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On 1st october, 2015 a machine was purchased for 1,50,000 by star Ltd. Addjitions were made on 1st January,206 of 1,20,00. On 31st December 2016 half part of first machine was sold for 38,750 and on same date a new machine was purchases for 60000. on 1st July,2017 remaining half part of first machine was also sold at a profit of 3500. Company closed its account on 31st march every year and depreciation is charged 15% p.a by original cost method. Prepare machinery account for 3 years?
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On 1st october, 2015 a machine was purchased for 1,50,000 by star Ltd....
Machinery Account


Year 1 (2015-2016)


  • Opening Balance: 1,50,000

  • Additions: 1,20,000

  • Total Cost: 2,70,000

  • Depreciation @ 15%: 40,500

  • Closing Balance: 2,29,500



Year 2 (2016-2017)


  • Opening Balance: 2,29,500

  • Sale of Half Machine: -38,750

  • New Machine Purchased: 60,000

  • Total Cost: 2,50,750

  • Depreciation @ 15%: 37,612.5

  • Closing Balance: 2,12,137.5



Year 3 (2017-2018)


  • Opening Balance: 2,12,137.5

  • Sale of Remaining Half Machine: 38,500 + 3,500 = 42,000

  • Total Cost: 1,70,137.5

  • Depreciation @ 15%: 25,520.63

  • Closing Balance: 1,44,616.87



Explanation


  • The machinery account is prepared to keep track of the cost and depreciation of the machine over the three years.

  • The opening balance for the first year is the cost of the machine purchased on October 1, 2015.

  • Additions made on January 1, 2016 are added to the opening balance to get the total cost for the year.

  • Depreciation is calculated at 15% p.a by original cost method and deducted from the total cost to arrive at the closing balance.

  • In the second year, a half part of the machine is sold and a new machine is purchased. The cost is adjusted accordingly and depreciation is calculated on the new cost.

  • The same process is followed in the third year when the remaining half part of the machine is sold at a profit of 3500.

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On 1st october, 2015 a machine was purchased for 1,50,000 by star Ltd. Addjitions were made on 1st January,206 of 1,20,00. On 31st December 2016 half part of first machine was sold for 38,750 and on same date a new machine was purchases for 60000. on 1st July,2017 remaining half part of first machine was also sold at a profit of 3500. Company closed its account on 31st march every year and depreciation is charged 15% p.a by original cost method. Prepare machinery account for 3 years?
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