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11th | Depreciation | Question No. 21 To 24 | Ts Grewal Solution 2022-2023

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
Mar.31


Profit and Loss A/c (Profit on Sale) (WN1)

 

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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