Question 5:
On 1st April, 2018, furniture costing ` 55,000 was purchased. It is estimated that its life is 10 years at the end of which it will be sold for ` 5,000. Additions are made on 1st April 2019 and 1st October, 2021 to the value of ` 9,500 and ` 8,400 (Residual values ` 500 and ` 400 respectively). Show the Furniture Account for the first four years, if Depreciation is written off according to the Straight Line Method.
Answer:
|
Furniture
Account |
|||||||||||
|
Dr. |
|
Cr. |
|||||||||
|
Date |
Particulars |
J.F. |
( `) |
Date |
Particulars |
J.F. |
( `) |
||||
|
2018 |
|
|
|
2019 |
|
|
|
||||
|
April
01 |
Bank (F1) |
|
55,000 |
March
31 |
Depreciation
(F1) |
|
5,000 |
||||
|
|
|
|
|
March
31 |
Balance c/d (F1) |
|
50,000 |
||||
|
|
|
|
55,000 |
|
|
|
55,000 |
||||
|
2019 |
|
|
|
2020 |
|
|
|
||||
|
April
01 |
Balance b/d (F1) |
|
50,000 |
March
31 |
Depreciation |
|
|
||||
|
April
01 |
Bank (F2) |
|
9,500 |
|
F1 |
5,000 |
|
|
|||
|
|
|
|
|
|
F2 |
900 |
|
5,900 |
|||
|
|
|
|
|
March
31 |
Balance c/d |
|
|
||||
|
|
|
|
|
|
F1 |
45,000 |
|
|
|||
|
|
|
|
|
|
F2 |
8,600 |
|
53,600 |
|||
|
|
|
|
59,500 |
|
|
|
59,500 |
||||
|
2020 |
|
|
|
2021 |
|
|
|
||||
|
April
01 |
Balance b/d |
|
|
March
31 |
Depreciation |
|
|
||||
|
|
F1 |
45,000 |
|
|
|
F1 |
5,000 |
|
|
||
|
|
F2 |
8,600 |
|
53,600 |
|
F2 |
900 |
|
5,900 |
||
|
|
|
|
|
March
31 |
Balance c/d |
|
|
||||
|
|
|
|
|
|
F1 |
40,000 |
|
|
|||
|
|
|
|
|
|
F2 |
7,700 |
|
47,700 |
|||
|
|
|
|
53,600 |
|
|
|
53,600 |
||||
|
2021 |
|
|
|
2022 |
|
|
|
||||
|
April
01 |
Balance b/d |
|
|
March
31 |
Depreciation |
|
|
||||
|
|
F1 |
40,000 |
|
|
|
F1 |
5,000 |
|
|
||
|
|
F2 |
7,700 |
|
47,700 |
|
F2 |
900 |
|
|
||
|
Oct.
01 |
Bank (F3) |
|
8,400 |
|
F3 |
400 |
|
6,300 |
|||
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
March
31 |
Balance c/d |
|
|
||||
|
|
|
|
|
|
F1 |
35,000 |
|
|
|||
|
|
|
|
|
|
F2 |
6,800 |
|
|
|||
|
|
|
|
|
|
F3 |
8,000 |
|
49,800 |
|||
|
|
|
|
56,100 |
|
|
|
56,100 |
||||
|
|
|
|
|
|
|
|
|
||||
Working Notes:
Drepreciation on Furniture
1=55,000-5,000(Scrap Value)/10 Year= `5,000 p.a.
Drepreciation on Furniture 2=9,500-500(Scrap
Value)/10 Year= `900 p.a.
Drepreciation on Furniture 3=8,400-400(Scrap
Value)/10 Year= `800 p.a.
Depreciation on Furniture(for 6 Month)=800×6/12= `400
Question 6:
From the following transactions of a concern, prepare the Machinery Account for the year ended 31st March, 2022:
|
1st
April, 2021 |
: |
Purchased
a second-hand machinery for ` 40,000 |
|
1st
April, 2021 |
: |
Spent ` 10,000 on repairs for
making it serviceable. |
|
30th
September, 2021 |
: |
Purchased
additional new machinery for `
20,000. |
|
31st
December, 2021 |
: |
Repairs
and renewal of machinery `
3,000. |
|
31st
March, 2022 |
: |
Depreciate
the machinery at 10% p.a. |
Answer:
|
Machinery
Account |
|||||||||||
|
Dr. |
|
Cr. |
|||||||||
|
Date |
Particulars |
J.F. |
( `) |
Date |
Particular |
J.F. |
( `) |
||||
|
2021 |
|
|
|
2022 |
|
|
|
||||
|
Apr.01 |
Bank (M1) |
|
50,000 |
Mar.31 |
Depreciation |
|
|
||||
|
Sept 30 |
Bank (M2) |
|
20,000 |
|
M1 |
5,000 |
|
|
|||
|
|
|
|
|
|
M2 (6 months) |
1,000 |
|
6,000 |
|||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
|
||||
|
|
|
|
|
|
M1 |
45,000 |
|
|
|||
|
|
|
|
|
|
M2 (6 months) |
19,000 |
|
64,000 |
|||
|
|
|
|
70,000 |
|
|
|
70,000 |
||||
|
|
|
|
|
|
|
|
|
||||
Note:
Repair and renewal made on December 31, 2021 will not be recorded in Machinery Account because, this repair was made after putting the Machinery into use.
Question 7:
An asset was purchased for `
10,500 on 1st April, 2014. The scrap value was estimated to to
be `
500 at the end of asset's 10 years' life. Straight Line Method of depreciation
was used. The accounting year ends on 31st March every year. The asset was sold
for `
600 on 31st March, 2021. Calculate the following.
(i) The Depreciation expense for the year ended 31st
March, 2015.
(ii) The net book value of the asset on 31st March, 2019.
(iii) The gain or loss on sale of the asset on 31st March, 2021.
Answer:
|
Asset
Account |
|||||||||
|
Dr. |
|
Cr. |
|||||||
|
Date |
Particulars |
J.F. |
( `) |
Date |
Particulars |
J.F. |
( `) |
||
|
2014 |
|
|
|
2015 |
|
|
|
||
|
April 01 |
Bank |
|
10,500 |
Mar.31 |
Depreciation |
|
1,000 |
||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
9,500 |
||
|
|
|
|
10,500 |
|
|
|
10,500 |
||
|
2015 |
|
|
|
2016 |
|
|
|
||
|
April 01 |
Balance b/d |
|
9,500 |
Mar.31 |
Depreciation |
|
1,000 |
||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
8,500 |
||
|
|
|
|
9,500 |
|
|
|
9,500 |
||
|
2016 |
|
|
|
2017 |
|
|
|
||
|
April 01 |
Balance b/d |
|
8,500 |
Mar.31 |
Depreciation |
|
1,000 |
||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
7,500 |
||
|
|
|
|
8,500 |
|
|
|
8,500 |
||
|
2017 |
|
|
|
2018 |
|
|
|
||
|
April 01 |
Balance b/d |
|
7,500 |
Mar.31 |
Depreciation |
|
1,000 |
||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
6,500 |
||
|
|
|
|
7,500 |
|
|
|
7,500 |
||
|
2018 |
|
|
|
2019 |
|
|
|
||
|
April 01 |
Balance b/d |
|
6,500 |
Mar.31 |
Depreciation |
|
1,000 |
||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
5,500 |
||
|
|
|
|
6,500 |
|
|
|
6,500 |
||
|
2019 |
|
|
|
2020 |
|
|
|
||
|
April 01 |
Balance b/d |
|
5,500 |
Mar.31 |
Depreciation |
|
1,000 |
||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
4,500 |
||
|
|
|
|
5,500 |
|
|
|
5,500 |
||
|
2021 |
|
|
|
2022 |
|
|
|
||
|
April 01 |
Balance b/d |
|
4,500 |
Mar.31 |
Depreciation |
|
1,000 |
||
|
|
|
|
|
Mar.31 |
Bank |
|
600 |
||
|
|
|
|
|
Mar.31 |
Profit and Loss
(Loss) |
|
2,900 |
||
|
|
|
|
4,500 |
|
|
|
4,500 |
||
|
|
|
|
|
|
|
|
|
||
(i) Depreciation Expense for the year ended March 31, 2015 is Rs 1000
(ii) The Net Book Value of the asset on March 31, 2019 is Rs 5,500
(iii) Loss on Sale of the asset on March 31, 2022 is Rs 2,900
Question 8:
On 1st April, 2018, Star Ltd. purchased 5 machines for ` 60,000 each.
On 1st April, 2020, one of the machine was sold at a loss of ` 8,000. On 1st
July, 2021, second machine was sold at a loss of ` 12,500. A new
machine was purchased for `
1,00,000 on 1st October, 2021.
Prepare Machinery Account for 4 years, assuming accounts are closed on 31st
March each year and depreciation is charged @ 10% per annum as per Straight
Line Method.
Answer:
|
Dr. |
Machinery A/c |
Cr. |
|||||
|
Date |
Particulars |
( `) |
Date |
Particulars |
( `) |
||
|
2018 |
|
|
2019 |
|
|
||
|
April 01 |
To
Cash/Bank A/c (60,000 × 5) |
3,00,000 |
March 31 |
By
Depreciation A/c (3,00,000 × 10/100) |
30,000 |
||
|
|
|
|
March 31 |
By
balance c/d |
2,70,000 |
||
|
|
|
|
|
|
|
||
|
|
|
3,00,000 |
|
|
3,00,000 |
||
|
2019 |
|
|
2020 |
|
|
||
|
April 01 |
To
balance b/d |
2,70,000 |
March 31 |
By
Depreciation A/c (3,00,000 × 10/100) |
30,000 |
||
|
|
|
|
March 31 |
By
balance c/d |
2,40,000 |
||
|
|
|
|
|
|
|
||
|
|
|
2,70,000 |
|
|
2,70,000 |
||
|
2020 |
|
|
2020 |
|
|
||
|
April 01 |
To
balance b/d |
2,40,000 |
April 01 |
By
Bank A/c (WN1) |
40,000 |
||
|
|
|
|
April 01 |
By
Profit & Loss A/c (Loss on sale) |
8,000 |
||
|
|
|
|
2021 |
|
|
||
|
|
|
|
March 31 |
By
Depreciation A/c (2,40,000 × 10/100) |
24,000 |
||
|
|
|
|
|
(On
remaining machinery) |
|
||
|
|
|
|
March 31 |
By
balance c/d |
1,68,000 |
||
|
|
|
|
|
|
|
||
|
|
|
2,40,000 |
|
|
2,40,000 |
||
|
2021 |
|
|
2021 |
|
|
||
|
April 01 |
To
balance c/d |
1,68,000 |
July 1 |
By
Depreciation A/c (6,000 × 3/12) |
1,500 |
||
|
Oct.01 |
To
Cash/Bank A/c |
1,00,000 |
July 1 |
By
Bank A/c (WN2) |
28,000 |
||
|
|
|
|
July 1 |
By
Profit & Loss A/c (Loss on Sale) |
12,500 |
||
|
|
|
|
2022 |
|
|
||
|
|
|
|
March 31 |
By
Depreciation A/c (On remaining |
23,000 |
||
|
|
|
|
|
Machinery) |
|
||
|
|
|
|
|
[(1,80,000
× 10/100) + |
|
||
|
|
|
|
|
(1,00,000
× 10/100 × 6/12)] |
|
||
|
|
|
|
March 31 |
By
balance c/d |
2,03,000 |
||
|
|
|
|
|
|
|
||
|
|
|
2,68,000 |
|
|
2,68,000 |
||
|
|
|
|
|
|
|
||
Working Notes:
|
1)
Calculation of Sale proceeds from Machinery sold on 1st April,
2020 |
||
|
Book
Value of the Machine as on 1st April, 2020 |
= |
(Total
opening balance of Machinery on this date/5) |
|
|
= |
`
(2,40,000/5) = `
48,000 |
|
Loss
on Sale of Machinery |
= |
`
8,000 |
|
Sale
proceeds from the Machinery |
= |
Book
Value of the Machine as on 1st April, 2020 – Loss on Sale |
|
|
= |
` (48,000 – 8,000) = ` 40,000 |
|
|
|
|
|
2)
Calculation of Sale proceeds from Machinery sold on 1st July 2021 |
||
|
Book
Value of the Machine as on 1st July, 2021 |
= |
[(Total
opening balance of Machinery on this date/4-Depreciation] |
|
|
= |
`
[(1,68,000/4) – 1,500] = ` 40,500 |
|
Loss
on Sale of Machinery |
= |
`
12,500 |
|
Sale
proceeds from the Machinery |
= |
Book
Value of the Machine as on 1st July, 2021 – Loss on Sale |
|
|
= |
` (40,500 – 12,500) = ` 28,000 |
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