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Question -

The following balances appear in the books of Crystal Ltd, on Jan 01, 2015

 

Rs

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 Rs 2,00,000 was sold for Rs 75,000. A new machine was purchased on July 01, 2015 for Rs 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 -

Machinery Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount

Rs

Date

Particulars

J.F.

Amount

Rs

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

 

 

 

 

 

 

 

 

 

Provision for Depreciation Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount

 Rs

Date

Particulars

J.F.

Amount

 Rs

2015

 

 

 

2015

 

 

 

Apr.01

Machinery 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Machinery Disposal Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount 

Rs

Date

Particulars

J.F.

Amount Rs

2015

 

 

 

2015

 

 

 

Apr.01

Machinery

 

2,00,000

Apr.01

Provision for Depreciation

 

1,30,000

 Apr.01 

Profit and Loss (Profit)

 

5,000 

Apr.01 

Bank

 

75,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,05,000

 

 

 

2,05,000

 

 

 

 

 

 

 

 

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