Question No 17 Chapter No 12

17. Raja Textiles Co. which closes its books on 31st March, purchased a machine on 1-4-2009 for 50,000. On 1-10-2010, it purchased an additional machine for 30,000. The part of the machine which was purchased on 1-4-2009 costing 10,000 was sold for 3,600 on 30th Sept., 2012. Prepare the Machine Account for four years, if the depreciation is provided at the rate of 10% p.a. on Diminishing Balance Method.

## The solution of Question No 17 Chapter No 12: –

 Dr. Machinery A/c Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount 1st Apr.2016 To Bank A/c (10,000+ 40,000) 50,000 31st Mar 2017 By Deprecation A/c 5,000 31st Mar 2017 By Balance C/d 45,000 50,000 50,000 1st Apr.2017 To Balance b/f 45,000 31st Mar 2018 By Deprecation A/c (900 +3,600 + 1500) 6,000 1st Oct.2017 To Bank A/c 30,000 31st Mar 2018 By Balance C/d 6,95,000 75,000 75,000 1st Apr.2018 To Balance b/f 69,000 31st Mar 2019 By Deprecation A/c (810 + 3,240 + 2,850) 6,900 31st Mar 2019 By Balance C/d (7,290 + 29,160 + 25,650) 62,100 69,000 69,000 1st Apr.2019 To Balance b/f 62,100 30th Sep.2019 By Deprecation A/c 365 30th Sep.2019 By Bank A/c 3,600 30th Sep.2019 By Profit & Loss A/c 3,325 31st Mar 2020 By Deprecation A/c (29,160 + 26,100+2,000) 5,481 31st Mar 2020 By Balance C/d 49,329 62,100 62,100

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 Apr. 2016 10,000 Less: – Amount of Depreciation charged on the year 2017-18 10,000 *10%* 12/12 1,000 Amount of Depreciation charged on the year 2018-19 9,000 *10%* 12/12 900 Amount of Depreciation charged on the year 2019-20 81,000 *10%* 12/12 810 Amount of Depreciation charged on the year 2019-20 7,290 *10%* 6/12 365 Book value of an asset as of 1st Oct 2019 6,925 Sale Price of Machinery 3,600 Loss on the sale of the asset 3,325

Note: In order to make an easy calculation, machinery purchased on April 01, 2017, has been divided into two parts i.e. M1 and M2. Thus, M1: Rs 10,000 (sold for Rs 3,600) M2: Rs 40,000

Depreciation | Meaning | Methods | Examples

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