Question No 41 Chapter No 13
Creation of Provision for Depreciation Account
41. On 1st April 2017 Hem Lata purchased 4 machineries for Rs 50,000 each. On 31st March 2019, one machinery was sold for Rs 41,000. depreciation was charged @10% p.a. on the straight-line method
Prepare Machinery account, Machinery Disposal Account and Provision for depreciation Account for 2 years. The account is closed on 31st March every year
The solution of Question No 41 Chapter No 13:-
| Dr. | Machinery A/c | Cr. | |||||
| Dat | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
| 01/03/17 | To Balance b/f | 2,00,000 | |||||
| 31/03/18 | By Balance C/d | 2,00,000 | |||||
| 2,00,000 | 2,00,000 |
||||||
| 01/04/18 | To Balance b/f | 2,00,000 | 01/03/19 | By Machinery Disposal A/c | 50,000 | ||
| 01/04/19 | By Balance C/d |
1,50,000 |
|||||
| 2,00,000 | 2,00,000 | ||||||
| Dr. | Provision for Depreciation A/c | Cr. | |||||
| Dat | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
| 01/04/018 | By Depreciation A/c | 20,000 | |||||
| 01/04/018 | To Balance c/d | 20,000 | |||||
| 20,000 | 20,000 |
||||||
| 31/03/19 | To Machinery Disposal A/c | 10,000 | 01/03/18 | By Balance b/f | 20,000 | ||
| 31/03/19 | To Balance c/d | 30,000 | 31/03/19 | By Depreciation A/c | 20,000 | ||
| 40,000 | 40,000 | ||||||
| Dr. | Machinery Disposal A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
| 01/03/19 | By Balance b/f | 41,000 | |||||
| 01/03/19 | By Provision for Dep. A/c | 10,000 | |||||
| 31/03/19 | To Machinery A/c | 50,000 | |||||
| 31/03/19 | To Profit/Loss A/c | 1,000 | |||||
| 51,000 | 51,000 | ||||||
Working note:-
| Statement Showing profit or loss on the sale of Machinery | |
| Particulars |
Amount |
| Purchase value of Equipment as on 1st Apr, 2017 | 50,000 |
| Less: – Amount of Depreciation charged on the year 2017-18 | |
| 50,000 *10%* 12/12 | 5,000 |
| Amount of Depreciation charged on the year 2018-19 | |
| 50,000 *10%* 12/12 | 5,000 |
| Book value of the asset as on 1st March 2018 | 40,000 |
| Sale Price of Machinery | 41,000 |
| Profit on the sale of the asset | 1,000 |
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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
Chapter No. 6 – Cash Book
Chapter No. 7 – Other Subsidiary Books
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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)