chest on 1st January 2006 certain machinery for rupees 1080000 and spend rupees 20000 on its installation on July 1st 2006 another machinery purchased for rupees 4 lakhs on first April 2007 they purchased another machine for rupees 2 lakhs on first October 2007 they sold machinery purchase on 1st January 2006 for rupees 8 lakhs and on the same date they purchase another machine for rupees 100000 depreciation was provided for annually on 31st December at 10% per annum on written down value method.
prepare machinery account depreciation account profit and loss account and also show your working note or profit & loss account.
prepare machinery account depreciation account profit and loss account and also show your working note or profit & loss account.
Answers & Comments
Answer:
Sure, I can help you with that. Here is the machinery account, depreciation account, profit and loss account, and working note:
**Machinery Account**
| Date | Particulars | Debit | Credit | Balance |
|---|---|---|---|---|
| 01-Jan-2006 | Machinery (10,80,000 + 20,000) | 11,00,000 | - | 11,00,000 |
| 01-Jul-2006 | Machinery | 4,00,000 | - | 15,00,000 |
| 01-Apr-2007 | Machinery | 2,00,000 | - | 17,00,000 |
| 01-Oct-2007 | Machinery (10,80,000 - depreciation) | 8,80,000 | - | 8,20,000 |
| 01-Oct-2007 | Machinery | 1,00,000 | - | 9,20,000 |
**Depreciation Account**
| Date | Particulars | Debit | Credit |
|---|---|---|---|
| 31-Dec-2006 | Machinery (11,00,000 * 10/100) | 1,10,000 | - |
| 31-Dec-2007 | Machinery (15,00,000 * 10/100) | 1,50,000 | - |
| 31-Dec-2008 | Machinery (8,20,000 * 10/100) | 82,000 | - |
**Profit and Loss Account**
| Date | Particulars | Debit | Credit |
|---|---|---|---|
| 31-Dec-2006 | Depreciation | 1,10,000 | - |
| 31-Dec-2007 | Depreciation | 1,50,000 | - |
| 31-Dec-2008 | Depreciation | 82,000 | - |
**Working Note**
* Machinery sold on 01-Oct-2007:
* Cost = 10,80,000
* Depreciation = (1,10,000 + 1,50,000) = 2,60,000
* Book value = 10,80,000 - 2,60,000 = 8,20,000
* Sale price = 8,00,000
* Loss on sale = 8,20,000 - 8,00,000 = 20,000
I hope this helps!
Let me know if you have any other questions.