Question

Shubhangi Trading Company of Dombivli purchased machinery for rupees 86000 on 1st Jan 2016 and immediately spend rupees 4000 on its fixation and erection on 1st October 2016 additional machinery costing rupees 40000 was purchased on 1st October 2017 the machinery purchased on 1st Jan 2016 became obsolete and was sold for Rs 70,000 on 1st July 2017 the new machine was also purchased for rupees 45000 depreciation was provided annually on 31st March @ 12% per annum on Fixed installment method prepare machinery account for 3 years and pass journal entries for 3rd year that is 2017-2018

Answer 1

Answer:

Hope this helps you : )

Answer 2

machine account

Explanation:

we create machine a/c in this Question

we very well know some basic rules for creating machine A/C

Increase in Asset (Debit)

Decrease in Asset (Credit)

Machine is Asset

we can use above rule and create machine a/c very easily

machine is asset

the opening balance if machine is debit

the closing balance of machine is credit

if we purchased machine, machine will debit

if we sale machine , machine will credit

loss on sale of machine will be debit because it decreased value of machine

we give performa of machine a/c in attachment  

Working Note:

For Machine 1

Cost on 1 Jan. 2016 = 90000

Less: Depreciation  = 2700

  For three months

                                = 87300

Less: Depreciation = 10800

for whole year

Cost on 1st April 2017 = 76500

For Machine 2

Cost on 1 oct. 2016 = 40000

Less: Depreciation  = 2400

  For Six months

                                =37600

Less: Depreciation = 4800

for whole year

Cost on 31 march = 32800

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