Page 175 - DMGT403_ACCOUNTING_FOR_MANAGERS

Accounting for Managers

Notes Cash sale of the machinery amounted to 26,000.
What happens during the cash sale of a machinery ?
Debit what comes in - Cash resources are coming in.
Credit what goes out- Machinery is going out of the firm.

Cash A/c Dr 26,000
To Machinery A/c 26,000
While selling the machinery, it is most important to identify the worth of the sale transaction of
the machinery.

Original cost of the asset 50,000
Accumulated Depreciation 20,000
30,000
Sale price 26,000
Loss on sale of the assets 4,000

Once the loss of the transaction is found out, the amount of the loss should be appropriately
recorded.
Debit all losses.
Credit the asset account.

Loss of Machinery sale A/c Dr. 4,000
To Machinery A/c 4,000
Dr. Machinery Account Cr.

To Balance B/d (Opening) 5,00,000 By cash sale 26,000
By Profit and loss a/c Loss 4,000
Balancing Fig.
By Depreciation Provision 20,000
By Balance c/d(Closing ) 4,50,000
2,80,000+1,70,000
5,00,000 5,00,000

During the purchase of land and building, what happens?
Debit what comes in - land and building are coming in.
Credit what goes out - cash resources are going out.

Land & Building A/c Dr 80,000
To Cash A/c 80,000

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