DEPRECIATION QUESTION WITH ANSWER QUESTION NO. 5

OMTEX CLASSES

5. M/s Amol Industries, Pune, purchased machinery for Rs. 19,400 on 1st January, 1976, and spent Rs. 600 for its erection. On 1st July 1976, additional machinery costing Rs. 10,000 was acquired. On 1st July 1978 the machinery purchased on 1st January, 1976 was sold for Rs. 12,000 and on the same date fresh machinery was purchased at a cost of Rs. 16,000. Depreciation was provided annually on 31st December at the rate of 10% on the original cost. Give the machinery account and deprecation account for 1976, 1977 and 1978. [F.I.M]
WORKING NOTE : CALCULATION OF DEPRECIATION
Date
Machinery
Machinery 2
Machinery 3
Total depreciation
1.1.76
20000



1.7.76

10000


Depreciation @10%
2000
500

2500
1.1.77
18000
9500


Depreciation @10%
2000
1000

3000
1.1.78
16000
8500


Depreciation @10%
1000


1000
30.6.78/1.7.78
15000



Sold
12000




3000
Loss



1.7.78


16000

Depreciation @10%

1000
800
1800
1.1.79

7500
15200

M/S ______________________
MACHINERY ACCOUNT
DATE
PARTICULARS
AMOUNT
DATE
PARTICULARS
AMOUNT
1.1.76
To cash / bank account
19400
31.12.76
By depreciation account
2500
1.1.76
To cash/ bank account
600



1.7.76
To cash bank account
10000
31.12.76
By balance c/d
27500


30000



30000
1.1.77
To balance b/d
27500
31.12.77
By depreciation account
3000



31.12.77
By balance c/d
24500


27500


27500
1.1.78
To balance b/d
24500
1.7.78
By depreciation account
1000
1.7.78
To cash/bank account
16000
1.7.78
By cash / bank account
12000



1.7.78
By profit / loss account
3000



31.12.78
By depreciation account
1800



31.12.78
By balance c/d
22700


40500


40500
1.1.79
To balance b/d