A Limited has the following balances on 1st April, 2017:
₹
Machinery A/c
2,00,000
Provision for Depreciation A/c
90,000
The company charged depreciation @ 10% p.a. on Straight Line Method. Accounts are closed on 31st March every year. On 1st October, 2017, a part of machinery purchased on 1st July, 2014 for ₹ 40,000 was sold for ₹ 18,400, charging CGST and SGST @ 6% each and on the same date a new plant was purchased for ₹ 1,00,000 plus IGST @ 12%.
Prepare 'Machinery Account' and 'Provision for Depreciation Account' for the year ended 31st March, 2018.
| ₹ | |
| Machinery A/c | 2,00,000 |
| Provision for Depreciation A/c | 90,000 |
The company charged depreciation @ 10% p.a. on Straight Line Method. Accounts are closed on 31st March every year. On 1st October, 2017, a part of machinery purchased on 1st July, 2014 for ₹ 40,000 was sold for ₹ 18,400, charging CGST and SGST @ 6% each and on the same date a new plant was purchased for ₹ 1,00,000 plus IGST @ 12%.
Prepare 'Machinery Account' and 'Provision for Depreciation Account' for the year ended 31st March, 2018.
Books of A Limited
Machinery Account
Dr.
Cr.
Date
Particulars
J.F.
Amount
(Rs)
Date
Particulars
J.F.
Amount
(Rs)
2017
2017
Apr.01
Balance b/d (1,60,000+40,000)
2,00,000
Oct 01
Provision for Depreciation
13,000
Oct 01
Bank
1,00,000
Oct 01
Bank
18,400
Oct 01
2018
Profit and Loss (Loss)
8,600
Mar.31
Balance c/d
2,60,000
3,00,000
3,00,000
Provision for Depreciation Account
Dr.
Cr.
Date
Particulars
J.F.
Amount
(Rs)
Date
Particulars
J.F.
Amount
(Rs)
2017
2017
Oct 01
2018
Machinery A/c
13,000
Apr.01
2018
Balance b/d
90,000
Mar.31
Balance c/d
1,00,000
Mar.31
Depreciation
23,000
1,13,000
1,13,000
Working Notes
1. Calculation of Profit or Loss on Machinery Sold
Particulars
Amount (Rs)
Original Cost of Machine on July 01, 2014
40,000
Less: Accumulated Depreciation on Machine Sold, from July 01, 2014 to Oct 01, 2017 (40,000 × 10% × 3.25 years)
(13,000)
Book Value of Machine on Oct 01, 2017
27,000
Less: Sale Value
(18,400)
Loss on Sale of Machine
8,600
2. Calculation of Depreciation Charged During the Year 2017
Particulars
Amount
(Rs)
On Rs 1,60,000 @ 10% (1,60,000 × 10%)
16,000
On Rs 1,00,0000 @ 10% for 6 months (1,00,000 × 10% × 6/12)
5,000
On Rs 40,000 @ 10% for 6 months (40,000 × 10% × 6/12)
2,000
Total
23,000
3. Journal entries for sale and purchase with GST
Journal
Date
Particulars
L.F.
Debit
Amount
(₹)
Credit
Amount
(₹)
2017
Oct 1
Bank A/c
Dr.
20,608
To Machinery A/c
18,400
To Output CGST A/c
To Output SGST A/c
(Machinery purchased on 1st July, 2014 sold with CGST and SGST @ 6% each.)
1,104
1,104
Oct 1
Machinery A/c
Input IGST A/c
To Bank A/c
(Machinery purchased with CGST and SGST @ 6% each paid.)
Dr.
Dr.
1,00,000
12,000
1,12,000
|
Books of A Limited Machinery Account |
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Dr. |
|
Cr. |
|||||||
|
Date |
Particulars |
J.F. |
Amount (Rs) |
Date |
Particulars |
J.F. |
Amount (Rs) |
||
|
2017 |
|
2017 |
|
||||||
|
Apr.01 |
Balance b/d (1,60,000+40,000) |
|
2,00,000 |
Oct 01 |
Provision for Depreciation |
|
13,000 |
||
|
Oct 01 |
Bank |
|
1,00,000 |
Oct 01 |
Bank |
|
18,400 |
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|
|
|
Oct 01 |
Profit and Loss (Loss) |
|
8,600 |
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|
|
|
|
Mar.31 |
Balance c/d |
|
2,60,000 |
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|
|
|
3,00,000 |
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|
3,00,000 |
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|
Provision for Depreciation Account |
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|
Dr. |
|
Cr. |
|||||||
|
Date |
Particulars |
J.F. |
Amount (Rs) |
Date |
Particulars |
J.F. |
Amount (Rs) |
||
|
2017 |
|
|
|
2017 |
|
|
|
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|
Oct 01 |
Machinery A/c |
|
13,000 |
Apr.01 |
Balance b/d |
|
90,000 |
||
|
Mar.31 |
Balance c/d |
|
1,00,000 |
Mar.31 |
Depreciation |
|
23,000 |
||
|
|
|
|
1,13,000 |
|
|
|
1,13,000 |
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Working Notes
1. Calculation of Profit or Loss on Machinery Sold
|
Particulars |
Amount (Rs) |
|
Original Cost of Machine on July 01, 2014 |
40,000 |
|
Less: Accumulated Depreciation on Machine Sold, from July 01, 2014 to Oct 01, 2017 (40,000 × 10% × 3.25 years) |
(13,000) |
|
Book Value of Machine on Oct 01, 2017 |
27,000 |
|
Less: Sale Value |
(18,400) |
|
Loss on Sale of Machine |
8,600 |
2. Calculation of Depreciation Charged During the Year 2017
|
Particulars |
Amount (Rs) |
|
On Rs 1,60,000 @ 10% (1,60,000 × 10%) |
16,000 |
|
On Rs 1,00,0000 @ 10% for 6 months (1,00,000 × 10% × 6/12) |
5,000 |
|
On Rs 40,000 @ 10% for 6 months (40,000 × 10% × 6/12) |
2,000 |
|
Total |
23,000 |
3. Journal entries for sale and purchase with GST
|
Journal
|
|||||
|
Date
|
Particulars
|
L.F.
|
Debit
Amount
(₹)
|
Credit
Amount
(₹)
|
|
|
|
|
|
|
||
|
2017
|
|
|
|
||
|
Oct 1
|
Bank A/c |
Dr.
|
20,608
|
|
|
|
|
To Machinery A/c |
|
|
18,400
|
|
|
|
To Output CGST A/c To Output SGST A/c (Machinery purchased on 1st July, 2014 sold with CGST and SGST @ 6% each.) |
|
|
1,104
1,104 |
|
|
Oct 1 |
Machinery A/c Input IGST A/c To Bank A/c (Machinery purchased with CGST and SGST @ 6% each paid.) |
Dr. Dr. |
1,00,000 12,000 |
1,12,000 |
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