Vaishnavi and Company purchased machinery for Rs.40,000 on October 01, 2013. New machinery was purchased on April 01, 2015 for 20,000. Depreciation is charged at 10% p.a. under Fixed Installation Method on March 31 every year.

Show necessary journal entries and necessary ledger account for the years 2013-2014, 2014-2015 and 2015-2016 when Provision for Depreciation account is maintained.

Asked by Topperlearning User | 4th Aug, 2016, 01:26: PM

Expert Answer:

In the Books of Vaishnavi and Company

 

Journal entries

Date

Particulars

 

LF

Dr.

Rs. 

Cr.

Rs. 

2013

 

 

 

 

 

Oct 1

Machinery A/c

Dr.

 

40,000

 

 

-------To Cash/ Bank A/c

 

 

 

40,000

 

(Being machine purchased)

 

 

 

 

2014

 

 

 

 

 

Mar 31

Depreciation A/c

Dr.

 

2,000

 

 

-------To Provision for Depreciation A/c

 

 

 

2,000

 

(Being depreciation provided for 6 months)

 

 

 

 

Mar 31

Profit and Loss A/c

Dr.

 

2,000

 

 

-------To Depreciation A/c

 

 

 

2,000

 

(Being depreciation transferred to profit and loss account)

 

 

 

 

2015

 

 

 

 

 

Mar 31

Depreciation A/c

Dr.

 

4,000

 

 

-------To Provision for Depreciation A/c

 

 

 

4,000

 

(Being depreciation provided for whole year)

 

 

 

 

Mar 31

Profit and Loss A/c

Dr.

 

4,000

 

 

-------

Answered by  | 4th Aug, 2016, 03:26: PM