11th | Ts grewal 2021-2022 | Question 17 to 20 | Ch: 15 Depreciation

Double Entry Book Keeping Ts Grewal 2021 for Class 11 Commerce Accountancy Chapter 15 - Depreciation

Page No 15.45:

Question 17:

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% p.a. on Diminishing Balance Method.

Answer:

Boiler Account
Dr.									Cr.
Date		Particulars	J.F.	Amount ( `)	Date	Particulars	J.F.	Amount ( `)
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

 

Page No 15.45:

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% p.a. on the diminishing balance of the asset each year.

Answer:

Furniture Account (Original Cost Method)
Dr.									Cr.
Date		Particulars	J.F.	Amount ( `)	Date	Particulars	J.F.	Amount ( `)
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: Depreciation 4,000×5/100=  ` 200 p.a.

 

Furniture Account (Diminishing Balance Method)
Dr.									Cr.
Date		Particulars	J.F.	Amount ( `)	Date	Particulars	J.F.	Amount ( `)
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 is calculated on opening balance every year By using below formula

  Depreciation p.a.= Opening Balance ×5/100

 

Page No 15.45:

Question 19:

Babu purchased on 1st April, 2019, a machine for  ` 6,000. On 1st October, 2019, he also purchased another machine for  ` 5,000. On 1st October, 2020, he sold the machine purchased on 1st April, 2019 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, 2020 and 2021.

Answer:

Books of Babu Machinery Account
Dr.											Cr.
Date		Particulars		J.F.	Amount ( `)	Date	Particulars		J.F.	Amount ( `)
2019						2020
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
2020						2020
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
						2021
						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 ( `)
Book Value of Machinery Apr. 01, 2020	5,400
Less: Depreciation (for 6 Months)	(270)
Book Value of Machinery on Oct. 01 2020	5,130
Less: Sale	(4,000)
Loss on Sale	1,130

 

Page No 15.45:

Question 20:

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% p.a. 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 ( `)	Date	Particulars	J.F.	Amount ( `)
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

 

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