Question

Journalise the trasanctions....
An old machine with the book value of Rs 80,000 is exchanged for a new machine of rs 2,40,000.The old machine is valued at rs 50,000 for exchange purpose by machine Tools Ltd.

Answer 1

New Machine A/C. Dr. Rs.2,40,000

To old machine A/C. Rs.50,000

To Cash A/C or Bank A/C. Rs.1,90,000

(Being new machinery bought by exchanging old machinery )

Profit and Loss A/C. Dr. Rs.30,000

To Old machine A/C. Rs.30,000

(Being loss on exchange of old machine)

Answer 2

New machinery A/c. Dr. 2,40,000

Profit & Loss A/c. Dr. 30,000

To Old Machinery A/c. 80,000

To Machine Tools Ltd. 1,90,000

( Being old machinery exchanged with new machinery by Machine Tools Ltd.)