8. A firm purchased on 1st January, 2010 a
second-hand machinery for Rs.36,000 and
spent Rs.4,000 on its installation.
On 1st July in the same year, another
machinery costing Rs.20,000 was
purchased. On 1st July, 2012 machinery
brought on 1st January, 2010 was sold for
Rs. 12,000 and a new machine purchased
for Rs.64,000 on the same date.
Depreciation is provided annually on 31st
December @ 10% per annum on the written
down value method. Show the machinery
account from 2010 to 2012.
Answers
Explanation:
Dr Machinery Account Cr
Date Particulars J.F. Amt (Rs.) Date Particulars J.F. Amt (Rs.)
2010 2010
Jan 1 To Bank A/c (Machine I) 40,000 Dec 31 By Depreciation A/c
(Rs. 36,000 + Rs. 4,000) Machine I 4,000
Jul 1 To Bank A/c (Machine II) 20,000 Machine II [(20,000*10%*)6/12] 1,000 5,000
Dec 31 By Balance c/d
Machine I (Rs. 40,000 -Rs.4,000) 36,000
Machine II (Rs. 20,000-Rs.1,000) 19,000 55,000
60,000 60,000
2011 2011
Jan 1 To Balance b/d Dec 31 By Depreciation A/c
Machine I 36,000 Machine I 3,600
Machine II 19,000 55,000 Machine II 1,900 5,500
Dec 31 By Balance c/d
Machine I (Rs.36,000-Rs.3,600) 32,400
Machine II(Rs.19,000-Rs.1,900) 17,100 49,500
55,000 55,000
2012 2012
Jan 1 To Balance b/d Jul 1 By Depreciation A/c (Machine I) 1,620
Machine I 32,400 By Bank A/c 12,000
Machine II 17,100 49,500 By Profit and Loss A/c (Loss) Rs.(32,400-1,620-12,000) 18,780
Jul 1 To Bank A/c (Machine III) 64,000
Dec 31 By Depreciation A/c
Machine II 1,710
Machine III 3,200 4,910
Dec 31 By Balance c/d
Machine II |(Rs. 17,100-Rs. 1,710) 15,390
Machine III(Rs.64,000-Rs.3,200) 60,800 76,190
1,13,500 1,13,500
2013
Jan 1 To Balance b/d
(Machine II) 15,390
(Machine III) 60,800
Working Notes:-
Calculation of Depreciation on July 1,2012 on Machine I = (32,400*10% )*6/12 = 1,620
Calculation of Depreciation on Dec 31,2012 on Machine III = (64,000*10%)*6/12 = 3,200
Depreciation is calculated on Balance or Book Value of the Machine because the firm has adopted the Written Down Value of the Depreciation.