Question : On April $1, 2000$ , Bajrang Marbles purchased a Machine for Rs. $2, 80, 000$ and spent Rs. $10, 000$ on its carriage and Rs. $10, 000$ on it installation. It is estimated that its working life is $10$ years and after $10$ years its scrap value will be Rs $20, 000$ .
(a) Prepare Machine account and Depreciation account for the first four years by providing depreciation on straight line method Accounts are closed on March $31^{s t}$ every year.
(b) Prepare Machine account, Depreciation account and Provision for depreciation account (or accumulated depreciation account) for the first four years by providing depreciation using straight line method. Accounts are closed on March $31^{s t}$ every year.

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Solution

Answer (a)
Dr Machinery Account
Date Particulars JF Amt. (Rs) Date Paticulars JF Amt. (Rs)
2000
Apr 1
To Bank A/c (2,80,000+10,000+10,000) 3,00,000

Rs 3,00,000
2001 Mar 31
Mar 31
By Depreciation A/c
By Balance c/d
28,000
2,72,000
3,00,000
2001 Apr 1 To Balance b/d 2,72,000
Rs 2,72,000
2002
Mar 31
By Depreciation A/c
By Balance c/d
28,000
2,44,000
2,72,000
2002 Apr 1 To Balance b/d 2,44,000
2,44,000
2003 Mar 31
Mar 31
By Depreciation A/c
By Balance c/d
28,000
2,16,000

2,44,000
2003
Apr 1
To Balance b/d 2,16,000
2,16,000
2004
Mar 31
Mar 31

By Depreciation A/c
By Balance c/d
28,000
1,88,000
2,16,000

Working Note
Computation of Depreciation = CostofMachine−ScrapNoofyears
Depreciation = (2,800,000+10,000+10,000)−20,00010 = Rs 28,000
Depreciation account
Date Particulars JF Amt . (Rs) Date Particulars JF Amt. (Rs)
2001 Mar3
To Machinery A/c 28,000 2001 Mar 31 By Profit & Loss A/c 28,000
28,000 28,000
2002 Mar 31 To Machinery A/c 28,000 2002 Mar 31 By Profit & Loss A/c 28,000
28,000 28,000
2003 Mar 31 To Machinery A/c 28,000 2003 Mar 31 By Profit & Loss A/c 28,000
28,000 28,000
2004 Mar 31 To Machinery A/c 28,000 2004 Mar 31 By Profit & Loss A/c 28,000
28,000 28,000

(b)
Dr Machinery Account Cr
Date Particulars JF Amt.Rs Date Particulars JF Amt
2000 Apr 1 To Bank A/c 3,00,000 2001 Mar 31 By Balance c/d 3,00,000
3,00,000 3,00,000
2001 Apr 1 To Balance b/d 3,00,000 2002 Mar 31 By Balance c/d 3,00,000
3,00,000 3,00,000
2002 Apr 1 To Balance b/d 3,00,000 2003 Mar 31 By Balance c/d 3,00,000
3,00,000 3,00,000
2003 Apr 1 To Balance b/d 3,00,000 2004 Mar 31 By Balance c/d 3,00,000
3,00,000 3,00,000

Dr Depreciation Account Cr
Date Particulars JF Amt. (Rs) Date Particulars JF Amt
2001 Mar 31 To Provision for Depreciation A/c 28,000 2001 Mar 31 By Profit & Loss A/c 28,000
28,000 28,000
2002 Mar 31 To Provision for Depreciation A/c 28,000 2002 Mar 31 By Profit & Loss A/c 28,000
28,000 28,000
2003 Mar 31 To Provision for Depreciation A/c 28,000 2003 Mar 31 By Profit & Loss A/c 28,000
28,000 28,000
2004 Mar 31 To Provision for Depreciation A/c 28,000 2004 Mar 31 By Profit & Loss A/c 28,000
28,000 28,000

Dr Provision for Depreciation Account Cr
Date Particulars JF Amt. (Rs) Date Particulars JF Amt. (Rs)
2001 Mar 31 To Balance c/d 28,000 2001 Mar 31 By Depreciation A/c 28,000

28,000 28,000
2002 Mar 31 To Balance c/d 56,000 2001 Apr 1 By Balance b/d 28,000

2002 Mar 31 By Depreciation A/c 28,000
56,000
56,000
2003 Mar 31 To Balance c/d 84,000 2002 Apr 1 By Balance b/d 56,000
2003
Mar 31 By Depreciation A/c 28,000
84,000 84,000
2004 Mar 31 To Balance c/d 11,200 2003 Apr 1 By Balance b/d 84,000
2004 Mar 31 By Depreciation A/c 28,000

1,20,000
1,12,000

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Date	Particulars	JF	Amt. (Rs)	Date	Paticulars	JF	Amt. (Rs)
2000 Apr 1	To Bank A/c (2,80,000+10,000+10,000)		3,00,000 Rs 3,00,000	2001 Mar 31 Mar 31	By Depreciation A/c By Balance c/d		28,000 2,72,000 3,00,000
2001 Apr 1	To Balance b/d		2,72,000 Rs 2,72,000	2002 Mar 31	By Depreciation A/c By Balance c/d		28,000 2,44,000 2,72,000
2002 Apr 1	To Balance b/d		2,44,000 2,44,000	2003 Mar 31 Mar 31	By Depreciation A/c By Balance c/d		28,000 2,16,000 2,44,000
2003 Apr 1	To Balance b/d		2,16,000 2,16,000	2004 Mar 31 Mar 31	By Depreciation A/c By Balance c/d		28,000 1,88,000 2,16,000

Date	Particulars	JF	Amt . (Rs)	Date	Particulars	JF	Amt. (Rs)
2001 Mar3	To Machinery A/c		28,000	2001 Mar 31	By Profit & Loss A/c		28,000
			28,000				28,000
2002 Mar 31	To Machinery A/c		28,000	2002 Mar 31	By Profit & Loss A/c		28,000
			28,000				28,000
2003 Mar 31	To Machinery A/c		28,000	2003 Mar 31	By Profit & Loss A/c		28,000
			28,000				28,000
2004 Mar 31	To Machinery A/c		28,000	2004 Mar 31	By Profit & Loss A/c		28,000
			28,000				28,000

Date	Particulars	JF	Amt.Rs	Date	Particulars	JF	Amt
2000 Apr 1	To Bank A/c		3,00,000	2001 Mar 31	By Balance c/d		3,00,000
			3,00,000				3,00,000
2001 Apr 1	To Balance b/d		3,00,000	2002 Mar 31	By Balance c/d		3,00,000
			3,00,000				3,00,000
2002 Apr 1	To Balance b/d		3,00,000	2003 Mar 31	By Balance c/d		3,00,000
			3,00,000				3,00,000
2003 Apr 1	To Balance b/d		3,00,000	2004 Mar 31	By Balance c/d		3,00,000
			3,00,000				3,00,000