Question

A firm purchased a machinery for Rs.2,00,000 on 01.01.2000. A depreciation fund was established to collect the necessary amount for replacement of the machinery at the end of 4 years with an interest of 4% p.a. On December 31, 2003 the fund account was closed and machine was replaced. Prepare depreciation fund a/c (table shows that to get Re.1.00 at the end of the 4 years @ 4% p.a., the annual investment is Re. 0.2355).
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Answer 1

Answer:

A firm acquires a four-year lease on 1st January 2002 for Rs 40,000. The firm decides to establish a Depreciation Fund for its replacement. Interest is expected to be earned at 5%.

ADVERTISEMENTS:

On 31st December 2005, the balance at Bank, before the receipt of interest on Depreciation Fund Invest­ment, was Rs 26,000. Investments were sold for Rs 29,000. New lease was acquired for Rs 45,000.

Give journal entries and ledger accounts relating to the above.

Answer 2

I guess you got you’re answer earlier