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Question -

Berlia Ltd. Purchased a second hand machine for Rs 56,000 on July 01, 2015 and spent Rs 24,000 on its repair and installation and Rs 5,000 for its carriage. On September 01, 2016, it purchased another machine for Rs 2,50,000 and spent Rs 10,000 on its installation.

(a) Depreciation is provided on machinery @10% p.a on original cost method annually on December 31. Prepare machinery account and depreciation account from the year 2015 to 2018.
(b) Prepare machinery account and depreciation account from the year 2015 to 20018, if depreciation is provided on machinery @10% p.a. on written down value method annually on December 31.



Answer -

Books of Berlia Ltd.

(a)

Machinery Account (Original Cost Method)

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount

Rs

Date

Particulars

J.F.

Amount

Rs

2015

 

 

 

2015

 

 

 

Jul.01

Bank (i)

 

85,000

Dec.31

Depreciation

 

4,250

 

(5,600 + 24,000 + 5,000)

 

 

Dec.31

Balance c/d

 

80,750

 

 

 

85,000

 

 

 

85,000

 

 

 

 

 

 

 

 

2016

 

 

 

2016

 

 

 

Jan.01

Balance b/d (i)

 

80,750

Dec.31

Depreciation

 

 

Sep.01

Bank (ii)

 

2,60,000

 

(i) 8,500, (ii) 8,667

 

17,167

 

(2,50,000 + 10,000)

 

 

Dec.31

Balance c/d

 

3,23,583

 

 

 

 

 

(i) 72,250, (ii) 2,51,333

 

 

 

 

 

3,40,750

 

 

 

3,40,750

 

 

 

 

 

 

 

 

2017

 

 

 

2017

 

 

 

Jan.01

Balance b/d

 

3,23,583

Dec.31

Depreciation

 

 

 

(i) 72,250, (ii) 2,51,333

 

 

 

(i) 8,500, (ii) 26,000

 

34,500

 

 

 

 

Dec.31

Balance c/d

 

 

 

 

 

 

 

(i) 63,750, (ii) 2,25,333

 

2,89,083

 

 

 

3,23,583

 

 

 

3,23,583

 

 

 

 

 

 

 

 

2018

Balance b/d

 

 

2018

 

 

 

Jan.01

(i) 63,750, (ii) 2,25,333

 

2,89,083

Dec.31

Depreciation

 

 

 

 

 

 

 

(i) 8,500, (ii) 26,000

 

34,500

 

 

 

 

Dec.31

Balance c/d

 

 

 

 

 

 

 

(i) 55,250, (ii) 1,99,333

 

2,54,583

 

 

 

2,89,083

 

 

 

2,89,083

 

 

 

 

 

 

 

 

 

Depreciation Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount

Rs

Date

Particulars

J.F.

Amount

Rs

2015

 

 

 

2015

 

 

 

Dec.31

Machinery

 

4,250

Dec.31

Profit and Loss

 

4,250

 

 

 

4,250

 

 

 

4,250

 

 

 

 

 

 

 

 

2016

 

 

 

2016

 

 

 

Dec.31

Machinery

 

 

Dec.31

Profit and Loss

 

17,167

 

(i) 8,500 (ii) 8,667

 

17,167

 

 

 

 

 

 

 

17,167

 

 

 

17,167

 

 

 

 

 

 

 

 

2017

 

 

 

2017

 

 

 

Dec.31

Machinery

 

 

Dec.31

Profit and Loss

 

34,500

 

(i) 8,500 (ii) 26,000

 

34,500

 

 

 

 

 

 

 

34,500

 

 

 

34,500

 

 

 

 

 

 

 

 

2018

 

 

 

2018

 

 

 

Dec.31

Machinery

 

34,500

Dec.31

Profit and Loss

 

34,500

 

(i) 8,500 (ii) 26,000

 

34,500

 

 

 

34,500

 

 

 

 

 

 

 

 

 

Working notes:Calculation of annual depreciation

 

(i) Depreciation (p.a.) on Machinery Purchased on July 01,2015

 

 

= (56,000 + 24,000 + 5,000) ×

10

100

 

= Rs 8,500 per annum

 

 

(ii) Depreciation (p.a.) on Machinery purchased onSeptember 01, 2016.

 

 

= (2,50,000 + 10,000)  ×

10

100

 

= Rs 26,000 per annum

 

 

(b)

Machinery Account (Written Down Value method)

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount 

Rs

Date

Particulars

J.F.

Amount 

Rs

2015

 

 

 

2015

 

 

 

Jul.01

Bank (i)

 

85,000

Dec.31

Depreciation

 

4,250

 

(5,600 + 24,000 + 5,000)

 

 

Dec.31

Balance c/d

 

80,750

 

 

 

85,000

 

 

 

85,000

 

 

 

 

 

 

 

 

2016

 

 

 

2016

 

 

 

Jan.01

Balance b/d (i)

 

80,750

Dec.31

Depreciation

 

 

Sep.01

Bank (ii)

 

2,60,000

 

(i) 8,075, (ii) 8,667

 

16,742

 

(2,50,000 + 10,000)

 

 

Dec.31

Balance c/d

 

 

 

 

 

 

 

(i) 72,675, (ii) 2,51,333

 

 3,24,008

 

 

 

3,40,750

 

 

 

3,40,750

 

 

 

 

 

 

 

 

2017

 

 

 

2017

 

 

 

Jan.01

Balance b/d

 

3,24,008

Dec.31

Depreciation

 

 

 

(i) 72,675, (ii) 2,51,333

 

 

 

(i) 7,268, (ii) 25,133

 

32,401

 

 

 

 

Dec.31

Balance c/d

 

 

 

 

 

 

 

(i) 65,407, (ii) 2,26,200

 

2,91,607

 

 

 

3,24,008

 

 

 

3,24,008

 

 

 

 

 

 

 

 

2018

Balance b/d

 

 

2018

 

 

 

Jan.01

(i) 65,407, (ii) 2,26,200

 

2,91,607

Dec.31

Depreciation

 

 

 

 

 

 

 

(i) 6,540, (ii) 22,620

 

29,160

 

 

 

 

Dec.31

Balance c/d

 

 

 

 

 

 

 

(i) 58,867, (ii) 2,03,580

 

2,62,447

 

 

 

2,91,607

 

 

 

2,91,607

 

 

 

 

 

 

 

 

  

Depreciation Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount

Rs

Date

Particulars

J.F.

Amount Rs

2015

 

 

 

2015

 

 

 

Dec.31

Machinery

 

4,250

Dec.31

Profit and Loss

 

4,250

 

 

 

4,250

 

 

 

4,250

 

 

 

 

 

 

 

 

2016

 

 

 

2016

 

 

 

Dec.31

Machinery

 

 

Dec.31

Profit and Loss

 

16,742

 

(i) 8,075, (ii) 8,667

 

16,742

 

 

 

 

 

 

 

16,742

 

 

 

16,742

 

 

 

 

 

 

 

 

2017

 

 

 

2017

 

 

 

Dec.31

Machinery

 

 

Dec.31

Profit and Loss

 

32,401

 

(i) 7,268, (ii) 25,133

 

32,401

 

 

 

 

 

 

 

32,401

 

 

 

32,401

 

 

 

 

 

 

 

 

2018

 

 

 

2018

 

 

 

Dec.31

Machinery

 

 

Dec.31

Profit and Loss

 

29,160

 

(i) 6,540, (ii) 22,620

 

29,160

 

 

 

 

 

 

 

29,160

 

 

 

29,160

 

 

 

 

 

 

 

 

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