11th | Ts grewal 2021-2022 | Question 25 to 29 | Ch: 15 Depreciation

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

Page No 15.46:

Question 25:

A company purchased on 1st July, 2018 machinery costing  ` 30,000. It further purchased machinery on 1st January, 2019 costing  ` 20,000 and on 1st October, 2019 costing  ` 10,000. On 1st April, 2020, one-third of the machinery installed on 1st July, 2018 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)
2018							2019
July 01		Bank					Mar.31	Depreciation
		I(2/3)		20,000				I(2/3)		1,500
2019		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
2019							2020
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
2020							2020
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				2021	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, 2020	8,325
Less: Sale Value	(3,000)
Loss on Sale	5,325

 

Page No 15.46:

Question 26:

Astha Engineering Works purchased a machine on 1st July, 2018 for  ` 1,80,000 and spent  ` 20,000 on its installation.
On 1st April, 2019, if purchased another machine for  ` 2,40,000. On 1st October, 2020, the machine purchased on 1st July, 2018 was sold for  ` 1,45,000 plus CGST and SGST @ 6% each. On 1st January, 2021, another machine was purchased for  ` 4,00,000 plus IGST @ 12%.
Prepare the Machinery Account for the years ended 31st March, 2019 to 2021 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 ( `)	Date	Particulars			J.F.	Amount ( `)
2018						2018
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
2019						2019
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
2020						2020
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	2021 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 ( `)
Book Value of as on Apr. 01, 2020	1,66,500
Less: Depreciation (for 6 Months)	(8,325)
Book Value on Oct 01, 2020	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 ( `)
2021
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)

 

Page No 15.46:

Question 27:

Following balances appear in the books of M/s. Amrit as on 1st April, 2020

		`
2020
1st April	Machinery A/c	60,000
	Provision for Depreciation A/c	36,000

On 1st April, 2020, they decided to dispose off a machinery for  ` 8,400 which was purchased on 1st April, 2016 for  ` 16,000.
You are required to prepare the Machinery Account, Provision for Depreciation Account and Machinery Disposal Account for the year ended 31st March, 2021. Depreciation was charged at 10% p.a on Cost following Straight Line Method.

Answer:

Books of M/s. Amrit Machinery Account
Dr.									Cr.
Date		Particulars	J.F.	Amount ( `)	Date	Particulars	J.F.	Amount ( `)
2020					2020
April 01		Balance b/d (44,000 + 16,000)		60,000	April 01	Machinery Disposal		16,000
					2021
					Mar.31	Balance c/d		44,000
				60,000				60,000

 

Provision for Depreciation Account
Dr.									Cr.
Date		Particulars	J.F.	Amount ( `)	Date	Particulars	J.F.	Amount ( `)
2020					2020
April 01		Machinery Disposal (4 years)		6,400	April 01	Balance b/d		36,000
2021					2021
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 ( `)	Date	Particulars	J.F.	Amount ( `)
2020					2020
April 01		Machinery		16,000	April 01	Provision for Depreciation		6,400
					2021
					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 ( `)
Original Cost of Machine Sold on April 01, 2016	16,000
Less: Accumulated Depreciation on Machine Sold (1,600 × 4)	(6,400)
Book Value of April 01, 2020	9,600
Less: Sale Value	(8,400)
Loss on Sale	1,200

 

Page No 15.47:

Question 28:

Ashok & Co. whose books are closed on 31st March, purchased a machinery for `1,50,000 on 1st April, 2018, Additional machinery was acquired for  ` 50,000 on 1st October, 2018. Certain machinery which was purchased for ` 50,000 on 1st October, 2018 was sold for `40,000 on 30th September, 2020.
Prepare the Machinery Account and Accumulated Depreciation Account for all the years up to the year ended 31st March, 2021. Depreciation is charged @ 10% p.a. on Straight Line Method. Also, show the Machinery Disposal Account.

Answer:

Books of Ashok & Co. Machinery Account
Dr.									Cr.
Date		Particulars	J.F.	Amount ( `)	Date	Particulars	J.F.	Amount ( `)
2018					2019
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
2019					2020
Apr.01		Balance b/d		2,00,000	Mar.31	Balance c/d		2,00,000
				2,00,000				2,00,000
2020					2020
Apr.01		Balance b/d		2,00,000	Sep 30	Machinery Disposal A/c		50,000
					Mar.31,2021	Balance c/d		1,50,000
				2,00,000				2,00,000

 

Accumulated Depreciation Account
Dr.													Cr.
Date		Particulars			J.F.	Amount ( `)	Date	Particulars			J.F.	Amount ( `)
2019							2019
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
2020							2019
Mar.31		Balance c/d					Apr. 01	Balance b/d
		I	30,000					I	15,000
		II	7,500			37,500	2020	II	2,500			17,500
							Mar. 31	Depreciation
								I		15,000
								II		5,000		20,000
						37,500						37,500
2020							2020
Sep 30		Machinery disposal (II)				10,000	Apr. 01	Balance b/d
Mar.31, 2021		Balance c/d (I)				45,000		I		30,000
								II		7,500		37,500
							Sep 30	Depreciation (II)				2,500
							Mar. 31, 2021	Depreciation (I)				15,000
						55,000						55,000

 

Machinery Disposal Account
Dr.									Cr.
Date		Particulars	J.F.	Amount ( `)	Date	Particulars	J.F.	Amount ( `)
2020					2020
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 ( `)
Original Cost Oct 01, 2018	50,000
Less: Accumulated Depreciation	(10,000)
Book Value on Sept 30, 2020	40,000
Less: Sale Value	(40,000)
Profit / Loss	NIL

 

Page No 15.47:

Question 29:

On 1st April, 2014, Veeru Ltd. purchased a machinery for ` 2,50,000 and spent ` 50,000 on its installation. On 1st July, 2016, 1/3rd of machinery purchased on 1st April, 2014 was sold for ` 15,000 and a new machinery at the cost of ` 2,00,000 was purchased on the same date: The company has adopted the method of providing depreciation@15% p.a. on Straight Line Method. Show the Machinery Account, Provision for Depreciation Account and Machinery Disposal Account for three years ended on 31st March, 2015 to 31st March, 2017. (Delhi)

Answer:

Dr.	Machinery Account				Cr.
Date	Particulars	`	Date	Particulars	`
1-4-2014	To Bank A/c	2,50,000	31-3-2015	By Balance c/d	3,00,000
1-4-2014	To Bank A/c	50,000
		3,00,000			3,00,000
1-4-2015	To Balance b/d	3,00,000	31-3-2016	By Balance c/d	3,00,000
1-4-2016	To Balance b/d	3,00,000	1-7-2016	Machinery disposable A/c (WN 3)	1,00,000
1-7-2016	To Bank A/c	2,00,000	31-3-2017	By Balance c/d	4,00,000
		5,00,000			5,00,000

1

Dr.	Provision for Depreciation Account				Cr.
Date	Particulars	`	Date	Particulars	`
31-3-2015	To Balance c/d	45,000	31-3-2015	By Depreciation A/c	45,000
		45,000			45,000
31-3-2016	To Balance c/d	90,000	1-4-2015	By Balance b/d	45,000
			31-3-2016	By Depreciation A/c	45,000
		90,000			90,000
1-7-2016	To Machinery Disposal A/c (WN2)	33,750	1-4-2016	By Balance b/d	90,000
31-3-2017	To Balance c/d	1,12,500	1-7-2016	By Depreciation A/c (WN1)	3,750
			31-3-2017	By Depreciation A/c
				M1- 30,000
				M2- 22,500	52,500
		1,45,250			1,45,250

1

Dr.	Machinery Disposable Account				Cr.
Date	Particulars	`	Date	Particulars	`
1-7-2016	To Machinery A/c	1,00,000	1-7-2016	By Provision for Depreciation A/c (WN2)	33,750
	(WN 3)		1-7-2016	By Bank A/c	15,000
			1-7-2016	By P&L A/c	51,250
		1,00,000			1,00,000

Working Note:

WN 1-

Depreciation provided on the Machinery sold for 3 Month on the date of sale

1,00,000×15/100×3/12=3,750

 

WN 2- Deprecation transferred from Provision for Depreciation account to Disposal account

Depreciation for 1 Year on sold Machinery is 1,00,000×15/100=15,000

 

2014-2015	15,000
2015-2016	15,000
2016-2017	3,750
Deprecation transferred	33,750

 

WN 3-

1/3 Value of Machinery sold 3,00,000 ÷ 3 = 1,00,000

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