(a) M/s. Ramco Textile Mills purchased Machinery on 1st April 2014 for Rs. 2,00,000 on credit from M/s. Nila C

Question 26 of 33

Q. (a) M/s. Ramco Textile Mills purchased Machinery on 1st April 2014 for Rs. 2,00,000 on credit from M/s. Nila & Co. and spent Rs. 10,000 on its installation. Depreciation is provided at 10% per annum on the written down value method. Prepare Machinery account and Depreciation account for the first three years. Books are closed on 31st March every year.

(OR)

(b) Mention any five limitations of computerised accounting system.

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Cost Rs. 2,10,000; WDV depreciation 10% gives Rs. 21,000, Rs. 18,900, Rs. 17,010, leaving Rs. 1,53,090 after three years.

Cost of machinery = Purchase price 2,00,000 + Installation 10,000 = Rs. 2,10,000 (installation is capitalised).

Under the written-down value method, depreciation of 10% is charged each year on the opening book value:

Machinery Account

Date	Particulars	Rs.	Date	Particulars	Rs.
2014 Apr 1	To M/s Nila & Co. A/c	2,00,000	2015 Mar 31	By Depreciation A/c	21,000
2014 Apr 1	To Bank A/c (installation)	10,000	2015 Mar 31	By Balance c/d	1,89,000
		2,10,000			2,10,000
2015 Apr 1	To Balance b/d	1,89,000	2016 Mar 31	By Depreciation A/c	18,900
			2016 Mar 31	By Balance c/d	1,70,100
		1,89,000			1,89,000
2016 Apr 1	To Balance b/d	1,70,100	2017 Mar 31	By Depreciation A/c	17,010
			2017 Mar 31	By Balance c/d	1,53,090
		1,70,100			1,70,100
…