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/c Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount 1stMay.2009 To Bank A/c (5,85,000+ 15,000) 6,00,000 31st Mar 2010 By Balance C/d 6,00,000 6,00,000 6,00,000 1st Apr.2010 To Balance b/f 6,00,000 1st Oct.2010 To Bank A/c 4,00,000 31st Mar 2011 By Balance C/d 10,00,000 10,00,000 10,00,000 1st Apr.2011 To Balance b/f 10,00,000 1st Jul.2011 By Provision forDepreciation A/c 2,02,500 30stJul.2011 To Bank A/c 4,20,000 1st Jul.2011 By Bank A/c (Sale) 2,50,000 1st Jul.2011 By Profit & Loss A/c 1,47,500 31st Mar 2012 By Balance C/d(4,00,000 + 4,20,000) 8,20,000 14,20,000 14,20,000 1st Apr.2012 To Balance b/f 8,20,000 1st Nov.2012 By Provision forDepreciation A/c 1,25,000 1stNov.2012 To Profit and Loss A/c 25,000 1st Nov.2012 By Bank A/c (Sale) 3,00,000 31st Mar 2015 By Balance C/d(1,60,000 + 2,00,000) 4,20,000 8,45,000 8,45,000
 Dr. Depreciation A/c Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount 31stMar2010 To Provision for Depreciation A/c 82,500 31st Mar 2010 By Profit & Loss A/c 82,500 82,500 82,500 31stMar.2011 To Provision for Depreciation A/c 1,20,000 31st Mar 2011 By Profit & Loss A/c 1,20,000 1,20,000 1,20,000 1st Apr.2012 To Provision for Depreciation A/c 1,32,000 31st Mar 2012 By Profit & Loss A/c 1,32,000 1,32,000 1,32,000 1st Apr.2013 To Balance b/f 98,000 31st Mar 2013 By Profit & Loss A/c 98,000 98,000 98,000
 Dr. Provision for Depreciation  A/c Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount 31st Mar 2010 By Depreciation A/c (11 Months) 82,500 31stMar.2010 Balance c/d 82,500 82,500 82,500 31st Apr 2010 By Balance b/d 82,500 31stMar.2012 Balance c/d 2,02,500 31st Mar 2012 By 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) 2,02,500 31st Apr 2011 By Balance b/d 2,02,500 1st Jul.2011 By Depreciation A/c (3 Months) 30,000 1st Apr.2014 To Balance b/f 1,32,000 31st Mar.2012 By Depreciation A/c (60,000 + 42,000) 1,02,000 2,03,500 2,03,500 1st Jan.2013 To Machinery A/c(30,000 + 60,000 + 35,000) 1,25,000 31st Apr 2012 By Balance b/d 1,32,000 31st Nov.2012 By Depreciation A/c(7 months) 35,000 1st Apr.2013 To Balance b/f 1,05,000 31st Mar.2013 By 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. 2009 6,00,000 Less: – Amount of Depreciation charged on the year 2009-10 6,00,000 *15%* 6/12 82,000 Amount of Depreciation charged on the year 2010-11 6,00,000 *15%* 12/12 90,000 Amount of Depreciation charged on the year 2011-12 6,00,000 *15%* 4/12 30,000 Book value of asset as on 30st Jul, 2011 3,97,500 Sale Price of Machinery 2,50,000 Loss on the sale of the asset 1,47,500

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. 2010 4,00,000 Less: – Amount of Depreciation charged on the year 2010-11 4,00,000 *15%* 6/12 30,000 Amount of Depreciation charged on the year 2011-12 4,00,000 *15%* 12/12 60,000 Amount of Depreciation charged on the year 2012-13 4,00,000 *15%* 7/12 35,000 Book value of asset as of 1st Nov 2012 2,75,000 Sale Price of Machinery 3,00,000 Profit on the sale of the asset 25,000

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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