Question No 8 Chapter No 14 - T.S. Grewal 11 Class

Question No 8 Chapter No 14

8. A company whose accounting year is the financial year purchased on 1st July 2014 machinery costing Rs 30,000
It purchased further machinery on 1st January 2015 costing Rs 20,000 and on 1st October 2015 costing Rs 10,000
On 1st April 2016 one-third of the machinery installed on 1st July 2014 became obsolete and was sold for Rs 3,000
Show how Machinery Account would appear in the books of the company. It is given that machinery was depreciated by Fixed Instalment Method at 10%p.a. what would be the value of Machinery Account on 1st April 2017?

The solution of Question No 8 Chapter No 14: –

Dr.	Machine A/c						Cr.
Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
01/07/14	To Cash A/c		30,000	31/03/15	By Deprecation A/c *1		2,750
01/1/15	To Cash A/c		20,000	31/03/15	By Balance C/d		47,250
			50,000				50,000
01/04/15	To Balance b/d		47,250	31/03/16	By Deprecation A/c *2		5,500
01/10/15	To Cash A/c		10,000	31/03/16	By Balance C/d		1,18,500
			57,250				57,250
01/04/16	To Balance b/d		51,750	01/04/16	By Cash A/c		3,000
01/04/17	To Cash A/c		1,70,000	01/04/16	By loss on the sale of van A/c		5,250
				31/03/17	By Deprecation A/c		5,000
				31/03/17	By Balance C/d		38,500
			51,750				51,750

Working note:-

*1:- Calculation of the amount of Depreciation on machinery for F/Y 2014-15
Purchased on 1st July 2014
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 30,000
Rate of Depreciation = 10%
Period = from 01/07/14 to 31/03/15 i.e. 9 months
(from the date of purchase/Beginning balance to the end of the financial year)
=30,000 X 10/100 X 9/12
Depreciation =2,250
Purchased 1st January 2014
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 20,000
Rate of Depreciation = 10%
Period = from 30/9/14 to 31/03/15 i.e. 3 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 20,000 X 10/100 X 3/12
Depreciation = 500
Total Depreciation for the finical year 2014-15 =2,750

*2:- Calculation of the amount of Depreciation on machinery for F/Y 2015-16
Purchased on 1st July 2014 and on 1 January 2014
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 50,000
Rate of Depreciation = 10%
Period = from 01/07/15 to 31/03/16 i.e. 12 months
(from the date of purchase/Beginning balance to the end of the financial year)
=50,000 X 10/100 X 12/12
Depreciation =5,000
Purchased 1st October 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 10,000
Rate of Depreciation = 10%
Period = from 01/10/15 to 31/03/16 i.e. 3 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 10,000 X 10/100 X 6/12
Total Depreciation for the finical year 2015-16=5,500

One- third of the Machinery was sold = 30,000*1/3 = 10,000

Statement Showing profit or loss on the sale of Machinery	Cr.
Particulars	Amount
Book value of machinery as on 1st April 2015 when it was purchased	10,000
Less: – Amount of Depreciation charged on the year 2014-15
10,00010%9/12	750
Amount of Depreciation charged on the year 2015-16	1,000
Sale Price of Machinery	3,000
Loss on the sale of the asset	5,250

Depreciation | Meaning | Methods | Examples

Thanks, Please Like and share with your friends

Comment if you have any question.

Also, Check out the solved question of previous Chapters: –

Advertisement-X

Chapter No. 1 – Introduction to Accounting
Chapter No. 2 – Basic Accounting Terms
Chapter No. 3 – Theory Base of Accounting, Accounting Standards and International Financial Reporting Standards(IFRS)
Chapter No. 4 – Bases of Accounting
Chapter No. 5 – Accounting Equation
Chapter No. 6 – Accounting Procedures – Rules of Debit and Credit
Goods and Services Tax(GST)
Chapter No. 7 – Origin of Transactions – Source Documents and Preparation of Vouchers
Chapter No. 8 – Journal
Chapter No. 9 – Ledger
Chapter No. 10 – Special Purpose Books I – Cash Book
Chapter No. 11 – Special Purpose Books II – Other Books
Chapter No. 12 – Bank Reconciliation Statement
Chapter No. 13 – Trial Balance
Chapter No. 14 – Depreciation
Chapter No. 15 – Provisions and Reserves
Chapter No. 16 – Accounting for Bills of Exchange
Chapter No. 17 – Rectification of Errors
Chapter No. 18 – Financial Statements of Sole Proprietorship
Chapter No. 19 – Adjustments in preparation of Financial Statements
Chapter No. 20 – Accounts from incomplete Records – Single Entry System
Chapter No. 21 – Computers in Accounting
Chapter No. 22 – Accounting Software – Tally
Chapter No. 5 – Accounting Equation
Chapter No. 6 – Accounting Procedures – Rules of Debit and Credit
Goods and Services Tax(GST)
Chapter No. 8 – Journal
Chapter No. 9 – Ledger
Chapter No. 10 – Special Purpose Books I – Cash Book