Question

Question: The following balances appear in the books of Crystal Ltd on January 1, 2005

Items	(Rs)
Machinery account on	$15,00,000$
Provision for depreciation account	$5,50,000$

On April 1, 2005, a machinery which was purchased on January 1, 2002 for Rs $2,00,000$ was sold for Rs $75,000$. A new machine was purchased on July 1, 2005, for Rs$6,00,000$. Depreciation is provided on machinery at $20\%$ per annum on straight-line method and books are closed on December 31st every year. Prepare the Machinery account and Provision for depreciation account for the year ending December 31, 2005.

Answer 1

Answer :
Dr Machinery Account Cr

Date	Particulars	JF	Amt.(Rs)	Date	Particulars	JF	Amt.(Rs)
2005 Jan 1	To Balance b/d $(13,00,000+2,00,000)$		$15,00,000	2005 Apr 1	By Machinery Disposal A/c		$2,00,000$
Jul 1	To Bank A/c		$6,00,000$	Dec 31	By balance c/d		$19,00,000$
			$21,00,000$				$21,00,000$

Dr Provision for Depreciation Account Cr

Date	Particulars	JF	Amt.(Rs)	Date	Particulars	JF	Amt.(Rs)
2005 Apr 1	To Machinery Disposal A/c		$1,30,000$	2005 Jan 1	By Balance c/d		$5,50,000$
Dec 31	To Balance c/d		$7,50,000$	Apr1	By Depreciation A/c M1 = $2,60,000$ M2 = $60,000$		$3,20,000$
			$8,80,000$				$8,80,000$

Dr Machinery Disposal Account Cr

Date	Particulars	JF	Amt.(Rs)	Date	Particulars	JF	Amt.(Rs)
2005 Apr 1	To Machinery A/c		$2,00,000$	2005 Apr 1	By Provision for Dep A/c		$1,30,000$
Apr1	To Profit & Loss A/c (Profit on Sale of Machine)		$5,000$	Apr1	By Bank A/c		$75,000$
			$2,05,000$				$2,05,000$