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Question No 25 Chapter No 14
25. A Machinery was purchased for ₹ 1,80,000 on 1st July, 2015. Depreciation was charged annually @ 10% on Diminishing Balance Method. 1/4th of this Machinery was sold on 1st October, 2017 for 36,000. Prepare Machinery A/c from the year ended 31st March, 2016 to 2018, if the books are closed on 31st March every year.
The solution of Question No 25 Chapter No 14: -
| Dr. | Machinery A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
|---|---|---|---|---|---|---|---|
| 01/07/15 | To Bank A/c | 1,80,000 | 31/03/16 | By Deprecation A/c*1 | 13,500 | ||
| 31/03/16 | By Balance C/d | 1,66,500 | |||||
| 1,80,000 | 1,80,000 | ||||||
| 01/04/16 | To Balance b/d | 1,66,500 | 31/03/17 | By Deprecation A/c | 16,650 | ||
| 31/03/17 | By Balance C/d | 1,49,850 | |||||
| 1,66,500 | 1,66,500 | ||||||
| 01/04/17 | To Balance b/d | 1,49,850 | 31/10/17 | By Deprecation A/c | 1,873 | ||
| 01/10/17 | To Profit on sale of Machinery A/c | 410 | 31/10/17 | By Bank A/c | 36,000 | ||
| 31/03/18 | By Deprecation A/c*2 | 11,239 | |||||
| 31/03/18 | By Balance C/d | 1,01,148 | |||||
| 1,50,260 |
1,50,260 | ||||||
Working Note:-
*1:- Calculation of the amount of Depreciation on furniture for the year 2016-17
Purchased on 1st July 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 1,80,000
Rate of Depreciation = 10%
Period = from 01/07/2016 to 31/03/2017 i.e.9months
(from the date of purchase/Beginning balance to the end of the financial year)
=1,80,000 X10/100 X 9/12
Depreciation =13,500
Total Depreciation for the year = 2,300
| Statement Showing profit or loss on the sale of Machinery | |
| Particulars |
Amount |
|---|---|
| The purchase value of machinery as on 1st July 2015 (1,80,000 *1/4) out of which 1/4 sold | 45,000 |
| Less: - Amount of Depreciation charged on the year 2015-16 | |
| 45,000*10%*9/12 | 3,375 |
| Amount of Depreciation charged on the year 2016-17 | |
| 41,625*10%*12/12 | 4,162 |
| Amount of Depreciation charged on the year 2017-18 | |
| 37,463*10%*6/12 | 1,873 |
| Book value of the asset as on 1st April 2018 | 35,590 |
| Sale Price of Machinery | 36,000 |
| Profit on the sale of the asset | 410 |
*2:- Calculation of the amount of Depreciation on furniture for the year 2017-18
purchased on 1st July 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 1,12,388
Rate of Depreciation = 10%
Period = from 01/03/2017 to 31/03/2018 i.e.12months
(from the date of purchase/Beginning balance to the end of the financial year)
=1,12,388 X10/100 X 12/12
| Depreciation | 11,239 |
| Total Depreciation for the year | 11,239 |
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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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