DEPRECIATION QUESTION WITH ANSWER QUESTION NO. 1

1.      OMTEX CLASSES

1.  A company purchased Machinery worth Rs. 2, 00,000 on 1st January, 1974. Accounting year of the Company closes on 31st December every year. Company provides depreciation at 10% p.a. on the original cost. On 31st December, 1976 the machinery was sold for Rs. 1, 20,000. Give the machinery Account for three years. [F.I.M]

Working Note: calculation of depreciation
Date
Machinery
Total depreciation
1.1.74
Depreciation@10%
200000
20000

20000
1.1.75
Depreciation@10%
180000
20000

20000
1.1.76
Depreciation@10%
160000
20000

20000
31.12.76/1.1.77
Sold
140000
120000


20000(loss)


M/S ______________________
MACHINERY ACCOUNT
DATE
PARTICULARS
AMOUNT
DATE
PARTICULARS
AMOUNT
1.1.74
To Cash Bank Account
200000
31.12.74
By depreciation Account
20000



31.12.74
By balance c/d
180000


200000


200000
1.1.75
To balance b/d
180000
31.12.75
By depreciation account
20000



31.12.75
By balance c/d
160000


180000


180000
1.1.76
To balance b/d
160000
31.12.76
By depreciation account
20000



31.12.76
By cash / bank account
120000



31.12.76
By profit / loss account
20000


160000


160000