Question

0.6. On 1st October, 2014, Raj & Co. purchased machinery worth 40,000. On 1st
October, 2016, it buys additional machinery worth 10,000. On 30th September, 2017,
half of the machinery purchased on 1st Oct., 2014, is sold for 8,200. The company writes
off 10 per cent p.a. on the original cost. The accounts are closed every year on 31st March.
Show the Machinery Account for four years.​

Answer 1

Answer:

the question is a good one.

Answer 2

Answer:

Explanation:

From the above question,

They have given :

Given :

On 1st October, 2014, Raj & Co. purchased a machinery worth ₹40,000. On 1st October, 2016, it buys additional machinery worth ₹10,000. On 30th September 2017, half of the Machinery purchased on 1st October 2014, is sold for ₹8,200. The company writes off 10% p.a. on the original cost. The accounts are closed every year on 31 March.

Show Machinery Account for four years.

Depreciation is the decrease in the value of an asset over the period of time due to its usage or due to the passage of time. Depreciation is usually calculated on the original cost of the asset and accounted for in the books of accounts as an expense. It is used to spread the cost of an asset over its useful life.

1. Calculate the depreciation rate: 10% of the original cost (₹40,000) is ₹4,000.

2. Calculate the opening balance for each year:

2014: 40,000

2015: 32,000 (40,000-4,000)

2016: 27,840 (32,000-4,000)

2017: 21,912 (27,840-4,000)

3. Calculate the total for each year:

2014: 40,000

2015: 32,000

2016: 37,840 (32,000+10,000)

2017: 21,912

4. Calculate the depreciation for each year:

2014: 4,000

2015: 3,200 (4,000-800)

2016: 2,784 (3,200-416)

2017: 2,191 (2,784-593)

5. Calculate the closing balance for each year:

2014: 36,000 (40,000-4,000)

2015: 28,800 (32,000-3,200)

2016: 35,056 (37,840-2

Machinery Account

Particulars       2014  2015  2016  2017

Opening Balance  40,000  32,000  27,840  21,912

Add Purchases      10,000  

Total                 40,000  32,000  37,840  21,912

Less: Depreciation  4,000  3,200  2,784  2,191

Less: Sale        8,200

Closing Balance  36,000  28,800  35,056  11,521

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