On 1st April, 2017, MRF Ltd. bought a machine for Rs.1,90,000 and spent Rs.10,000
for its installation. On 1st July, 2018, the company purchased another machine for
Rs.80,000 and spent Rs.20,000 for its transportation.On December 31st
, 2019, the company sold its first machine for Rs.1,00,000. On
the same day the company bought another machine for Rs.75,000. The company
charges depreciation @10% p.a on diminishing balances method. The company
closes its books on 31st March each year.
Prepare Machinery account and Depreciation account for 2017-18, 2018-19 and
2019-20.On December 31st
, 2019, the company sold its first machine for Rs.1,00,000. On
the same day the company bought another machine for Rs.75,000. The company
charges depreciation @10% p.a on diminishing balances method. The company
closes its books on 31st March each year.
Prepare Machinery account and Depreciation account for 2017-18, 2018-19 and
2019-20.
Answers
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2
Given:
Depreciation charged @10% p.a. on diminishing balances method. The company closes its books on 31st March each year.
M1 - Machinery bought on 1st April, 2017
M2 - Machinery bought on 1st July, 2018,
M3 - Machinery bought on 31st December, 2019
Sold M1 on 31st December, 2019 for 1,00,000
Working Notes:
Cost of M1 = 1,90,000 + 10,000 = 2,00,000
Cost of M2 = 80,000 + 20,000 = 1,00,000
Cost of M3 = 75,000
Explanation:
In the attached file Machinery A/c is made for 2017-18, 2018-19 and
2019-20.
Attachments:
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