Question No 20 Chapter No 14 - T.S. Grewal 11 Class

Question No 20 Chapter No 14

20. Babu purchased on 1st April 2016, a machine for ₹ 6,000. On 1st October 2016, he also purchased another machine for ₹ 5,000. On 1st October 2017, he sold the machine purchased on 1st April 2016 for ₹ 4,000.
It was decided that Depreciation @ 10% p.a. was to be written off every year under Diminishing Balance Method.
Assuming the accounts were closed on 31st March every year, show the Machinery Account for the years ended 31st March 2017 and 2018

The solution of Question No 20 Chapter No 14: –

Dr.	Furniture A/c						Cr.
Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
01/01/16	To Bank A/c		6,000	31/03/17	By Deprecation A/c*1		850
01/10/16	To Bank A/c		5,000	31/03/17	By Balance C/d		10,150
			11,000				11,000
01/04/17	To Balance b/d		10,150	01/10/17	By Bank A/c		4,000
				01/10/17	By Deprecation A/c		270
				01/10/17	By loss on sale on machinery A/c		1,130
				31/03/18	By Deprecation A/c*2		475
				31/03/18	By Balance C/d		4,275
			10,150				10,150

Wroking Note:-

*1:- Calculation of the amount of Depreciation on machinery for F/Y 2016-17
Purchased on 1st April 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 6,000
Rate of Depreciation = 10%
Period = from 01/03/17 to 31/03/18 i.e.12 months
(from the date of purchase/Beginning balance to the end of the financial year)
=6,000 X 10/100 X 12/12
Depreciation =600
Purchased 1st October 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 5,000
Rate of Depreciation = 10%
Period = from 01/10/17 to 31/03/18 i.e. 6 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 5,000 X 10/100 X 6/12
Depreciation = 250
Total Depreciation for the year =850
*2:- Calculation of the amount of Depreciation on machinery for F/Y 2017-18
Purchased 1st October 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 4,750
Rate of Depreciation = 10%
Period = from 01/03/17 to 31/03/18 i.e.12 months
(from the date of purchase/Beginning balance to the end of the financial year)
=4,750 X 10/100 X 12/12
Depreciation =475
Total Depreciation for the year =1,015

Statement Showing profit or loss on the sale of Machinery
Particulars	Amount
Book value of machinery as on 1st April 2016 when it was purchased	6,000
Less: – Amount of Depreciation charged on the year 2016-17
6,00010%12/12	600
Amount of Depreciation charged on the year 2017-18
5,40010%6/12	270
Book value of the asset as on 1st October 2017	5,130
Sale Price of Machinery	4,000
Loss on the sale of the asset	1,130

Depreciation | Meaning | Methods | Examples

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Also, Check out the solved question of previous Chapters: –

Chapter No. 1 – Introduction to Accounting
Chapter No. 2 – Basic Accounting Terms
Chapter No. 3 – Theory Base of Accounting, Accounting Standards and International Financial Reporting Standards(IFRS)
Chapter No. 4 – Bases of Accounting
Chapter No. 5 – Accounting Equation
Chapter No. 6 – Accounting Procedures – Rules of Debit and Credit
Goods and Services Tax(GST)
Chapter No. 7 – Origin of Transactions – Source Documents and Preparation of Vouchers
Chapter No. 8 – Journal
Chapter No. 9 – Ledger
Chapter No. 10 – Special Purpose Books I – Cash Book
Chapter No. 11 – Special Purpose Books II – Other Books
Chapter No. 12 – Bank Reconciliation Statement
Chapter No. 13 – Trial Balance
Chapter No. 14 – Depreciation
Chapter No. 15 – Provisions and Reserves
Chapter No. 16 – Accounting for Bills of Exchange
Chapter No. 17 – Rectification of Errors
Chapter No. 18 – Financial Statements of Sole Proprietorship
Chapter No. 19 – Adjustments in preparation of Financial Statements
Chapter No. 20 – Accounts from incomplete Records – Single Entry System
Chapter No. 21 – Computers in Accounting
Chapter No. 22 – Accounting Software – Tally
Chapter No. 5 – Accounting Equation
Chapter No. 6 – Accounting Procedures – Rules of Debit and Credit
Goods and Services Tax(GST)
Chapter No. 8 – Journal
Chapter No. 9 – Ledger
Chapter No. 10 – Special Purpose Books I – Cash Book