A firm purchased machinery costing Rs 68,000 on 31st march 2008 and spent Rs 7,000 on its installation - Accountancy - Depreciation Provisions and Reserves

Question

A firm purchased machinery costing Rs 68,000 on 31st march 2008
and spent Rs 7,000 on its installation On 1st September 2010 1/3rd
of the machinery was damaged by fire and replacement was done on
the same day for the damaged part for Rs 20,000 The insurance
company admitted a claim of Rs 7,000 for the damaged part prepare
machinery account from 2008 to 2010 after charging depreciation
@20% by diminishing balance method Accounts are closed on 31st
December pls reply fast

Jayati Jawa · Accepted Answer

M1 Part1 = 1/3rd of Machinery =
13×75,000 = 25,000
M1 Part2 = Remaining portion of machinery = 2/3rd =
23×75,000 = 50,000

Machinery Account

Dr

Cr

Date
Particulars
Amount
(Rs)
Date
Particulars
Amount
(Rs)

2008

Dec 31
Depreciation (M1 Part 1)*
3,750

Mar 31
Bank A/c (M1)
75,000
Dec 31
Depreciation (M1 part 2)*
7,500

(68,000 + 7,000)

Dec 31
Balance c/d
M1 part 1

11,250

42,500
53,750

75,000

2009

Jan 01
Balance b/d

Dec 31
Depreciation A/c

M1 part 1
11,250

M1 Part 1
2,250

M1 part 2
42,500
53,750

M1 Part 2
8,500
10,750

Dec 31
Balance c/d

M1 part 1
9,000

M1 part 2
34,000
43,000

53,750

2010

Jan 01
Balance b/d

Sep 01
Depreciation A/c

M1 part1
9,000

M1 part 1
1,200

M1 part2
34,000
43,000
Sep 01
Insurance Claim A/c
7,000

Sep 01
Bank A/c (M2)
20,000
Sep 01
Profit and Loss A/c (Loss on
sale)
800

Dec 31
Depreciation A/c

M1 part2
6,800

M2
1,333
8,133

Dec 31
Balance c/d

M1 Part2
27,200

M2
18,667
35,867

63,000

*Depreciation is calculated for 9 months i e from April 01 to
Dec 31, 2008

Machinery Account
Dr.					Cr.
Date	Particulars			Amount (Rs)		Date	Particulars				Amount (Rs)
2008						2008
						Dec. 31	Depreciation (M1 Part 1)*				3,750
Mar. 31	Bank A/c (M1)			75,000		Dec. 31	Depreciation (M1 part 2)*				7,500
	(68,000 + 7,000)					Dec. 31	Balance c/d M1 part 1	11,250
								42,500			53,750
				75,000							75,000
2009						2009
Jan. 01	Balance b/d					Dec. 31	Depreciation A/c
	M1 part 1		11,250				M1 Part 1			2,250
	M1 part 2		42,500	53,750			M1 Part 2			8,500	10,750
						Dec. 31	Balance c/d
							M1 part 1		9,000
							M1 part 2		34,000		43,000
				53,750							53,750
2010						2010
Jan. 01	Balance b/d					Sep. 01	Depreciation A/c
	M1 part1	9,000					M1 part 1				1,200
	M1 part2	34,000		43,000		Sep. 01	Insurance Claim A/c				7,000
Sep 01	Bank A/c (M2)			20,000		Sep. 01	Profit and Loss A/c (Loss on sale)				800
						Dec. 31	Depreciation A/c
							M1 part2	6,800
							M2	1,333			8,133
						Dec. 31	Balance c/d
							M1 Part2	27,200
							M2	18,667			35,867
				63,000							63,000