Question No 21 Chapter No 12 – D.K Goal 11 Class

Question No 21 Chapter No 12

21. On 1st July 2015, ABC Ltd. purchase 4 machines for 80,000 each. The accounting year of the company ends on 31st March every year. Depreciation is provided at the rate of 15% p.a. on original cost. On 1st April, 2017 one machine was sold for 50,000 and on 1st January 2019, a second machine was sold for 40,000. Another machine with a higher capacity which cost 2,00,000 was purchased on 1st January, 2019.
You are required to show: (i) Machinery Account, (ii) Depreciation Account, and (iii) Provision for Depreciation Account for four years
ending 31st March, 2019.

The solution of Question No 21 Chapter No 12: –

Dr.	Machinery A/c						Cr.
Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
1st Jul.2015	To Bank A/c (80,000 + 80,000 + 1,60,000)		3,20,000
				31st Mar 2016	By Balance C/d		3,20,000
			3,20,000				3,20,000
1st Apr.2016	To Balance b/f		3,20,000
				31st Mar 2017	By Balance C/d		3,20,000
			3,20,000				3,20,000
1st Apr.2017	To Balance b/f		3,20,000	1st Apr.2017	By Provision for Depreciation A/c		21,000
				1st Apr.2017	By Bank A/c (Sale)		50,000
				1st Apr.2017	By Profit & Loss A/c		9,000
				31st Mar 2018	By Balance C/d(80,000 + 1,60,000)		2,40,000
			3,20,000				3,20,000
1st Apr.2019	To Balance b/f		2,40,000	1st Jan.2019	By Provision for Depreciation A/c		42,000
1st Jan.2019	To Profit and Loss A/c (Profit on Sale of M2)		2,000	1st Jan.2019	By Bank A/c (Sale)		40,000
1st Jan.2019	To Bank A/c (M4)		2,00,000
				31st Mar 2020	By Balance C/d(1,60,000 + 2,00,000)		3,60,000
			4,42,000				4,42,000

Dr.	Depreciation A/c						Cr.
Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
31stMar2016	To Provision for Depreciation A/c		36,000
				31st Mar 2016	By Profit & Loss A/c		36,000
			36,000				36,000
31stMar.2017	To Provision for Depreciation A/c		48,000
				31st Mar 2017	By Profit & Loss A/c		48,000
			48,000				48,000
1st Apr.2018	To Provision for Depreciation A/c		36,000
				31st Mar 2018	By Profit & Loss A/c		36,000
			36,000				36,000
1st Apr.2019	To Balance b/f		40,500
				31st Mar 2020	By Profit & Loss A/c		40,500
			40,500				40,500

Dr.	Provision for Depreciation  A/c						Cr.
Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
				31st Mar.2016	By Depreciation A/c (9,000 + 9,000 + 18,000)		36,000
31stMar.2016	Balance c/d		36,000
			36,000				36,000
				31st Apr 2017	By Balance b/d		36,000
31stMar.2018	Balance c/d		84,000	31st Mar 2018	By Depreciation A/c (5,000 + 5,000 + 20,000)		48,000
			84,000				84,000
1st Oct.2019	To Balance b/f(9,000 + 12,000)		21,000	31st Apr 2018	By Balance b/d		84,000
1st Apr.2018	To Balance b/f		99,000	31st Mar.2019	By Depreciation A/c (12,000 + 24,000)		36,000
			1,20,000				1,20,000
1st Jan.2019	To Balance b/f(9,000 + 12,000 + 12,000 + 9,000)		42,000	31st Apr 2019	By Balance b/d		99,000
				31st Mar.2019	By Depreciation A/c		20,000
1st Apr.2020	To Balance b/f		97,500	31st Mar.2019	By Depreciation A/c (24,000 + 7,500)		31,500
			1,39,500				1,39,500

Working Note:
Calculation of Profit or Loss on Sale M1

Statement Showing profit or loss on the sale of Machinery
Particulars	Amount
Machinery Purchase on of Equipment as on 1st Jul. 2015	80,000
Less: – Amount of Depreciation charged on the year 2015-16
80,000 *15%* 9/12	9,000
Amount of Depreciation charged on the year 2018-19
80,000 *15%* 12/12	12,000
Book value of the asset as of 1st Oct 2018	59,000
Sale Price of Machinery	50,000
Loss on the sale of the asset	9,000

Calculation of Profit & Loss on Sale of M2

Statement Showing profit or loss on the sale of Machinery
Particulars	Amount
Machinery Purchase on of Equipment as on 1st Jul. 2015	80,000
Less: – Amount of Depreciation charged on the year 2015-16
80,000 *15%* 9/12	9,000
Amount of Depreciation charged on the year 2016-17
80,000 *15%* 12/12	12,000
Amount of Depreciation charged on the year 2017-18
80,000 *15%* 12/12	12,000
Amount of Depreciation charged on the year 2018-19
80,000 *15%* 9/12	9,000
Book value of the asset as of 1st Oct 2018	38,000
Sale Price of Machinery	40,000
Profit on the sale of the asset	2,000

Note: In order to make easy calculations, machinery purchased on July 01, 2015, has been divided into three parts i.e. M1, M2, and M3.
Thus,
M1: Rs 80,000 (sold for Rs 50,000 on Apr. 01, 2017)
M2: Rs 80,000 (sold for Rs 40,000 on Jan. 01, 2019)
M3: Rs 1,60,000 (includes the cost of 2 machines)

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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)

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