Question

Following balances appear in the books of M/s. Amrit as on 1st April, 2017:

		₹
2017
1st April	Machinery A/c	60,000
	Provision for Depreciation A/c	36,000

On 1st April, 2017, they decided to dispose off a machinery for ₹ 8,400 which was purchased on 1st April, 2013 for ₹ 16,000.
You are required to prepare the Machinery A/c, Provision for Depreciation A/c and Machinery Disposal A/c for the year ended 31^st March, 2018. Depreciation was charged at 10% on Cost following SLM.

Answer 1

Books of M/s. Amrit Machinery Account
Dr.									Cr.
Date		Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2017					2017
April 01		Balance b/d (44,000 + 16,000)		60,000	April 01	Machinery Disposal		16,000
					2018
					Mar.31	Balance c/d		44,000
				60,000				60,000

Provision for Depreciation Account
Dr.									Cr.
Date		Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2017					2017
April 01		Machinery Disposal (4 years)		6,400	April 01	Balance b/d		36,000
2018					2018
Mar.31		Balance c/d		34,000	Mar.31	Depreciation (on Machine costing Rs 44,000)		4,400
				40,400				40,000

Machinery Disposal Account
Dr.									Cr.
Date		Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2017					2017
April 01		Machinery		16,000	April 01	Provision for Depreciation		6,400
					2018
					Mar.31	Bank (Sale)		8,400
						Profit and Loss (Loss)		1,200
				16,000				16,000

Working Note

1. Calculation of profit or loss on Machine Sold:

Particulars	Amount (Rs)
Original Cost of Machine Sold on April 01, 2013	16,000
Less: Accumulated Depreciation on Machine Sold (1,600 × 4)	(6,400)
Book Value of April 01, 2017	9,600
Less: Sale Value	(8,400)
Loss on Sale	1,200