Question

on first October 2016,Ashwini purchased a machine for 200000 on credit installation expenses, 50000 paod by cheque . The estimated life is 10 years and its scrap value after 5 years will be 50000. Depreciation to be charged on straight line method. Show the journal entries and machinery account for first three years.​

Answer 1

Answer:

Find the total cost of the machine to 200000 + 50000 = 250000

Annual Depreciation = (200000+ 50000)-50000 /10 = 20000

Explanation:

Journal entry would be :

1) Machine a/c  Dr 250000

     To Bank a/c Cr 250000

2) Depreciation a/c Dr 20000

     To Machine a/c 20000

3) P& L a/c 20000

    To Machine a/c 20000

Machine A/c Ledger

2016  Bank a/c 250000

          To Depreciation a/c 20000

Balance c/d -  230000

2017  Bank a/c 230000

          To Depreciation a/c 20000

Balance c/d - 210000

2018   Balance b/d 210000