Question

Babu purchased on 1st April, 2017, a machine for ₹ 6,000. On 1st October, 2017, he also purchased another machine for ₹ 5,000. On 1st October, 2018, he sold the machine purchased on 1st April, 2017 for ₹ 4,000.
It was decided that Depreciation @ 10% p.a. was to be written off every year under Diminishing Balance Method.
Assuming the accounts were closed on 31st March every year, show the Machinery Account for the years ended 31st March, 2018 and 2019.

Answer 1

Books of Babu Machinery Account
Dr.											Cr.
Date		Particulars		J.F.	Amount (₹)	Date	Particulars		J.F.	Amount (₹)
2017						2018
Apr. 01		Bank (I)			6,000	Mar. 31	Depreciation
Oct. 01		Bank (II)			5,000		I	600
							II (for 6 months)	250		850
						Mar. 31	Balance c/d
							I	5,400
							II	4,750		10,150
					11,000					11,000
2018						2018
Apr. 01		Balance b/d				Oct. 01	Depreciation (I) (for 6 months)			270
		I	5,400			Oct. 01	Bank (I)			4,000
		II	4,750		10,150	Oct. 01	Profit and Loss (Loss)			1,130
						2019
						Mar. 31	Depreciation (II)			475
						Mar. 31	Balance c/d (II)			4,275
					10,150					10,150

Working Note

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

Particulars	Amount (₹)
Book Value of Machinery Apr. 01, 2018	5,400
Less: Depreciation (for 6 Months)	(270)
Book Value of Machinery on Oct. 01 2018	5,130
Less: Sale	(4,000)
Loss on Sale	1,130