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Question -

Saraswati Ltd. purchased a machinery costing Rs 10,00,000 on January 01, 2011. A new machinery was purchased on 01 May, 2012 for Rs 15,00,000 and another on July 01, 2014 for Rs 12,00,000. A part of the machinery which originally cost Rs 2,00,000 in 2011 was sold for Rs 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 -

Books of Saraswati Ltd.

Machinery Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount

(₹)

Date

Particulars

J.F.

Amount

(₹)

2011

 

 

 

2011

 

 

 

Jan.01

Bank (i)

 

10,00,000

 

 

 

 

 

(8,00,000 + 2,00,000)

 

 

Dec.31

Balance c/d

 

10,00,000

 

 

 

10,00,000

 

 

 

10,00,000

 

 

 

 

 

 

 

 

2012

 

 

 

2012

 

 

 

Jan.01

Balance b/d

 

10,00,000

Dec.31

Balance c/d

 

25,00,000

May.01

Bank (ii)

 

15,00,000

 

 
 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Provision for Depreciation Account

Dr.

 

 

 

 

 

 

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

 

2,00,000

 

 

 

 

 

(8 months)

 

 

 

 

 

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

 

2,50,000

 

 

 

5,50,000

 

(i) 1,00,000 (ii) 1,50,000,

 

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

 

 

 

 

 

 

 

 

 

Machinery Disposal Account

Dr.

 

 

 

 

 

 

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

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