Question No 9 Chapter No 14 - T.S. Grewal 11 Class

Question No 9 Chapter No 14

9. On 1st July 2015 A Co., Ltd. Purchases second-hand machinery for Rs 20,000 and spends Rs 30,000 on reconditioning and installing it. On 1st January 2016, the firm purchases new machinery worth Rs 12,000. on 30th June 2017, the machinery purchased on 1st January 2016 was sold for Rs 8,000 and on 1st July, a fresh Plant was installed payment for this plant was to be made as follows:
1st July 2017 Rs 5,000
30th Jun 2018 Rs 6,000
03rd June 2019 Rs 5,500
Payment in 2018 and 2019 include the interest of Rs 1,000 and RS 500 respectively.
The Company writes off 10 p.a. on the original cost. The account closed every year on 31st March. Show the Machinery account for the year ended 31st March 2018.

The solution of Question No 9 Chapter No 14: –

Dr.	Machine A/c						Cr.
Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
01/7/15	To Cash A/c		23,000	31/03/15	By Deprecation A/c *1		2,075
01/1/16	To Cash A/c		12,000	31/03/15	By Balance C/d		32,975
			35,000				35,000
01/04/16	To Balance b/d		32,975	31/03/17	By Deprecation A/c *2		3,500
				31/03/17	By Balance C/d		29,475
			32,975				32,975
01/04/17	To Balance b/d		29,475	30/6/17	By Cash A/c		8,000
01/07/17	To Cash A/c		15,000	30/6/17	By Deprecation A/c		300
				30/6/17	By loss on the sale of van A/c		2,200
				30/3/18	By Deprecation A/c*3		3,425
				30/3/18	By Balance C/d		30,550
			51,750				51,750

Working note:-

*1:- Calculation of the amount of Depreciation on machinery for F/Y 2015-16
Purchased on 1st July 2015
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 23,000
Rate of Depreciation = 10%
Period = from 01/07/15 to 31/03/16 i.e. 9 months
(from the date of purchase/Beginning balance to the end of the financial year)
=23,000 X 10/100 X 9/12
Depreciation =1,725

Purchased 1st January 2016
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 12,000
Rate of Depreciation = 10%
Period = from 01/1/15 to 31/03/16 i.e. 3 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 12,000 X 10/100 X 3/12
Depreciation = 300
Total Depreciation for the finical year 2014-15 =2,025

*2:- Calculation of the amount of Depreciation on machinery for F/Y 2015-16
Purchased on 1st July 2014
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 23,000
Rate of Depreciation = 10%
Period = from 01/04/15 to 31/03/16 i.e. 12 months
(from the date of purchase/Beginning balance to the end of the financial year)
=23,000 X 10/100 X 12/12
Depreciation = 2,300

Purchased 1st January 2017
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 15,000
Rate of Depreciation = 10%
Period = from 01/7/15 to 31/03/16 i.e. 3 months
(from the date of purchase/Beginning balance to the end of the financial year)
= 15,000 X 10/100 X 9/12
Depreciation = 1,125
Total Depreciation for the finical year 2015-16=3,425

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Statement Showing profit or loss on the sale of Machinery	Cr.
Particulars	Amount
Book value of machinery as on 1st June 2015 when it was purchased	12,000
Less: – Amount of Depreciation charged on the year 2015-16
12,00010%3/12	300
Amount of Depreciation charged on the year 2016-17	1,200
Amount of Depreciation charged on the year 2017-18
12,00010%3/12	300
Sale Price of Machinery	8,000
Loss on the sale of the asset	2,200

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