M/s Jalaram Mill, Mulund, showed a debit balance of Rs. 32,000 to the Machinery A/c on 1st April, 2001(Original cost of the Machinery was Rs. 40,000). On 1st October, 2001 the Mill bought additional Machinery for Rs. 15,000 and spent Rs. 1,000 for its installation. One more machinery costing Rs. 20,000 was purchased on 31st March, 2003. Depreciation is charged on 31st March, every year at 10% p.a. under the Diminishing Balanced Method. On 31st March, 2004, the machinery which was purchased on 1st October, 2001 was sold for Rs. 12000. Prepare Machinery A/c and Depreciation A/c for the years 2001 – 2001, 2002 – 2003 and 2003 – 2004. (February, 2008)
| Date | Machinery | Machinery 2 | Machinery 3 | Total depreciation |
| 1.4.01 | 32000 | | | |
| 1.10.01 | | 16000 | | |
| Depreciation @10% | 3200 | 1800 | | 4000 |
| 1.4.02 | 28800 | 15200 | | |
| 31.3.2003 | | | 20000 | |
| Depreciation @10% | 2880 | 1520 | | 4400 |
| 1.4.03 | 25920 | 13680 | 20000 | |
| Depreciation @10% | 2592 | 1368 | 2000 | 5960 |
| 31.3.01/1.4.04 | | 12312 | | |
| Sold | | 12000 | | |
| | | 312 Loss | | |
| 1.4.04 | 23328 | | 18000 | |
| DATE | PARTICULARS | AMOUNT | DATE | PARTICULARS | AMOUNT |
| 1.4.01 | To balance b/d | Nil | 31.3.02 | By depreciation account | 4000 |
| 1.10.01 | To cash / bank account | 15000 | | | |
| 1.10.01 | To cash bank account | 1000 | | | |
| | | | 31.3.02 | By balance c/d | 44000 |
| | | 48000 | | | 48000 |
| 1.4.02 | To balance b/d | 44000 | 31.3.03 | By depreciation account | 4400 |
| 31.3.03 | To cash / bank account | 20000 | | | |
| | | | 31.3.03 | By balance c/d | 59600 |
| | | 64000 | | | 64000 |
| 1.4.03 | To balance b/d | 59600 | 31.3.04 | By depreciation account | 5960 |
| | | | 31.3.04 | By cash bank account | 12000 |
| | | | 31.3.04 | By profit / loss account | 312 |
| | | | 31.3.04 | By balance c/d | 41328 |
| | | 59600 | | | 59600 |
| 1.4.04 | To balance b/d | 41328 | | | |