Question No 18 Chapter No 12
18. A Company, which closes its books on 31st March every year, purchased on 1st July 2017, machinery costing 30,000. It purchased further machinery on 1st January 2018, costing 20,000, and on 1st October 2011, costing 10,000. On 1st April 2019, one-third of the machinery installed on 1st July 2019, became obsolete and was sold for 3,000.
Show how the machinery account would appear in the books of the Company, it is given that machinery was depreciated by Diminishing Balance Method at 10% per annum. What would be the balance of the Machinery Account on 1st April 2020?
The solution of Question No 18 Chapter No 12: –
| Dr. | Machinery A/c | Cr. | |||||
| Date | Particulars |
J.F. | Amount | Date | Particulars |
J.F. | Amount |
| 1st Jul.2017 | To Bank A/c (10,000+ 20,000) | 30,000 | 31st Mar 2018 | By Deprecation A/c(750+ 1,500 + 500) | 2,750 | ||
| 1st Jan.2018 | To Bank A/c | 20,000 | 31st Mar 2018 | By Balance C/d | 47,250 | ||
| 50,000 | 50,000 | ||||||
| 1st Apr.2018 | To Balance b/f | 47,250 | 31st Mar 2019 | By Deprecation A/c (925 + 1,850 +1,950 + 500) | 5,225 | ||
| 1st Oct.2018 | To Bank A/c | 10,000 | 31st Mar 2019 | By Balance C/d |
52,025 | ||
| 57,250 | 57,250 | ||||||
| 1st Apr.2019 | To Balance b/f | 52,025 | 1st Apr.2019 | By Bank A/c | 3,000 | ||
| 1st Apr.2019 | By Profit & Loss A/c | 5,325 | |||||
| 31st Mar 2020 | By Deprecation A/c (1,665 + 1,755 + 950) | 4,370 | |||||
| 31st Mar 2020 | By Balance C/d (7,290 + 29,160 + 25,650) | 39,330 |
|||||
| 52,025 |
52,025 | ||||||
Working Note:
Calculation of Profit or Loss on Sale
| Statement Showing profit or loss on the sale of Machinery | |
| Particulars |
Amount |
| Machinery Purchase on of Equipment as on 1st Jul. 2017 | 10,000 |
| Less: – Amount of Depreciation charged on the year 2017-18 | |
| 10,000 *10%* 12/12 | 750 |
| Amount of Depreciation charged on the year 2018-19 | |
| 9,250 *10%* 12/12 | 925 |
| Book value of an asset as of 1st Oct 2019 | 8,325 |
| Sale Price of Machinery | 3,000 |
| Profit on the sale of the asset | 5,325 |
Note: In order to make easy calculation, machinery purchased on July 01, 2010 has been divided into two parts i.e. M1 and M2. Thus, M1: 1/3rd value i.e Rs 10,000 (sold for Rs 3,000) M2: 2/3rd value i.e. Rs 40,000 (remained in the business)
https://tutorstips.com/depreciation/
Comment if you have any question.
Also, Check out the solved question of all Chapters: –
D K Goel – New ISC Accountancy -(Class 11 – ICSE)- Solution
- Chapter 1 Evolution of Accounting & Basic Accounting Terms
- Chapter 2 Accounting Equations
- Chapter 3 Meaning and Objectives of Accounting
- Chapter 4 Double Entry System
- Chapter 5 Books of Original Entry – Journal
- Chapter 6 Accounting for Goods and Service Tax (GST) (Coming soon)
- Chapter 7 Books of Original Entry – Cash Book (Coming soon)
- Chapter 8 Books of Original Entry – Special Purpose Subsidiary Books (Coming soon)
- Chapter 9 Ledger (Coming soon)
- Chapter 10 Trial Balance and Errors (Coming soon)
- Chapter 11 Bank Reconciliation Statement (Coming soon)
- Chapter 12 Depreciation (Coming soon)
- Chapter 13 Bills of Exchange (Coming soon)
- Chapter 14 Generally Accepted Accounting Principles(GAAP)
- Chapter 15 Bases of Accounting
- Chapter 16 Accounting Standards and International Financial Reporting Standard(IFRS) (Coming soon)
- Chapter 17 Capital and Revenue
- Chapter 18 Provisions and Reserves
- Chapter 19 Final Accounts (Coming soon)
- Chapter 20 Final Accounts – With Adjustments (Coming soon)
- Chapter 21 Errors and their Rectification (Coming soon)
- Chapter 22 Accounts from Incomplete Records – Single Entry System (Coming soon)
- Chapter 23 Accounts of Not-for-Profit Organisations (Coming soon)
- Chapter 24 Computerised Accounting System (Coming soon)
- Chapter 25 Introduction to Accounting Information System (Coming soon)
Check out the Accountancy Class +1 by D.K. Goal (Arya Publication) from their official Site.
