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11th | Depreciation | Question No. 17 To 20 | Ts Grewal Solution 2022-2023

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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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