Question 17:
Following balances appear in the books of Priyank Brothers:
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1st
April, 2023 |
Machinery
A/c |
20,00,000 |
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Provision
for Depreciation A/c |
8,00,000 |
On
1st April, 2023, they decide to sell a machine for `5,00,000. This machine was
purchased for `7,50,000 on 1st April, 2017. Prepare the Machinery Account
and Provision for Depreciation Account for the year ended 31st March, 2024
assuming that the firm has been charging Depreciation @ 10% p.a. on the
Straight Line Method.
Answer:
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Books
of Priyank Brothers Machinery
Account |
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Dr. |
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Cr. |
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Date |
Particulars |
J.F. |
(`) |
Date |
Particulars |
J.F. |
(`) |
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2023 |
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2023 |
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April 01 |
Balance b/d |
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20,00,000 |
April
01 |
Provision for
Depreciation |
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2,25,000 |
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April
01 |
Bank |
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5,00,000 |
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April
01 |
Profit and Loss
(Loss) |
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25,000 |
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2024 |
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Mar.31 |
Balance c/d |
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12,50,000 |
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20,00,000 |
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20,00,000 |
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Provision
for Depreciation Account |
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Dr. |
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Cr. |
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Date |
Particulars |
J.F. |
(`) |
Date |
Particulars |
J.F. |
(`) |
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2023 |
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2023 |
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April 01 |
Machinery |
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2,25,000 |
April
01 |
Balance b/d |
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8,00,000 |
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2024 |
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2024 |
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Mar.31 |
Balance c/d |
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7,00,000 |
Mar.31 |
Depreciation
(for the year) |
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1,25,000 |
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9,25,000 |
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9,25,000 |
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Working Notes
1 Calculation
of Loss on Sale of Machinery
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Particulars |
(`) |
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Original cost of
Machine Sold |
7,50,000 |
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Less: Accumulated
Depreciation on Machine Sold, for
3 years, (7,50,000 × 10% × 3 years) |
(2,25,000) |
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Book Value of
Machine Sold |
5,25,000 |
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Less: Sale Value |
(5,00,000) |
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Loss on Sale of
Machine |
25,000 |
Question
18:
A boiler was
purchased from abroad for
`10,000. Shipping and forwarding charges
`2,000, Import duty
`7,000 and expenses of installation amounted to `1,000.
Calculate the Depreciation for the first three years (separately for each year)
@ 10% p.a. on Diminishing Balance Method.
Answer:
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Boiler Account |
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Dr. |
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Cr. |
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Date |
Particulars |
J.F. |
(`) |
Date |
Particulars |
J.F. |
(`) |
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I year |
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I
year |
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Jan.01 |
Bank (10,000 +
2,000 + 7,000 + 1,000) |
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20,000 |
Dec.31 |
Depreciation |
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2,000 |
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Balance c/d |
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18,000 |
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20,000 |
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20,000 |
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II year |
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II
year |
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Jan.01 |
Balance b/d |
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18,000 |
Dec.31 |
Depreciation |
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1,800 |
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Dec.31 |
Balance c/d |
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16,200 |
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18,000 |
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18,000 |
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III year |
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III
year |
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Jan.01 |
Balance b/d |
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16,200 |
Dec.31 |
Depreciation |
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1,620 |
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Dec.31 |
Balance c/d |
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14,580 |
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16,200 |
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16,200 |
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Question 19:
The original
cost of furniture amounted to `4,000 and it is decided to write off 5% on
the original cost as Depreciation at the end of each year. Show the Ledger
Account as it will appear during the first four years. Show also how the same
account will appear if it was decided to write off 5% p.a. on the diminishing
balance of the asset each year.
Answer:
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Furniture
Account (Original
Cost Method) |
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Dr. |
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Cr. |
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Date |
Particulars |
J.F. |
(`) |
Date |
Particulars |
J.F. |
(`) |
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I year |
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I
year |
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Jan.01 |
Bank |
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4,000 |
Dec.31 |
Depreciation |
|
200 |
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Dec.31 |
Balance c/d |
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3,800 |
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4,000 |
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4,000 |
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II year |
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II
year |
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Jan.01 |
Balance b/d |
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3,800 |
Dec.31 |
Depreciation |
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200 |
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Dec.31 |
Balance c/d |
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3,600 |
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3,800 |
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3,800 |
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III year |
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III
year |
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Jan.01 |
Balance b/d |
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3,600 |
Dec.31 |
Depreciation |
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200 |
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Dec.31 |
Balance c/d |
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3,400 |
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3,600 |
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3,600 |
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IV year |
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IV
year |
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Jan.01 |
Balance b/d |
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3,400 |
Dec.31 |
Depreciation |
|
200 |
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Dec.31 |
Balance c/d |
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3,200 |
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3,400 |
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3,400 |
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Note: Depreciation 4,000×5/100= `200 p.a.
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Furniture
Account (Diminishing
Balance Method) |
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Dr. |
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Cr. |
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Date |
Particulars |
J.F. |
(`) |
Date |
Particulars |
J.F. |
(`) |
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I year |
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I
year |
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Jan.01 |
Bank |
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4,000 |
Dec.31 |
Depreciation |
|
200 |
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Dec.31 |
Balance c/d |
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3,800 |
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4,000 |
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4,000 |
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II year |
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II
year |
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Jan.01 |
Balance b/d |
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3,800 |
Dec.31 |
Depreciation |
|
190 |
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Dec.31 |
Balance c/d |
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3,610 |
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3,800 |
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3,800 |
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III year |
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III
year |
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Jan.01 |
Balance b/d |
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3,610 |
Dec.31 |
Depreciation |
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181 |
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Dec.31 |
Balance c/d |
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3,429 |
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3,610 |
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3,610 |
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IV year |
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IV
year |
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Jan.01 |
Balance b/d |
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3,429 |
Dec.31 |
Depreciation |
|
171 |
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Dec.31 |
Balance c/d |
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3,258 |
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3,429 |
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3,429 |
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Note: Depreciation is
calculated on opening balance every year By using below formula
Annual
Depreciation = Opening Balance ×5/100
Question 20:
Kabir bought a machine for
`25,000 on which
he spent `5,000 for carriage and freight.
`1,000 for
brokerage of the middleman, `3,500 for installation and `500 for an iron pad. The
machine is depreciated @ 10% p.a. on Written Down Value basis. After three
years, the machine was sold to Yash for `30,500 and `500 was paid as commission to the broker through whom the
sale was effected. Find out the profit and loss on sale of machine.
Answer:
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Books
of Kabir Machinery
Account |
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Dr. |
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Cr. |
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Date |
Particulars |
J.F. |
(`) |
Date |
Particulars |
J.F. |
(`) |
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I year |
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I
year |
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Jan.01 |
Bank (25,000 +
5,000 + 1,000 + 3,500 + 500) |
|
35,000 |
Dec.31 |
Depreciation |
|
3,500 |
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Dec.31 |
Balance c/d |
|
31,500 |
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35,000 |
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35,000 |
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II
year |
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II year |
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Jan.01 |
Balance b/d |
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31,500 |
Dec.31 |
Depreciation |
|
3,150 |
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Dec.31 |
Balance c/d |
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28,350 |
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31,500 |
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31,500 |
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III
year |
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III year |
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Jan.01 |
Balance b/d |
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28,350 |
Dec.31 |
Depreciation |
|
2,835 |
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Dec.31 |
Balance c/d |
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25,515 |
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28,350 |
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28,350 |
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IV
year |
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IV year |
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Jan.01 |
Balance b/d |
|
25,515 |
Jan.01 |
Bank (30,500 –
500 brokerage) |
|
30,000 |
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Dec.31 |
Profit and Loss
(Profit) |
|
4,485 |
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30,000 |
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30,000 |
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Ts Grewal Solution 2024-2025
Class 11th