Question

The following balances appear in the books of Crystal Ltd, on Jan 01, 2015

	Rs
Machinery account on	15,00,000
Provision for depreciation account	5,50,000

On April 01, 2015 a machinery which was purchased on January 01, 2012 for Rs 2,00,000 was sold for Rs 75,000. A new machine was purchased on July 01, 2015 for Rs 6,00,000. Depreciation is provided on machinery at 20% p.a. on Straight line method and books are closed on December 31 every year. Prepare the machinery account and provision for depreciation account for the year ending December 31, 2015.

Answer 1

Machinery Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2015				2015
Jan.01	Balance b/d		15,00,000	Apr.01	Machinery Disposal		2,00,000
	(13,00,000 + 2,00,000)
Jul.01	Bank		6,00,000	Dec.31	Balance c/d		19,00,000
			21,00,000				21,00,000

Provision for Depreciation Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2015				2015
Apr.01	Machinery Disposal		1,30,000	Jan.01	Balance b/d		5,50,000
Apr.01	Balance c/d		7,50,000	Apr.01	Depreciation		10,000
				Dec.31	Depreciation
					(i) 2,60,000, (ii) 60,000		3,20,000
			8,80,000				8,80,000

Working Note:

Machine Sold on July 01, 2015

(i)		Years	Opening Balance				Depreciation		Closing Balance
	2012		2,00,000			–	40,000	=	1,60,000
	2013		1,60,000			–	40,000	=	1,20,000
	2014		1,20,000			–	40,000	=	80,000
	2015		80,000			–	10,000	=	70,000
			Accumulated Depreciation			=	1,30,000
Value on April 01, 2015			=		(70,000)
Less: Sale			=		75,000
Profit on sale of Machinery					5,000

Machinery Disposal Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2015				2015
Apr.01	Machinery		2,00,000	Apr.01	Provision for Depreciation		1,30,000
Apr.01	Profit and Loss (Profit)		5,000	Apr.01	Bank		75,000
			2,05,000				2,05,000