Question

Following balances appear in the books of X Ltd. as on 1st April, 2018:

	₹
Machinery A/c	5,00,000
Provision for Depreciation A/c	2,25,000

The machinery is depreciated @ 10% p.a. on the Fixed Instalment Method. The accounting year being April-March. On 1st October, 2018, a machinery which was purchased on 1st July, 2015 for ₹ 1,00,000 was sold for ₹ 42,000 plus CGST and SGST @ 6% each and on the same date a new machine was purchased for ₹ 2,00,000 paying IGST @ 12%. Prepare Machinery Account and Provision for Depreciation Account for the year ended 31st March, 2019.

Answer 1

Machinery Account
Dr.									Cr.
Date		Particulars	J.F.	Amount (₹)	Date	Particulars	J.F.	Amount (₹)
2018					2018
April 01		Balance b/d (4,00,000 + 1,00,000)		5,00,000	Oct.01	Provision for Depreciation		32,500
Oct.01		Bank		2,00,000	Oct.01	Bank		42,000
					Oct.01	Profit and Loss(WN1)		25,500
					2019
					Mar.31	Balance c/d		6,00,000
				7,00,000				7,00,000

Provision for Depreciation Account
Dr.									Cr.
Date		Particulars	J.F.	Amount (₹)	Date	Particulars	J.F.	Amount (₹)
2018					2018
Oct.01		Machinery		32,500	April 01	Balance b/d		2,25,000
2019					2019
Mar.31		Balance c/d		2,47,500	Mar.31	Depreciation (WN2)		55,000
				2,80,000				2,80,000

Working Notes:

1 Calculation of Loss on Sale of Machinery

Particulars	Amount (₹)
Original cost of Machine Sold	1,00,000
Less: Accumulated Depreciation on Machine Sold, from July 2015 to Oct 01, 2018 (1,00,000 × 10% × 3.25 years)	(32,500)
Book Value of Machine Sold	67,500
Less: Sale Value	(42,000)
Loss on Sale of Machine	25,500

2 Calculation of Depreciation Charged during the year

Particulars	Amount (₹)
On 4,00,000 @ 10% (4,00,000 × 10%)	40,000
On 2,00,000 @ 10% for 6 months (2,00,000 × 10% × 6/12)	10,000
On 1,00,000 @ 10% for 6 months (1,00,000 × 10% × 6/12)	5,000
Total	55,000

3. Journal entries for sale and purchase with GST

Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
2018
Oct 1	Bank A/c	Dr.		47,040
	To Machinery A/c				42,000
	To Output CGST A/c To Output SGST A/c (Machinery purchased on 1st July, 2014 sold with CGST and SGST @ 6% each.)				2,520 2,520
Oct 1	Machinery A/c Input IGST A/c To Bank A/c (Machinery purchased with IGST @ 12% paid.)	Dr. Dr.		2,00,000 24,000	2,24,000