Question

On 1st April 2012, Banglore Silk Ltd. purchased a machinery for ₹ 20,00,000. It provides depreciation at 10% p.a. on the Written Down Value Method and closes its books on 31st March every year. On 1st July 2014, a part of the machinery purchased on 1st April 2012 for ₹ 4,00,000 was sold for ₹ 3,20,000. On 1st November 2014, a new machinery was purchased for ₹ 4,80,000. You are required to prepare Machinery Account, Depreciation Account and Provision for Depreciation Account for three years ending 31st March 2015.

Answer 1

Machinery Account
Dr.				Cr.
Date	Particulars		Amount (Rs)		Date	Particulars		Amount (Rs)
2012					2013
Apr. 01	Bank A/c				Mar. 31	Balance c/d
	M1	4,00,000				M1	4,00,000
	M2	16,00,000	20,00,000			M2	16,00,000	20,00,000
			20,00,000					20,00,000
2013					2014
Apr. 01	Balance b/d				Mar. 31	Balance c/d		20,00,000
	M1	4,00,000				M1	4,00,000
	M2	16,00,000	20,00,000			M2	16,00,000	20,00,000
			20,00,000					20,00,000
2014					2014
Apr. 01	Balance b/d				July 01	Provision for Depreciation A/c		84,100
	M1	4,00,000			July 01	Bank A/c (Sale of M1)		3,20,000
	M2	16,00,000	20,00,000		2015
July 01	Profit and Loss A/c (Profit on Sale of M1)		4,100		Mar. 31	Balance c/d
Nov. 01	Bank A/c (M3)		4,80,000			M2	16,00,000
						M3	4,80,000	20,80,000
			24,84,100					24,84,100

Depreciation Account
Dr.				Cr.
Date	Particulars	Amount (Rs)	Date		Particulars	Amount (Rs)
2013			2013
Mar.31	Provision for Depreciation A/c	2,00,000	Mar.31		Profit and Loss A/c	2,00,000
		2,00,000				2,00,000
2014			2014
Mar.31	Provision for Depreciation A/c	1,80,000	Mar.31		Profit and Loss A/c	1,80,000
		1,80,000				1,80,000
2015			2015
Mar.31	Provision for Depreciation A/c	1,57,700	Mar.31		Profit and Loss A/c (1,47,600 + 8,100)	1,57,700
		1,57,700				1,57,700

Provision for Depreciation Account
Dr.			Cr.
Date	Particulars	Amount (Rs)		Date	Particulars		Amount (Rs)
2013				2013
Mar. 31	Balance c/d	2,00,000		Mar. 31	Depreciation A/c
					M1	40,000
					M2	1,60,000	2,00,000
		2,00,000					2,00,000
2014				2013
Mar. 31	Balance c/d	3,80,000		Apr. 01	Balance b/d		2,00,000
				2014
				Mar. 31	Depreciation A/c
					M1	36,000
					M2	1,44,000	1,80,000
		3,80,000					3,80,000
2014				2014
July 01	Machinery A/c (M1) (40,000 + 36,000 + 8,100)	84,100		Apr. 01	Balance b/d		3,80,000
2015				July 01	Depreciation A/c (M1) (for 3 months)		8,100
Mar. 31	Balance c/d	4,53,600		2015
				Mar. 31	Depreciation A/c
					M2	1,29,600
					M3 (for 5 months)	20,000	1,49,600
		5,37,700					5,37,700

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

Particulars	Amount
Value of Machinery on Apr. 01, 2012	4,00,000
Less: Depreciation	40,000
Value of Machinery on Apr. 01, 2013	3,60,000
Less: Depreciation	36,000
Value of Machinery on Apr. 01, 2013	3,24,000
Less: Depreciation for 3 months	8,100
Value of Machinery on July 01, 2014	3,15,900
Less: Sale Value	3,20,000
Profit on Sale	4,100

Note: In order to make easy calculation, machinery purchased on Apr. 01, 2012 has been divided into two parts i.e. M1 and M2.

Thus, M1: Rs 4,00,000 (sold for Rs 3,20,000 on July 01, 2014)

M2: Rs 16,00,000