Q. On 1st July, 2012, A Co. Ltd. purchases second-hand machinery for Rs. 20,000 and spends Rs. 3,000 on reconditioning and installing it. On 1st January, 2013, the firm purchases new machinery worth Rs. 12,000. On 30th June, 2014, the machinery purchased on 1st January, 2013, was sold for 8,000 and on 1st July, 2014, a fresh plant was installed. Payment for this plant was to be made as follows:
1st July, 2014 Rs. 5,000
30th June, 2015 Rs. 6,000
30th June, 2016 Rs. 5,500
Payments in 2015 and 2016 include interest of Rs. 1,000 and Rs. 500 respectively.
The company writes off 10% p.a. on the original cost. The accounts are closed every year on 31st March. Show the Machinery Account for the year ended 31st March, 2015.
Hanspreet,
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