Question

On 1st July, 2014, Ashwani purchased a machine for Rs. 2,00,000 on credit from Dushyant. Installation expenses Rs. 25,000 are paid by cheque. Depreciation is to be charged on written down value method @ 10 % per annum. Prepare necessary ledger accounts for first three years, assuming that Ashwani closes his books on 31st December.

Answer 1

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

$\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs)}& \text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs)}\\ 2014& & & & 2014& & & \\ \text{July 1}& \text{Dushyant}& & 2,00,000& \text{Dec 31}& \text{Depreciation A/c}& & 11,250\\ \text{July 1}& \text{Bank A/c}& & 25,000& \text{Dec 31}& \text{Balance c/d}& & 2,13,750\\ 2015& & & \overline{\underset{–}{\underset{–}{2,25,000}}}& 2015& & & \overline{\underset{–}{\underset{–}{2,25,000}}}\\ \text{Jan 1}& \text{Balance b/d}& & 2,13,750& \text{Dec 31}& \text{Depreciation A/c}& & 21,375\\ & & & & \text{Dec 31}& \text{Balance c/d}& & 1,92,375\\ 2016& & & \overline{\underset{–}{\underset{–}{2,13,750}}}& 2016& & & \overline{\underset{–}{\underset{–}{2,13,750}}}\\ \text{Jan 1}& \text{Balance b/d}& & 1,92,375& \text{Dec 31}& \text{Depreciation A/c}& & 19,237.5\\ & & & & \text{Dec 31}& \text{Balance c/d}& & 1,73,137.5\\ 2017& & & \overline{\underset{–}{\underset{–}{1,92,375}}}& & & & \overline{\underset{–}{\underset{–}{1,92,375}}}\\ \text{Jan 1}& \text{Balance b/d}& & 1,73,137.5& & & & \end{array}$

$\begin{array}{cccccccc}\text{Dr}& & & & \text{Depreciation Account}& & & \text{Cr}\end{array}$

$\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs)}& \text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs)}\\ 2014& & & & 2014& & & \\ \text{Dec 31}& \text{Machinery A/c}& & 11,250& \text{Dec 31}& \text{Profit and Loss A/c}& & 11,250\\ 2015& & & \overline{\underset{–}{\underset{–}{11,250}}}& 2015& & & \overline{\underset{–}{\underset{–}{11,250}}}\\ \text{Dec 31}& \text{Machinery A/c}& & 21,375& \text{Dec 31}& \text{Profit and Loss A/c}& & 21,375\\ 2016& & & \overline{\underset{–}{\underset{–}{21,375}}}& 2016& & & \overline{\underset{–}{\underset{–}{21,375}}}\\ \text{Dec 31}& \text{Machinery A/c}& & 19,237.5& \text{Dec 31}& \text{Profit and Loss A/c}& & 19,237.5\\ & & & \overline{\underset{–}{\underset{–}{19,237.5}}}& & & & \overline{\underset{–}{\underset{–}{19,237.5}}}\end{array}$

Note: Depreciation for 2014 = 2,25000 $\times \frac{10}{100}\times \frac{6}{12}=11,250$