On 1st January,2004, machinery was purchased by X for Rs. 50,000. On 1st July, 2005, additions were made to extent of Rs. 10,000. On 1st April, 2006 further additions were made to extent of Rs. 6400. On 30 th June, 2007 machinery , the original value of which was Rs. 8000 on 1st January, 2004. was sold for Rs. 6000. Depriciation is charged at 10% per annum on original cost.
Show machinery A/C for the years from 2004 to 2007 in books of X.X closes the books 31st December.
Machinery Account | ||||||||||
Dr. | Cr. | |||||||||
Date | Particulars | Amount Rs | Date | Particulars | Amount Rs | |||||
2004 | 2004 | |||||||||
Jan. 01 | Bank A/c (M1) | 50,000 | Dec. 31 | Depreciation (M1) | 5,000 | |||||
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| Dec. 31 | Balance c/d (M1) | 45,000 | |||||
|
| 45,000 |
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| 45,000 | |||||
2005 |
|
| 2005 |
|
| |||||
Jan.01 | Balance b/d (M1) | 45,000 | Dec. 31 | Depreciation: |
| |||||
Jul.01 | Bank A/c (M2) | 10,000 |
| M1 | 5,000 |
| ||||
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|
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| M2 (for 6 months) | 500 | 5,500 | ||||
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| Dec. 31 | Balance c/d |
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| M1 | 40,000 |
| ||||
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|
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| M2 | 9,500 | 49,500 | ||||
|
| 55,000 |
|
| 55,000 | |||||
2006 |
|
| 2006 |
|
| |||||
Jan.01 | Balance b/d |
| Dec. 31 | Depreciation |
| |||||
| M1 | 40,000 |
|
| M1 | 5,000 |
| |||
| M2 | 9,500 | 49,500 |
| M2 | 1,000 |
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| M3 (for 9 months) | 480 | 6,480 | ||||
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Apr.01 | Bank A/c (M3) | 6,400 | Dec. 31 | Balance c/d |
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| M1 | 35,000 |
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| M2 | 8,500 |
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| M3 | 5,920 | 49,420 | ||||
|
| 55,900 |
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| 55,900 | |||||
2007 |
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| 2007 |
|
| |||||
Jan.01 | Balance b/d |
| Jun.30 | Depreciation (WN1) | 400 | |||||
| M1 | 35,000 |
| Jun. 30 | Bank A/c (WN1) | 6,000 | ||||
| M2 | 8,500 |
| Dec. 31 | Depreciation |
| ||||
| M3 | 5,920 | 49,420 |
| M1 (WN2) | 4,200 |
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| M2 | 1,000 |
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| M3 | 640 | 5,840 | ||||
Jun.30 | Profit and Loss A/c (Profit) (WN1) | 800 |
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| Dec. 31 | Balance c/d |
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| M1 (WN3) | 25,200 |
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| M2 | 7,500 |
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| M3 | 5,280 | 37,980 | ||||
|
| 50,220 |
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| 50,220 | |||||
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Working Notes:
WN1Calculation of Profit or Loss on Sale of M1
Particulars | Amount (Rs) |
Value of sold M1 as on 01.01.2004 | 8,000 |
Less: Depreciation (for 2004) | (800) |
Value as on 01.01.2005 | 7,200 |
Less: Depreciation (for 2005) | (800) |
Value as on 01.01.2006 | 6,400 |
Less: Depreciation (for 2006) | (800) |
Value as on 01.01.2007 | 5,600 |
Less: Depreciation (for 6 months) | (400) |
Value as on 01.01.2007 | 5,200 |
Less: Sale Value | (6,000) |
Profit on Sale | 800 |
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|
WN2Calculation of Depreciation on remaining M1
Value of Remaining M1 (Rs 50,000 – Rs 8,000) = Rs 42,000
Depreciation (42,000 × 10%) = Rs 4,200
WN3Calculation of Value of Remaining M1as on 31.12.2007
Value of Remaining M1 = Total Value (as on 01.01.2007) – Sold M1 (as on 01.01.2007) – Depreciation on Renaming M1
= 35,000 – 5,600 – 4,200 = Rs 25,200