Page 112 - debkxi

Depreciation 15.7

Dr. PROVISION FOR DEPRECIATION ACCOUNT Cr.
Date Particulars ` Date Particulars `
2000 2000
Dec. 31 To Balance c/d 80,000 Dec. 31 By Depreciation A/c 80,000
80,000 80,000
2001 2001
Dec. 31 To Balance c/d 1,60,000 Jan. 1 By Balance b/d 80,000
Dec. 31 By Depreciation A/c 80,000
1,60,000 1,60,000
2002 2002
Dec. 31 To Balance c/d 2,40,000 Jan. 1 By Balance b/d 1,60,000
Dec. 31 By Depreciation A/c 80,000
2,40,000 2,40,000
2003 2003
Dec. 31 To Plant Disposal A/c 3,20,000 Jan. 1 By Balance b/d 2,40,000
Dec. 31 By Depreciation A/c 80,000
3,20,000 3,20,000

Dr. PLANT DISPOSAL ACCOUNT Cr.
Date Particulars ` Date Particulars `
2003 2003
Dec. 31 To Plant A/c 4,10,000 Dec. 31 By Provision for Depreciation A/c 3,20,000

Dec. 31 By Bank A/c (Insurance Claim) 50,000

Dec. 31 By Loss on Sale of Plant A/c 40,000
(Profit & Loss A/c) (Bal. Fig.)
4,10,000 4,10,000
5. On 1st April, 2022, R.K. Traders purchased an old machine for ` 28,000 and paid
` 4,600 for its repairs and installation. The machinery started functioning on
1st June, 2022. Another new plant was purchased for ` 45,000 and incurred
installation charges ` 3,000 on 1st October, 2022. On 31st October, 2023, the plant
installed on 1st April, 2022 was sold for ` 27,400 due to some mechanical problem.
Depreciation is charged @ 10% p.a. on Fixed Instalment Basis. Show Machinery
Account and Depreciation Account for 2 years ended 31st December, 2023.

Solution:
Dr. MACHINERY ACCOUNT Cr.
Date Particulars ` Date Particulars `
2022 2022
April 1 To Bank A/c (Purchase) 28,000 Dec. 31 By Depreciation A/c (Note 1) 3,102
To Bank A/c (Installation) 4,600 By Balance c/d 77,498
Oct. 1 To Bank A/c (Purchase) 45,000
To Bank A/c (Installation) 3,000
80,600 80,600
2023 2023
Jan. 1 To Balance b/d 77,498 Oct. 31 By Bank A/c (Sale) 27,400
By Loss on Sale of Machinery A/c 581
(Profit & Loss A/c) (Note 3)
Dec. 31 By Depreciation A/c (Note 2) 7,517
By Balance c/d 42,000
77,498 77,498