Question

Sharma co. Whose books are closed on 31st december, purchased a machinery for rs.1,50,000 on 1st january,2005,additional machinery was acquired for rs.50,000 on 1st july,2005.certain machinery which was purchased for rs.50,000 on 1st july,2005 was sold for rs.40,000 on 30th june,2007.

Prepare the machinery account and accumulated depriciation account for all the years up to the year ended 31st december,2007.depriciation is charged 10% p.a. on straight line method.also,show the machinery disposal account.

Answer 1

Machinery Account
Dr.					Cr.
Date	Particulars		Amount (Rs)	Date		Particulars		Amount (Rs)
2005				2005
Jan 01	Bank A/c (M1)		1,50,000	Dec. 31		Balance c/d
July 01	Bank A/c		50,000			M1	1,50,000
						M2	50,000	2,00,000
			2,00,000					2,00,000
2006				2006
Jan. 01	Balance b/d			Dec. 31		Balance c/d
	M1	1,50,000				M1	1,50,000
	M2	50,000	2,00,000			M2	50,000	2,00,000
			2,00,000					2,00,000
2007				2007
Jan. 01	Balance b/d			June 30		Machinery Disposal A/c (M2)		50,000
	M1	1,50,000		Dec 31		Balance c/d		1,50,000
	M2	50,000	2,00,000
			2,00,000					2,00,000

Provision for Depreciation Account
Dr.				Cr.
Date	Particulars	Amount (Rs)	Date		Particulars			Amount (Rs)
2005			2005
Dec 31	Balance c/d	17,500	Dec 31		Depreciation
					M1	15,000
					M2 (6 months)	2,500		17,500
		17,500						17,500
2006			2006
Dec 31	Balance c/d	37,500	Jan 01		Balance b/d			17,500
			Dec 31		Depreciation
					M1	15,000
					M2	5,000		20,000
		37,500						37,500
2007			2007
June 30	Machinery Disposal A/c	10,000	Jan 01		Balance b/d			37,500
Dec 31	Balance c/d	45,000			Depreciation
			June 30		M2 (sold) (6 months)		2,500
			Dec 31		M1		15,000	17,500
		55,000						55,000

Machinery Disposal Account
Dr.				Cr.
Date	Particulars	Amount (Rs)	Date		Particulars	Amount (Rs)
2007			2007
June 30	Machinery Disposal A/c(cost)	50,000	June 30		Bank A/c(sale)	40,000
			June 30		Provision for depreciation A/c	10,000
		50,000				50,000