Question

Ganga Ltd. purchased a machinery on January 01, 2014 for Rs 5,50,000 and spent Rs 50,000 on its installation. On September 01, 2014 it purchased another machine for Rs 3,70,000. On May 01, 2016 it purchased another machine for Rs 8,40,000 (including installation expenses).

Depreciation was provided on machinery @10% p.a. on original cost method annually on December 31. Prepare:

(a) Machinery account and depreciation account for the years 2014, 2015, 2016 and 2017.

(b) If depreciation is accumulated in provision for Depreciation account then prepare machine account and provision for depreciation account for the years 2014, 2015, 2016 and 2017.

Answer 1

(a)

Books of Ganga Ltd.
Machinery Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2014				2014
Jan.01	Bank (i)		6,00,000	Dec.31	Depreciation (i) 60,000 (ii) 12,333		72,333
	(5,50,000 + 50,000)			Dec.31	Balance c/d
Sep.01	Bank (ii)		3,70,000		(i) 5,40,000, (ii) 3,57,667		8,97,667
			9,70,000				9,70,000
2015				2015
Jan.01	Balance b/d			Dec.31	Depreciation
	(i) 5,40,000, (ii) 3,57,667		8,97,667		(i) 60,000, (ii) 37,000,
May.01	Bank (iii)		8,40,000		(iii) 56,000		1,53,000
				Dec.31	Balance c/d
					(i) 4,80,000 (ii) 3,20,667,
					(iii) 7,84,000		15,84,667
			17,37,667				17,37,667
2016				2016
Jan.01	Balance b/d			Dec.31	Depreciation
	(i) 4,80,000, (ii) 3,20,667				(i) 60,000, (ii) 37,000,
	(iii) 7,84,000		15,84,667	Dec.31	(iii) 84,000		1,81,000
					Balance c/d
					(i) 4,20,000, (ii) 2,83,667,
					(iii) 7,00,000		14,03,667
			15,84,667				15,84,667
2017				2017
Jan.01	Balance b/d			Dec.31	Depreciation
	(i) 4,20,000, (ii) 2,83,667,				(i) 60,000, (ii) 37,000,
	(iii) 7,00,000		14,03,667		(iii) 84,000		1,81,000
				Dec.31	Balance c/d
					(i) 3,60,000, (ii) 2,46,667,
					(iii) 6,16,000		12,22,667
			14,03,667				14,03,667

Depreciation Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2014				2014
Dec.31	Machinery		72,333	Dec.31	Profit and Loss		72,333
			72,333				72,333
2015				2015
Dec.31	Machinery		1,53,000	Dec.31	Profit and Loss		1,53,000
			1,53,000				1,53,000
2016				2016
Dec.31	Machinery		1,81,000	Dec.31	Profit and Loss		1,81,000
			1,81,000				1,81,000
2017				2017
Dec.31	Machinery		1,81,000	Dec.31	Profit and Loss		1,81,000
			1,81,000				1,81,000

(b)

Machinery Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2014				2014
Jan.01	Bank (i)		6,00,000
	(5,50,000 + 50,000)			Dec.31	Balance c/d
Sep.01	Bank (ii)		3,70,000				9,70,000
			9,70,000				9,70,000
2015				2015
Jan.01	Balance b/d
	(i) 6,00,000 (ii) 3,70,000		9,70,000
May.01	Bank (iii)		8,40,000	Dec.31	Balance c/d		18,10,000
			18,10,000				18,10,000
2016				2016
Jan.01	Balance b/d			Dec.31	Balance c/d		18,10,000
	(i) 6,00,000 (ii) 3,70,000
	(iii) 8,40,000		18,10,000
			18,10,000				18,10,000
2017				2017
Jan.01	Balance b/d			Dec.31	Balance c/d		18,10,000
	(i) 6,00,000 (ii) 3,70,000
	(iii) 8,40,000		18,10,000
			18,10,000				18,10,000

Provision for Depreciation Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2014				2014
Dec.31	Balance c/d		72,333	Dec.31	Depreciation		72,333
			72,333				72,333
				2015
2015				Jan.01	Balance b/d		72,333
Dec.31	Balance c/d		2,25,333	Dec.31	Depreciation		1,53,000
			2,25,333				2,25,333
				2016
2016				Jan.01	Balance b/d		2,25,333
Dec.31	Balance c/d		4,06,333	Dec.31	Depreciation		1,81,000
			4,06,333				4,06,333
				2017
2017				Jan.01	Balance b/d		4,06,333
Dec.31	Balance c/d		5,87,333	Dec.31	Depreciation		1,81,000
			5,87,333				5,87,333