Question No 28 Chapter No 14 - T.S. Grewal 11 Class

Question No 28 Chapter No 14

28. On 1st October 2010, Meenal Sharma bought a machine for ₹ 25,000 on which he spent ₹ 5,000 for carriage and freight; ₹ 1,000 for the brokerage of the middle-man, ₹ 4,000 for installation. The machine is depreciated @ 10% p.a. on written down value basis. On 31st March 2013, the machine was sold to Deepa for ₹ 30,500 and ₹ 500 was paid as commission to a broker through whom the sales were effected. Find out the profit or loss on the sale of the machine if accounts are closed on 31st March, every year.

The solution of Question No 28 Chapter No 14: –

Dr.	Machinery A/c						Cr.
Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
01/10/10	To Bank A/c		35,000	31/03/11	By Deprecation A/c*1		1,750
				31/03/11	By Balance C/d		33,250
			35,000				35,000
01/04/11	To Balance b/d		33,250	31/03/12	By Deprecation A/c		3,325
				31/03/12	By Balance C/d		29,925
			33,250				33,250
01/04/12	To Balance b/d		29,925	31/03/13	By Deprecation A/c		2,993
01/03/13	To profit on sale on machine A/c		3,068	31/03/13	By Bank A/c (30,500-500)		30,000
			32,993				32,993

Working Note:-`

*1:- Calculation of the amount of Depreciation on furniture for the year 2010-11
Purchased on 1st October 2010
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 35,000
Rate of Depreciation = 10%
Period = from 01/10/2010 to 31/03/2011 i.e.6months
(from the date of purchase/Beginning balance to the end of the financial year)
=35,000 X10/100 X 9/12
Depreciation =1,750
Total Depreciation for the year = 1,750

Statement Showing profit or loss on the sale of Machinery
Particulars	Amount
Purchase value of machinery as on 1st October 2010	35,000
Less: – Amount of Depreciation charged on the year 2010-11
35,00010%6/12	1,750
Amount of Depreciation charged on the year 2011-12
33,25010%12/12	3,325
Amount of Depreciation charged on the year 2012-13
29,92510%12/12	2,993
Add: commission paid	500
Book value of the asset as on 1st March 2017	27,432
Sale Price of Machinery	30,500
Profit on the sale of the asset	3,068

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