Question

M/s. P & Q purchased machinery for ₹ 40,000 on 1st October, 2016. Depreciation is provided @ 10% p.a. on the Diminishing Balance. On 31st January, 2019, one-fourth of the machinery was found unsuitable and disposed off for ₹ 5,600. On the same date new machinery at a cost of ₹ 15,000 was purchased. Write up the Machinery account for the years ended 31st March, 2017, 2018 and 2019. Accounts are closed on 31st March each year.

Answer 1

Machinery Account
Dr.	Cr.
Date		Particulars		J.F.	Amount (₹)	Date	Particulars			J.F.	Amount (₹)
2016						2017
Oct. 01		Bank				Mar.31	Depreciation
		I (3/4)	30,000				I (3/4) for 6 months	1,500
		I(1/4)	10,000		40,000		I (1/4) for 6 months	500			2,000
						Mar.31	Balance c/d
							I (3/4)	28,500
							I (1/4)	9,500			38,000
					40,000						40,000
2017						2018
Apr.01		Balance b/d				Mar.31	Depreciation
		I (3/4)	28,500				I (3/4)	2,850
		I (1/4)	9,500		38,000		I (1/4)	950			3,800
						Mar.31	Balance c/d
							I (3/4)		25,650
							I (1/4)		8,550		34,200
					38,000						38,000
2018						2019
Apr.01		Balance b/d				Jan.31	Depreciation I (1/4)(for 10 Months)				713
		I (3/4)	25,650			Jan.31	Bank I(1/4)				5,600
2019		I (1/4)	8,550		34,200		Profit and Loss (Loss)				2,237
Jan.31		Bank (II)			15,000	Mar.31	Depreciation
							I (3/4)		2,565
							II (for 2 months)		250		2,815
						Mar.31	Balance c/d
							I (3/4)		23,085
							II		14,750		37,835
					49,200						49,200

Working Note

(1)Calculation of Profit or Loss on Sale of Machine I (1/4):

Particulars	Amount (₹)
Book Value of Machine (I)(1/4) on Apr. 01, 2018	8,550
Less: Depreciation for 10 Months	(713)
Book Value of Machine (I)(1/4) on Jan. 31 2019	7,837
Less: Sale Value	(5,600)
Loss on Sale of Machine I(1/4)	2,237