Question

On 1st January, 2016, A Ltd. Purchased a machine for ₹ 2,40,000 and spent ₹ 10,000 on its erection. On 1st July, 2016 an additional machinery costing ₹ 1,00,000 was purchased. On 1st July, 2018 the machine purchased on 1st January, 2016 was sold for ₹ 1,43,000 and on the same date, a new machine was purchased at a cost of ₹ 2,00,000.
Show the Machinery Account for the first three calendar years after charging depreciation at 5% by the Straight Line Method.

Answer 1

Machinery Account
Dr.			Cr.
Date	Particulars			Amount (₹)	Date	Particulars		Amount (₹)
2016					2016
Jan. 01	Bank A/c (M1) (2,40,000 + 10,000)			2,50,000	Dec. 31	Depreciation A/c
2011						M1	12,500
July 01	Bank A/c (M2)			1,00,000		M2 (for 6 months)	2,500	15,000
						Balance c/d
						M1	2,37,500
						M2	97,500	3,35,000
				3,50,000				3,50,000
2017					2017
Jan. 01	Balance b/d				Dec. 31	Depreciation A/c
	M1	2,37,500				M1	12,500
	M2	97,500		3,35,000		M2	5,000	17,500
						Balance c/d
						M1	2,25,000
						M2	92,500	3,17,500
				3,35,000				3,35,000
2018					2018
Jan. 01	Balance b/d				July 01	Depreciation A/c (M1)		6,250
	M1	2,25,000				Bank A/c (Sale of M1 )		1,43,000
	M2	92,500		3,17,500		Profit and Loss A/c (Loss on Sale of M1)		75,750
July 01	Bank A/c (M3)			2,00,000	Dec. 31	Depreciation A/c
						M2	5,000
						M3 (for 6 months)	5,000	10,000
						Balance c/d
						M2	87,500
						M3	1,95,000	2,82,500
				5,17,500				5,17,500

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

Particulars	Amount
Value of Machinery on Jan. 01, 2018	2,25,000
Less: Depreciation for 6 months	6,250
Value of Machinery on July 01, 2018	28,750
Less: Sale Value	1,43,000
Loss on Sale	75,750