Question

Bhushan & Company purchased a Machinery on 1st April, 2009, for ₹ 54,000 and spent ₹ 6,000 on its installation. On 1st December, 2010, it purchased another machine for ₹ 30,000.
On 30th June 2011, the first machine purchased on 1st April, 2009, is sold for ₹ 36,000 and on the same date it purchased a new machinery for ₹ 80,000.
On December 1, 2012, the second machine (purchased on December 1, 2010) was also sold off for ₹ 26,000.
Depreciation was provided on machinery @ 10% p.a. on Original Cost Method annually o 31st March. Give the machinery account for four years.

Answer 1

Machinery Account
Dr.					Cr.
Date	Particulars		Amount (Rs)	Date		Particulars			Amount (Rs)
2009				2010
Apr. 01	Bank A/c (M1) (54,000 + 6,000)		60,000	Mar. 31		Depreciation A/c			6,000
				Mar. 31		Balance c/d			54,000
			60,000						60,000
2010				2011
Apr. 01	Balance b/d		54,000	Mar. 31		Depreciation A/c
Dec. 01	Bank A/c (M2)		30,000			M1		6,000
						M2 (for 4 months)		1,000	7,000
				Mar. 31		Balance c/d
						M1		48,000
						M2		29,000	77,000
			84,000						84,000
2011				2011
Apr. 01	Balance b/d			June 30		Depreciation A/c (M1)			1,500
	M1	48,000				Bank A/c (Sale of M1)			36,000
	M2	29,000	77,000			Profit and Loss A/c (Loss on Sale of M1)			10,500
June 30	Bank A/c (M3)		80,000	2012
				Mar. 31		Depreciation A/c
						M2	3,000
						M3 (for 9 months)	6,000		9,000
						Balance c/d
						M2	26,000
						M3	74,000		1,00,000
			1,57,000						1,57,000
2012				2012
Apr. 01	Bank A/c			Dec. 01		Depreciation A/c (M2)			2,000
	M2	26,000				Bank A/c (Sale of M2)			26,000
	M3	74,000	1,00,000	2013
Dec. 01	Profit and Loss A/c (Profit on sale of M2)		2,000	Mar. 31		Depreciation A/c (M3)			8,000
						Balance c/d			66,000
			1,02,000						1,02,000

Working Notes:

WN1: Calculation of Profit or Loss on Sale on M1

Particulars	Amount
Value of Machinery on Apr. 01, 2011	48,000
Less: Depreciation for 3 months	1,500
Value of Machinery on June 30, 2011	46,500
Less: Sale Value	36,000
Loss on Sale	10,500

WN2: Calculation of Profit or Loss on Sale of M2

Particulars	Amount
Value of Machinery on Apr. 01, 2012	26,000
Less: Depreciation for 8 months	2,000
Value of Machinery on Dec. 01, 2012	24,000
Less: Sale Value	26,000
Profit on Sale	2,000