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

#### 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.

 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

#### 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.

 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)

#### 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.

 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

#### 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.

 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

#### 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)