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11th | Depreciation | Question No. 13 To 16 | Ts Grewal Solution 2022-2023

Question 13:


On 1st July, 2017, A Co. Ltd. purchases second-hand machinery for  ` 20,000 and spends  ` 3,000 on reconditioning and installing it. On 1st January, 2018, the firm purchases new machinery worth  ` 12,000. On 30th June, 2019, the machinery purchased on 1st January, 2016, was sold for  ` 8,000 and on 1st July, 2019, a fresh plant was installed.
Payments for this plant was to be made as follows:

1st July, 2019

 ` 5,000

30th June, 2020

 ` 6,000

30th June, 2021

 ` 5,500

Payments in 2020 and 2021 include interest of  ` 1,000 and  ` 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, 2020.

Answer:


Books of A. Co. Ltd

Machinery A/c

Date

Particulars

J.F.

 ( `)

Date

Particulars

J.F.

 ( `)

 

 

 

 

 

2018

 

 

 

 

2017

 

 

 

 

Mar.31

Depreciation

 

 

 

July 01

Bank (I)

(20,000 + 3,000) 

 

23,000

 

I (for 9 months)

1,725

 

 

2017

 

 

 

 

 

II (for 3 months)

300

 

2,025

Jan.01

Bank (II)

 

 

12,000

Mar.31

Balance c/d

 

 

 

 

 

 

 

 

 

I

21,275

 

 

 

 

 

 

 

 

II

11,700

 

32,975

 

 

 

 

35,000

 

 

 

 

35,000

2018

April 01

Balance b/d

 

 

 

2019

 

 

 

 

 

I

21,275

 

 

Mar.31

Depreciation

 

 

 

 

II

11,700

 

32,975

 

I

2,300

 

 

 

 

 

 

 

 

II

1,200

 

3,500

 

 

 

 

 

Mar.31

Balance c/d

 

 

 

 

 

 

 

 

 

I

18,975

 

 

 

 

 

 

 

 

II

10,500

 

29,475

 

 

 

 

32,975

 

 

 

 

32,975

2019

 

 

 

 

2019

 

 

 

 

April 01

Balance b/d

 

 

 

June 30

Bank (II)

 

 

8,000

 

I

18,975

 

 

June 30

Depreciation (II)

(for 3 months)

 

 

300

 

II

10,500

 

29,475

June 30

Profit and Loss (Loss)

 

 

2,200

July 01

Bank (III)

 

 

5,000

2020

 

 

 

 

July 01

Creditors for plant (III)

 

 

10,000

Mar.31

Depreciation

 

 

 

 

 

 

 

 

 

I

2,300

 

 

 

 

 

 

 

 

III (on 15,000 for 8 months)

1,125

 

3,425

 

 

 

 

 

 

Balance c/d

 

 

 

 

 

 

 

 

 

I

16,675

 

 

 

 

 

 

 

 

III

13,875

 

30,550

 

 

 

 

44,475

 

 

 

 

44,475

Working Notes

1. Calculation of Depreciation

Machine I= 23,000×10/100=  ` 2,300 p.a.

Machine II=12,000×10/100=  ` 1,200 p.a.

Machine III=15,000×10/100=  ` 1,500 p.a.

 

2.     Calculation of profit on loss on sale of Machine (II)

 

Particulars

 (Rs)

Book Value of Machine (II) on April 01, 2017

10,500

Less: Depreciation for 3 Months

(300)

Book Value on June 30

10,200

Less: Sale

(8,000)

Loss on Sale

2,200

Question 14:


Following balances appear in the books of Hari Bros:

 

 

 `

1st April, 2020

Machinery A/c

80,000

 

Provision for Depreciation A/c

36,000


On 1st April, 2020, they decided to sell a machine for  ` 8,700. This machine was purchased for  ` 16,000 in April, 2016. Prepare the Provision for Depreciation Account and Machinery Account on 31st March, 2021, assuming the firm has been charging Depreciation at 10% p.a. on Straight Line Method.

Answer:


Books of Rama Bros.

Machinery Account

Dr.

 

Cr.

Date

Particulars

J.F.

 ( `)

Date

Particulars

J.F.

 ( `)

2020

 

 

 

2020

 

 

 

Apr.01

Balance b/d (64,000 + 16,000)

 

80,000

Apr.01

Provision for Depreciation

 

6,400

 

 

 

 

Apr.01

Bank

 

8,700

 

 

 

 

Apr.01

Profit and Loss

 

900

 

 

 

 

2021

 

 

 

 

 

 

 

Mar.31

Balance c/d

 

64,000

 

 

 

80,000

 

 

 

80,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for Depreciation Account

Dr.

 

Cr.

Date

Particulars

J.F.

 ( `)

Date

Particulars

J.F.

 ( `)

2020

 

 

 

2020

 

 

 

Apr.01

Machinery Account

(Accumulated Dep. on Machine Sold)

 

6,400

Apr.01

Balance b/d

 

36,000

2021
Mar.31

Balance c/d

 

36,000

2021
Mar.31

Depreciation (on 64,000 @10%)

 

6,400

 

 

 

42,400

 

 

 

42,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Working Notes

(1) Calculation of Book Value of Machine Sold on April 01, 2020

Particulars

 ( `)

Machine purchased in 2016

16,000

Less: Accumulate Depreciation for 4 years till Mar 31, 2020 (1,600 × 4)

(6,400)

Book value on April 01, 2020

9,600

 

(2)Calculation of profit or loss on Sale of Machine

Particulars

 ( `)

Book Value on April 01, 2020

9,600

Less: Sale Value

(8,700)

Loss on Sale of Machine

900

 

Question 15:


Following balances appear in the books of Priyank Brothers:

 

 

 `

1st April, 2020

Machinery A/c

20,00,000

 

Provision for Depreciation A/c

8,00,000

On 1st April, 2020, they decide to sell a machine for ` 5,00,000. This machine was purchased for `7,50,000 on 1st April, 2017. Prepare the Machinery Account and Provision for Depreciation Account for the year ended 31st March, 2021 assuming that the firm has been charging Depreciation @ 10% p.a. on the Straight Line Method.

Answer:


Books of Priyank Brothers

Machinery Account

Dr.

 

Cr.

Date

Particulars

J.F.

 ( `)

Date

Particulars

J.F.

 ( `)

 

2020

 

 

 

2020

 

 

 

 

April 01

Balance b/d

 

20,00,000

April 01

Provision for Depreciation

 

2,25,000

 

 

 

 

 

April 01

Bank

 

5,00,000

 

 

 

 

 

April 01

Profit and Loss (Loss)

 

25,000

 

 

 

 

 

2021

 

 

 

 

 

 

 

 

Mar.31

Balance c/d

 

12,50,000

 

 

 

 

20,00,000

 

 

 

20,00,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for Depreciation Account

Dr.

 

Cr.

Date

Particulars

J.F.

 ( `)

Date

Particulars

J.F.

 ( `)

2020

 

 

 

2020

 

 

 

April 01

Machinery

 

2,25,000

April 01

Balance b/d

 

8,00,000

2021

 

 

 

2021

 

 

 

Mar.31

Balance c/d

 

7,00,000

Mar.31

Depreciation (for the year)

 

1,25,000

 

 

 

 

 

 

 

 

 

 

 

9,25,000

 

 

 

9,25,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Working Notes

1 Calculation of Loss on Sale of Machinery

Particulars

 ( `)

Original cost of Machine Sold

7,50,000

Less: Accumulated Depreciation on Machine Sold,  for 3 years, (7,50,000 × 10%  × 3 years)

 

(2,25,000)

Book Value of Machine Sold

5,25,000

Less: Sale Value

(5,00,000)

Loss on Sale of Machine

25,000

 

Question 16:


A boiler was purchased from abroad for `10,000. Shipping and forwarding charges ` 2,000, Import duty  ` 7,000 and expenses of installation amounted to  ` 1,000.
Calculate the Depreciation for the first three years (separately for each year) @ 10% p.a. on Diminishing Balance Method.

Answer:


Boiler Account

Dr.

 

Cr.

Date

Particulars

J.F.

 ( `)

Date

Particulars

J.F.

 ( `)

I year

 

 

 

I year

 

 

 

Jan.01

Bank (10,000 + 2,000 + 7,000 + 1,000)

 

20,000

Dec.31

Depreciation

 

2,000

 

 

 

 

 

Balance c/d

 

18,000

 

 

 

20,000

 

 

 

20,000

II year

 

 

 

II year

 

 

 

Jan.01

Balance b/d

 

18,000

Dec.31

Depreciation

 

1,800

 

 

 

 

Dec.31

Balance c/d

 

16,200

 

 

 

18,000

 

 

 

18,000

III year

 

 

 

III year

 

 

 

Jan.01

Balance b/d

 

16,200

Dec.31

Depreciation

 

1,620

 

 

 

 

Dec.31

Balance c/d

 

14,580

 

 

 

16,200

 

 

 

16,200

 

 

 

 

 

 

 

 

 

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