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 |
Balance c/d |
|
36,000 |
2021 |
Depreciation (on
64,000 @10%) |
|
6,400 |
||
|
|
|
|
42,400 |
|
|
|
42,400 |
||
|
|
|
|
|
|
|
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||
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|
|
|
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|
|
|
|
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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