Question

M/s Sagar Limited purchased a machinery for Rs 3,00,000 on 1st April 2008 additional machinery was acquired for Rs 3,00,000 on 30th September 2009 and for Rs 50,000 on 1st April 2011.
Machinery which was purchased on 30th September 2009 was sold for Rs 2,25,000 on 30th September 2011
You are required to give Machinery Account Depreciation Account for the year ended 31st March 2009, 31st March 2010, 31st March 2011, and 31st March 2012, taking into account depreciation @ 10% p.a. on written down value method

Answer 1

Machinery Account
Dr.	Cr.
Date		Particulars			Amount (Rs)	Date	Particulars		Amount (Rs)
2008						2009
Apr 1		Bank A/c (M1)			3,00,000	Mar 31	Depreciation A/C (M1)		30,000
						Mar 31	Balance c/d (3,00,000 - 30,000)		2,70,000
					3,00,000				3,00,000
2009						2010
Apr 1		Balance b/d (M1)			2,70,000	Mar 31	Deprecation A/c
Sep 30		Bank A/c (M2)			3,00,000		M1	27,000
							M2 (for 6 months)	15,000	42,000
						Mar 31	Balance c/d
							M1 (2,70,00-27,000)	2,43,000
							M2 (3,00,000-15,000)	2,85,000	5,28,000
					5,70,000				5,70,000
2010						2011
Apr 1		Balance b/d				Mar 31	Depreciation A/c
		M1	2,43,000				M1	24,300
		M2	2,85,000		5,28,000		M2	28,500	52,800
						Mar 31	Balance c/d
							M1 (2,43,000-24,300)	2,18,700
							M2 (2,85,000-28,500)	2,56,500	4,75,200
					5,28,000				5,28,000
2011						2011
Apr 1		Balance b/d				Sep 30	Depreciation A/c M2 (for 6 months)		12,825
		M1		2,18,700			Bank A/c		2,25,000
		M2		2,56,500	4,75,200		Profit & Loss A/c (loss on sale)		18,675
Apr 1		Bank A/c (M3)			50,000	2012
						Mar 31	Depreciation A/c
							M1	21,870
							M3	5,000	26,870
						Mar 31	Balance c/d
							M1 (2,18,700 - 21,870)	1,96,830
							M3 (50,000 - 5,000)	45,000	2,41,830
					5,25,200				5,25,200

Working Notes: Calculation of Profit or Loss on Sale

Particulars	Amount
Value of M2 as on Apr.01, 2011	2,56,500
Less: Depreciation for 6 months	(12,825)
Value of M2 as on Sept. 30, 2011	2,43,675
Less: Sale Value	(2,25,000)
Loss on Sale	18,675

Note: As per the book, there is Profit on Sale of Machinery (i.e. Rs 11,325) but as per our solution there is Loss on Sale of Machinery i.e. Rs 18,675.