S Chand & Associates purchased a machine for ₹ 3,00,000 on 1.1.2021 Another machine costing 4,50,000 was purchased on 1.7.2022. On 31.12.2023 the m...

Question

S Chand & Associates purchased a machine for ₹ 3,00,000 on 1.1.2021 Another machine costing 4,50,000 was purchased on 1.7.2022. On 31.12.2023 the machine purchased on 1.1.2021 was sold for 1,50,000. The company provides depreciation at 15% on Written Down Value Method. The company closes its accounts on 31st December every year. Prepare - (i) Machinery Account, (ii) Machinery Disposal Account, and (iii) Provision for Depreciation Account. [MTP Jan. 2025]

Accepted Answer

Answer Solution: S Chand & Associates Machinery Account | Date | Particulars | Amount (₹) | Date | Particulars | Amount (₹) | | :--- | :--- | ---: | :--- | :--- | ---: | | 1.1.2021 | To Bank A/c | 3,00,000 | 31.12.2021 | By Balance c/d | 3,00,000 | | | TOTAL | 3,00,000 | | TOTAL | 3,00,000 | | 1.1.2022 1.7.2022 | To Balance b/d To Bank A/c | 3,00,000 4,50,000 | 31.12.2022 | By Balance c/d | 7,50,000 | | | TOTAL | 7,50,000 | | TOTAL | 7,50,000 | | 1.1.2023 | To Balance b/d | 7,50,000 | 31.12.2023 | By Machinery Disposal A/c By Balance c/d | 3,00,000 4,50,000 | | | TOTAL | 7,50,000 | | TOTAL | 7,50,000 | | 1.1.2024 | To Balance b/d | 4,50,000 | | | | Provision for Depreciation Account A/c | Date | Particulars | Amount (₹) | Date | Particulars | Amount (₹) | | :--- | :--- | ---: | :--- | :--- | ---: | | 31.12.2021 | To Balance c/d | 45,000 | 31.12.2021 | By Depreciation A/c | 45,000 | | | TOTAL | 45,000 | | TOTAL | 45,000 | | 31.12.2022 | To Balance c/d | 1,17,000 | 1.1.2022 31.12.2022 | By Balance b/d By Depreciation A/c ( 38,250 + 33,750 ) | 45,000 72,000 | | | TOTAL | 1,17,000 | | TOTAL | 1,17,000 | | 31.12.2023 | To Machinery Disposal A/c To Balance c/d | 1,15,762 96,188 | 1.1.2023 31.12.2023 | By Balance b/d By Depreciation A/c (WN 1) By Depreciation on machinery sold (WN 2) | 1,17,000 62,438 32,512 | | | TOTAL | 2,11,950 | | TOTAL | 2,11,950 | | | | | 1.1.2024 | By Balance b/d | 96,188 | Machinery Disposal Account | Date | Particulars | Amount (₹) | Date | Particulars | Amount (₹) | | :--- | :--- | ---: | :--- | :--- | ---: | | 31.12.23 | To Machinery A/c | 3,00,000 | 31.12.23 | By Provision for Depreciation A/c By Bank A/c By Profit & Loss A/c (Loss on Sale) | 1,15,762 1,50,000 34,238 | | | TOTAL | 3,00,000 | | TOTAL | 3,00,000 | Working Notes: 1. Depreciation for the machine purchased on 1.7.2022: - For the year 2022 (Used for 6 months) = 4,50,000 × 15% × 6/12 = 33,750 - For the year 2023 (Used for full year) = (4,50,000 - 33,750) × 15% = 4,16,250 × 15% = 62,438 2. Depreciation for the machine purchased on 1.1.2021: - Depreciation for the year 2021 = 3,00,000 × 15% = 45,000 - Depreciation for the year 2022 = (3,00,000 - 45,000) × 15% = 2,55,000 × 15% = 38,250 - Depreciation for the year 2023 = (2,55,000 - 38,250) × 15% = 2,16,750 × 15% = 32,512

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