Question No 40 Chapter No 13 – USHA Publication 11 Class

Question No 40 Chapter No 13

Question No 40 Chapter No 13

Creation of Provision for Depreciation Account

40. The following balances appear in the books of Jain Mills:

     
April.1 2018 Machinery Account Rs 80,000
  Provision for Depreciation Rs 30,000

On April 1, 2018 they decided to sell machinery for Rs 8,350. this machine was purchased for Rs 16,000 on 1st April 2014.
You are required to prepare Machinery Account and provision for depreciation Account for the year 2018-19, assuming the firm has been charging depreciation at 10% p.a. on original cost method

The solution of Question No 40 Chapter No 13:-  

Dr. Machinery A/c Cr.
Dat Particulars
J.F. Amount Date Particulars
J.F. Amount
01/03/18 To Balance b/f   80,000 01/03/18 By Machinery Disposal A/c   16,000
        31/03/19 By Balance C/d   64,000
      80,000       80,000

 

Dr. Provision for Depreciation A/c Cr.
Date Particulars
J.F. Amount Date Particulars
J.F. Amount
01/03/18 To Machinery Disposal A/c   6,400 01/03/18 By Balance b/f   30,000
31/03/19 To Balance c/d   30,000 31/03/19 By Depreciation A/c   6,400
      36,400       36,400

 

Dr. Machinery Disposal A/c Cr.
Date Particulars
J.F. Amount Date Particulars
J.F. Amount
        01/03/18 By Balance b/f   8,350
        01/03/18 By Provision for Dep. A/c   6,400
        01/03/18 By Profit/Loss A/c   1,250
31/03/19 To Balance c/d   16,000        
      16,000       16,000

 


Working note:-

Statement Showing profit or loss on the sale of Machinery  
Particulars
Amount
Purchase value of Equipment as on 1st Apr, 2014 16,000
Less: – Amount of Depreciation charged on the year 2014-15  
16,000 *10%* 12/12 1,600
Amount of Depreciation charged on the year 2015-16  
16,000 *10%* 12/12 1,600
Amount of Depreciation charged on the year 2016-17  
16,000 *10%* 12/12 1,600
 Amount of Depreciation charged on the year 2017-18  
16,000 *10%* 12/12 1,600
Book value of the asset as on 1st March 2018 9,600
Sale Price of Machinery 8,350
Loss on the sale of the asset 1,250

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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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