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Question

On 1st April, 2014, A Ltd. purchased a machine for ₹ 2,40,000 and spent ₹ 10,000 on its erection. On 1st October, 2014 an additional machinery costing ₹ 1,00,000 was purchased. On 1st October, 2016, the machine purchased on 1st April, 2014 was sold for ₹ 1,43,000 and on the same date, a new machine was purchased ata cost of ₹ 2,00,000.

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Solution

Machinery Account

Dr.

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2014

2015

April 01

Bank (M1)

2,50,000

March 31

Depreciation

Oct. 01

Bank (M2)

1,00,000

M1

12,500

M2 (6 Months)

2,500

15,000

March 31

Balance c/d

M1

2,37,500

M2

97,500

3,35,000

3,50,000

3,50,000

2015

2016

April 01

Balance b/d

March 31

Depreciation

M1

2,37,500

M1

12,500

M2

97,500

3,35,000

M2

5,000

17,500

March 31

Balance c/d

M1

2,25,000

M2

92,500

3,17,500

3,35,000

3,35,000

2016

2016

April 01

Balance b/d

Oct. 01

Depreciation (for 6 months)

6,250

M1

2,25,000

Oct. 01

Bank (M1 sold)

1,43,000

M2

92,500

3,17,500

Oct. 01

Profit and Loss (loss on sale)

75,750

2017

July 01

Bank (M3)

2,00,000

March 31

Depreciation

M2

5,000

M3 (for 6 months)

5,000

10,000

March 31

Balance c/d

M2

87,500

M3

1,95,000

2,82,500

5,17,500

5,17,500

2017

2018

April 01

Balance b/d

March 31

Depreciation

M2

87,500

M2

5,000

M3

1,95,000

2,82,500

M3

10,000

15,000

March 31

Balance c/d

M2

82,500

M3

1,85,000

2,67,500

2,82,500

2,82,500

Working Notes:

1. Calculation of Deprecation

2. Calculation of profit or loss on sale of Machine 1

Particulars

Amount

(Rs)

Book Value on April 01, 2016

2,25,000

Less: Deprecation for six month

(6,250)

Book Value on Oct. 01, 2016

2,18,750

Less: Sale Proceeds

(1,43,000)

Loss on Sale of Machine

75,750


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