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

Question No 8 Chapter No 14

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  
10,000*10%*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

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

  • 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

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T.S. Grewals Double Entry Book Keeping - Question No 8 Chapter No 14 - T.S. Grewal 11 Class

T.S. Grewal’s Double Entry Book Keeping

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