Question No 14 Chapter No 12

14. A Company purchased a machinery for 50,000 on 1st Oct., 2016. Another machinery costing 10,000 was purchased on 1st Dec., 2017. On 31st March, 2019, the machinery purchased in 2016 was sold at a loss of 5,000. The Company charges depreciation at the rate of 15% p.a. on Diminishing Balance Method. Accounts are closed on 31st March every year. Prepare Machinery account for 3 years.

## The solution of Question No 14 Chapter No 12: –

 Dr. Machinery A/c Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount 1st Oct.2116 To Bank A/c (36,000 + 4,000) 50,000 31st Mar2017 By Deprecation A/c (6 months) 3,750 31st Mar2017 By Balance C/d(36,000 + 19,000) 46,250 50,000 50,000 1st Apr 2017 To Balance b/f 46,250 31st Mar2018 By Deprecation A/c (6,938 + 500) 7,438 1st Dec.2108 To Bank A/c 10,000 31st Mar2018 By Balance C/d(39,312 + 9,500 ) 28,350 56,250 56,250 1st Apr 2018 To Balance b/f 48,812 31st Mar2019 By Deprecation A/c 5,897 31st Mar2019 By Bank A/c 28,415 31st Mar2019 By Profit & Loss A/c 5,000 31st Mar2019 By Deprecation A/c (1,710 + 3,200) 1,425 31st Mar2019 By Balance C/d 8,075 48,812 48,812

Working Note:
Calculation of Profit or Loss on Sale

 Statement Showing profit or loss on the sale of Machinery Particulars Amount Machinery Purchase on of Equipment as on 1st Oct. 2016 40,000 Less: – Amount of Depreciation charged on the year 2016-17 50,000 *15%* 6/12 3,750 Amount of Depreciation charged on the year 2017-18 46,250 *15%* 12/12 6,938 Amount of Depreciation charged on the year 2018-19 39,312 *15%* 12/12 5,897 Book value of asset as of 1st Oct 2019 33,415 Sale Price of Machinery 28,415 Loss on the sale of the asset 5,000

Depreciation | Meaning | Methods | Examples

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