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/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

*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: –

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)