Question No 22 Chapter No 12 – D.K Goal 11 Class

Question No 22 Chapter No 12

22. X Ltd. which closes its books of account every year on 31st March, purchased on 1st October, 2011 machinery costing 4,40,000. It purchased further machinery on 1st April, 2012 costing 5,20,000. On 30th June, 2013, the first machine was sold for 2,50,000 and on the same date a fresh machine was installed at a cost of 3,00,000. On 1st July 2014, the second machine purchased on 1st April 2012 was also sold for 3,25,000.
The company writes off depreciation at 10% p.a. on the Straight Line Method each year. Show the Machinery A/c, Depreciation A/c and Provision for Depreciation A/c for all the four years.

The solution of Question No 22 Chapter No 12: –

Dr.	Machinery A/c						Cr.
Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
1st Oct.2011	To Bank A/c		4,40,000
				31st Mar 2012	By Balance C/d		4,40,000
			4,40,000				4,40,000
1st Apr.2012	To Balance b/f		4,40,000
1st Apr.2012	To Bank A/c		5,20,000	31st Mar 2013	By Balance C/d		9,60,000
			9,60,000				9,60,000
1st Apr.2013	To Balance b/f		9,60,000	1st Jun.2013	By Provision for Depreciation A/c		77,000
30stJun.2013	To Bank A/c		3,00,000	1st Jun.2013	By Bank A/c (Sale)		2,50,000
				1st Jun.2013	By Profit & Loss A/c		1,13,000
				31st Mar 2014	By Balance C/d(5,20,000 + 3,00,000)		8,20,000
			12,60,000				12,60,000
1st Apr.2013	To Balance b/f		8,20,000	1st Jul.2014	By Provision for Depreciation A/c		1,17,000
				1st Jul.2014	By Bank A/c (Sale)		3,25,000
				1st Jul.2014	By Profit & Loss A/c		78,000
				31st Mar 2015	By Balance C/d(1,60,000 + 2,00,000)		3,60,000
			8,20,000				8,20,000

Dr.	Depreciation A/c						Cr.
Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
31stMar2012	To Provision for Depreciation A/c		22,000
				31st Mar 20112	By Profit & Loss A/c		22,000
			22,000				22,000
31stMar.2013	To Provision for Depreciation A/c		96,000
				31st Mar 2013	By Profit & Loss A/c		96,000
			96,000				96,000
1st Apr.2014	To Provision for Depreciation A/c		85,500
				31st Mar 2014	By Profit & Loss A/c		85,500
			85,500				85,500
1st Apr.2015	To Balance b/f		43,000
				31st Mar 2025	By Profit & Loss A/c		43,000
			43,000				43,000

Dr.	Provision for Depreciation  A/c						Cr.
Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
				31st Mar.2012	By Depreciation A/c (9,000 + 9,000 + 18,000)		22,000
31stMar.2012	Balance c/d		22,000
			22,000				22,000
				31st Apr 2012	By Balance b/d		22,000
31stMar.2013	Balance c/d		1,18,000	31st Mar 2013	By Depreciation A/c (44,000 + 52,000)		96,000
			1,18,000				1,18,000
1st Jan.2013	To Balance b/f(22,000 + 44,000 + 11,000)		77,000	31st Apr 2013	By Balance b/d		84,000
				1st Jan.2013	By Depreciation A/c (3 Months)		11,000
1st Apr.2014	To Balance b/f		1,26,500	31st Mar.2014	By Depreciation A/c (12,000 + 24,000)		74,500
			2,03,500				2,03,500
1st Jan.2014	To Machinery A/c(52,000 + 52,000 + 13,000)		1,17,000	31st Apr 2014	By Balance b/d		1,26,500
				31st Mar.2015	By Depreciation A/c93 months)		13,000
1st Apr.2015	To Balance b/f		52,500	31st Mar.2015	By Depreciation A/c (24,000 + 7,500)		30,000
			1,69,500				1,69,500

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 Oct. 2011	4,40,000
Less: – Amount of Depreciation charged on the year 2011-12
4,40,000 *10%* 6/12	22,000
Amount of Depreciation charged on the year 2012-13
4,40,000 *10%* 6/12	44,000
Amount of Depreciation charged on the year 2013-14
4,40,000 *10%* 3/12	11,000
Book value of the asset as of 1st Oct 2018	3,63,000
Sale Price of Machinery	2,50,000
Loss on the sale of the asset	1,13,000

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 Apr. 2012	5,20,000
Less: – Amount of Depreciation charged on the year 2012-13
5,20,0000 *10%* 12/12	52,000
Amount of Depreciation charged on the year 2013-14
5,20,0000 *10%* 12/12	52,000
Amount of Depreciation charged on the year 2014-15
5,20,000 *10%* 3/12	13,000
Book value of asset as of 30st Jun 2014	4,03,000
Sale Price of Machinery	3,25,000
Loss on the sale of the asset	78,000

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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