Depreciation, Provisions and Reserves – Numerical Problems Solutions

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Depreciation, Provisions and Reserves – Numerical Problems Solutions

1. On April 01, 2010, Bajrang Marbles purchased a Machine for ₹ 1,80,000 and spent ₹ 10,000 on its carriage and ₹ 10,000 on its installation. It is estimated that its working life is 10 years and after 10 years its scrap value will be ₹ 20,000.
(a)
Prepare Machine account and Depreciation account for the first four years by providing depreciation on straight line method. Accounts are closed on March 31st every year.
(b)
Prepare Machine account, Depreciation account and Provision for depreciation account (or accumulated depreciation account) for the first four years by providing depreciation using straight line method. Accounts are closed on March 31st every year.
(a) When charging depreciation to Machine Account:
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2010
2011
Apr 01
To Bank A/c
1,80,000
Mar 31
By Depreciation A/c
18,000
Apr 01
To Bank A/c
(Carriage Expenses)
10,000
Mar 31
By Balance c/d
1,82,000
Apr 01
To Bank A/c
(Installation Expenses)
10,000
2,00,000
2,00,000
2011
2012
Apr 01
To Balance b/d
1,82,000
Mar 31
By Depreciation A/c
18,000
Mar 31
By Balance c/d
1,64,000
1,82,000
1,82,000
2012
2013
Apr 01
To Balance b/d
1,64,000
Mar 31
By Depreciation A/c
18,000
Mar 31
By Balance c/d
1,46,000
1,64,000
1,64,000
2013
2014
Apr 01
To Balance b/d
1,46,000
Mar 31
By Depreciation A/c
18,000
Mar 31
By Balance c/d
1,28,000
1,46,000
1,46,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2011
2011
Mar 31
To Machine A/c
18,000
Mar 31
By Profit & Loss A/c
18,000
18,000
18,000
2012
2012
Mar 31
To Machine A/c
18,000
Mar 31
By Profit & Loss A/c
18,000
18,000
18,000
2013
2013
Mar 31
To Machine A/c
18,000
Mar 31
By Profit & Loss A/c
18,000
18,000
18,000
2014
2014
Mar 31
To Machine A/c
18,000
Mar 31
By Profit & Loss A/c
18,000
18,000
18,000
(b) Creating Provision for Depreciation / Accumulated Depreciation Account:
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2010
2011
Apr 01
To Bank A/c
1,80,000
Mar 31
By Balance c/d
2,00,000
Apr 01
To Bank A/c
(Carriage Expenses)
10,000
Apr 01
To Bank A/c
(Installation Expenses)
10,000
2,00,000
2,00,000
2011
2012
Apr 01
To Balance b/d
2,00,000
Mar 31
By Balance c/d
2,00,000
2,00,000
2,00,000
2012
2013
Apr 01
To Balance b/d
2,00,000
Mar 31
By Balance c/d
2,00,000
2,00,000
2,00,000
2013
2014
Apr 01
To Balance b/d
2,00,000
Mar 31
By Balance c/d
2,00,000
2,00,000
2,00,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2011
2011
Mar 31
To Provision for
 Depreciation A/c
18,000
Mar 31
By Profit & Loss A/c
18,000
18,000
18,000
2012
2012
Mar 31
To Provision for
 Depreciation A/c
18,000
Mar 31
By Profit & Loss A/c
18,000
18,000
18,000
2013
2013
Mar 31
To Provision for
 Depreciation A/c
18,000
Mar 31
By Profit & Loss A/c
18,000
18,000
18,000
2014
2014
Mar 31
To Provision for
 Depreciation A/c
18,000
Mar 31
By Profit & Loss A/c
18,000
18,000
18,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2011
2011
Mar 31
To Balance c/d
18,000
Mar 31
By Depreciation A/c
18,000
18,000
18,000
2012
2011
Mar 31
To Balance c/d
36,000
Apr 01
By Balance b/d
18,000
2012
Mar 31
By Depreciation A/c
18,000
36,000
36,000
2013
2012
Mar 31
To Balance c/d
54,000
Apr 01
By Balance b/d
36,000
2013
Mar 31
By Depreciation A/c
18,000
54,000
54,000
2014
2013
Mar 31
To Balance c/d
72,000
Apr 01
By Balance b/d
54,000
2014
Mar 31
By Depreciation A/c
18,000
72,000
72,000
Working Notes:
Cost of Asset
=
₹ 1,80,000 + ₹ 10,000 + ₹ 10,000
=
₹ 2,00,000
We have,
Yearly Depreciation
=
{\dfrac{\text{Cost of Asset - Estimated Residential value}}{\text{Estimated useful life of the Asset}}}
=
{\dfrac{₹~2,00,000 - ₹~20,000}{10}}
=
{\dfrac{₹~1,80,000}{10}}
=
₹ 18,000

2. On July 01, 2010, Ashok Ltd. purchased a machine for ₹ 1,08,000 and spent ₹ 12,000 on its installation. At the time of purchase it was estimated that the effective commercial life of the machine will be 12 years and after 12 years its salvage value will be ₹ 12,000.
Prapare machine account and depreciation Account in the books of Ashok Ltd. For first three years, if depreciation is written off according to straight line method. The account are closed on December 31st, every year.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2010
2010
Jul 01
To Bank A/c
1,08,000
Dec 31
By Depreciation A/c
4,500
Jul 01
To Bank A/c
(Installation Expenses)
12,000
Dec 31
By Balance c/d
1,15,500
1,20,000
1,20,000
2011
2011
Jan 01
To Balance b/d
1,15,500
Dec 31
By Depreciation A/c
9,000
Dec 31
By Balance c/d
1,06,500
1,15,500
1,15,000
2012
2012
Jan 01
To Balance b/d
1,06,500
Dec 31
By Depreciation A/c
9,000
Dec 31
By Balance c/d
97,500
1,06,500
1,06,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2010
2010
Dec 31
To Machine A/c
4,500
Dec 31
By Profit & Loss A/c
4,500
4,500
4,500
2011
2011
Dec 31
To Machine A/c
9,000
Dec 31
By Profit & Loss A/c
9,000
9,000
9,000
2012
2012
Dec 31
To Machine A/c
9,000
Dec 31
By Profit & Loss A/c
9,000
9,000
9,000
Working Notes:
Cost of machine
=
₹ 1,08,000 + ₹ 12,000
=
₹ 1,20,000
We have,
Yearly Depreciation
=
{\dfrac{\text{Cost of asset - Estimated Residential value}}{\text{Estimated useful life of the Asset}}}
=
{\dfrac{₹~1,20,000 - ₹~12,000}{12}}
=
{\dfrac{₹~1,08,000}{12}}
=
₹ 9,000

3. Reliance Ltd. purchased a second hand machine for ₹ 56,000 on October 01, 2011 and spent ₹ 28,000 on its overhaul and installation before putting it to operation. It is expected that the machine can be sold for ₹ 6,000 at the end of its useful life of 15 years. Moreover an estimated cost of ₹ 1,000 is expected to be incurred to recover the salvage value of ₹ 6,000. Prepare machine account and Provision for depreciation account for the first three years charging depreciation by fixed installment method. Accounts are closed on March 31, every year.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2011
2012
Oct 01
To Bank A/c
56,000
Mar 31
By Balance c/d
84,000
Oct 01
To Bank A/c
(Overhaul and
Installation Expenses)
28,000
84,000
84,000
2012
2013
Apr 01
To Balance b/d
84,000
Mar 31
By Balance c/d
84,000
84,000
84,000
2013
2014
Apr 01
To Balance b/d
84,000
Mar 31
By Balance c/d
84,000
84,000
84,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2012
2012
Mar 31
To Balance c/d
2,634
Mar 31
By Depreciation A/c
2,634
2,634
2,634
2013
2012
Mar 31
To Balance c/d
7,901
Apr 01
By Balance b/d
2,634
2013
Mar 31
By Depreciation A/c
5,267
7,901
7,901
2014
2013
Mar 31
To Balance c/d
13,168
Apr 01
By Balance b/d
7,901
2014
Mar 31
By Depreciation A/c
5,267
13,168
13,168
Working Notes:
Net Residual value
=
Sale value – Expenses incurred for the disposal of the Asset
=
₹ 6,000 – ₹ 1,000
=
₹ 5,000
Cost of asset
=
₹ 56,000 + ₹ 28,000
=
₹ 84,000
Yearly Depreciation
=
{\dfrac{\text{Cost of Asset - Estimated Residential Value}}{\text{Estimated useful life of the Asset}}}
=
{\dfrac{₹~84,000 - ₹~5,000}{15}}
=
{\dfrac{₹~79,000}{15}}
=
₹ 5,267
4. Berlia Ltd. Purchased a second hand machine for ₹ 56,000 on July 01, 2015 and spent ₹ 24,000 on its repair and installation and ₹ 5,000 for its carriage. On September 01, 2016, it purchased another machine for ₹ 2,50,000 and spent ₹ 10,000 on its installation.
(a)
Depreciation is provided on machinery @ 10% p.a on original cost method annually on December 31. Prepare machinery account and depreciation account from year 2015 to 2018.
(b)
Prepare machinery account and depreciation account from the year 2011 2015 to 2018, if depreciation is provided on machinery @ 10% p.a. on written down value method annually on December 31.

Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2015
2015
Jul 01
To Bank A/c
56,000
Dec 31
By Depreciation A/c
(Purchase Price of
machine 11
4,250
4,250
machine 1)
Dec 31
By Balance c/d
80,750
Jul 01
To Bank A/c
(Repair and Installation charges for machine 1)
24,000
Jul 01
To bank A/c
(Carriage Expenses for
machine 1)
5,000
85,000
85,000
2016
2016
Jan 01
To Balance b/d
80,750
Dec 31
By Depreciation A/c
Sep 01
To Bank A/c
2,50,000
machine 12
8,500
(Purchase price of
machine 22
8,667
17,167
machine 2)
Dec 31
By Balance c/d
3,23,583
Sep 01
To Bank A/c
10,000
(Installation charges on machine 2)
3,40,750
3,40,750
2017
2017
Jan 01
To Balance b/d
3,23,583
Dec 31
By Depreciation A/c
machine 13
8,500
machine 23
26,000
34,500
Dec 31
By Balance b/d
2,89,083
3,23,583
3,23,583
2018
2018
Jan 01
To Balance b/d
2,89,083
Dec 31
By Depreciation A/c
machine 14
8,500
machine 24
26,000
34,500
Dec 31
By Balance b/d
2,54,583
2,89,083
2,89,083
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2015
2015
Dec 31
To Machine A/c
Dec 31
By Profit & Loss A/c
4,250
machine 11
4,250
4,250
4,250
4,250
2016
2016
Dec 31
To Machine A/c
Dec 31
By Profit & Loss A/c
17,167
machine 12
8,500
machine 22
8,667
17,167
17,167
17,167
2017
2017
Dec 31
To Machine A/c
Dec 31
By Profit & Loss A/c
34,500
machine 13
8,500
machine 23
26,000
34,500
34,500
34,500
2018
2018
Dec 31
To Machine A/c
Dec 31
By Profit & Loss A/c
34,500
machine 14
8,500
machine 24
26,000
34,500
34,500
34,500
Working Notes:
Cost of machine 1
=
₹ 56,000 + ₹ 24,000 + ₹ 5,000
=
₹ 85,000
Cost of machine 2
=
₹ 2,50,000 + ₹ 10,000
=
₹ 2,60,000
Depreciation Chart
Year
Machine
Duration
Calculation
Depreciation
2015
Machine 1
6 months
{= 85,000 × \dfrac{10}{100} × \dfrac{6}{12}}
4,250
Total
4,250
2016
Machine 1
12 months
{= 85,000 × \dfrac{10}{100}}
8,500
Machine 2
4 months
{= 2,60,000 × \dfrac{10}{100} × \dfrac{4}{12}}
8,667
Total
17,167
2017
Machine 1
12 months
{= 85,000 × \dfrac{10}{100}}
8,500
Machine 2
12 months
{= 2,60,000 × \dfrac{10}{100}}
26,000
Total
34,500
2018
Machine 1
12 months
{= 85,000 × \dfrac{10}{100}}
8,500
Machine 2
12 months
{= 2,60,000 × \dfrac{10}{100}}
26,000
Total
34,500
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2015
2015
Jul 01
To Bank A/c
56,000
Dec 31
By Depreciation A/c
(Purchase price of
machine 11
4,250
4,250
machine 1)
Dec 31
By Balance c/d
80,750
Jul 01
To Bank A/c
(Repair and Installation charges for
machine 1)
24,000
Jul 01
To Bank A/c
(Carriage expenses for
machine 1)
5,000
85,000
85,000
2016
2016
Jan 01
To Balance b/d
80,750
Dec 31
By Depreciation A/c
Sep 01
To Bank A/c
2,50,000
machine 12
8,075
(Purchase price of
machine 22
8,667
16,742
machine 2)
Dec 31
By Balance c/d
3,24,008
Sep 01
To Bank A/c
(Installation charges for
machine 2)
10,000
3,40,750
3,40,750
2017
2017
Jan 01
To Balance b/d
3,24,008
Dec 31
By Depreciation A/c
machine 13
7,268
machine 23
25,133
32,401
Dec 31
By Balance c/d
2,91,607
3,24,008
3,24,008
2018
2018
Jan 01
To Balance b/d
2,91,607
Dec 31
By Depreciation A/c
machine 14
6,541
machine 24
22,620
29,161
Dec 31
By Balance c/d
2,62,446
2,91,607
2,91,607
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2015
2015
Mar 31
To Machine A/c
Mar 31
By Profit & Loss A/c
4,250
machine 11
4,250
4,250
4,250
4,250
2016
2016
Mar 31
To Machine A/c
Mar 31
By Profit & Loss A/c
16,742
machine 12
8,075
machine 22
8,667
16,742
16,742
16,742
2017
2017
Mar 31
To Machine A/c
Mar 31
By Profit & Loss A/c
32,401
machine 13
7,268
machine 23
25,133
32,401
32,401
32,401
2018
2018
Mar 31
To Machine A/c
Mar 31
By Profit & Loss A/c
29,161
machine 14
6,541
machine 24
22,620
29,161
29,161
29,161
Working Notes for Written Down Value Method
Year
Machine
Book Value
Duration
Calculation
Depreciation
2015
Machine 1
85,000
6 months
{= 85,000 × \dfrac{10}{100} × \dfrac{6}{12}}
4,250
Total
4,250
2016
Machine 1
80,750
12 months
{= 80,750 × \dfrac{10}{100}}
8,075
Machine 2
2,60,000
4 months
{= 2,60,000 × \dfrac{10}{100} × \dfrac{4}{12}}
8,667
Total
16,742
2017
Machine 1
72,675
12 months
{= 72,675 × \dfrac{10}{100}}
7,268
Machine 2
2,51,333
12 months
{= 2,51,333 × \dfrac{10}{100}}
25,133
Total
32,401
2018
Machine1
65,407
12 months
{= 65,407 × \dfrac{10}{100}}
6,541
Machine 2
2,26,200
12 months
{= 2,60,000 × \dfrac{10}{100}}
22,620
Total
29,161

5. Ganga Ltd. Purchased a second hand machine on January 01, 2014 for ₹ 5,50,000 and spent ₹ 50,000 on its installation. On September 01, 2014 it purchased another machine for ₹ 3,70,000. On May 01, 2015 it purchased another machine for ₹ 8,40,000 (including installation expenses).
Depreciation was provided on machiner @10% p.a. on original cost method annually on December 31. Prepare:
(a)
Machinery account and depreciation account for the years 2014, 2015, 2016 and 2017.
(b)
If depreciation is accumulated in provision for Depreciation account then prepare machine account and provision for depreciation account for the years 2014, 2015, 2016 and 2017.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2014
2014
Jan 01
To Bank A/c
5,50,000
Dec 31
By Depreciation A/c
(Purchase price of
machine 1
60,000
machine 1)
Dec 31
machine 2
12,333
72,333
Jan 01
To Bank A/c
50,000
Dec 31
By Balance c/d
8,97,667
(Installation charges for
machine 1)
Sep 01
To Bank A/c
(Purchase price of
machine 2)
3,70,000
9,70,000
9,70,000
2015
2015
Jan 01
To Balance b/d
8,97,667
Dec 31
By Depreciation A/c
May 01
To Bank A/c
8,40,000
machine 1
60,000
(Purchase price of
machine 2
37,000
machine 3)
machine 3
56,000
1,53,000
Dec 31
By Balance c/d
15,84,667
17,37,667
17,37,667
2016
2016
Jan 01
To Balance b/d
15,84,667
Dec 31
By Depreciation A/c
machine 1
60,000
machine 2
37,000
machine 3
84,000
1,81,000
Dec 31
By Balance c/d
14,03,667
15,84,667
15,84,667
2017
2017
Jan 01
To Balance b/d
14,03,667
Dec 31
By Depreciation A/c
machine 1
60,000
machine 2
37,000
machine 3
84,000
1,81,000
Dec 31
By Balance c/d
12,22,667
14,03,667
14,03,667
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2014
2014
Dec 31
To Machine A/c
72,333
Dec 31
By Profit & Loss A/c
72,333
72,333
72,333
2015
2015
Dec 31
To Machine A/c
153,000
Dec 31
By Profit & Loss A/c
153,000
153,000
153,000
2016
2016
Dec 31
To Machine A/c
1,81,000
Dec 31
By Profit & Loss A/c
1,81,000
1,81,000
1,81,000
2017
2017
Dec 31
To Machine A/c
1,81,000
Dec 31
By Profit & Loss A/c
1,81,000
1,81,000
1,81,000
Working Notes:
Cost of machine 1
=
₹ 56,000 + ₹ 24,000 + ₹ 5,000
=
₹ 85,000
Cost of machine 2
=
₹ 2,50,000 + ₹ 10,000
=
₹ 2,60,000
Depreciation Chart
Year
Machine
Duration
Calculation
Depreciation
2014
Machine 1
12 months
{= 6,00,000 × \dfrac{10}{100}}
60,000
Machine 2
4 months
{= 3,70,000 × \dfrac{10}{100} × \dfrac{4}{12}}
12,333
Total
72,333
2015
Machine 1
12 months
{= 6,00,000 × \dfrac{10}{100}}
60,000
Machine 2
12 months
{= 3,70,000 × \dfrac{10}{100}}
37,000
Machine 3
8 months
{= 8,40,000 × \dfrac{10}{100} × \dfrac{8}{12}}
56,000
Total
1,53,000
2016
Machine 1
12 months
{= 6,00,000 × \dfrac{10}{100}}
60,000
Machine 2
12 months
{= 3,70,000 × \dfrac{10}{100}}
37,000
Machine 3
12 months
{= 8,40,000 × \dfrac{10}{100}}
84,000
Total
1,81,000
2017
Machine 1
12 months
{= 6,00,000 × \dfrac{10}{100}}
60,000
Machine 2
12 months
{= 3,70,000 × \dfrac{10}{100}}
37,000
Machine 3
12 months
{= 8,40,000 × \dfrac{10}{100}}
84,000
Total
1,81,000
When provision for depreciation account is maintained separately.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2014
2014
Jan 01
To Bank A/c
6,00,000
Dec 31
By Balance c/d
9,70,000
Sep 01
To Bank A/c
3,70,000
9,70,000
9,70,000
2015
2015
Jan 01
To Balance b/d
9,70,000
Dec 31
By Balance c/d
18,10,000
May 01
To Bank A/c
8,40,000
18,10,000
18,10,000
2016
2016
Jan 01
To Balance b/d
18,10,000
Dec 31
By Balance c/d
18,10,000
18,10,000
18,10,000
2017
2017
Jan 01
To Balance b/d
18,10,000
Dec 31
By Balance c/d
18,10,000
18,10,000
18,10,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2014
2014
Dec 31
To Balance c/d
72,333
Dec 31
By Depreciation A/c
machine 1
60,000
machine 2
12,333
72,333
72,333
72,333
2015
2015
Dec 31
To Balance c/d
2,25,333
Dec 31
By Balance b/d
72,333
Dec 31
By Depreciation A/c
machine 1
60,000
machine 2
37,000
machine 3
56,000
1,53,000
2,25,333
2,25,333
2016
2016
Dec 31
To Balance c/d
4,06,333
Dec 31
By Balance b/d
2,25,333
Dec 31
By Depreciation A/c
machine 1
60,000
machine 2
37,000
machine 3
84,000
1,81,000
4,06,333
4,06,333
2017
2017
Dec 31
To Balance c/d
5,87,333
Dec 31
By Balance b/d
4,06,333
Dec 31
By Depreciation A/c
machine 1
60,000
machine 2
37,000
machine 3
84,000
1,81,000
5,87,333
5,87,333
6. Azad Ltd. purchased furniture on October 01, 2014 for ₹ 4,50,000. On March 01, 2015 it purchased another furniture for ₹ 3,00,000. On July 01, 2016 it sold off the first furniture purchased in 2014 for ₹ 2,25,000. Depreciation is provided at 15% p.a. on writtten down value method each year. Accounts are closed each year on March 31. Prepare furniture account and accumulated depreciation account for the years ended on March 31, 2015, March 31, 2016 and March 31, 2017. Also give the above two accounts if furniture disposal account is opened.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2014
2015
Oct 01
To Bank A/c
(Purchase of furniture 1)
4,50,000
Mar 31
By Balance c/d
7,50,000
2015
Mar 01
To Bank A/c
(Purchase of furniture 2)
3,00,000
7,50,000
7,50,000
2015
2016
Apr 01
To Balance b/d
7,50,000
Mar 31
By Balance c/d
7,50,000
7,50,000
7,50,000
2016
2016
Apr 01
To Balance b/d
7,50,000
Jul 01
By Furniture Disposal A/c
4,50,000
2017
Mar 31
By Balance c/d
3,00,000
7,50,000
7,50,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2015
2015
Mar 31
To Balance c/d
37,500
Mar 31
By Depreciation A/c
furniture 1
33,750
furniture 2
3,750
37,500
37,500
37,500
2016
2015
Mar 31
To Balance c/d
1,44,376
Apr 01
By Balance b/d
37,500
2016
Mar 31
By Depreciation A/c
furniture 1
62,438
furniture 2
44,438
1,06,876
1,44,376
1,44,376
2016
2016
Jul 01
To Furniture Disposal A/c
1,09,456
Apr 01
By Balance b/d
1,44,376
2017
Jul 01
By Depreciation A/c
Mar 31
To Balance c/d
85,960
furniture 1
13,268
13,268
2017
Mar 31
By Depreciation A/c
furniture 2
37,772
37,772
1,95,416
1,95,416
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2016
2016
Jul 01
To Furniture A/c
4,50,000
Jul 01
By Accumulated Depreciation A/c
1,09,456
Jul 01
By Bank A/c
2,25,000
Jul 01
By Profit & Loss A/c
(Loss)
1,15,544
4,50,000
4,50,000
Working Notes for Written Down Value Method
Accounting
Period
Furniture
Book Value
Duration
Calculation
Depreciation
2014 – 2015
Furniture 1
4,50,000
6 months
{= 4,50,000 × \dfrac{15}{100} × \dfrac{6}{12}}
33,750
Furnitue 2
3,00,000
1 month
{= 3,00,000 × \dfrac{15}{100} × \dfrac{1}{12}}
3,750
Total
37,500
2015 – 2016
Furniture 1
= 4,50,000 – 33,750
= 4,16,250
12 months
{= 4,16,250 × \dfrac{15}{100}}
62,438
Furniture 2
= 3,00,000 – 3,750
= 2,96,250
12 months
{= 2,96,250 × \dfrac{15}{100}}
44,438
Total
1,06,876
2016 – 2017
Furniture 1
= 4,16,250 – 62,438
= 3,53,812
3 months
{= 3,53,812 × \dfrac{15}{100} × \dfrac{3}{12}}
13,268
Furnitue 2
= 2,96,250 – 44,438
= 2,51,812
12 months
{= 2,51,812 × \dfrac{15}{100}}
37,772
Total
51,040
Book Value of furniture 1
=
₹ 3,53,812 – ₹ 13,268
(as of Jul 01, 2014)
=
₹ 3,40,544
Sale Price of Furniture 1
=
₹ 2,25,000
Loss on sale of furniture 1
=
₹ 3,40,544 – ₹ 2,25,000
=
₹ 1,15,544

7. M/s Lokesh Fabrics purchased a Textile Machine on April 01, 2011 for ₹ 1,00,000. On July 01, 2012 another machine costing ₹ 2,50,000 was purchased. The machine purchased on April 01, 2011 was sold for ₹ 25,000 on October 01, 2015. The company charges depreciation @15% p.a. on straight line method. Prepare machinery account and machinery disposal account for the year ended March 31, 2016.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2011
2012
Apr 01
To Bank A/c
1,00,000
Mar 31
By Depreciation A/c
(Purchase price of
machine 1
15,000
15,000
machine 1)
Mar 31
By Balance c/d
85,000
1,00,000
1,00,000
2012
2013
Apr 01
To Balance b/d
85,000
Mar 31
By Depreciation A/c
Jul 01
To Bank A/c
2,50,000
machine 1
15,000
(Purchase price of
machine 2
28,125
43,125
machine 2)
Mar 31
By Balance c/d
2,91,875
3,35,000
3,35,000
2013
2014
Apr 01
To Balance b/d
2,91,875
Mar 31
By Depreciation A/c
machine 1
15,000
machine 2
37,500
52,500
Mar 31
By Balance c/d
2,39,375
2,91,875
2,91,875
2014
2015
Apr 01
To Balance b/d
2,39,375
Mar 31
By Depreciation A/c
machine 1
15,000
machine 2
37,500
52,500
Mar 31
By Balance c/d
1,86,875
2,39,375
2,39,375
2015
2015
Apr 01
To Balance b/d
1,86,875
Oct 01
By Depreciation A/c
machine 1
7,500
7,500
Oct 01
By Machinery Disposal A/c
32,500
2016
Mar 31
By Depreciation A/c
machine 2
37,500
37,500
Mar 31
By Balance c/d
1,09,375
1,86,875
1,86,875
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2015
2015
Oct 01
To Machinery A/c
32,500
Oct 01
By Bank A/c
25,000
Oct 01
By Profit & Loss A/c
(Loss)
7,500
32,500
32,500
Working Notes:
Depreciation Chart
Year
Machine
Duration
Calculation
Depreciation
2011 – 2012
Machine 1
12 months
{= 1,00,000 × \dfrac{15}{100}}
15,000
Total
15,000
2012 – 2013
Machine 1
12 months
{= 1,00,000 × \dfrac{15}{100}}
15,000
Machine 2
4 months
{= 2,50,000 × \dfrac{15}{100} × \dfrac{9}{12}}
28,125
Total
43,125
2013 – 2014
Machine 1
12 months
{= 1,00,000 × \dfrac{15}{100}}
15,000
Machine 2
12 months
{= 2,50,000 × \dfrac{15}{100}}
37,500
Total
52,500
2014 – 2015
Machine 1
12 months
{= 1,00,000 × \dfrac{15}{100}}
15,000
Machine 2
12 months
{= 2,50,000 × \dfrac{15}{100}}
37,500
Total
52,500
2015 – 2016
Machine 1
6 months
{= 1,00,000 × \dfrac{15}{100} × \dfrac{6}{12}}
7,500
Machine 2
12 months
{= 2,50,000 × \dfrac{15}{100}}
37,500
Total
45,000
Description
Amount
₹
Book Value of machine 1 as of Oct 01, 2015
=
Original Cost – Accumulated Depreciation
=
₹ 1,00,000 – (₹ 15,000 + ₹ 15,000 + ₹ 15,000 + ₹ 15,000 + ₹ 7,500)
=
₹ 32,500
Sale Price of machine 1
=
₹ 25,000
Loss on sale of machine 1
=
₹ 32,500 – ₹ 25,000
=
₹ 7,500
8. The following balances appear in the books of Crystal Ltd. on Jan 01, 2015
₹
Machinery account on
15,00,000
Provision for depreciation account
5,50,000
On April 01, 2015 a machinery which was purchased on January 01, 2012 for ₹ 2,00,000 was sold for ₹ 75,000. A new machine was purchased on July 01, 2015 for ₹ 6,00,000. Depreciation is provided on machinery at 20% p.a. on Straight line method and books are closed on December 31 every year. Prepare the machinery account and provision for depreciation account for the year ending December 31, 2015.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2015
2015
Jan 01
To Balance b/d
(Given)
15,00,000
Apr 01
By Machinery Disposal A/c
2,00,000
Jul 01
To Bank A/c
6,00,000
Jul 01
By Balance c/d
19,00,000
21,00,000
21,00,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2015
2015
Apr 01
To Machinery Disposal A/c
1,30,000
Jan 01
By Balance c/d
5,50,000
Dec 31
To Balance c/d
7,50,000
Apr 01
By Depreciation A/c
Sold out machinery 1
10,000
10,000
Dec 31
By Depreciation A/c
Retained machinery 1
2,60,000
New machine 2
60,000
3,20,000
8,80,000
8,80,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2015
2015
Apr 01
To Machinery A/c
2,00,000
Apr 01
By Provision for Depreciation A/c
1,30,000
Apr 01
To Profit & Loss A/c
(Profit)
5,000
Apr 01
By Bank A/c
75,000
2,05,000
2,05,000
Working Notes:
Depreciation Chart
Year
Machine
Book Value
Duration
Calculation
Depreciation
2015
Machine 1
2,00,000
3 months
{= ₹~2,00,000 × \dfrac{20}{100} × \dfrac{3}{12}}
10,000
Retained Machinery 1
= 15,00,000 – 2,00,000
=13,00,000
12 months
{= ₹~13,00,000 × \dfrac{20}{100}}
2,60,000
Machine 2
6,00,000
6 months
{= ₹~6,00,000 × \dfrac{20}{100} × \dfrac{6}{12}}
60,000
Original Cost of
sold out machinery 1
as of Apr 01, 2015
=
₹ 2,00,000
Accumulated Depreciation
=
Depreciation in 2012 + Depreciation in 2013 + Depreciation in 2014 + Depreciation in 2015
=
₹ 40,000 + ₹ 40,000 + ₹ 40,000 + ₹ 10,000
=
₹ 1,30,000
Book Value as of Apr 01, 2015
=
Original Cost – Accumulated Depreciation
=
₹ 2,00,000 – ₹ 1,30,000
=
₹ 70,000
Sale Price of machine 1
=
₹ 75,000
Gain on sale of machine 1
=
₹ 75,000 – ₹ 70,000
=
₹ 5,000
9. M/s. Excel Computers has a debit balance of ₹ 50,000 (original cost ₹ 1,20,000) in computers account on April 01, 2010. On July 01, 2010 it purchased another computer costing ₹ 2,50,000. One more computer was purchased on January 01, 2011 for ₹ 30,000. On April 01, 2014 the computer which was purchased on July 01, 2010 became obselete obsolete and was sold for ₹ 20,000. A new version of the IBM computer was purchased on August 01, 2014 for ₹ 80,000. Show computers account in the books of Excel Computers for the years ended on March 31, 2011, 2012, 2013, 2014 and 2015. The computer is depreciated @10 p.a. on straight line basis.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2010
2011
Apr 01
To Balance b/d
50,000
Mar 31
By Depreciation A/c
(Given)
old computers
12,000
Jul 01
To Bank A/c
2,50,000
new computer 1
18,750
2011
new computer 2
750
31,500
Jan 01
To Bank A/c
30,000
Mar 31
By Balancd c/d
2,98,500
3,30,000
3,30,000
2011
2012
Apr 01
To Balance b/d
2,98,500
Mar 31
By Depreciation A/c
old computers
12,000
new computer 1
25,000
new computer 2
3,000
40,000
Mar 31
By Balancd c/d
2,58,500
2,98,500
2,98,500
2012
2013
Apr 01
To Balance b/d
2,58,500
Mar 31
By Depreciation A/c
old computers
12,000
new computer 1
25,000
new computer 2
3,000
40,000
Mar 31
By Balancd c/d
2,18,500
2,58,500
2,58,500
2013
2014
Apr 01
To Balance b/d
2,18,500
Mar 31
By Depreciation A/c
old computers
12,000
new computer 1
25,000
new computer 2
3,000
40,000
Mar 31
By Balancd c/d
1,78,500
2,18,500
2,18,500
2014
2014
Apr 01
To Balance b/d
1,78,500
Apr 01
By Bank A/c
20,000
Aug 01
To Bank A/c
80,000
(new computer 1
(Purchase of
is sold out)
new computer 3)
Apr 01
By Profit & Loss A/c
(Loss)
1,36,250
2015
Mar 31
By Depreciation A/c
old computers
2,000
new computer 2
3,000
new computer 3
5,333
10,333
Mar 31
By Balancd c/d
91,917
2,58,500
2,58,500
Working Notes:
Depreciation Chart
Year
Machine
Duration
Calculation
Depreciation
2010 – 2011
Old Computers
12 months
{= 1,20,000 × \dfrac{10}{100}}
12,000
New Computer 1
9 months
{= 2,50,000 × \dfrac{10}{100} × \dfrac{9}{12}}
18,750
New Computer 2
3 months
{= 30,000 × \dfrac{10}{100} × \dfrac{3}{12}}
750
Total
31,500
2011 – 2012
Old Computers
12 months
{= 1,20,000 × \dfrac{10}{100}}
12,000
New Computer 1
12 months
{= 2,50,000 × \dfrac{10}{100}}
25,000
New Computer 2
12 months
{= 30,000 × \dfrac{10}{100}}
3,000
Total
40,000
2012 – 2013
Old Computers
12 months
{= 1,20,000 × \dfrac{10}{100}}
12,000
New Computer 1
12 months
{= 2,50,000 × \dfrac{10}{100}}
25,000
New Computer 2
12 months
{= 30,000 × \dfrac{10}{100}}
3,000
Total
40,000
2013 – 2014
Old Computers
12 months
{= 1,20,000 × \dfrac{10}{100}}
12,000
New Computer 1
12 months
{= 2,50,000 × \dfrac{10}{100}}
25,000
New Computer 2
12 months
{= 30,000 × \dfrac{10}{100}}
3,000
Total
40,000
2014 – 2015
Old Computers
Book Value – Scrap Value
= 50,000 – (12,000 + 12,000 + 12,000 + 12,000)
= 50,000 – 48,000
= 2,000
12 months
= 2,000
2,000
New Computer 1
12 months
{= 2,50,000 × \dfrac{10}{100}}
25,000
New Computer 2
8 months
{= 30,000 × \dfrac{10}{100} × \dfrac{8}{12}}
5,333
Total
32,333
Original Cost of sold out new computer 1 as of Apr 01, 2014
=
₹ 2,50,000
Accumulated Depreciation
=
Depreciation in 2010 – 2011 + Depreciation in 2011 – 2012 + Depreciation in 2012 – 2013 + Depreciation in 2013 – 2014
=
₹ 18,750 + ₹ 25,000 + ₹ 25,000 + ₹ 25,000
=
₹ 93,750
Book Value as of Apr 01, 2014
=
Original Cost – Accumulated Depreciation
=
₹ 2,50,000 – ₹ 93,750
=
₹ 1,56,250
Sale Price of new computer 1
=
₹ 20,000
Loss on sale of new computer 1
=
₹ 1,36,250

10. Carriage Transport Company purchased 5 trucks at the cost of ₹ 2,00,000 each on April 01, 2011. The company writes off depreciation @20% p.a. on original cost and closes its books on December 31, every year. On October 01, 2013, one of the trucks is involved in an accident and is completely destroyed. Insurance company agreed to pay ₹ 70,000 in full settlement of the claim. On the same date the company purchased a second hand truck for ₹ 1,00,000 and spent ₹ 20,000 on its overhauling. Prepare truck account and provision for depreciation account for the three years ended on December 31, 2013. Also give truck account if truck disposal account is prepared.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2011
2011
Apr 31
To Bank A/c
10,00,000
Dec 31
By Balance c/d
10,00,000
10,00,000
10,00,000
2012
2012
Jan 01
To Balance b/d
10,00,000
Dec 31
By Balance c/d
10,00,000
10,00,000
10,00,000
2013
2013
Jan 01
To Balance b/d
10,00,000
Oct 01
By Truck Disposal A/c
2,00,000
Oct 01
To Bank A/c
1,00,000
(One truck disposed)
(Purchase of
second hand truck)
Dec 31
By Balance b/d
9,20,000
Oct 01
To Bank A/c
(Overhauling of
second hand truck)
20,000
11,20,000
11,20,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2011
2011
Dec 31
To Balance c/d
1,50,000
Dec 31
By Depreciation A/c
5 old trucks
1,50,000
1,50,000
1,50,000
1,50,000
2012
2012
Dec 31
To Balance c/d
3,50,000
Jan 01
By Balance b/d
1,50,000
Dec 31
By Depreciation A/c
5 old trucks
2,00,000
2,00,000
3,50,000
3,50,000
2013
2013
Oct 01
To Truck Disposal A/c
1,00,000
Jan 01
By Balance b/d
1,50,000
(Accumulated Depreciation
Oct 01
By Depreciation A/c
on the truck)
disposed old truck
30,000
30,000
= 30,000 + 40,000 + 30,000
Dec 31
By Depreciation A/c
= 1,00,000
remaining
1,60,000
Dec 31
To Balance c/d
4,46,000
4 old trucks
new truck
6,000
1,66,000
5,46,000
5,46,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2013
2013
Oct 01
To Truck A/c
2,00,000
Oct 01
By Provision for Depreciation A/c
1,00,000
Oct 01
By Insurance A/c
70,000
Dec 31
By Profit & Loss A/c
(Loss)
30,000
2,00,000
2,00,000
Working Notes:
Depreciation Chart
Year
Truck
Duration
Calculation
Depreciation
2011
5 Old trucks
9 months
{= 5 × 2,00,000 × \dfrac{20}{100} × \dfrac{9}{12}}
1,50,000
Total
1,50,000
2012
5 Old trucks
12 months
{= 5 × 2,00,000 × \dfrac{20}{100}}
2,00,000
Total
2,00,000
2013
Disposed Old Truck
9 months
{= 2,00,000 × \dfrac{20}{100} × \dfrac{9}{12}}
30,000
Remaining 4 Old trucks
12 months
{= 4 × 2,00,000 × \dfrac{4}{100}}
1,60,000
New Truck
3 months
{= 1,20,000 × \dfrac{20}{100} × \dfrac{3}{12}}
6,000
Total
1,96,000
11. Saraswati Ltd. purchased a machinery costing ₹ 10,00,000 on January 01, 2011. A new machinery was purchased on 01 May, 2012 for ₹ 15,00,000 and another on July 01, 2014 for ₹ 12,00,000. A part of the machinery which originally cost ₹ 2,00,000 in 2011 was sold for ₹ 75,000 on April 30, 2014. Show the machinery account, provision for depreciation account and machinery disposal account from 2011 to 2015 if depreciation is provided at 10% p.a. on original cost and accounts are closed on December 31, every year.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2011
2011
Jan 01
To Bank A/c
(Purchase of machine 1)
10,00,000
Dec 01
By Balance c/d
10,00,000
10,00,000
10,00,000
2012
2012
Jan 01
To Balance A/c
10,00,000
Dec 01
By Balance c/d
25,00,000
May 01
By Bank A/c
(Purchase of machine 2)
15,00,000
25,00,000
25,00,000
2013
2013
Jan 01
To Balance b/d
25,00,000
Dec 01
By Balance c/d
25,00,000
25,00,000
25,00,000
2014
2014
Jan 01
To Balance b/d
25,00,000
Apr 30
By Machinery Disposal A/c
2,00,000
Jul 01
To Bank A/c
12,00,000
Dec 01
By Balance c/d
35,00,000
37,00,000
37,00,000
2015
2015
Jan 01
To Balance b/d
35,00,000
Dec 01
By Balance c/d
35,00,000
35,00,000
35,00,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2011
2011
Dec 31
To Balance c/d
1,00,000
Dec 31
By Depreciation A/c
machine 1
1,00,000
1,00,000
1,00,000
1,00,000
2012
2012
Dec 31
To Balance c/d
3,00,000
Jan 01
By Balance b/d
1,00,000
Dec 31
By Depreciation A/c
machine 1
1,00,000
machine 2
1,00,000
2,00,000
3,00,000
3,00,000
2013
2013
Dec 31
To Balance c/d
5,50,000
Jan 01
By Balance b/d
3,00,000
Dec 31
By Depreciation A/c
machine 1
1,00,000
machine 2
1,00,000
2,50,000
5,50,000
5,50,000
2014
2014
Apr 30
To Machinery Disposal A/c
66,667
Jan 01
By Balance b/d
5,50,000
Dec 31
To Balance c/d
7,80,000
Apr 30
By Depreciation A/c
machine 1
(sold out part)
6,667
6,667
Dec 31
By Depreciation A/c
machine 1
(Retained part)
80,000
machine 2
1,50,000
machine 3
60,000
2,90,000
8,46,667
8,46,667
2015
2015
Dec 31
To Balance c/d
11,30,000
Jan 01
By Balance b/d
7,80,000
Dec 31
By Depreciation A/c
machine 1
80,000
machine 2
1,50,000
machine 3
1,20,000
3,50,000
11,30,000
11,30,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2014
2014
Apr 30
To Machine A/c
2,00,000
Apr 30
By Provision for Depreciation A/c
66,667
Apr 30
By Bank A/c
(Selling price of part of machine 1)
75,000
Apr 30
By Profit & Loss A/c
(Loss)
58,333
2,00,000
2,00,000
Working Notes:
Depreciation Chart
Year
Truck
Duration
Calculation
Depreciation
2011
Machine 1
12 months
{= 10,00,000 × \dfrac{10}{100}}
1,00,000
Total
1,00,000
2012
Machine 1
12 months
{= 10,00,000 × \dfrac{10}{100}}
1,00,000
Machine 2
8 months
{= 15,00,000 × \dfrac{10}{100} × \dfrac{8}{12}}
1,00,000
Total
2,00,000
2013
Machine 1
12 months
{= 10,00,000 × \dfrac{10}{100}}
1,00,000
Machine 2
12 months
{15,00,000 × \dfrac{10}{100}}
1,50,000
Total
2,50,000
2014
Machine 1
(sold out part)
Orignal Cost = 2,00,000
4 months
{= 2,00,000 × \dfrac{10}{100} × \dfrac{4}{12}}
6,667
Machine 1
(Retained part)
Original cost
= 10,00,000 – 2,00,000
= 8,00,000
12 months
{= 8,00,000 × \dfrac{10}{100}}
80,000
Machine 2
12 months
{= 15,00,000 × \dfrac{10}{100}}
1,50,000
Machine 3
6 months
{= 12,00,000 × \dfrac{10}{100} × \dfrac{6}{12}}
60,000
Total
2,96,667
2015
Machine 1
12 months
{= 8,00,000 × \dfrac{10}{100}}
80,000
Machine 2
12 months
{= 15,00,000 × \dfrac{10}{100}}
1,50,000
Machine 3
12 months
{= 12,00,000 × \dfrac{10}{100}}
1,20,000
Total
3,50,000
Machine Disposal Calculation:
Description
Amount
₹
Original Cost of sold out machine part
=
₹ 2,00,000
Accumulated Depreciation
=
Depreciation in 2011 + Depreciation in 2012 + Depreciation in 2013 + Depreciation in 2014
=
₹ 20,000 + ₹ 20,000 + ₹ 20,000 + ₹ 6,667
=
₹ 66,667
Book Value as of Oct 01, 2014
=
Original Cost – Accumulated Depreciation
=
₹ 2,00,000 – ₹ 66,667
=
₹ 1,33,333
Sale Price of machine 1 part
=
₹ 75,000
Loss on sale of part of machine 1
=
Book Value – Sale Price
=
₹ 58,333

12. On July 01, 2011 Ashwani purchased a machine for ₹ 2,00,000 on credit. Installation expenses ₹ 25,000 are paid by cheque. The estimated life is 5 years and its scrap value after 5 years will be ₹ 20,000. Depreciation is to be charged on straight line basis. Show the journal entry for the year 2011 and prepare necessary ledger accounts for the first three years.
Books of Ashwani
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
2011
Jul 01
Machinery A/c
Dr
2,25,000
To Credit Seller A/c
2,00,000
To Bank A/c
25,000
(Being Machine purchased on credit for ₹ 2,00,000 and installation expenses of ₹ 25,000 paid by cheque)
Dec 31
Depreciation A/c
Dr
20,500
To Machine A/c
20,500
(Being depreciation charged on machine for 6 months)
Dec 31
Profit & Loss A/c
Dr
20,500
To Depreciation A/c
20,500
(Being depreciation moved to Profit & Loss account)
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2011
2011
Jul 01
To Credit Seller A/c
2,00,000
Dec 31
By Depreciation A/c
20,500
Jul 01
To Bank A/c
(Installtion charges)
25,000
Dec 31
By Balance c/d
2,04,500
2,25,000
2,25,000
2012
2012
Jan 01
To Balance b/d
2,04,500
Dec 31
By Depreciation A/c
41,000
Dec 31
By Balance c/d
1,63,500
2,04,500
2,04,500
2013
2013
Jan 01
To Balance b/d
1,63,500
Dec 31
By Depreciation A/c
41,000
Dec 31
By Balance c/d
1,22,500
1,63,500
1,63,500
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
20xa
20xa
Dec 31
To Machine A/c
20,500
Dec 31
By Profit & Loss A/c
20,500
20,500
20,500
20xb
20xb
Dec 31
To Machine A/c
41,000
Dec 31
By Profit & Loss A/c
41,000
41,000
41,000
20xc
20xc
Dec 31
To Machine A/c
41,000
Dec 31
By Profit & Loss A/c
41,000
41,000
41,000
Working Notes:
Cost of Asset
=
₹ 2,00,000 + ₹ 25,000
=
₹ 2,25,000
We have,
Yearly Depreciation
=
{\dfrac{\text{Cost of Asset - Estimated Residential Value}}{\text{Estimated useful life of the Asset}}}
=
{\dfrac{₹~2,25,000 - ₹~20,000}{5}}
=
{\dfrac{₹~2,05,000}{5}}
=
₹ 41,000
13. On October 01, 2010, a Truck was purchased for ₹ 8,00,000 by Laxmi Transport Ltd. Depreciation was provided at 15% p.a. on the diminishing balance basis on this truck. On December 31, 2013 this Truck was sold for ₹ 5,00,000. Accounts are closed on 31st March every year. Prepare a Truck Account for the four years.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2010
2011
Oct 01
To Bank A/c
8,00,000
Mar 31
By Depreciation A/c
60,000
Mar 31
By Balance c/d
7,40,000
8,00,000
8,00,000
2011
2012
Apr 01
To Balance b/d
7,40,000
Mar 31
By Depreciation A/c
1,11,000
Mar 31
By Balance c/d
6,29,000
7,40,000
7,40,000
2012
2013
Apr 01
To Balance b/d
6,29,000
Mar 31
By Depreciation A/c
94,350
Mar 31
By Balance c/d
5,34,650
6,29,000
6,29,000
2013
2013
Apr 01
To Balance b/d
5,34,650
Dec 31
By Depreciation A/c
60,148
Dec 31
To Profit & Loss A/c
(Profit)
25,498
Dec 31
By Bank A/c
(Sale of Truck)
5,00,000
5,60,148
5,60,148
Working Notes:
Depreciation Chart
Year
Book Value
Duration
Calculation
Depreciation
2010 – 2011
8,00,000
6 months
{= 8,00,000 × \dfrac{15}{100} × \dfrac{6}{12}}
60,000
2011 – 2012
= 8,00,000 – 60,000
= 7,40,000
12 months
{= 7,40,000 × \dfrac{15}{100}}
1,11,000
2012 – 2013
= 7,40,000 – 1,11,000
= 6,29,000
12 months
{= 6,29,000 × \dfrac{15}{100}}
94,350
2013 – 2014
= 6,29,000 – 94,350
= 5,34,650
9 months
{= 5,34,650 × \dfrac{15}{100} × \dfrac{9}{12}}
60,148
Machine Disposal Calculation:
Book Value as on Dec 31, 2013
=
Book Value as on Apr 01, 2013 – Depreciation till Dec 31, 2013
=
₹ 5,34,650 – ₹ 60,148
=
₹ 4,74,502
Sale Price of truck
=
₹ 5,00,000
Profit on sale of truck
=
Sale Price – Book Value
=
₹ 5,00,000 – ₹ 4,74,502
=
₹ 25,498
14. Kapil Ltd. purchased a machinery on July 01, 2011 for ₹ 3,50,000. It purchased two additional machines, on April 01, 2012 costing ₹ 1,50,000 and on October 01, 2012 costing ₹ 1,00,000. Depreciation is provided @10% pa.a. on straight line basis. On January 01, 2013, first machinery become useless due to technical changes. This machinery was sold for ₹ 1,00,000. Prepare machinery account for 4 years on the basis of calendar year.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2011
2011
Jul 01
To Bank A/c
3,50,000
Dec 31
By Depreciation A/c
(Purchase price of
machine 1
17,500
17,500
machine 1)
Dec 31
By Balance c/d
3,32,500
3,50,000
3,50,000
2012
2012
Jan 01
To Balance b/d
3,32,500
Dec 31
By Depreciation A/c
Apr 01
To Bank A/c
1,50,000
machine 1
35,000
(Purchase price of
machine 2
11,250
machine 2)
machine 3
2,500
48,750
Oct 01
To Bank A/c
1,00,000
Dec 31
By Balance c/d
5,33,750
(Purchase price of
machine 3)
5,82,500
5,82,500
2013
2013
Jan 01
To Balance b/d
5,33,750
Jan 01
By Bank A/c
(Sale price of
machine 1)
1,00,000
Jan 01
By Profit & Loss A/c
(Loss)
1,97,500
By Depreciation A/c
machine 2
15,000
machine 3
10,000
25,000
Dec 31
By Balance b/d
2,11,250
5,33,750
5,33,750
2014
2014
Jan 01
To Balance b/d
2,11,250
Dec 31
By Depreciation A/c
34,500
machine 2
15,000
machine 3
10,000
25,000
Dec 31
By Balance b/d
1,86,250
2,11,250
2,11,250
Working Notes:
Depreciation Chart
Year
Machine
Duration
Calculation
Depreciation
2011
Machine 1
6 months
{= 3,50,000 × \dfrac{10}{100} × \dfrac{6}{12}}
17,500
Total
17,500
2012
Machine 1
12 months
{= 3,50,000 × \dfrac{10}{100}}
35,000
Machine 2
9 months
{= 1,50,000 × \dfrac{10}{100} × \dfrac{9}{12}}
11,250
Machine 3
3 months
{= 1,00,000 × \dfrac{10}{100} × \dfrac{3}{12}}
2,500
Total
48,750
2013
Machine 2
12 months
{= 1,50,000 × \dfrac{10}{100}}
15,000
Machine 3
12 months
{= 1,00,000 × \dfrac{10}{100}}
10,000
Total
25,000
2014
Machine 2
12 months
{= 1,50,000 × \dfrac{10}{100}}
15,000
Machine 3
12 months
{= 1,00,000 × \dfrac{10}{100}}
10,000
Total
25,000
Machine Disposal Calculation:
Original cost of Machine 1
=
₹ 3,50,000
Accumulated Depreciation
=
Depreciation in 2011 + Depreciation in 2012
=
₹ 17,500 + ₹ 35,000
=
₹ 52,500
Book Value as on Jan 01, 2013
=
Origina Cost – Depreciation till Dec 31, 2012
=
₹ 3,50,000 – ₹ 52,500
=
₹ 2,97,500
Sale Price of Machine 1
=
$ 1,00,000
Loss on sale of truck
=
Book Value – Sale Price
=
₹ 2,97,500 – ₹ 1,00,000
=
₹ 1,97,500
15. On January 01, 2011, Satkar Transport Ltd., purchased 3 buses for ₹ 10,00,000 each. On July 01, 2013, one bus was involved in an accident and was completely destroyed and ₹ 7,00,000 were received from the Insurance Company in full settlement. Depreciation is written off @15% p.a. on diminishing balance method. Prepare bus account from 2011 to 2014. Books are closed on December 31 every year.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2011
2011
Jan 01
To Bank A/c
30,00,000
Dec 31
By Depreciation A/c
(Purchase price of
bus 1
1,50,000
3 buses)
other 2 buses
3,00,000
4,50,000
Dec 31
By Balance c/d
25,50,000
30,00,000
30,00,000
2012
2012
Jan 01
To Balance b/d
25,50,000
Dec 31
By Depreciation A/c
bus 1
1,27,500
other 2 buses
2,55,000
3,82,500
Dec 31
By Balance c/d
21,67,500
25,50,000
25,50,000
2013
2013
Jan 01
To Balance b/d
21,67,500
Jul 01
By Depreciation A/c
Jul 01
To Profit & Loss A/c
31,688
bus 1
54,188
54,188
(Profit)
Jul 01
By Bank A/c
(Insurance claim)
7,00,000
Dec 31
Depreciation A/c
other 2 buses
2,16,750
2,16,750
Dec 31
By Balance c/d
12,28,250
21,99,188
21,99,188
2014
2014
Jan 01
To Balance b/d
12,28,250
Dec 31
By Depreciation A/c
34,500
other 2 buses
1,84,238
1,84,238
Dec 31
By Balance c/d
10,44,012
12,28,250
12,28,250
Working Notes:
Depreciation Chart
Year
Bus
Book Value
Duration
Calculation
Depreciation
2011
Bus 1
10,00,000
12 months
{= 10,00,000 × \dfrac{15}{100}}
1,50,000
Other 2 Buses
= 2 × 10,00,000
= 20,00,000
12 months
{= 20,00,000 × \dfrac{15}{100}}
3,00,000
Total
17,500
2012
Bus 1
= 10,00,000 – 1,50,000
= 8,50,000
12 months
{= 8,50,000 × \dfrac{15}{100}}
1,27,500
Other 2 Buses
= 20,00,000 – 3,00,000
= 17,00,000
12 months
{= 17,00,000 × \dfrac{15}{100}}
2,55,000
Total
3,82,500
2013
Bus 1
= 8,50,000 – 1,27,500
= 7,22,500
6 months
{= 7,22,500 × \dfrac{15}{100} × \dfrac{6}{12}}
54,188
Other 2 Buses
= 17,00,000 – 2,55,000
= 14,45,000
12 months
{= 14,45,000 × \dfrac{15}{100}}
2,16,750
Total
2,70,938
2014
Other 2 Buses
= 14,45,000 – 2,16,750
= 12,28,250
12 months
{= 12,28,250 × \dfrac{15}{100}}
1,84,238
Total
1,84,238
Bus Disposal Calculation:
Original cost of Bus 1
=
₹ 10,00,000
Accumulated Depreciation
=
Depreciation in 2011 + Depreciation in 2012 + Depreciation in 2013
=
₹ 1,50,000 + ₹ 1,27,500 + ₹ 54,188
=
₹ 3,31,688
Book Value as on Jul 01, 2013
=
Original Cost – Depreciation till Jul 01, 2013
=
₹ 10,00,000 – ₹ 3,31,688
=
₹ 6,68,312
Insurance claimed on bus 1
=
₹ 7,00,000
Profit due to insurance claim
=
Insurance Claim – Book Value
=
₹ 7,00,000 – ₹ 6,68,312
=
₹ 31,688

16. On October 01, 2011 Juneja Transport Company purchased 2 Trucks for ₹ 10,00,000 each. On July 01, 2013, One Truck was involved in an accident and was completely destroyed and ₹ 6,00,00 were received from the insurance company in full settlement. On December 31, 2013, another truck was involved in an accident and destroyed partially, which was not insured. It was sold off for ₹ 1,50,000. On January 31, 2014, company purchased a fresh truck for ₹ 12,00,000. Depreciation is to be provided at 10% p.a. on written down value every year. The books are closed every year on March 31. Give the truck account from 2011 to 2014.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2011
2012
Oct 01
To Bank A/c
20,00,000
Mar 31
By Depreciation A/c
(Purchase price of
truck 1
50,000
2 trucks)
truck 2
50,000
1,00,000
Mar 31
By Balance c/d
19,00,000
20,00,000
20,00,000
2012
2013
Apr 01
To Balance b/d
19,00,000
Mar 31
By Depreciation A/c
truck 1
95,000
truck 2
95,000
1,90,000
Mar 31
By Balance c/d
17,10,000
19,00,000
19,00,000
2013
2013
Apr 01
To Balance b/d
17,10,000
Jul 01
By Depreciation A/c
2014
truck 1
21,375
21,375
Jan 31
To Bank A/c
12,00,000
Jul 01
By Bank A/c
6,00,000
(Purchase price of
(Insurance Claim)
truck 3)
Jul 01
By Profit & Loss A/c
2,33,625
(Loss)
Dec 31
By Depreciation A/c
truck 2
64,125
64,125
Dec 31
By Bank A/c
(Selling Price of
truck 2)
1,50,000
Dec 31
By Profit & Loss A/c
(Loss)
6,40,875
2014
Mar 31
By Depreciation A/c
truck 3
20,000
20,000
Mar 31
By Balance c/d
11,80,000
29,10,000
29,10,000
Working Notes:
Depreciation Chart
Year
Truck
Book Value
Duration
Calculation
Depreciation
2011 – 2012
Truck 1
10,00,000
6 months
{= 10,00,000 × \dfrac{10}{100} × \dfrac{6}{12}}
50,000
Truck 2
10,00,000
6 months
{= 10,00,000 × \dfrac{10}{100} × \dfrac{6}{12}}
50,000
Total
1,00,000
2012 – 2013
Truck 1
= 10,00,000 – 50,000
= 9,50,000
12 months
{= 9,50,000 × \dfrac{10}{100}}
95,000
Truck 2
= 10,00,000 – 50,000
= 9,50,000
12 months
{= 9,50,000 × \dfrac{10}{100}}
95,000
Total
1,90,000
2013 – 2014
Truck 1
= 9,50,000 – 95,000
= 8,55,000
3 months
{= 8,55,000 × \dfrac{10}{100} × \dfrac{3}{12}}
21,375
Truck 2
= 9,50,000 – 95,000
= 8,55,000
9 months
{= 8,55,000 × \dfrac{10}{100} × \dfrac{3}{12}}
64,125
Truck 3
12,00,000
2 months
{= 12,00,000 × \dfrac{10}{100} × \dfrac{2}{12}}
20,000
Total
1,05,500
Truck 1 Disposal Calculation:
Original cost of Truck 1
=
₹ 10,00,000
Accumulated Depreciation
=
Depreciation in 2011 – 2012 + Depreciation in 2012 – 2013 + Depreciation in 2013 – 2014
=
₹ 50,000 + ₹ 95,000 + ₹ 21,375
=
₹ 1,66,375
Book Value as on Jul 01, 2013
=
Original Cost – Depreciation till Jul 01, 2013
=
₹ 10,00,000 – ₹ 1,66,375
=
₹ 8,33,625
Insurance claimed on truck 1
=
₹ 6,00,000
Loss on truck 1
=
Book Value of Truck 1 – Insurance Claim
=
₹ 8,33,625 – ₹ 6,00,000
=
₹ 2,33,625
Truck 2 Disposal Calculation:
Original cost of Truck 2
=
₹ 10,00,000
Accumulated Depreciation
=
Depreciation in 2011 – 2012 + Depreciation in 2012 – 2013 + Depreciation in 2013 – 2014
=
₹ 50,000 + ₹ 95,000 + ₹ 64,125
=
₹ 2,09,125
Book Value as on Dec 31, 2013
=
Original Cost – Depreciation till Jul 01, 2013
=
₹ 10,00,000 – ₹ 2,09,125
=
₹ 7,90,875
Sale Price of truck 2
=
₹ 1,50,000
Loss on truck 2
=
Book Value of Truck 2 – Sale Price
=
₹ 7,90,875 – ₹ 1,50,000
=
₹ 6,40,875
17. A Noida based construction company owns 5 cranes and the value of this asset in its books on April 01, 2011 is ₹ 40,00,000. On October 01, 2011 it sold one of its cranes whose value was ₹ 5,00,000 on April 01, 2011 at a 10% profit. On the same day it purchased 2 cranes for ₹ 4,50,000 each. Prepare cranes account. It closes the books on December 31 and provides for depreciation on 10% written down value.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2011
2011
Apr 01
To Balance b/d
40,00,000
Oct 31
By Depreciation A/c
Oct 01
To Profit & Loss A/c
47,500
crane 1
25,000
25,000
(Profit)
Oct 01
By Back A/c
5,22,500
Oct 01
To Bank A/c
9,00,000
(Sale of crane 1)
(Purchase of
2012
2 new cranes)
Mar 31
By Depreciation A/c
4 old cranes
2,62,500
2 new cranes
22,500
2,85,000
By Balance c/d
41,15,000
49,47,500
49,47,500
Working Notes:
Depreciation Chart
Year
Crane
Book Value
Duration
Calculation
Depreciation
2011 – 2012
Sold out Old Crane 1
5,00,000
6 months
{= 5,00,000 × \dfrac{10}{100} × \dfrac{6}{12}}
25,000
Other 4 Old cranes
= 40,00,000 – 5,00,000
= 35,00,000
9 months
{= 35,00,000 × \dfrac{10}{100} × \dfrac{9}{12}}
2,62,500
4 New cranes
= 2 × 4,50,000
= 9,00,000
3 months
{= 9,00,000 × \dfrac{10}{100} × \dfrac{9}{12}}
22,500
Total
3,10,000
Crane 1 Disposal Calculation:
Original cost of Crane 1
=
₹ 5,00,000
Accumulated Depreciation
=
Depreciation in 2011 – 2012
=
₹ 25,000
Book Value as on Oct 01, 2011
=
Original Cost – Depreciation till Oct 01, 2011
=
₹ 5,00,000 – ₹ 25,000
=
₹ 4,75,000
Selling Price
=
Book Value + 10% of Book Value
=
₹ 4,75,000 + 10% of ₹ 4,75,000
=
₹ 4,75,000 + ₹ 47,500
=
₹ 5,22,500
Profit on crane 1
=
Sale Price – Book Value
=
₹ 5,22,500 – ₹ 4,75,000
=
₹ 47,500
Alternatively,
Profit
=
10% of Book Value
=
10% of ₹ 4,75,000
=
₹ 47,500
18. Shri Krishnan Manufacturing Company purchased 10 machines for ₹ 75,000 each on July 01, 2014. On October 01, 2016, one of the machines got destroyed by fire and an insurance claim of ₹ 45,000 was admitted by the company. On the same date another machine is purchased by the company for ₹ 1,25,000.
The company writes off 15% p.a. depreciation on written down value basis. The company maintains the calendar year as its financial year. Prepare the machinery account from 2014 to 2017.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2010
2010
Jul 01
To Bank A/c
7,50,000
Dec 31
By Depreciation A/c
56,250
By Balance c/d
6,93,750
7,50,000
7,50,000
2011
2011
Jan 01
To Balance b/d
6,93,750
Dec 31
By Depreciation A/c
1,04,062
By Balance c/d
5,89,688
6,93,750
6,93,750
2012
2012
Jan 01
To Balance b/d
5,89,688
Oct 01
By Depreciation A/c
Oct 01
To Bank A/c
1,25,000
sold out machine 1
6,634
6,634
(Purchase of
Oct 01
By Bank A/c
45,000
new machine)
(Insurance Claim)
Oct 01
By Profit & Loss A/c
(Loss)
7,335
Dec 31
By Depreciation A/c
other 9 old machines
79,608
new machine
4,688
84,296
By Balance c/d
5,71,423
7,14,688
7,14,688
2013
2013
Jan 01
To Balance b/d
5,71,423
Dec 01
By Depreciation A/c
9 old machines
67,667
new machine
18,047
85,714
By Balance c/d
4,85,709
5,71,423
5,71,423
Working Notes:
Depreciation Chart
Year
Machine
Book Value
Duration
Calculation
Depreciation
2010
sold out machine 1
75,000
6 months
{= 75,000 × \dfrac{15}{100} × \dfrac{6}{12}}
5,625
Other 9 old machines
= 9 × 75,000
= 6,75,000
6 months
{= 6,75,000 × \dfrac{10}{100} × \dfrac{6}{12}}
50,625
Total
56,250
2011
sold out machine 1
= 75,000 – 5,625
= 69,375
12 months
{= 69,375 × \dfrac{15}{100}}
10,406
Other 9 old machines
= 6,75,000 – 50,625
= 6,24,375
12 months
{= 6,24,375 × \dfrac{15}{100}}
93,656
Total
1,04,062
2012
sold out machine 1
= 69,375 – 10,406
= 58,969
9 months
{= 58,969 × \dfrac{15}{100} × \dfrac{9}{12}}
6,634
Other 9 old machines
= 6,24,375 – 93,656
= 5,30,719
12 months
{= 5,30,719 × \dfrac{15}{100}}
79,608
2 new machines
1,25,000
3 months
{= 1,25,000 × \dfrac{15}{100} × \dfrac{3}{12}}
4,688
Total
90,930
2013
Other 9 old machines
= 5,30,719 – 79,608
= 4,51,111
12 months
{= 5,30,719 × \dfrac{15}{100}}
67,667
2 new machines
= 1,25,000 – 4,688
= 1,20,312
12 months
{= 1,20,312 × \dfrac{15}{100}}
18,047
Total
85,714
Machine 1 Disposal Calculation:
Original cost of Machine 1
=
₹ 75,000
Accumulated Depreciation
=
Depreciation in 2010 + Depreciation in 2011 + Depreciation in 2012
=
₹ 5,625 + ₹ 10,406 + ₹ 6,634
=
₹ 22,665
Book Value as on Oct 01, 2012
=
Original Cost – Depreciation till Oct 01, 2012
=
₹ 75,000 – ₹ 22,665
=
₹ 52,335
Insurance Claim
=
₹ 45,000
Loss on machine 1
=
Book Value – Insurance Claim
=
₹ 52,335 – ₹ 45,000
=
₹ 7,335
19. On January 01, 2014, a Limited Company purchased machinery for ₹ 20,00,000. Depreciation is provided @15 p.a. on diminishing balance method. On March 01, 2016, one fourth of machinery was damaged by fire and ₹ 40,000 were received from the insurance company in full settlement. On September 01, 2016 another machinery was purchased by the company for ₹ 15,00,000.
Write up the machinery account from 2016 to 2017. Books are closed on December 31, every year.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2016
2016
Jan 01
To Balance b/d
14,45,000
Mar 01
By Depreciation A/c
¼ of machine 1
9,031
9,031
By Bank A/c
(Insurance claim)
40,000
Sep 01
To Bank A/c
15,00,000
Mar 01
By Profit & Loss A/c
(Loss)
3,12,219
Dec 31
By Depreciation A/c
¾ of machine 1
1,62,563
new machine
75,000
2,37,563
Dec 31
By Balance c/d
23,46,187
29,45,000
29,45,000
2017
2017
Jan 01
To Balance b/d
23,46,187
Dec 01
By Depreciation A/c
¾ of machine 1
1,38,178
new machine
2,13,750
3,51,928
Dec 01
By Balance c/d
19,94,259
23,46,187
23,46,187
Working Notes:
Depreciation Chart
Year
Machine
Book Value
Duration
Calculation
Depreciation
2014
¼ of machinery 1
{= 20,00,000 × \dfrac{1}{4}}\\= 5,00,000
12 months
{= 5,00,000 × \dfrac{15}{100}}
75,000
Rest ¾ of machinery 1
{= 20,00,000 × \dfrac{3}{4}}\\= 15,00,000
12 months
{= 15,00,000 × \dfrac{10}{100}}
2,25,000
Total
3,00,000
2015
¼ of machinery 1
= 5,00,000 – 75,000
= 4,25,000
12 months
{= 4,25,000 × \dfrac{15}{100}}
63,750
¾ of machinery 1
= 15,00,000 – 2,25,000
= 12,75,000
12 months
{= 12,75,000 × \dfrac{75}{100}}
1,91,250
Total
2,55,000
2016
¼ of machinery 1
= 4,25,000 – 63,750
= 3,61,250
2 months
{= 3,61,250 × \dfrac{15}{100} × \dfrac{2}{12}}
9,031
new machine
15,00,000
4 months
{= 10,83,750 × \dfrac{15}{150}}
1,62,563
Total
2,46,594
2017
¾ of machine 1
= 10,83,750 – 1,62,563
= 9,21,187
12 months
{= 9,21,187 × \dfrac{15}{100}}
1,38,179
new machine
= 15,00,000 – 75,000
= 14,25,000
12 months
{= 14,25,000 × \dfrac{15}{100}}
2,13,750
Total
3,51,929
¼ of Machine 1 Disposal Calculation:
Original cost of ¼ of Machine 1
=
₹ 5,00,000
Accumulated Depreciation
=
Depreciation in 2014 + Depreciation in 2015 + Depreciation in 2016
=
₹ 75,000 + ₹ 63,750 + ₹ 9,031
=
₹ 1,47,781
Book Value as on Mar 01, 2016
=
Original Cost – Depreciation till Oct 01, 2016
=
₹ 5,00,000 – ₹ 1,47,781
=
₹ 3,52,219
Insurance Claim
=
₹ 40,000
Loss on ¼ of machine 1
=
= Book Value – Insurance Claim
=
₹ 3,52,219 – ₹ 40,000
=
₹ 3,12,219
20. A Plant was purchased on 1st July, 2015 at a cost of ₹ 3,00,000 and ₹ 50,000 were spent on its installation. The depreciation is written off at 15% p.a. on the straight line method. The plant was sold for ₹ 1,50,000 on October 01, 2017 and on the same date a new Plant was installed at the cost of ₹ 4,00,000 including purchasing value. The accounts are closed on December 31 every year.
Show the machinery account and provision for depreciation account for 3 years.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2015
2015
Jul 01
To Bank A/c
(Cost of plant)
3,00,000
Dec 31
By Balance c/d
3,50,000
Jul 01
To Bank A/c
(Plant
Installation charges)
50,000
3,50,000
3,50,000
2016
2016
Jan 01
To Balance b/d
3,50,000
Dec 31
By Balance c/d
3,50,000
3,50,000
3,50,000
2017
2017
Jan 01
To Balance b/d
3,50,000
Oct 01
By Provision for
1,18,125
Oct 01
By Bank A/c
4,00,000
Depreciation A/c
(Purchase of
Oct 01
By Bank A/c
1,50,000
new plant)
(Sale of plant 1)
Oct 01
By Profit & Loss A/c
(Loss on plant 1)
81,875
Dec 01
By Balance c/d
4,00,000
7,50,000
7,50,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2015
2015
Dec 01
To Balance c/d
26,250
Dec 31
By Depreciation A/c
plant 1
26,250
26,250
26,250
26,250
2016
2016
Dec 31
To Balance c/d
78,750
Jan 01
By Balance b/d
26,250
Dec 31
By Depreciation A/c
plant 1
52,500
52,500
78,750
78,750
2017
2017
Oct 01
To Plant A/c
1,18,125
Jan 01
By Balance b/d
78,750
Dec 31
To Balance c/d
15,000
Oct 01
By Depreciation A/c
plant 1
39,375
39,375
Dec 31
By Depreciation A/c
new plant
15,000
15,000
1,33,125
1,33,125
Working Notes:
Depreciation Chart
Year
Plant
Book Value
Duration
Calculation
Depreciation
2015
Plant 1
= 3,00,000 + 50,000
= 3,50,000
6 months
{= 3,50,000 × \dfrac{15}{100} × \dfrac{6}{12}}
26,250
Total
26,250
2016
Plant 1
3,50,000
12 months
{= 3,50,000 × \dfrac{15}{100}}
52,500
Total
52,500
2017
Plant 1
3,50,000
9 months
{= 3,50,000 × \dfrac{15}{100} × \dfrac{9}{12}}
39,375
New Plant
4,00,000
3 months
{= 4,00,000 × \dfrac{15}{100} × \dfrac{3}{12}}
15,000
Total
54,375
Plant 1 Disposal Calculation:
Original cost of ¼ of Machine 1
=
₹ 5,00,000
Accumulated Depreciation
=
Depreciation in 2015 + Depreciation in 2016 + Depreciation in 2017
=
₹ 26,250 + ₹ 52,500 + ₹ 39,375
=
₹ 1,18,125
Book Value as on Oct 01, 2017
=
Original Cost – Depreciation till Oct 01, 2017
=
₹ 3,50,000 – ₹ 1,18,125
=
₹ 2,31,875
Selling Price
=
₹ 1,50,000
Loss on plant 1
=
Book Value – Selling Price
=
₹ 2,31,875 – ₹ 1,50,000
=
₹ 81,875
21. An extract of Trial balance from the books of Tahiliani and Sons Enterprises on March 31, 2015 is given below:
Name of the Account
Debit Amount
₹
Credit Amount
₹
Sundry debtors
50,000
Bad Debts
6,000
Provision for doubtful debts
4,000
Additional Information:
●
Bad Debts proved bad but not recorded amounted to ₹ 2,000
●
Provision is to be maintained at 8% of Debtors
Give necessary accounting entries for writing off the bad debts and creating the provision for doubtful debts account. Also show the necessary accounts.
Books of Tahiliani and Sons Enterprises
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
i.
Bad Debts A/c
Dr
2,000
To Debtors A/c
2,000
(Being Further Bad Debts)
ii.
Provision for doubtful debts A/c
Dr
8,000
To Bad Debts A/c
8,000
(Being all the bad debts transferred to Provision for Doubtful Debts account)
iii.
Profit & Loss A/c
Dr
7,840
To Provision for Doubtful Debts A/c
7,840
(Being amount charged from Profit & Loss account)
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2015
2015
Mar 31
To Balance b/d
50,000
Mar 31
By Bad Debts A/c
2,000
Mar 31
By Balance c/d
48,000
50,000
50,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2015
2015
Mar 31
To Balance b/d
6,000
Mar 31
To Debtors A/c
2,000
Mar 31
By Provision for
Doubtful Debts A/c
8,000
8,000
8,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2015
2015
Mar 31
To Bad Debts A/c
8,000
Mar 31
By Balance b/d
4,000
Mar 31
To Balance c/d
8% of (₹ 50,000 – ₹ 2,000)
3,840
Mar 31
By Profit and Loss A/c
7,840
11,840
11,840
Expenses/Losses
Amount
₹
Revenues/Gains
Amount
₹
Provision for doubtful debts:
Bad Debts
6,000
Further Bad Debts
2,000
New Provision
3,840
11,840
Old Provision
4,000
7,840

22. The following information is extracted from the Trial Balance of M/s Nisha Traders on 31 March 2015.
Sundry Debtors
80,500
Bad Debts
1,000
Provision for bad debts
5,000
Additional Information:
Bad Debts
₹ 500
Provision is to be maintained at 2 % of Debtors
Prepare Bad Debts account, Provision for Bad Debts account and Profit & Loss account
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2015
2015
Mar 31
To Balance b/d
1,000
Mar 31
By Provisions for
1,500
Mar 31
To Debtors A/c
500
 Bad Debts A/c
1,500
1,500
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2015
2015
Mar 31
To Bad Debts A/c
1,500
Mar 31
By Balance b/d
5,000
Mar 31
To Profit & Loss A/c
1,900
Mar 31
To Balance c/d
= 2% of (₹ 80,500 – ₹ 500)
1,600
5,000
5,000
Expenses/Losses
Amount
₹
Revenues/Gains
Amount
₹
Provision for doubtful debts:
Old Provision
5,000
Bad Debts
1,000
Further Bad Debts
500
New Provision
1,600
1,900