Question

Prakash Trading Company Purchased a machine worth Rs 77,600 and installed at a cost Rs 2,400 on 1st October 2006. On 1st April 2007 an additional Machine costing Rs 40,000 was purchased. The machine purchased on 1st April 2007 having become obsolete and was Sold for Rs 22,000 on 1st October 2009, and a new machine worth Rs 60,000 was purchased on 1st November 2009.
The depreciation was provided annually on 31st March @ 10% p.a. on original cost of machine.
show Machinery Account for the year 2006-07, 2007-08, 2008-09 and 2009-10

Answer 1

Machinery Account
Dr.	Cr.
Date		Particulars		Amount (Rs)	Date	Particulars		Amount (Rs)
2006					2007
Oct 1		Bank A/c (M1) (77,600+2,400)		80,000	Mar 31	Depreciation A/c (M1) (for 6 months)		4,000
					Mar 31	Balance c/d (M1) (80,000-4,000)		76,000
				80,000				80,000
2007					2008
Apr 1		Balance b/d (M1)		76,000	Mar 31	Depreciation A/c
Apr 1		Bank A/c (M2)		40,000		M1	8,000
						M2	4,000	12,000
					Mar 31	Balance c/d
						M1 (76,000 - 8,000)	68,000
						M2 (40,000 - 4,000)	36,000	1,04,000
				1,16,000				1,16,000
2008					2009
Apr 1		Balance b/d			Mar 31	Depreciation A/c
		M1	68,000			M1	8,000
		M2	36,000	1,04,000		M2	4,000	12,000
					Mar 31	Balance c/d
						M1 (68,000 - 8,000)	60,000
						M2 (36,000 - 4,000)	32,000	92,000
				1,04,000				1,04,000
2009-					2009
Apr 1		Balance b/d			Oct 1	Bank A/c		22,000
		M1	60,000		Oct 1	Depreciation A/c (for 6 months)		2,000
		M2	32,000	92,000	Oct 1	Profit & Loss A/c (Loss on sale)		8,000
Nov 1		Bank A/c (M3)		60,000	2010
					Mar 31	Depreciation A/c
						M1	8,000
						M3 (for 5 months)	2,500	10,500
					Mar 31	Balance c/d
						M1 (60,000 - 8,000)	52,000
						M3 (60,000 - 2,500)	57,500	1,09,500
				1,52,000				1,52,000

Working Notes: Calculation of Profit or Loss on Sale

Particulars	Amount
Value of M2 as on Apr.01, 2009	32,000
Less: Depreciation for 6 months	(2,000)
Value of M2 as on Oct. 01, 2009	30,000
Less: Sale Value	(22,000)
Loss on Sale	8,000