Question

Ram & Company, purchased Machinery costing ₹ 60,000 on 1st April 2016. They purchased further Machinery on 1st October 2017, costing ₹ 30,000, and on 1st July 2018, costing ₹ 20,000. On 1st Jan 2019, one-third of the Machinery, which was purchased on 1st April 2016, became obsolete and it was sold for ₹ 18,000. Company is charging depreciation at 10% p.a. on Written Down Value Method. Assume that, company account closes on 31st March every year. Prepare Observation chart.​

Answer 1

Machinery Account

Dr.

Cr.

Date Particulars Amount (₹) Date Particulars Amount (₹)

2015 2016

Apr. 01 Bank A/c (1,90,000 + 10,000) 2,00,000 Mar. 31 Depreciation A/c 25,000

Mar. 31 Balance c/d 1,75,000

2,00,000 2,00,000

2016 2017

Apr. 01 Balance b/d 1,75,000 Mar. 31 Depreciation A/c 25,000

Mar. 31 Balance c/d 1,50,000

1,75,000 1,75,000

2017 2018

Apr. 01 Balance b/d 1,50,000 Mar. 31 Depreciation A/c 25,000

Mar. 31 Balance c/d 1,25,000

1,50,000 1,50,000

2018 2019

Apr. 01 Balance b/d 1,25,000 Mar. 31 Depreciation A/c 25,000

Mar. 31 Balance c/d 1,00,000

1,25,000 1,25,000