On 1.1.93 Machinery was purchased by X Ior Rs. 50,000. On 1.7.

94 additions were made to the extent oI

Rs. 10,000. On 1.4.95 Iurther additions oI Rs. 6,400 were made on 30
th
June 1996. Machinery original
value oI which was Rs. 8,000 on 1.1.93 was sold Ior Rs.6,000. Depreciation is charged at 105 p.a. on
original cost. Show the Machinery Account Ior the years 1993 to 1996 in the books oI X who closes his
books on 31st December every year.

SoIution :

Working Notes:
#8#8
1. Annual depreciation
a. For 1993
Depreciation 10 on Rs. 50,000 5,000

For 1994
1st Machine 10 on Rs. 50,000 5,000
2nd Machine 10 on Rs.10,000 Ior 6 mths 500 5,500

For 1995
1st Machine 10 on Rs. 50,000 5,000
2nd Machine 10 on Rs. 10,000 1,000
3rd Machine 10 on Rs. 6,400 Ior
9 months 6,40010/1009/12 480 6,480

1st M/c 10 on (50,000 8,000) Rs.42,000 4,200
2nd Machine 10 on Rs. 10,000 1,000
3rd Machine 10 on 6,400 640
On selling Machine at Rs. 8,000 Ior 6 mths.
Rs. 8,00010/1001/2 400 6,240




2. ProIit or loss on sale

Original cost oI Machine as on 1.1.93 8,000
Less : Deprn. 10 Ior 31/2 years 2, 800
Value as on Selling date i.e. 30.6.96 5, 200
Sales Value 6,000
So ProIit on Sale (6,000 5.200) 800