On April 01, 2010, Bajrang Marbles purchased a Machine for Rs. 1,80,000
and spent Rs. 10,000 on its carriage and Rs. 10,000 on its installation. It is
estimated that its working life is 10 years and after 10 years its scrap value
will be Rs. 20,000.
(a) Prepare Machine account and Depreciation account for the first four
years by providing depreciation on straight line method. Accounts are
closed on March 31st every year.
(b) Prepare Machine account, Depreciation account and Provision for
depreciation account (or accumulated depreciation account) for the first
four years by providing depreciation using straight line method accounts
are closed on March 31 every year.
Answers
Answer:
Explanation:
Calculation depreciation
= original cost - scrap value
Estimate years
= 1,80,000 +10000 + 10000 - 20000 / 10
= 1,80,000 / 10
= 18,000
Books of Bajrang marbles
To Bank 3,00,000 By Depreciation 18000
By Bal c/d 2,82000
-----------------------------------------------------------------------------
3,00,000 3,00,000
To Balance b/d 282000 By Depreciation 18000
By Bal c/d 264000
--------------------------------------------------------------------------------
282000 282000
To Balance b/d 264000 By Depreciation 18000
By Bal c/d 246000
----------------------------------------------------------------------------------------
264000 264000
To Balance b/d 246000 By Depreciation 18000
By Bal c/d 228000
-----------------------------------------------------------------------------------------------
246000 246000
To balance B/d 22800
DEPRECIATION ACCOUNT
To machinery A/c 18000 By P & L A/c 18000
To machinery A/c 18000 By P & L A/c 18000
To machinery A/c 18000 By P & L A/c 18000
To machinery A/c 18000 By P & L A/c 18000
To machinery A/c 18000 By P & L A/c 18000