Question No 23 Chapter No 12

Question No 23 Chapter No 12 D K Goal

23. A company purchased second-hand machinery on 1st May, 2009 for 5,85,000 and immediately spent 15,000 on its erection. On 1st October, 2010, it purchased another machine for 4,00,000. On 31st July, 2011, it sold off the first machine for 2,50,000 and bought another for 4,20,000. On 1st November, 2012, the second machine was also sold off for 3,00,000. Depreciation was provided on the machinery @ 15% p.a. on Equal Instalment Method.
Show the Machinery Account, Depreciation Account and Provision for Depreciation Account assuming that the books are closed on 31st March every year.

The solution of Question No 23 Chapter No 12 D K Goal: –

Dr.Machinery A/cCr.
DateParticulars
J.F.AmountDateParticulars
J.F.Amount
1stMay.2009To Bank A/c (5,85,000+ 15,000) 6,00,000    
    31st Mar 2010By Balance C/d  6,00,000
   6,00,000   6,00,000
1st Apr.2010To Balance b/f 6,00,000    
1st Oct.2010To Bank A/c 4,00,00031st Mar 2011By Balance C/d
 10,00,000
   10,00,000   10,00,000
1st Apr.2011To Balance b/f 10,00,0001st Jul.2011By Provision for
Depreciation A/c
 2,02,500
30stJul.2011To Bank A/c 4,20,0001st Jul.2011By Bank A/c (Sale) 2,50,000
    1st Jul.2011By Profit & Loss A/c 1,47,500
    31st Mar 2012By Balance C/d(4,00,000 + 4,20,000)  8,20,000
   14,20,000   14,20,000
1st Apr.2012To Balance b/f 8,20,0001st Nov.2012By Provision for
Depreciation A/c
 1,25,000
1stNov.2012To Profit and Loss A/c 25,0001st Nov.2012By Bank A/c (Sale) 3,00,000
    31st Mar 2015By Balance C/d(1,60,000 + 2,00,000) 4,20,000
   8,45,000
   8,45,000
Dr.Depreciation A/cCr.
DateParticulars
J.F.AmountDateParticulars
J.F.Amount
31stMar2010To Provision for Depreciation A/c 82,500    
    31st Mar 2010By Profit & Loss A/c 82,500
   82,500   82,500
31stMar.2011To Provision for Depreciation A/c 1,20,000    
    31st Mar 2011By Profit & Loss A/c 1,20,000
   1,20,000   1,20,000
1st Apr.2012To Provision for Depreciation A/c 1,32,000    
    31st Mar 2012By Profit & Loss A/c 1,32,000
   1,32,000   1,32,000
1st Apr.2013To Balance b/f 98,000    
        
    31st Mar 2013By Profit & Loss A/c 98,000
   98,000
   98,000
Dr.Provision for Depreciation  A/cCr.
DateParticulars
J.F.AmountDateParticulars
J.F.Amount
    31st Mar 2010By Depreciation A/c (11 Months) 82,500
31stMar.2010Balance c/d 82,500    
   82,500   82,500
    31st Apr 2010By Balance b/d 82,500
31stMar.2012Balance c/d 2,02,50031st Mar 2012By Depreciation A/c (90,000 + 30,000) 1,20,000
   2,02,500   2,02,500
31st Jul.2011

To Machinery A/c (82,500 + 90,000 + 30,000)

 2,02,50031st Apr 2011By Balance b/d 2,02,500
    1st Jul.2011By Depreciation A/c (3 Months) 30,000
1st Apr.2014To Balance b/f 1,32,00031st Mar.2012By Depreciation A/c (60,000 + 42,000) 1,02,000
   2,03,500   2,03,500
1st Jan.2013To Machinery A/c(30,000 + 60,000 + 35,000) 1,25,00031st Apr 2012By Balance b/d 1,32,000
    31st Nov.2012By Depreciation A/c(7 months) 35,000
1st Apr.2013To Balance b/f 1,05,000
31st Mar.2013By Depreciation A/c
(24,000 + 7,500)
 63,000
   2,30,000   2,30,000

Working Note of Question No 23 Chapter No 12 D K Goal:
Calculation of Profit or Loss on Sale Machinery 1

Statement Showing profit or loss on the sale of Machinery
Particulars
Amount
Machinery Purchase on of Equipment as on 1st May. 20096,00,000
Less: – Amount of Depreciation charged on the year 2009-10 
6,00,000 *15%* 6/1282,000
Amount of Depreciation charged on the year 2010-11 
6,00,000 *15%* 12/1290,000
Amount of Depreciation charged on the year 2011-12 
6,00,000 *15%* 4/1230,000
Book value of asset as on 30st Jul, 20113,97,500
Sale Price of Machinery 2,50,000
Loss on the sale of the asset1,47,500

Calculation of Profit & Loss on Sale of Machinery 2

Statement Showing profit or loss on the sale of Machinery
Particulars
Amount
Machinery Purchase on of Equipment as on 1st Oct. 20104,00,000
Less: – Amount of Depreciation charged on the year 2010-11 
4,00,000 *15%* 6/1230,000
Amount of Depreciation charged on the year 2011-12 
4,00,000 *15%* 12/1260,000
Amount of Depreciation charged on the year 2012-13 
4,00,000 *15%* 7/1235,000
Book value of asset as of 1st Nov 20122,75,000
Sale Price of Machinery 3,00,000
Profit on the sale of the asset25,000

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

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

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ISC Accounts 11 20 Image min 197x300 - Question No 23 Chapter No 12 - D.K Goal 11 Class
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