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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.

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Solution

Answer (a)

Dr Machinery Account Cr
DateParticularsJFAmt.(Rs)DateParticularsJFAmt.(Rs)20012001Jan 1 Bank A/cDec 31 DepreciationM1=(5,50,000A/c +50,000)6,00,000 M1=60,000Sep 1 Bank A/c3,70,000 M2=12,333––––––72,333Dec 31 Balance c/dM1=5,40,000M2=3,57,667––––––––8,97,667¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯9,70,000––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯9,70,000––––––––20022002Jan 1 Balance b/dDec 31 DepreciationM1=5,40,000A/cM2=3,57,667––––––––8,97,667 M1=60,000 M2=37,000May 1 Bank A/c M3=56,000––––––1,53,000M3=8,40,0008,40,000Dec 31 Balance c/dM1=4,80,000M2=3,20,667M3=7,84,000––––––––15,84,667¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯17,37,667–––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯17,37,667–––––––––20032003Jan 1 Balance b/dDec 31 Depreciation A/cM1=4,80,000 M1=60,000M2=3,20,667 M2=37,000M3=7,84,000––––––––15,84,667 M3=84,000––––––1,81,000Dec 31 Balance c/dM1=4,20,000M2=2,83,667M3=7,00,000––––––––14,03,667¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯15,84,667–––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯15,84,667–––––––––20042004Jan 1 Balance c/dDec 31 DepreciationM1=4,20,000A/cM2=2,83,667 M1=60,000M3=7,00,000––––––––14,03,667 M2=37,000 M3=84,000––––––1,81,000Dec 31 Balance c/d M1=3,60,000 M2=2,46,667 M3=6,16,000––––––––12,22,667¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯14,03,667–––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯14,03,667–––––––––

Dr Depreciation Account Cr
DateParticularsJFAmt.(Rs)DateParticularsJFAmt.(Rs)20012001Dec 31 Machinery A/c72,333Dec 31 Profit&Loss A/c72,333¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯72,333––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯72,333––––––20022002Dec 31 Machinery A/c1,53,000Dec 31 Profit&Loss A/c1,53,000¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯1,53,000––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯1,53,000––––––––20032003Dec 31 Machinery A/c1,81,000Dec 31 Profit&Loss A/c1,81,000¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯1,81,000––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯1,81,000––––––––20042004Dec 31 Machinery A/c1,81,000Dec 31 Profit&Loss A/c1,81,000¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯1,81,000––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯1,81,000––––––––

(b)

Dr Machinery Account Cr
DateParticularsJFAmt.(Rs)DateParticularsJFAmt.(Rs)20012001Jan 1 Bank A/cDec 31 Balance c/dM1=(5,50,000M1=6,00,000 +50,000)6,00,000M2=3,70,000––––––––9,70,000Sep 1 Bank A/c3,70,000¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯9,70,000––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯9,70,000––––––––20022002Jan 1 Balance b/dDec 31 Balance c/dM1=6,00,000M1=6,00,000M2=3,70,000––––––––9,70,000M2=3,70,000M3=8,40,000––––––––18,10,000May 1 Bank A/c (M3)8,40,000¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯18,10,000–––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯18,10,000–––––––––20032003Jan 1 Balance b/dDec 31 Balance c/dM1=6,00,000M1=6,00,000M2=3,70,000M2=3,70,000M3=8,40,000––––––––18,10,000M3=8,40,000––––––––18,10,000¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯18,10,000–––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯18,10,000–––––––––20042004Jan 1 Balance b/dDec 31 Balance c/dM1=6,00,000M1=6,00,000M2=3,70,000M2=3,70,000M3=8,40,000––––––––18,10,000M3=8,40,000––––––––18,10,000¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯18,10,000–––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯18,10,000–––––––––

Dr Provision for Depreciation Account Cr
DateParticularsJFAmt.(Rs)DateParticularsJFAmt.(Rs)20012001Dec 31 Balance c/d72,333Dec 31 Depreciation A/c72,333¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯72,333––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯72,333––––––20022002Dec 31 Balance c/d2,25,333Jan 1 Balance b/d 72,333Dec 31 Depreciation A/c1,53,000¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯2,25,333––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯2,25,333––––––––20032003Dec 31 Balance c/d4,06,333Jan 1 Balance b/d2,25,333Dec 31 Depreciation A/c1,81,000¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯4,06,333––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯4,06,333––––––––20042004Dec 31 Balance c/d5,87,333Jan 1 Balance b/d4,06,333Dec 31 Depreciation A/c1,81,000¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯5,87,333––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯5,87,333––––––––


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