Page 134 - DCOM101_FINANCIAL_ACCOUNTING_I

Financial Accounting-I

Notes z The next transaction is the final transaction pertaining to the posting of depreciation
accounting balance under the P & L account.
z It is nothing but the transfer of Depreciation accounting balance into P&L account. At the

end of every year, immediately after finalizing the accounting, balance of depreciation is
regularly posted under the P&L account.
z The journal entry transfer is carried out as follows:
z For the I year depreciation transfer to P&L A/c

` `
31 March, P&L A/c Dr 16,000
st
2000 To Depreciation A/c 16,000

Being the first year depreciation is transferred to P&L A/c
z For the II year depreciation transfer to P&L A/c

` `
31 March, P&L A/c Dr 16,000
st
2001 To Depreciation A/c 16,000
Being the second year depreciation is transferred to P&L A/c
z For the III year depreciation transfer to P&L A/c
` `
31 March, P&L A/c Dr 16,000
st
2002 To Depreciation A/c 16,000
Being the third year depreciation is transferred to P&L A/c
z For the IV year depreciation transfer to P&L A/c

` `
31 March, P&L A/c Dr 16,000
st
2003 To Depreciation A/c 16,000
Being the fourth year depreciation is transferred to P&L A/c
z For the V year depreciation transfer to P&L A/c
` `
31 March, P&L A/c Dr 16,000
st
2004 To Depreciation A/c 16,000

Being the fifth year depreciation is transferred to P&L A/c
The preparation of Plant & Machinery account: It is very easy to prepare the machinery Ledger
account.
Dr Plant & Machinery A/c I Yr Cr

Date Particular ` Date Particulars `
1 April, 1999 To Cash A/c 90,000 31 March, 2000 By Depreciation 16,000
st
By Balance c/d
transferred to
Second year Plant &
Machinery A/C 74,000
90,000 90,000
To Balance B/d 74,000

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