Question

On 1st April 2008, Verma & Co. purchased two machines of ₹ 40,000 each. On 1st July 2009 and 1st Oct. 2009 additional machinery were purchased for ₹ 30,000 and ₹ 20,000 respectively. On 1st April 2010 one of the machines purchased on 1st April 2008 became obsolete and was sold for ₹ 21,000. Depreciation is charged @ 15% p.a. on written down value method on 31st March each year. You are required to prepare Machinery Account for 3 years.

Answer 1

Machinery Account
Dr.						Cr.
Date	Particulars			Amount (Rs)	Date		Particulars		Amount (Rs)
2008					2009
Apr. 01	Bank A/c				Mar. 31		Depreciation A/c
	M1	40,000					M1	6,000
	M2	40,000		80,000			M2	6,000	12,000
					Mar. 31		Balance c/d
							M1	34,000
							M2	34,000	68,000
				80,000					80,000
2009					2010
Apr. 01	Balance b/d				Mar. 31		Depreciation A/c
	M1	34,000					M1	5,100
	M2	34,000		68,000			M2	5,100
July 01	Bank A/c (M3)			30,000			M3 (for 9 months)	3,375
Oct. 01	Bank A/c (M4)			20,000			M4 (for 6 months)	1,500	15,075
					Mar. 31		Balance c/d
							M1	28,900
							M2	28,900
							M3	26,625
							M4	18,500	1,02,925
				1,18,000					1,18,000
2010					2010
Apr. 01	Balance b/d				Apr. 01		Bank A/c (Sale of M1)		21,000
	M1		28,900				Profit and Loss A/c (Loss on Sale of M1)		7,900
	M2		28,900		2011
	M3		26,625		Mar. 31		Depreciation A/c
	M4		18,500	1,02,925			M2	4,335
							M3	3,994
							M4	2,775	11,104
					Mar. 31		Balance c/d
							M2	24,565
							M3	22,631
							M4	15,725	62,921
				1,02,925					1,02,925

Working Notes: Calculation of Profit & Loss on Sale of M1

Particulars	Amount
Value of Machinery on Apr. 01, 2010	28,900
Less: Sale Value	21,000
Loss on Sale	7,900