Question No 37 Chapter No 12

37. A Limited purchased a machine on 1st July 2017 for 3,00,000 and on 1st January 2019 bought another machinery for 2,00,000. On 1st August 2019 machine bought in 2017 was sold for 1,60,000. Another machine was bought for 1,50,000 on 1st October 2019. It was decided to provide depreciation @ 10% p.a. on written down value method assuming books are closed on 31st March each year. Prepare Machinery Account and Provision for depreciation account for 3 years.

## The solution of Question No 37 Chapter No 12: –

 Dr. Plant A/c Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount 1st Jan.2017 To Bank A/c 3,00,000 31st Dec2017 By Balance C/d 3,00,000 3,00,000 3,00,000 1st Jan.2018 To Balance b/f 3,00,000 1st Jan.2019 To Bank A/c 2,00,000 31st Dec2018 By Balance C/d 5,00,000 5,00,000 5,00,000 1st Jan 2019 To Balance b/f 5,00,000 1st Aug 2019 By Provision for Depreciation A/c 58,575 1st Oct.2019 To Bank A/c 1,50,000 1st Aug 2019 By Bank A/c 1,60,000 1st Aug 2019 By Profit & loss A/c 81,425 31st Mar 2019 By Balance C/d 3,50,000 6,50,000 6,50,000
 Dr. Provision for Depreciation  A/c Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount 31st Mar 2018 By Depreciation A/c 22,500 31stMar.2018 Balance c/d 22,500 22,500 22,500 31st Apr 2018 By Balance b/d 22,500 31st Mar.2018 Balance c/d 55,250 31st Mar 2019 By Depreciation A/c (27,750 + 5,000) 32,750 55,250 55,250 31stOct.2019 To Machine Disposal A/c 58,575 31st Apr 2019 By Balance b/d 55,250 1st Oct 2019 By Depreciation A/c (6 Months) 8,325 31stMar.2020 To Balance b/f 32,000 31st Mar.2020 By Depreciation A/c (19,500 +7,5000 27,000 90,575 90,575

Working Note:
Calculation of Profit or Loss on Sale M1

 Statement Showing the Profit and loss on the sale of Plant Particulars Amount Machinery Purchase on of Equipment as on 1st Jan. 2017 3,00,000 Less: Depreciation 58,575 Book value of asset as on 1st Oct, 2019 2,41,425 Sale Price of Machinery 1,60,000 Profit on the sale of the asset 81,425

Depreciation | Meaning | Methods | Examples

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