Rohit Traders purchased machinery for Rs.60,000/- on 1st April 2016. The firm purchased another machinery for Rs.20,000/- on 1st October 2017. It sold the first machinery (purchased on 1st April 2016) for Rs.40,000/- on 30th Sept. 2018. The depreciation is charged @ 10% p.a. on straight line method. Prepare machinery account assuming that the books are closed on 31st March every year.
Answers
Answer:
Machinery Accounts
Date Particular Amount Date Particular Amount
01-04-2016 To Cash 60000 31-03-2017 By Depreciation($60000*10%) 6000
By Balance C/d 54000
Total 60000 Total 60000
01-04-2017 To Balance b/d 54000 31-03-2018 By Depreciation($60000*10%+$20000*10%*6/12) 7000
01-10-2017 To Cash 20000 31-03-2018 By Balance C/d 67000
Total 74000 Total 74000
01-04-2018 To Balance b/d 67000 30-09-2018 By Machinery sold account 45000
30-09-2018 By Depreciation($60000*10%*6/12) 3000
31-03-2019 By Depreciation($20000*10%) 2000
31-03-2019 By Balance C/d 17000
67000 Total 67000
Machinery sold Account
Date Particular Amount Date Particular Amount
30-09-2018 Machinery Account 45000 30-09-2018 By Cash 40000
By loss on sale of machinery 5000
Total 45000 45000
Book Value of Machinery sold on September 30th
Depreciation 2016-2017 6000
Depreciation 2017-2018 6000
Depreciation on Sept 2018 3000
Total Depreciation 15000
Book Value=($60000-$15000) 45000
Sales Price 40000
Loss on sale 5000
Explanation: