Question

2.1. Following is the information provided by the sole proprietor, Mr. Aakash Seth
On 1st Apr, 2016, he purchased machinery worth 1,00,000.
On 1st July, 2016, he purchased machinery worth 50,000.
On 1st Oct, 2017, another machinery was purchased for 75,000
Depreciation is provided on Straight Line Method basis @ 10% per annum. He closes the books on
31st March every year.
Prepare Machinery Account and Depreciation Account for 3 years. Give journal entries as well.​

Answer 1

Answer:

Explanation:

Machinery account is a real account. So debit what comes in and credit what goes out.

Year 1

Depreciation a/c 15000₹

Machinery a/c 15000₹

Value of machinery year 1: 150000-15000= 135000

Year2

Depreciation a/c 13500₹+7500₹

Machinery a/c 13500₹+7500₹

Value of machinery year 2: 135000+75000-(13500+7500)= 189000₹

Year3

Depreciation a/c 18900₹

Machinery a/c 18900₹

Value of machinery on year 3: 189000-18900=170100₹

The depreciation is reducing balance. Straight line depreciation is

15000 for year 1. 15000+7500 for second and third year.