on 1 07 2011 mr radhakrishna purchased a second hand machineryfor rs 80000 and spent rs 16000 on reconditioning and - Accountancy - Depreciation Provisions and Reserves

Question

on 1 07 2011 mr radhakrishna purchased a second hand machineryfor
rs 80000 and spent rs 16000 on reconditioning and installingit on
01 01 2012 he had purchased new machineryworth rs 60000 on 30 06
2013,the machinery which was purchased on 01 02 2012 was sold for
rs 48000 and on 01 07 2013 fresh machinery was acquired at a cost
rs 64000 he writes off depreciation at 10% on original cost method
the accounts are closed every year on 31st march show the machinery
account and depreciation account for three years ending 31 03 2014

Manisha Arora · Accepted Answer

Dear Student,
Welcome to meritnation com We appreciate your effort for bringing
your need to our notice
However, the solution to your this query is given below

Machinery Account

Dr
Cr

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

2011

July 01
Bank A/c (M1)
96,000
Mar 31
Depreciation A/c (M1)

(80,000 + 16,000)

M1(for 9 months)
7,200

2012

2012
M2 (for 3 months)
1,500
8,700

Jan 01
Bank A/c (M2)
60,000
Mar 31
Balance c/d

M1
88,800

M2
58,500
1,47,300

1,56,000

2012

2013

Apr 01
Balance b/d

Mar 31
Depreciation A/c

M1
88,800

M1
9,600

M2
58,500
1,47,300

M2
6,000
15,600

Mar 31
Balance c/d

M1
79,200

M2
52,500
1,31,700

1,47,300

2013

Apr 01
Balance b/d

June 30
Depreciation A/c (on M1 for 3
months)
2,400

M1
79,200

Bank A/c (Sale of
M1)
48,000

M2
52,500
1,31,700

Profit and Loss A/c (Loss on
Sale)
28,800

July 01
Bank A/c (M3)
64,000
2014

Mar 31
Depreciation on:

M2
6,000

M3
4,800
10,800

Mar 31
Balance c/d

M2
46,500

M3
59,200
1,05,700

1,95,700

Depreciation
Account

Dr
Cr

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

2012

Mar 31
Machinery A/c
8,700
Mar 31
Profit and Loss A/c
8,700

8,700

2013

Mar 31
Machinery A/c
15,600
Mar 31
Profit and Loss A/c
15,600

15,600

2014

Mar 31
Machinery A/c
(10,800 + 2,400)
13,200
Mar 31
Profit and Loss A/c
13,200

13,200

Working
Notes: Calculation of Profit or Loss on
Sale

Particulars
Amount

Value of M1 as on Apr 01,
2013
79,200

Less: Depreciation for 3 months
2,400

Value of M1 as on June 30,
2013
76,800

Less: Sale Value
48,000

Loss on Sale
28,800

Depreciation Account
Dr.				Cr.
Date	Particulars	Amount (Rs)	Date		Particulars	Amount (Rs)
2012			2012
Mar. 31	Machinery A/c	8,700	Mar. 31		Profit and Loss A/c	8,700
		8,700				8,700
2013			2013
Mar. 31	Machinery A/c	15,600	Mar. 31		Profit and Loss A/c	15,600
		15,600				15,600
2014			2014
Mar. 31	Machinery A/c (10,800 + 2,400)	13,200	Mar. 31		Profit and Loss A/c	13,200
		13,200				13,200

Particulars	Amount
Value of M1 as on Apr. 01, 2013	79,200
Less: Depreciation for 3 months	2,400
Value of M1 as on June 30, 2013	76,800
Less: Sale Value	48,000
Loss on Sale	28,800

Machinery Account
Dr.					Cr.
Date	Particulars		Amount (Rs)	Date		Particulars		Amount (Rs)
2011				2011
July 01	Bank A/c (M1)		96,000	Mar. 31		Depreciation A/c (M1)
	(80,000 + 16,000)					M1(for 9 months)	7,200
2012				2012		M2 (for 3 months)	1,500	8,700
Jan. 01	Bank A/c (M2)		60,000	Mar. 31		Balance c/d
						M1	88,800
						M2	58,500	1,47,300
			1,56,000					1,56,000
2012				2013
Apr. 01	Balance b/d			Mar. 31		Depreciation A/c
	M1	88,800				M1	9,600
	M2	58,500	1,47,300			M2	6,000	15,600
				Mar. 31		Balance c/d
						M1	79,200
						M2	52,500	1,31,700
			1,47,300					1,47,300
2013				2013
Apr. 01	Balance b/d			June 30		Depreciation A/c (on M1 for 3 months)		2,400
	M1	79,200				Bank A/c (Sale of M1)		48,000
	M2	52,500	1,31,700			Profit and Loss A/c (Loss on Sale)		28,800
July 01	Bank A/c (M3)		64,000	2014
				Mar. 31		Depreciation on:
						M2	6,000
						M3	4,800	10,800
				Mar. 31		Balance c/d
						M2	46,500
						M3	59,200	1,05,700
			1,95,700					1,95,700