Question

A Limited purchased a machine on 1st July 2011 for ₹ 3,00,000 and on 1st January 2013 bought another machinery for ₹ 2,00,000. On 1st August 2013 machine bought in 2011 was sold for ₹ 1,60,000. Another machine was bought for ₹ 1,50,000 on 1st October 2013. It was decided to provide depreciation @ 10% p.a. on written down value method assuming books are closed on 31st March each year. Prepare Machinery Account and Provision for depreciation account for 3 years.

Answer 1

Machinery Account
Dr.					Cr.
Date	Particulars		Amount (Rs)	Date		Particulars		Amount (Rs)
2011				2012
Jul. 01	Bank A/c (M1)		3,00,000	Mar. 31		Balance c/d		3,00,000
			3,00,000					3,00,000
2012				2013
Apr. 01	Balance b/d		3,00,000	Mar. 31		Balance c/d
2013						M1	3,00,000
Jan.01	Bank A/c (M2)		2,00,000			M2	2,00,000	5,00,000
			5,00,000					5,00,000
2013				2013
Apr. 01	Balance b/d		5,00,000	Aug.01		Provision for Depreciation A/c (on M1 for 4 months)		58,575
	M1	3,00,000				Bank A/c (Sale of M1)		1,60,000
	M2	2,00,000				Profit and Loss A/c (Loss on Sale)		81,425
				2014
Oct.01	Bank A/c (M3)		1,50,000	Mar.31		Balance c/d
						M2	2,00,000
						M3	1,50,000	3,50,000
			6,50,000					6,50,000

Working Notes: Calculation of Profit or Loss on Sale

Particulars	Amount
Value of M1 as on July 01, 2011	3,00,000
Less: Depreciation	58,575
Value of M1 as on Aug. 01, 2013	2,41,425
Less: Sale Value	1,60,000
Loss on Sale	81,425

Provision for Depreciation Account
Dr.					Cr.
Date	Particulars		Amount (Rs)	Date		Particulars		Amount (Rs)
2012				2012
Mar. 31	Balance c/d		22,500	Mar. 31		Depreciation A/c		22,500
			22,500					22,500
2013				2012
Mar. 31	Balance c/d			Apr.01		Balance b/d		22,500
	M1	50,250		2013
	M2	5,000	55,250	Mar.31		Depreciation A/c
						M1	27,750
						M2	5,000	32,750
			55,250					55,250
2013				2013
Aug.01	Machinery A/c		58,575	Apr.01		Balance b/d
2014						M1	50,250
Mar. 31	Balance c/d					M2	5,000	55,250
	M2	24,500		Aug.01		Depreciation A/c (M1)		8,325
	M3	7,500	32,000	2014
				Mar.31		Depreciation A/c
						M2	19,500
						M3	7,500	27,000
			90,575					90,575