Question

Berlia Ltd. Purchased a second hand machine for Rs 56,000 on July 01, 2015 and spent Rs 24,000 on its repair and installation and Rs 5,000 for its carriage. On September 01, 2016, it purchased another machine for Rs 2,50,000 and spent Rs 10,000 on its installation.

(a) Depreciation is provided on machinery @10% p.a on original cost method annually on December 31. Prepare machinery account and depreciation account from the year 2015 to 2018.

(b) Prepare machinery account and depreciation account from the year 2015 to 20018, if depreciation is provided on machinery @10% p.a. on written down value method annually on December 31.

Answer 1

Books of Berlia Ltd. (a)
Machinery Account (Original Cost Method)
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2015				2015
Jul.01	Bank (i)		85,000	Dec.31	Depreciation		4,250
	(5,600 + 24,000 + 5,000)			Dec.31	Balance c/d		80,750
			85,000				85,000
2016				2016
Jan.01	Balance b/d (i)		80,750	Dec.31	Depreciation
Sep.01	Bank (ii)		2,60,000		(i) 8,500, (ii) 8,667		17,167
	(2,50,000 + 10,000)			Dec.31	Balance c/d		3,23,583
					(i) 72,250, (ii) 2,51,333
			3,40,750				3,40,750
2017				2017
Jan.01	Balance b/d		3,23,583	Dec.31	Depreciation
	(i) 72,250, (ii) 2,51,333				(i) 8,500, (ii) 26,000		34,500
				Dec.31	Balance c/d
					(i) 63,750, (ii) 2,25,333		2,89,083
			3,23,583				3,23,583
2018	Balance b/d			2018
Jan.01	(i) 63,750, (ii) 2,25,333		2,89,083	Dec.31	Depreciation
					(i) 8,500, (ii) 26,000		34,500
				Dec.31	Balance c/d
					(i) 55,250, (ii) 1,99,333		2,54,583
			2,89,083				2,89,083

Depreciation Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2015				2015
Dec.31	Machinery		4,250	Dec.31	Profit and Loss		4,250
			4,250				4,250
2016				2016
Dec.31	Machinery			Dec.31	Profit and Loss		17,167
	(i) 8,500 (ii) 8,667		17,167
			17,167				17,167
2017				2017
Dec.31	Machinery			Dec.31	Profit and Loss		34,500
	(i) 8,500 (ii) 26,000		34,500
			34,500				34,500
2018				2018
Dec.31	Machinery		34,500	Dec.31	Profit and Loss		34,500
	(i) 8,500 (ii) 26,000		34,500				34,500

Working notes: Calculation of annual depreciation

(i) Depreciation (p.a.) on Machinery Purchased on July 01, 2015

	= (56,000 + 24,000 + 5,000) ×	10
		100
	= Rs 8,500 per annum

(ii) Depreciation (p.a.) on Machinery purchased on September 01, 2016.

	= (2,50,000 + 10,000) ×	10
		100
	= Rs 26,000 per annum

(b)

Machinery Account (Written Down Value method)
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2015				2015
Jul.01	Bank (i)		85,000	Dec.31	Depreciation		4,250
	(5,600 + 24,000 + 5,000)			Dec.31	Balance c/d		80,750
			85,000				85,000
2016				2016
Jan.01	Balance b/d (i)		80,750	Dec.31	Depreciation
Sep.01	Bank (ii)		2,60,000		(i) 8,075, (ii) 8,667		16,742
	(2,50,000 + 10,000)			Dec.31	Balance c/d
					(i) 72,675, (ii) 2,51,333		3,24,008
			3,40,750				3,40,750
2017				2017
Jan.01	Balance b/d		3,24,008	Dec.31	Depreciation
	(i) 72,675, (ii) 2,51,333				(i) 7,268, (ii) 25,133		32,401
				Dec.31	Balance c/d
					(i) 65,407, (ii) 2,26,200		2,91,607
			3,24,008				3,24,008
2018	Balance b/d			2018
Jan.01	(i) 65,407, (ii) 2,26,200		2,91,607	Dec.31	Depreciation
					(i) 6,540, (ii) 22,620		29,160
				Dec.31	Balance c/d
					(i) 58,867, (ii) 2,03,580		2,62,447
			2,91,607				2,91,607

Depreciation Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2015				2015
Dec.31	Machinery		4,250	Dec.31	Profit and Loss		4,250
			4,250				4,250
2016				2016
Dec.31	Machinery			Dec.31	Profit and Loss		16,742
	(i) 8,075, (ii) 8,667		16,742
			16,742				16,742
2017				2017
Dec.31	Machinery			Dec.31	Profit and Loss		32,401
	(i) 7,268, (ii) 25,133		32,401
			32,401				32,401
2018				2018
Dec.31	Machinery			Dec.31	Profit and Loss		29,160
	(i) 6,540, (ii) 22,620		29,160
			29,160				29,160