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Answer / dkd
Backward Integration is a strategy employed to expand
profits and gain greater control over production of a
product whereby a company will purchase or build a business
that will increase its own supply capability or lessen its
cost of production. For example, a clothing manufacturer may
purchase one of its suppliers of fabrics to lessen the cost
of raw materials and have more control over the delivery
schedules of the finished product.
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Answer / srinath
spliting the thing
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Raj & Raj Ltd purchased a machinery on 01.01.1996 for Rs.88,000.The life of the machine estimated to be 5 Yrs.It was calculated that the old machinery would fetch Rs.8000 at the end of its useful life.it was decided to replace the machinery at the end of the fifth year by setting up depreciation fund and invest the annual depreciation (along with interest earned each year) in gilt edged securities carrying interest at 5% per annum at the end of the 5th year the securities were sold for Rs.62,200 and the old machinery was sold for Rs.9000.As per the sinking fund table Rs.14,478 is to be invested every year.A new machine was purchased on 01.01.2001 for Rs.1,00,000.Pass the journal entries and show the ledger accounts
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