Astha Engineering Works purchased a machine on 1st July, 2015 for ₹ 1,80,000 and spent ₹ 20,000 on its installation.
On 1st April, 2016, if purchased another machine for ₹ 2,40,000. On 1st October, 2017, the machine purchased on 1st July, 2015 was sold for ₹ 1,45,000 plus CGST and SGST @ 6% each. On 1st January, 2018, another machine was purchased for ₹ 4,00,000 plus IGST @ 12%.
Prepare the Machinery Account for the years ended 31st March, 2016 to 2018 after charging Depreciation @ 10% p.a. by Diminishing Balance Method. Accounts are closed on 31st March every year.

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Solution

Book of Astha Engineering Works

Machinery Account

Dr.

Cr.

Date

Particulars

J.F.

Amount

(₹)

Date

Particulars

J.F.

Amount

(₹)

2015-16

2015-16

July 01

Bank (I) (1,80,000 + 20,000)

2,00,000

Mar.31

Depreciation (for 9 months)

15,000

Mar.31

Balance c/d

1,85,000

2,00,000

2,00,000

2016-17

2016-17

Apr.01

Balance b/d (I)

1,85,000

Mar.31

Depreciation

Apr.01

Bank (II)

2,40,000

I

18,500

II

24,000

42,500

Mar.31

Balance c/d

I

1,66,500

II

2,16,000

3,82,500

4,25,000

4,25,000

2017-18

2017-18

Apr.01

Balance b/d

Oct. 01

Depreciation (I) (for 6 months)

8,325

I

1,66,500

Oct. 01

Bank (I)

1,45,000

II

2,16,000

3,82,500

Oct. 01

Profit and Loss (Loss)

13,175

Jan.01

Bank (III)

4,00,000

Mar.31

Depreciation

II

21,600

III (for 3 months)

10,000

31,600

Mar.31

Balance c/d

II

1,94,400

III

3,90,000

5,84,400

7,82,500

7,82,500

Working Note:

(1) Calculation of profit or loss on sale of Machine I:

Particulars

Amount (₹)

Book Value of as on Apr. 01, 2017

1,66,500

Less: Depreciation (for 6 Months)

(8,325)

Book Value on Oct 01, 2017

1,58,175

Less: Sale Value

(1,45,000)

Loss on Sale

13,175

(2) Journal entry for purchase with GST

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2018

Jan 01
Machinery A/c
Dr.

4,00,000

Input IGST A/c
Dr.

48,000

To Bank A/c

4,48,000

(Machinery purchased with IGST @ 12% paid)

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Book of Astha Engineering Works Machinery Account
Dr.											Cr.
Date	Particulars		J.F.	Amount (₹)	Date	Particulars			J.F.	Amount (₹)
2015-16					2015-16
July 01	Bank (I) (1,80,000 + 20,000)			2,00,000	Mar.31	Depreciation (for 9 months)				15,000
					Mar.31	Balance c/d				1,85,000
				2,00,000						2,00,000
2016-17					2016-17
Apr.01	Balance b/d (I)			1,85,000	Mar.31	Depreciation
Apr.01	Bank (II)			2,40,000		I		18,500
						II		24,000		42,500
					Mar.31	Balance c/d
						I	1,66,500
						II	2,16,000			3,82,500
				4,25,000						4,25,000
2017-18					2017-18
Apr.01	Balance b/d				Oct. 01	Depreciation (I) (for 6 months)				8,325
	I	1,66,500			Oct. 01	Bank (I)				1,45,000
	II	2,16,000		3,82,500	Oct. 01	Profit and Loss (Loss)				13,175
Jan.01	Bank (III)			4,00,000	Mar.31	Depreciation
						II	21,600
						III (for 3 months)	10,000			31,600
					Mar.31	Balance c/d
						II	1,94,400
						III	3,90,000			5,84,400
				7,82,500						7,82,500

Particulars	Amount (₹)
Book Value of as on Apr. 01, 2017	1,66,500
Less: Depreciation (for 6 Months)	(8,325)
Book Value on Oct 01, 2017	1,58,175
Less: Sale Value	(1,45,000)
Loss on Sale	13,175

Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
2018
Jan 01	Machinery A/c	Dr.		4,00,000
	Input IGST A/c	Dr.		48,000
	To Bank A/c				4,48,000
	(Machinery purchased with IGST @ 12% paid)