# Question No 10 Chapter No 14 – T.S. Grewal 11 Class

Question No.10 - Chapter No.14- T.S. Grewal +1 Book 2019-Solution

Question No 10 Chapter No 14

10. On 1st April 2015, Shivam Enterprise purchased a second- hand machinery for Rs 52,000and spent Rs 2,000 on cartage, Rs 3,000 on unloading, Rs 2,000 on installation and Rs 1,000 as the brokerage of the middle man. It was estimated that the machinery will have a scrap value of Rs 6,000 at the end of its useful life, which is 10 year. On 31st December 2015, repairs and renewals amounted to Rs 2,500 were paid. On 1st October 2017, this machine was sold for Rs 30,600 and an amount of Rs 600 was paid as commission to the agent. Calculate the amount of annual depreciation and rate of depreciation. Also prepare the Machinery Account for the first 3 years, assuming that firm follows finical year for accounting.

The solution of Question No 10 Chapter No 14: –

 Dr. Machine A/c Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount 01/4/15 To Cash A/c 60,000 31/03/16 By Deprecation A/c 5,400 31/03/16 By Balance C/d 54,600 60,000 60,000 01/04/16 To Balance b/d 54,600 31/03/17 By Deprecation A/c 5,400 31/03/17 By Balance C/d 29,475 54,600 54,600 01/04/17 To Balance b/d 49,200 01/10/17 By Cash A/c 30,600 01/10/17 By Deprecation A/c 2,700 01/10/17 By loss on the sale of van A/c 16,500 49,200 49,200

Working note:-

The method of calculating the Deprecation rate:

 Amount of Depreciation = Cost of assets- Estimated Realizable or Scrap value Number of years of expected useful life

Rate of Deprecation can be calculated with the help of following formula:

 Rate of Depreciation = Amount of Depreciation X100 Total Cost of Assets

Cost of assets = Cost of Machine + cartage+ unloading + installation + brokerage of the middle man

Cost of assets = 52,000 + 2,000 + 3,000 + 2,000 + 1,000 = 60,000
Number of years of expected useful life = 10 years
Estimated Retaliated or Scrap value = 6,000

 Amount of Depreciation = 60,000 – 6,000 = 5,400 10

Rate of Deprecation can be calculated with the help of following formula:

 Rate of Depreciation = 5,400 X100 60,000

=9%

 Statement Showing profit or loss on the sale of Machinery Cr. Particulars Amount Book value of machinery as on 1st April 2015 when it was purchased 12,000 Add: commission to an agent 600 60,600 Less: – Amount of Depreciation charged on the year 2015-16 10,000*9%*12/12 5,400 Amount of Depreciation charged on the year 2016-17 5,400 Amount of Depreciation charged on the year 2017-18 10,000*9%*6/12 2,700 Sale Price of Machinery 30,600 Loss on the sale of the asset 16,500

Depreciation | Meaning | Methods | Examples

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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

T.S. Grewal’s Double Entry Book Keeping