Question No 20 Chapter No 13

Question No 20 Chapter No 13

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/cCr.
DateParticulars
J.F.AmountDateParticulars
J.F.Amount
01/04/16To Cash A/c 10,00031/03/17By Deprecation A/c*1 1,250
01/10/16To Cash A/c 5,00031/03/17By Balance C/d 13,750
   15,000   15,000
01/04/17To Balance b/d 13,75031/10/17By Bank A/c 4,000
    31/10/17By Depreciation A/c 500
    31/10/17By Profit/loss A/c 4,500
    31/03/18By Depreciation A/c*2 500
    31/03/17By Balance C/d 4,250
   13,750   13,750
01/04/18To Balance b/d 4,25001/01/18By Bank A/c 4,200
01/10/18To Bank A/c 12,00001/01/18By Deprecation A/c 250
01/10/18To Profit/loss A/c 20031/03/19By Deprecation A/c*3 600
    31/03/19By 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 201610,000
Less: – Amount of Depreciation charged on the year 2016-17 
10,000*10%* 12/121,000
 Amount of Depreciation charged on the year 2017-18 
10,000*10%* 6/12500
Book value of the asset as on 1st October 20178,500
Sale Price of Machinery 4,000
Loss on the sale of the asset4,500

*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 20165,000
Less: – Amount of Depreciation charged on the year 2016-17 
5,000*10%* 6/12250
 Amount of Depreciation charged on the year 2017-18 
50,000*10%* 12/12500
 Amount of Depreciation charged on the year 2018-19 
5,000*10%* 6/12250
Book value of an asset as on 1st April , 20174,000
Sale Price of Machinery 4,200
Profit on the sale of the asset200


*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: –

Chapter No. 1 – Introduction

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

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)

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