Question

On 1st April, 2015, A Ltd. purchased a machine for ₹ 2,40,000 and spent ₹ 10,000 on its erection. On 1st October, 2015 an additional machinery costing ₹ 1,00,000 was purchased. On 1st October, 2017, the machine purchased on 1st April, 2015 was sold for ₹ 1,43,000 and on the same date, a new machine was purchased at cost of ₹ 2,00,000.
Show the Machinery Account for the first four financial years after charging Depreciation at 5% p.a. by the Straight Line Method.

Answer 1

Machinery Account

Dr.												Cr.
Date		Particulars		J.F.	Amount (₹)	Date	Particulars			J.F.	Amount (₹)
2015						2016
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
2016						2017
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
2017						2018
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
2018						2019
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 (₹)
Book Value on April 01, 2017	2,25,000
Less: Deprecation for six month	(6,250)
Book Value on Oct. 01, 2017	2,18,750
Less: Sale Proceeds	(1,43,000)
Loss on Sale of Machine	75,750