Question

Saraswati Ltd. purchased a machinery costing ₹ 10,00,000 on January 01, 2011. A new machinery was purchased on 01 May, 2012 for ₹ 15,00,000 and another on July 01, 2014 for ₹ 12,00,000. A part of the machinery which originally cost ₹ 2,00,000 in 2011 was sold for ₹ 75,000 on April 30, 2014. Show the machinery account, provision for depreciation account and machinery disposal account from 2011 to 2015 if depreciation is provided at 10% p.a. on original cost and account are closed on December 31, every year.

Answer 1

Dr.	Books of Saraswati Ltd. Machinery Account						Cr.
Date	Particulars	J.F.	Amount (₹)	Date	Particulars	J.F.	Amount (₹)
2011				2011
Jan.01	Bank (i) (8,00,000 + 2,00,000)		10,00,000
				Dec.31	Balance c/d		10,00,000
			10,00,000				10,00,000
2012				2012
Jan.01	Balance b/d		10,00,000
May.01	Bank (ii)		15,00,000	Dec.31	Balance c/d		25,00,000
			25,00,000				25,00,000
2013				2013
Jan.01	Balance b/d		25,00,000
				Dec.31	Balance c/d		25,00,000
			25,00,000				25,00,000
2014				2014
Jan.01	Balance b/d		25,00,000	Apr.30	Machinery Disposal		2,00,000
Jul.01	Bank (ii)		12,00,000	Dec.31	Balance c/d (i) 8,00,000 (ii) 15,00,000 (iii) 12,00,000		35,00,000
			37,00,000				37,00,000
2015				2015
Jan.01	Balance c/d		35,00,000
				Dec.31	Balance c/d		35,00,000
			35,00,000				35,00,000

 

Dr.	Provision for Depreciation Account						Cr.
Date	Particulars	J.F.	Amount (₹)	Date	Particulars	J.F.	Amount (₹)
2011				2011
Dec.31	Balance c/d		1,00,000
				Dec.31	Depreciation (i)		1,00,000
			1,00,000				1,00,000
2012				2012
Dec.31	Balance c/d		3,00,000	Jan.01	Balance c/d		1,00,000
				Dec.31	Depreciation (i) 1,00,000 (ii) 1,00,000 (8 months)		2,00,000
			3,00,000				3,00,000
2013				2013
Dec.31	Balance b/d		5,50,000	Jan.01	Balance c/d		3,00,000
				Dec.31	Depreciation (i) 1,00,000 (ii) 1,50,000		2,50,000
			5,50,000				5,50,000
2014				2014
Apr.30	Machinery Disposal		66,667	Jan.01	Balance b/d		5,50,000
Dec.31	Balance c/d		7,80,000	Apr.30	Depreciation		6,667
				Dec.31	Depreciation (i) 80,000 (ii) 1,50,000 (iii) 60,000		2,90,000
			8,46,667				8,46,667
2015				2015
Dec.31	Balance c/d		11,30,000	Jan.01	Balance c/d		7,80,000
				Dec.31	Depreciation (i) 80,000, (ii) 1,50,000, (iii) 1,20,000		3,50,000
			11,30,000				11,30,000

 

Dr.	Machinery Disposal Account						Cr.
Date	Particulars	J.F.	Amount (₹)	Date	Particulars	J.F.	Amount (₹)
2014				2014
Apr.30	Machinery		2,00,000	Apr.30	Provision for Depreciation		66,667
				Apr.30	Bank		75,000
				Apr.30	Profit and Loss (Loss)		58,333
			2,00,000				2,00,000

Working Note:

	Opening Balance		Depreciation		Closing Balance
2011	2,00,000	–	20,000	=	1,80,000
2012	1,80,000	–	20,000	=	1,60,000
2013	1,60,000	–	20,000	=	1,40,000
2014	1,40,000	–	6,667	=	1,33,333
	Accumulated Depreciation		66,667

 

Value on Apr. 30, 2014	1,33,333
Sale on Apr. 30, 2014	– 75,000
Loss on sale	₹ 58,333