Question

Shri Krishan Manufacturing Company purchased 10 machines for Rs 75,000 each on July 01, 2014. On October 01, 2016, one of the machines got destroyed by fire and an insurance claim of Rs 45,000 was admitted by the company. On the same date another machine is purchased by the company for Rs 1,25,000.

The company writes off 15% p.a. depreciation on written down value basis. The company maintains the calendar year as its financial year. Prepare the machinery account from 2014 to 2017.

Answer 1

Books of Shri Krishna Manufacturing Company Machinery Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2014				2014
Jul.01	Bank		7,50,000	Dec.31	Depreciation		56,250
				Dec.31	Balance c/d		6,93,750
			7,50,000				7,50,000
2015				2015
Jan.01	Balance b/d		6,93,750	Dec.31	Depreciation		1,04,063
				Dec.31	Balance c/d		5,89,687
			6,93,750				6,93,750
2016				2016
Jan.01	Balance b/d		5,89,687	Oct.01	Depreciation (9 months		6,634
					for one machine)
Oct.01	Bank		1,25,000	Oct.01	Insurance Co.		45,000
				Oct.01	Profit and Loss (Loss)		7,335
				Dec.31	Depreciation
					(i) 79,608, (ii) 4,688		84,296
				Dec.31	Balance c/d
					(i) 4,51,110, (ii) 1,20,312		5,71,422
			7,14,687				7,14,687
2017				2017
Jan.01	Balance b/d			Dec.31	Depreciation
	(i) 4,51,110, (ii) 1,20,312		5,71,422		(i) 67,667, (ii) 18,047		85,714
				Dec.31	Balance c/d
					(i) 3,83,443, (ii) 1,02,265		4,85,708
			5,71,422				5,71,422

Working Note:

Machine Costing Rs 75,000 sold on Oct.01, 2002

	Opening Balance	–	Depreciation	=	Closing Balance
Jul.01, 2014	75,000	–	5,625 (6 months)	=	69,375
Jan.01, 2015	69,375	–	10,406	=	58,969
Jan.01, 2016	58,969	–	6,634 (9 months)	=	52,335

Value on Oct.01, 2016		52,335
Insurance Claim		– 45,000
Loss		Rs 7,335