Question

Modern Ltd. purchased a machinery on 1st August, 2015 for ₹ 60,000. On 1st October, 2016, it purchased another machine for ₹ 20,000 plus CGST and SGST @ 6% each. On 30th June, 2017, it sold the first machine purchased in 2015 for ₹ 38,500 charging IGST @ 12%. Depreciation is provided @ 20% p.a. on the original cost each year. Accounts are closed on 31st March every year. Prepare the Machinery A/c for three years.

Answer 1

Books of Modern Ltd. Machinery Account
Dr.											Cr.
Date		Particulars		J.F.	Amount (Rs)	Date	Particulars		J.F.	Amount (Rs)
2015						2016
Aug.01		Bank (M1)			60,000	March 31	Depreciation
							M1 (for 8 months)			8,000
						March 31	Balance c/d			52,000
					60,000					60,000
2016						2017
April 01		Balance b/d			52,000	March 31	Depreciation
Oct. 01		Bank (M2)			20,000		M1	12,000
							M2 (6 months)	2,000		14,000
						March 31	Balance c/d
							M1	40,000
							M2	18,000		58,000
					72,000					72,000
2017						2017
April 01		Balance b/d				June 30	Depreciation (M1) (for 3 months)			3,000
		M1	40,000			June 30	Bank (M1)			38,500
		M2	18,000		58,000	2018
June 30		Profit and Loss (profit)			1,500	Mar.31	Depreciation (M2)			4,000
						Mar.31	Balance c/d			14,000
					59,500					59,500

Working Notes

1. Calculation of Annual Depreciation

Particulars	Amount (Rs)
Value on Apr 01, 2017	40,000
Depreciation for 3 Months	(3,000)
Value on June 30, 2017	37,000
Less: Sales Value of Machine	(38,500)
Profit on sale of Machine 1	1,500

3. Journal entries for purchase and sale with GST

Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
2016
Oct 01	Machinery A/c	Dr.		20,000
	Input CGST A/c	Dr.		1,200
	Input SGST A/c	Dr.		1,200
	To Bank A/c				22,400
	(Machinery purchased with CGST and SGST @ 6% each paid)
2017
Jun 30	Bank A/c	Dr.		43,120
	To Machinery A/c				38,500
	To Output IGST A/c (Machinery purchased on 1st Aug, 2015 sold with IGST @ 12%.)				4,620