Question 32.
Following balances appear in the books of M/s. Amrit as on 1st April, 2017:
2017 1st April
Machinery A/c – ₹ 60,000
Provision for Depreciation A/c – ₹ 36,000
On 1st April, 2017, they decided to dispose off a machinery for ₹ 8,400 which was purchased on 1st April, 2013 for ₹ 16,000.
You are required to prepare the Machinery A/c, Provision for Depreciation A/c and Machinery Disposal A/c for the year ended 31st March, 2018. Depreciation was charged at 10% on Cost following SLM.
Answers
Answer:
Explanation:
MACHINERY DISPOSAL ACCOUNT
To Machinery A/c 16000 By provision for depreciation 6400
By Bank 8400
By Profit & loss A/c 1200
-----------------------------------------------------------------------------------------------------------
16000 16000
Working Notes:
original cost of machinery on April 01 ,2013 16000
Less : Accumalated Depreciation (1600 *4) (6400)
Book value of Machine 1 on April 2017 9600
Less sale value (8400)
------------------------------------------------------------------------------------------------------
Loss on sale 1200