Question No 42 Chapter No 13

Question No 42 Chapter No 13

Creation of Provision for Depreciation Account

42. The following balance appears in the books of Rohit Thakur

April.1 2018Machinery Account4,00,000
 Provision for Depreciation1,20,000

On April 1, 2018, Rohit Thakur sold machinery for Rs 44,000 which was purchased on 1st April 2015 for Rs 90,000
Prepare Machinery Account, Provision for Depreciation and Machinery Disposal Account for the years 2018-19, assuming 10% p.a. depreciation on Straight-line method.

The solution of Question No 42 Chapter No 13:-  

Dr.Machinery A/cCr.
DatParticulars
J.F.AmountDateParticulars
J.F.Amount
01/04/18To Balance b/f 4,00,00001/04/19By Machinery Disposal A/c 90,000
    01/04/19By Balance C/d
 4,10,000
   4,00,000   4,00,000

 

Dr.Provision for Depreciation A/cCr.
DatParticulars
J.F.AmountDateParticulars
J.F.Amount
31/03/17To Machinery Disposal A/c 27,00001/04/18By Balance b/f 1,20,000
31/03/19To Balance c/d 1,24,00031/03/19By Depreciation A/c 31,000
   1,51,000   1,51,000

 

Dr.Machinery Disposal A/cCr.
DateParticulars
J.F.AmountDateParticulars
J.F.Amount
    01/04/18By Balance b/f 44,000
    01/04/18By Provision for Dep. A/c 27,000
    01/04/18By Profit/Loss A/c 19,000
01/04/18To Machinery A/c 90,000    
   90,000   90,000

Note: The answer given in the book is wrong and the correct answer is Rs 19,000 as we have been shown in the above answer.


Working note:-

Statement Showing profit or loss on the sale of Machinery 
Particulars
Amount
Purchase value of Equipment as on 1st Apr, 201550,000
Less: – Amount of Depreciation charged on the year 2015-16 
90,000 *10%* 12/129,000
Amount of Depreciation charged on the year 2016-17 
90,000 *10%* 12/129,000
Amount of Depreciation charged on the year 2017-18 
90,000 *10%* 12/129,000
Book value of the asset as on 31st March 201863,000
Sale Price of Machinery 44,000
Loss on the sale of the asset19,000

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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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