Answer to Question #181085 in Accounting for Nyabali Chavangi

Question

A business firm purchased two machines on 1^st January 2017 at a cost of Sh1,500,000 each. Each machine had an estimated useful life of five years and a nil residual value. The straight line method of depreciation is used. On 31^st March 2019, one machine was sold for Sh.800,000. The second machine was sold on 1^st December 2019 for Sh.250,000.

Required: 

1. Machinery account                                          (3 marks)
2. Provision for depreciation account for machinery                 (3 marks)
3. Disposal of machinery account   

Answer 1

Given Data: Purchased 2 Machines for Sh 15,00,000 each.

Let rename the 2 machines be Machine 1 and Machine 2.

Separate Accounts and calculations are done for Machine 1 and Machine 2.

Calculation for Machine 1

Calculation for machine 2: