Question

X bought a machine for ₹ 25,000 on which he spent ₹ 5,000 for carriage and freight. ₹ 1,000 for brokerage of the middleman, ₹ 3,500 for installation and ₹ 500 for an iron pad. The machine is depreciated @ 10% every year on Written Down Value basis. After three years, the machine was sold to Y for ₹ 30,500 and ₹ 500 was paid as commission to the broker through whom the sale was effected. Find out the profit and loss on sale of machine.

Answer 1

Books of X Machinery Account
Dr.									Cr.
Date		Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
I year					I year
Jan.01		Bank (25,000 + 5,000 + 1,000 + 3,500 + 500)		35,000	Dec.31	Depreciation		3,500
					Dec.31	Balance c/d		31,500
				35,000				35,000
II year					II year
Jan.01		Balance b/d		31,500	Dec.31	Depreciation		3,150
					Dec.31	Balance c/d		28,350
				31,500				31,500
III year					III year
Jan.01		Balance b/d		28,350	Dec.31	Depreciation		2,835
					Dec.31	Balance c/d		25,515
				28,350				28,350
IV year					IV year
Jan.01		Balance b/d		25,515	Jan.01	Bank (30,500 – 500 brokerage)		30,000
Dec.31		Profit and Loss (Profit)		4,485
				30,000				30,000