Question No 38 Chapter No 13 – USHA Publication 11 Class

Q 38 CH 13 USHA 1 Book 2020 Solution min 1024x576 - Question No 38 Chapter No 13 - USHA Publication  11 Class

Question No 38 Chapter No 13

Creation of Provision for Depreciation Account

38. Ravi Kumar purchased machinery for Rs 2,00,000 on 1st April 2016. he spent Rs 40,000 on its installation. He purchased another machine for Rs 60,000 on 1st October 2017 and sold on 31st December 2018, one-half of the machinery purchased on 1st April 2016 for Rs 75,000.
Prepare Machinery Account and Provision for depreciation Account for 3 years when depreciation is charged 10% p.a. on reducing balance method and books are closed on 31st March every year.

The solution of Question No 38 Chapter No 13:-  

Dr. Machinery A/c Cr.
Date Particulars
J.F. Amount Date Particulars
J.F. Amount
01/04/16 To Bank A/c   2,40,000        
        31/03/17 By Balance C/d   2,40,000
      2,40,000       2,40,000
01/04/17 To Balance b/d   2,40,000        
01/10/17 To Bank A/c   60,000 31/03/18 By Balance C/d   3,00,000
      3,00,000       3,00,000
01/04/18 To Balance b/f   3,00,000 01/04/18 By Bank A/c   75,000
        01/04/18 By Provision for Dep.   30,090
        01/04/18 By Profit/loss   14,910
        31/03/19 By Balance C/d   1,80,000
      3,00,000       3,00,000

 

Dr. Provision for Depreciation A/c Cr.
Date Particulars
J.F. Amount Date Particulars
J.F. Amount
        01/03/17 By Depreciation A/c*1   24,000
31/03/16 To Balance c/d   24,000        
      24,000       24,000
        01/04/17 By Balance b/f   24,000
        01/03/18 By Depreciation A/c   24,600
01/03/18 To Balance c/d   48,600        
      48,600       48,600
1/12/18 To Machinery A/c   30,090 01/04/8 By Balance b/f   48,600
        01/12/18 By Depreciation A/c   7,290
        13/03/18 By Depreciation A/c*3   15,420
13/03/18 To Balance c/d   71,310        
      71,310       71,310

 


Working note:-

*1:- Calculation of the amount of Depreciation on furniture for the year 2015-16
Machinery purchased on 1st Apr 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 2,40,000
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)
= 2,40,000 X 10/100 X 12/ 12
Depreciation = 24,000
Total Depreciation for the year = 24,000

*2:- Calculation of the amount of Depreciation on furniture for the year 2016-17
Machinery purchased on 1st Apr 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 2,16,000
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)
= 2,16,000 X 10/100 X 12/ 12
Depreciation = 12,600
Machinery purchased on 1st Oct 2017
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 60,000
Rate of Depreciation = 10%
Period = from 01/10/2016 to 31/03/2017 i.e.6 months
(from the date of purchase/Beginning balance to end of the financial year)
= 60,000 X 10/100 X 6/ 12
Depreciation = 3,000
Total Depreciation for the year =24,600

Statement Showing profit or loss on the sale of Machinery  
Particulars
Amount
Purchase value of Equipment as on 1st Apr, 2016 ½ 1,20,000
Less: – Amount of Depreciation charged on the year 2017-18  
1,20,000 *10%* 12/12 12,000
Amount of Depreciation charged on the year 2017-18  
1,08,000 *10%* 12/12 10,800
 Amount of Depreciation charged on the year 2018-19  
97,200 *10%* 9/12 7,290
Book value of the asset as on 1st December 2018 89,910
Sale Price of Machinery 75,000
Profit on the sale of the asset 14,910


*3:- Calculation of the amount of Depreciation on furniture for the year 2018-19

Machinery purchased on 1st Apr 2016 ½
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 97,200
Rate of Depreciation = 10%
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)
= 97,200 X 10/100 X 12/ 12
Depreciation = 9,720
Machinery purchased on 1st Oct 2017
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 57,000
Rate of Depreciation = 10%
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)
= 57,000 X 10/100 X 12/ 12
Depreciation = 5,700
Total Depreciation for the year = 15,420

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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