Question

One machine was purchased on 1-4-’11. On 1-4-’17 the opening balance of machine account is 32,000. DepreciatIon on machine is charged at 10 % under straight-line method. Write journal entry for depreciation on 31-3-’18.

Answer 1

First of all. in this sum, cost price of machine will be ascertained.

If balance of machine is ₹ 40, the cost price is ₹ 100.

∴ If balance of machine is ₹ 32,000, the cost price is (₹)

= \(\frac{32,000×100}{40}\) = ₹ 80,000

∴ Cost price of machine = ₹ 80,000

Annual Decleration D = \(\frac{C×R}{100}\)

= \(\frac{80,000×10}{100}\)

= ₹ 8,000