Question

Shri Krishan Manufacturing Company purchased 10 machines for Rs. 75,000 each on July 1, 2000. On October 1, 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

$\begin{array}{c}\text{Dr}\text{Machinery Acconunt}\text{Cr}\end{array}$

$\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs)}& \text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs.)}\\ \text{2000}& & & & \text{2000}& & & \\ \text{Jul 1}& \text{Bank A/c}& & & \text{Dec 31}& \text{Depreciation}& & \text{56,250}\\ & \text{(75,000}\times \text{10)}& & \text{7,50,000}& & \text{A/c}& & \\ & & & & \text{Dec 31}& \text{Balance c/d}& & \text{6,93,750}\\ & & & \overline{\underset{–}{7,50,000}}& & & & \overline{\underset{–}{7,50,000}}\\ \text{2001}& & & & \text{2001}& & & \\ \text{Jul 1}& \text{Balance b/d}& & \text{6,93,750}& \text{Dec 31}& \text{Depreciation}& & \text{1,04,063}\\ & & & & & \text{A/c}& & \\ & & & & \text{Dec 31}& \text{Balance c/d}& & \text{5,89,687}\\ & & & \overline{\underset{–}{6,93,750}}& & & & \overline{\underset{–}{6,93,750}}\\ \text{2002}& & & & \text{2002}& & & \\ \text{Jan 1}& \text{Balance b/d}& & \text{5,89,687}& \text{Oct 1}& \text{Depreciation}& & \\ \text{Oct 1}& \text{Bank A/c}& & \text{1,25,000}& & \text{A/c (@ 15 \% on}& & \\ & & & & & \text{58,968 for 9}& & \\ & & & & & \text{months)}& & \text{6,634}\\ & & & & \text{Oct 1}& \text{Bank A/c}& & \\ & & & & & \text{(Insurance}& & \\ & & & & & \text{Company)}& & \text{45,000}\\ & & & & \text{Oct 1}& \text{Profit \& Loss}& & \\ & & & & & \text{A/c (Loss)}& & \text{7,335}\\ & & & & \text{Dec 31}& \text{Depreciation}& & \\ & & & & & \text{A/c}& & \\ & & & & & \text{Old = 79,608}& & \\ & & & & & \text{New =}\underset{–}{4,688}& & \text{84,296}\\ & & & & \text{Dec 31}& \text{Balance c/d}& & \\ & & & & & \text{Old = 4,51,110}& & \\ & & & & & New=\underset{–}{\text{1,20,312}}& & 5,71,422\\ & & & \overline{\underset{–}{7,14,687}}& & & & \overline{\underset{–}{7,14,687}}\\ \text{2003}& & & & \text{2003}& & & \\ & & & & \text{Dec 31}& \text{Depreciation}& & \\ \text{Jan 1}& \text{Balance b/d}& & & & \text{A/c}& & \\ & \text{Old = 4,51,110}& & & & \text{Old = 67,667}& & \\ & New=\underset{–}{\text{1,20,312}}& & \text{5,71,422}& & \text{New =}\text{18,047}& & \text{85,714}\\ & & & & \text{Dec 31}& \text{Balance c/d}& & \\ & & & & & \text{Old = 3,83,443}& & \\ & & & & & \text{New =}\underset{–}{1,02,265}& & 4,85,708\\ & & & \overline{\underset{–}{5,71,422}}& & & & \overline{\underset{–}{5,71,422}}\end{array}$

Working Note

Cost of one Machine as on 1 Jan, 2002 is $(5,89,687÷10)=Rs.58,968.8$

Loss on Sale of Machine = 58,969 - [Dep = 6,634] - [Claim = 45,000] = Rs. 7,335