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11th | Depreciation | Question No. 9 To 12 | Ts Grewal Solution 2022-2023

Question 9:


On 1st April, 2018, A Ltd. purchased a machine for  ` 2,40,000 and spent  ` 10,000 on its erection. On 1st October, 2018 an additional machinery costing  ` 1,00,000 was purchased. On 1st October, 2020, the machine purchased on 1st April, 2018 was sold for  ` 1,43,000 and on the same date, a new machine was purchased at cost of  ` 2,00,000.
Show the Machinery Account for the first four financial years after charging Depreciation at 5% p.a. by the Straight Line Method.

Answer:


Machinery Account

Dr.

 

Cr.

Date

Particulars

J.F.

 ( `)

Date

Particulars

J.F.

 ( `)

2018

 

 

 

2019

 

 

 

April 01

Bank (M1)

 

2,50,000

March 31

Depreciation

 

 

Oct. 01

Bank (M2)

 

1,00,000

 

M1

12,500

 

 

 

 

 

 

 

M2 (6 Months)

2,500

 

15,000

 

 

 

 

March 31

Balance c/d

 

 

 

 

 

 

 

M1

2,37,500

 

 

 

 

 

 

 

M2

97,500

 

3,35,000

 

 

 

3,50,000

 

 

 

3,50,000

2019

 

 

 

2020

 

 

 

April 01

Balance b/d

 

 

March 31

Depreciation

 

 

 

M1

2,37,500

 

 

 

M1

12,500

 

 

 

M2

97,500

 

3,35,000

 

M2

5,000

 

17,500

 

 

 

 

 

 

 

 

 

 

 

 

March 31

Balance c/d

 

 

 

 

 

 

 

M1

2,25,000

 

 

 

 

 

 

 

M2

92,500

 

3,17,500

 

 

 

3,35,000

 

 

 

3,35,000

2020

 

 

 

2020

 

 

 

April 01

Balance b/d

 

 

Oct. 01

Depreciation (for 6 months)

 

6,250

 

M1

2,25,000

 

 

Oct. 01

Bank (M1 sold)

 

1,43,000

 

M2

92,500

 

3,17,500

Oct. 01

Profit and Loss (loss on sale)

 

75,750

 

 

 

 

 

2021

 

 

 

July 01

Bank (M3)

 

2,00,000

March 31

Depreciation

 

 

 

 

 

 

 

M2

5,000

 

 

 

 

 

 

 

M3 (for 6 months)

5,000

 

10,000

 

 

 

 

March 31

Balance c/d

 

 

 

 

 

 

 

M2

87,500

 

 

 

 

 

 

 

M3

1,95,000

 

2,82,500

 

 

 

5,17,500

 

 

 

5,17,500

2021

 

 

 

2022

 

 

 

April 01

Balance b/d

 

 

March 31

Depreciation

 

 

 

M2

87,500

 

 

 

M2

5,000

 

 

 

M3

1,95,000

 

2,82,500

 

M3

10,000

 

15,000

 

 

 

 

March 31

Balance c/d

 

 

 

 

 

 

 

M2

82,500

 

 

 

 

 

 

 

M3

1,85,000

 

2,67,500

 

 

 

2,82,500

 

 

 

2,82,500

 

 

 

 

 

 

 

 

 

Working Notes:

1. Calculation of Deprecation  

Machine 1= 2,50,000×5/100=  `12,500 p.a.

Machine 2= 1,00,000×5/100=  `5,000 p.a.

Machine 3= 2,00,000×4/100=  `10,000 p.a.

 

2. Calculation of profit or loss on sale of Machine

Particulars

 ( `)

Book Value on April 01, 2020

2,25,000

Less: Deprecation for six month

(6,250)

Book Value on Oct. 01, 2021

2,18,750

Less: Sale Proceeds

(1,43,000)

Loss on Sale of Machine

75,750

 Question 10:


A Van was purchased on 1st April, 2019 for `60,000 and  ` 5,000 was spent on its repair and registration. On 1st October, 2020 another van was purchased for `70,000. On 1st April, 2021, the first van purchased on 1st April, 2019 was sold for `45,000 and a new van costing `1,70,000 was purchased on the same date. Show the Van Account from 2019-20 to 2021-22 on the basis of Straight Line Method, if the rate of Depreciation charged is 10% p.a. Assume that books are closed on 31st March every year.

Answer:


Van Account 

 

Dr.

 

Cr.

Date

Particulars

J.F.

 ( `)

Date

Particulars

J.F.

 ( `)

 

2019

 

 

 

2020

 

 

 

 

April 01

Bank A/c (I)

 

65,000

March 31

Depreciation A/c (I)

 

6,500

 

 

 

 

 

March 31

Balance c/d (I)

 

58,500

 

 

 

 

65,000

 

 

 

65,000

 

2020

 

 

 

2021

 

 

 

 

April 01

Balance b/d (I)

 

58,500

March 31

Depreciation A/c

 

 

 

Oct. 01

Bank A/c (II)

 

70,000

 

(I)

6,500

 

 

 

 

 

 

 

 

(II)

(for 6 month)

3,500

 

10,000

 

 

 

 

 

March 31

Balance c/d

 

 

 

 

 

 

 

 

(I)

52,000

 

 

 

 

 

 

 

 

(II)

66,500

 

1,18,500

 

 

 

 

1,28,500

 

 

 

1,28,500

 

2021

 

 

 

2021

 

 

 

 

April 01

Balance b/d

 

 

April 01

Bank A/c (I)

 

45,000

 

 

(I)

52,000

 

 

April 01

Profit and Loss A/c (Loss on Sale)

 

7,000

 

 

 

 

 

 

2022

 

 

 

 

 

(II)

66,500

 

1,18,500

March 31

Depreciation A/c

 

 

 

April 01

Bank A/c (III)

 

1,70,000

 

(II)

7,000

 

 

 

 

 

 

 

 

(III)

17,000

 

24,000

 

 

 

 

 

March 31

Balance c/d

 

 

 

 

 

 

 

 

(II)

59,500

 

 

 

 

 

 

 

 

(III)

1,53,000

 

2,12,500

 

 

 

 

2,88,500

 

 

 

2,88,500

 

 

 

 

 

 

 

 

 

 

Working Notes

1. Calculation of Annual Depreciation

Maruti  Van (1) = 65,000×10/100=  `6,500

Maruti  Van (1I) = 70,000×10/100=  `7,000

Maruti  Van (1II) =1,70,000×10/100=  `17,000

2. Calculation of profit or loss on sale of Van (I)

 

Particulars

 ( `)

Book Value on Apr. 01, 2021

52,000

Less: Sale of Van

(45,000)

Loss on Sale of Van

7,000

 

Question 11:


A company whose accounting year is a financial year, purchased on 1st July, 2019 machinery costing  ` 30,000.
It purchased further machinery on 1st January, 2020 costing  ` 20,000 and on 1st October, 2020 costing  ` 10,000.
On 1st April, 2021, one-third of the machinery installed on 1st July, 2019 became obsolete and was sold for  ` 3,000.
Show how Machinery Account would appear in the books of the company. It being given that machinery was depreciated by Fixed Instalment Method at 10% p.a. What would be the value of Machinery Account on 1st April, 2022?

Answer:


Date

Particulars

 

J.F.

 ( `)

Date

Particulars

 

J.F.

 ( `)

2019

 

 

 

 

2020

 

 

 

 

July 01

Bank (I)

 

 

30,000

March 31

Depreciation

 

 

 

2019

 

 

 

 

 

I (for 9 months)

2,250

 

 

Jan. 01

Bank (II)

 

 

20,000

 

II

500

 

2,750

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31

Balanced c/d

 

 

 

 

 

 

 

 

 

I

27,750

 

 

 

 

 

 

 

 

II

19,500

 

47,250

 

 

 

 

50,000

 

 

 

 

50,000

2020

 

 

 

 

2021

 

 

 

 

April 01

Balance b/d

 

 

 

March 31

Depreciation

 

 

 

 

I

27,750

 

 

 

I

3,000

 

 

 

II

19,500

 

47,250

 

II

2,000

 

 

 

 

 

 

 

 

III

500

 

5,500

Oct. 01

Bank (III)

 

 

10,000

March 31

Balance c/d

 

 

 

 

 

 

 

 

 

I

24,750

 

 

 

 

 

 

 

 

II

17,500

 

 

 

 

 

 

 

 

III

9,500

 

51,750

 

 

 

 

57,250

 

 

 

 

57,250

2021

Balance b/d

 

 

 

2021

 

 

 

 

April 01

I

24,750

 

 

April 01

Bank I(1/3rd portion)

 

 

3,000

 

II

17,500

 

 

April 01

Profit and Loss

(Loss on Sale of I)

 

 

5,250

 

III

9,500

 

51,750

2022

 

 

 

 

 

 

 

 

 

March 31

Depreciation

 

 

 

 

 

 

 

 

 

I (on 2/3rd portion)

2,000

 

 

 

 

 

 

 

 

II

2,000

 

 

 

 

 

 

 

 

III

1,000

 

5,000

 

 

 

 

 

March 31

Balance c/d

 

 

 

 

 

 

 

 

 

I (on 2/3rd portion)

14,500

 

 

 

 

 

 

 

 

II

15,500

 

 

 

 

 

 

 

 

III

8,500

 

38,500

 

 

 

 

51,750

 

 

 

 

51,750

Working Notes

1. Calculation of Depreciation

Machine 1=30,000×10/100= ` 3,000

And Drepreciation of  2/3rd proportion=3,000×2/3= `2,000

Machine II =20,000×10/100=  ` 2,000p.a.

Machine III =10,000×10/100=  ` 1,000p.a.

 

Calculation of profit or loss on sale of 1/3rd Portion of Machine I

Particulars

 ( `)

Book Value of 1/3rd portion of Machine I on April 01, 2021 (24,750 × 1/3)

8,250

Less: Sale Value

(3,000)

Loss on sale

5,250

 

Question 12:


On 1st April, 2010, Plant and Machinery was purchased for `1,20,000. New machinery was purchased on 1st October, 2010 for `50,000 and on 1st July, 2011, for `25,000. On 1st January, 2013, a machinery of the original value of `20,000 which was included in the machinery purchased on 1st April, 2010, was sold for `6,000. Prepare Plant and Machinery A/c for three years after providing depreciation at 10% p.a. on Straight Line Method. Accounts are closed on 31st March every year. (KVS)

Answer


Machinery Account 

Dr.

 

Cr.

Date

Particulars

J.F.

 ( `)

Date

Particulars

J.F.

 ( `)

2010

 

 

 

2011

 

 

 

April 01

Bank A/c (M1)

 

1,20,000

Mar.31

Depreciation A/c

 

 

Oct. 01

Bank A/c (M2)

 

50,000

 

M1 – 12,000

 

 

 

 

 

 

 

(WN3) M2 – 2,500

 

14,500

 

 

 

 

Mar.31

Balance c/d

 

 

 

 

 

 

 

M1 – 1,08,000

 

 

 

 

 

 

 

M2 – 47,500

 

1,55,500

 

 

 

1,70,000

 

 

 

1,70,000

2011

 

 

 

2012

 

 

 

April 01

Balance B/d

 

 

Mar.31

Depreciation A/c

 

 

 

M1 – 1,08,000

 

 

M1 – 12,000

 

 

 

M2 – 47,500

1,55,500

 

M2 – 5,000 

 

 

 

 

 

 

(WN4) M3-1,875

 

18,875

July 01

Bank A/c (M3)

 

25,000

Mar.31

Balance c/d

 

 

2012

 

 

 

 

M1 – 96,000

 

 

 

 

 

 

 

M2 – 42,500

 

 

 

 

 

 

 

M3 – 23,125

 

1,61,625

 

 

 

1,80,500

 

 

 

1,80,500

 2012

 

 

 

2013

 

 

 

Mar.31

Balance B/d

 

 

Jan 1

Depreciation A/c (WN5)

 

1,500

 

M1 – 96,000

 

Jan 1

Bank A/c (M1)

 

 6,000

 

M2 – 42,500

 

 

Jan 1

Profit and loss A/c

(Loss)

 

8,500

 

M3 – 23,125

 

1,61,625

Mar.31

Depreciation A/c

 

 

 

 

 

 

 

M1– 10,000

 

 

 

 

 

 

 

M2 – 5,000

 

 

 

 

 

 

 

M3 – 2,500

 

17,500

 

 

 

 

Mar.31

Balance c/d

 

 

 

 

 

 

 

M1 – 70,000

 

 

 

 

 

 

 

M2 – 37,500

 

 

 

 

 

 

 

M3 – 20,625

 

1,28,125

 

 

 

1,61,625

 

 

 

1,61,625

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Working notes:

WN 1: Annual depreciation @10% p. a.

Machinery 1 – 12,000 of 1,20,000

Machinery 2 – 5,000 of 50,000

Machinery 3 – 2,500 of 25,000

 

WN 2: First year depreciation @10% p. a.

Machinery 1 – 12,000 of 1,20,000

Machinery 2 – 5,000 of 50,000 for 6 month is 2,500

 

WN3: Depreciation (for 2nd Machinery)

(For 6 months) M2 – 2,500

Calculated as below

(1,20,000 ×10×6)÷(100×12) =2,500

 

WN4: Depreciation (for 3rd Machinery)

(For 9 months) M3 -1,875

Calculated as below

(50,000 ×10×9)÷(100×12) =1,875

 

WN5: Depreciation (for 1st machinery sold at time of sale)

(For Machinery, cost of 20,000 for 3 months)

Calculated as below

(25,000 ×10×3)÷(100×12) =1,500

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