, , x = % Note: Cost of the asset = Purchase price + Installation cost = , + , = ` , , Ledger accounts Machinery Account Cr. April April To Bank A/c To Bank A/c , , Dec Dec By Depreciation A/c ( , , × / × / ) By Balance c/d , , , , , , Jan To Balance b/d , Dec Dec By Depreciation A/c ( , , × / ) By Balance c/d , , , , Jan To Balance b/d , Sep Sep Sep By Depreciation A/c ( , , × / × / ) By Bank A/c By Profit and Loss A/c (Loss on sale) , , , , , Accountancy Illustration M/s Ramco textile mills purchased machinery on 1st April for ` , , on credit from M/s. Nila & Co. and spent ` , on its installation.
Depreciation is provided at % per annum on the written down value method. Prepare machinery account and depreciation account for the first three years. Books are closed on st March every year. Solution Ledger accounts Machinery Account Cr.
April April To Nila & Co. A/c To Bank A/c . , , March March By Depreciation A/c ( , , × %) By Balance c/d , , , , , , , April To Balance b/d , , March March By Depreciation A/c ( , , × %) By Balance c/d , , , , , , , April To Balance b/d , , March March By Depreciation A/c ( , , × %) By Balance c/d , , , , , , , April To Balance b/d , , Depreciation Account Cr. March To MachineryA/c , March By Profit & Loss A/c , , , March To MachineryA/c , March By Profit & Loss A/c ,, , , March To MachineryA/c , March By Profit & Loss A/c , , , Illustration A Ltd., purchased a machine on 1st January for ` , .