Question No 41 Chapter No 13

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/cCr.
DatParticulars
J.F.AmountDateParticulars
J.F.Amount
01/03/17To Balance b/f 2,00,000    
    31/03/18By Balance C/d 2,00,000
   2,00,000   2,00,000
01/04/18To Balance b/f 2,00,00001/03/19By Machinery Disposal A/c 50,000
    01/04/19By Balance C/d
 1,50,000
   2,00,000   2,00,000

 

Dr.Provision for Depreciation A/cCr.
DatParticulars
J.F.AmountDateParticulars
J.F.Amount
    01/04/018By Depreciation A/c 20,000
01/04/018To Balance c/d 20,000    
   20,000   20,000
31/03/19To Machinery Disposal A/c 10,00001/03/18By Balance b/f 20,000
31/03/19To Balance c/d 30,00031/03/19By Depreciation A/c 20,000
   40,000   40,000

 

Dr.Machinery Disposal A/cCr.
DateParticulars
J.F.AmountDateParticulars
J.F.Amount
    01/03/19By Balance b/f 41,000
    01/03/19By Provision for Dep. A/c 10,000
31/03/19To Machinery A/c 50,000    
31/03/19To 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, 201750,000
Less: – Amount of Depreciation charged on the year 2017-18 
50,000 *10%* 12/125,000
Amount of Depreciation charged on the year 2018-19 
50,000 *10%* 12/125,000
Book value of the asset as on 1st March 201840,000
Sale Price of Machinery 41,000
Profit on the sale of the asset1,000

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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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