a company whose accounting year is a calender year , purchase on 1st april 2003 machine costing rs 30000 . It purchase machine on 1st october 2003 costing 20000 and on 1st july 2004 costing rs 10000 . On 1st january 2005 one-third of the machine installed on 1st april 2003 became obsolete and was sold for rs 3000. Show how machine account would appear in the books of the company. It being given that machine was depreciation by fixed instalment method at 10% p.a. what would be the valu of machine account on 1st january 2006?
Machinery Account | ||||||||
Dr. | Cr. | |||||||
Date | Particulars | Amount (Rs) | Date | Particulars | Amount (Rs) | |||
2003 |
|
| 2003 |
|
| |||
Apr 01 | Bank(M1) | 30,000 | Dec 31 | Depreciation | ||||
Oct 01 | Bank(M2) | 20,000 |
| M1 (9 months) | 2,250 | |||
|
|
|
| M2 (6 months) | 500 | 2,750 | ||
|
|
| Dec 31 | Balance c/d | 47,250 | |||
|
| 50,000 |
|
| 50,000 | |||
2004 |
|
| 2004 |
|
| |||
Jan 01 | Balance b/d | 47,250 | Dec 31 | Depreciation |
| |||
July 01 | Bank(M3) | 10,000 | M1 | 3,000 |
| |||
|
|
|
| M2 | 2,000 | |||
|
|
|
| M3(6 months) | 500 | 5,500 | ||
|
|
| Dec 31 | Balance c/d | 51,750 | |||
|
| 57,250 |
|
| 57,250 | |||
2005 |
|
| 2005 |
|
| |||
Jan 01 | Balance b/d | 51,750 | Jan 01 | Bank | 3,000 | |||
|
|
| Jan 01 | Loss on sale | 5,250 | |||
|
|
| Dec 31 | Depreciation |
| |||
|
|
|
| M1(remaining) | 2,000 |
| ||
|
|
|
| M2 | 2,000 |
| ||
|
|
|
| M3 | 1,000 | 5,000 | ||
|
|
| Dec 31 | Balance c/d | 38,500 | |||
|
| 51,750 |
|
| 51,750 | |||
2006 |
|
|
|
|
| |||
Jan 01 | Balance b/d | 38,500 |
|
|
| |||
Working Notes:
Particulars | Amount (Rs) |
Book Value of Machine Sold (M1) on Apr. 01, 03 | 10,000 |
Less: Depreciation | 1,750 |
Book Value of Machine Sold on Jan. 01, 2005 | 8,250 |
Less: Sale Value | 3,000 |
Loss on Sale of Machine I | 5,250 |
Depreciation on sold machinery = Rs 10,000 @ 10% for 9 months = Rs 750 (2003)
Rs 10,000 @ 10% = Rs 1,000 (2004)