Double Entry Book Keeping Ts Grewal 2018 for Class 11 Commerce Accountancy Chapter 11

Question 1:

Calculate the Rate of Depreciation under Straight Line Method (SLM) from the following:
Purchased a second-hand machine for ₹ 96,000, spent ₹ 24,000 on its cartage, repairs and installation, estimated useful life of machine 4 years. Estimated residual value ₹ 72,000.

Answer:

$\begin{array}{l} Amount of Depreciation = \frac{Cost of Machine - Scrap Value of Machine}{Life in Years} \\ = \frac{1, 20, 000 - 72, 000}{4} = Rs 12,000 \\ Rate of Depreciation = \frac{Amount of Depreciation}{Cost of Machine} \times 100 \\ = \frac{12, 000}{1, 20, 000} \times 100 = 10 % p.a. \end{array}$

Question 2:

On 1st April, 2015, X Ltd. purchased a machine costing ₹ 4,00,000 and spent ₹ 50,000 on its installation. The estimated life of the machinery is 10 years, after which its residual value will be ₹ 50,000 only. Find the amount of annual depreciation according to the Fixed Instalment Method and prepare Machinery Account for t he first three years. The books are closed on 31st March every year.

Answer:

Book of X Ltd. Machinery Account
Dr.								Cr.
Date	Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2015				2016
April 01	Bank		4,00,000	Mar.31	Depreciation		40,000
April 01	Bank (Erection Expense)		50,000		Balance c/d		4,10,000
			4,50,000				4,50,000
2016				2017
April 01	Balance b/d		4,10,000	Mar.31	Depreciation		40,000
					Balance c/d		3,70,000
			4,10,000				4,10,000
2017				2018
April 01	Balance b/d		3,70,000	Mar.31	Depreciation		40,000
					Balance c/d		3,30,000
			3,70,000				3,70,000

Calculation of Depreciation:

$Depreciation p . a . = \frac{4, 00, 000 + 50, 000 - 50, 000 (Scrap Value)}{10 years} = Rs 40, 000 p . a .$

Question 3:

On 1st April, 2014, furniture costing ₹ 55,000 was purchased. It is estimated that its life is 10 years at the end of which it will be sold for ₹ 5,000. Additions are made on 1st April 2015 and 1st October, 2017 to the value of ₹ 9,500 and ₹ 8,400 (Residual values ₹ 500 and ₹ 400 respectively). Show the Furniture Account for the first four years, if Depreciation is written off according to the Straight Line Method.

Answer:

Furniture Account
Dr.										Cr.
Date	Particulars		J.F.	Amount (Rs)	Date	Particulars		J.F.	Amount (Rs)
2014					2015
April 01	Bank (F1)			55,000	March 31	Depreciation (F1)			5,000
					March 31	Balance c/d (F1)			50,000
				55,000					55,000
2015					2016
April 01	Balance b/d (F1)			50,000	March 31	Depreciation
April 01	Bank (F2)			9,500		F1	5,000
						F2	900		5,900
					March 31	Balance c/d
						F1	45,000
						F2	8,600		53,600
				59,500					59,500
2016					2017
April 01	Balance b/d				March 31	Depreciation
	F1	45,000				F1	5,000
	F2	8,600		53,600		F2	900		5,900
					March 31	Balance c/d
						F1	40,000
						F2	7,700		47,700
				53,600					53,600
2017					2018
April 01	Balance b/d				March 31	Depreciation
	F1	40,000				F1	5,000
	F2	7,700		47,700		F2	900
Oct. 01	Bank (F3)			8,400		F3	400		6,300

					March 31	Balance c/d
						F1	35,000
						F2	6,800
						F3	8,000		49,800
				56,100					56,100

Working Notes:

Question 4:

On 1st April, 2014, A Ltd. purchased a machine for ₹ 2,40,000 and spent ₹ 10,000 on its erection. On 1st October, 2014 an additional machinery costing ₹ 1,00,000 was purchased. On 1st October, 2016, the machine purchased on 1st April, 2014 was sold for ₹ 1,43,000 and on the same date, a new machine was purchased ata cost of ₹ 2,00,000.

Answer:

Machinery Account

Dr.											Cr.
Date	Particulars		J.F.	Amount (Rs)	Date	Particulars			J.F.	Amount (Rs)
2014					2015
April 01	Bank (M1)			2,50,000	March 31	Depreciation
Oct. 01	Bank (M2)			1,00,000		M1	12,500
						M2 (6 Months)	2,500			15,000
					March 31	Balance c/d
						M1	2,37,500
						M2	97,500			3,35,000
				3,50,000						3,50,000
2015					2016
April 01	Balance b/d				March 31	Depreciation
	M1	2,37,500				M1		12,500
	M2	97,500		3,35,000		M2		5,000		17,500

					March 31	Balance c/d
						M1	2,25,000
						M2	92,500			3,17,500
				3,35,000						3,35,000
2016					2016
April 01	Balance b/d				Oct. 01	Depreciation (for 6 months)				6,250
	M1	2,25,000			Oct. 01	Bank (M1 sold)				1,43,000
	M2	92,500		3,17,500	Oct. 01	Profit and Loss (loss on sale)				75,750
					2017
July 01	Bank (M3)			2,00,000	March 31	Depreciation
						M2	5,000
						M3 (for 6 months)	5,000			10,000
					March 31	Balance c/d
						M2	87,500
						M3	1,95,000			2,82,500
				5,17,500						5,17,500
2017					2018
April 01	Balance b/d				March 31	Depreciation
	M2	87,500				M2	5,000
	M3	1,95,000		2,82,500		M3	10,000			15,000
					March 31	Balance c/d
						M2	82,500
						M3	1,85,000			2,67,500
				2,82,500						2,82,500

Working Notes:

1. Calculation of Deprecation

2. Calculation of profit or loss on sale of Machine 1

Particulars	Amount (Rs)
Book Value on April 01, 2016	2,25,000
Less: Deprecation for six month	(6,250)
Book Value on Oct. 01, 2016	2,18,750
Less: Sale Proceeds	(1,43,000)
Loss on Sale of Machine	75,750

Question 5:

From the following transactions of a concern, prepare the Machinery Account for the year ended 31st March, 2018:

1st April, 2017	:	Purchased a second-hand machinery for ₹ 40,000
1st April, 2017	:	Spent ₹ 10,000 on repairs for making it serviceable.
30th September, 2017	:	Purchased additional new machinery for ₹ 20,000.
31st December, 2017	:	Repairs and renewals of machinery ₹ 3,000.
31st March, 2018	:	Depreciate the machinery at 10% p.a.

Answer:

Machinery Account
Dr.										Cr.
Date	Particulars	J.F.	Amount (Rs)	Date	Particular			J.F.	Amount (Rs)
2017				2018
Apr.01	Bank (M1)		50,000	Mar.31	Depreciation
Sept 30	Bank (M2)		20,000		M1		5,000
					M2 (6 months)		1,000		6,000
				Mar.31	Balance c/d
					M1	45,000
					M2 (6 months)	19,000			64,000
			70,000						70,000

Note:

Repair and renewal made on December 31, 2017 will not be recorded in Machinery Account because, this repair was made after putting the Machinery into use.

Question 6:

An asset was purchased for ₹ 10,500 on 1st April, 2011. The scrap value was estimated to to be ₹ 500 at the end of asset's 10 years' life. Straight Line Method of depreciation was used. The accounting year ends on 31st March every year. The asset was sold for ₹ 600 on 31st March, 2018. Calculate the following.
(i) The Depreciation expense for the year ended 31st March, 2012.
(ii) The net book value of the asset on 31st March, 2016.
(iii) The grain or loss on sale of the asset on 31st March, 2018.

Answer:

Asset Account
Dr.								Cr.
Date	Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2011				2012
April 01	Bank		10,500	Mar.31	Depreciation		1,000
				Mar.31	Balance c/d		9,500
			10,500				10,500
2012				2013
April 01	Balance b/d		9,500	Mar.31	Depreciation		1,000
				Mar.31	Balance c/d		8,500
			9,500				9,500
2013				2014
April 01	Balance b/d		8,500	Mar.31	Depreciation		1,000
				Mar.31	Balance c/d		7,500
			8,500				8,500
2014				2015
April 01	Balance b/d		7,500	Mar.31	Depreciation		1,000
				Mar.31	Balance c/d		6,500
			7,500				7,500
2015				2016
April 01	Balance b/d		6,500	Mar.31	Depreciation		1,000
				Mar.31	Balance c/d		5,500
			6,500				6,500
2016				2017
April 01	Balance b/d		5,500	Mar.31	Depreciation		1,000
				Mar.31	Balance c/d		4,500
			5,500				5,500
2017				2018
April 01	Balance b/d		4,500	Mar.31	Depreciation		1,000
				Mar.31	Bank		600
				Mar.31	Profit and Loss (Loss)		2,900
			4,500				4,500

(i) Depreciation Expense for the year ended March 31, 2012 is Rs 1000

(ii) The Net Book Value of the asset on March 31, 2016 is Rs 5,500

(iii) Loss on Sale of the asset on March 31, 2018 is Rs 2,900

Question 7:

A Van was purchased on 1st April, 2015 for ₹ 60,000 and ₹ 5,000 was spent on its repair and registration. On 1st October, 2016 another van was purchased for ₹ 70,000. On 1st April, 2017, the first van purchased on 1st April, 2015 was sold for ₹ 45,000 and a new van costing ₹ 1,70,000 was purchased on the same date. Show the Van Account from 2015-16 to 2017-18 on the basis of Straight Line Method, if the rate of Depreciation charged is 10% p.a. Assume that books are closed on 31st March every year.

Answer:

Van Account
Dr.											Cr.
Date	Particulars		J.F.	Amount (Rs)	Date	Particulars			J.F.	Amount (Rs)
2015					2016
April 01	Bank (I)			65,000	March 31	Depreciation (I)				6,500
					March 31	Balance c/d (I)				58,500
				65,000						65,000
2016					2017
April 01	Balance b/d (I)			58,500	March 31	Depreciation
Oct. 01	Bank (II)			70,000		(I)	6,500
						(II) (for 6 month)	3,500			10,000
					March 31	Balance c/d
						(I)		52,000
						(II)		66,500		1,18,500
				1,28,500						1,28,500
2017					2017
April 01	Balance b/d				April 01	Bank (I)				45,000
	(I)	52,000			April 01	Profit and Loss (Loss on Sale)				7,000
					2018
	(II)	66,500		1,18,500	March 31	Depreciation
April 01	Bank (III)			1,70,000		(II)		7,000
						(III)		17,000		24,000
					March 31	Balance c/d
						(II)		59,500
						(III)		1,53,000		2,12,500
				2,88,500						2,88,500

Working Notes

1. Calculation of Annual Depreciation

2. Calculation of profit or loss on sale of Van (I)

Particulars	Amount (Rs)
Book Value on Apr. 01, 2017	52,000
Less: Sale of Van	(45,000)
Loss on Sale of Van	7,000

Question 8:

A company whose accounting year is a financial year, purchased on 1st July, 2014 machinery costing ₹ 30,000.
It purchased further machinery on 1st January, 2015 costing ₹ 20,000 and on 1st October, 2015 costing ₹ 10,000.
On 1st April, 2016, one-third of the machinery installed on 1st July, 2014 became obsolete and was sold for ₹ 3,000.
Show how Machinery Account would appear in the books of the company. It being 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?

Answer:

Machinery Account
Dr.														Cr.
Date	Particulars			J.F.	Amount (Rs)	Date	Particulars					J.F.	Amount (Rs)
2014						2015
July 01	Bank (I)				30,000	March 31	Depreciation
2015
Jan. 01	Bank (II)				20,000		I (for 9 months)				2,250
							II				500		2,750
						March 31	Balanced c/d
							I				27,750
							II				19,500		47,250
					50,000								50,000
2015						2016
April 01	Balance b/d					March 31	Depreciation
	I		27,750				I		3,000
	II		19,500		47,250		II		2,000
							III		500				5,500
Oct. 01	Bank (III)				10,000	March 31	Balance c/d
							I			24,750
							II			17,500
							III			9,500			51,750
					57,250								57,250
2016						2016
April 01	Balance b/d					April 01	Bank I(1/3^rd portion)						3,000
	I	24,750				April 01	Profit and Loss (Loss on Sale of I)						5,250
						2017
	II	17,500				March 31	Depreciation
	III	9,500			51,750		I (on 2/3^rd portion)		2,000
							II		2,000
							III		1,000				5,000
						March 31	Balance c/d
							I (on 2/3^rd portion)	14,500
							II	15,500
							III	8,500					38,500
					51,750								51,750

Working Notes

1. Calculation of Depreciation

Calculation of profit or loss on sale of 1/3^rd Portion of Machine I

Particulars	Amount (Rs)
Book Value of 1/3rd portion of Machine I on April 01, 2016 (24,750 × 1/3)	8,250
Less: Sale Value	(3,000)
Loss on sale	5,250

Question 9:

On 1st July, 2015, A Co. Ltd. purchases second-hand machinery for ₹ 20,000 and spends ₹ 3,000 on reconditioning and installing it. On 1st January, 2016, the firm purchases new machinery worth ₹ 12,000. On 30th June, 2017, the machinery purchased on 1st January, 2016, was sold for ₹ 8,000 and on 1st July, 2017, a fresh plant was installed. Payment for this plant was to be made as follows:

1st July, 2017	₹ 5,000
30th June, 2018	₹ 6,000
30th June, 2019	₹ 5,500

Payments in 2018 and 2019 include interest of ₹ 1,000 and ₹ 500 respectively.
The company writes off 10% p.a. on the original cost. The accounts are closed every year on 31st March. Show the Machinery Account for the year ended 31st March, 2018.

Answer:

Books of A. Co. Ltd

Machinery
Dr.												Cr.
Date	Particulars		J.F.	Amount (Rs)	Date	Particulars				J.F.	Amount (Rs)
2015					2016
July 01	Bank (I) (20,000 + 3,000)			23,000	Mar.31	Depreciation
2016						I (for 9 months)			1,725
Jan.01	Bank (II)			12,000		II (for 3 months)			300		2,025
					Mar.31	Balance c/d
						I			21,275
						II			11,700		32,975
				35,000							35,000
2016					2017
April 01	Balance b/d				Mar.31	Depreciation
	I	21,275				I	2,300
	II	11,700		32,975		II	1,200				3,500
					Mar.31	Balance c/d
						I	18,975
						II	10,500				29,475
				32,975							32,975
2017					2017
April 01	Balance b/d				June 30	Bank (II)					8,000
	I	18,975			June 30	Depreciation (II) (for 3 months)					300
	II	10,500		29,475	June 30	Profit and Loss (Loss)					2,200
July 01	Bank (III)			5,000	2018
July 01	Creditors for plant (III)			10,000	Mar.31	Depreciation
						I		2,300
						III (on 15,000 for 8 months)		1,125			3,425
						Balance c/d
						I		16,675
						III		13,875			30,550
				44,475							44,475

Working Notes

1. Calculation of Depreciation

2. Calculation of profit on loss on sale of Machine (II)

Particulars	Amount (Rs)
Book Value of Machine (II) on April 01, 2017	10,500
Less: Depreciation for 3 Months	(300)
Book Value on June 30	10,200
Less: Sale	(8,000)
Loss on Sale	2,200

Question 10:

On 1st April, 2015, Shivam Enterprise purchased a second-hand machinery for ₹ 52,000 and spent ₹ 2,000 on cartage, ₹ 3,000 on unloading, ₹ 2,000 on installation and ₹ 1,000 as brokerage of the middle man. It was estimated that the machinery will have a scrap value of ₹ 6,000 at the end of its useful life, which is 10 years. On 31st December 2015, repairs and renewals amounted to ₹ 2,500 were paid. On 1st October, 2017, this machine was sold for ₹ 30,600 and an amount of ₹ 600 was paid as commission to an agent. Calculate the amount of annual depreciation and rate of depreciation. Also prepare the Machinery Account for first 3 years, assuming that firm follows financial year for accounting.

Answer:

$\begin{array}{l} Amount of Depreciation = \frac{Cost of Machine - Scrap Value of Machine}{Life in Years} \\ = \frac{60, 000 (Note) - 6, 000}{10} = Rs 5,400 \\ Rate of Depreciation = \frac{Amount of Depreciation}{Cost of Machine} \times 100 \\ = \frac{5, 400}{60, 000} \times 100 = 9 % p.a. \end{array}$

Machinery Account
Dr.				Cr.
Date	Particulars	Amount (Rs)	Date		Particulars	Amount (Rs)
2015			2016
Apr. 01	Bank A/c	60,000	Mar. 31		Depreciation A/c	5,400
			Mar. 31		Balance c/d	54,600
		60,000				60,000
2016			2017
Apr. 01	Balance b/d	54,600	Mar. 31		Depreciation A/c	5,400
			Mar. 31		Balance c/d	49,200

		54,600				54,600
2017			2017
Apr. 01	Balance b/d	49,200	Oct. 01		Depreciation A/c (for 6 months)	2,700
					Bank A/c (Sale)	30,000
					Profit and Loss A/c (Loss on Sale)	16,500

		49,200				49,200

Working Notes: Calculation of Profit or Loss on Sale

Particulars	Amount
Value of Machine as on Apr. 01, 2017	49,200
Less: Depreciation for 6 months	2,700
Value of M1 as on Oct. 01, 2017	46,500
Less: Sale Value	30,000
Loss on Sale	16,500

Note:

1. All the expenses incurred up to the date at which machine is put in use will be added to cost of machine.
2. The amount spent on repairs is a recurring nature expenses. So, it will not be added to Machine A/c.
3. Cost of Machine = 52,000 + 2,000 + 3,000 + 2,000 + 1,000 = Rs 60,000

Question 11:

Modern Ltd. purchased a machinery on 1st August, 2015 for ₹ 60,000. On 1st October, 2016, it purchased another machine for ₹ 20,000 plus CGST and SGST @ 6% each. On 30th June, 2017, it sold the first machine purchased in 2015 for ₹ 38,500 charging IGST @ 12%. Depreciation is provided @ 20% p.a. on the original cost each year. Accounts are closed on 31st March every year. Prepare the Machinery A/c for three years.

Answer:

Books of Modern Ltd. Machinery Account
Dr.										Cr.
Date	Particulars		J.F.	Amount (Rs)	Date	Particulars		J.F.	Amount (Rs)
2015					2016
Aug.01	Bank (M1)			60,000	March 31	Depreciation
						M1 (for 8 months)			8,000
					March 31	Balance c/d			52,000
				60,000					60,000
2016					2017
April 01	Balance b/d			52,000	March 31	Depreciation
Oct. 01	Bank (M2)			20,000		M1	12,000
						M2 (6 months)	2,000		14,000
					March 31	Balance c/d
						M1	40,000
						M2	18,000		58,000
				72,000					72,000
2017					2017
April 01	Balance b/d				June 30	Depreciation (M1) (for 3 months)			3,000
	M1	40,000			June 30	Bank (M1)			38,500
	M2	18,000		58,000	2018
June 30	Profit and Loss (profit)			1,500	Mar.31	Depreciation (M2)			4,000
					Mar.31	Balance c/d			14,000
				59,500					59,500

Working Notes

1. Calculation of Annual Depreciation

Particulars	Amount (Rs)
Value on Apr 01, 2017	40,000
Depreciation for 3 Months	(3,000)
Value on June 30, 2017	37,000
Less: Sales Value of Machine	(38,500)
Profit on sale of Machine 1	1,500

3. Journal entries for purchase and sale with GST

Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
2016
Oct 01	Machinery A/c	Dr.		20,000
	Input CGST A/c	Dr.		1,200
	Input SGST A/c	Dr.		1,200
	To Bank A/c				22,400
	(Machinery purchased with CGST and SGST @ 6% each paid)

2017
Jun 30	Bank A/c	Dr.		43,120
	To Machinery A/c				38,500
	To Output IGST A/c (Machinery purchased on 1st Aug, 2015 sold with IGST @ 12%.)				4,620

Question 12:

On 1st July, 2015, Sohan Lal & Sons purchased a plant costing ₹ 60,000. Additonal plant was purchased on 1st January, 2016 for ₹ 40,000 and on 1st October, 2016, for ₹ 20,000, paying CGST and SGST @ 6% each. On 1st April, 2017, one-third of the plant purchased on 1st July, 2015, was found to have become obsolete and was sold for ₹ 6,000, charging CGST and SGST @ 6% each.
Prepare the Plant Account for the first three years in the books of Sohan Lal & Sons. Depreciation is charged @ 10% p.a. on Straight Line Method. Accounts are closed on 31st March each year.

Answer:

Books of Sohan Lal & Sons Plant Account
Dr.													Cr.
Date	Particulars			J.F.	Amount (Rs)	Date	Particulars				J.F.	Amount (Rs)
2015						2016
July 01	Bank (I)				60,000	March 31	Depreciation
							(I) for 9 months			4,500
2016							(II) for 3 months			1,000		5,500
Jan. 01	Bank (II)				40,000	March 31	Balance c/d
							(I)	55,500
							(II)	39,000				94,500
					1,00,000							1,00,000
2016						2017
April 01	Balance b/d					March 31	Depreciation
	(I)		55,500				(I)		6,000
	(II)		39,000		94,500		(II)		4,000
Oct. 01	Bank (III)				20,000		(III) for 6 months		1,000			11,000
						March 31	Balance c/d
							(I)		49,500
							(II)		35,000
							(III)		19,000			1,03,500
					1,14,500							1,14,500
2017						2017
April 01	Balance b/d					April 01	Bank					6,000
	(I)	49,500				April 01	Profit and Loss (loss)(16,500 – 6,000)					10,500
						2018
	(II)	35,000				March 31	Depreciation
	(III)	19,000			1,03,500		(I)		4,000
							(II)		4,000
							(III)		2,000			10,000
						March 31	Balance c/d
							(I)	29,000
							(II)	31,000
							(III)	17,000				77,000
					1,03,500							1,03,500

Working Notes

1. Calculation of Depreciation

2. Calculation of profit or loss on Sale of Plant I

Particulars	Amount (Rs)
1/3^rd of Book Value of Plant I as on April 01, 2017( 49,500 × 1/3)	16,500
Less: Sale of Plant	(6,000)
Loss on Sale of Plant	10,500

3. Journal entries for purchase and sale with GST

Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
2016
Oct 01	Machinery A/c	Dr.		20,000
	Input CGST A/c	Dr.		1,200
	Input SGST A/c	Dr.		1,200
	To Bank A/c				22,400
	(Machinery purchased with CGST and SGST @ 6% each paid)

2017
Apr 1	Bank A/c	Dr.		6,720
	To Machinery A/c				6,000
	To Output CGST A/c To Output SGST A/c (Machinery purchased on 1st July, 2015 sold with CGST and SGST @ 6% each.)				360 360

Question 13:

A firm purchased a second-hand machine on 1st April, 2015 and paid ₹ 1,40,000 for it. It spent on its overhauling and installation ₹ 20,000. On 1st October, 2015, another machine costing ₹ 80,000 was purchased. On 1st October, 2017, the machine purchased on 1st April, 2015 was disposed off for ₹ 1,04,000, charging CGST and SGST @ 6% each and a new machine costing ₹ 2,00,000 was installed, paying CGST and SGST @ 6% each. Depreciation was provided @ 10% p.a. by the Straight Line Method. Give the Machinery Account and Depreciation Account for 3 years. Firm's books are closed on 31st March every year.

Answer:

Machinery Account
Dr.										Cr.
Date	Particulars		J.F.	Amount (Rs)	Date	Particulars		J.F.	Amount (Rs)
2015					2016
April 01	Bank (I)			1,60,000	Mar.31	Depreciation
Oct.01	Bank (II)			80,000		I	16,000
						II	4,000		20,000
					Mar.31	Balance c/d
						I	1,44,000
						II	76,000		2,20,000
				2,40,000					2,40,000
2016					2017
April 01	Balance b/d				Mar.31	Depreciation
	I	1,44,000				I	16,000
	II	76,000		2,20,000		II	8,000		24,000
					Mar.31	Balance c/d
						I	1,28,000
						II	68,000		1,96,000
				2,20,000					2,20,000
2017					2017
April 01	Balance b/d				Oct.01	Depreciation (I) (6 Months)			8,000
	I	1,28,000			Oct.01	Bank			1,04,000
	II	68,000		1,96,000	Oct.01	Profit and Loss (Loss)			16,000
Oct.01	Bank (III)			2,00,000	2018
					Mar.31	Depreciation
						II	8,000
						III (for 6 months)	10,000		18,000
					Mar.31	Balance c/d
						II	60,000
						III	1,90,000		2,50,000
				3,96,000					3,96,000

Working Notes

1. Calculation of Depreciation

2. Calculation of profit on loss on sale of Machine (I)

Particulars	Amount (Rs)
Book Value on April 01, 2017	1,28,000
Less: Depreciation for 6 Months	(8,000)
Book Value on Oct 01, 2017	1,20,000
Less: Sale Value	(1,04,000)
Loss on Sale	16,000

3. Journal entries for sale and purchase with GST

Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)

2017
Oct 1	Bank A/c	Dr.		1,16,480
	To Machinery A/c				1,04,000
	To Output CGST A/c To Output SGST A/c (Machinery purchased on 1st Aug, 2015 sold with CGST and SGST @ 6% each.)				6,240 6,240
Oct 1	Machinery A/c Input CGST A/c Input SGST A/c To Bank A/c (Machinery purchased with CGST and SGST @ 6% each paid.)	Dr. Dr. Dr.		2,00,000 12,000 12,000	2,24,000

Question 14:

Following balances appear in the books of Rama Bros:

		₹
1st April, 2015	Machinery A/c	80,000
	Provision for Depreciation Ac	36,000

On 1st April, 2015, they decided to sell a machine for ₹ 8,700. This machine was purchased for ₹ 16,000 in April, 2011. Prepare the Provision for Depreciation Account and Machinery Account on 31st March, 2016, assuming the firm has been charging Depreciation at 10% p.a. on Straight Line Method.

Answer:

Books of Rama Bros. Machinery Account
Dr.								Cr.
Date	Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2015				2015
Apr.01	Balance b/d (64,000 + 16,000)		80,000	Apr.01	Provision for Depreciation		6,400
				Apr.01	Bank		8,700
				Apr.01	Profit and Loss		900
				2016
				Mar.31	Balance c/d		64,000
			80,000				80,000

Provision for Depreciation Account
Dr.								Cr.
Date	Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2015				2015
Apr.01	Machinery Account (Accumulated Dep. on Machine Sold)		6,400	Apr.01	Balance b/d		36,000
2016 Mar.31	Balance c/d		36,000	2016 Mar.31	Depreciation (on 64,000 @10%)		6,400
			42,400				42,400

Working Notes

(1) Calculation of Book Value of Machine Sold on April 01, 2015

Particulars	Amount (Rs)
Machine purchased in 2011	16,000
Less: Accumulate Depreciation for 4 years till Mar 31, 2015 (1,600 × 4)	(6,400)
Book value on April 01, 2015	9,600

(2)Calculation of profit or loss on Sale of Machine

Particulars	Amount (Rs)
Book Value on April 01, 2015	9,600
Less: Sale Value	(8,700)
Loss on Sale of Machine	900

Question 15:

Following balances appear in the books of Priyank Brothers:

		₹
1st April, 2016	Machinery A/c	20,00,000
	Provision for Depreciation A/c	8,00,000

On 1st April, 2016, they decide to sell a machine for ₹ 5,00,000. This machine was purchased for ₹ 7,50,000 on 1st April, 2013. Prepare the Machinery Account and Provisin for Depreciation Account for the year ended 31st March, 2017 assuming that the firm has been charging Depreciation @ 10% p.a. on the Straight Line Method.

Answer:

Books of Priyank Brothers Machinery Account
Dr.								Cr.
Date	Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2016				2016
April 01	Balance b/d		20,00,000	April 01	Provision for Depreciation		2,25,000
				April 01	Bank		5,00,000
				April 01	Profit and Loss (Loss)		25,000
				2017
				Mar.31	Balance c/d		12,50,000
			20,00,000				20,00,000

Provision for Depreciation Account
Dr.								Cr.
Date	Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2016				2016
April 01	Machinery		2,25,000	April 01	Balance b/d		8,00,000
2017				2017
Mar.31	Balance c/d		7,00,000	Mar.31	Depreciation (for the year)		1,25,000

			9,25,000				9,25,000

Working Notes

1 Calculation of Loss on Sale of Machinery

Particulars	Amount (Rs)
Original cost of Machine Sold	7,50,000
Less: Accumulated Depreciation on Machine Sold, for 3 years, (7,50,000 × 10% × 3 years)	(2,25,000)
Book Value of Machine Sold	5,25,000
Less: Sale Value	(5,00,000)
Loss on Sale of Machine	25,000

Question 16:

Following balances appear in the books of X Ltd. as on 1st April, 2017:

	₹
Machinery A/c	5,00,000
Provision for Depreciation A/c	2,25,000

The machinery is depreciated @ 10% p.a. on the Fixed Instalment Method. The accounting year being April-March. On 1st October, 2017, a machinery which was purchased on 1st July, 2014 for ₹ 1,00,000 was sold for ₹ 42,000 plus CGST and SGST @ 6% each and on the same date a new machine was purchased for ₹ 2,00,000 paying IGST @ 12%. Prepare Machinery Account and Provision for Depreciation Account for the year ended 31st March, 2018.

Answer:

Machinery Account
Dr.								Cr.
Date	Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2017				2017
April 01	Balance b/d (4,00,000 + 1,00,000)		5,00,000	Oct.01	Provision for Depreciation		32,500
Oct.01	Bank		2,00,000	Oct.01	Bank		42,000
				Oct.01	Profit and Loss(WN1)		25,500
				2018
				Mar.31	Balance c/d		6,00,000
			7,00,000				7,00,000

Provision for Depreciation Account
Dr.								Cr.
Date	Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2017				2017
Oct.01	Machinery		32,500	April 01	Balance b/d		2,25,000
2018				2018
Mar.31	Balance c/d		2,47,500	Mar.31	Depreciation *(WN2)*		55,000
			2,80,000				2,80,000

Working Notes:

1 Calculation of Loss on Sale of Machinery

Particulars	Amount (Rs)
Original cost of Machine Sold	1,00,000
Less: Accumulated Depreciation on Machine Sold, from July 2014 to Oct 01, 2017 (1,00,000 × 10% × 3.25 years)	(32,500)
Book Value of Machine Sold	67,500
Less: Sale Value	(42,000)
Loss on Sale of Machine	25,500

2 Calculation of Depreciation Charged during the year

Particulars	Amount (Rs)
On 4,00,000 @ 10% (4,00,000 × 10%)	40,000
On 2,00,000 @ 10% for 6 months (2,00,000 × 10% × 6/12)	10,000
On 1,00,000 @ 10% for 6 months (1,00,000 × 10% × 6/12)	5,000
Total	55,000

3. Journal entries for sale and purchase with GST

Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)

2017
Oct 1	Bank A/c	Dr.		47,040
	To Machinery A/c				42,000
	To Output CGST A/c To Output SGST A/c (Machinery purchased on 1st July, 2014 sold with CGST and SGST @ 6% each.)				2,520 2,520
Oct 1	Machinery A/c Input IGST A/c To Bank A/c (Machinery purchased with IGST @ 12% paid.)	Dr. Dr.		2,00,000 24,000	2,24,000

Question 17:

A Limited has the following balances on 1st April, 2017:

	₹
Machinery A/c	2,00,000
Provision for Depreciation A/c	90,000

The company charged depreciation @ 10% p.a. on Straight Line Method. Accounts are closed on 31st March every year. On 1st October, 2017, a part of machinery purchased on 1st July, 2014 for ₹ 40,000 was sold for ₹ 18,400, charging CGST and SGST @ 6% each and on the same date a new plant was purchased for ₹ 1,00,000 plus IGST @ 12%.
Prepare 'Machinery Account' and 'Provision for Depreciation Account' for the year ended 31st March, 2018.

Answer:

Books of A Limited Machinery Account
Dr.								Cr.
Date	Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2017				2017
Apr.01	Balance b/d (1,60,000+40,000)		2,00,000	Oct 01	Provision for Depreciation		13,000
Oct 01	Bank		1,00,000	Oct 01	Bank		18,400
				Oct 01 2018	Profit and Loss (Loss)		8,600
				Mar.31	Balance c/d		2,60,000
			3,00,000				3,00,000

Provision for Depreciation Account
Dr.								Cr.
Date	Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2017				2017
Oct 01 2018	Machinery A/c		13,000	Apr.01 2018	Balance b/d		90,000
Mar.31	Balance c/d		1,00,000	Mar.31	Depreciation		23,000
			1,13,000				1,13,000

Working Notes

1. Calculation of Profit or Loss on Machinery Sold

Particulars	Amount (Rs)
Original Cost of Machine on July 01, 2014	40,000
Less: Accumulated Depreciation on Machine Sold, from July 01, 2014 to Oct 01, 2017 (40,000 × 10% × 3.25 years)	(13,000)
Book Value of Machine on Oct 01, 2017	27,000
Less: Sale Value	(18,400)
Loss on Sale of Machine	8,600

2. Calculation of Depreciation Charged During the Year 2017

Particulars	Amount (Rs)
On Rs 1,60,000 @ 10% (1,60,000 × 10%)	16,000
On Rs 1,00,0000 @ 10% for 6 months (1,00,000 × 10% × 6/12)	5,000
On Rs 40,000 @ 10% for 6 months (40,000 × 10% × 6/12)	2,000
Total	23,000

3. Journal entries for sale and purchase with GST

Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)

2017
Oct 1	Bank A/c	Dr.		20,608
	To Machinery A/c				18,400
	To Output CGST A/c To Output SGST A/c (Machinery purchased on 1st July, 2014 sold with CGST and SGST @ 6% each.)				1,104 1,104
Oct 1	Machinery A/c Input IGST A/c To Bank A/c (Machinery purchased with CGST and SGST @ 6% each paid.)	Dr. Dr.		1,00,000 12,000	1,12,000

Question 18:

The original cost of furniture amounted to ₹ 4,000 and it is decided to write off 5% on the original cost as depreciation at the end of each year. Show the Ledger Account as it will appear during the first four years. Show also how the same account will appear if it was decided to write off 5% on the diminishing balance of the asset each year.

Answer:

Furniture Account (Original Cost Method)
Dr.								Cr.
Date	Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
I year				I year
Jan.01	Bank		4,000	Dec.31	Depreciation		200
				Dec.31	Balance c/d		3,800
			4,000				4,000
II year				II year
Jan.01	Balance b/d		3,800	Dec.31	Depreciation		200
				Dec.31	Balance c/d		3,600
			3,800				3,800
III year				III year
Jan.01	Balance b/d		3,600	Dec.31	Depreciation		200
				Dec.31	Balance c/d		3,400
			3,600				3,600
IV year				IV year
Jan.01	Balance b/d		3,400	Dec.31	Depreciation		200
				Dec.31	Balance c/d		3,200
			3,400				3,400

Note:

Furniture Account (Diminishing Balance Method)
Dr.								Cr.
Date	Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
I year				I year
Jan.01	Bank		4,000	Dec.31	Depreciation		200
				Dec.31	Balance c/d		3,800
			4,000				4,000
II year				II year
Jan.01	Balance b/d		3,800	Dec.31	Depreciation		190
				Dec.31	Balance c/d		3,610
			3,800				3,800
III year				III year
Jan.01	Balance b/d		3,610	Dec.31	Depreciation		181
				Dec.31	Balance c/d		3,429
			3,610				3,610
IV year				IV year
Jan.01	Balance b/d		3,429	Dec.31	Depreciation		171
				Dec.31	Balance c/d		3,258
			3,429				3,429

Note: Depreciation p.a. =

Question 19:

A boiler was purchased from abroad for ₹ 10,000; shipping and forwarding charges ₹ 2,000, Import duty ₹ 7,000 and expenses of installation amounted to ₹ 1,000.
Calculate the depreciation for the first three years (separately for each year) @ 10% on Diminishing Balance Method.

Answer:

Boiler Account
Dr.								Cr.
Date	Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
I year				I year
Jan.01	Bank (10,000 + 2,000 + 7,000 + 1,000)		20,000	Dec.31	Depreciation		2,000
					Balance c/d		18,000
			20,000				20,000
II year				II year
Jan.01	Balance b/d		18,000	Dec.31	Depreciation		1,800
				Dec.31	Balance c/d		16,200
			18,000				18,000
III year				III year
Jan.01	Balance b/d		16,200	Dec.31	Depreciation		1,620
				Dec.31	Balance c/d		14,580
			16,200				16,200

Question 20:

Babu purchased on 1st April, 2016, a machine for ₹ 6,000. On 1st October, 2016, he also purchased another machine for ₹ 5,000. On 1st October, 2017, he sold the machine purchased on 1st April, 2016 for ₹ 4,000.
It was decided that Depreciation @ 10% p.a. was to be written off every year under Diminishing Balance Method.
Assuming the accounts were closed on 31st March every year, show the Machinery Account for the years ended 31st March, 2017 and 2018.

Answer:

Books of Babu Machinery Account
Dr.										Cr.
Date	Particulars		J.F.	Amount (Rs)	Date	Particulars		J.F.	Amount (Rs)
2016					2017
Apr. 01	Bank (I)			6,000	Mar. 31	Depreciation
Oct. 01	Bank (II)			5,000		I	600
						II (for 6 months)	250		850
					Mar. 31	Balance c/d
						I	5,400
						II	4,750		10,150
				11,000					11,000
2017					2017
Apr. 01	Balance b/d				Oct. 01	Depreciation (I) (for 6 months)			270
	I	5,400			Oct. 01	Bank (I)			4,000
	II	4,750		10,150	Oct. 01	Profit and Loss (Loss)			1,130
					2018
					Mar. 31	Depreciation (II)			475
					Mar. 31	Balance c/d (II)			4,275
				10,150					10,150

Working Note

(1) Calculation of profit or loss on sale of machine:

Particulars	Amount (Rs)
Book Value of Machinery Apr. 01, 2017	5,400
Less: Depreciation (for 6 Months)	(270)
Book Value of Machinery on Oct. 01 2017	5,130
Less: Sale	(4,000)
Loss on Sale	1,130

Question 21:

Kaushal Traders purchased a second-hand machinery on 1st April, 2015 for ₹ 23,000 and spent ₹ 2,000 on its repair. It was decided to depreciate the machinery @ 20% every year on 31st March at Diminishing Balance Method.
Prepare the Machinery Account from years ended 31st March, 2016 to 2018 and show Profit or Loss as it was sold on 31st March, 2018 for ₹ 10,800.

Answer:

Books of Kaushal Traders Machinery Account
Dr.								Cr.
Date	Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2015				2016
Apr.01	Bank (23,000 + 2,000)		25,000	Mar.31	Depreciation (25,000 × 20%)		5,000
				Mar.31	Balance c/d		20,000
			25,000				25,000
2016				2017
Apr.01	Balance b/d		20,000	Mar.31	Depreciation (20,000 × 20%)		4,000
					Balance c/d		16,000
			20,000				20,000
2017				2018
Apr.01	Balance b/d		16,000	Mar.31	Depreciation (16,000 × 20%)		3,200
				Mar.31	Bank		10,800
				Mar.31	Profit and Loss (Loss)		2,000
			16,000				16,000

Working Note:

(1) Calculation of profit or loss on sale of machine:

Particulars	Amount (Rs)
Book Value of machine on Apr. 01, 2017	16,000
Less: Depreciation for 2017 (16,000 × 20%)	(3,200)
Book Value of Machine on Mar. 31, 2018	12,800
Less: Sale Value	(10,800)
Loss on Sale	2,000

Question 22:

X bought a machine for ₹ 25,000 on which he spent ₹ 5,000 for carriage and freight. ₹ 1,000 for brokerage of the middleman, ₹ 3,500 for installation and ₹ 500 for an iron pad. The machine is depreciated @ 10% every year on Written Down Value basis. After three years, the machine was sold to Y for ₹ 30,500 and ₹ 500 was paid as commission to the broker through whom the sale was effected. Find out the profit and loss on sale of machine.

Answer:

Books of X Machinery Account
Dr.								Cr.
Date	Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
I year				I year
Jan.01	Bank (25,000 + 5,000 + 1,000 + 3,500 + 500)		35,000	Dec.31	Depreciation		3,500
				Dec.31	Balance c/d		31,500
			35,000				35,000
II year				II year
Jan.01	Balance b/d		31,500	Dec.31	Depreciation		3,150
				Dec.31	Balance c/d		28,350
			31,500				31,500
III year				III year
Jan.01	Balance b/d		28,350	Dec.31	Depreciation		2,835
				Dec.31	Balance c/d		25,515
			28,350				28,350
IV year				IV year
Jan.01	Balance b/d		25,515	Jan.01	Bank (30,500 – 500 brokerage)		30,000
Dec.31	Profit and Loss (Profit)		4,485
			30,000				30,000

Question 23:

A company purchased a machinery for ₹ 50,000 on 1st October, 2015. Another machinery costing ₹10,000 was purchased on 1st December, 2016. On 31st March, 2018, the machinery purchased in 2015 was sold at a loss of ₹ 5,000. The company charges depreciation @ 15% p.a. on Diminishing Balance Method. Accounts are closed on 31st March every year. Prepare the Machinery Account for 3 years.

Answer:

Machinery Account
Dr.												Cr.
Date	Particulars		J.F.	Amount (Rs)	Date	Particulars				J.F.	Amount (Rs)
2015					2016
Oct.01	Bank (I)			50,000	Mar.31	Depreciation (for 6 Months)					3,750
					Mar.31	Balance c/d					46,250
				50,000							50,000
2016					2017
Apr.01	Balance b/d (I)			46,250	Mar.31	Depreciation
Dec.01	Bank (II)			10,000		I		6,938
						II		500			7,438
					Mar.31	Balance c/d
						I	39,312
						II	9,500				48,812
				56,250							56,250
2017					2018
Apr.01	Balance b/d				Mar.31	Depreciation
	I	39,312				I			5,897
	II	9,500		48,812		II			1,425		7,322
					Mar.31	Bank (I)					28,415
					Mar.31	Profit and Loss (Loss)					5,000
					Mar.31	Balance c/d (II)					8,075
				48,812							48,812

Working Note

(1) Calculation of profit or loss on sale of machine:

Particulars	Amount (Rs)
Book Value of Machine I on Apr. 01, 2017	39,312
Less: Depreciation (39,312 × 15%)	5,897
Book Value of Machine I on Mar. 31, 2018	33,415
Less: Sale Value	(28,415)
Loss on Sale of Machine I	5,000

Question 24:

On 1st April, 2015, a machinery was purchased for ₹ 20,000. On 1st October, 2016 another machine was purchased for ₹ 10,000 and on 1st April, 2017, one more machine was purchased for ₹ 5,000. The firm depreciates its machinery @ 10% p.a. on the Diminishing Balance Method.
What is the amount of Depreciation for the years ended 31st March, 2016; 2017 and 2018? What will be the balance in Machinery Account as on 31st March, 2018?

Answer:

I. Calculation of Depreciation from April 01, 2015 to March 31, 2018

Depreciation Rate: 10% p.a. on Diminishing Balance Method

Year	Machinery	Date of Purchase	Value	No. of Months	Amt. of Dep.	Total Dep.
2015-16	M1	April 01, 2015	20,000	12	2,000	2,000
2016-17	M1	April 01, 2015	18,000 (20,000 – 2,000)	12	1,800
	M2	Oct. 01,2016	10,000	6	500	2,300
2017-18	M1	April 01, 2015	16,200 (18,000 – 1,800)	12	1,620
	M2	Oct. 01,2016	9,500	12	950
	M3	April 01, 2017	5,000	12	500	3,070

II. Balance in Machinery Account as on March 31, 2018 will be Rs 27,630

Working Notes: Preparation of Machinery Account

Machinery Account
Dr.					Cr.
Date	Particulars		Amount (Rs)	Date		Particulars					Amount (Rs)
2015				2016
April 01	Bank A/c (M1)		20,000	March 31		Depreciation A/c (M1)					2,000
				March 31		Balance c/d (M1)					18,000
			20,000								20,000
2016				2017
April 01	Balance b/d (M1)		18,000	March 31		Depreciation A/c
Oct. 01	Bank A/c (M2)		10,000			M1				1,800
						M2				500	2,300
				March 31		Balance c/d
						M1			16,200
						M2			9,500		25,700
			28,000								28,000
2017				2018
April 01	Balance b/d			March 31		Depreciation A/c
	M1	16,200				M1		1,620
	M2	9,500	25,700			M2		950
April 01	Bank A/c (M3)		5,000			M3		500			3,070
				March 31		Balance c/d
						M1	14,580
						M2	8,550
						M3	4,500				27,630
			30,700								30,700

Note: Since the question does not specify to prepare the Machinery Account, thus, it is optional to prepare this account.

Question 25:

A Machinery was purchased for ₹ 1,80,000 on 1st July, 2015. Depreciation was charged annually @ 10% on Diminishing Balance Method. 1/4th of this Machinery was sold on 1st October, 2017 for 36,000. Prepare Machinery A/c from the year ended 31st March, 2016 to 2018, if the books are closed on 31st March every year.

Answer:

Machinery Account
Dr.											Cr.
Date	Particulars			J.F.	Amount (Rs)	Date	Particulars		J.F.	Amount (Rs)
2015-16						2015-16
July 01	Bank					Mar.31	Depreciation
	I (3/4)	1,35,000					I (3/4) (for 9 months)	10,125
	I(1/4)	45,000			1,80,000		I (1/4) (for 9 months)	3,375		13,500
						Mar.31	Balance c/d
							I (3/4)	1,24,875
							I(1/4)	41,625		1,66,500
					1,80,000					1,80,000
2016-17						2016-17
Apr.01	Balance b/d					Mar.31	Depreciation
	I (3/4)		1,24,875				I (3/4)	12,487
	I(1/4)		41,625		1,66,500		I(1/4)	4,163		16,650
						Mar.31	Balance c/d
							I (3/4)	1,12,388
							I(1/4)	37,462		1,49,850
					1,66,500					1,66,500
2017-18						2017-18
Apr.01	Balance b/d					Oct. 01	Depreciation I(1/4)			1,873
	I (3/4)		1,12,388			Oct. 01	Bank I(1/4)			36,000
	I(1/4)		37,462		1,49,850	Mar.31	Depreciation I(3/4)			11,239
Oct. 01	Profit and Loss A/c				411	Mar.31	Balance c/d I(3/4)			1,01,149
					1,50,261					1,50,261

Working Note

(1)Calculation of Profit or Loss on Sale of Machine I (1/4):

Particulars	Amount (Rs)
Book Value of Machine (I)(1/4) on Apr. 01, 2017	37,462
Less: Depreciation (for 6 months)	(1,873)
Book Value of Machine (I)(1/4) on Oct. 01, 2017	35,589
Less: Sale Value	(36,000)
Profit on Sale of Machine I(1/4)	411

Question 26:

M/s. P & Q purchased machinery for ₹ 40,000 on 1st October, 2015. Depreciation is provided @ 10% p.a. on the Diminishing Balance. On 31st January, 2018, one-fourth of the machinery was found unsuitable and disposed off for ₹ 5,600. On the same date new machinery at a cost of ₹ 15,000 was purchased. Write up the Machinery account for the years ended 31st March, 2016, 2017 and 2018. Accounts are closed on 31st March each year.

Answer:

Machinery Account
Dr.	Cr.
Date		Particulars		J.F.	Amount (Rs)	Date	Particulars			J.F.	Amount (Rs)
2015						2016
Oct. 01		Bank				Mar.31	Depreciation
		I (3/4)	30,000				I (3/4) for 6 months	1,500
		I(1/4)	10,000		40,000		I (1/4) for 6 months	500			2,000
						Mar.31	Balance c/d
							I (3/4)	28,500
							I (1/4)	9,500			38,000
					40,000						40,000
2016						2017
Apr.01		Balance b/d				Mar.31	Depreciation
		I (3/4)	28,500				I (3/4)	2,850
		I (1/4)	9,500		38,000		I (1/4)	950			3,800
						Mar.31	Balance c/d
							I (3/4)		25,650
							I (1/4)		8,550		34,200
					38,000						38,000
2017						2018
Apr.01		Balance b/d				Jan.31	Depreciation I (1/4)(for 10 Months)				713
		I (3/4)	25,650			Jan.31	Bank I(1/4)				5,600
2018		I (1/4)	8,550		34,200		Profit and Loss (Loss)				2,237
Jan.31		Bank (II)			15,000	Mar.31	Depreciation
							I (3/4)		2,565
							II (for 2 months)		250		2,815
						Mar.31	Balance c/d
							I (3/4)		23,085
							II		14,750		37,835
					49,200						49,200

Working Note

(1)Calculation of Profit or Loss on Sale of Machine I (1/4):

Particulars	Amount (Rs)
Book Value of Machine (I)(1/4) on Apr. 01, 2017	8,550
Less: Depreciation for 10 Months	(713)
Book Value of Machine (I)(1/4) on Jan. 31 2018	7,837
Less: Sale Value	(5,600)
Loss on Sale of Machine I(1/4)	2,237

Question 27:

A company purchased on 1st July, 2015 machinery costing ₹ 30,000. It further purchased machinery on 1st January, 2016 costing ₹ 20,000 and on 1st October, 2016 costing ₹ 10,000. On 1st April, 2017, one-third of the machinery installed on 1st July, 2015 became obsolete and was sold for ₹ 3,000. The company follows financial year as accounting year.
Show how the Machinery Account would appear in the books of company if depreciation is charged @ 10% p.a. on Written Down Value Method.

Answer:

Machinery Account
Dr.												Cr.
Date	Particulars			J.F.	Amount (Rs)	Date	Particulars			J.F.	Amount (Rs)
2015						2016
July 01	Bank					Mar.31	Depreciation
	I(2/3)		20,000				I(2/3)		1,500
2016	I(1/3)		10,000		30,000		I(1/3)		750
Jan.01	Bank (II)				20,000		II		500		2,750
						Mar.31	Balance c/d
							I(2/3)		18,500
							I(1/3)		9,250
							II		19,500		47,250
					50,000						50,000
2016						2017
Apr 01	Balance b/d					Mar 31	Depreciation
	I(2/3)	18,500					I(2/3)	1,850
	I(1/3)	9,250					I(1/3)	925
	II	19,500			47,250		II	1,950
Oct 01	Bank (III)				10,000		III	500			5,225
						Mar 31	Balance c/d
							I(2/3)	16,650
							I(1/3)	8,325
							II	17,550
							III	9,500			52,025
					57,250						57,250
2017						2017
Apr.01	Balance b/d					Apr.01	Bank (I)(1/3)				3,000
	I(2/3)	16,650				Apr.01	Profit and Loss (Loss)				5,325
	I(1/3)	8,325				Mar.31,	Depreciation
	II	17,550				2018	I(2/3)	1,665
	III	9,500			52,025		II	1,755
							III	950			4,370
						Mar.31	Balance c/d
							I(2/3)	14,985
							II	15,795
							III	8,550			39,330
					52,025						52,025

Working Note:

(1) Calculation of Profit or Loss on Sale of Plant I(1/3):

Particulars	Amount (Rs)
Book Value of Plant I (1/3) as on Apr 01, 2017	8,325
Less: Sale Value	(3,000)
Loss on Sale	5,325

Question 28:

On 1st October, 2010, Meenal Sharma bought a machine for ₹ 25,000 on which he spent ₹ 5,000 for carriage and freight; ₹ 1,000 for brokerage of the middle-man, ₹ 4,000 for installation. The machine is depreciated @ 10% p.a. on written down value basis. On 31st March, 2013 the machine was sold to Deepa for ₹ 30,500 and ₹ 500 was paid as commission to broker through whom the sales was effected. Find out the profit or loss on sale of machine if accounts are closed on 31st March, every year.

Answer:

Machinery Account
Dr.								Cr.
Date	Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2010				2011
Oct 01	Bank (25,000+5,000+1,000+4,000)		35,000	Mar.31	Depreciation (for 6 months)		1,750
				Mar.31	Balance c/d		33,250
			35,000				35,000
2011				2012
Apr.01	Balance b/d		33,250	Mar.31	Depreciation		3,325
				Mar.31	Balance c/d		29,925
			33,250				33,250
2012				2013
Apr.01	Balance b/d		29,925	Mar.31	Depreciation		2,993
2013 Mar.31	Profit and Loss A/c (Profit on Sale) *(WN1)*		3,068	Mar.31	Bank A/c (30,500 – 500)		30,000
			32,993				32,993

Working Note:

(1) Calculation of Profit or Loss on sale of Machine I:

Particulars	Amount (Rs)
Book Value of Machine on Apr. 01, 2012	29,925
Less: Depreciation for the year	(2,993)
Book Value of Machine I on Mar. 31, 2013	26,932
Less: Sale Value (30,500 – 500)	(30,000)
Profit on Sale	3,068

Question 29:

Astha Engineering Works purchased a machine on 1^st July, 2015 for ₹ 1,80,000 and spent ₹ 20,000 on its installation.
On 1st April, 2016, if purchased another machine for ₹ 2,40,000. On 1st October, 2017, the machine purchased on 1st July, 2015 was sold for ₹ 1,45,000. On 1st January, 2018, another machine was purchased for ₹ 4,00,000 plus IGST @ 12%.
Prepare the Machinery Account for the years ended 31st March, 2016 to 2018 after charging Depreciation @ 10% p.a. by Diminishing Balance Method.
Accounts are closed on 31st March every year.

Answer:

Book of Astha Engineering Works Machinery Account
Dr.											Cr.
Date	Particulars		J.F.	Amount (Rs)	Date	Particulars			J.F.	Amount (Rs)
2015-16					2015-16
July 01	Bank (I) (1,80,000 + 20,000)			2,00,000	Mar.31	Depreciation (for 9 months)				15,000
					Mar.31	Balance c/d				1,85,000
				2,00,000						2,00,000
2016-17					2016-17
Apr.01	Balance b/d (I)			1,85,000	Mar.31	Depreciation
Apr.01	Bank (II)			2,40,000		I		18,500
						II		24,000		42,500
					Mar.31	Balance c/d
						I	1,66,500
						II	2,16,000			3,82,500
				4,25,000						4,25,000
2017-18					2017-18
Apr.01	Balance b/d				Oct. 01	Depreciation (I) (for 6 months)				8,325
	I	1,66,500			Oct. 01	Bank (I)				1,45,000
	II	2,16,000		3,82,500	Oct. 01	Profit and Loss (Loss)				13,175
Jan.01	Bank (III)			4,00,000	Mar.31	Depreciation
						II	21,600
						III (for 3 months)	10,000			31,600
					Mar.31	Balance c/d
						II	1,94,400
						III	3,90,000			5,84,400
				7,82,500						7,82,500

Working Note:

(1) Calculation of profit or loss on sale of Machine I:

Particulars	Amount (Rs)
Book Value of as on Apr. 01, 2017	1,66,500
Less: Depreciation (for 6 Months)	(8,325)
Book Value on Oct 01, 2017	1,58,175
Less: Sale Value	(1,45,000)
Loss on Sale	13,175

(2) Journal entry for purchase with GST

Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
2018
Jan 01	Machinery A/c	Dr.		4,00,000
	Input IGST A/c	Dr.		48,000
	To Bank A/c				4,48,000
	(Machinery purchased with IGST @ 12% paid)

Question 30:

A firm purchased on 1st April, 2015 certain machinery for ₹ 5,82,000 and spent ₹ 18,000 on its installation. On 1st October, 2015, additional machinery costing ₹ 2,00,000 was purchased. On 1st October, 2017, the machinery purchased on 1st April, 2015 was auctioned for ₹ 2,86,000 plus CGST and SGST @ 6% each and a new machinery for ₹ 4,00,000, plus IGST @ 12% was purchased on the same date. Depreciation was provided annually on 31st March at the rate of 10% p.a. on the Written Down Value Method. Prepare the Machinery Account for the three years ended 31st March, 2018.

Answer:

Machinery Account
Dr.													Cr.
Date	Particulars			J.F.	Amount (Rs)	Date	Particulars				J.F.	Amount (Rs)
2015-16						2015-16
Apr.01	Bank (I)				6,00,000	Mar.31	Depreciation
Oct.01	Bank (II)				2,00,000		I			60,000
							II (for 6 months)			10,000		70,000
						Mar.31	Balance c/d
							I		5,40,000
							II		1,90,000			7,30,000
					8,00,000							8,00,000
2016-17						2016-17
Apr.01	Balance b/d					Mar.31	Depreciation
	I		5,40,000				I		54,000
	II		1,90,000		7,30,000		II		19,000			73,000
						Mar.31	Balance c/d
							I		4,86,000
							II		1,71,000			6,57,000
					7,30,000							7,30,000
2017-18						2017-18
Apr.01	Balance b/d					Oct.01	Depreciation (I)					24,300
	I	4,86,000				Oct.01	Bank (I)					2,86,000
	II	1,71,000			6,57,000	Oct.01	Profit and Loss (Loss)					1,75,700
Oct.01	Bank (III)				4,00,000	Mar.31	Depreciation
							II	17,100
							III (for 6 months)	20,000				37,100
						Mar.31	Balance c/d
							II	1,53,900
							III	3,80,000				5,33,900
					10,57,000							10,57,000

Working Notes:

(1) Calculation of Profit or Loss on sale of Machine I:

Particulars	Amount (Rs)
Book Value of Machine I on Apr. 01, 2017	4,86,000
Less: Depreciation (for 6 Months)	(24,300)
Book Value of Machine I on Oct 01, 2017	4,61,700
Less: Sale Value	(2,86,000)
Loss on Sale	1,75,700

(2) Journal entries for sale and purchase with GST

Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)

2017
Oct 1	Bank A/c	Dr.		3,20,320
	To Machinery A/c				2,86,000
	To Output CGST A/c To Output SGST A/c (Machinery purchased on 1st April, 2015 sold with CGST and SGST @ 6% each.)				17,160 17,160
Oct 1	Machinery A/c Input IGST A/c To Bank A/c (Machinery purchased with IGST @ 12% paid.)	Dr. Dr.		4,00,000 48,000	4,48,000

Question 31:

Shakti Cements purchased on 1st April, 2015 a plant for ₹ 80,000. On 1st July, 2016, it purchased additional plant costing ₹ 48,000. On 1st December, 2017, the plant purchased on 1st April, 2015 was sold for ₹ 42,000 plus IGST @ 12% and on the same date a fresh plant was purchased for ₹ 75,000 plus CGST and SGST @ 6% each. Depreciation is provided at 10% p.a. on the Diminishing Balance Method. Accounts are closed on 31st March each year. Show the plant Account for 3 years (along with working notes).

Answer:

Book of Shakti Cements Plant Account
Dr.										Cr.
Date	Particulars		J.F.	Amount (Rs)	Date	Particulars		J.F.	Amount (Rs)
2015					2016
Apr.01	Bank (I)			80,000	Mar.31	Depreciation (I)			8,000
					Mar.31	Balance c/d (I)			72,000
				80,000					80,000
2016					2017
Apr.01	Balance b/d (I)			72,000	Mar.31	Depreciation
Jul. 01	Bank (II)			48,000		I	7,200
						II (for 9 Months)	3,600		10,800
					Mar.31	Balance c/d
						I	64,800
						II	44,400		1,09,200
				1,20,000					1,20,000
2017					2017
Apr.01	Balance b/d				Dec.01	Depreciation (I) (for 8 Months)			4,320
	I	64,800			Dec.01	Bank (I)			42,000
	II	44,400		1,09,200	Dec.01	Profit and Loss (Loss)			18,480
					2018
Dec.01	Bank (III)			75,000	Mar.31	Depreciation
						II	4,440
						III (for 4 Months)	2,500		6,940
					Mar.31	Balance c/d
						II	39,960
						III	72,500		1,12,460
				1,84,200					1,84,200

Working Note

(1) Calculation of Profit or Loss on Sale of Plant I:

Particulars	Amount (Rs)
Book Value of Plant I as on Apr 01, 2017	64,800
Less: Depreciation on Plant I (for 8 Months )	(4,320)
Book Value of Plant I on Dec. 01 2017	60,480
Less: Sale Value	(42,000)
Loss on Sale	18,480

(2) Journal entries for sale and purchase with GST

Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)

2017
Dec 1	Bank A/c	Dr.		47,040
	To Machinery A/c				42,000
	To Output IGST A/c (Machinery purchased on 1st April, 2015 sold with IGST @ 12% )				5,040
Dec 1	Machinery A/c Input CGST A/c Input SGST A/c To Bank A/c (Machinery purchased with CGST and SGST @ 6% each paid.)	Dr. Dr. Dr.		75,000 4,500 4,500	84,000

Question 32:

Following balances appear in the books of M/s. Amrit as on 1st April, 2017:

		₹
2017
1st April	Machinery A/c	60,000
	Provision for Depreciation A/c	36,000

On 1st April, 2017, they decided to dispose off a machinery for ₹ 8,400 which was purchased on 1st April, 2013 for ₹ 16,000.
You are required to prepare the Machinery A/c, Provision for Depreciation A/c and Machinery Disposal A/c for the year ended 31^st March, 2018. Depreciation was charged at 10% on Cost following SLM.

Answer:

Books of M/s. Amrit Machinery Account
Dr.								Cr.
Date	Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2017				2017
April 01	Balance b/d (44,000 + 16,000)		60,000	April 01	Machinery Disposal		16,000
				2018
				Mar.31	Balance c/d		44,000
			60,000				60,000

Provision for Depreciation Account
Dr.								Cr.
Date	Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2017				2017
April 01	Machinery Disposal (4 years)		6,400	April 01	Balance b/d		36,000
2018				2018
Mar.31	Balance c/d		34,000	Mar.31	Depreciation (on Machine costing Rs 44,000)		4,400
			40,400				40,000

Machinery Disposal Account
Dr.								Cr.
Date	Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2017				2017
April 01	Machinery		16,000	April 01	Provision for Depreciation		6,400
				2018
				Mar.31	Bank (Sale)		8,400
					Profit and Loss (Loss)		1,200
			16,000				16,000

Working Note

1. Calculation of profit or loss on Machine Sold:

Particulars	Amount (Rs)
Original Cost of Machine Sold on April 01, 2013	16,000
Less: Accumulated Depreciation on Machine Sold (1,600 × 4)	(6,400)
Book Value of April 01, 2017	9,600
Less: Sale Value	(8,400)
Loss on Sale	1,200

Question 33:

On 1st October, 2011, X Ltd. purchased a machinery for ₹ 2,50,000. A part of machinery which was purchased for ₹ 20,000 on 1st October, 2011 became obsolete and was disposed off on 1st January, 2014 (having a book value ₹ 17,100 on 1st April, 2013) for ₹ 2,000. Depreciation is charged @ 10% annually on written down value. Prepare Machinery Disposal Account and also show your workings. The books being closed on 31st March of every year.

Answer:

Books of X Ltd. Machinery Account
Dr.										Cr.
Date	Particulars		J.F.	Amount (Rs)	Date	Particulars		J.F.	Amount (Rs)
2011					2012
Oct 01	Bank				Mar.31	Depreciation
	I (part 1)	2,30,000				I (part 1) (for 6 months)	11,500
	I (part 2)	20,000		2,50,000		I (part 2) (for 6 months)	1,000		12,500
					Mar.31	Balance c/d
						I (part 1)	2,18,500
						I (part 2)	19,000		2,37,500
				2,50,000					2,50,000
2012					2013
Apr.01	Balance b/d				Mar.31	Depreciation
	I (part 1)	2,18,500				I (part 1)	21,850
	I (part 2)	19,000		2,37,500		I (part 2)	1,900		23,750
					Mar.31	Balance c/d
						I (part 1)	1,96,650
						I (part 2)	17,100		2,13,750
				2,37,500					2,37,500
2013					2014
Apr.01	Balance b/d				Jan.01	Depreciation (I) (part 2) (for 9 Months)			1,283
	I (part 1)	1,96,650			Jan.01	Bank (I) (part 2)			2,000
	I (part 2)	17,100		2,13,750	Jan.01	Profit and Loss (Loss)			13,817
					Mar.31	Depreciation I (part 1)			19,665
					Mar.31	Balance c/d			1,76,985
				2,13,750					2,13,750

Question 34:

Sharma & Co. whose books are closed on 31st March, purchased a machinery for ₹ 1,50,000 on 1st April, 2015, Additional machinery was acquired for ₹ 50,000 on 1st October, 2015. Certain machinery which was purchased for ₹ 50,000 on 1st October, 2015 was sold for ₹ 40,000 on 30th September, 2017.

Prepare the Machinery Account and Accumulated Depreciation Account for all the years up to the year ended 31st March, 2018. Depreciation is charged @ 10% p.a. on Straight Line Method. Also, show the Machinery Disposal Account.

Answer:

Books of Sharma & Co. Machinery Account
Dr.								Cr.
Date	Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2015				2016
Apr.01	Bank (I)		1,50,000
Oct 01	Bank (II)		50,000	Mar.31	Balance c/d		2,00,000
			2,00,000				2,00,000
2016				2017
Apr.01	Balance b/d		2,00,000	Mar.31	Balance c/d		2,00,000

			2,00,000				2,00,000
2017				2017
Apr.01	Balance b/d		2,00,000	Sep 30	Machinery Disposal A/c		50,000
				Mar.31,2018	Balance c/d		1,50,000
			2,00,000				2,00,000

Accumulated Depreciation Account
Dr.											Cr.
Date	Particulars			J.F.	Amount (Rs)	Date	Particulars		J.F.	Amount (Rs)
2016						2016
Mar.31	Balance c/d					Mar. 31	Depreciation
	I		15,000				I	15,000
	II		2,500		17,500		II (for 6 months)	2,500		17,500
					17,500					17,500
2017						2016
Mar.31	Balance c/d					Apr. 01	Balance b/d
	I	30,000					I	15,000
	II	7,500			37,500	2017	II	2,500		17,500
						Mar. 31	Depreciation
							I	15,000
							II	5,000		20,000
					37,500					37,500
2017						2017
Sep 30	Machinery disposal (II)				10,000	Apr. 01	Balance b/d
Mar.31, 2018	Balance c/d (I)				45,000		I	30,000
							II	7,500		37,500
						Sep 30	Depreciation (II)			2,500
						Mar. 31, 2018	Depreciation (I)			15,000
					55,000					55,000

Machinery Disposal Account
Dr.								Cr.
Date	Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2017				2017
Sep 30	Machinery		50,000	Sep 30	Accumulated Depreciation		10,000
				Sep 30	Bank		40,000
			50,000				50,000

Working note

1. Calculation of Profit or Loss on sale of Machine II:

Particulars	Amount (Rs)
Original Cost Oct 01, 2015	50,000
Less: Accumulated Depreciation	(10,000)
Book Value on Sept 30, 2017	40,000
Less: Sale Value	(40,000)
Profit / Loss	NIL

Question 35:

On 1st April, 2015, Amit Kumar purchased five machines for ₹ 60,000 each. Depreciation @ 10% p.a. on initial cost has been charged from the Profit and Loss Account and credited to Provision for Depreciation Account.
On 1st April, 2016, one machine was sold for ₹ 50,000 and on 1st April, 2017 another machine was sold for ₹ 50,000. An improved model costing ₹ 1,00,000 was purchased on 1st October, 2016. IGST was paid @ 12%. Amit Kumar closes his books on 31st March each year.
You are required to show: (i) Machinery Account: (ii) Machinery Disposal Account and (iii) Provision for Depreciation Account for the period of three accounting years ended 31st March, 2018.

Answer:

Books of Amit Kumar Machinery Account
Dr.										Cr.
Date	Particulars		J.F.	Amount (Rs)	Date	Particulars		J.F.	Amount (Rs)
2015					2016
April 01	Bank (I) (5 machines @ Rs 60,000 each)			3,00,000	Mar.31	Balance c/d			3,00,000
				3,00,000					3,00,000
2016					2016
April 01	Balance b/d			3,00,000	April 01	Machinery Disposal			60,000
Oct.01	Bank (II)			1,00,000	2017
					Mar.31	Balance c/d
						I	2,40,000
						II	1,00,000		3,40,000
				4,00,000					4,00,000
2017					2017
April 01	Balance b/d				April 01	Machinery Disposal			60,000
	I	2,40,000			2018
	II	1,00,000		3,40,000	Mar.31	Balance c/d
						I	1,80,000
						II	1,00,000		2,80,000
				3,40,000					3,40,000

Provision for Depreciation Account
Dr.											Cr.
Date	Particulars			J.F.	Amount (Rs)	Date	Particulars		J.F.	Amount (Rs)
2016						2016
Mar.31	Balance c/d				30,000	Mar.31	Depreciation I			30,000
					30,000					30,000
2016						2016
April 01	Machinery Disposal				6,000	April 01	Balance b/d (I)			30,000
	(Accumulated Depreciation on Machinery Costing Rs 60,000)
2017						2017
Mar.31	Balance c/d					Mar.31	Depreciation
	I	48,000					I	24,000
	II	5,000			53,000		II(for 6 months)	5,000		29,000
					59,000					59,000
2017						2017
April 01	Machinery Disposal				12,000	April 01	Balance b/d
	(Accumulated Depreciation on Machinery Costing Rs 60,000)						I	48,000
							II	5,000		53,000
2018						2018
Mar.31	Balance c/d					Mar.31	Depreciation
	I		54,000				I	18,000
	II		15,000		69,000		II	10,000		28,000
					81,000					81,000

Machinery Disposal Account as on April 01, 2016
Dr.								Cr.
Date	Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2016				2016
April 01	Machinery		60,000	April 01	Provision for Depreciation		6,000
				April 01	Bank		50,000
				April 01	Profit and Loss (Loss) (Balancing Figure)		4,000
			60,000				60,000

Machinery Disposal Account as on April 01, 2017
Dr.								Cr.
Date	Particulars	J.F.	Amount (Rs)	Date	Particular	J.F.	Amount (Rs)
2017				2017
April 01	Machinery		60,000	April 01	Provision for Depreciation		12,000
April 01	Profit and Loss (Profit) (Balancing Figure)		2,000	April 01	Bank		50,000
			62,000				62,000

Double Entry Book Keeping Ts Grewal 2018 for Class 11 Commerce Accountancy Chapter 11 - Depreciation

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