Raja Textile Co. which closes its books on 31stMarch, purchased a machine on 1/4/2009 for Rs. 50000. On 1/10/2010, it purchased an additional machine for Rs. 30000. The part of the machine which was purchased on 1/4/2009 costing Rs.10000 was sold for Rs.3,600 on 30th sept.,2012. Prepare the machine account for 4 yrs, if the depreciation is provided at the rate of 10% p.a. on diminishing balance method.
The solution to your query is provided below:
Loss on Sale of Machinery = Balance of M1 Part 1 - Depreciation till Sep 30 - Sale Proceeds
= 7,290 - 365 - 3,600 = Rs 3,325
| Machinery Account | ||||||||||
| Dr. | Cr. | |||||||||
| Date | Particulars | Amount (Rs) |
Date | Particulars | Amount (Rs) |
|||||
| 2009 | 2010 | |||||||||
| Mar. 31 | Depreciation (1/5th of M1) | 1,000 | ||||||||
| Apr 01 | Bank A/c (M1) | 50,000 | Mar. 31 | Depreciation (4/5th of M1) | 4,000 | |||||
| Mar. 31 | Balance c/d | |||||||||
| Mar. 31 | M1 part 1 | 9,000 | ||||||||
| M1 part 2 | 36,000 | 45,000 | ||||||||
| 50,000 | 50,000 | |||||||||
| 2010 | 2011 | |||||||||
| Apr. 01 | Balance b/d | Mar. 31 | Depreciation A/c | |||||||
| M1 part 1 | 9,000 | M1 Part 1 | 900 | |||||||
| M1 part 2 | 36,000 | 45,000 | M1 Part 2 | 3,600 | ||||||
| Oct. 01 | Bank A/c (M2) | 30,000 | M2 | 1,500 | 6,000 | |||||
| Mar. 31 | Balance c/d | |||||||||
| M1 part 1 | 8,100 | |||||||||
| M1 part 2 | 32,400 | |||||||||
| M2 | 28,500 | 69,000 | ||||||||
| 75,000 | 75,000 | |||||||||
| 2011 | 2012 | |||||||||
| Apr. 01 | Balance b/d | Mar. 31 | Depreciation A/c | |||||||
| M1 part1 | 8,100 | M1 part 1 | 810 | |||||||
| M1 part2 | 32,400 | M1 part 2 | 3,240 | |||||||
| M2 | 28,500 | 69,000 | M2 | 2,850 | 6,900 | |||||
| Mar. 31 | Balance c/d | |||||||||
| M1 part1 | 7,290 | |||||||||
| M1 part2 | 29,160 | |||||||||
| M2 | 25,650 | 62,100 | ||||||||
| 69,000 | 69,000 | |||||||||
| 2012 | 2012 | |||||||||
| Apr. 01 | Balance c/d | Sep. 30 | Dep. A/c (M1 Part 1) | 365 | ||||||
| M1 part1 | 7,290 | Sep. 30 | Bank A/c | 3,600 | ||||||
| M1 part2 | 29,160 | Sep. 30 | Profit and Loss A/c (Loss on sale) | 3,325 | ||||||
| M2 | 25,650 | 62,100 | 2013 | |||||||
| Mar. 31 | Depreciation A/c | |||||||||
| M1 part2 | 2,916 | |||||||||
| M2 | 2,565 | 5,481 | ||||||||
| Mar. 31 | Balance c/d | |||||||||
| M1 part2 | 26,244 | |||||||||
| M2 | 23,085 | 49,329 | ||||||||
| 62,100 | 62,100 | |||||||||
Loss on Sale of Machinery = Balance of M1 Part 1 - Depreciation till Sep 30 - Sale Proceeds
= 7,290 - 365 - 3,600 = Rs 3,325