Question

A company purchased a machinery for ₹ 50,000 on 1st October, 2016. Another machinery costing ₹ 10,000 was purchased on 1st December, 2017. On 31st March, 2019, the machinery purchased in 2016 was sold at a loss of ₹ 5,000. The company charges depreciation @ 15% p.a. on Diminishing Balance Method. Accounts are closed on 31st March every year. Prepare the Machinery Account for 3 years.

Answer 1

Machinery Account
Dr.													Cr.
Date		Particulars		J.F.	Amount (₹)	Date	Particulars				J.F.	Amount (₹)
2016						2017
Oct.01		Bank (I)			50,000	Mar.31	Depreciation (for 6 Months)					3,750
						Mar.31	Balance c/d					46,250
					50,000							50,000
2017						2018
Apr.01		Balance b/d (I)			46,250	Mar.31	Depreciation
Dec.01		Bank (II)			10,000		I		6,938
							II		500			7,438
						Mar.31	Balance c/d
							I	39,312
							II	9,500				48,812
					56,250							56,250
2018						2019
Apr.01		Balance b/d				Mar.31	Depreciation
		I	39,312				I			5,897
		II	9,500		48,812		II			1,425		7,322
						Mar.31	Bank (I)					28,415
						Mar.31	Profit and Loss (Loss)					5,000
						Mar.31	Balance c/d (II)					8,075
					48,812							48,812

Working Note

(1) Calculation of profit or loss on sale of machine:

Particulars	Amount (₹)
Book Value of Machine I on Apr. 01, 2018	39,312
Less: Depreciation (39,312 × 15%)	5,897
Book Value of Machine I on Mar. 31, 2019	33,415
Less: Sale Value	(28,415)
Loss on Sale of Machine I	5,000