Question No 22 Chapter No 12

Question No 22 Chapter No 12

22. X Ltd. which closes its books of account every year on 31st March, purchased on 1st October, 2011 machinery costing 4,40,000. It purchased further machinery on 1st April, 2012 costing 5,20,000. On 30th June, 2013, the first machine was sold for 2,50,000 and on the same date a fresh machine was installed at a cost of 3,00,000. On 1st July 2014, the second machine purchased on 1st April 2012 was also sold for 3,25,000.
The company writes off depreciation at 10% p.a. on the Straight Line Method each year. Show the Machinery A/c, Depreciation A/c and Provision for Depreciation A/c for all the four years.

The solution of Question No 22 Chapter No 12: –

Dr.Machinery A/cCr.
DateParticulars
J.F.AmountDateParticulars
J.F.Amount
1st Oct.2011To Bank A/c 4,40,000    
    31st Mar 2012By Balance C/d  4,40,000
   4,40,000   4,40,000
1st Apr.2012To Balance b/f 4,40,000    
1st Apr.2012To Bank A/c 5,20,00031st Mar 2013By Balance C/d
 9,60,000
   9,60,000   9,60,000
1st Apr.2013To Balance b/f 9,60,0001st Jun.2013By Provision for
Depreciation A/c
 77,000
30stJun.2013To Bank A/c 3,00,0001st Jun.2013By Bank A/c (Sale) 2,50,000
    1st Jun.2013By Profit & Loss A/c 1,13,000
    31st Mar 2014By Balance C/d(5,20,000 + 3,00,000)  8,20,000
   12,60,000   12,60,000
1st Apr.2013To Balance b/f 8,20,0001st Jul.2014By Provision for
Depreciation A/c
 1,17,000
    1st Jul.2014By Bank A/c (Sale) 3,25,000
    1st Jul.2014By Profit & Loss A/c 78,000
    31st Mar 2015By Balance C/d(1,60,000 + 2,00,000) 3,60,000
   8,20,000
   8,20,000
Dr.Depreciation A/cCr.
DateParticulars
J.F.AmountDateParticulars
J.F.Amount
31stMar2012To Provision for Depreciation A/c 22,000    
    31st Mar 20112By Profit & Loss A/c 22,000
   22,000   22,000
31stMar.2013To Provision for Depreciation A/c 96,000    
    31st Mar 2013By Profit & Loss A/c 96,000
   96,000   96,000
1st Apr.2014To Provision for Depreciation A/c 85,500    
    31st Mar 2014By Profit & Loss A/c 85,500
   85,500   85,500
1st Apr.2015To Balance b/f 43,000    
        
    31st Mar 2025By Profit & Loss A/c 43,000
   43,000
   43,000
Dr.Provision for Depreciation  A/cCr.
DateParticulars
J.F.AmountDateParticulars
J.F.Amount
    31st Mar.2012By Depreciation A/c (9,000 + 9,000 + 18,000) 22,000
31stMar.2012Balance c/d 22,000    
   22,000   22,000
    31st Apr 2012By Balance b/d 22,000
31stMar.2013Balance c/d 1,18,00031st Mar 2013By Depreciation A/c (44,000 + 52,000) 96,000
   1,18,000   1,18,000
1st Jan.2013To Balance b/f(22,000 + 44,000 + 11,000) 77,00031st Apr 2013By Balance b/d 84,000
    1st Jan.2013By Depreciation A/c (3 Months) 11,000
1st Apr.2014To Balance b/f 1,26,50031st Mar.2014By Depreciation A/c (12,000 + 24,000) 74,500
   2,03,500   2,03,500
1st Jan.2014To Machinery A/c(52,000 + 52,000 + 13,000) 1,17,00031st Apr 2014By Balance b/d 1,26,500
    31st Mar.2015By Depreciation A/c93 months) 13,000
1st Apr.2015To Balance b/f 52,500
31st Mar.2015By Depreciation A/c
(24,000 + 7,500)
 30,000
   1,69,500   1,69,500

Working Note:
Calculation of Profit or Loss on Sale M1

Statement Showing profit or loss on the sale of Machinery
Particulars
Amount
Machinery Purchase on of Equipment as on 1st Oct. 20114,40,000
Less: – Amount of Depreciation charged on the year 2011-12 
4,40,000 *10%* 6/1222,000
Amount of Depreciation charged on the year 2012-13 
4,40,000 *10%* 6/1244,000
Amount of Depreciation charged on the year 2013-14 
4,40,000 *10%* 3/1211,000
Book value of the asset as of 1st Oct 20183,63,000
Sale Price of Machinery 2,50,000
Loss on the sale of the asset1,13,000

Calculation of Profit & Loss on Sale of M2

Statement Showing profit or loss on the sale of Machinery
Particulars
Amount
Machinery Purchase on of Equipment as on 1st Apr. 20125,20,000
Less: – Amount of Depreciation charged on the year 2012-13 
5,20,0000 *10%* 12/1252,000
Amount of Depreciation charged on the year 2013-14 
5,20,0000 *10%* 12/1252,000
Amount of Depreciation charged on the year 2014-15 
5,20,000 *10%* 3/1213,000
Book value of asset as of 30st Jun 20144,03,000
Sale Price of Machinery 3,25,000
Loss on the sale of the asset78,000

Note: In order to make easy calculations, machinery purchased on July 01, 2015, has been divided into three parts i.e. M1, M2, and M3.
Thus,
M1: Rs 80,000 (sold for Rs 50,000 on Apr. 01, 2017)
M2: Rs 80,000 (sold for Rs 40,000 on Jan. 01, 2019)
M3: Rs 1,60,000 (includes the cost of 2 machines)

Depreciation | Meaning | Methods | Examples

Comment if you have any question.

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

D K Goel – New ISC Accountancy -(Class 11 – ICSE)- Solution

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ISC Accounts 11 20 Image min 197x300 - Question No 22 Chapter No 12 - D.K Goal 11 Class
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