Question

Kumar Manglam purchased a plant for 6,00,000 on 1st April, 2016. The addition was
made in the plant on 1st July, 2017 for 3,00,000. On 1st January, 2019, one-third of the
plant purchased on 1st April, 2016 was sold for 1,40,000.
Prepare the Plant Account and Depreciation Account for the years 2016-17 to 2018-19, when
depreciation was charged @ 20% p.a. on straight line basis and books are closed on 31st
March every year.​

Answer 1

Given:

Kumar Manglam purchased a plant for 6,00,000 on 1st April 2016. The addition was  made in the plant on 1st July 2017 for 3,00,000. On 1st January 2019, one-third of the  plant purchased on 1st April 2016 was sold for 1,40,000.

To Find:

Prepare the Plant Account and Depreciation Account for the years 2016-17 to 2018-19, when  depreciation was charged @ 20% p.a. on a straight-line basis and books are closed on 31st  March every year.​

Solution:

• Depreciation as of 31st March 2018 is calculated as follows, Machinery purchased on 1st April 2016 of 600000 = 600000*20%=120000
• Depreciation as of 31st March 2018 on new machinery purchased on 1st July 2017 is 300000*20%*(9/12)=45000
• Depreciation as of 31st March 2019 on machinery costing 160000 which is sold on 1st Jan 2019 is 160000*20%*(9/12)=24000
• Profit on sale of machinery shall be shown on the credit side of the p/l account

Hence the Plant and Depreciation account has been prepared and attached below,