Vishal Company, Dhule, purchased Machinery costing ₹60,000 on 1st April 2016. They purchased further Machinery on 1st October 2017, costing ₹30,000 and on 1st July 2018, costing ₹20,000. On 1st Jan 2019, one-third of the Machinery, which was purchased on 1st April 2016, became obsolete and it was sold for ₹18,000. Assume that, company account closes on 31st March every year. Show Machinery Account for the first three(3) years and pass journal entries for third year, after charging depreciation at 10% p.a. on Written Down Value Method.

Practical Problems on Written Down Value Method

2. Vishal Company, Dhule, purchased Machinery costing ₹60,000 on 1st April 2016. They purchased further Machinery on 1st October 2017, costing ₹30,000 and on 1st July 2018, costing ₹20,000. On 1st Jan 2019, one-third of the Machinery, which was purchased on 1st April 2016, became obsolete and it was sold for ₹18,000.
Assume that, company account closes on 31st March every year.
Show Machinery Account for the first three(3) years and pass journal entries for third year, after charging depreciation at 10% p.a. on Written Down Value Method.

Solution:

In the Books of Vishal Company, Dhule.

Machinery Account


Date	Particulars	JF	Amount	Date	Particulars	JF	Amount
2016				2017
1^st April	To Cash/Bank A/c		60,000	31^st March	By Depreciation		6,000

				31^st March	By Balance c/d		54,000
			60,000				60,000
2017				2018
1^st April	To Balance b/d		54,000	31^st March	By Depreciation		6,900
1^st Oct	To cash/Bank A/c		30,000	31^st March	By balance c/d		77,100
			84,000				84,000




2018				2019
1^st April	To Balance b/d		77,100	1^st Jan	By Depreciation		1215
1^st July	To Cash/bank A/c		20,000	1^st Jan	By cash/bank A/c		18,000
1^st Jan	To Profit on sale		3,015	31^st March	By Depreciation		7,590

				31^st March	By Balance c/d		73,310
			1,00,115				1,00,115

Journal Entry


Date	Particulars	LF	Debit	Credit
2018	Machine A/c Dr.		20,000
1^st July	To Cash/bank A/c			20,000
	(Being purchased machinery)
2019
1^st Jan	Depreciation A/c Dr.		1,215
	To Machine A/c			1,215
	(Being Depreciation charged)
1^st Jan	Cash/Bank A/c Dr.		18,000
	To machine A/c			18,000
	(Being sold machine on Profit)
1st Jan	Machinery A/c Dr.		3,015
	To Profit on Sale			3,015
	(Being profit on sale of machine)
31^st March	Depreciation A/c Dr.		7,590
	To Machine			7,590
	(Being Depreciation charged at 10%p.a.)
31^st March	Profit & Loss A/c Dr.		8,805
	To Depreciation A/c			8,805
	(Being depreciation transferred to P & L A/c)

Calculation & Explanation:

1. 60,000*10% = 6,000 (31st March 2017)

2. 31st March 2018

(M1) 54,000*10% = 5,400

(M2) 30,000*10%*6/12 = 1,500

3. 1st Jan 2019

(M1) On 1st Jan 2019, one-third of the Machinery, purchased on 1st April 2016 was sold for ₹18,000.

48,600*1/3 = 16,200

Depreciation: 16,200*10%*9/12 = 1,215

31st March 2019

(M1) 32,400*10% = 3,240

(M2) 28,500*10% = 2,850

(M3) 20,000*10%*9/12 = 1,500

mesothelioma Lawyer

Depreciation Calculator along with month and percentage

Comments

Excitement surges as Prime Minister Narendra Modi inaugurates Atal Setu, India's longest sea-bridge, with an enticing announcement – toll rates set at just Rs 250 for a one-way trip and Rs 375 for a round trip in the first year! PM Modi's symbolic journey from INS Shikara in Colaba marked the grand commencement. In Navi Mumbai, he dedicated three pivotal infrastructure projects, laying the foundation stone for another. This Rs 21,200 crore investment plan, unfolding over five years, not only enhances Atal Setu's accessibility but also integrates the city's waterfronts with tunnels and flyovers.

Student Reviews

Very helpful for getting a solution. Thank you!

I like all your posts. You have done really good work. Thank you for the information you provide; it helped me a lot.

The answers are so perfect and proper 🌝

Nice explanation in full detail is very helpful.

It's very easy to learn.

Privacy Statement: We respect student privacy and do not share any personal information. Reviews are voluntarily provided to showcase genuine appreciation for our content.