A Firm purchased an old Machinery for Rs. 37,000 on 1st January, 2015 and spent Rs. 3,000
on its overhauling. On 1st July 2016, another machine was purchased for Rs. 10,000. On 1st July 2017, the machinery which was purchased on 1st January 2015, was sold forRs. 28,000
and the same day a new machinery costing Rs.25,000 was purchased. On 1st July, 2018, the machine which was purchased on 1st July, 2016 was sold for Rs. 2,000.
Depreciation is charged @ 10% per annum on straight line method. The firm changed the
method and adopted diminishing balance method with effect from 1st January, 2016 and the
rate was increased to 15% per annum. The books are closed on 31st December every year.(Round off depreciation to nearest rupee)
Prepare Machinery account for four years from 1st January, 2015.
Answers
Answer:
Machinery Account for the 4 years
Machinery Account
Date Particulars Amount Date Particulars Amount
01-01-15 To Bank A/c 37,000 31-12-15 By Depreciation A/c 4,000
01-01-15 To Bank A/c 3,000 31-12-15 By balance c/d 36,000
Total 40,000 Total 40,000
01-01-16 To balance b/d 36,000 31-12-16 By Depreciation A/c 6,150
01-07-16 To Bank A/c 10,000 31-12-16 By balance c/d 39,850
Total 46,000 Total 46,000
01-01-17 To balance b/d 39,850 01-07-17 By Bank A/c 28,000
01-07-17 To Bank A/c 25,000 01-07-17 By By Profit & Loss A/c 305
31-12-17 By Depreciation A/c 5,558
31-12-17 By balance c/d 30,987
Total 64,850 Total 64,850
01-07-18 To balance b/d 30,987 01-07-18 By Bank A/c 2,000
01-07-18 By By Profit & Loss A/c 5,272
31-12-18 By Depreciation A/c 4,059
31-12-18 By balance c/d 19,656
Total 64,850 Total 64,850
Notes:
01-01-15 to 31-12-15
Price of Machinery 1 purchased on 01-01-15 + overhaul = 40,000
Depreciation for 1 year at the rate of 10% per year = 4000
Closing Value = 40,000 – 4,000 = 36,000
01-01-16 to 31-12-16
Price of Machinery 2 purchased on 01-07-16 = 10,000
Depreciation on Machinery 1 at the rate of 15% per year = 5,400
Depreciation on Machinery 2 for 6 months at the rate of 15% per year = 750
Closing Value of Machinery 1 = 36,000 – 5,400 = 30,600
Closing Value of Machinery 2 = 10,000 – 750 = 9,250
01-01-17 to 31-12-17
Depreciation on Machinery 1 for 6 months at the rate of 15% per year = 2,295
Closing Value of Machinery 1 on 01-07-17 = 30,600-2,295 = 28,305
Sales Price = 28,000
Loss on Sales = 305
Depreciation on Machinery 2 for 6 months at the rate of 15% per year = 1,388
Closing Value of Machinery 2 = 9,250 – 1,388 = 7,862
Price of Machinery 3 purchased on 01-07-17 = 25,000
Depreciation on Machinery 3 for 6 months at the rate of 15% per year = 1,875
Closing Value of Machinery 3 = 25,000 – 1,875 = 23,125
01-01-18 to 31-12-18
Depreciation on Machinery 2 for 6 months at the rate of 15% per year = 590
Closing Value of Machinery 2 on 01-07-18 = 7,862-590 = 7,272
Sales Price = 2,000
Loss on Sales = 5,272
Depreciation on Machinery 3 for 1 year at the rate of 15% per year =3,469
Closing Value of Machinery 3 = 23,125 – 3,469 = 19,656
