Question

Ashoka Ltd. bought a machine on 1st April, 2010 for ₹ 2,40,000 and spent ₹ 4,000 on its carriage and ₹ 6,000 towards installation cost. On 1st July, 2011 it purchased a second hand machinery for ₹ 75,000 and spent ₹ 25,000 on its overhauling.
On 1st January, 2013 it decided to sell the machinery bought on 1st April, 2010 at a loss of ₹ 20,000. It bought another machine on the same date for ₹ 40,000. Company decided to charge depreciation @ 15% p.a. on written down value method. Prepare machinery account for 3 years. Books are closed each year on 31st March.

Answer 1

Machinery Account
Dr.				Cr.
Date	Particulars		Amount (Rs)		Date	Particulars			Amount (Rs)
2010					2011
Apr. 01	Bank A/c (M1) (2,40,000 + 4,000 + 6,000)		2,50,000		Mar. 31	Depreciation A/c			37,500
					Mar. 31	Balance c/d			2,12,500
			2,50,000						2,50,000
2011					2012
Apr. 01	Balance b/d		2,12,500		Mar. 31	Depreciation A/c
July 01	Bank A/c (M2) (75,000+25,000)		1,00,000			M1	31,875
						M2 (for 9 months)	11,250		43,125
					Mar. 31	Balance c/d
						M1	1,80,625
						M2	88,750		2,69,375
			3,12,500						3,12,500
2012					2013
Apr. 01	Balance b/d				Jan. 01	Depreciation A/c (M1)			20,320
	M1	1,80,625				Bank A/c (Sale of M1)			1,40,305
	M2	88,750	2,69,375			Profit and Loss A/c (Loss on Sale of M1)			20,000
2013					Mar. 31	Depreciation A/c
Jan. 01	Bank A/c (M3)		40,000			M2		13,312
						M3 (for 3 months)		1,500	14,813
					Mar. 31	Balance c/d
						M2		75,438
						M3		38,500	1,13,938
			3,09,375						3,09,375

Working Note: Calculation of Sale Price of M1

Particulars	Amount
Value of Machinery on Apr. 01, 2012	1,80,625
Less: Depreciation for 9 months	20,320
Value of Machinery on Jan. 01, 2013	1,60,305
Less: Loss on Sale (given)	20,000
Sale Value (Balancing Figure)	1,40,305