Question 1:

On 1st April, 2007, a limited company purchased a Machine for ₹ 1, 90,000 and spent ₹ 10,000 on its installation. At the date of
purchase, it was estimated that the scrap value of the machine would be ₹ 50,000 at the end of sixth year.
Give Machine Account and Depreciation A/c in the books of the Company for 4 years after providing depreciation by Fixed
Installment Method. The books are closed on 31st March every year.
ANSWER:
Machinery Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2007 2008
Apr. 01 Bank A/c 2,00,000 Mar. 31 Depreciation A/c 25,000
(1,90,000 + 10,000)
Mar. 31 Balance c/d 1,75,000
2,00,000 2,00,000
2008 2009
Apr. 01 Balance b/d 1,75,000 Mar. 31 Depreciation A/c 25,000
Mar. 31 Balance c/d 1,50,000
1,75,000 1,75,000
2009 2010
Apr. 01 Balance b/d 1,50,000 Mar. 31 Depreciation A/c 25,000
 Mar. 31 Balance c/d 1,25,000
1,50,000 1,50,000
2010 2011
Apr. 01 Balance b/d 1,25,000 Mar. 31 Depreciation A/c 25,000
Mar. 31 Balance c/d 1,00,000
1,25,000 1,25,000

Depreciation Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2008 2008
Mar. 31 Machinery A/c 25,000 Mar. 31 Profit and Loss A/c 25,000
25,000 25,000
2009 2009
Mar. 31 Machinery A/c 25,000 Mar. 31 Profit and Loss A/c 25,000
25,000 25,000
2010 2010
Mar. 31 Machinery A/c 25,000 Mar. 31 Profit and Loss A/c 25,000
25,000 25,000
 2011 2011
Mar. 31 Machinery A/c 25,000 Mar. 31 Profit and Loss A/c 25,000
25,000 25,000

Question 2:
A Ltd. purchased a machine for ₹ 5, 00,000 on 1st April, 2012. Further additions were made on 1st October 2012 and on 1st
July 2013 for ₹ 4, 00,000 and ₹ 3, 00,000 respectively. On 1st January, 2015, 1st machine was sold for ₹ 2, 85,000 and new
machine was purchased for ₹ 6, 00,000.
Prepare Machine A/c for three years ending 31st March, 2015 if depreciation is to be charged @ 10% p.a. on straight line basis.
ANSWER:

Machinery Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2012 2013
Apr. Bank A/c (M1) 5,00,000 Mar. 31 Depreciation A/c (M1) 50,000
01
Oct.01 Bank A/c (M2) 4,00,000 Depreciation A/c (M2) 20,000
Mar. 31 Balance c/d
M1 4,50,000
 M2 3,80,000 8,30,000
9,00,000 9,00,000
2013 2014
Apr. Balance b/d Mar. 31 Depreciation A/c
01
M1 4,50,000 M1 50,000

M2 3,80,000 8,30,000 M2 40,000

Jul.01 Bank A/c (M3) 3,00,000 M3 22,500 1,12,500

Mar. 31 Balance c/d
M1 4,00,000
M2 3,40,000
M3 2,77,500 10,17,500
11,30,000 11,30,000
2014 2015
Apr. Balance b/d Jan.01 Depreciation A/c (on M1 for 9 37,500
01 months)
M1 4,00,000 Bank A/c (Sale of M1) 2,85,000
M2 3,40,000 Profit and Loss A/c (Loss on 77,500
Sale)
M3 2,77,500 10,17,500 Mar. 31 Depreciation on-
 2015 M2 40,000
Jan.01 Bank A/c (M4) 6,00,000 M3 30,000
M4 15,000 85,000
Mar. 31 Balance c/d
M2 3,00,000
M3 2,47,500
M4 5,85,000 11,32,500
16,17,500 16,17,500

Question 3:
On 1st January, 2006, A Ltd. purchased a machine for ₹ 2, 40,000 and spent ₹ 10,000 on its erection. On 1st July, 2006 an
additional machinery costing ₹ 1, 00,000 was purchased. On 1st July, 2008 the machine purchased on 1st January, 2006 was
sold for ₹ 1, 43,000 and on the same date, a new machine was purchased at a cost of ₹ 2,00,000.
Show the Machinery Account for the first three calendar years after charging depreciation at 5% by the Straight Line Method.
ANSWER:
Machinery Account
Dr. Cr.

Date Amount Amount

Particulars Date Particulars
(Rs) (Rs)
2006 2006
Jan. 01 Bank A/c (M1) 2,50,000 Dec. 31 Depreciation A/c
(2,40,000 + 10,000)
 2011 M1 12,500
July 01 Bank A/c (M2) 1,00,000 M2 (for 6 months) 2,500 15,000
Balance c/d
M1 2,37,500
M2 97,500 3,35,000
3,50,000 3,50,000
2007 2007
Jan. 01 Balance b/d Dec. 31 Depreciation A/c
M1 2,37,500 M1 12,500
M2 97,500 3,35,000 M2 5,000 17,500
Balance c/d
M1 2,25,000
M2 92,500 3,17,500
3,35,000 3,35,000
2008 2008
Jan. 01 Balance b/d July 01 Depreciation A/c (M1) 6,250
M1 2,25,000 Bank A/c (Sale of M1 ) 1,43,000
M2 92,500 3,17,500 Profit and Loss A/c 75,750
(Loss on Sale of M1)
July 01 Bank A/c (M3) 2,00,000 Dec. 31 Depreciation A/c
M2 5,000
 M3 (for 6 months) 5,000 10,000
Balance c/d
M2 87,500
M3 1,95,000 2,82,500
5,17,500 5,17,500

Working Note: Calculation of Profit or Loss on Sale of M1

Particulars Amount
Value of Machinery on Jan. 01, 2008 2,25,000
Less: Depreciation for 6 months 6,250
Value of Machinery on July 01, 2008 28,750
Less: Sale Value 1,43,000
Loss on Sale 75,750

Question 4:
A company purchased on 1st April, 2009, machinery for ₹ 80,000. On 1st October, 2010, it purchased another machine for ₹
50,000 and on 1st October, 2011, it sold off the first machine purchased in 2009 for ₹ 23,000. Depreciation was provided on the
machinery at the rate of 20% p.a. on the original cost annually. Give the Machinery Account for four years commencing from 1st
April, 2009. Accounts are closed on 31st March every year.
ANSWER:
Machinery Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2009 2010
Apr. 01 Bank A/c (M1) 80,000 Mar. 31 Depreciation A/c 16,000
Mar. 31 Balance c/d 64,000
80,000 80,000
2010 2011
Apr. 01 Balance b/d 64,000 Mar. 31 Depreciation A/c
Oct. 01 Bank A/c (M2) 50,000 M1 16,000
M2 (for 6 months) 5,000 21,000
Mar. 31 Balance c/d
M1 48,000
M2 45,000 93,000
1,14,000 1,14,000
2011 2011
Apr. 01 Balance b/d Oct. 01 Depreciation A/c (M1) 8,000
M1 48,000 Bank A/c (Sale of M1) 23,000
M2 45,000 93,000 Profit and Loss A/c (Loss on Sale of M1) 17,000
 2012
Mar. 31 Depreciation A/c 10,000
Balance c/d 35,000
93,000 93,000
2012 2013
Apr. 01 Balance b/d 35,000 Mar. 31 Depreciation A/c 10,000
Mar. 31 Balance c/d 25,000
35,000 35,000

Working Note: Calculation of Profit or Loss on Sale of M1

Particulars Amount
Value of Machinery on Apr. 01, 2011 48,000
Less: Depreciation for 6 months 8,000
Value of Machinery on Oct. 01, 2011 40,000
Less: Sale Value 23,000
Loss on Sale 17,000

Question 5:
Bhushan & Company purchased Machinery on 1st April, 2009, for ₹ 54,000 and spent ₹ 6,000 on its installation. On 1st
December, 2010, it purchased another machine for ₹ 30,000. On 30th June 2011, the first machine purchased on 1st April, 2009,
is sold for ₹ 36,000 and on the same date it purchased new machinery for ₹ 80,000. On December 1, 2012, the second machine
(purchased on December 1, 2010) was also sold off for ₹ 26,000. Depreciation was provided on machinery @ 10% p.a. on Original
Cost Method annually o 31st March. Give the machinery account for four years.
ANSWER:
Machinery Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2009 2010
Apr. 01 Bank A/c (M1) (54,000 + 6,000) 60,000 Mar. 31 Depreciation A/c 6,000
Mar. 31 Balance c/d 54,000
60,000 60,000
2010 2011
Apr. 01 Balance b/d 54,000 Mar. 31 Depreciation A/c
Dec. 01 Bank A/c (M2) 30,000 M1 6,000
M2 (for 4 months) 1,000 7,000
Mar. 31 Balance c/d
M1 48,000
M2 29,000 77,000
84,000 84,000
2011 2011
Apr. 01 Balance b/d June 30 Depreciation A/c (M1) 1,500
 M1 48,000 Bank A/c (Sale of M1) 36,000
M2 29,000 77,000 Profit and Loss A/c (Loss on Sale 10,500
of M1)
June Bank A/c (M3) 80,000 2012
30
Mar. 31 Depreciation A/c
M2 3,000
M3 (for 9 months) 6,000 9,000
Balance c/d
M2 26,000
M3 74,000 1,00,000
1,57,000 1,57,000
2012 2012
Apr. 01 Bank A/c Dec. 01 Depreciation A/c (M2) 2,000
M2 26,000 Bank A/c (Sale of M2) 26,000
M3 74,000 1,00,000 2013
Dec. 01 Profit and Loss A/c (Profit on sale of M2) 2,000 Mar. 31 Depreciation A/c (M3) 8,000
Balance c/d 66,000
1,02,000 1,02,000
Working Notes:
WN1: Calculation of Profit or Loss on Sale on M1
Particulars Amount
Value of Machinery on Apr. 01, 2011 48,000
Less: Depreciation for 3 months 1,500
Value of Machinery on June 30, 2011 46,500
Less: Sale Value 36,000
Loss on Sale 10,500

WN2: Calculation of Profit or Loss on Sale of M2

Particulars Amount
Value of Machinery on Apr. 01, 2012 26,000
Less: Depreciation for 8 months 2,000
Value of Machinery on Dec. 01, 2012 24,000
Less: Sale Value 26,000
Profit on Sale 2,000
Question 6:
On 1st October, 2009, Raj & Co. purchased machinery worth ₹ 40,000. On 1st October, 2011, it buys additional machinery
worth ₹ 10,000. On 30th September, 2012, half of the machinery purchased on 1st Oct., 2009, is sold for ₹ 8,200. The company
writes off 10 per cent p.a. on the original cost. The accounts are closed every year on 31st March.
Show the Machinery Account for four years.
ANSWER:
Machinery Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2009 2010
Oct. 01 Bank Mar. 31 Depreciation A/c
A/c
M1 20,000 M1 (for 6 months) 1,000
M2 20,000 40,000 M2 (for 6 months) 1,000 2,000
Balance c/d
M1 19,000
M2 19,000 38,000
40,000 40,000
2010 2011
Apr. 01 Balance b/d Mar. 31 Depreciation A/c
M1 19,000 M1 2,000
 M2 19,000 38,000 M2 2,000 4,000
Balance c/d
M1 17,000
M2 17,000 34,000
38,000 38,000
2011 2012
Apr. 01 Balance b/d Mar. 31 Depreciation A/c
M1 17,000 M1 2,000
M2 17,000 34,000 M2 2,000
Oct. 01 Bank A/c (M3) 10,000 M3 (for 6 months) 500 4,500
Mar. 31 Balance c/d
M1 15,000
M2 15,000
M3 9,500 39,500
44,000 44,000
2012 2012
Apr. 01 Balance b/d Sept. 30 Depreciation A/c (M1) 1,000
M1 15,000 Bank A/c (Sale of M1) 8,200
M2 15,000 Profit and Loss A/c (Loss on Sale 5,800
of M1)
M3 9,500 39,500 2013
 Mar.31 Depreciation A/c
M2 2,000
M3 1,000 3,000
Balance c/d
M2 13,000
M3 8,500 21,500
39,500 39,500

Working Note: Calculation of Profit or Loss on Sale of M1

Particulars Amount
Value of Machinery on Apr. 01, 2012 15,000
Less: Depreciation for 6 months 1,000
Value of Machinery Sept. 30, 2012 14,000
Less: Sale Value 8,200
Loss on Sale 5,800

Note: In order to make easy calculation machinery purchased on October 01, 2009 has been divided into two parts i.e. M1 and
M2. Thus, M1 represents the first part i.e. sold for Rs 8,200. M2 represents the second part, which remains in the business
Question 7:
On 1st April, 2010, Plant and Machinery was purchased for ₹ 1, 20,000. New machinery was purchased on 1st Oct., 2010, for ₹
50,000 and on 1st July, 2011, for ₹ 25,000. On 1st January, 2013, a machinery of the original value of ₹ 20,000 which was
included in the machinery purchased on 1st April, 2010, was sold for ₹ 6,000. Prepare Plant & Machinery A/c for three years
after providing depreciation at 10% p.a. on Straight Line Method. Accounts are closed on 31st March every year.
ANSWER:
Plant & Machinery Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2010 2011
Apr. 01 Bank Mar. 31 Depreciation A/c
A/c
M1 20,000 M1 2,000
M2 1,00,000 1,20,000 M2 10,000
Oct. 01 Bank A/c (M3) 50,000 M3 (for 6 months) 2,500 14,500
Mar. 31 Balance c/d
M1 18,000
M2 90,000
M3 47,500 1,55,500
1,70,000 1,70,000
2011 2012
Apr. 01 Balance b/d Mar. 31 Depreciation A/c
 M1 18,000 M1 2,000
M2 90,000 M2 10,000
M3 47,500 1,55,500 M3 5,000
July 01 Bank A/c (M4) 25,000 M4 (for 9 months) 1,875 18,875
Mar. 31 Balance c/d
M1 16,000
M2 80,000
M3 42,500
M4 23,125 1,61,625
1,80,500 1,80,500
2012 2013
Apr.01 Balance b/d Jan. 01 Depreciation A/c (M1) 1,500
M1 16,000 Bank A/c (Sale of M1) 6,000
M2 80,000 Profit and Loss A/c (Loss on 8,500
Sale of M1)
M3 42,500 Mar. 31 Depreciation A/c
M4 23,125 1,61,625 M2 10,000
M3 5,000
M4 2,500 17,500
Mar. 31 Balance c/d
M2 70,000
M3 37,500
 M4 20,625 1,28,125
1,61,625 1,61,625

Working Note: Calculation of Profit or Loss on Sale of M1

Particulars Amount
Value of Machinery on Apr. 01, 2012 16,000
Less: Depreciation for 9 months 1,500
Value of Machinery on Jan.01, 2013 14,500
Less: Sale Value 6,000
Loss on Sale 8,500

Note: In order to make easy calculation plant and machinery purchased on April 01, 2010 has been divided into two parts i.e.
M1 and M2. Thus, M1: Rs 20,000 (sold for Rs 6,000). M2: Rs 1, 00,000 (remains in the business)

Question 8:
From the following transactions of a concern, prepare Machinery Account for the year ending 31st March, 2013:-
2012
April 1 : Purchased second-hand machinery for ₹ 40,000.
April 1 : Spent ₹ 10,000 on repairs for making it serviceable.
 Sept. 30 : Purchased additional new machinery for ₹ 20,000.
Dec. 31 : Repairs and renewals of machinery ₹ 2,000.
2013
March 31 : Depreciate the machinery at 10% p.a.
ANSWER:
Machinery Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2012 2013
Apr. 01 Bank A/c (M1) (40,000 + 50,000 Mar. 31 Depreciation A/c
10,000)
Sept.30 Bank A/c (M2) 20,000 M1 5,000
M2 (for 6 months) 1,000 6,000
Balance c/d
M1 45,000
M2 19,000 64,000
70,000 70,000

Note: Repair charges of Rs 2,000 are categorized under revenue expenditure because these are incurred on December 31, 2012
but machinery has been purchased on September 30, 2012.

Question 9:
A plant is purchased for ₹ 60,000 on 1st April, 2009. It is estimated that the residual value of this plant at the end of its
working life of 10 years will be ₹ 20,920. Depreciation is to be provided at 10% p.a. on diminishing balance method.
You are required to show the Plant Account for 4 years, assuming that the books are closed on 31st March every year.
ANSWER:
Plant Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2009 2010
Apr. 01 Bank A/c 60,000 Mar. 31 Depreciation A/c 6,000
Mar. 31 Balance c/d 54,000
60,000 60,000
2010 2011
Apr. 01 Balance b/d 54,000 Mar. 31 Depreciation A/c 5,400
Mar. 31 Balance c/d 48,600
54,000 54,000
2011 2012
Apr. 01 Balance b/d 48,600 Mar. 31 Depreciation A/c 4,860
Mar. 31 Balance c/d 43,740
48,600 48,600
2012 2013
Apr. 01 Balance b/d 43,740 Mar. 31 Depreciation A/c 4,374
Mar. 31 Balance c/d 39,366
43,740 43,740

Note: When deprecation is charged as per written down value method, scrap value of asset is ignored.

Question 10:
On 1st July, 2005, Geeta Paper Limited purchased a Plant for ₹ 1, 50,000 and paid ₹ 10,000 as freight on its carriage.
Depreciation was provided at 10% p.a. on the Written Down Value Method on this plant. On 1st Oct., 2008, this plant was sold
for ₹ 80,000. Prepare Plant A/c for 4 years, assuming that the books are closed on 31st March every year.
ANSWER:
Plant Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2005 2006
July 01 Bank A/c (1,50,000 + 1,60,000 Mar. 31 Depreciation A/c (for 9 months) 12,000
10,000)
Balance c/d 1,48,000
1,60,000 1,60,000
2006 2007
Apr. 01 Balance b/d 1,48,000 Mar. 31 Depreciation A/c 14,800
Mar. 31 Balance c/d 1,33,200
1,48,000 1,48,000
2007 2008
Apr. 01 Balance b/d 1,33,200 Mar. 31 Depreciation A/c 13,320
Mar. 31 Balance c/d 1,19,880
1,33,200 1,33,200
2008 2008
Apr. 01 Balance b/d 1,19,880 Oct. 01 Depreciation A/c 5,994
Bank A/c (Sale) 80,000
Profit and Loss A/c (Loss on 33,886
Sale)
1,19,880 1,19,880
Working Note: Calculation of Profit or Loss on Sale
Particulars Amount
Value of Plant on Apr. 01, 2008 1,19,880
Less: Depreciation for 6 months 5,994
Value of Plant on Oct. 01, 2008 1,13,886
Less: Sale Value 80,000
Loss on Sale 33,886

Question 11:
A firm purchased on 1st April, 2009, second-hand Machinery for ₹ 36,000 and spent ₹ 4,000 on its installation. On 1st Oct. in
the same year another Machinery costing ₹ 20,000 was purchased. On 1st Oct., 2011, the Machinery bought on 1st April, 2009
was sold off for ₹ 12,000 and on the same date a fresh Machine was purchased for ₹ 64,000. Depreciation is provided annually
on 31st March, @ 10% p.a. on the Written down Value Method. Show the Machine A/c from 1st April, 2009 to 31st March, 2013.
ANSWER:
Machinery Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2009 2010
Apr. 01 Bank A/c (M1) (36,000 + 40,000 Mar. 31 Depreciation A/c
4,000)
Oct. 01 Bank A/c (M2) 20,000 M1 4,000
M2 (for 6 months) 1,000 5,000
Mar. 31 Balance c/d
M1 36,000
M2 19,000 55,000
60,000 60,000
2010 2011
Apr. 01 Balance b/d Mar. 31 Depreciation A/c
M1 36,000 M1 3,600
M2 19,000 55,000 M2 1,900 5,500
Mar. 31 Balance c/d
M1 32,400
M2 17,100 49,500
55,000 55,000
2011 2011
Apr. 01 Balance b/d Oct. 01 Depreciation A/c (M1) 1,620
M1 32,400 Bank A/c (Sale of M1) 12,000
M2 17,100 49,500 Profit and Loss A/c (Loss on Sale of M1) 18,780
Oct. 01 Bank A/c (M3) 64,000 2012
Mar. 31 Depreciation A/c
M2 1,710
 M3 (for 6 months) 3,200 4,910
Mar. 31 Balance c/d
M2 15,390
M3 60,800 76,190
1,13,500 1,13,500
2012 2013
Apr. 01 Balance b/d Mar. 31 Depreciation A/c
M2 15,390 M2 1,539
M3 60,800 76,190 M3 6,080 7,619
Mar. 31 Balance c/d
M2 13,851
M3 54,720 68,571
76,190 76,190

Working Note: Calculation of Profit or Loss on Sale

Particulars Amount
Value of Machinery on Apr. 01, 2011 32,400
Less: Depreciation for 6 months 1,620
Value of Machinery on Oct. 01, 2011 30,780
Less: Sale Value 12,000
Loss on Sale 18,780
Question 12:
A Company purchased machinery for ₹ 50,000 on 1st Oct., 2007. Another machinery costing ₹ 10,000 was purchased on 1st
Dec., 2008. On 31st March, 2010, the machinery purchased in 2007 was sold at a loss of ₹ 5,000. The Company charges
depreciation at the rate of 15% p.a. on Diminishing Balance Method. Accounts are closed on 31st March every year.
Prepare Machinery account for 3 years.
ANSWER: Machinery Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2007 2008
Oct. 01 Bank A/c 50,000 Mar. 31 Depreciation A/c (for 6 months) 3,750
(M1)
Mar. 31 Balance c/d 46,250
50,000 50,000
2008 2009
Apr. 01 Balance b/d 46,250 Mar. 31 Depreciation A/c
Dec. 01 Bank A/c (M2) 10,000 M1 6,938
M2 (for 4 months) 500 7,438
Mar. 31 Balance c/d
M1 39,312
M2 9,500 48,812
56,250 56,250
 2009 2010
Apr. 01 Balance b/d Mar. 31 Depreciation A/c 5,897
M1 39,312 Bank A/c (Sale of M1) 28,415
M2 9,500 48,812 Profit and Loss A/c (Loss on Sale of M1) 5,000
Mar. 31 Depreciation A/c (M2) 1,425
Mar. 31 Balance c/d 8,075
48,812 48,812

Working Note: Calculation of Sale Price of M1

Particulars Amount
Value of Machinery on Apr. 01, 2009 39,312
Less: Depreciation for 12 months 5,897
Value of Machinery on Mar. 31, 2010 33,415
Less: Loss on Sale (given) 5,000
Sale Value (Balancing Figure) 28,415

Question 13:
Ashoka Ltd. bought a machine on 1st April, 2010 for ₹ 2, 40,000 and spent ₹ 4,000 on its carriage and ₹ 6,000 towards
installation cost. On 1st July, 2011 it purchased second hand machinery for ₹ 75,000 and spent ₹ 25,000 on its overhauling.
On 1st January, 2013 it decided to sell the machinery bought on 1st April, 2010 at a loss of ₹ 20,000. It bought another
machine on the same date for ₹ 40,000. Company decided to charge depreciation @ 15% p.a. on written down value method.
Prepare machinery account for 3 years. Books are closed each year on 31st March.
ANSWER:
Machinery Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2010 2011
Apr. 01 Bank A/c (M1) (2,40,000 2,50,000 Mar. 31 Depreciation A/c 37,500
+ 4,000 + 6,000)
Mar. 31 Balance c/d 2,12,500
2,50,000 2,50,000
2011 2012
Apr. 01 Balance b/d 2,12,500 Mar. 31 Depreciation A/c
July 01 Bank A/c (M2) 1,00,000 M1 31,875
(75,000+25,000)
M2 (for 9 months) 11,250 43,125
Mar. 31 Balance c/d
M1 1,80,625
M2 88,750 2,69,375
3,12,500 3,12,500
 2012 2013
Apr. 01 Balance b/d Jan. 01 Depreciation A/c (M1) 20,320
M1 1,80,625 Bank A/c (Sale of M1) 1,40,305
M2 88,750 2,69,375 Profit and Loss A/c (Loss on Sale of M1) 20,000
2013 Mar. 31 Depreciation A/c
Jan. 01 Bank A/c (M3) 40,000 M2 13,312
M3 (for 3 months) 1,500 14,813
Mar. 31 Balance c/d
M2 75,438
M3 38,500 1,13,938
3,09,375 3,09,375

Working Note: Calculation of Sale Price of M1

Particulars Amount
Value of Machinery on Apr. 01, 2012 1,80,625
Less: Depreciation for 9 months 20,320
Value of Machinery on Jan. 01, 2013 1,60,305
Less: Loss on Sale (given) 20,000
Sale Value (Balancing Figure) 1,40,305
Question 14:
The Sameer Transport Company purchased 10 Trucks at ₹ 90,000 each on 1st April 2011. On 1st October 2013 one of the
Trucks was involved in an accident and is completely destroyed. ₹ 56,200 was received from the Insurance Company in full
settlement. On the same date another truck was purchased by the company for the sum of ₹ 1, 00,000. The company writes off
20% per annum on the Diminishing Balance Method. The company maintains the calendar year as its financial year. Show the
Truck Account for four years ending 31st December, 2014.
ANSWER:
Truck Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2011 2011
Apr. 01 Bank A/c Dec. 31 Depreciation
A/c
T1 90,000 T1 (for 9 months) 13,500
T2 8,10,000 9,00,000 T2 (for 9 months) 1,21,500 1,35,000
Dec. 31 Balance c/d
T1 76,500
T2 6,88,500 7,65,000
9,00,000 9,00,000
2012 2012
Jan. 01 Balance b/d Dec. 31 Depreciation A/c
 T1 76,500 T1 15,300
T2 6,88,500 7,65,000 T2 1,37,700 1,53,000
Dec. 31 Balance c/d
T1 61,200
T2 5,50,800 6,12,000
7,65,000 7,65,000
2013 2013
Jan. 01 Balance b/d Oct. 01 Depreciation A/c (T1) 9,180
T1 61,200 Oct. 01 Bank A/c (Sale of T1) 56,200
T2 5,50,800 6,12,000 Dec. 31 Depreciation A/c
Oct. 01 Profit and Loss A/c 4,180 T2 1,10,160
(Profit on Sale of T1)
Oct. 01 Bank A/c 1,00,000 T3 (for 6 months) 5,000 1,15,160
(T3)
Dec. 31 Balance c/d
T2 4,40,640
T3 95,000 5,35,640
7,16,180 7,16,180
2014 2014
Jan. 01 Balance b/d Dec. 31 Depreciation A/c
T2 4,40,640 T2 88,128
 T3 95,000 5,35,640 T3 19,000 1,07,128
Dec. 31 Balance c/d
T2 3,52,512
T3 76,000 4,28,512
5,35,640 5,35,640

Working Note: Calculation of Profit & Loss on Sale of T1

Particulars Amount
Value of Truck on Jan. 01, 2013 61,200
Less: Depreciation for 9 months 9,180
Value of Truck on Oct. 01, 2013 52,020
Less: Sale Value 56,200
Profit on Sale 4,180

Note: In order to make easy calculation, Truck purchased on April 01, 2011 has been divided into two parts i.e. T1 and T2.
Thus, T1: Rs 90,000 (sold for Rs 56,200). T2: Rs 8, 10,000 (includes the cost of 9 trucks)
Question 15:
Raja Textiles Co. which closes its books on 31st March, purchased a machine on 1-4-2009 for ₹ 50,000. On 1-10-2010, it
purchased an additional machine for ₹ 30,000. The part of the machine which was purchased on 1-4-2009 costing ₹ 10,000 was
sold for ₹ 3,600 on 30th Sept., 2012. Prepare the Machine Account for four years, if the depreciation is provided at the rate of
10% p.a. on Diminishing Balance Method.
ANSWER:
Machinery Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2009 2010
Apr. 01 Bank Mar. 31 Depreciation A/c
A/c
M1 10,000 M1 1,000
M2 40,000 50,000 M2 4,000 5,000
Mar. 31 Balance c/d
M1 9,000
M2 36,000 45,000
50,000 50,000
2010 2011
Apr. 01 Balance b/d Mar. 31 Depreciation A/c
M1 9,000 M1 900
 M2 36,000 45,000 M2 3,600
Oct. 01 Bank A/c (M3) 30,000 M3 (for 6 months) 1,500 6,000
Mar. 31 Balance c/d
M1 8,100
M2 32,400
M3 28,500 69,000
75,000 75,000
2011 2012
Apr. 01 Balance b/d Mar. 31 Depreciation A/c
M1 8,100 M1 810
M2 32,400 M2 3,240
M3 28,500 69,000 M3 2,850 6,900
Mar. 31 Balance c/d
M1 7,290
M2 29,160
M3 25,650 62,100
69,000 69,000
2012 2012
Apr. 01 Balance b/d Sept. 30 Depreciation A/c (M1) 365
M1 7,290 Sept. 30 Bank A/c (sale of M1) 3,600
M2 29,160 Sept. 30 Profit and Loss A/c (Loss on Sale of M1) 3,325
 M3 25,650 62,100 2013
Mar. 31 Depreciation A/c
M2 2,916
M3 2,565 5,481
Mar. 31 Balance c/d
M2 26,244
M3 23,085 49,329
62,100 62,100

Working Note: Calculation of Profit & Loss Sale of M1

Particulars Amount
Value of Machinery on Apr. 01, 2012 7,290
Less: Depreciation for 6 months 365
Value of Machinery on Sept.30, 2012 6,925
Less: Sale Value 3,600
Loss on Sale 3,325

Note: In order to make easy calculation, machinery purchased on April 01, 2009 has been divided into two parts i.e. M1 and
M2. Thus, M1: Rs 10,000 (sold for Rs 3,600) M2: Rs 40,000
Question 16:
A Company, which closes its books on 31st March every year, purchased on 1st July, 2010, machinery costing ₹ 30,000. It
purchased further machinery on 1st January, 2011, costing ₹ 20,000 and on 1st October, 2011, costing ₹ 10,000. On 1st April,
2012, one-third of the machinery installed on 1st July, 2010, became obsolete and was sold for ₹ 3,000. Show how the machinery
account would appear in the books of the Company, it being given that machinery was depreciated by Diminishing Balance
Method at 10% per annum. What would be the balance of Machinery Account on 1st April, 2013?
ANSWER:
Machinery Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2010 2011
July 01 Bank Mar. 31 Depreciation A/c
A/c
M1 10,000 M1 (for 9 months) 750
M2 20,000 30,000 M2 (for 9 months) 1,500
2011 M3 (for 3 months) 500 2,750
Jan. 01 Bank A/c (M3) 20,000 Mar. 31 Balance c/d
M1 9,250
M2 18,500
M3 19,500 47,250
50,000 50,000
 2011 2012
Apr. 01 Balance b/d Mar. 31 Depreciation A/c
M1 9,250 M1 925
M2 18,500 M2 1,850
M3 19,500 47,250 M3 1,950
Oct. 01 Bank A/c (M4) 10,000 M4 (for 6 months) 500 5,225
Mar. 31 Balance c/d
M1 8,325
M2 16,650
M3 17,550
M4 9,500 52,025
57,250 57,250
2012 2012
Apr. 01 Balance b/d Apr. 01 Bank A/c (Sale of M1) 3,000
M1 8,325 Profit and Loss A/c (Loss on Sale of M1) 5,325
M2 16,650 2013
M3 17,550 Mar. 31 Depreciation A/c
M4 9,500 52,025 M2 1,665
M3 1,755
M4 950 4,370
Mar. 31 Balance c/d
 M2 14,985
M3 15,795
M4 8,550 39,330
52,025 52,025

Working Note: Calculation of Profit & Loss on Sale of M1

Particulars Amount
Value of Machinery on Apr. 01, 2012 8,325
Less: Sale Value 3,000
Loss on Sale 5,325

Note: In order to make easy calculation, machinery purchased on July 01, 2010 has been divided into two parts i.e. M1 and M2.

Thus, M1: 1/3rd value i.e. Rs 10,000 (sold for Rs 3,000) M2: 2/3rd value i.e. Rs 40,000 (remained in the business)

Question 17:
On July 1, 2005 Pushpak Ltd. purchased machinery for ₹ 5, 70,000 and paid ₹ 30,000 for its overhauling and installation.
Depreciation is provided @ 20% p.a. on Original Cost Method and the books are closed on 31st March every year. The machine
was sold on 31st January 2008 for a sum of ₹ 1, 60,000. You are required to show the Machinery Account and Provision for
Depreciation Account for three years.
ANSWER:
Machinery Account
Dr. Cr.
Date Particulars Amount (Rs) Date Particulars Amount (Rs)
2005 2006
July 01 Bank A/c (5,70,000 + 30,000) 6,00,000 Mar. 31 Balance c/d 6,00,000
6,00,000 6,00,000
2006 2007
Apr. 01 Balance b/d 6,00,000 Mar. 31 Balance c/d 6,00,000
6,00,000 6,00,000
2007 2008
Apr. 01 Balance b/d 6,00,000 Jan. 31 Provision for Depreciation A/c 3,10,000
Bank A/c (Sale) 1,60,000
Profit and Loss A/c (Loss on Sale) 1,30,000
6,00,000 6,00,000
 Provision for Depreciation Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2006 2006
Mar. 31 Balance c/d 90,000 Mar. 31 Depreciation A/c (for 9 months) 90,000
90,000 90,000
2007 2006
Mar. 31 Balance c/d 2,10,000 Apr. 01 Balance b/d 90,000
2007
Mar. 31 Depreciation A/c 1,20,000
2,10,000 2,10,000
2008 2007
Jan. 31 Machinery A/c 3,10,000 Apr. 01 Balance b/d 2,10,000
2008
Jan. 31 Depreciation A/c (for 10 months) 1,00,000
3,10,000 3,10,000
Working Note: Calculation of Profit & Loss on Sale
Particulars Amount
Value of Machinery on July 01, 2005 6,00,000
Less: Depreciation for 9 Months 90,000
Value of Machinery on Apr. 01, 2006 5,10,000
Less: Depreciation 1,20,000
Value of Machinery on Apr. 01, 2007 3,90,000
Less: Depreciation for 10 Months 1,00,000
Value of Machinery on Jan. 31, 2008 2,90,000
Less: Sale Value 1,60,000
Loss on Sale 1,30,000

Question 18:
A machine as purchased on 1st October 2012 at a cost of ₹ 3, 00,000 and ₹ 20,000 were spent on its installation. The
depreciation is written off at 10% p.a. on the Diminishing Value Method. The books are closed on 31st March every year. The
machine was sold for ₹ 1, 30,000 on 1st July 2015. Show the Machinery Account and Provision for Depreciation Account for all
the years.
ANSWER:
 Machinery Account
Dr. Cr.
Date Particulars Amount (Rs) Date Particulars Amount (Rs)
2012 2013
Oct. 01 Bank A/c (3,00,000 + 20,000) 3,20,000 Mar. 31 Balance c/d 3,20,000
3,20,000 3,20,000
2013 2014
Apr. 01 Balance b/d 3,20,000 Mar. 31 Balance c/d 3,20,000
3,20,000 3,20,000

2014 2015
Apr. 01 Balance b/d 3,20,000 Mar. 31 Balance c/d 3,20,000
3,20,000 3,20,000
2015 2015
Apr. 01 Balance b/d 3,20,000 July 01 Provision for Depreciation A/c 79,916
Bank A/c (Sale ) 1,30,000
Profit and Loss A/c (Loss on Sale) 1,10,084
3,20,000 3,20,000
 Provision for Depreciation Account
Dr. Cr.
Date Particulars Amount (Rs) Date Particulars Amount (Rs)
2013 2013
Mar. 31 Balance c/d 16,000 Mar. 31 Depreciation A/c (for 6 months) 16,000
16,000 16,000
2014 2013
Mar. 31 Balance c/d 46,400 Apr. 01 Balance b/d 16,000
2014
Mar. 31 Depreciation A/c 30,400
46,400 46,400
2015 2014
Mar. 31 Balance c/d 73,760 Apr. 01 Balance b/d 46,400
2015
Mar. 31 Depreciation A/c 27,360
73,760 73,760
2015 2015
July 01 Machinery A/c 79,916 Apr. 01 Balance b/d 73,760
July 01 Depreciation A/c (for 3 months) 6,156
79,916 79,916
Working Note: Calculation of Profit & Loss on Sale
Particulars Amount
Value of Machinery on Oct. 01, 2012 3,20,000
Less: Depreciation for 6 Months 16,000
Value of Machinery on Apr. 01, 2013 3,04,000
Less: Depreciation 30,400
Value of Machinery on Apr. 01, 2014 2,73,600
Less: Depreciation 27,360
Value of Machinery on Apr. 01, 2015 2,46,240
Less: Depreciation for 3 Months 6,156
Value of Machinery on July 01, 2015 2,40,084
Less: Sale Value 1,30,000
Loss on Sale 1,10,084

Question 19:
On 1st April 2008, a Company purchased 6 machines for ₹ 50,000 each. Depreciation at the rate of 10% p.a. is charged on
Straight Line Method. The accounting year of the Company ends on 31st March and the depreciation is credited to a separate
'Provision for Depreciation Account'. On 1st October, 2010, one machine was sold for ₹ 30,000 and on 1st April, 2011 a second
machine was sold for ₹ 24,000. You are required to prepare Machinery Account and Provision for Depreciation Account for four
years ending 31st March, 2012.
ANSWER: Machinery Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2008 2009
Apr. 01 Bank Mar. 31 Balance c/d
A/c
M1 50,000 M1 50,000
M2 50,000 M2 50,000
M3 2,00,000 3,00,000 M3 2,00,000 3,00,000
3,00,000 3,00,000
2009 2010
Apr. 01 Balance b/d Mar. 31 Balance c/d
M1 50,000 M1 50,000
M2 50,000 M2 50,000
M3 2,00,000 3,00,000 M3 2,00,000 3,00,000
3,00,000 3,00,000
2010 2010
Apr. 01 Balance b/d Oct. 01 Provision for Depreciation A/c 12,500
M1 50,000 Bank A/c (Sale of M1) 30,000
M2 50,000 Profit and Loss A/c (Loss on Sale of M1) 7,500
 M3 2,00,000 3,00,000 2011
Mar. 31 Balance c/d
M2 50,000
M3 2,00,000 2,50,000
3,00,000 3,00,000
2011 2011
Apr. 01 Balance b/d Apr. 01 Provision for Depreciation A/c 15,000
M2 50,000 Bank A/c (Sale of M2) 24,000
M3 2,00,000 2,50,000 Profit and Loss A/c (Loss on Sale of M2) 11,000
2012
Mar. 31 Balance c/d (M3) 2,00,000
2,50,000 2,50,000

Provision for Depreciation Account

Dr. Cr.
Date Particulars Amount (Rs) Date Particulars Amount (Rs)
2009 2009
Mar. 31 Balance c/d 30,000 Mar. 31 Depreciation A/c
M1 5,000
M2 5,000
M3 20,000 30,000
 30,000 30,000
2010 2009
Mar. 31 Balance c/d 60,000 Apr. 01 Balance b/d 30,000
2010
Mar. 31 Depreciation A/c
M1 5,000
M2 5,000
M3 20,000 30,000
60,000 60,000
2010 2010
Oct. 01 Machinery A/c (M1) 12,500 Apr. 01 Balance b/d 60,000
(5,000 + 5,000 + 2,500)
2011 Oct.01 Depreciation A/c (M1) 2,500
Mar. 31 Balance c/d 75,000 2011
Mar. 31 Depreciation A/c
M2 5,000
M3 20,000 25,000
87,500 87,500
2011 2011
Apr. 01 Machinery A/c (M2) 15,000 Apr. 01 Balance b/d 75,000
(5,000 + 5,000 + 5,000)
 2012 2012
Mar. 31 Balance c/d 80,000 Mar. 31 Depreciation A/c (M3) 20,000
95,000 95,000

Working Notes: WN1: Calculation of Profit & Loss on Sale of M1

Particulars Amount
Value of Machinery on Apr. 01, 2008 50,000
Less: Depreciation 5,000
Value of Machinery on Apr. 01, 2009 45,000
Less: Depreciation 5,000
Value of Machinery on Apr. 01, 2010 40,000
Less: Depreciation for 6 months 2,500
Value of Machinery on Oct. 01, 2010 37,500
Less: Sale Value 30,000
Loss on Sale 7,500

WN2: Calculation of Profit & Loss on Sale of M2

Particulars Amount
Value of Machinery on Apr. 01, 2008 50,000
Less: Depreciation 5,000
Value of Machinery on Apr. 01, 2009 45,000
Less: Depreciation 5,000
Value of Machinery on Apr. 01, 2010 40,000
Less: Depreciation 5,000
Value of Machinery on Apr. 01, 2011 35,000
Less: Sale Value 24,000
Loss on Sale 11,000
Note: For making calculation easy, Machinery purchased on April 01, 2008 has been divided into three i.e. M1, M2 and M3.
Thus, M1: Rs 50,000 (sold for Rs 30,000 on Oct. 01, 2010). M2: Rs 50,000 (sold for Rs 24,000 on Apr. 01, 2011). M3: Rs 2,00,000
(includes the cost of 4 machines)
Question 20:
On 1st July 2016, ABC Ltd. purchases 4 machines for ₹ 80,000 each. The accounting year of the company ends on 31st March
every year. Depreciation is provided at the rate of 15% p.a. on original cost. On 1st April, 2008 one machine was sold for ₹
50,000 and on 1st January, 2010 a second machine was sold for ₹ 40,000. Another machine with a higher capacity which cost ₹
2, 00,000 was purchased on 1st January, 2010. You are required to show: (i) Machinery Account, (ii) Depreciation Account, and
(iii) Provision for Depreciation Account for four years ending 31st March, 2010.
:Machinery Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2006 2007
July 01 Bank A/c Mar. 31 Balance c/d
M1 80,000 M1 80,000
M2 80,000 M2 80,000
M3 1,60,000 3,20,000 M3 1,60,000 3,20,000
3,20,000 3,20,000
2007 2008
Apr. 01 Balance b/d Mar. 31 Balance c/d
M1 80,000 M1 80,000
 M2 80,000 M2 80,000
M3 1,60,000 3,20,000 M3 1,60,000 3,20,000
3,20,000 3,20,000
2008 2008
Apr. 01 Balance b/d Apr. 01 Provision for Depreciation A/c 21,000
M1 80,000 Apr. 01 Bank A/c (Sale of M1 ) 50,000
M2 80,000 Apr. 01 Profit and Loss A/c (Loss on 9,000
Sale of M1)
M3 1,60,000 3,20,000 2009
Mar. 31 Balance c/d
M2 80,000
M3 1,60,000 2,40,000
3,20,000 3,20,000
2009 2010
Apr. 01 Balance b/d Jan. 01 Provision for Depreciation A/c 42,000
M2 80,000 Jan. 01 Bank A/c (Sale of M2) 40,000
M3 1,60,000 2,40,000 Mar. 31 Balance c/d
2010 M3 1,60,000
Jan. 01 Profit and Loss A/c 2,000 M4 2,00,000 3,60,000
(Profit on Sale of M2)
Jan. 01 Bank A/c (M4) 2,00,000
4,42,000 4,42,000
 Depreciation Account
Dr. Cr.
Date Particulars Amount (Rs) Date Particulars Amount (Rs)
2007 2007
Mar.31 Provision for Depreciation A/c 36,000 Mar.31 Profit & Loss A/c 36,000
36,000 36,000
2008 2008
Mar.31 Provision for Depreciation A/c 48,000 Mar.31 Profit & Loss A/c 48,000
48,000 48,000
2009 2009
Mar.31 Provision for Depreciation A/c 36,000 Mar.31 Profit & Loss A/c 36,000
36,000 36,000
2010 2010
Mar.31 Provision for Depreciation A/c 40,500 Mar.31 Profit & Loss A/c (31,500 + 9,000) 40,500
40,500 40,500
 Provision for Depreciation Account
Dr. Cr.
Date Particulars Amount (Rs) Date Particulars Amount (Rs)
2007 2007
Mar. 31 Balance c/d 36,000 Mar. 31 Depreciation A/c
M1 (for 9 months) 9,000
M2 (for 9 months) 9,000
M3 (for 9 months) 18,000 36,000
36,000 36,000
2008 2007
Mar. 31 Balance c/d 84,000 Apr. 01 Balance b/d 36,000
2008
Mar. 31 Depreciation A/c
M1 12,000
M2 12,000
M3 24,000 48,000
84,000 84,000
2008 2008
Apr. 01 Machinery A/c (9,000 + 12,000) 21,000 Apr. 01 Balance b/d 84,000
2009 2009
Mar. 31 Balance c/d 99,000 Mar. 31 Depreciation A/c
 M2 12,000
M3 24,000 36,000
1,20,000 1,20,000
2010 2009
Jan. 01 Machinery A/c (9,000 + 42,000 Apr. 01 Balance b/d 99,000
12,000 + 12,000 + 9,000)
Mar. 31 Balance c/d 97,500 2010
Jan. 01 Depreciation A/c (M2) 9,000
Mar. 31 Depreciation A/c
M3 24,000
M4 (for 3 months) 7,500 31,500
1,39,500 1,39,500

Working Notes:
WN1: Calculation of Profit & Loss on Sale M1
Particulars Amount
Value of Machinery on July 01, 2006 80,000
Less: Depreciation for 9 months 9,000
Value of Machinery on Apr. 01, 2007 71,000
Less: Depreciation 12,000
Value of Machinery on Apr. 01, 2008 59,000
Less: Sale Value 50,000
Loss on Sale 9,000
WN2: Calculation of Profit & Loss on Sale of M2
Particulars Amount
Value of Machinery on July 01, 2006 80,000
Less: Depreciation for 9 months 9,000
Value of Machinery on Apr. 01, 2007 71,000
Less: Depreciation 12,000
Value of Machinery on Apr. 01, 2008 59,000
Less: Depreciation 12,000
Value of Machinery on Apr. 01, 2009 47,000
Less: Depreciation for 9 months 9,000
Value of Machinery on Jan. 01, 2010 38,000
Less: Sale Value 40,000
Profit on Sale 2,000

Note: In order to make easy calculation, machinery purchased on July 01, 2006 has been divided into three parts i.e. M1, M2
and M3. Thus, M1: Rs 80,000 (sold for Rs 50,000 on Apr. 01, 2008) M2: Rs 80,000 (sold for Rs 40,000 on Jan. 01, 2010)
M3: Rs 1,60,000 (includes the cost of 2 machines)
Question 21:
X Ltd. which closes its books of account every year on 31st March, purchased on 1st October, 2011 machinery costing ₹ 4,
40,000. It purchased further machinery on 1st April, 2012 costing ₹ 5, 20,000. On 30th June, 2013, the first machine was sold
for ₹ 2, 50,000 and on the same date a fresh machine was installed at a cost of ₹ 3, 00,000. On 1st July 2014, the second
machine purchased on 1st April 2012 was also sold for ₹ 3, 25,000. The company writes off depreciation at 10% p.a. on the
Straight Line Method each year. Show the Machinery A/c, Depreciation A/c and Provision for Depreciation A/c for all the four
years.
ANSWER: Machinery Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2011 2012
Oct. 01 Bank A/c (M1) 4,40,000 Mar. 31 Balance c/d 4,40,000
4,40,000 4,40,000
2012 2013
Apr. 01 Balance b/d 4,40,000 Mar. 31 Balance c/d
Apr. 01 Bank A/c (M2) 5,20,000 M1 4,40,000
M2 5,20,000 9,60,000
9,60,000 9,60,000
2013 2013
Apr. 01 Balance b/d June 30 Provision for Depreciation A/c 77,000
 M1 4,40,000 Bank A/c (Sale of M1 ) 2,50,000
M2 5,20,000 9,60,000 Profit and Loss A/c (Loss on Sale of M1) 1,13,000
June 30 Bank A/c (M3) 3,00,000 2014
Mar. 31 Balance c/d
M2 5,20,000
M3 3,00,000 8,20,000
12,60,000 12,60,000
2014 2014
Apr. 01 Balance b/d July 01 Provision for Depreciation A/c 1,17,000
M2 5,20,000 Bank A/c (Sale of M2) 3,25,000
M3 3,00,000 8,20,000 Profit and Loss A/c (Loss on Sale of M2) 78,000
2015
Mar. 31 Balance c/d (M3) 3,00,000
8,20,000 8,20,000
 Depreciation Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2012 2012
Mar. 31 Provision for 22,000 Mar. 31 Profit & Loss A/c 22,000
Depreciation A/c
22,000 22,000
2013 2013
Mar. 31 Provision for 96,000 Mar. 31 Profit & Loss A/c 96,000
Depreciation A/c
96,000 96,000
2014 2014
Mar. 31 Provision for 85,500 Mar. 31 Profit & Loss A/c 85,500
Depreciation A/c (74,500 + 11,000)
85,500 85,500
2015 2015
Mar. 31 Provision for 43,000 Mar. 31 Profit & Loss A/c 43,000
Depreciation A/c (30,000 + 13,000)
43,000 43,000
 Provision for Depreciation Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2012 2012
Mar. 31 Balance c/d (M1) 22,000 Mar. 31 Depreciation A/c (M1) 22,000
(for 6 months)
22,000 22,000
2013 2012
Mar. 31 Balance c/d 1,18,000 Apr. 01 Balance b/d 22,000
2013
Mar. 31 Depreciation A/c
M1 44,000
M2 52,000 96,000
1,18,000 1,18,000
2013 2013
June 30 Machinery A/c (M1) 77,000 Apr. 01 Balance b/d 1,18,000
(22,000 + 44,000 + 11,000)
2014 June 30 Depreciation A/c (M1) 11,000
(for 3 months)
Mar. 31 Balance c/d 1,26,500 2014
Mar. 31 Depreciation A/c
 M2 52,000
M3 (for 9 months) 22,500 74,500
2,03,500 2,03,500
2014 2014
July 01 Machinery A/c (M2) 1,17,000 Apr. 01 Balance b/d 1,26,500
(52,000 + 52,000 + 13,000)
2015 July 01 Depreciation A/c (M2) 13,000
(for 3 months)
Mar. 31 Balance c/d (M3) 52,500 2015
Mar. 31 Depreciation A/c (M3) 30,000
1,69,500 1,69,500

Working Notes:
WN1: Calculation of Profit & Loss on Sale of M1
Particulars Amount
Value of Machinery on Oct. 01, 2011 4,40,000
Less: Depreciation for 6 months 22,000
Value of Machinery on Apr. 01, 2012 4,18,000
Less: Depreciation 44,000
Value of Machinery on Apr. 01, 2013 3,74,000
Less: Depreciation for 3 months 11,000
Value of Machinery on June 30, 2013 3,63,000
Less: Sale Value 2,50,000
Loss on Sale 1,13,000
WN2: Calculation of Profit & Loss on Sale of M2
Particulars Amount
Value of Machinery on Apr. 01, 2012 5,20,000
Less: Depreciation 52,000
Value of Machinery on Apr. 01, 2013 4,68,000
Less: Depreciation 52,000
Value of Machinery on Apr. 01, 2014 4,16,000
Less: Depreciation for 3 months 13,000
Value of Machinery on June 30, 2014 4,03,000
Less: Sale Value 3,25,000
Loss on Sale 78,000

Question 22:
A company purchased second-hand machinery on 1st May, 2009 for ₹ 5, 85,000 and immediately spent ₹ 15,000 on its erection.
On 1st October, 2010, it purchased another machine for ₹ 4, 00,000. On 31st July, 2011, it sold off the first machine for ₹ 2,
50,000 and bought another for ₹ 4, 20,000. On 1st November, 2012, the second machine was also sold off for ₹ 3, 00,000.
Depreciation was provided on the machinery @ 15% p.a. on Equal Installment Method. Show the Machinery Account,
Depreciation Account and Provision for Depreciation Account assuming that the books are closed on 31st March every year.
ANSWER:
 Machinery Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2009 2010
May 01 Bank A/c (M1) (5,58,000 + 15,000) 6,00,000 Mar. 31 Balance c/d 6,00,000
6,00,000 6,00,000
2010 2011
Apr. 01 Balance b/d 6,00,000 Mar. 31 Balance c/d
Oct. 01 Bank A/c (M2) 4,00,000 M1 6,00,000
M2 4,00,000 10,00,000
10,00,000 10,00,000
2011 2011
Apr. 01 Balance b/d July 31 Provision for Depreciation A/c 2,02,500
M1 6,00,000 Bank A/c (Sale of M1) 2,50,000
M2 4,00,000 10,00,000 Profit and Loss A/c (Loss on 1,47,500
Sale of M1)
July 31 Bank A/c (M3) 4,20,000 2012
Mar. 31 Balance c/d
M2 4,00,000
M3 4,20,000 8,20,000
14,20,000 14,20,000
 2012 2012
Apr. 01 Balance b/d Nov. 01 Provision for Depreciation A/c 1,25,000
M2 4,00,000 Bank A/c (Sale of M2) 3,00,000
M3 4,20,000 8,20,000 2013
Nov. 01 Profit and Loss A/c (Profit on Sale 25,000 Mar. 31 Balance c/d (M3) 4,20,000
of M2)
8,45,000 8,45,000

Depreciation Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2010 2010
Mar. 31 Provision for Depreciation A/c 82,500 Mar. 31 Profit & Loss A/c 82,500
82,500 82,500
2011 2011
Mar. 31 Provision for Depreciation A/c 1,20,000 Mar. 31 Profit & Loss A/c 1,20,000
1,20,000 1,20,000
2012 2012
Mar. 31 Provision for Depreciation A/c 1,32,000 Mar. 31 Profit & Loss A/c (1,02,000 + 30,000) 1,32,000
1,32,000 1,32,000
 2013 2013
Mar. 31 Provision for Depreciation A/c 98,000 Mar. 31 Profit & Loss A/c (63,000+ 35,000) 98,000
98,000 98,000

Provision for Depreciation Account

Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2010 2010
Mar. 31 Balance c/d 82,500 Mar. 31 Depreciation A/c (M1) (for 11 months) 82,500
82,500 82,500
2011 2010
Mar. 31 Balance c/d 2,02,500 Apr. 01 Balance b/d 82,500
2011
Mar. 31 Depreciation A/c
M1 90,000
M2 (for 6 months) 30,000 1,20,000
2,02,500 2,02,500
2011 2011
July 31 Machinery A/c (82,500 + 2,02,500 Apr. 01 Balance b/d 2,02,500
90,000 + 30,000)
 2012 July 31 Depreciation A/c (M1) (for 4 months) 30,000
Mar. 31 Balance c/d 1,32,000 2012
Mar. 31 Depreciation A/c
M2 60,000
M3 (for 8 months) 42,000 1,02,000
3,34,500 3,34,500
2011 2012
Nov. 01 Machinery A/c (30,000 1,25,000 Apr. 01 Balance b/d 1,32,000
+ 60,000 + 35,000)
2013 Nov. 01 Depreciation A/c (M2) (for 7 months) 35,000
Mar. 31 Balance c/d 1,05,000 2013
Mar. 31 Depreciation A/c (M3) 63,000
2,30,000 2,30,000

Working Notes:
WN1: Calculation of Profit & Loss on Sale of M1
Particulars Amount
Value of Machinery on May 01, 2009 6,00,000
Less: Depreciation for 11 months 82,500
Value of Machinery on Apr. 01, 2010 5,17,500
Less: Depreciation 90,000
Value of Machinery on Apr. 01, 2011 4,27,500
Less: Depreciation for 4 months 30,000
Value of Machinery on July 31, 2011 3,97,500
Less: Sale Value 2,50,000
Loss on Sale 1,47,500
WN2: Calculation of Profit & Loss on Sale of M2
Particulars Amount
Value of Machinery on Oct. 01, 2010 4,00,000
Less: Depreciation for 6 months 30,000
Value of Machinery on Apr. 01, 2011 3,70,000
Less: Depreciation 60,000
Value of Machinery on Apr. 01, 2012 3,10,000
Less: Depreciation for 7 months 35,000
Value of Machinery on Nov. 01, 2012 2,75,000
Less: Sale Value 3,00,000
Profit on Sale 25,000

Question 23:
X Ltd. purchased a plant on 1st July, 2010 costing ₹ 5, 00,000. It purchased another plant on 1st September, 2010 costing ₹ 3,
00,000. On 31st December, 2012, the plant purchased on 1st July, 2010 got out of order and was sold for ₹ 2,15,000. Another
plant was purchased to replace the same for ₹ 6,00,000. Depreciation is to be provided at 20% p.a. according to Written Down
Value Method. The accounts are closed every year on 31st March. Show the Plant Account and Provision for Depreciation
Account.
ANSWER:
 Plant Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2010 2011
July 01 Bank A/c 5,00,000 Mar. 31 Balance c/d
(P1)
Sept. 01 Bank A/c (P2) 3,00,000 P1 5,00,000
P2 3,00,000 8,00,000
8,00,000 8,00,000
2011 2012
Apr. 01 Balance b/d Mar. 31 Balance c/d
P1 5,00,000 P1 5,00,000
P2 3,00,000 8,00,000 P2 3,00,000 8,00,000
8,00,000 8,00,000
2012 2012
Apr. 01 Balance b/d Dec. 31 Provision for Depreciation A/c 2,11,000
P1 5,00,000 Bank A/c (Sale of P1) 2,15,000
P2 3,00,000 8,00,000 Profit and Loss A/c (Loss on Sale of P1) 74,000
Dec. 31 Bank A/c (P3) 6,00,000 2013
Mar. 31 Balance c/d
P2 3,00,000
P3 6,00,000 9,00,000
14,00,000 14,00,000
 Provision for Depreciation Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2011 2011
Mar. 31 Balance c/d 1,10,000 Mar. 31 Depreciation A/c
P1 (for 9 months) 75,000
P2 (for 7 months) 35,000 1,10,000
1,10,000 1,10,000
2012 2011
Mar. 31 Balance c/d 2,48,000 Apr. 01 Balance b/d 1,10,000
2012
Mar. 31 Depreciation A/c
P1 85,000
P2 53,000 1,38,000
2,48,000 2,48,000
2012 2012
Dec. 31 Machinery A/c (75,000 + 85,000 + 2,11,000 Apr. 01 Balance b/d 2,48,000
66,000)
2013 Dec. 31 Depreciation A/c (P1) (for 9 51,000
months)
Mar. 31 Balance c/d 1,60,400 2013
Mar. 31 Depreciation A/c
P2 42,400
P3 (for 3 months) 30,000 72,400
3,71,400 3,71,400
Working Note: Calculation of Profit & Loss on Sale of P1
Particulars Amount
Value of Plant on July 01, 2010 5,00,000
Less: Depreciation for 9 months 75,000
Value of Plant on Apr. 01, 2011 4,25,000
Less: Depreciation 85,000
Value of Plant on Apr. 01, 2012 3,40,000
Less: Depreciation for 9 months 51,000
Value of Plant on Dec. 31, 2012 2,89,000
Less: Sale Value 2,15,000
Loss on Sale 74,000

Question 24:
On 1st August, 2010, Hindustan Toys Ltd. purchased a plant for ₹ 12, 00,000. The firm writes off depreciation at 10% p.a. on
the diminishing balance and the books are closed on 31st March each year. On 1st July, 2012, a part of this plant of which the
original cost was ₹ 1, 80,000 was sold for ₹ 1, 00,000 and on the same date a new plant was purchased for ₹ 4,00,000. Show the
Plant Account and Provision for Depreciation Account for three years ending 31st March, 2013.
ANSWER:
 Plant Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2010 2011
Aug. 01 Bank A/c Mar. 31 Balance c/d
P1 1,80,000 P1 1,80,000
P2 10,20,000 12,00,000 P2 10,20,000 12,00,000
12,00,000 12,00,000
2011 2012
Apr. 01 Balance b/d Mar. 31 Balance c/d
P1 1,80,000 P1 1,80,000
P2 10,20,000 12,00,000 P2 10,20,000 12,00,000
12,00,000 12,00,000

2012 2012
Apr. 01 Balance b/d July 01 Provision for Depreciation A/c 32,580
P1 1,80,000 Bank A/c (Sale of P1) 1,00,000
P2 10,20,000 12,00,000 Profit and Loss A/c (Loss on Sale of P1) 47,420
July 01 Bank A/c (P3) 4,00,000 2013
Mar. 31 Balance c/d
P2 10,20,000
P3 4,00,000 14,20,000
16,00,000 16,00,000
 Provision for Depreciation Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2011 2011
Mar. 31 Balance c/d 80,000 Mar. 31 Depreciation A/c
P1 (for 8 months) 12,000
P2 (for 8 months) 68,000 80,000
80,000 80,000
2012 2011
Mar. 31 Balance c/d 1,92,000 Apr. 01 Balance b/d 80,000
2012
Mar. 31 Depreciation A/c
P1 16,800
P2 95,200 1,12,000
1,92,000 1,92,000
2012 2012
July 01 Plant A/c (P1) (12,000 + 32,580 Apr. 01 Balance b/d 1,92,000
16,800 + 3,780)
2013 July 01 Depreciation A/c (P1) 3,780
(for 3 months)
Mar. 31 Balance c/d 2,78,880 2013
Mar. 31 Depreciation A/c
P2 85,680
P3 (for 9 months) 30,000 1,15,680
3,11,460 3,11,460
Working Note: Calculation of Profit & Loss on Sale of P1
Particulars Amount
Value of Plant on Aug. 01, 2010 1,80,000
Less: Depreciation for 8 months 12,000
Value of Plant on Apr. 01, 2011 1,68.000
Less: Depreciation 16,800
Value of Plant on Apr. 01, 2012 1,51,200
Less: Depreciation for 3 months 3,780
Value of Plant on July 01, 2012 1,47,420
Less: Sale Value 1,00,000
Loss on Sale 47,420

Note: In order to make easy calculation, plant purchased on Aug. 01, 2010 has been divided into two parts i.e. P1 and P2.

Thus, P1: Rs 1, 80,000 (sold for Rs 1, 00,000 on July 01, 2012) P2: Rs 10, 20,000

Question 25:
On 1st April 2012, Bangalore Silk Ltd. purchased machinery for ₹ 20, 00,000. It provides depreciation at 10% p.a. on the
Written down Value Method and closes its books on 31st March every year. On 1st July 2014, a part of the machinery
purchased on 1st April 2012 for ₹ 4, 00,000 was sold for ₹ 3, 20,000. On 1st November 2014, new machinery was purchased for
₹ 4, 80,000. You are required to prepare Machinery Account, Depreciation Account and Provision for Depreciation Account for
three years ending 31st March 2015.
ANSWER:
Machinery Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2012 2013
Apr. 01 Bank A/c Mar. 31 Balance c/d
M1 4,00,000 M1 4,00,000
M2 16,00,000 20,00,000 M2 16,00,000 20,00,000
20,00,000 20,00,000
2013 2014
Apr. 01 Balance b/d Mar. 31 Balance c/d 20,00,000
M1 4,00,000 M1 4,00,000
M2 16,00,000 20,00,000 M2 16,00,000 20,00,000
20,00,000 20,00,000
2014 2014
Apr. 01 Balance b/d July 01 Provision for Depreciation A/c 84,100
M1 4,00,000 July 01 Bank A/c (Sale of M1) 3,20,000
M2 16,00,000 20,00,000 2015
July 01 Profit and Loss A/c 4,100 Mar. 31 Balance c/d
(Profit on Sale of M1)
Nov. 01 Bank A/c (M3) 4,80,000 M2 16,00,000
M3 4,80,000 20,80,000
24,84,100 24,84,100
 Depreciation Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2013 2013
Mar.31 Provision for Depreciation A/c 2,00,000 Mar.31 Profit and Loss A/c 2,00,000
2,00,000 2,00,000
2014 2014
Mar.31 Provision for Depreciation A/c 1,80,000 Mar.31 Profit and Loss A/c 1,80,000
1,80,000 1,80,000
2015 2015
Provision for Depreciation A/c 1,57,700 Mar.31 Profit and Loss A/c (1,47,600 1,57,700
Mar.31
+ 8,100)
1,57,700 1,57,700

Provision for Depreciation Account

Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2013 2013
Mar. 31 Balance c/d 2,00,000 Mar. 31 Depreciation A/c
M1 40,000
 M2 1,60,000 2,00,000
2,00,000 2,00,000
2014 2013
Mar. 31 Balance c/d 3,80,000 Apr. 01 Balance b/d 2,00,000
2014
Mar. 31 Depreciation A/c
M1 36,000
M2 1,44,000 1,80,000
3,80,000 3,80,000
2014 2014
July 01 Machinery A/c (M1) (40,000 + 84,100 Apr. 01 Balance b/d 3,80,000
36,000
+ 8,100)
2015 July 01 Depreciation A/c (M1) (for 3 8,100
months)
Mar. 31 Balance c/d 4,53,600 2015
Mar. 31 Depreciation A/c
M2 1,29,600
M3 (for 5 months) 20,000 1,49,600
5,37,700 5,37,700
Working Note: Calculation of Profit & Loss on Sale of M1
Particulars Amount
Value of Machinery on Apr. 01, 2012 4,00,000
Less: Depreciation 40,000
Value of Machinery on Apr. 01, 2013 3,60,000
Less: Depreciation 36,000
Value of Machinery on Apr. 01, 2013 3,24,000
Less: Depreciation for 3 months 8,100
Value of Machinery on July 01, 2014 3,15,900
Less: Sale Value 3,20,000
Profit on Sale 4,100

Note: In order to make easy calculation, machinery purchased on Apr. 01, 2012 has been divided into two parts i.e. M1 and M2.

Thus, M1: Rs 4, 00,000 (sold for Rs 3, 20,000 on July 01, 2014) M2: Rs 16, 00,000

Question 26:
Binny Textiles Ltd. which depreciates its machinery at 20% p.a. on diminishing balance method purchased a machine for
₹ 6, 00,000 on 1st October, 2010. It closes its books on 31st March every year. On 1st January, 2012, it purchased another
machine for ₹ 1, 50,000. On 1st December, 2012, one-third of the machinery purchased on 1st October, 2010 was sold for
₹ 80,000. You are required to prepare Machinery A/c and Provision for Depreciation A/c for the relevant years.
ANSWER:
 Machinery Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2010 2011
Oct. 01 Bank A/c Mar. 31 Balance c/d
M1 2,00,000 M1 2,00,000
M2 4,00,000 6,00,000 M2 4,00,000 6,00,000
6,00,000 6,00,000
2011 2012
Apr. 01 Balance b/d Mar. 31 Balance c/d
M1 2,00,000 M1 2,00,000
M2 4,00,000 6,00,000 M2 4,00,000
2012 M3 1,50,000 7,50,000
Dec. 01 Bank A/c (M3) 1,50,000
7,50,000 7,50,000
2012 2012
Apr. 01 Balance b/d Dec. 01 Provision for Depreciation A/c 75,200
M1 2,00,000 Bank A/c (Sale of M1) 80,000
M2 4,00,000 Profit and Loss A/c (Loss on 44,800
Sale of M1)
M3 1,50,000 7,50,000 2013
Mar. 31 Balance c/d
M2 4,00,000
M3 1,50,000 5,50,000
7,50,000 7,50,000
 Provision for Depreciation Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2011 2011
Mar. 31 Balance c/d 60,000 Mar. 31 Depreciation A/c
M1 (for 6 months) 20,000
M2 (for 6 months) 40,000 60,000
60,000 60,000
2012 2011
Mar. 31 Balance c/d 1,75,500 Apr. 01 Balance b/d 60,000
2012
Mar. 31 Depreciation A/c
M1 36,000
M2 72,000
M3 (for 3 months) 7,500 1,15,500
1,75,500 1,75,500
2012 2012
Dec. 01 Machinery A/c (M1) (20,000 + 75,200 Apr. 01 Balance b/d 1,75,500
36,000 + 19,200)
2013 Dec. 01 Depreciation A/c (M1) (for 8 19,200
months)
Mar. 31 Balance c/d 2,05,600 2013
Mar. 31 Depreciation A/c
M2 57,600
M3 28,500 86,100
2,80,800 2,80,800
Working Note: Calculation of Profit & Loss on Sale of M1
Particulars Amount
Value of Machinery on Oct. 01, 2010 2,00,000
Less: Depreciation for 6 months 20,000
Value of Machinery on Apr. 01, 2011 1,80,000
Less: Depreciation 36,000
Value of Machinery on Apr. 01, 2012 1,44,000
Less: Depreciation for 8 months 19,200
Value of Machinery on Dec. 01, 2012 1,24,800
Less: Sale Value 80,000
Loss on Sale 44,800

Note: In order to make easy calculation, machinery purchased on Apr. 01, 2012 has been divided into two parts i.e. M1 and M2.

Thus, M1: Rs 2, 00,000 (1/3rd value of machinery, sold for Rs 80,000 on Dec. 01, 2012) M2: Rs 4, 00,000 (2/3rd value of
machinery)

Question 27:
The following balances appear in the books of Y Ltd:
₹
Machinery A/c as on 1-4-2014 8,00,000
Provision for Depreciation A/c as on 1-4-2014 3,10,000
On 1-7-2014, machinery which was purchased on 1-4-2011 for ₹ 1, 20,000 was sold for ₹ 50,000 and on the same date machinery
was purchased for ₹ 3, 20,000. The firm has been charging depreciation at 15% p.a. on Original Cost Method and closes its
books on 31st March every year. Prepare the Machinery A/c and Provision for Depreciation A/c for the year ending 31st March
2015.
ANSWER:
Machinery Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2014 2014
Apr. 01 Balance b/d (6,80,000 + 1,20,000) 8,00,000 July Provision for Depreciation A/c 58,500
01
July 01 Bank A/c 3,20,000 Bank A/c (Sale) 50,000
Profit and Loss A/c (Loss on Sale) 11,500
2015
Mar. Balance c/d 10,00,000
31
11,20,000 11,20,000
 Provision for Depreciation Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2014 2014
July 01 Machinery A/c (54,000 + 4,500) 58,500 Apr. 01 Balance b/d 3,10,000
2015 2015
Mar. 31 Balance c/d 3,94,000 Mar. 31 Depreciation A/c (WN2) 1,42,500
4,52,500 4,52,200

Working Notes:
WN1: Calculation of Profit & Loss on Sale
Particulars Amount
Value of Machinery on Apr. 01, 2011 1,20,000
Less: Depreciation for 3 Years 3 months 58,500
Value of Machinery July 01, 2014 61,500
Less: Sale Value 50,000
Loss on Sale 11,500
WN2: Depreciation charged during the year
Particulars Amount
On Rs 6,80,000 @ 15% 1,02,000
On Rs 1,20,000 @ 15% for 3 months 4,500
On Rs 3,20,000 @ 15% for 9 months 36,000
1,42,500

Question 28:
On 1st April, 2010, following balances appeared in the books of M/s Krishna Traders:
₹
Furniture Account 50,000
Provision for Depreciation on Furniture Account 22,000
On 1st October, 2010 a part of Furniture purchased for ₹ 20,000 on 1st April, 2006 was sold for ₹ 5,000. On the same date a new
furniture costing ₹ 25,000 was purchased. The depreciation was provided @ 10% p.a. on original cost of the asset and no
depreciation was charged on the asset in the year of sale. Prepare 'Furniture Account' and 'Provision for Depreciation Account'
for the year ending 31st March, 2011.
ANSWER:
 Furniture Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2010 2010
Apr. 01 Balance b/d (30,000 + 20,000) 50,000 Oct. 01 Provision for Depreciation A/c 8,000
Oct. 01 Bank A/c 25,000 Oct. 01 Bank A/c (Sale ) 5,000
Oct. 01 Profit and Loss A/c (Loss on Sale) 7,000
2011
Mar. 31 Balance c/d 55,000
75,000 75,000

Provision for Depreciation Account

Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2010 2010
Oct.01 Furniture A/c 8,000 Apr.01 Balance b/d 22,000
2011 2011
Mar.31 Balance c/d 18,250 Mar.31 Depreciation A/c (WN2) 4,250
26,250 26,250
Working Notes:
WN1: Calculation of Profit & Loss on Sale
Particulars Amount
Value of Furniture on Apr. 01, 2006 20,000
Less: Depreciation for 4 Years @ 10% 8,000
Value of Furniture on Oct. 01, 2010 12,000
Less: Sale Value 5,000
Loss on Sale 7,000

WN2: Depreciation charged during the year

Particulars Amount
On Rs 30,000 @ 10% 3,000
On Rs 25,000 @ 10% for 6 months 1,250
4,250

Question 29:
Books of Mumbai Chemicals Ltd. showed the following balances on 1st April 2012:
Machinery A/c ₹ 10,00,000
Provision for Depreciation A/c ₹ 4,05,000
On 1st April, 2012, a machine which had a cost of ₹ 2, 00,000 on 1st October, 2009 was sold for ₹ 80,000. The firm writes off
depreciation @ 10% p.a. under the Reducing Balance Method and its accounts are made up on 31st March each year. You are
required to prepare the Machinery A/c and Provision for Depreciation A/c for the year ending 31st March, 2013.
ANSWER:
Machinery Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2012 2012
Apr.01 Balance b/d (8,00,000 + 2,00,000) 10,00,000 Apr.01 Provision for Depreciation A/c 46,100
Bank A/c (Sale ) 80,000
Profit and Loss A/c (Loss on Sale) 73,900
2013
Mar.31 Balance c/d 8,00,000
10,00,000 10,00,000
 Provision for Depreciation Account
Dr. Cr.
Amount Amount
Date Particulars Date Particulars
(Rs) (Rs)
2012 2012
Apr. 01 Machinery A/c 46,100 Apr. 01 Balance b/d 4,05,000
2013 M1 46,100
Mar. 31 Balance c/d 4,03,010 M2 3,28,900 4,05,000
2013
Mar. 31 Depreciation 44,110
A/c (WN2)
4,49,110 4,49,110

Working Notes:
WN1: Calculation of Profit & Loss on Sale
Particulars Amount
Value of Machinery on Oct. 01, 2009 2,00,000
Less: Depreciation for 6 months 10,000
Value of Machinery on Apr. 01, 2010 1,90,000
Less: Depreciation 19,000
Value of Machinery on Apr. 01, 2011 1,71,000
Less: Depreciation 17,100
Value of Machinery on Apr. 01,2012 1,53,900
Less: Sale Value 80,000
Loss on Sale 73,900