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

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.

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

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.

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

 

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?

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  2/3^rd 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 1/3^rd 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

 

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)

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 2^nd Machinery)

(For 6 months) M2 – 2,500

Calculated as below

(1,20,000 ×10×6)÷(100×12) =2,500

 

WN4: Depreciation (for 3^rd Machinery)

(For 9 months) M3 -1,875

Calculated as below

(50,000 ×10×9)÷(100×12) =1,875

 

WN5: Depreciation (for 1^st 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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