Question

Ram Brothers acquired a machine on 1^st July 2000 at a cost of ₹14000 and spent ₹1000 on its installation. The firm writes off depreciation at 10% of the original cost every year. The books are closed on 31 December every year. On March 31^st, 2003, the machine is sold for ₹9500. Show the machinery account under Fixed Instalment method.

Answer 1

Dr					Cr
Date	Particulars	Amount	Date	Particulars	Amount
1/7/2000	Cash (14000+1000)	15000	31/12/00	Depreciation (1500 \(\times\) 10/100 \(\times\)  6/12)	750 14250
		15000			15000
1/1/2001	Balance b/d	14250	31/12/01	Depreciation(15000 \(\times\) 10/100) Balance c/d	1500 12750
		14250			14250
1/1/2002	Balance b/d	12750	31/12/02	Depreciation  Balance c/d	1500 11250
		12750			12750
1/1/2003	Balance b/d	11250	31/3/03	Cash (sales proceeds) depreciation (15000 \(\times\) 10/100 \(\times\) 3/12) Profit and Loss A/c [(11250 - 375) - 9500]	9500 375 1375
		11250			11250

Note : - Loss on sale of asset transferred to profit and Loss a/c