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Question No 4 Chapter No 14 - T.S. Grewal 11 Class

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Question No 4 Chapter No 14

4. On 1st April 2014 A Ltd, purchased a machine for the Rs 2,40,000 and spent Rs 10,000 on its erection. On 1st October 2014, a piece of addition machinery costing Rs 1,00,000 was purchased, On October 2016 the machinery purchased on 1st April, 0214 was sold for Rs 1,43,000 and on the same date, a new machine was purchased at a cost of Rs 2,00,000.
Show the Machinery Account for the first four financial years after charging Depreciation at 5% p.a. by the Straight Line Method.

The solution of Question No 4 Chapter No 14: -

Date	Particulars	Amount	Date	Particulars	Amount
Dr.	Machine A/c				Cr.
01/04/14	To Cash A/c	2,50,000	31/03/15	By Deprecation A/c *1	15,000
01/10/14	To Cash A/c	1,00,000	31/03/15	By Balance C/d	3,35,000
		3,50,000			3,50,000
01/03/15	To Balance b/f	3,35,000	31/03/16	By Deprecation A/c	17,500
			31/03/16	By Balance C/d	3,17,500
		3,35,000			3,35,000
01/03/16	To Balance b/d	3,17,500	01/10/16	By Cash A/c	1,43,000
01/10/16	To Cash A/c	2,00,000	01/10/16	By Deprecation A/c	6,250
			01/10/16	By Loss on sale of machine A/c	75,750
			31/03/17	By Deprecation A/c*3	10,000
			31/03/17	By Balance C/d	2,82,500
		2,82,500			2,82,500
01/04/17	To Balance b/f	2,82,500	31/03/18	By Deprecation A/c	17,500
			31/03/18	By Balance C/d	2,67,500
		2,82,500			2,82,500

Working note:-

*1:- Calculation of the amount of Depreciation on machinery for F/Y 2014-15
Purchased on 1st April 2014
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 2,50,000
Rate of Depreciation = 5%
Period = from 01/04/14 to 31/03/15 i.e. 12 months
(from the date of purchase/Beginning balance to the end of the financial year)
=2,50,000 X 5/100 X 12/12
Depreciation =12,500
Purchased 1st October 2014
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 1,00,000
Rate of Depreciation = 5%
Period = from 01/10/14 to 31/03/15 i.e. 6 months
(from the date of purchase/Beginning balance to end of the financial year)
= 1,00,000 X 5/100 X 6/12
Depreciation =2,500
Total Depreciation for the finical year 2014-15 =15,000

Particulars	Amount
Statement Showing profit or loss on the sale of Machinery	Cr.
Book value of machinery as on 1st April 2014 when it was purchased	2,50,000
Less: - Amount of Depreciation charged on the year 2014-15
2,50,000 * 5% *12/12	12,500
Amount of Depreciation charged on year 2015-16
2,50,000 * 5% *12/12	12,500
Amount of Depreciation charged on year 2015-16
2,50,000 * 5% *6/12	6,250
Sale Price of Machinery	1,43,000
Loss on the sale of the asset	75,750

*2:- Calculation of the amount of Depreciation on machinery for F/Y 2016-17
Purchased on 1st October 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 1,00,000
Rate of Depreciation = 5%
Period = from 01/04/16 to 31/03/17 i.e. 12 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 1,00,000 X 5/100 X 12/12
Depreciation =5,000
Purchased 1st October 2014
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 2,00,000
Rate of Depreciation = 5%
Period = from 01/10/16 to 31/03/17 i.e. 6 months
(from the date of purchase/Beginning balance to end of the financial year)
= 2,00,000 X 5/100 X 6/12
Depreciation =5,000
Total Depreciation for the finical year 2014-15 =10,000

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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