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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Question No 21 Chapter No 14
21. Kaushal Traders purchased second-hand machinery on 1st April 2015 for ₹ 23,000 and spent ₹ 2,000 on its repair. It was decided to depreciate the machinery @ 20% every year on 31st March at Diminishing Balance Method.
Prepare the Machinery Account from years ended 31st March 2016 to 2018 and show Profit or Loss as it was sold on 31st March 2018 for ₹ 10,800.
The solution of Question No 21 Chapter No 14: -
| Dr. | Furniture A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
|---|---|---|---|---|---|---|---|
| 01/01/15 | To Bank A/c | 25,000 | 31/03/16 | By Deprecation A/c | 5,000 | ||
| 31/03/16 | By Balance C/d | 20,000 | |||||
| 25,000 | 25,000 | ||||||
| 01/04/16 | To Balance b/d | 20,000 | 31/03/17 | By Deprecation A/c | 4,000 | ||
| 31/03/17 | By Balance C/d | 16,000 | |||||
| 20,000 | 20,000 | ||||||
| 01/04/17 | To Balance b/d | 16,000 | 31/03/18 | By Deprecation A/c | 3,200 | ||
| 31/03/18 | By Bank A/c | 10,800 | |||||
| 31/03/18 | By Loss on sale of Machinery A/c | 2,000 | |||||
| 16,000 |
16,000 | ||||||
Working Note:-
| Statement Showing profit or loss on the sale of Machinery | |
| Particulars |
Amount |
|---|---|
| Book value of machinery as on 1st April 2015 when it was purchased | 25,000 |
| Less: - Amount of Depreciation charged on the year 2015-16 | |
| 25,000*20%*12/12 | 5,000 |
| Amount of Depreciation charged on the year 2016-17 | |
| 20,000*20%*12/12 | 4,000 |
| Amount of Depreciation charged on the year 2017-18 | |
| 16,000*20%*12/12 | 3,200 |
| Book value of the asset as on 1st October 2017 | 12,800 |
| Sale Price of Machinery | 10,800 |
| Loss on the sale of the asset | 2,000 |
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Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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