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Question No 7 Chapter No 14
7. A Van was purchased on 1st April 2015 for Rs 60,000 and Rs 5,000 spent on its repair and registration. On 1st October 2016, another van was purchased for Rs 70,000. On 1st April 2017, the first van was purchased on 1st April 2015 was sold for Rs 45,000 and new van costing Rs 1,70,000 was purchased on the same date. Show the van Account from 2015-16 to 2017-18 on the basis of straight Line Method, if the rate of Depreciation charged is 10% p.a. Assume that books are closed on 31st March every year.
The Depreciation expense for the year ended 31st March 2012
The netbook value of the asset on 31st March 2016.
The gain or loss on the sale of the asset on 31st March 2012
The solution of Question No 7 Chapter No 14: -
| Dr. | Machine A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
|---|---|---|---|---|---|---|---|
| 01/04/15 | To Cash A/c | 65,000 | 31/03/16 | By Deprecation A/c | 6,500 | ||
| 31/03/16 | By Balance C/d | 58,500 | |||||
| 65,000 | 65,000 | ||||||
| 01/04/16 | To Balance b/d | 58,500 |
31/03/17 | By Deprecation A/c | 10,000 | ||
| 01/10/16 | To Cash A/c | 70,000 |
31/03/17 | By Balance C/d | 1,18,500 |
||
| 1,28,500 |
1,28,500 |
||||||
| 01/04/17 | To Balance b/d | 1,18,500 | 01/04/17 | By Cash A/c | 45,000 | ||
| 01/04/17 | To Cash A/c | 1,70,000 | 01/04/17 | By loss on the sale of van A/c | 7,000 | ||
| 31/03/15 | By Deprecation A/c | 24,000 | |||||
| 31/03/15 | By Balance C/d | 2,12,500 |
|||||
| 2,88,500 |
2,88,500 |
||||||
Working note:-
| Statement Showing profit or loss on the sale of Machinery | Cr. |
| Particulars |
Amount |
|---|---|
| Book value of van as on 1st April 2015 when it was purchased | 65,000 |
| Less: - Amount of Depreciation charged on the year 2015-16 | |
| 65,000*10%*12/12 | 6,500 |
| Amount of Depreciation charged on the year 2016-17 | 6,500 |
| Sale Price of Machinery | 45,000 |
| Loss on the sale of the asset | 7,000 |
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Accounting & Commerce Educator
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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