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Question No 07 Chapter No 13
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Addition to Assets
7. Panch Rattan Processors purchased machinery at a cost of Rs 4,60,000 on 1st January 2017 and incurred Rs 40,000 expenses on its purchase and installation. On 1st October 2017, straight-line method id 10%p.a. the firm closes its books on 31st March each year.
Write up machinery account and depreciation account for the years 2016-17, 2017-18 and 2018-19
The solution of Question No 07 Chapter No 13:-
| Dr. | Machine A/c | Cr. | |||||
| Date | Particulars | J.F. | Amount | Date | Particulars | J.F. | Amount |
| 01/01/16 | To Cash A/c | 5,00,000 | 31/03/17 | By Deprecation A/c*1 | 12,500 | ||
| 31/03/17 | By Balance C/d | 4,87,500 | |||||
| 5,00,000 | 5,00,000 | ||||||
| 01/03/17 | To Balance b/d | 4,87,500 | 31/03/18 | By Deprecation A/c*2 | 60,000 | ||
| 01/10/17 | To Cash A/c | 2,00,000 | 31/03/18 | By Balance C/d | 6,27,500 | ||
| 6,87,500 | 6,87,500 | ||||||
| 01/03/18 | To Balance b/d | 6,27,500 | 31/03/19 | By Deprecation A/c | 70,000 | ||
| 31/03/19 | By Balance C/d | 5,57,500 | |||||
| 6,27,500 | 6,27,500 | ||||||
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| Dr. | Depreciation A/c | Cr. | |||||
| Date | Particulars | J.F. | Amount | Date | Particulars | J.F. | Amount |
| 31/03/17 | To Plant A/c | 12,500 | |||||
| 31/03/17 | By Profit & Loss A/c | 12,500 | |||||
| 12,500 | 12,500 | ||||||
| 31/03/18 | To Plant A/c | 60,000 | |||||
| 31/03/18 | By Profit & Loss A/c | 60,000 | |||||
| 60,000 | 60,000 | ||||||
| 31/03/19 | To Plant A/c | 70,000 | |||||
| 31/03/19 | By Profit & Loss A/c | 70,000 | |||||
| 70,000 | 70,000 | ||||||
Working note:-
*1:- Calculation of the amount of Depreciation on furniture for the year 2016-17
Machinery purchased on 1st January 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 5,00,000
Rate of Depreciation = 10%
Period = from 01/01/2017 to 31/03/2017 i.e.3 months
(from the date of purchase/Beginning balance to the end of the financial year)
=5,00,000 X10/100 X 3 / 12
Depreciation = 12,500
Total Depreciation for the year = 12,500
*2:- Calculation of amount of Depreciation on furniture for year 2015-16
Machinery purchased on 1st January 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 5,00,000
Rate of Depreciation = 10%
Period = from 01/01/2017 to 31/03/2017 i.e.3 months
(from the date of purchase/Beginning balance to end of the financial year)
=5,00,000 X10/100 X 3 / 12
Depreciation = 50,000
Machinery purchased on 1st October 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 2,00,000
Rate of Depreciation = 10%
Period = from 01/01/2017 to 31/03/2017 i.e.3 months
(from the date of purchase/Beginning balance to end of the financial year)
= 2,00,000 X10/100 X 6 / 12
Depreciation = 10,000
Total Depreciation for the year =60,000
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Depreciation | Meaning | Methods | Examples
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Also, Check out the solved question of all Chapters: –
Chapter No. 2 – Theory Base of Accounting
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Chapter No. 3 – Vouchers and transactions
Chapter No. 4 – Journal
Chapter No. 5 – Ledger
Chapter No. 6 – Cash Book
Chapter No. 7 – Other Subsidiary Books
Chapter No. 8 – Journal Proper
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Chapter No. 9 – Trial Balance
Chapter No. 10 – Bank Reconciliation Statement
Chapter No. 11 – Depreciation
Chapter No. 12 – Provisions and Reserves
Chapter No. 13 – Bills of Exchange
Chapter No. 14 – Rectification of Errors
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Chapter No. 15 – Financial Statements – (Without Adjustments)
Chapter No. 16 – Financial Statements – (With Adjustments)
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