Question No 26 Chapter No 14 - T.S. Grewal 11 Class

Question No 26 Chapter No 14

26.M/s. P & Q purchased machinery for ₹ 40,000 on 1st October 2015. Depreciation is provided @ 10% p.a. on the Diminishing Balance. On 31st January 2018, one-fourth of the machinery was found unsuitable and disposed of for ₹ 5,600. On the same date, new machinery at a cost of ₹ 15,000 was purchased. Write up the Machinery account for the years ended 31st March 2016, 2017 and 2018. Accounts are closed on 31st March each year.

The solution of Question No 26 Chapter No 14: –

Dr.	Machinery A/c						Cr.
Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
01/10/15	To Bank A/c		40,000	31/03/16	By Deprecation A/c		2,000
				31/03/16	By Balance C/d		38,000
			40,000				40,000
01/04/16	To Balance b/d		38,000	31/03/17	By Deprecation A/c		3,800
				31/03/17	By Balance C/d		34,200
			38,000				38,000
01/04/17	To Balance b/d		34,200	31/01/18	By Deprecation A/c		713
31/01/18	To Bank A/c		15,000	31/01/18	By Bank A/c		5,600
				31/01/18	By Loss on sale of Machinery A/c		2,237
				31/03/18	By Deprecation A/c*1		2,815
				31/03/18	By Balance C/d		37,835
			49,200				49,200

Working Note:-`

Statement Showing profit or loss on the sale of Machinery
Particulars	Amount
The purchase value of machinery as on 1st October 2015 (40,000*1/4) out of which 1/4 sold	10,000
Less: – Amount of Depreciation charged on the year 2015-16
10,00010%6/12	500
Amount of Depreciation charged on the year 2016-17
9,50010%12/12	950
Amount of Depreciation charged on the year 2017-18
8,55010%10/12	713
Book value of the asset as on 1st April 2018	7,877
Sale Price of Machinery	5,600
Loss on the sale of the asset	2,237

*1:- Calculation of the amount of Depreciation on furniture for the year 2017-18
Purchased on 1st October 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 25,650
Rate of Depreciation = 10%
Period = from 01/03/2017 to 31/03/2018 i.e.12months
(from the date of purchase/Beginning balance to the end of the financial year)
=25,650 X10/100 X 12/12

Depreciation

2,565

Purchased on 1st January 2018
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 15,000
Rate of Depreciation = 10%
Period = from 01/01/2018 to 31/03/2018 i.e.2months
(from the date of purchase/Beginning balance to the end of the financial year)
=15,000 X10/100 X 12/12

Depreciation

250

Total Depreciation for the year

2,815

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