18 March 2015
plant &machinery on 31.3.2013 =220000
31.3.2014=330000
additional info
on 1.10.13 sold machine having book value 40000 (as on 31.3.2014) at a loss of 15000.New machinery was purchased on 1.1.2014.
plz anyone give me idea to solve above qstn
27 July 2024
To solve this accounting question, follow these steps:
### **1. Determine the Book Value of the Sold Machine:** - **Book Value on 1 OCT 2013:** Given as ₹40K - **Loss on Sale:** ₹15K - **Selling Price:** Since the machine was sold at a loss of ₹15K, the selling price can be calculated as: \[ \text{Selling Price} = \text{Book Value} - \text{Loss} = ₹40K - ₹15K = ₹25K \]
### **2. Determine the Cost of New Machinery Purchased:** - **Plant & Machinery on 31 MARCH 2013:** ₹2.20L - **Plant & Machinery on 31.MARCH 2014:** ₹3.30L - **Increase in Machinery:** \[ \text{Increase} = ₹3.30L - ₹2.20L = ₹1.10L \] - **Less Sale of Machinery:** \[ \text{Book Value of Sold Machinery} = ₹40K \] - **Net Increase due to Purchase of New Machinery:** \[ \text{Net Purchase} = ₹1.10L - ₹40K = ₹70K \]
### **3. Record the Transactions:**
#### **Journal Entries:**
**A. Sale of Old Machinery:** - **Date:** 1.10.2013 - **Entry:** - **Debit:** Bank/Cash ₹25K (Selling Price) - **Debit:** Loss on Sale of Machinery ₹15K (Loss) - **Credit:** Machinery Account ₹40K (Book Value)
**B. Purchase of New Machinery:** - **Date:** 1.1.2014 - **Entry:** - **Debit:** New Machinery ₹70K (Net Purchase Cost) - **Credit:** Bank/Cash ₹70K
### **4. Prepare the Plant & Machinery Account:**
#### **Plant & Machinery Account for the Year Ending 31.3.2014**
| Date | Particulars | Dr (₹) | Cr (₹) | |------------|--------------------------|-----------|------------| | 01.04.2013 | To Balance B/d | | 2.20L | | 01.10.2013 | By Sale of Machinery | | 40K | | 01.01.2014 | To New Machinery | 70K | | | 31.03.2014 | By Balance C/d | | 3.30K |
**Balance c/d** = **Dr** Balance of Plant & Machinery for the next year.
If you need to calculate depreciation, consider the following: - **Depreciation on New Machinery** will be calculated based on its purchase cost from 1.1.2014. - **Depreciation on Remaining Machinery** will be adjusted for the remaining book value.
### **Summary:** - The loss on the sale of the machine and the cost of the new machinery should be recorded as per the transactions. - The machinery account should reflect the purchases and sales accurately. - Ensure the correct treatment of depreciation, if applicable, based on the new and existing machinery.
If you have any additional details or need further clarification on specific aspects of this question, feel free to ask!
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