# Question No 27 Chapter No 12 – D.K Goal 11 Class

Question No 27 Chapter No 12

27.Binny Textiles Ltd. which depreciates its machinery at 20% p.a. on diminishing balance method, purchased a machine for 6,00,000 on 1st October, 2010. It closes its books on 31st March every year. On 1st January, 2012, it purchased another machine for 1,50,000. On 1st December, 2012, one-third of the machinery purchased on 1st October, 2010 was sold for 80,000.
You are required to prepare Machinery A/c and Provision for Depreciation A/c for the relevant years.

## The solution of Question No 27 Chapter No 12: –

 Dr. Machinery A/c Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount 1st Oct.2010 To Bank A/c(2,00,000+ 4,00,000) 6,00,000 31st Mar 2011 By Balance C/d 6,00,000 6,00,000 6,00,000 1st Apr.2011 To Balance b/f 6,00,000 1st Jan.2012 To Bank A/c 1,50,000 31st Mar 2012 By Balance C/d 7,50,000 7,50,000 7,50,000 1st Apr.2012 To Balance b/f 7,50,000 1st Dec.2012 By Provision forDepreciation A/c 75,200 1st Dec.2012 By Bank A/c (Sale) 80,000 1st Dec.2012 By Profit & Loss A/c 44,800 31st Mar 2013 By Balance C/d(3,00,000 + 6,00,000) 5,50,000 7,50,000 7,50,000
 Dr. Provision for Depreciation  A/c Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount 31st Mar.2011 By Depreciation A/c (40,000 + 1,60,000) 60,000 31stMar.2011 Balance c/d 60,000 60,000 60,000 31st Apr 2011 By Balance b/d 60,000 31stMar.2014 Balance c/d 1,75,500 31st Mar 2012 By Depreciation A/c (36,000 + 72,000 + 7,500) 1,15,500 1,75,500 1,75,500 31st Jul.2012 To Machinery A/c (20,000 + 36,000 +19,200) 75,200 31st Apr 2013 By Balance b/d 1,75,500 31st Jul.2013 By Depreciation A/c (3 Months) 19,200 1st Apr.2012 To Balance b/f 2,05,600 31st Mar.2014 By Depreciation A/c (1,29,600 + 20,000) 86,100 2,80,800 2,80,800

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. 2010 2,00,000 Less: – Amount of Depreciation charged on the year 2010-11 2,00,000 *20%* 6/12 20,000 Amount of Depreciation charged on the year 2011-12 1,80,000 *20%* 12/12 36,000 Amount of Depreciation charged on the year 2012-13 1,44,000 *20%* 8/12 19,200 Book value of asset as on 1st Dec, 2012 1,24,800 Sale Price of Machinery 80,000 Loss on the sale of the asset 44,800

Note: In order to make easy calculation, machinery purchased on Apr. 01, 2012 has been divided into two parts i.e. M1 and M2.
Thus, M1: Rs 2,00,000 (1/3rd value of machinery, sold for Rs 80,000 on Dec. 01, 2012)
M2: Rs 4,00,000 (2/3rd value of machinery)

Depreciation | Meaning | Methods | Examples

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