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Question No 34 Chapter No 13
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WDV Method and Partial Sale
34. Jung Traders purchased equipment on 1st July 2015, for Rs 28,000 and spends Rs 2,000 for its carriage and installation. On 1st October 2015 and on 1st Jan 2016 additional equipment was bought for Rs 40,000 and 10,000 respectively. On 31st March 2017 first day. On 30th September 2018, the second equipment was taken away at home at 60% of the value of the book. On 31st March 2019, the third equipment was heavily damaged and could not fetch anything. Depreciation was charged at 20% p.a. on reducing instalment basis.
Prepare Equipment Account till March 31, 2019, with all workings, and financial years being followed.
The solution of Question No 34 Chapter No 13
| Dr. | Machinery A/c | Cr. | |||||
| Date | Particulars | J.F. | Amount | Date | Particulars | J.F. | Amount |
| 01/07/15 | To Bank A/c(28000+2000) | 30,000 | 31/03/16 | By Deprecation A/c*1 | 9,000 | ||
| 01/10/15 | To Bank A/c | 40,000 | |||||
| 01/01/15 | To Bank A/c | 10,000 | |||||
| 31/03/16 | By Balance C/d | 71,000 | |||||
| 80,000 | 80,000 | ||||||
| 01/04/16 | To Balance b/d | 71,000 | 31/03/17 | By Bank A/c | 20,000 | ||
| 31/03/17 | To Bank A/c | 20,000 | 31/03/17 | By Depreciation A/c | 5,100 | ||
| 31/03/17 | By Profit/loss A/c | 400 | |||||
| 31/03/17 | By Depreciation A/c*2 | 9,100 | |||||
| 31/03/17 | By Balance C/d | 56,400 | |||||
| 91,000 | 91,000 | ||||||
| 01/04/17 | To Balance b/d | 56,400 | 31/03/18 | By Depreciation A/c*3 | 11,280 | ||
| 31/03/18 | By Balance C/d | 45,120 | |||||
| 56,400 | 56,400 | ||||||
| 01/04/18 | To Balance b/d | 45,120 | 30/09/18 | By Drawing A/c | 12,442 | ||
| 30/09/18 | By Deprecation A/c | 2,304 | |||||
| 30/09/18 | By Profit/loss A/c | 8,294 | |||||
| 31/03/19 | By Profit/loss A/c | 4,864 | |||||
| 31/03/19 | By Deprecation A/c*4 | 4,416 | |||||
| 31/03/19 | By Balance C/d | 12,800 | |||||
| 45,120 | 45,120 | ||||||
Working note:-
*1:- Calculation of the amount of Depreciation on furniture for the year 2015-16
Machinery purchased on 1st Jul 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 30,000
Rate of Depreciation = 20%
Period = from 01/07/2015 to 31/03/2016 i.e.9 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 30,000 X 20/100 X 9/ 12
Depreciation = 4,500
Machinery purchased on 1st Oct 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 40,000
Rate of Depreciation = 20%
Period = from 01/10/2015 to 31/03/2016 i.e.6 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 40,000 X 20/100 X 6/ 12
Depreciation = 4,000
Machinery purchased on 1st Jan 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 10,000
Rate of Depreciation = 20%
Period = from 01/01/2015 to 31/03/2016 i.e.3 months
(from the date of purchase/Beginning balance to end of the financial year)
= 10,000 X 20/100 X 3/ 12
Depreciation = 500
Total Depreciation for the year = 9,000/-
*2:- Calculation of the amount of Depreciation on furniture for the year 2016-17
Machinery purchased on 1st Oct 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 36,000
Rate of Depreciation = 20%
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)
= 36,000 X 20/100 X 12/ 12
Depreciation = 7,200
Machinery purchased on 1st Jan 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 9,500
Rate of Depreciation = 20%
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)
= 9,500 X 20/100 X 12/ 12
Depreciation = 1,900
Total Depreciation for the year = 9,100
*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 = 28,800
Rate of Depreciation = 20%
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)
= 28,800 X 20/100 X 12/ 12
Depreciation = 5,760
Machinery purchased on 1st Jan 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 7,600
Rate of Depreciation = 20%
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)
= 9,500 X 20/100 X 12/ 12
Depreciation = 1,520
Machinery purchased on 1st March 2017
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 20,000
Rate of Depreciation = 20%
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)
= 20,000 X 20/100 X 12/ 12
Depreciation = 4,000
Total Depreciation for the year = 11,280
| Statement Showing profit or loss on the sale of Machinery | |
| Particulars | Amount |
| The purchase value of Equipment as on 1st Oct 2015 | 40,000 |
| Less: – Amount of Depreciation charged on the year 2015-16 | |
| 40,000 *20%* 6/12 | 4,000 |
| Amount of Depreciation charged on the year 2016-17 | |
| 36,000 *20%* 12/12 | 7,200 |
| Amount of Depreciation charged on the year 2017-18 | |
| 28,800 *20%* 12/12 | 5,760 |
| Amount of Depreciation charged on the year 2018-19 | |
| 23,040 *20%* 6/12 | 2,304 |
| Book value of an asset as on 30th September 2018 | 20,736 |
| Taken by owner @ 60% of Book Value (20,736 * 60%) | 12,442 |
| Loss on the sale of the asset | 8,294 |
*4:- Calculation of the amount of Depreciation on furniture for the year 2018-19
Machinery purchased on 1st Jan 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 6,080
Rate of Depreciation = 20%
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)
= 6,080 X 20/100 X 12/ 12
Depreciation = 1,216
Machinery purchased on 1st March 2017
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 16,000
Rate of Depreciation = 20%
Period = from 01/04/2018 to 31/03/2019 i.e. 12 months
(from the date of purchase/Beginning balance to end of the financial year)
= 16,000 X 20/100 X 12/ 12
Depreciation = 3,200
Total Depreciation for the year = 4,416
| Statement Showing profit or loss on the sale of Machinery | |
| Particulars | Amount |
| Purchase value of Equipment as on 1st Jan 2016 | 10,000 |
| Less: – Amount of Depreciation charged on the year 2015-16 | |
| 10,000 *20%* 3/12 | 500 |
| Amount of Depreciation charged on the year 2016-17 | |
| 9,500 *20%* 12/12 | 1,900 |
| Amount of Depreciation charged on the year 2017-18 | |
| 7,600 *20%* 12/12 | 1,520 |
| Amount of Depreciation charged on the year 2018-19 | |
| 6,080 *20%* 12/12 | 1,216 |
| Loss due to damaged | 4,864 |
This is all about the Question No 34 Chapter No 13 – USHA Publication. You can check out the following article to better understand:
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Depreciation | Meaning | Methods | Examples
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Depreciation – Meaning – Methods – Examples -In Hindi
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You can also Check out the solved question of other Chapters: –
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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
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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)