Question No 29 Chapter No 13
WDV Method and Partial Sale
29. On 1st April 2015, Ritu Chaudhry purchased machinery for Rs 10,000. she pent Rs 2,000 in its erection. On 1st October 2015, she purchased another machinery for Rs 4,000, on 1st April 2017 the machinery purchased on 1st April 2015 was sold Rs 4,600. Ritu Chaudhry writes of depreciation at 10% p.a. on the diminishing balance method.
Prepare machinery Account for three years ending 31st March 2018
The solution of Question No 29 Chapter No 13:-
| Dr. | Machine A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
| 01/04/15 | To Cash A/c | 12,000 | 31/03/16 | By Deprecation A/c*1 | 1,400 | ||
| 01/10/15 | To Bank A/c | 4,000 | 31/03/16 | By Balance C/d | 14,600 | ||
| 16,000 | 16,000 | ||||||
| 01/04/16 | To Balance b/d | 14,600 | 31/03/17 | By Depreciation A/c*2 | 1,460 | ||
| 31/03/17 | By Balance C/d | 13,140 | |||||
| 14,600 | 14,600 | ||||||
| 01/04/17 | To Balance b/d | 13,140 | 31/03/17 | By Bank A/c | 4,600 | ||
| 31/03/17 | By Profit/Loss A/c | 5,120 | |||||
| 31/03/18 | By Depreciation A/c*3 | 342 | |||||
| 31/03/18 | By Balance C/d | 3,078 | |||||
| 13,140 | 13,140 | ||||||
Working note:-
*1:- Calculation of the amount of Depreciation on furniture for the year 2015-16
Machinery purchased on 1st Apr 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 12,000
Rate of Depreciation = 10%
Period = from 01/04/2015 to 31/03/2016 i.e. 12 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 12,000 X 10/100 X 6/ 12
Depreciation = 1,200
Machinery purchased on 1st Oct 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 4,000
Rate of Depreciation = 10%
Period = from 01/10/2017 to 31/03/2018 i.e. 6 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 4,000 X 10/100 X 6/ 12
Depreciation = 200
Total Depreciation for the year = 1,400
*2:- Calculation of the amount of Depreciation on furniture for the year 2016-17
Machinery purchased on 1st Apr 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 10,800
Rate of Depreciation = 10%
Period = from 01/04/2016 to 31/03/2017 i.e. 12 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 10,800 X 10/100 X 12/ 12
Depreciation = 1,080
Machinery purchased on 1st Oct 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 3,800
Rate of Depreciation = 10%
Period = from 01/04/2016 to 31/03/2017 i.e. 12 months
(from the date of purchase/Beginning balance to end of the financial year)
= 3,800 X 10/100 X 12/ 12
Depreciation = 380
Total Depreciation for the year = 1,460
| Statement Showing profit or loss on the sale of Machinery | |
| Particulars |
Amount |
| Purchase value of machinery as on 1st April 2015 | 12,000 |
| Less: – Amount of Depreciation charged on the year 2015-16 | |
| 12,000 *10%* 12/12 | 1,200 |
| Amount of Depreciation charged on the year 2016-17 | |
| 10,800 *10%* 12/12 | 1,080 |
| Book value of an asset as on 31st March 2019 | 9,720 |
| Sale Price of Machinery | 4,600 |
| Profit on the sale of the asset | 5,120 |
*3:- Calculation of the amount of Depreciation on furniture for the year 2017-18
Machinery purchased on 1st Oct 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 3,420
Rate of Depreciation = 10%
Period = from 01/04/2017 to 31/03/2018 i.e. 12 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 3,420 X 10/100 X 12/ 12
Depreciation = 342
Total Depreciation for the year = 342
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Also, Check out the solved question of all Chapters: –
Chapter No. 2 – Theory Base of Accounting
Chapter No. 3 – Vouchers and transactions
Chapter No. 4 – Journal
Chapter No. 5 – Ledger
Chapter No. 6 – Cash Book
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Chapter No. 7 – Other Subsidiary Books
Chapter No. 8 – Journal Proper
Chapter No. 9 – Trial Balance
Chapter No. 10 – Bank Reconciliation Statement
Chapter No. 11 – Depreciation
Chapter No. 12 – Provisions and Reserves
Chapter No. 13 – Bills of Exchange
Chapter No. 14 – Rectification of Errors
Chapter No. 15 – Financial Statements – (Without Adjustments)
Chapter No. 16 – Financial Statements – (With Adjustments)
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