A firm purchased on 1st January, 2010 a second hand machinery for Rs 36,000 and spent Rs 4,000 - Accountancy - Depreciation Provisions and Reserves

Question

A firm purchased on 1st January, 2010 a second hand machinery for
Rs 36,000 and
spent Rs 4,000 on its installation
On 1st July in the same year, another machinery costing Rs 20,000
was purchased
On 1st July, 2012 machinery bought on 1st January, 2010 was sold
for Rs 12,000 and
a new machine was purchased for Rs 64,000 on the same date
Depreciation is
provided annually on 31st December @ 10% per annum on the written
down value
method Show the machinery account from 2010 to 2012

Neha Arora · Accepted Answer

Dear Student,

Machinery Account

Dr

Cr

Date
Particulars
Amount
(Rs)
Date
Particulars
Amount
(Rs)

2010

Jan 01
Bank A/c
40,000
Dec 31
Depreciation A/c

July 01
Bank A/c (M2)
20,000

M1
4,000

M2 (for 6 months)
1,000
5,000

Dec 31
Balance c/d

M1
36,000

M2
19,000
55,000

60,000

2011

Jan 01
Balance b/d

Dec 31
Depreciation A/c

M1
36,000

M1
3,600

M2
19,000
55,000

M2
1,900
5,500

Dec 31
Balance c/d

M1
32,400

M2
17,100
49,500

55,000

2012

Jan 01
Balance b/d

July 01
Depreciation A/c (on M1 for 6
months)
1,620

M1
32,400

Bank A/c (Sale of
M1)
12,000

M2
17,100
49,500

Profit and Loss A/c (Loss on
Sale)
18,780

July 01
Bank A/c (M3)
64,000
Dec 31
Depreciation on-

M2
1,710

M3 (for 6 months)
3,200
4,910

Dec 31
Balance c/d

M2
15,390

M3
60,800
76,190

1,13,500

Loss on sale = Book value - Sale value
Book value = Cost as on Jan 01, 2012 - Depreciation for 6 months =
32,400 - 1,620 = Rs 30,780
Sale value (given) = Rs 12,000
Loss = Rs 18,780

Machinery Account
Dr.						Cr.
Date	Particulars			Amount (Rs)	Date		Particulars		Amount (Rs)
2010					2010
Jan. 01	Bank A/c			40,000	Dec. 31		Depreciation A/c
July 01	Bank A/c (M2)			20,000			M1	4,000
							M2 (for 6 months)	1,000	5,000
					Dec. 31		Balance c/d
							M1	36,000
							M2	19,000	55,000
				60,000					60,000
2011					2011
Jan. 01	Balance b/d				Dec. 31		Depreciation A/c
	M1	36,000					M1	3,600
	M2	19,000		55,000			M2	1,900	5,500
					Dec. 31		Balance c/d
							M1	32,400
							M2	17,100	49,500
				55,000					55,000
2012					2012
Jan. 01	Balance b/d				July 01		Depreciation A/c (on M1 for 6 months)		1,620
	M1		32,400				Bank A/c (Sale of M1)		12,000
	M2		17,100	49,500			Profit and Loss A/c (Loss on Sale)		18,780
July 01	Bank A/c (M3)			64,000	Dec. 31		Depreciation on-
							M2	1,710
							M3 (for 6 months)	3,200	4,910
					Dec. 31		Balance c/d
							M2	15,390
							M3	60,800	76,190
				1,13,500					1,13,500