Question No 31 Chapter No 13
WDV Method and Partial Sale
31. Chetan Printer purchased machinery for Rs 50,000 on 1st October 2016. Another machinery costing Rs 10,000 was purchased on 1st December 2017. On 31st March 2019, the machinery purchased in December 2017, was sold at a loss of Rs 5,000. the firm charges depreciation at the rate of 15% p.a. on the diminishing balance method. Accounts are closed on 31st March each year. Prepare the machinery Account for three years
The solution of Question No 31 Chapter No 13:-
| Dr. | Machinery A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
| 01/10/16 | To Cash A/c | 50,000 | 31/03/17 | By Deprecation A/c*1 | 3,750 | ||
| 31/03/17 | By Balance C/d | 46,250 | |||||
| 50,000 | 50,000 | ||||||
| 01/04/17 | To Balance b/d | 46,250 | 31/03/18 | By Depreciation A/c*2 | 7,437.50 | ||
| 01/12/17 | To Bank A/c | 10,000 | 31/03/18 | By Balance C/d | 48,812.50 | ||
| 56,250 | 56,250 | ||||||
| 01/04/18 | To Balance b/d | 48,812.50 | 31/03/19 | By Bank A/c*3 | 3,075 | ||
| 31/03/19 | By Profit/Loss A/c | 5,000 | |||||
| 31/03/19 | By Depreciation A/c *4 | 7,771.87 | |||||
| 31/03/18 | By Balance C/d | 32,965.63 | |||||
| 48,812.50 | 48,812.50 | ||||||
Note: In this question, the above answer did not match the answer given in the book because the answer given in the book is wrong. The Correct Answer is given above. If you want to find the same answer then you have to assume that the machinery purchased on 1st October 2016 was sold on dated 31/03/2019 instead of the machinery bought on the 1st December 2017.
Working note:-
*1:- Calculation of the amount of Depreciation on furniture for the year 2016-17
Machinery purchased on 1st Oct 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 50,000
Rate of Depreciation = 15%
Period = from 01/10/2016 to 31/03/2017 i.e. 6 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 50,000 X 15/100 X 6/ 12
Depreciation = 3,750
*2:- Calculation of the amount of Depreciation on furniture for the year 2017-18
Machinery purchased on 1st Oct 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset as of date = 46,250 (50000-3750)
Rate of Depreciation = 15%
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)
= 46,250 X 15/100
Depreciation = 6,937.50
Machinery purchased on 1st Dec 2017
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 10,000
Rate of Depreciation = 15%
Period = from 01/12/2017 to 31/03/2018 i.e. 4months
(from the date of purchase/Beginning balance to the end of the financial year)
= 10,000 X 15/100 X 4/ 12
Depreciation = 500
Total Depreciation for the year = (6,937.50 + 500) 7,437.50/-
*3 Statement Showing profit or loss on the sale of Machinery
| Particulars |
Amount |
| The purchase value of machinery as on 1st Dec 2017 | 10,000 |
| Less: – Amount of Depreciation charged on the year 2017-18 | |
| 10,000 *15%* 4/12 | 500 |
| Amount of Depreciation charged on the year 2018-19 | |
| 9,500 *15%* 12/12 | 1,425 |
| Book value of an asset as on 31st March 2019 | 8,075 |
| Less : – Loss on the sale of the asset – Already given in the question. | 5,000 |
| Sale Price of Machinery | 3,075 |
*4:- Calculation of the amount of Depreciation on furniture for the year 2018-19
Machinery purchased on 1st Oct 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 42,312.50 (50000 – 3750 – 6,937.50)
Rate of Depreciation = 15%
Period = from 01/04/2018 to 31/03/2019 i.e. 12 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 42,312.50 X 15/100 X 12/ 12
Depreciation = 6,346.87
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Depreciation on Machinery Sold (already calculated in above table WN 3) = 1,425
Total Depreciation for the year = 7,771.87 (6,346.87 + 1,425)
Depreciation | Meaning | Methods | Examples
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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
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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)
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Chapter No. 16 – Financial Statements – (With Adjustments)