Question

Question: Shri Krishan Manufacturing Company purchased 10 machines for $75,000$ each on July 1, 2000. On October 2002 one of the machines got destroyed by fire and an insurance claim of Rs$45,000$ was admitted by the company. On the same date, another machine is purchased by the company for Rs $1,25,000$.
The company writes off $15\%$ per annum depreciation on written down value basis. The company maintains the calendar year as its financial year. Prepare the Machinery account from 2000 to 2003.

Answer 1

Answer :
Dr Machinery Account Cr

Date	Particulars	JF	Amt.(Rs)	Date	Particulars	JF	Amt.(Rs)
2000 Jul 1	To Bank A/c $(75,000\times 10)$		$7,50,000$	2000 Dec 31	By Depreciation A/c		$56,250$
			$7,50,000$				$7,50,000$
2001 Jan 1	To Balance b/d		$6,93,750$	2001 Dec 31	By Depreciation A/c		$1,04,063$
				Dec 31	By Balance c/d		$5,89,687$
			$6,93,750$				$6,93,750$
2002 Jan 1	To Balance b/d		$5,89,687$	2002 Oct 1	By Depreciation A/c @ $15\%$ on $58,968$ for 9 months		$6,634$
Oct 1	To Bank A/c		$1,25,000$	Oct 1	By Bank A/c (Insurance Company)		$45,000$
				Oct 1	By Profit and Loss A/c (Loss)		$7,335$
				Dec 31	By Depreciation A/c Old = 79,608 New = 4,688		$84,296$
				Dec 31	By Balance c/d Old = $4,51,110$ New = $1,20,312$		$5,71,422$
			$7,14,687$				$7,14,687$
2003 Jan 1	To Balance b/d Old = $4,51,110$ New = $1,20,312$		$5,71,422$	2003 Dec 31	By Depreciation A/c Old = $67,667$ New = $18,047$		$85,714$
				Dec 31	By Balance c/d Old = $3,83,443$ New = $1,02,665$		$4,85,708$
			$5,71,422$				$5,71,422$

Working Note
Cost of one Machine as on 1 Jan, 2002 is (5,89,687 divided by 10) = Rs.$58,968.8
Lost on Sale of Machine = $58,969-[Dep=6,634]-[Claim=45,000]=Rs7,365$