Nishi Kanti Dey
Profile Answers by Nishi Kanti Dey Questions by Nishi Kanti Dey

Jan 26th, 2009

Machinery A/c
88                   89                          90
60000 DR        20000 DR              31400DR
Depreciation A/C
6000                  7400                      1800

I am giving a clear description;
88--(1)-Machinery Account Dr--60000
              to Cash/Payable --------------60000
          (2)Depreciation A/c Dr-------6000
                  To Accumulated Depreciation---6000

89--(1) Machinery A/C Dr------20000
                 To Cash/Payable-----------------20000
        (2) Depreciation A/C Dr---------7400
                   To Accumulated Depreciation ---------7400
90--(1) Cash/Debtors A/C Dr.........40000
             Loss on Machinery DR..........8600 (48600-8600)
                      To Machine A/c---------------48600 (60000-6000-(7400-2000)

          (2) Depreciation A/C Dr-------1800 (60000+20000-48600-6000-7400)*10%
                     To Accumulated Depreciation .........1800


Thanks

Reducing Balance Method

Seema Automobiles Ltd., purchesed a machine for Rs. 60,000 on 1st july, 1988. On 1st january, 1989 company purchesed an additional machine costing Rs 20,000. On 31st december, 1990 the machinery purchesed on 1st july, 1988 became absolete and was sold for 40,000. Deprication was provided annualy on 31st December at the rate of 10% per annu on the Reducing Balance Method. Prepare machinery account and deprication account for the period from 1988 to 1990.