Question
5:
1st April, 2021, Starex purchased a machine costing `4,00,000 and spent `50,000 on its installation. The estimated life of the machinery is 10 years, after which its residual value will be `50,000 only. Find the amount of annual depreciation according to the Fixed Instalment Method and prepare Machinery Account for the first three years. The books are closed on 31st March every year.
Answer:
|
Book
of X Ltd. Machinery
Account |
|||||||||
|
Dr. |
|
Cr. |
|||||||
|
Date |
Particulars |
J.F. |
(`) |
Date |
Particulars |
J.F. |
(`) |
||
|
2021 |
|
|
|
2022 |
|
|
|
||
|
April 01 |
Bank |
|
4,00,000 |
Mar.31 |
Depreciation |
|
40,000 |
||
|
April 01 |
Bank (Erection
Expense) |
|
50,000 |
|
Balance c/d |
|
4,10,000 |
||
|
|
|
|
4,50,000 |
|
|
|
4,50,000 |
||
|
2022 |
|
|
|
2023 |
|
|
|
||
|
April 01 |
Balance b/d |
|
4,10,000 |
Mar.31 |
Depreciation |
|
40,000 |
||
|
|
|
|
|
|
Balance c/d |
|
3,70,000 |
||
|
|
|
|
4,10,000 |
|
|
|
4,10,000 |
||
|
2023 |
|
|
|
2024 |
|
|
|
||
|
April 01 |
Balance b/d |
|
3,70,000 |
Mar.31 |
Depreciation |
|
40,000 |
||
|
|
|
|
|
|
Balance c/d |
|
3,30,000 |
||
|
|
|
|
3,70,000 |
|
|
|
3,70,000 |
||
|
|
|
|
|
|
|
|
|
||
Calculation of Depreciation:
Depreciation p.a.=4,00,000+50,000-50,000(Scrap Value)10 years
= `40,000 p.a.
Question 6:
On 1st April, 2020, 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 2021 and 1st October, 2023 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. |
(`) |
||||
|
2020 |
|
|
|
2021 |
|
|
|
||||
|
April
01 |
Bank (F1) |
|
55,000 |
March
31 |
Depreciation
(F1) |
|
5,000 |
||||
|
|
|
|
|
March
31 |
Balance c/d (F1) |
|
50,000 |
||||
|
|
|
|
55,000 |
|
|
|
55,000 |
||||
|
2021 |
|
|
|
2022 |
|
|
|
||||
|
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 |
||||
|
2022 |
|
|
|
2023 |
|
|
|
||||
|
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 |
||||
|
2023 |
|
|
|
2024 |
|
|
|
||||
|
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 7:
An asset was
purchased for `1,05,000 on 1st April, 2017. The scrap value
was estimated to to be `5,000 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 `6,000 on 31st March, 2024. Calculate the
following.
(i) The Depreciation expense for the year ended 31st March, 2018.
(ii) The net book value of the asset on 31st March, 2022.
(iii) The gain or loss on sale of the asset on 31st March, 2024.
Answer:
|
Asset
Account |
|||||||||
|
Dr. |
|
Cr. |
|||||||
|
Date |
Particulars |
J.F. |
(`) |
Date |
Particulars |
J.F. |
(`) |
||
|
2017 |
|
|
|
2018 |
|
|
|
||
|
April 01 |
Bank |
|
10,500 |
Mar.31 |
Depreciation |
|
1,000 |
||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
9,500 |
||
|
|
|
|
10,500 |
|
|
|
10,500 |
||
|
2018 |
|
|
|
2019 |
|
|
|
||
|
April 01 |
Balance b/d |
|
9,500 |
Mar.31 |
Depreciation |
|
1,000 |
||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
8,500 |
||
|
|
|
|
9,500 |
|
|
|
9,500 |
||
|
2019 |
|
|
|
2020 |
|
|
|
||
|
April 01 |
Balance b/d |
|
8,500 |
Mar.31 |
Depreciation |
|
1,000 |
||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
7,500 |
||
|
|
|
|
8,500 |
|
|
|
8,500 |
||
|
2020 |
|
|
|
2021 |
|
|
|
||
|
April 01 |
Balance b/d |
|
7,500 |
Mar.31 |
Depreciation |
|
1,000 |
||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
6,500 |
||
|
|
|
|
7,500 |
|
|
|
7,500 |
||
|
2021 |
|
|
|
2022 |
|
|
|
||
|
April 01 |
Balance b/d |
|
6,500 |
Mar.31 |
Depreciation |
|
1,000 |
||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
5,500 |
||
|
|
|
|
6,500 |
|
|
|
6,500 |
||
|
2022 |
|
|
|
2023 |
|
|
|
||
|
April 01 |
Balance b/d |
|
5,500 |
Mar.31 |
Depreciation |
|
1,000 |
||
|
|
|
|
|
Mar.31 |
Balance c/d |
|
4,500 |
||
|
|
|
|
5,500 |
|
|
|
5,500 |
||
|
2023 |
|
|
|
2024 |
|
|
|
||
|
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, 2018 is Rs 1000
(ii) The Net Book Value of the asset on March 31, 2022 is Rs 5,500
(iii) Loss on Sale of the asset on March 31, 2024 is Rs 2,900
Question 8:
From the following transactions of a concern, prepare the Machinery Account for the year ended 31st March, 2024:
|
1st
April, 2023 |
: |
Purchased
a second-hand machinery for `40,000 |
|
1st
April, 2023 |
: |
Spent `10,000
on repairs for making it serviceable. |
|
30th
September, 2023 |
: |
Purchased
additional new machinery for `20,000. |
|
31st
December, 2023 |
: |
Repairs
and renewal of machinery `3,000. |
|
31st
March, 2024 |
: |
Depreciate
the machinery at 10% p.a. |
Answer:
|
Machinery
Account |
|||||||||||
|
Dr. |
|
Cr. |
|||||||||
|
Date |
Particulars |
J.F. |
(`) |
Date |
Particular |
J.F. |
(`) |
||||
|
2023 |
|
|
|
2024 |
|
|
|
||||
|
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, 2023 will not be recorded in Machinery Account because, this repair was made after putting the Machinery into use.
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Ts Grewal Solution 2024-2025
Class 11th