Question

Raj & Co purchased a machine on 1^st January 2014 for ₹ 90,000. On 1st July 2014, they purchased another machine for ₹ 60,000. On 1st January 2015, they sold the machine purchased on 1st January 2014 for ₹ 40,000. It was decided that the machine be depreciated at 10% per annum on the diminishing balance method. Accounts are closed on 31st December every year. Show the machinery account for the years 2014 and 2015.

Answer 1

Date	Particulars	1st Machinery ₹	2nd Machinery ₹
1.1.2014	Cost price - 1	90,000
1.7.2014	Cost price - 2		60,000
31.12.2015	(-) Depreciation at 10%	9,000	3,000
		81,000	57,000
1.1.2015	(-) Selling price	40,000
	Loss on Sales	41,000
31.12.2015	(-) Depreciation - 2		5,700
	Balance in machinery A/c		51,300

Machinery Account

Dr.							Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
1.1.2014	To Bank A/c		90,000	31.12.2014	By Depreciation A/c (9000 + 3000)		12,000
01.07.2014	To Bank A/c		60,000	31.12.2014	By Balance c/d		1,38,000
			1,50,000				1,50,000
1.1.2015	To Balance b/d		1,38,000	1.1.2015	By Bank A/c		40,000
					By Profit and loss A/c		41,000
				31.12.2015	By Depreciaton A/c		5,700
				31.12.2015	By Bank c/d		51,300
			1,38,000				1,38,000
1.1.2016	To Balance c/d		51,300