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Question No 20 Chapter No 13
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Sale of Total Assets
20. Navjot Traders purchased on 1st April,2016, a small plant for Rs 10,000. on 1st October, in the same years, additional plants was purchased costing Rs 5,000. on 1st October, 2017, the plant purchased on 1st April, 2016 having become obsolete was sold for Rs 4,000. on 1st October, 2018, fresh plant was purchased for Rs 12,000 and the plants purchased on 1st October, 2016 was sold for Rs 4,200
Depreciation is provided at 10% per annum on original cost every year. Show the plants account for three years , when books are closed o 31st March every year.
The solution of Question No 20 Chapter No 13:-
| Dr. | Plant A/c | Cr. | |||||
| Date | Particulars | J.F. | Amount | Date | Particulars | J.F. | Amount |
| 01/04/16 | To Cash A/c | 10,000 | 31/03/17 | By Deprecation A/c*1 | 1,250 | ||
| 01/10/16 | To Cash A/c | 5,000 | 31/03/17 | By Balance C/d | 13,750 | ||
| 15,000 | 15,000 | ||||||
| 01/04/17 | To Balance b/d | 13,750 | 31/10/17 | By Bank A/c | 4,000 | ||
| 31/10/17 | By Depreciation A/c | 500 | |||||
| 31/10/17 | By Profit/loss A/c | 4,500 | |||||
| 31/03/18 | By Depreciation A/c*2 | 500 | |||||
| 31/03/17 | By Balance C/d | 4,250 | |||||
| 13,750 | 13,750 | ||||||
| 01/04/18 | To Balance b/d | 4,250 | 01/01/18 | By Bank A/c | 4,200 | ||
| 01/10/18 | To Bank A/c | 12,000 | 01/01/18 | By Deprecation A/c | 250 | ||
| 01/10/18 | To Profit/loss A/c | 200 | 31/03/19 | By Deprecation A/c*3 | 600 | ||
| 31/03/19 | By Balance C/d | 11,400 | |||||
| 16,450 | 16,450 | ||||||
Working note:-
*1:- Calculation of the amount of Depreciation on furniture for the year 2016-17
Machinery purchased on 1st Apr 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 10,000
Rate of Depreciation = 10%
Period = from 01/04/2016 to 31/03/2017 i.e. 12 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 10,000 X 10/100 X 12/ 12
Depreciation = 1,000
Machinery purchased on 1st Oct 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 5,000
Rate of Depreciation = 10%
Period = from 01/10/2016 to 31/03/2017 i.e. 6 months
(from the date of purchase/Beginning balance to end of the financial year)
= 5,000 X 10/100 X 6/ 12
Depreciation = 250
Total Depreciation for the year = 1,250
| Statement Showing profit or loss on the sale of Machinery | |
| Particulars | Amount |
| Purchase value of machinery as on 1st April 2016 | 10,000 |
| Less: – Amount of Depreciation charged on the year 2016-17 | |
| 10,000*10%* 12/12 | 1,000 |
| Amount of Depreciation charged on the year 2017-18 | |
| 10,000*10%* 6/12 | 500 |
| Book value of the asset as on 1st October 2017 | 8,500 |
| Sale Price of Machinery | 4,000 |
| Loss on the sale of the asset | 4,500 |
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*2:– Calculation of the amount of Depreciation on furniture for year 2016-17
Machinery purchased on 1st Oct 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 5,000
Rate of Depreciation = 10%
Period = from 01/10/2016 to 31/03/2017 i.e. 6 months
(from the date of purchase/Beginning balance to end of the financial year)
= 5,000 X 10/100 X 12/ 12
Depreciation = 500
Total Depreciation for the year = 500
| Statement Showing profit or loss on the sale of Machinery | |
| Particulars | Amount |
| Purchase value of machinery as on 1st October 2016 | 5,000 |
| Less: – Amount of Depreciation charged on the year 2016-17 | |
| 5,000*10%* 6/12 | 250 |
| Amount of Depreciation charged on the year 2017-18 | |
| 50,000*10%* 12/12 | 500 |
| Amount of Depreciation charged on the year 2018-19 | |
| 5,000*10%* 6/12 | 250 |
| Book value of an asset as on 1st April , 2017 | 4,000 |
| Sale Price of Machinery | 4,200 |
| Profit on the sale of the asset | 200 |
*3:- Calculation of the amount of Depreciation on furniture for the year 2017-18
Machinery purchased on 1st Oct 2018
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 12,000
Rate of Depreciation = 10%
Period = from 01/10/2016 to 31/03/2017 i.e. 6 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 12,000 X 10/100 X 12/ 12
Depreciation = 600
Total Depreciation for the year = 600
Depreciation | Meaning | Methods | Examples
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Also, Check out the solved question of all Chapters: –
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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
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Chapter No. 7 – Other Subsidiary Books
Chapter No. 8 – Journal Proper
Chapter No. 9 – Trial Balance
Chapter No. 10 – Bank Reconciliation Statement
Chapter No. 11 – Depreciation
Chapter No. 12 – Provisions and Reserves
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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)