Savin & Co. purchased a machine for 1,00,000 on 1.4.2021 Another machine costing - 1,50,000 was purchased on 1.10.2022. On 31.3.2024 the machine…

CA Foundation · Accounting · MTP · September 2024
Savin & Co. purchased a machine for 1,00,000 on 1.4.2021 Another machine costing - 1,50,000 was purchased on 1.10.2022. On 31.3.2024 the machine purchased on 1.4.2021 was sold for 50,000. The company provides depreciation at 15% on Written Down Value Method. Prepare – (i) Machinery Account, (ii) Machinery Disposal Account and (iii) Provision for Depreciation Account.

Suggested Answer and Working Notes:

Savin & Co. Dr. Machinery Account Cr. Date Particulars Amount (₹) Date Particulars Amount (₹) 1.4.2021 To Bank A/c 1,00,000 31.3.2022 By Balance c/d 1,00,000 1,00,000 1,00,000 1.4.2022 To Balance b/d 1,00,000 1.10.2022 To Bank A/c 1,50,000 31.03.2023 By Balance c/d 2,50,000 2,50,000 2,50,000 1.4.2023 To Balance b/d 2,50,000 31.03.2024 By Machinery Disposal A/c 1,00,000 31.03.2024 By Balance c/d 1,50,000 2,50,000 2,50,000 1.4.2024 To Balance b/d 1,50,000 Dr. Provision for Depreciation Account Cr. Date Particulars Amount (₹) Date Particulars Amount (₹) 31.03.2022 To Balance c/d 15,000 31.03.2022 By Depreciation A/c 15,000 15,000 15,000 31.03.2023 To Balance c/d 39,000 1.4.2022 By Balance b/d 15,000 31.03.2023 By Depreciation A/c (₹ 12,750+11,250) 24,000 39,000 39,000 31.03.2024 To Machinery Disposal A/c [₹ 100000-61,413] 38,587 1.4.2023 By Balance b/d 39,000 31.03.2024 To Balance c/d 32,063 31.03.2024 By Depreciation A/c 20,813 31.03.2024 By Depreciation - Machinery disposed 10,837 70,650 70,650 1.4.2024 By Balance b/d 32,063 Dr. Machinery Disposal Account Cr. Date Particulars Amount (₹) Date Particulars Amount (₹) 31.03.2024 To Machinery A/c 1,00,000 31.03.2024 By Provision for Depreciation A/c 38,587 31.03.2024 By Bank A/c 50,000 31.03.2024 By Profit & Loss A/c (Loss on Sale) 11,413 1,00,000 1,00,000 Working Notes: 1. Depreciation for the machine purchased on 1.10.2022. For the year 2022-23 (used for6 months) = 1,50,000 x 15% x 6/12 = 11,250 For the year 2023-24 (used for full year) = 1,38,750 x 15% = 20,813 2. Depreciation for the machine purchased on 1.4.2021. Depreciation = 1,00,000 x 15% = 15,000 So, Depreciation for2nd year = 85,000 x 15% = 12,750 Depreciation for3rd year = 72,250 x 15% = 10,837

Topics: Depreciation and Amortisation

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