Question No 13 Chapter No 13
Sale of Total Assets
13. Arun Singh purchased furniture for Rs 1,90,000 and spent Rs 10,000 on its freight. Depreciation on furniture is charged @10% p.a. on fixed instalment method. The furniture was sold Rs 1,20,000. Books are closed on 31st March each year.
Calculate the profit or loss on the sale of furniture in the following alternative cases:
| Case 1: | Furniture was purchased on 1st April 2014 and sold 31st March 2019 |
| Case 2: | Furniture purchased on 1st October 2015 and sold on 31st March 2019 |
| Case 3: | Furniture purchased on 1st January 2015 and sold on 31st October 2018 |
| Case 4: | Furniture was purchased on 1sr April 2017 and sold on 31st December 2018 |
The solution of Question No 13 Chapter No 13:-
Case 1: Furniture was purchased on 1st April,2014 and sold 31st March 2019
| Dr. | Furniture A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
| 01/04/14 | To Cash A/c | 2,00,000 | 31/03/15 | By Deprecation A/c | 20,000 | ||
| 31/03/15 | By Balance C/d | 1,80,000 | |||||
| 2,00,000 | 2,00,000 | ||||||
| 01/04/15 | To Balance b/d | 1,80,000 | 31/03/16 | By Deprecation A/c | 20,000 | ||
| 31/03/16 | By Balance C/d | 1,60,000 | |||||
| 1,80,000 | 1,80,000 | ||||||
| 01/04/16 | To Balance b/d | 1,60,000 |
31/03/17 | By Deprecation A/c | 20,000 | ||
| 31/03/17 | By Balance C/d | 1,40,000 | |||||
| 1,60,000 | 1,60,000 | ||||||
| 01/04/17 | To Balance b/f | 1,40,000 | 31/03/18 | By Deprecation A/c | 20,000 | ||
| 31/03/18 | By Balance C/d | 1,20,000 | |||||
| 1,40,000 |
1,40,000 |
||||||
| 01/04/18 | To Balance b/f | 1,20,000 | 31/03/19 | By Deprecation A/c | 20,000 | ||
| 31/03/19 | To Profit on sale of machinery | 20,000 | 31/03/19 | By Sale A/c | 1,20,000 | ||
| 1,40,000 | 1,40,000 | ||||||
Case 2: Furniture purchased on 1st October 2015 and sold on 31st March 2019
| Dr. | Furniture A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
| 01/10/15 | To Cash A/c | 2,00,000 | 31/03/16 | By Deprecation A/c*1 | 10,000 | ||
| 31/03/16 | By Balance C/d | 1,90,000 | |||||
| 2,00,000 | 2,00,000 | ||||||
| 01/04/16 | To Balance b/d | 1,90,000 | 31/03/17 | By Deprecation A/c | 20,000 | ||
| 31/03/17 | By Balance C/d | 1,70,000 | |||||
| 1,90,000 | 1,90,000 | ||||||
| 01/04/17 | To Balance b/d | 1,70,000 |
31/03/18 | By Deprecation A/c | 20,000 | ||
| 31/03/18 | By Balance C/d | 1,50,000 | |||||
| 1,70,000 | 1,70,000 | ||||||
| 01/04/18 | To Balance b/f | 1,50,000 | 31/03/19 | By Deprecation A/c | 20,000 | ||
| 31/03/19 | By Sale A/c | 1,20,000 | |||||
| 31/03/19 | By Loss on sale of machinery | 10,000 | |||||
| 1,50,000 | 1,50,000 | ||||||
Working note:-
*1:- Calculation of amount of Depreciation on furniture for year 2015-16
Machinery purchased on 1st October 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 2,00,000
Rate of Depreciation = 10%
Period = from 01/10/2015 to 31/03/2016 i.e. 6 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 2,00,000 X 10/100 X 6 / 12
Depreciation = 10,000
Total Depreciation for the year = 10,000
Case 3: Furniture purchased on 1st January, 2015 and sold on 31st October,2018
| Dr. | Furniture A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
| 01/01/15 | To Cash A/c | 2,00,000 | 31/03/15 | By Deprecation A/c*1 | 5,000 | ||
| 31/03/15 | By Balance C/d | 1,95,000 | |||||
| 2,00,000 | 2,00,000 | ||||||
| 01/04/15 | To Balance b/d | 1,95,000 | 31/03/16 | By Deprecation A/c | 20,000 | ||
| 31/03/16 | By Balance C/d | 1,75,000 | |||||
| 1,95,000 | 1,95,000 | ||||||
| 01/04/16 | To Balance b/d | 1,75,000 |
31/03/17 | By Deprecation A/c | 20,000 | ||
| 31/03/17 | By Balance C/d | 1,55,000 | |||||
| 1,75,000 | 1,75,000 | ||||||
| 01/01/17 | To Balance b/f | 1,55,000 | 31/03/18 | By Deprecation A/c | 20,000 | ||
| 31/03/18 | By Balance C/d | 1,35,000 | |||||
| 1,55,000 |
1,55,000 |
||||||
| 01/04/18 | To Balance b/f | 1,35,000 | 31/03/19 | By Deprecation A/c*2 | 11,667 | ||
| 31/03/19 | By Sale A/c | 1,20,000 | |||||
| 31/03/19 | By Loss on sale of machinery | 3,333 | |||||
| 1,35,000 | 1,35,000 | ||||||
Working note:-
*1:- Calculation of the amount of Depreciation on furniture for the year 2014-15
Machinery purchased on 1st January 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 2,00,000
Rate of Depreciation = 10%
Period = from 01/01/2016 to 31/03/2017 i.e. 3 months
(from the date of purchase/Beginning balance to end of the financial year)
= 2,00,000 X 10/100 X 3 / 12
Depreciation = 5,000
Total Depreciation for the year 5,000
*2:- Calculation of amount of Depreciation on furniture for year 2017-18
Machinery purchased on 1st January 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 2,00,000
Rate of Depreciation = 10%
Period = from 01/04/2017 to 31/10/2017 i.e. 8 months
(from the date of purchase/Beginning balance to end of the financial year)
= 3,00,000 X10/100 X 12 / 12
Depreciation = 13,333
Total Depreciation for the year = 13,333
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Case 4: Furniture was purchased on 1sr April, 2017 and sold on 31st December, 2018
| Dr. | Furniture A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
| 01/04/17 | To Cash A/c | 2,00,000 | 31/03/15 | By Deprecation A/c*1 | 20,000 | ||
| 31/03/15 | By Balance C/d | 1,80,000 | |||||
| 2,00,000 | 2,00,000 | ||||||
| 01/04/18 | To Balance b/f | 1,80,000 | 31/03/19 | 31/03/19 | 20,000 | ||
| 31/03/19 | By Balance C/d | 1,60,000 | |||||
| 1,80,000 | 1,80,000 | ||||||
| 01/04/19 | To Balance b/f | 1,60,000 | 31/12/19 | By Deprecation A/c*1 | 15,000 | ||
| 31/12/19 | By Sale A/c | 1,60,000 | |||||
| 31/12/19 | By Loss on sale of machinery | 25,000 | |||||
| 1,60,000 | 1,60,000 | ||||||
Working note :-
*1:- Calculation of amount of Depreciation on furniture for year 2018-19
Machinery purchased on 1st April, 2017
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 2,00,000
Rate of Depreciation = 10%
Period = from 01/04/2016 to 31/10/2018 i.e. 9 months
(from the date of purchase/Beginning balance to end of the financial year)
= 2,00,000 X 10/100 X 9 / 12
Depreciation = 15,000
Total Depreciation for the year = 15,000
Depreciation | Meaning | Methods | Examples
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Depreciation – Meaning – Methods – Examples -In Hindi
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Chapter No. 2 – Theory Base of Accounting
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
Chapter No. 9 – Trial Balance
Chapter No. 10 – Bank Reconciliation Statement
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Chapter No. 11 – Depreciation
Chapter No. 12 – Provisions and Reserves
Chapter No. 13 – Bills of Exchange
Chapter No. 14 – Rectification of Errors
Chapter No. 15 – Financial Statements – (Without Adjustments)
Chapter No. 16 – Financial Statements – (With Adjustments)