Question

The following balances appear in the books of Crystal Ltd, on Jan 01, 2015
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 ₹ 2, 00,000 was sold for ₹ 75,000. A new machine was purchased on July 01, 2015 for ₹ 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

Dr.	Machinery Account						Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
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

 

Dr.	Provision for Depreciation Account						Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
2015	Machinery			2015
Apr.01	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

 

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