Question

Sahil Bros. Kolhapur, Purchased a Machinery on 1st April 2008 for Rs 47,000 and spent Rs 3,000 for its installation. On 1st October 2008 additional Machinery Costing Rs 5,000 was Purchased. On 1st July 2009 the Machinery Purchased. on 1st October 2008 was sold for Rs 3,000 and on the same date new Machinery was purchased for Rs 12,000.
They decided to provide to depreciation @ 10% p.a. under Straight Line Method on 31st March every year
Prepare Machinery Account and Depreciation Account for 3 year only

Answer 1

Machinery Account
Dr.									Cr.
Date		Particulars		Amount (Rs)	Date	Particulars		Amount (Rs)
2008					2009
Apr 1		Bank A/c (M1) (47,000 + 3,000)		50,000	Mar 31	Depreciation A/c
Oct 1		Bank A/c (M2)		5,000		M1	5,000
						M2 (for 6 months)	250	5,250
					Mar 31	Balance c/d
						M1 (50,000 – 5,000)	45,000
						M2 (5,000 – 250)	4,750	49,750
				55,000				55,000
2009					2010
Apr 1		Balance b/d			July 1	Depreciation A/c M2 (for 3 months)		125
		M1	45,000		July 1	Bank A/c		3,000
		M2	4,750	49,750	July 1	Profit & Loss A/c		1,625
July 1		Bank A/c (M3)		12,000	Mar 31	Depreciation A/c
						M1	5,000
						M3 (for 9 months)	900	5,900
					Mar 31	Balance c/d
						M1 (45,000 – 5,000)	40,000
						M3 (12,000 – 900)	11,100	51,100
				61,750				61,750
2010					2011
Apr 1		Balance b/d			Mar 31	Depreciation A/c
		M1	40,000			M1	5,000
		M3	11,100	51,100		M3	1,200	6,200
					Mar 31	Balance c/d
						M1 (40,000 – 5,000)	35,000
						M3 (11,100 – 1,200)	9,900	44,900
				51,100				51,100

Depreciation Account
Dr.							Cr.
Date		Particulars	Amount (Rs)	Date	Particulars	Amount (Rs)
2009				2009
Mar 31		Machinery A/c	5,250	Mar 31	Profit and loss A/c	5,250
			5,250			5,250
2010				2010
July 1		Machinery A/c	125
Mar 31		Machinery A/c	5,900	Mar 31	Profit and loss A/c	6,025
			6,025			6,025
2011				2011
Mar 31		Machinery A/c	6,200	Mar 31	Profit and loss A/c	6,200
			6,200			6,200

Working Notes: Calculation of Profit or Loss on Sale

Particulars	Amount
Value of M2 as on Mar. 31, 2009	4,750
Less: Depreciation for 3 months	(125)
Value of M2 as on Jul. 01, 2009	4,625
Less: Sale Value	(3,000)
Loss on Sale	1,625