On 1st July, 2015, A Co. Ltd. Purchases second-hand machinery for Rs 20,000 and spends Rs 3,000 or reconditioning and installing it. On 1st January, 2016, the firm purchases new machinery worth Rs 12,000. On 30th June, 2017, the machinery purchased on 1st January, 2016, was sold for Rs 8,000 and on 1st July, 2017, a fresh plant was installed. Payments for this plant was to be made as follows: {:("1st July, 2017","Rs 5,000"),("30t June, 2018","Rs 6,000"),("30th June, 2019","RS 5,500"):} Payments in 2018 and 2019 include interset of Rs 1,000 and Rs 500 respectively. The Company writes off 10% p.a. on the original cost. The accounts are closed every year on 31st March, Show the Machinery Account for the year ended 31st March, 2018.

On 1st July, 2015, A Co. Ltd. Purchases second-hand machinery for Rs 2

1.	On 1st July, 2015, A Co. Ltd. Purchases second-hand machinery for Rs 20,000 and spends Rs 3,000 or reconditioning and installing it. On 1st January, 2016, the firm purchases new machinery worth Rs 12,000. On 30th June, 2017, the machinery purchased on 1st January, 2016, was sold for Rs 8,000 and on 1st July, 2017, a fresh plant was installed. Payments for this plant was to be made as follows: {:("1st July, 2017","Rs 5,000"),("30t June, 2018","Rs 6,000"),("30th June, 2019","RS 5,500"):} Payments in 2018 and 2019 include interset of Rs 1,000 and Rs 500 respectively. The Company writes off 10% p.a. on the original cost. The accounts are closed every year on 31st March, Show the Machinery Account for the year ended 31st March, 2018.
Answer» <html><body><p><br/></p>Solution :Cost of Plant <a href="https://interviewquestions.tuteehub.com/tag/purchased-2962400" style="font-weight:bold;" target="_blank" title="Click to know more about PURCHASED">PURCHASED</a> on 1st July, 2017 = Rs 5,000 + (Rs 6,000 - Rs 1,000 interest) + Rs (5,500 - Rs 500 for interest) = Rs 15,000. Interest expenses are of <a href="https://interviewquestions.tuteehub.com/tag/revenue-1188040" style="font-weight:bold;" target="_blank" title="Click to know more about REVENUE">REVENUE</a> nature and not of capital nature and <a href="https://interviewquestions.tuteehub.com/tag/hence-484344" style="font-weight:bold;" target="_blank" title="Click to know more about HENCE">HENCE</a> not debited to <a href="https://interviewquestions.tuteehub.com/tag/machinery-1082418" style="font-weight:bold;" target="_blank" title="Click to know more about MACHINERY">MACHINERY</a> Account.</body></html>

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