How do you post this journal entry in a ledger?

Question

Profit and loss A/c. Dr(125000)

Machine A/c. Dr (625000)

To machine (325000)

To modern machine (400000)

Answer 1

Is this missing some info? Did you sell the old machine for cash and get the new machine? Is the 400,000 the new machine value. right now you won't be able to match your debits and credits

In general a disposal or sale of a fixed asset would be as follows

Gain on sale/disposal

Debit New Equipment

Debit A/D Old Equipment

Credit Gain on Sale/Disposal

Credit Old Equipment

Credit Cash (if used in transaction)

Loss on sale/disposal

Debit New Equipment

Debit A/D Old Equipment

Debit Loss on Sale/Disposal

Credit Old Equipment

Credit Cash (if used in transaction)

For your problem if we go with the following

New Machine 400,000

Gain on sale/disposal 125,000

A/D on Old Machine 325,000

Old Machine 625,000

DR. New Machine 400,000

DR. A/D Old Machine 325,000

CR. Gain on Sale/disposal 125,000

CR. Old Machine. 625,000

You can see that our debits and credits do not match. It is off by 25,000. I chose 625,000 as the value of the old machine as the old machine value as A/D should not be more than the value of the actual fixed asset. Please let me know if you need additional help.