Question

Ganga Ltd purchased a machinery on January 1, 2001, for Rs 5,50,000 and spent Rs 50,000 on its installation. On September 1, 2001, it purchased another machine for Rs 3,70,000. On May 01, 2002 it purchased another machine for Rs 8,40,000 (including installation expenses).

Depreciation was provided on machinery @ $10\%$ per annum on original cost method annually on December 31. Prepare

(a) Machinery account and Depreciation account for the years 2001, 2002, 2003 and 2004.

(b) If depreciation is accumulated in the provision for Depreciation account, then prepare Machine account and Provision for depreciation account for the years 2001, 2002, 2003 and 2004.

Answer 1

Answer (a)

Dr Machinery Account Cr
$\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{JF}& \text{Amt.(Rs)}& \text{Date}& \text{Particulars}& \text{JF}& \text{Amt.(Rs)}\\ 2001& & & & 2001& & & \\ \text{Jan 1}& \text{Bank A/c}& & & \text{Dec 31}& \text{Depreciation}& & \\ & M1=(5,50,000& & & & \text{A/c}& & \\ & +50,000)& & 6,00,000& & M1=60,000& & \\ \text{Sep 1}& \text{Bank A/c}& & 3,70,000& & M2=\underset{–}{12,333}& & 72,333\\ & & & & \text{Dec 31}& \text{Balance c/d}& & \\ & & & & & M1=5,40,000& & \\ & & & & & M2=\underset{–}{3,57,667}& & 8,97,667\\ & & & \underset{–}{\overline{9,70,000}}& & & & \underset{–}{\overline{9,70,000}}\\ 2002& & & & 2002& & & \\ \text{Jan 1}& \text{Balance b/d}& & & \text{Dec 31}& \text{Depreciation}& & \\ & M1=5,40,000& & & & \text{A/c}& & \\ & M2=\underset{–}{3,57,667}& & 8,97,667& & M1=60,000& & \\ & & & & & M2=37,000& & \\ \text{May 1}& \text{Bank A/c}& & & & M3=\underset{–}{56,000}& & 1,53,000\\ & M3=8,40,000& & 8,40,000& \text{Dec 31}& \text{Balance c/d}& & \\ & & & & & M1=4,80,000& & \\ & & & & & M2=3,20,667& & \\ & & & & & M3=\underset{–}{7,84,000}& & 15,84,667\\ & & & \underset{–}{\overline{17,37,667}}& & & & \underset{–}{\overline{17,37,667}}\\ 2003& & & & 2003& & & \\ \text{Jan 1}& \text{Balance b/d}& & & \text{Dec 31}& \text{Depreciation A/c}& & \\ & M1=4,80,000& & & & M1=60,000& & \\ & M2=3,20,667& & & & M2=37,000& & \\ & M3=\underset{–}{7,84,000}& & 15,84,667& & M3=\underset{–}{84,000}& & 1,81,000\\ & & & & \text{Dec 31}& \text{Balance c/d}& & \\ & & & & & M1=4,20,000& & \\ & & & & & M2=2,83,667& & \\ & & & & & M3=\underset{–}{7,00,000}& & 14,03,667\\ & & & \underset{–}{\overline{15,84,667}}& & & & \underset{–}{\overline{15,84,667}}\\ 2004& & & & 2004& & & \\ \text{Jan 1}& \text{Balance c/d}& & & \text{Dec 31}& \text{Depreciation}& & \\ & M1=4,20,000& & & & \text{A/c}& & \\ & M2=2,83,667& & & & M1=60,000& & \\ & M3=\underset{–}{7,00,000}& & 14,03,667& & M2=37,000& & \\ & & & & & M3=\underset{–}{84,000}& & 1,81,000\\ & & & & \text{Dec 31}& \text{Balance c/d}& & \\ & & & & & M1=3,60,000& & \\ & & & & & M2=2,46,667& & \\ & & & & & M3=\underset{–}{6,16,000}& & 12,22,667\\ & & & \underset{–}{\overline{14,03,667}}& & & & \underset{–}{\overline{14,03,667}}\end{array}$

Dr Depreciation Account Cr
$\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{JF}& \text{Amt.(Rs)}& \text{Date}& \text{Particulars}& \text{JF}& \text{Amt.(Rs)}\\ 2001& & & & 2001& & & \\ \text{Dec 31}& \text{Machinery A/c}& & 72,333& \text{Dec 31}& \text{Profit}\&\text{Loss A/c}& & 72,333\\ & & & \underset{–}{\overline{72,333}}& & & & \underset{–}{\overline{72,333}}\\ 2002& & & & 2002& & & \\ \text{Dec 31}& \text{Machinery A/c}& & 1,53,000& \text{Dec 31}& \text{Profit}\&\text{Loss A/c}& & 1,53,000\\ & & & \underset{–}{\overline{1,53,000}}& & & & \underset{–}{\overline{1,53,000}}\\ 2003& & & & 2003& & & \\ \text{Dec 31}& \text{Machinery A/c}& & 1,81,000& \text{Dec 31}& \text{Profit}\&\text{Loss A/c}& & 1,81,000\\ & & & \underset{–}{\overline{1,81,000}}& & & & \underset{–}{\overline{1,81,000}}\\ 2004& & & & 2004& & & \\ \text{Dec 31}& \text{Machinery A/c}& & 1,81,000& \text{Dec 31}& \text{Profit}\&\text{Loss A/c}& & 1,81,000\\ & & & \underset{–}{\overline{1,81,000}}& & & & \underset{–}{\overline{1,81,000}}\end{array}$

(b)

Dr Machinery Account Cr
$\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{JF}& \text{Amt.(Rs)}& \text{Date}& \text{Particulars}& \text{JF}& \text{Amt.(Rs)}\\ 2001& & & & 2001& & & \\ \text{Jan 1}& \text{Bank A/c}& & & \text{Dec 31}& \text{Balance c/d}& & \\ & M1=(5,50,000& & & & M1=6,00,000& & \\ & +50,000)& & 6,00,000& & M2=\underset{–}{3,70,000}& & 9,70,000\\ \text{Sep 1}& \text{Bank A/c}& & 3,70,000& & & & \\ & & & \underset{–}{\overline{9,70,000}}& & & & \underset{–}{\overline{9,70,000}}\\ 2002& & & & 2002& & & \\ \text{Jan 1}& \text{Balance b/d}& & & \text{Dec 31}& \text{Balance c/d}& & \\ & M1=6,00,000& & & & M1=6,00,000& & \\ & M2=\underset{–}{3,70,000}& & 9,70,000& & M2=3,70,000& & \\ & & & & & M3=\underset{–}{8,40,000}& & 18,10,000\\ \text{May 1}& \text{Bank A/c}& & & & & & \\ & \left(M3\right)& & 8,40,000& & & & \\ & & & \underset{–}{\overline{18,10,000}}& & & & \underset{–}{\overline{18,10,000}}\\ 2003& & & & 2003& & & \\ \text{Jan 1}& \text{Balance b/d}& & & \text{Dec 31}& \text{Balance c/d}& & \\ & M1=6,00,000& & & & M1=6,00,000& & \\ & M2=3,70,000& & & & M2=3,70,000& & \\ & M3=\underset{–}{8,40,000}& & 18,10,000& & M3=\underset{–}{8,40,000}& & 18,10,000\\ & & & \underset{–}{\overline{18,10,000}}& & & & \underset{–}{\overline{18,10,000}}\\ 2004& & & & 2004& & & \\ \text{Jan 1}& \text{Balance b/d}& & & \text{Dec 31}& \text{Balance c/d}& & \\ & M1=6,00,000& & & & M1=6,00,000& & \\ & M2=3,70,000& & & & M2=3,70,000& & \\ & M3=\underset{–}{8,40,000}& & 18,10,000& & M3=\underset{–}{8,40,000}& & 18,10,000\\ & & & \underset{–}{\overline{18,10,000}}& & & & \underset{–}{\overline{18,10,000}}\end{array}$

Dr Provision for Depreciation Account Cr
$\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{JF}& \text{Amt.(Rs)}& \text{Date}& \text{Particulars}& \text{JF}& \text{Amt.(Rs)}\\ 2001& & & & 2001& & & \\ \text{Dec 31}& \text{Balance c/d}& & 72,333& \text{Dec 31}& \text{Depreciation A/c}& & 72,333\\ & & & \underset{–}{\overline{72,333}}& & & & \underset{–}{\overline{72,333}}\\ 2002& & & & 2002& & & \\ \text{Dec 31}& \text{Balance c/d}& & 2,25,333& \text{Jan 1}& \text{Balance b/d}& & 72,333\\ & & & & \text{Dec 31}& \text{Depreciation A/c}& & 1,53,000\\ & & & \underset{–}{\overline{2,25,333}}& & & & \underset{–}{\overline{2,25,333}}\\ 2003& & & & 2003& & & \\ \text{Dec 31}& \text{Balance c/d}& & 4,06,333& \text{Jan 1}& \text{Balance b/d}& & 2,25,333\\ & & & & \text{Dec 31}& \text{Depreciation A/c}& & 1,81,000\\ & & & \underset{–}{\overline{4,06,333}}& & & & \underset{–}{\overline{4,06,333}}\\ 2004& & & & 2004& & & \\ \text{Dec 31}& \text{Balance c/d}& & 5,87,333& \text{Jan 1}& \text{Balance b/d}& & 4,06,333\\ & & & & \text{Dec 31}& \text{Depreciation A/c}& & 1,81,000\\ & & & \underset{–}{\overline{5,87,333}}& & & & \underset{–}{\overline{5,87,333}}\end{array}$