Question 21:
On 1st April,
2019, a machinery was purchased for ` 20,000. On
1st October, 2020 another machine was purchased for ` 10,000 and on
1st April, 2021, one more machine was purchased for ` 5,000. The firm depreciates its machinery @
10% p.a. on the Diminishing Balance Method.
What is the amount of Depreciation for the years ended 31st March, 2020, 2021
and 2022? What will be the balance in Machinery Account as on 31st March, 2022?
Answer:
I. Calculation of Depreciation
from April 01, 2019 to March 31, 2022
Depreciation Rate: 10% p.a. on Diminishing Balance Method
|
Year |
Machinery |
Date
of Purchase |
Value |
No.
of Months |
Amt.
of Dep. |
Total
Dep. |
|
March
31, 2020 |
M1 |
April
01, 2019 |
20,000 |
12 |
2,000 |
2,000 |
|
March
31, 2021 |
M1 |
April
01, 2019 |
18,000 (20,000
– 2,000) |
12 |
1,800 |
|
|
|
M2 |
Oct.
01,2020 |
10,000 |
6 |
500 |
2,300 |
|
March
31, 2022 |
M1 |
April
01, 2021 |
16,200 (18,000
– 1,800) |
12 |
1,620 |
|
|
|
M2 |
Oct.
01,2020 |
9,500 |
12 |
950 |
|
|
|
M3 |
April
01, 2021 |
5,000 |
12 |
500 |
3,070 |
II. Balance in Machinery Account
as on March 31, 2022 will be Rs. 27,630
Working
Notes: Preparation of Machinery Account
|
Machinery
Account |
|||||||||||||
|
Dr. |
Cr. |
||||||||||||
|
Date |
Particulars |
(`) |
Date |
Particulars |
(`) |
||||||||
|
2019 |
|
|
2020 |
|
|
||||||||
|
April
01 |
Bank A/c (M1) |
20,000 |
March
31 |
Depreciation A/c (M1) |
2,000 |
||||||||
|
|
|
|
March
31 |
Balance c/d (M1) |
18,000 |
||||||||
|
|
|
20,000 |
|
|
20,000 |
||||||||
|
2020 |
|
|
2021 |
|
|
||||||||
|
April
01 |
Balance b/d (M1) |
18,000 |
March
31 |
Depreciation A/c |
|
||||||||
|
Oct.
01 |
Bank A/c (M2) |
10,000 |
|
M1(10,000×10×6/100/12) |
*1,800 |
|
|||||||
|
|
|
|
|
M2 |
500 |
2,300 |
|||||||
|
|
|
|
March
31 |
Balance c/d |
|
||||||||
|
|
|
|
|
M1 |
16,200 |
|
|||||||
|
|
|
|
|
M2 |
9,500 |
25,700 |
|||||||
|
|
|
28,000 |
|
|
28,000 |
||||||||
|
2021 |
|
|
2022 |
|
|
||||||||
|
April
01 |
Balance b/d |
|
March
31 |
Depreciation A/c |
|
||||||||
|
|
M1 |
16,200 |
|
|
M1 |
1,620 |
|
||||||
|
|
M2 |
9,500 |
25,700 |
|
M2 |
950 |
|
||||||
|
April
01 |
Bank A/c (M3) |
5,000 |
|
M3 |
500 |
3,070 |
|||||||
|
|
|
|
March
31 |
Balance c/d |
|
||||||||
|
|
|
|
|
M1 |
14,580 |
|
|||||||
|
|
|
|
|
M2 |
8,550 |
|
|||||||
|
|
|
|
|
M3 |
4,500 |
27,630 |
|||||||
|
|
|
30,700 |
|
|
30,700 |
||||||||
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Note: Since the question does not specify to
prepare the Machinery Account, thus, it is optional to prepare this account.
Question 22:
M/s. P & Q purchased machinery for ` 40,000 on 1st October, 2018. Depreciation is provided @ 10% p.a. on the Diminishing Balance. On 31st January, 2021, one-fourth of the machinery was found unsuitable and disposed off for ` 5,600. On the same date new machinery at a cost of ` 15,000 was purchased. Write up the Machinery account for the years ended 31st March, 2019, 2020 and 2022. Accounts are closed on 31st March each year.
Answer:
|
Machinery
Account |
||||||||||||
|
Dr. |
Cr. |
|||||||||||
|
Date |
Particulars |
J.F. |
(`) |
Date |
Particulars |
J.F. |
(`) |
|||||
|
2018 |
|
|
|
2019 |
|
|
|
|||||
|
Oct. 01 |
Bank |
|
|
Mar.31 |
Depreciation |
|
|
|||||
|
|
I (3/4) |
30,000 |
|
|
|
I (3/4) for 6 months |
1,500 |
|
|
|||
|
|
I(1/4) |
10,000 |
|
40,000 |
|
I (1/4) for 6 months |
500 |
|
2,000 |
|||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
|
|||||
|
|
|
|
|
|
I (3/4) |
28,500 |
|
|
||||
|
|
|
|
|
|
I (1/4) |
9,500 |
|
38,000 |
||||
|
|
|
|
40,000 |
|
|
|
40,000 |
|||||
|
2019 |
|
|
|
2020 |
|
|
|
|||||
|
Apr.01 |
Balance b/d |
|
|
Mar.31 |
Depreciation |
|
|
|||||
|
|
I (3/4) |
28,500 |
|
|
|
I (3/4) |
2,850 |
|
|
|||
|
|
I (1/4) |
9,500 |
|
38,000 |
|
I (1/4) |
950 |
|
3,800 |
|||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
|
|||||
|
|
|
|
|
|
I (3/4) |
25,650 |
|
|
||||
|
|
|
|
|
|
I (1/4) |
8,550 |
|
34,200 |
||||
|
|
|
|
38,000 |
|
|
|
|
38,000 |
||||
|
2020 |
|
|
|
2021 |
|
|
|
|||||
|
Apr.01 |
Balance b/d |
|
|
Jan.31 |
Depreciation I
(1/4)(for 10 Months) |
|
713 |
|||||
|
|
I (3/4) |
25,650 |
|
|
Jan.31 |
Bank I(1/4) |
|
5,600 |
||||
|
2021 |
I (1/4) |
8,550 |
|
34,200 |
|
Profit and Loss
(Loss) |
|
2,237 |
||||
|
Jan.31 |
Bank (II) |
|
15,000 |
2021 Mar.31 |
Depreciation |
|
|
|||||
|
|
|
|
|
|
I (3/4) |
2,565 |
|
|
||||
|
|
|
|
|
|
II (for 2 months) |
250 |
|
2,815 |
||||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
|
|||||
|
|
|
|
|
|
I (3/4) |
23,085 |
|
|
||||
|
|
|
|
|
|
II |
14,750 |
|
37,835 |
||||
|
|
|
|
49,200 |
|
|
|
|
49,200 |
||||
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working Note
(1)Calculation
of Profit or Loss on Sale of Machine I (1/4):
|
Particulars |
(`) |
|
Book Value of Machine (I)(1/4) on Apr. 01, 2020 |
8,550 |
|
Less: Depreciation for 10
Months |
(713) |
|
Book Value of
Machine (I)(1/4) on Jan. 31 2021 |
7,837 |
|
Less: Sale Value |
(5,600) |
|
Loss on Sale of
Machine I(1/4) |
2,237 |
Question 23:
On 1st October, 2018, Meenal Sharma bought a machine for ` 25,000 on which he spent ` 5,000 for carriage and freight; ` 1,000 for brokerage of the middle-man, ` 4,000 for installation. The machine is depreciated @ 10% p.a. on written down value basis. On 31st March, 2021 the machine was sold to Deepa for ` 30,500 and ` 500 was paid as commission to broker through whom the sales was effected. Find out the profit or loss on sale of machine if accounts are closed on 31st March, every year.
Answer:
|
Machinery
Account |
|||||||||||
|
Dr. |
|
Cr. |
|
||||||||
|
Date |
Particulars |
J.F. |
(`) |
Date |
Particulars |
J.F. |
(`) |
||||
|
2018 |
|
|
|
2019 |
|
|
|
||||
|
Oct 01 |
Bank (25,000+5,000+1,000+4,000) |
|
35,000 |
Mar.31 |
Depreciation (for
6 months) |
|
1,750 |
||||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
33,250 |
||||
|
|
|
|
35,000 |
|
|
|
35,000 |
||||
|
2019 |
|
|
|
2020 |
|
|
|
||||
|
Apr.01 |
Balance b/d |
|
33,250 |
Mar.31 |
Depreciation |
|
3,325 |
||||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
29,925 |
||||
|
|
|
|
33,250 |
|
|
|
33,250 |
||||
|
2020 |
|
|
|
2021 |
|
|
|
||||
|
Apr.01 |
Balance b/d |
|
29,925 |
Mar.31 |
Depreciation |
|
2,993 |
||||
|
2021 |
|
|
3,068 |
Mar.31 |
Bank A/c (30,500
– 500) |
|
30,000 |
||||
|
|
|
|
32,993 |
|
|
|
32,993 |
||||
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Working Note:
(1)
Calculation of Profit or Loss on sale of Machine I:
|
Particulars |
(`) |
|
Book Value of Machine on Apr. 01,
2020 |
29,925 |
|
Less: Depreciation for the
year |
(2,993) |
|
Book Value of
Machine I on Mar. 31, 2021 |
26,932 |
|
Less: Sale Value (30,500 –
500) |
(30,000) |
|
Profit on Sale |
3,068 |
Question 24:
A company purchased on 1st July, 2015 machinery costing ` 30,000. It
further purchased machinery on 1st January, 2016 costing ` 20,000 and on
1st October, 2016 costing `
10,000. On 1st April, 2017, one-third of the machinery installed on 1st July,
2015 became obsolete and was sold for ` 3,000. The
company follows financial year as accounting year.
Show how the Machinery Account would appear in the books of company if depreciation
is charged @ 10% p.a. on Written Down Value Method.
Answer:
|
Machinery
Account |
|||||||||||||
|
Dr. |
|
Cr. |
|||||||||||
|
Date |
Particulars |
J.F. |
(Rs) |
Date |
Particulars |
J.F. |
(Rs) |
||||||
|
2018 |
|
|
|
2019 |
|
|
|
||||||
|
July 01 |
Bank |
|
|
Mar.31 |
Depreciation |
|
|
||||||
|
|
I(2/3) |
20,000 |
|
|
|
I(2/3) |
1,500 |
|
|
||||
|
2019 |
I(1/3) |
10,000 |
|
30,000 |
|
I(1/3) |
750 |
|
|
||||
|
Jan.01 |
Bank (II) |
|
20,000 |
|
II |
500 |
|
2,750 |
|||||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
|
||||||
|
|
|
|
|
|
I(2/3) |
18,500 |
|
|
|||||
|
|
|
|
|
|
I(1/3) |
9,250 |
|
|
|||||
|
|
|
|
|
|
II |
19,500 |
|
47,250 |
|||||
|
|
|
|
50,000 |
|
|
|
|
50,000 |
|||||
|
2019 |
|
|
|
2020 |
|
|
|
||||||
|
Apr 01 |
Balance b/d |
|
|
Mar
31 |
Depreciation |
|
|
||||||
|
|
I(2/3) |
18,500 |
|
|
|
I(2/3) |
1,850 |
|
|
||||
|
|
I(1/3) |
9,250 |
|
|
|
I(1/3) |
925 |
|
|
||||
|
|
II |
19,500 |
|
47,250 |
|
II |
1,950 |
|
|
||||
|
Oct 01 |
Bank (III) |
|
10,000 |
|
III |
500 |
|
5,225 |
|||||
|
|
|
|
|
Mar
31 |
Balance c/d |
|
|
||||||
|
|
|
|
|
|
I(2/3) |
16,650 |
|
|
|||||
|
|
|
|
|
|
I(1/3) |
8,325 |
|
|
|||||
|
|
|
|
|
|
II |
17,550 |
|
|
|||||
|
|
|
|
|
|
III |
9,500 |
|
52,025 |
|||||
|
|
|
|
57,250 |
|
|
|
57,250 |
||||||
|
2020 |
|
|
|
2020 |
|
|
|
||||||
|
Apr.01 |
Balance b/d |
|
|
Apr.01 |
Bank (I)(1/3) |
|
3,000 |
||||||
|
|
I(2/3) |
16,650 |
|
|
Apr.01 |
Profit and Loss
(Loss) |
|
5,325 |
|||||
|
|
I(1/3) |
8,325 |
|
|
Mar.31, |
Depreciation |
|
|
|||||
|
|
II |
17,550 |
|
|
2021 |
I(2/3) |
1,665 |
|
|
||||
|
|
III |
9,500 |
|
52,025 |
|
II |
1,755 |
|
|
||||
|
|
|
|
|
|
III |
950 |
|
4,370 |
|||||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
|
||||||
|
|
|
|
|
|
I(2/3) |
14,985 |
|
|
|||||
|
|
|
|
|
|
II |
15,795 |
|
|
|||||
|
|
|
|
|
|
III |
8,550 |
|
39,330 |
|||||
|
|
|
|
52,025 |
|
|
|
|
52,025 |
|||||
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working Note:
(1) Calculation of Profit or
Loss on Sale of Plant I(1/3):
|
Particulars |
(Rs) |
|
Book Value of Plant I (1/3) as on Apr 01,
2020 |
8,325 |
|
Less:
Sale Value |
(3,000) |
|
Loss on Sale |
5,325 |
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