Question No 34 Chapter No 14 - T.S. Grewal 11 Class

Question No 34 Chapter No 14

34. Sharma & Co. whose books are closed on 31st March purchased a piece of machinery for ₹ 1,50,000 on 1st April 2015, Additional machinery was acquired for ₹ 50,000 on 1st October 2015. Certain machinery which was purchased for ₹ 50,000 on 1st October 2015 was sold for ₹ 40,000 on 30th September 2017.
Prepare the Machinery Account and Accumulated Depreciation Account for all the years up to the year ended 31st March, 2018. Depreciation is charged @ 10% p.a. on Straight Line Method. Also, show the Machinery Disposal Account
The solution of Question No 34 Chapter No 14: –

Dr.	Machinery A/c						Cr.
Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
01/04/15	To Bank A/c		1,50,000
01/10/15	To Bank A/c		50,000	31/03/16	By Balance C/d		2,00,000
			2,00,000				2,00,000
01/04/16	To Balance b/d		2,00,000
				31/03/17	By Balance C/d		2,00,000
			2,00,000				2,00,000
01/04/17	To Balance b/d		2,00,000	31/03/18	By Machinery Disposal A/c		50,000
				31/03/18	By Balance C/d		1,50,000
			2,00,000				2,00,000

Dr.	Accumulated Depreciation Account A/c						Cr.
Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
				31/03/15	By Deprecation A/c*1		17,500
31/03/16	To Balance c/d		17,500
			17,500				17,500
				31/03/16	To Balance b/d		17,500
01/04/17	To Balance c/d		37,500	31/03/16	By Deprecation A/c*2		20,000
			37,500				37,500
30/09/13	To Machinery disposal A/c		10,000	01/12/17	To Balance b/d		37,500
				30/09/17	By Deprecation A/c		2,500
31/03/18	To Balance c/d		45,000	31/03/18	By Deprecation A/c*3		15,000
			55,000				55,000

Dr.	Machinery Disposal Account						Cr.
Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
30/09/17	To Machinery A/c		50,000	01/01/14	By Accumulated Depreciation A/c		10,000
				01/01/14	By Bank A/c		40,000
			50,000				50,000

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Working Note:-

*1:- Calculation of the amount of Depreciation on furniture for the year 2015-16
Purchased on 1st April 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 1,50,000
Rate of Depreciation = 10%
Period = from 01/04/2015 to 31/03/2016 i.e.12months
(from the date of purchase/Beginning balance to the end of the financial year)
=1,50,000 X10/100 X 12/12
Depreciation = 15,000
Purchased on 1st October 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset =,50,000
Rate of Depreciation = 10%
Period = from 01/10/2015 to 31/03/2016 i.e.6months
(from the date of purchase/Beginning balance to the end of the financial year)
=50,000 X10/100 X 6/12
Depreciation = 2,500
Total Depreciation for the year = 17,500

*2:- Calculation of the amount of Depreciation on furniture for the year 2016-17
Purchased on 1st April 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 1,50,000
Rate of Depreciation = 10%
Period = from 01/04/2016 to 31/03/2017 i.e.12months
(from the date of purchase/Beginning balance to the end of the financial year)
=1,50,000 X10/100 X 12/12
Depreciation = 15,000
Purchased on 1st October 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset =50,000
Rate of Depreciation = 10%
Period = from 01/10/2016 to 31/03/2017 i.e.12months
(from the date of purchase/Beginning balance to end of the financial year)
=50,000 X10/100 X 6/12
Depreciation = 5,000
Total Depreciation for the year = 20,000

Statement Showing profit or loss on the sale of Machinery
Particulars	Amount
Purchase value of machinery as on 1st October 2015	50,000
Less: – Amount of Depreciation charged on the year 2015-16
50,00010%6/12	2,500
Amount of Depreciation charged on the year 2016-17
50,00010%12/12	5,000
Amount of Depreciation charged on the year 2017-18
50,00010%6/12	2,500
Book value of an asset as on 1st December 2017	40,000
Sale Price of Machinery	40,000
Loss on the sale of the asset	–

*3:– Calculation of the amount of Depreciation on furniture for the year 2016-17
Purchased on 1st April 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 1,50,000
Rate of Depreciation = 10%
Period = from 01/04/2016 to 31/03/2017 i.e.12months
(from the date of purchase/Beginning balance to end of the financial year)
=1,50,000 X10/100 X 12/12
Depreciation = 15,000
Total Depreciation for the year = 20,000

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