Question 17:
The original
cost of furniture amounted to `4,000 and it is decided to write off 5% on
the original cost as Depreciation at the end of each year. Show the Ledger
Account as it will appear during the first four years. Show also how the same account
will appear if it was decided to write off 5% p.a. on the diminishing balance
of the asset each year.
Answer:
|
Furniture
Account (Original
Cost Method) |
|||||||||
|
Dr. |
|
Cr. |
|||||||
|
Date |
Particulars |
J.F. |
( `) |
Date |
Particulars |
J.F. |
( `) |
||
|
I year |
|
|
|
I
year |
|
|
|
||
|
Jan.01 |
Bank |
|
4,000 |
Dec.31 |
Depreciation |
|
200 |
||
|
|
|
|
|
Dec.31 |
Balance c/d |
|
3,800 |
||
|
|
|
|
4,000 |
|
|
|
4,000 |
||
|
II year |
|
|
|
II
year |
|
|
|
||
|
Jan.01 |
Balance b/d |
|
3,800 |
Dec.31 |
Depreciation |
|
200 |
||
|
|
|
|
|
Dec.31 |
Balance c/d |
|
3,600 |
||
|
|
|
|
3,800 |
|
|
|
3,800 |
||
|
III year |
|
|
|
III
year |
|
|
|
||
|
Jan.01 |
Balance b/d |
|
3,600 |
Dec.31 |
Depreciation |
|
200 |
||
|
|
|
|
|
Dec.31 |
Balance c/d |
|
3,400 |
||
|
|
|
|
3,600 |
|
|
|
3,600 |
||
|
IV year |
|
|
|
IV
year |
|
|
|
||
|
Jan.01 |
Balance b/d |
|
3,400 |
Dec.31 |
Depreciation |
|
200 |
||
|
|
|
|
|
Dec.31 |
Balance c/d |
|
3,200 |
||
|
|
|
|
3,400 |
|
|
|
3,400 |
||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
Note: Depreciation 4,000×5/100= ` 200 p.a.
|
Furniture
Account (Diminishing
Balance Method) |
|||||||||
|
Dr. |
|
Cr. |
|||||||
|
Date |
Particulars |
J.F. |
( `) |
Date |
Particulars |
J.F. |
( `) |
||
|
I year |
|
|
|
I
year |
|
|
|
||
|
Jan.01 |
Bank |
|
4,000 |
Dec.31 |
Depreciation |
|
200 |
||
|
|
|
|
|
Dec.31 |
Balance c/d |
|
3,800 |
||
|
|
|
|
4,000 |
|
|
|
4,000 |
||
|
II year |
|
|
|
II
year |
|
|
|
||
|
Jan.01 |
Balance b/d |
|
3,800 |
Dec.31 |
Depreciation |
|
190 |
||
|
|
|
|
|
Dec.31 |
Balance c/d |
|
3,610 |
||
|
|
|
|
3,800 |
|
|
|
3,800 |
||
|
III year |
|
|
|
III
year |
|
|
|
||
|
Jan.01 |
Balance b/d |
|
3,610 |
Dec.31 |
Depreciation |
|
181 |
||
|
|
|
|
|
Dec.31 |
Balance c/d |
|
3,429 |
||
|
|
|
|
3,610 |
|
|
|
3,610 |
||
|
IV year |
|
|
|
IV
year |
|
|
|
||
|
Jan.01 |
Balance b/d |
|
3,429 |
Dec.31 |
Depreciation |
|
171 |
||
|
|
|
|
|
Dec.31 |
Balance c/d |
|
3,258 |
||
|
|
|
|
3,429 |
|
|
|
3,429 |
||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
Note: Depreciation is
calculated on opening balance every year By using
below formula
Annual
Depreciation = Opening Balance ×5/100
Question 18:
Babu purchased on 1st April, 2020, a machine for `
6,000. On 1st October, 2020, he also purchased another machine for `
5,000. On 1st October, 2021, he sold the machine purchased on 1st April, 2020 for `
4,000.
It was decided that Depreciation @ 10% p.a. was to be written off every year
under Diminishing Balance Method.
Assuming the accounts were closed on 31st March every year, show the Machinery
Account for the years ended 31st March, 2021 and 2022.
Answer:
|
Books
of Babu Machinery
Account |
|||||||||||
|
Dr. |
|
Cr. |
|||||||||
|
Date |
Particulars |
J.F. |
( `) |
Date |
Particulars |
J.F. |
( `) |
||||
|
2020 |
|
|
|
2021 |
|
|
|
||||
|
Apr. 01 |
Bank (I) |
|
6,000 |
Mar.
31 |
Depreciation |
|
|
||||
|
Oct. 01 |
Bank (II) |
|
5,000 |
|
I |
600 |
|
|
|||
|
|
|
|
|
|
II (for 6 months) |
250 |
|
850 |
|||
|
|
|
|
|
Mar.
31 |
Balance c/d |
|
|
||||
|
|
|
|
|
|
I |
5,400 |
|
|
|||
|
|
|
|
|
|
II |
4,750 |
|
10,150 |
|||
|
|
|
|
11,000 |
|
|
|
11,000 |
||||
|
2021 |
|
|
|
2021 |
|
|
|
||||
|
Apr. 01 |
Balance b/d |
|
|
Oct.
01 |
Depreciation (I)
(for 6 months) |
|
270 |
||||
|
|
I |
5,400 |
|
|
Oct.
01 |
Bank (I) |
|
4,000 |
|||
|
|
II |
4,750 |
|
10,150 |
Oct.
01 |
Profit and Loss
(Loss) |
|
1,130 |
|||
|
|
|
|
|
2022 |
|
|
|
||||
|
|
|
|
|
Mar.
31 |
Depreciation
(II) |
|
475 |
||||
|
|
|
|
|
Mar.
31 |
Balance c/d (II) |
|
4,275 |
||||
|
|
|
|
10,150 |
|
|
|
10,150 |
||||
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
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|
Working Note
(1) Calculation of profit or
loss on sale of machine:
|
Particulars |
( `) |
|
Book Value of Machinery Apr. 01,
2021 |
5,400 |
|
Less: Depreciation (for 6
Months) |
(270) |
|
Book Value of
Machinery on Oct. 01 2021 |
5,130 |
|
Less: Sale |
(4,000) |
|
Loss on Sale |
1,130 |
Question 19:
X bought a machine for `
25,000 on which he spent ` 5,000 for carriage and freight. ` 1,000 for brokerage of the middleman, ` 3,500 for
installation and ` 500 for an iron pad. The
machine is depreciated @ 10% p.a. on Written Down
Value basis. After three years, the machine was sold to Y for `
30,500 and ` 500 was paid as commission
to the broker through whom the sale was effected. Find out the profit and loss
on sale of machine.
Answer:
|
Books
of X Machinery
Account |
|||||||||
|
Dr. |
|
Cr. |
|||||||
|
Date |
Particulars |
J.F. |
( `) |
Date |
Particulars |
J.F. |
( `) |
||
|
I year |
|
|
|
I
year |
|
|
|
||
|
Jan.01 |
Bank (25,000 +
5,000 + 1,000 + 3,500 + 500) |
|
35,000 |
Dec.31 |
Depreciation |
|
3,500 |
||
|
|
|
|
|
Dec.31 |
Balance c/d |
|
31,500 |
||
|
|
|
|
35,000 |
|
|
|
35,000 |
||
|
II
year |
|
|
|
II year |
|
|
|
||
|
Jan.01 |
Balance b/d |
|
31,500 |
Dec.31 |
Depreciation |
|
3,150 |
||
|
|
|
|
|
Dec.31 |
Balance c/d |
|
28,350 |
||
|
|
|
|
31,500 |
|
|
|
31,500 |
||
|
III
year |
|
|
|
III year |
|
|
|
||
|
Jan.01 |
Balance b/d |
|
28,350 |
Dec.31 |
Depreciation |
|
2,835 |
||
|
|
|
|
|
Dec.31 |
Balance c/d |
|
25,515 |
||
|
|
|
|
28,350 |
|
|
|
28,350 |
||
|
IV
year |
|
|
|
IV year |
|
|
|
||
|
Jan.01 |
Balance b/d |
|
25,515 |
Jan.01 |
Bank (30,500 –
500 brokerage) |
|
30,000 |
||
|
Dec.31 |
Profit and Loss
(Profit) |
|
4,485 |
|
|
|
|
||
|
|
|
|
30,000 |
|
|
|
30,000 |
||
|
|
|
|
|
|
|
|
|
||
Question 20:
A company purchased a machinery for ` 50,000 on 1st October, 2019. Another machinery costing ` 10,000 was purchased on 1st December, 2020. On 31st March, 2022, the machinery purchased in 2019 was sold at a loss of ` 5,000. The company charges depreciation @ 15% p.a. on Diminishing Balance Method. Accounts are closed on 31st March every year. Prepare the Machinery Account for 3 years.
Answer:
|
Machinery
Account |
|||||||||||||
|
Dr. |
|
Cr. |
|||||||||||
|
Date |
Particulars |
J.F. |
( `) |
Date |
Particulars |
J.F. |
( `) |
||||||
|
2019 |
|
|
|
2020 |
|
|
|
||||||
|
Oct.01 |
Bank (I) |
|
50,000 |
Mar.31 |
Depreciation (for
6 Months) |
|
3,750 |
||||||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
46,250 |
||||||
|
|
|
|
50,000 |
|
|
|
50,000 |
||||||
|
2020 |
|
|
|
2021 |
|
|
|
||||||
|
Apr.01 |
Balance b/d (I) |
|
46,250 |
Mar.31 |
Depreciation |
|
|
||||||
|
Dec.01 |
Bank (II) |
|
10,000 |
|
I |
6,938 |
|
|
|||||
|
|
|
|
|
|
II |
500 |
|
7,438 |
|||||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
|
||||||
|
|
|
|
|
|
I |
39,312 |
|
|
|||||
|
|
|
|
|
|
II |
9,500 |
|
48,812 |
|||||
|
|
|
|
56,250 |
|
|
|
56,250 |
||||||
|
2021 |
|
|
|
2022 |
|
|
|
||||||
|
Apr.01 |
Balance b/d |
|
|
Mar.31 |
Depreciation |
|
|
||||||
|
|
I |
39,312 |
|
|
|
I |
5,897 |
|
|
||||
|
|
II |
9,500 |
|
48,812 |
|
II |
1,425 |
|
7,322 |
||||
|
|
|
|
|
Mar.31 |
Bank (I) |
|
28,415 |
||||||
|
|
|
|
|
Mar.31 |
Profit and Loss
(Loss) |
|
5,000 |
||||||
|
|
|
|
|
Mar.31 |
Balance c/d (II) |
|
8,075 |
||||||
|
|
|
|
48,812 |
|
|
|
48,812 |
||||||
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working
Note
(1) Calculation of profit or
loss on sale of machine:
|
Particulars |
( `) |
|
Book Value of
Machine I on Apr. 01, 2021 |
39,312 |
|
Less: Depreciation (39,312 ×
15%) |
5,897 |
|
Book Value of
Machine I on Mar. 31, 2022 |
33,415 |
|
Less: Sale Value |
(28,415) |
|
Loss on Sale of
Machine I |
5,000 |
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