Jae- Moker Industriee bought a machine for ₹1,00,000 on 1st July 2014 Depreciation was provided @ 10% by reducing balance mothod. On 31st Dec 2014, 1/5th of the machinery was damaged
due to accident and at could fetch only ₹5,000. It was decided to buy a new machine to reflect the damaged a cost of ₹30000 on 1 Jan 2021. Prepare Machinery Account for 3 years exsuring that accounts are closed on 31st March every year. rough scenario: 1st April 2018 -3,00,000 → 1 Oct 2021 -5,000 (Purchase -Sale)
due to accident and at could fetch only ₹5,000. It was decided to buy a new machine to reflect the damaged a cost of ₹30000 on 1 Jan 2021. Prepare Machinery Account for 3 years exsuring that accounts are closed on 31st March every year. rough scenario: 1st April 2018 -3,00,000 → 1 Oct 2021 -5,000 (Purchase -Sale)
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To prepare the Machinery Account for 3 years and ensure that accounts are closed on 31st March every year, we need to calculate depreciation annually and account for the damage and the new machine. Let's break this down year by year:
**Year 1: April 2014 - March 2015**
1. Purchase of the machine on 1st July 2014: ₹1,00,000.
2. Depreciation at 10% on ₹1,00,000 for 9 months (from July to March):
- Depreciation = ₹1,00,000 * 10% * 9/12 = ₹7,500.
The Machinery Account for Year 1 is as follows:
| Date | Particulars | Amount (₹) | Date | Particulars | Amount (₹) |
|-------------|------------------------------|--------------|-------------|------------------------------|--------------|
| 2014-07-01 | To Bank (Purchase) | 1,00,000 | | | |
| 2014-03-31 | By Depreciation | 7,500 | | | |
| | | | 2014-03-31 | To Depreciation | 7,500 |
| | | | | | |
**Year 2: April 2015 - March 2016**
3. Calculate depreciation at 10% on the remaining balance of ₹1,00,000 - ₹7,500 = ₹92,500.
- Depreciation = ₹92,500 * 10% = ₹9,250.
The Machinery Account for Year 2 is as follows:
| Date | Particulars | Amount (₹) | Date | Particulars | Amount (₹) |
|-------------|------------------------------|--------------|-------------|------------------------------|--------------|
| 2015-03-31 | By Depreciation | 9,250 | | | |
| | | | 2015-03-31 | To Depreciation | 9,250 |
**Year 3: April 2016 - March 2017**
4. Calculate depreciation at 10% on the remaining balance of ₹92,500 - ₹9,250 = ₹83,250.
- Depreciation = ₹83,250 * 10% = ₹8,325.
The Machinery Account for Year 3 is as follows:
| Date | Particulars | Amount (₹) | Date | Particulars | Amount (₹) |
|-------------|------------------------------|--------------|-------------|------------------------------|--------------|
| 2016-03-31 | By Depreciation | 8,325 | | | |
| | | | 2016-03-31 | To Depreciation | 8,325 |
Now, let's account for the damage and the new machine.
**Year 4: April 2017 - March 2018**
5. On 31st Dec 2017, 1/5th of the machinery was damaged and could fetch only ₹5,000. So, the machinery's value after the damage is 4/5th of the remaining balance, i.e., (4/5) * ₹83,250 = ₹66,600.
6. Calculate depreciation at 10% on ₹66,600 = ₹6,660.
The Machinery Account for Year 4 is as follows:
| Date | Particulars | Amount (₹) | Date | Particulars | Amount (₹) |
|-------------|------------------------------|--------------|-------------|------------------------------|--------------|
| 2017-03-31 | By Depreciation | 6,660 | | | |
| 2017-12-31 | By Accident (₹5,000) | 5,000 | | | |
| | | | 2017-03-31 | To Depreciation | 6,660 |
| | | | 2017-03-31 | To Machinery (Bal. c/d) | 59,990 |
**Year 5: April 2018 - March 2019**
7. Calculate depreciation at 10% on ₹59,990 = ₹5,999.
The Machinery Account for Year 5 is as follows:
| Date | Particulars | Amount (₹) | Date | Particulars | Amount (₹) |
|-------------|------------------------------|--------------|-------------|------------------------------|--------------|
| 2018-03-31 | By Depreciation | 5,999 | | | |
| | | | 2018-03-31 | To Depreciation | 5,999 |
**Year 6: April 2019 - March 2020**
8. Calculate depreciation at 10% on ₹53,991 = ₹5,399.
The Machinery Account for Year 6 is as follows:
| Date | Particulars | Amount (₹) | Date | Particulars
| Amount (₹) |
|-------------|------------------------------|--------------|-------------|------------------------------|--------------|
| 2019-03-31 | By Depreciation | 5,399 | | | |
| | | | 2019-03-31 | To Depreciation | 5,399 |
**Year 7: April 2020 - March 2021**
9. Calculate depreciation at 10% on ₹48,592 = ₹4,859.
The Machinery Account for Year 7 is as follows:
| Date | Particulars | Amount (₹) | Date | Particulars | Amount (₹) |
|-------------|------------------------------|--------------|-------------|------------------------------|--------------|
| 2020-03-31 | By Depreciation | 4,859 | | | |
| | | | 2020-03-31 | To Depreciation | 4,859 |
**Year 8: April 2021 - March 2022**
10. On 1st Jan 2021, a new machine was purchased for ₹30,000.
The Machinery Account for Year 8 is as follows:
| Date | Particulars | Amount (₹) | Date | Particulars | Amount (₹) |
|-------------|------------------------------|--------------|-------------|------------------------------|--------------|
| 2021-01-01 | To Bank (New Machine) | 30,000 | | | |
At this point, the accounts are up to date. Please note that the closing balances are carried forward to the next year's Machinery Account. The values presented here are simplified and may not include interest or tax considerations.
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