Question No 29 Chapter No 13

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/cCr.
DateParticulars
J.F.AmountDateParticulars
J.F.Amount
01/04/15To Cash A/c 12,00031/03/16By Deprecation A/c*1 1,400
01/10/15To Bank A/c 4,00031/03/16By Balance C/d 14,600
   16,000   16,000
01/04/16To Balance b/d 14,60031/03/17By Depreciation A/c*2 1,460
    31/03/17By Balance C/d 13,140
   14,600   14,600
01/04/17To Balance b/d 13,14031/03/17By Bank A/c 4,600
    31/03/17By Profit/Loss A/c 5,120
    31/03/18By Depreciation A/c*3 342
    31/03/18By 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 201512,000
Less: – Amount of Depreciation charged on the year 2015-16 
12,000 *10%* 12/121,200
 Amount of Depreciation charged on the year 2016-17 
10,800 *10%* 12/121,080
Book value of an asset as on 31st March 20199,720
Sale Price of Machinery 4,600
Profit on the sale of the asset5,120

*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

Depreciation | Meaning | Methods | Examples

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Also, Check out the solved question of all Chapters: –

Chapter No. 1 – Introduction

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

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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