Question

On 1st April, 2013 a firm purchased a machinery for Rs. 1,00,000. ON 1st July, 2016 the machinery became obsolete and was sold fro Rs. 40,000. The firm charges depreciation on its machinery @ 10% per annum on written down value method. The books are closed on 31st March of every year. Prepare necessary ledger accounts assuming that provision for depreciation account is maintained.

Answer 1

$\begin{array}{cccccc}\text{Dr}& & & & \text{Machinery Account}& \text{Cr}\end{array}$

$\begin{array}{cccccc}\text{Date}& \text{Particulars}& \text{Amt. (Rs)}& \text{Date}& \text{Particulars}& \text{Amt. (Rs)}\\ \text{2013}& & & \text{2014}& & \\ \text{Apr 1}& \text{Bank A/c}& 1,00,000& \text{Mar 31}& \text{Balance c/d}& 1,00,000\\ & & \overline{\underset{–}{\underset{–}{1,00,000}}}& & & \overline{\underset{–}{\underset{–}{1,00,000}}}\\ \text{2014}& & & \text{2015}& & \\ \text{Apr 1}& \text{Balance b/d}& 1,00,000& \text{Mar 31}& \text{Balance c/d}& 1,00,000\\ & & \overline{\underset{–}{\underset{–}{1,00,000}}}& & & \overline{\underset{–}{\underset{–}{1,00,000}}}\\ \text{2015}& & & \text{2016}& & \\ \text{Apr 1}& \text{Balance b/d}& 1,00,000& \text{Mar 31}& \text{Balance c/d}& 1,00,000\\ & & \overline{\underset{–}{\underset{–}{1,00,000}}}& & & \overline{\underset{–}{\underset{–}{1,00,000}}}\\ \text{2016}& & & \text{2016}& & \\ \text{Apr 1}& \text{Balance b/d}& 1,00,000& \text{July 1}& \text{Asset Disposal A/c}& 1,00,000\\ & & \overline{\underset{–}{\underset{–}{1,00,000}}}& & & \overline{\underset{–}{\underset{–}{1,00,000}}}\end{array}$

$\begin{array}{cccccc}\text{Dr}& & & & \text{Provision For Depreciation Account}& \text{Cr}\end{array}$

$\begin{array}{cccccc}\text{Date}& \text{Particulars}& \text{Amt. (Rs)}& \text{Date}& \text{Particulars}& \text{Amt. (Rs)}\\ \text{2014}& & & \text{2014}& & \\ \text{Mar 31}& \text{Balance c/d}& 10,000& \text{Mar 31}& \text{Depreciation A/c}& 10,000\\ & & & & (1,00,000\times 10\%)& \\ & & \overline{\underset{–}{\underset{–}{10,000}}}& & & \overline{\underset{–}{\underset{–}{10,000}}}\\ \text{2015}& & & \text{2014}& & \\ \text{Mar 31}& \text{Balance c/d}& 19,000& \text{Apr 1}& \text{Balance b/d}& 10,000\\ & & & \text{2015}& & \\ & & & \text{Mar 31}& \text{Depreciation A/c}& 9,000\\ & & & & (1,00,000-10,000\times 10\%)& \\ & & \overline{\underset{–}{\underset{–}{19,000}}}& & & \overline{\underset{–}{\underset{–}{19,000}}}\\ \text{2016}& & & \text{2015}& & \\ \text{Mar 31}& \text{Balance c/d}& 27,100& \text{Apr 1}& \text{Balance b/d}& 19,000\\ & & & \text{2016}& & \\ & & & \text{Mar 31}& \text{Depreciation A/c}& 8,100\\ & & & & (90,000-9,000\times 10\%)& \\ & & \overline{\underset{–}{\underset{–}{27,100}}}& & & \overline{\underset{–}{\underset{–}{27,100}}}\\ \text{2016}& & & \text{2016}& & \\ \text{July 1}& \text{Asset Disposal A/c}& 28,922.50& \text{Apr 1}& \text{Balance b/d}& 27,100\\ & & & \text{July 1}& \text{Depreciation A/c}& 1,822.50\\ & & & & \left[\right(81,000-8,100)\times 10\%\times \frac{3}{12})]& \\ & & \overline{\underset{–}{\underset{–}{28,922.50}}}& & & \overline{\underset{–}{\underset{–}{28,922.50}}}\end{array}$

$\begin{array}{cccccc}& & & & \text{Asset Disposal A/c}& \end{array}$

$\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs)}& \text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs)}\\ \text{2016}& & & & \text{2016}& & & \\ \text{July 1}& \text{Machinery A/c}& & 1,00,000& \text{July 1}& \text{Provision for}& & 28,922.50\\ & & & & & \text{Depreciation A/c}& & \\ & & & & \text{July 1}& \text{Bank A/c}& & 40,000\\ & & & & \text{July 1}& \text{Profit and Loss A/c}& & 3,10,77.50\\ & & & \overline{\underset{–}{\underset{–}{1,00,000}}}& & & & \overline{\underset{–}{\underset{–}{1,00,000}}}\end{array}$