Question No 19 Chapter No 13
Sale of Total Assets
19. Mummun Sen bought furniture for Rs 36,000 and spent Rs 4,000 for its fitting and cartage on 1st April 2014. Additional furniture was bought on 1st October 2014 for Rs 20,000. while the first furniture was to serve for 10 years with no scrap value, the second one to serve for 5 years to leave a scrap of Rs 4,000. on 1st July 2015, another item of furniture was bought for Rs 10,000, charging 10%p.a. depreciation on cost. On 30th June 2016 the furniture purchased on 1st October 2014 was auctioned at 60% of its book value and the first furniture was disposed of at par on 31st March 2017 and replaced by new furniture of Rs 15,000 to serve for 6 years when scrap was esteemed to be Rs 3,000. show furniture Account till 2017-18 with all calculation.
The solution of Question No 19 Chapter No 13:-
| Dr. | Furniture A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
| 01/04/14 | To Cash A/c | 40,000 | 31/03/15 | By Deprecation A/c*1 | 5,600 | ||
| 01/10/14 | To Cash A/c | 20,000 | 31/03/15 | By Balance C/d | 54,400 | ||
| 60,000 | 60,000 | ||||||
| 01/04/15 | To Balance b/d | 54,400 | 31/03/16 | By Deprecation A/c*2 | 7,950 | ||
| 01/07/15 | To Cash A/c | 10,000 | 31/03/16 | By Balance C/d | 56,450 | ||
| 64,,400 | 64,,400 | ||||||
| 01/04/16 | To Balance b/d | 56,450 | 30/06/17 | By Bank A/c | 8,640 | ||
| 01/03/17 | To Bank A/c | 15,000 | 30/06/17 | By Profit/Loss A/c | 5,760 | ||
| 30/06/17 | By Deprecation A/c | 800 | |||||
| 31/03/17 | By Bank A/c | 28,000 | |||||
| 31/03/17 | By Deprecation A/c*3 | 5,000 | |||||
| 31/03/17 | By Balance C/d | 23,250 | |||||
| 71,450 | 71,450 | ||||||
| 01/04/18 | To Balance b/f | 23,250 | 31/03/19 | By Deprecation A/c*4 | 3,000 | ||
| 31/03/19 | By Balance C/d | 20,250 |
|||||
| 23,250 |
23,250 |
||||||
Working note:-
*1:- Calculation of amount of Depreciation on furniture purchased on 1st April, 2014
The method of calculating the Deprecation rate:
Depreciation = Value of Asset X Rate of Depreciation X Period
| Amount of Depreciation = | Cost of assets- Estimated Realizable or Scrap value |
| Number of years of expected useful life |
Cost of assets = Cost of Furniture + Fitting = 36,000 + 4,000
Number of years of expected useful life = 5 years
| Amount of Depreciation = | 40,000 | = 4,000 |
| 10 |
*2:- Calculation of the amount of Depreciation on furniture purchased on 1st October 2014
The method of calculating the Deprecation rate:
Cost of assets = Cost of Furniture + Fitting = 20,000
Number of years of expected useful life = 5 years
Estimated Retaliated or Scrap value = 4,000
| Amount of Depreciation = | 20,000 – 4,000 | = 3,200 |
| 5 |
| Statement Showing the Profit and loss on the sale of Furniture | |
| Particulars |
Amount |
| Purchase value of machinery as on 1st April 2014 | 20,000 |
| Less: – Amount of Depreciation charged on the year 2014-15 | |
| 3,200 6/12 | 1,600 |
| Amount of Depreciation charged on the year 2015-16 | |
| 3,200 12/12 | 3,200 |
| Amount of Depreciation charged on the year 2016-17 | |
| 3,200 3/12 | 800 |
| Book value of the asset as on 30th June 2016 | 14,400 |
| Sale Price of Machinery | 8,640 |
| Loss on the sale of the asset | 5,760 |
| Statement Showing the Profit and loss on the sale of Furniture | |
| Particulars |
Amount |
| Purchase value of machinery as on 1st October, 2014 | 40,000 |
| Less: – Amount of Depreciation charged on the year 2014-15 | |
| 4,000 12/12 | 4,000 |
| Amount of Depreciation charged on the year 2015-16 | |
| 4,000 12/12 | 4,000 |
| Amount of Depreciation charged on the year 2016-17 | |
| 4,000 12/12 | 4,000 |
| Book value of the asset as on 30th June 2016 | 28,000 |
| Sale Price of Machinery | 28,000 |
| Loss on the sale of the asset | Nil |
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