Question

On 1st July, 2015, A Co. Ltd. purchases second-hand machinery for ₹ 20,000 and spends ₹ 3,000 on reconditioning and installing it. On 1st January, 2016, the firm purchases new machinery worth ₹ 12,000. On 30th June, 2017, the machinery purchased on 1st January, 2016, was sold for ₹ 8,000 and on 1st July, 2017, a fresh plant was installed. Payment for this plant was to be made as follows:

1st July, 2017	₹ 5,000
30th June, 2018	₹ 6,000
30th June, 2019	₹ 5,500

Payments in 2018 and 2019 include interest of ₹ 1,000 and ₹ 500 respectively.
The company writes off 10% p.a. on the original cost. The accounts are closed every year on 31st March. Show the Machinery Account for the year ended 31st March, 2018.

Answer 1

Books of A. Co. Ltd

Machinery
Dr.													Cr.
Date		Particulars		J.F.	Amount (Rs)	Date	Particulars				J.F.	Amount (Rs)
2015						2016
July 01		Bank (I) (20,000 + 3,000)			23,000	Mar.31	Depreciation
2016							I (for 9 months)			1,725
Jan.01		Bank (II)			12,000		II (for 3 months)			300		2,025
						Mar.31	Balance c/d
							I			21,275
							II			11,700		32,975
					35,000							35,000
2016						2017
April 01		Balance b/d				Mar.31	Depreciation
		I	21,275				I	2,300
		II	11,700		32,975		II	1,200				3,500
						Mar.31	Balance c/d
							I	18,975
							II	10,500				29,475
					32,975							32,975
2017						2017
April 01		Balance b/d				June 30	Bank (II)					8,000
		I	18,975			June 30	Depreciation (II) (for 3 months)					300
		II	10,500		29,475	June 30	Profit and Loss (Loss)					2,200
July 01		Bank (III)			5,000	2018
July 01		Creditors for plant (III)			10,000	Mar.31	Depreciation
							I		2,300
							III (on 15,000 for 8 months)		1,125			3,425
							Balance c/d
							I		16,675
							III		13,875			30,550
					44,475							44,475

Working Notes

1. Calculation of Depreciation

2. Calculation of profit on loss on sale of Machine (II)

Particulars	Amount (Rs)
Book Value of Machine (II) on April 01, 2017	10,500
Less: Depreciation for 3 Months	(300)
Book Value on June 30	10,200
Less: Sale	(8,000)
Loss on Sale	2,200