On April 1st 2016 your company purchased an asset at a cost of 7 lacs and incurred Rs50000 on installation. The machinery being depreciated on WDV method every year. On March 31st 2019, the machinery was sold for Rs4.5 lacs.
a) Pass relevant journal entries to recognize the profit or loss and sale of asset
b) Calculate the profit or loss on disposal, Calculate Closing book value and depreciation for the years 2016-19
Answers
Answer:
Explanation:
date particulars amount amount
1/4/16 To bank 750000
750000
1/4/17 To
balance b/d 637500
637500
1/4/18 to
balance b/d 541875
541875
1/4/19 to
balance b/d 460594
to P/L A/C 58495
519089
date particulars amount amount
31/3/16 by
depreciation 112500
by balance c/d 637500
750000
31/3/17 by
depreciation 95625
by balance c/d 541875
637500
31/3/18 by
depreciation 81281
by balance c/d 460594
541875
31/3/19 by
Depreciation 69089
By bank 450000
519089
Relevant journal entry
Machinery A/C dr.. 750000
To, asset A/C 7500000
[being purchase of asset ]
Depreciation A/c Sr. 112500
To, machinery A/C 112500
[being machinery depreciated]
p/L A/C dr. 637500
to depreciation A/C 637500
[being depreciated amount transferred into P/L A/C ]