Question

On 1st October, 2015, Meenal Sharma bought a machine for ₹ 25,000 on which he spent ₹ 5,000 for carriage and freight; ₹ 1,000 for brokerage of the middle-man, ₹ 4,000 for installation. The machine is depreciated @ 10% p.a. on written down value basis. On 31st March, 2018 the machine was sold to Deepa for ₹ 30,500 and ₹ 500 was paid as commission to broker through whom the sales was effected. Find out the profit or loss on sale of machine if accounts are closed on 31st March, every year.

Answer 1

Machinery Account
Dr.									Cr.
Date		Particulars	J.F.	Amount (₹)	Date	Particulars	J.F.	Amount (₹)
2015					2016
Oct 01		Bank (25,000+5,000+1,000+4,000)		35,000	Mar.31	Depreciation (for 6 months)		1,750
					Mar.31	Balance c/d		33,250
				35,000				35,000
2016					2017
Apr.01		Balance b/d		33,250	Mar.31	Depreciation		3,325
					Mar.31	Balance c/d		29,925
				33,250				33,250
2017					2018
Apr.01		Balance b/d		29,925	Mar.31	Depreciation		2,993
2018 Mar.31		Profit and Loss A/c (Profit on Sale) (WN1)		3,068	Mar.31	Bank A/c (30,500 – 500)		30,000
				32,993				32,993

Working Note:

(1) Calculation of Profit or Loss on sale of Machine I:

Particulars	Amount (₹)
Book Value of Machine on Apr. 01, 2017	29,925
Less: Depreciation for the year	(2,993)
Book Value of Machine I on Mar. 31, 2018	26,932
Less: Sale Value (30,500 – 500)	(30,000)
Profit on Sale	3,068