Question No 22 Chapter No 14 - T.S. Grewal 11 Class

Question No 22 Chapter No 14

22. X bought a machine for Rs 25,000 on which he spent Rs 5,000 for carriage and freight. Rs 1,000 for the brokerage of the middleman, Rs 3,500 for installation and ₹ 500 for an iron pad. The machine is depreciated @ 10% every year on the Written Down Value basis. After three years, the machine was sold to Y for Rs 30,500 and Rs 500 was paid as commission to the broker through whom the sale was effected. Find out the profit and loss on the sale of the machine.


The solution of Question No 22 Chapter No 14: -

Dr.	Machinery A/c						Cr.
Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
I year
01/01/	To Bank A/c		35,000	31/12/	By Deprecation A/c		3,500
				31/12/	By Balance C/d		31,500
			35,000				35,000
II year
01/01/	To Balance b/d		31,500	31/12/	By Deprecation A/c		3,150
				31/12/	By Balance C/d		28,350
			31,500				31,500
III year
01/01/	To Balance b/d		28,350	31/12/	By Deprecation A/c		2,835
31/12/	To Profit on sale on Machinery A/c		4,485	31/12/	By Bank A/c (30,500-500)		30,000
			32,835				32,835

Working Note:-

Statement Showing profit or loss on the sale of Machinery
Particulars	Amount
Book value of machinery as on 1st January when it was purchased	35,000
Less: - Amount of Depreciation charged on I year
35,000*10%*12/12	3,500
Amount of Depreciation charged on II year
31,500*10%*12/12	3,150
Amount of Depreciation charged on III year
28,350*10%*12/12	2,835
Add: commission to the broker	500
Book value of the asset as on 1st October 2017	26,015
Sale Price of Machinery	30,500
Profit on the sale of the asset	4,485

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Also, Check out the solved question of previous Chapters: -

• Chapter No. 1 – Introduction to Accounting
• Chapter No. 2 – Basic Accounting Terms
• Chapter No. 3 – Theory Base of Accounting, Accounting Standards and International Financial Reporting Standards(IFRS)
• Chapter No. 4 – Bases of Accounting
• Chapter No. 5 – Accounting Equation
• Chapter No. 6 – Accounting Procedures – Rules of Debit and Credit
• Goods and Services Tax(GST)
• Chapter No. 7 – Origin of Transactions – Source Documents and Preparation of Vouchers
• Chapter No. 8 – Journal
• Chapter No. 9 – Ledger
• Chapter No. 10 – Special Purpose Books I – Cash Book
• Chapter No. 11 – Special Purpose Books II – Other Books
• Chapter No. 12 – Bank Reconciliation Statement
• Chapter No. 13 – Trial Balance
• Chapter No. 14 – Depreciation
• Chapter No. 15 – Provisions and Reserves
• Chapter No. 16 – Accounting for Bills of Exchange
• Chapter No. 17 – Rectification of Errors
• Chapter No. 18 – Financial Statements of Sole Proprietorship
• Chapter No. 19 – Adjustments in preparation of Financial Statements
• Chapter No. 20 – Accounts from incomplete Records – Single Entry System
• Chapter No. 21 – Computers in Accounting
• Chapter No. 22 – Accounting Software – Tally
• Chapter No. 5 - Accounting Equation
• Chapter No. 6 - Accounting Procedures - Rules of Debit and Credit
• Goods and Services Tax(GST)
• Chapter No. 8 - Journal
• Chapter No. 9 - Ledger
• Chapter No. 10 – Special Purpose Books I – Cash Book

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