Scribd
Upload
10 views3 pages

Machinery Sale Profit/Loss Calculations

The document contains financial scenarios involving the purchase and sale of machinery by three companies, detailing costs, repairs, and depreciation calculations using the reducing balance method. It also includes instructions for preparing Trading, Profit & Loss accounts, and Balance Sheets for M/s Mansi Steels Ltd and another entity, with specific adjustments and depreciation rates. The calculations aim to determine profit or loss on machinery sales and overall financial statements for the respective companies.

Uploaded by

aniketmohapatra07
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
10 views3 pages

Machinery Sale Profit/Loss Calculations

The document contains financial scenarios involving the purchase and sale of machinery by three companies, detailing costs, repairs, and depreciation calculations using the reducing balance method. It also includes instructions for preparing Trading, Profit & Loss accounts, and Balance Sheets for M/s Mansi Steels Ltd and another entity, with specific adjustments and depreciation rates. The calculations aim to determine profit or loss on machinery sales and overall financial statements for the respective companies.

Uploaded by

aniketmohapatra07
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

1) A machinery was purchased on 01/07/2019 for Rs. 4,75,000 and spent Rs.

25,000 on its
installation. The estimated scrap value of the machinery is Rs. 0 and expected life is 5 years. On
01/10/2021, a sum of Rs. 50,000 was spent on its repairs and the machinery was sold on 31/12/2022
for Rs. 1,17,000. Calculate the profit/loss on the sale of machinery if the company has followed
reducing balance method of depreciation if the rate of depreciation is 20%.

2) M/s Jaina Exports Ltd (JEL) purchased a machinery on 01/07/2018 for Rs. 7,25,000 and spent Rs.
25,000 on its installation. The estimated scrap value of the machinery is Rs. 0 and expected life is
5 years. On 01/10/2020, a sum of Rs. 50,000 was spent on its maintenance and repairs and the
machinery was sold on 31/11/2022 for Rs. 2,25,500. Calculate the profit/loss on the sale of
machinery if JEL followed reducing balance method of depreciation at the rate of 20%.

3) M/s Ritika Exports Ltd (REL) purchased a machinery on 01/07/2018 for Rs. 6,25,000 and spent
Rs. 25,000 on its installation. The estimated scrap value of the machinery is Rs. 0 and expected
life is 5 years. On 01/10/2020, a sum of Rs. 50,000 was spent on its maintenance and repairs and
the machinery was sold on 31/11/2022 for Rs. 2,05,500. Calculate the profit/loss on the sale of
machinery if REL followed reducing balance method of depreciation at the rate of 20%.

Page 1 of 3
4) Prepare Trading, Profit & Loss a/c and Balance Sheet of M/s Mansi Steels Ltd (MSL) from the
following Trial Balance for the year ended 2023-24
Particulars Debit Credit Particulars Debit Credit
Opening Stock 33500 Preference Share 120000
Capital
Purchases 312500 Land & Buildings 200000
Salaries & Wages 21000 Loan from SBI 228800
Audit fee 10000 Accounts Payables 112550
Debtors 110000 Wages 49300
Sales 712800 Short Term 43000
Investments
Returns 2600 650 Insurance 5300
Carriage Inwards 2550 Freight 4100
Goodwill 32000 Rent 32000
Plant & Machinery 345000 Carriage outwards 16500
Share Capital 200000 Cash 5450
Vehicles 150000 1374800 1374800

Additional information:
a) Closing stock’s cost stood at Rs. 15,400 which has a market value of Rs. 14,500
b) Insurance prepaid Rs. 300
c) Rent paid in advance Rs. 500
d) Depreciate land & building, Plant & machinery and vehicles at 12%
e) Create bad debts at 5% and provision for bad debts at 5%

Page 2 of 3
5) Prepare trading, profit & loss account and balance sheet with the given adjustments

Particulars Debit Credit PPE 127775


Opening Stock 22795 Furniture 75805
Purchases 212330 Loan from
Sales 499315 bank 103180
Purchase Interest
returns 1075 Received 1330
Sales Returns 1190 Commission
Salaries 5240 paid 595
Discount
Prepaid received 115
Insurance 2230 Vehicles 22300
Investments 35900
Debtors 20525 Goodwill 525
Share Capital 52500 Creditors 19900
Cash 12450 677415 677415
Buildings 137755

Adjustments / Additional information:

a) Provide bad debts Rs. 525 and create provision for bad debts @ 5%
b) Depreciate furniture and PPE @ 10%

Page 3 of 3

You might also like