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Page No 14.48:

Question 1:

Calculate the Rate of Depreciation under Straight Line Method (SLM) from the following:
Purchased a second-hand machine for ₹ 96,000, spent ₹ 24,000 on its cartage, repairs and installation, estimated useful life of machine 4 years. Estimated residual value ₹ 72,000.

Answer:

Amount of Depreciation=Cost of MachineScrap Value of Machine Life in Years                                       =1,20,00072,0004=Rs 12,000Rate of Depreciation=Amount of DepreciationCost of Machine×100                                  =12,0001,20,000×100=10%p.a.

Page No 14.48:

Question 2:

On 1st April, 2015, X Ltd. purchased a machine costing ₹ 4,00,000 and spent ₹ 50,000 on its installation. The estimated life of the machinery is 10 years, after which its residual value will be ₹ 50,000 only. Find the amount of annual depreciation according to the Fixed Instalment Method and prepare Machinery Account for t he first three years. The books are closed on 31st March every year.

Answer:

Book of X Ltd.

Machinery Account 

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2015

 

 

 

2016

 

 

 

April 01

Bank

 

4,00,000

Mar.31

Depreciation

 

40,000

April 01

Bank (Erection Expense)

 

50,000

 

Balance c/d

 

4,10,000

 

 

 

4,50,000

 

 

 

4,50,000

2016

 

 

 

2017

 

 

 

April 01

Balance b/d

 

4,10,000

Mar.31

Depreciation

 

40,000

 

 

 

 

 

Balance c/d

 

3,70,000

 

 

 

4,10,000

 

 

 

4,10,000

2017

 

 

 

2018

 

 

 

April 01

Balance b/d

 

3,70,000

Mar.31

Depreciation

 

40,000

 

 

 

 

 

Balance c/d

 

3,30,000

 

 

 

3,70,000

 

 

 

3,70,000

 

 

 

 

 

 

 

 

Calculation of Depreciation:

Depreciation p.a.=4,00,000+50,000-50,000(Scrap Value)10 years                              =Rs 40,000 p.a.

Page No 14.48:

Question 3:

On 1st April, 2014, furniture costing ₹ 55,000 was purchased. It is estimated that its life is 10 years at the end of which it will be sold for ₹ 5,000. Additions are made on 1st April 2015 and 1st October, 2017 to the value of ₹ 9,500 and ₹ 8,400 (Residual values ₹ 500 and ₹ 400 respectively). Show the Furniture Account for the first four years, if Depreciation is written off according to the Straight Line Method.

Answer:

Furniture Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2014

 

 

 

2015

 

 

 

April 01

Bank (F1)

 

55,000

March 31

Depreciation (F1)

 

5,000

 

 

 

 

March 31

Balance c/d (F1)

 

50,000

 

 

 

55,000

 

 

 

55,000

2015

 

 

 

2016

 

 

 

April 01

Balance b/d (F1)

 

50,000

March 31

Depreciation

 

 

April 01

Bank (F2)

 

9,500

 

F1

5,000

 

 

 

 

 

 

 

F2

900

 

5,900

 

 

 

 

March 31

Balance c/d

 

 

 

 

 

 

 

F1

45,000

 

 

 

 

 

 

 

F2

8,600

 

53,600

 

 

 

59,500

 

 

 

59,500

2016

 

 

 

2017

 

 

 

April 01

Balance b/d

 

 

March 31

Depreciation

 

 

 

F1

45,000

 

 

 

F1

5,000

 

 

 

F2

8,600

 

53,600

 

F2

900

 

5,900

 

 

 

 

March 31

Balance c/d

 

 

 

 

 

 

 

F1

40,000

 

 

 

 

 

 

 

F2

7,700

 

47,700

 

 

 

53,600

 

 

 

53,600

2017

 

 

 

2018

 

 

 

April 01

Balance b/d

 

 

March 31

Depreciation

 

 

 

F1

40,000

 

 

 

F1

5,000

 

 

 

F2

7,700

 

47,700

 

F2

900

 

 

Oct. 01

Bank (F3)

 

8,400

 

F3

400

 

6,300

 

 

 

 

 

 

 

 

 

 

 

 

March 31

Balance c/d

 

 

 

 

 

 

 

F1

35,000

 

 

 

 

 

 

 

F2

6,800

 

 

 

 

 

 

 

F3

8,000

 

49,800

 

 

 

56,100

 

 

 

56,100

 

 

 

 

 

 

 

 

Working Notes:



Page No 14.49:

Question 4:

On 1st April, 2014, A Ltd. purchased a machine for ₹ 2,40,000 and spent ₹ 10,000 on its erection. On 1st October, 2014 an additional machinery costing ₹ 1,00,000 was purchased. On 1st October, 2016, the machine purchased on 1st April, 2014 was sold for ₹ 1,43,000 and on the same date, a new machine was purchased ata cost of ₹ 2,00,000.

Answer:

Machinery Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2014

 

 

 

2015

 

 

 

April 01

Bank (M1)

 

2,50,000

March 31

Depreciation

 

 

Oct. 01

Bank (M2)

 

1,00,000

 

M1

12,500

 

 

 

 

 

 

 

M2 (6 Months)

2,500

 

15,000

 

 

 

 

March 31

Balance c/d

 

 

 

 

 

 

 

M1

2,37,500

 

 

 

 

 

 

 

M2

97,500

 

3,35,000

 

 

 

3,50,000

 

 

 

3,50,000

2015

 

 

 

2016

 

 

 

April 01

Balance b/d

 

 

March 31

Depreciation

 

 

 

M1

2,37,500

 

 

 

M1

12,500

 

 

 

M2

97,500

 

3,35,000

 

M2

5,000

 

17,500

 

 

 

 

 

 

 

 

 

 

 

 

March 31

Balance c/d

 

 

 

 

 

 

 

M1

2,25,000

 

 

 

 

 

 

 

M2

92,500

 

3,17,500

 

 

 

3,35,000

 

 

 

3,35,000

2016

 

 

 

2016

 

 

 

April 01

Balance b/d

 

 

Oct. 01

Depreciation (for 6 months)

 

6,250

 

M1

2,25,000

 

 

Oct. 01

Bank (M1 sold)

 

1,43,000

 

M2

92,500

 

3,17,500

Oct. 01

Profit and Loss (loss on sale)

 

75,750

          2017      

July 01

Bank (M3)

 

2,00,000

March 31

Depreciation

 

 

 

 

 

 

 

M2

5,000

 

 

 

 

 

 

 

M3 (for 6 months)

5,000

 

10,000

 

 

 

 

March 31

Balance c/d

 

 

 

 

 

 

 

M2

87,500

 

 

 

 

 

 

 

M3

1,95,000

 

2,82,500

 

 

 

5,17,500

 

 

 

5,17,500

2017

 

 

 

2018

 

 

 

April 01

Balance b/d

 

 

March 31

Depreciation

 

 

 

M2

87,500

 

 

 

M2

5,000

 

 

 

M3

1,95,000

 

2,82,500

 

M3

10,000

 

15,000

 

 

 

 

March 31

Balance c/d

 

 

 

 

 

 

 

M2

82,500

 

 

 

 

 

 

 

M3

1,85,000

 

2,67,500

 

 

 

2,82,500

 

 

 

2,82,500

 

 

 

 

 

 

 

 

 

Working Notes:

1. Calculation of Deprecation  

2. Calculation of profit or loss on sale of Machine 1

Particulars

Amount

(Rs)

Book Value on April 01, 2016

2,25,000

Less: Deprecation for six month

(6,250)

Book Value on Oct. 01, 2016

2,18,750

Less: Sale Proceeds

(1,43,000)

Loss on Sale of Machine

75,750

 

Page No 14.49:

Question 5:

From the following transactions of a concern, prepare the Machinery Account for the year ended 31st March, 2018:

1st April, 2017 : Purchased a second-hand machinery for ₹ 40,000
1st April, 2017 : Spent ₹ 10,000 on repairs for making it serviceable.
30th September, 2017 : Purchased additional new machinery for ₹ 20,000.
31st December, 2017 : Repairs and renewals of machinery ₹ 3,000.
31st March, 2018 : Depreciate the machinery at 10% p.a.

Answer:

Machinery Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particular

J.F.

Amount

(Rs)

2017

 

 

 

2018

 

 

 

Apr.01

Bank (M1)

 

50,000

Mar.31

Depreciation

 

 

Sept 30

Bank (M2)

 

20,000

 

M1

5,000

 

 

 

 

 

 

 

M2 (6 months)

1,000

 

6,000

 

 

 

 

Mar.31

Balance c/d

 

 

 

 

 

 

 

M1

45,000

 

 

 

 

 

 

 

M2 (6 months)

19,000

 

64,000

 

 

 

70,000

 

 

 

70,000

 

 

 

 

 

 

 

 

Note: 

Repair and renewal made on December 31, 2017 will not be recorded in Machinery Account because, this repair was made after putting the Machinery into use.

Page No 14.49:

Question 6:

An asset was purchased for ₹ 10,500 on 1st April, 2011. The scrap value was estimated to to be ₹ 500 at the end of asset's 10 years' life. Straight Line Method of depreciation was used. The accounting year ends on 31st March every year. The asset was sold for ₹ 600 on 31st March, 2018. Calculate the following.
(i) The Depreciation expense for the year ended 31st March, 2012.
(ii) The net book value of the asset on 31st March, 2016.
(iii) The grain or loss on sale of the asset on 31st March, 2018.

Answer:

Asset Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2011

 

 

 

2012

 

 

 

April 01

Bank

 

10,500

Mar.31

Depreciation

 

1,000

 

 

 

 

Mar.31

Balance c/d

 

9,500

 

 

 

10,500

 

 

 

10,500

2012

 

 

 

2013

 

 

 

April 01

Balance b/d

 

9,500

Mar.31

Depreciation

 

1,000

 

 

 

 

Mar.31

Balance c/d

 

8,500

 

 

 

9,500

 

 

 

9,500

2013

 

 

 

2014

 

 

 

April 01

Balance b/d

 

8,500

Mar.31

Depreciation

 

1,000

 

 

 

 

Mar.31

Balance c/d

 

7,500

 

 

 

8,500

 

 

 

8,500

2014

 

 

 

2015

 

 

 

April 01

Balance b/d

 

7,500

Mar.31

Depreciation

 

1,000

 

 

 

 

Mar.31

Balance c/d

 

6,500

 

 

 

7,500

 

 

 

7,500

2015

 

 

 

2016

 

 

 

April 01

Balance b/d

 

6,500

Mar.31

Depreciation

 

1,000

 

 

 

 

Mar.31

Balance c/d

 

5,500

 

 

 

6,500

 

 

 

6,500

2016

 

 

 

2017

 

 

 

April 01

Balance b/d

 

5,500

Mar.31

Depreciation

 

1,000

 

 

 

 

Mar.31

Balance c/d

 

4,500

 

 

 

5,500

 

 

 

5,500

2017

 

 

 

2018

 

 

 

April 01

Balance b/d

 

4,500

Mar.31

Depreciation

 

1,000

 

 

 

 

Mar.31

Bank

 

600

 

 

 

 

Mar.31

Profit and Loss (Loss)

 

2,900

 

 

 

4,500

 

 

 

4,500

 

 

 

 

 

 

 

 

(i) Depreciation Expense for the year ended March 31, 2012 is Rs 1000

(ii) The Net Book Value of the asset on March 31, 2016 is Rs 5,500

(iii) Loss on Sale of the asset on March 31, 2018 is Rs 2,900

Page No 14.49:

Question 7:

A Van was purchased on 1st April, 2015 for ₹ 60,000 and ₹ 5,000 was spent on its repair and registration. On 1st October, 2016 another van was purchased for ₹ 70,000. On 1st April, 2017, the first van purchased on 1st April, 2015 was sold for ₹ 45,000 and a new van costing ₹ 1,70,000 was purchased on the same date. Show the Van Account from 2015-16 to 2017-18 on the basis of Straight Line Method, if the rate of Depreciation charged is 10% p.a. Assume that books are closed on 31st March every year.

Answer:

Van Account 

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2015

 

 

 

2016

 

 

 

April 01

Bank (I)

 

65,000

March 31

Depreciation (I)

 

6,500

 

 

 

 

March 31

Balance c/d (I)

 

58,500

 

 

 

65,000

 

 

 

65,000

2016

 

 

 

2017

 

 

 

April 01

Balance b/d (I)

 

58,500

March 31

Depreciation

 

 

Oct. 01

Bank (II)

 

70,000

 

(I)

6,500

 

 

 

 

 

 

 

(II) (for 6 month)

3,500

 

10,000

 

 

 

 

March 31

Balance c/d

 

 

 

 

 

 

 

(I)

52,000

 

 

 

 

 

 

 

(II)

66,500

 

1,18,500

 

 

 

1,28,500

 

 

 

1,28,500

2017

 

 

 

2017

 

 

 

April 01

Balance b/d

 

 

April 01

Bank (I)

 

45,000

 

(I)

52,000

 

 

April 01

Profit and Loss (Loss on Sale)

 

7,000

          2018      

 

(II)

66,500

 

1,18,500

March 31

Depreciation

 

 

April 01

Bank (III)

 

1,70,000

 

(II)

7,000

 

 

 

 

 

 

 

(III)

17,000

 

24,000

 

 

 

 

March 31

Balance c/d

 

 

 

 

 

 

 

(II)

59,500

 

 

 

 

 

 

 

(III)

1,53,000

 

2,12,500

 

 

 

2,88,500

 

 

 

2,88,500

 

 

 

 

 

 

 

 

Working Notes

1. Calculation of Annual Depreciation

2. Calculation of profit or loss on sale of Van (I)

 

Particulars

Amount

(Rs)

Book Value on Apr. 01, 2017

52,000

Less: Sale of Van

(45,000)

Loss on Sale of Van

7,000



Page No 14.50:

Question 8:

A company whose accounting year is a financial year, purchased on 1st July, 2014 machinery costing ₹ 30,000.
It purchased further machinery on 1st January, 2015 costing ₹ 20,000 and on 1st October, 2015 costing ₹ 10,000.
On 1st April, 2016, one-third of the machinery installed on 1st July, 2014 became obsolete and was sold for ₹ 3,000.
Show how Machinery Account would appear in the books of the company. It being given that machinery was depreciated by Fixed Instalment Method at 10% p.a. What would be the value of Machinery Account on 1st April, 2017?

Answer:

Machinery Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2014

 

 

 

2015

 

 

 

July 01

Bank (I)

 

30,000

March 31

Depreciation

 

 

2015              

Jan. 01

Bank (II)

 

20,000

 

I (for 9 months)

2,250

 

 

 

 

 

 

 

II

500

 

2,750

 

 

 

 

March 31

Balanced c/d

 

 

 

 

 

 

 

I

27,750

 

 

 

 

 

 

 

II

19,500

 

47,250

 

 

 

50,000

 

 

 

50,000

2015

 

 

 

2016

 

 

 

April 01

Balance b/d

 

 

March 31

Depreciation

 

 

 

I

27,750

 

 

 

I

3,000

 

 

 

II

19,500

 

47,250

 

II

2,000

 

 

 

 

 

 

 

III

500

 

5,500

Oct. 01

Bank (III)

 

10,000

March 31

Balance c/d

 

 

 

 

 

 

 

I

24,750

 

 

 

 

 

 

 

II

17,500

 

 

 

 

 

 

 

III

9,500

 

51,750

 

 

 

57,250

 

 

 

57,250

2016

 

 

 

2016

 

 

 

April 01

Balance b/d

 

 

April 01

Bank I(1/3rd portion)

 

3,000

 

I

24,750

 

 

April 01

Profit and Loss (Loss on Sale of I)

 

5,250

          2017      

 

II

17,500

 

 

March 31

Depreciation

 

 

 

III

9,500

 

51,750

 

I (on 2/3rd portion)

2,000

 

 

 

 

 

 

 

II

2,000

 

 

 

 

 

 

 

III

1,000

 

5,000

 

 

 

 

March 31

Balance c/d

 

 

 

 

 

 

 

I (on 2/3rd portion)

14,500

 

 

 

 

 

 

 

II

15,500

 

 

 

 

 

 

 

III

8,500

 

38,500

 

 

 

51,750

 

 

 

51,750

 

 

 

 

 

 

 

 

Working Notes

1. Calculation of Depreciation

 

Calculation of profit or loss on sale of 1/3rd Portion of Machine I

Particulars

Amount (Rs)

Book Value of 1/3rd portion of Machine I on April 01, 2016 (24,750 × 1/3)

8,250

Less: Sale Value

(3,000)

Loss on sale

5,250

 

Page No 14.50:

Question 9:

On 1st July, 2015, A Co. Ltd. purchases second-hand machinery for ₹ 20,000 and spends ₹ 3,000 on reconditioning and installing it. On 1st January, 2016, the firm purchases new machinery worth ₹ 12,000. On 30th June, 2017, the machinery purchased on 1st January, 2016, was sold for ₹ 8,000 and on 1st July, 2017, a fresh plant was installed. Payment for this plant was to be made as follows:
 

1st July, 2017 ₹ 5,000
30th June, 2018 ₹ 6,000
30th June, 2019 ₹ 5,500

Payments in 2018 and 2019 include interest of ₹ 1,000 and ₹ 500 respectively.
The company writes off 10% p.a. on the original cost. The accounts are closed every year on 31st March. Show the Machinery Account for the year ended 31st March, 2018.

Answer:

Books of A. Co. Ltd

Machinery

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2015

 

 

 

2016

 

 

 

July 01

Bank (I) (20,000 + 3,000)

 

23,000

Mar.31

Depreciation

 

 

2016

 

 

 

 

I (for 9 months)

1,725

 

 

Jan.01

Bank (II)

 

12,000

 

II (for 3 months)

300

 

2,025

 

 

 

 

Mar.31

Balance c/d

 

 

 

 

 

 

 

I

21,275

 

 

 

 

 

 

 

II

11,700

 

32,975

 

 

 

35,000

 

 

 

35,000

2016

 

 

 

2017

 

 

 

April 01

Balance b/d

 

 

Mar.31

Depreciation

 

 

 

I

21,275

 

 

 

I

2,300

 

 

 

II

11,700

 

32,975

 

II

1,200

 

3,500

 

 

 

 

Mar.31

Balance c/d

 

 

 

 

 

 

 

I

18,975

 

 

 

 

 

 

 

II

10,500

 

29,475

 

 

 

32,975

 

 

 

32,975

2017

 

 

 

2017

 

 

 

April 01

Balance b/d

 

 

June 30

Bank (II)

 

8,000

 

I

18,975

 

 

June 30

Depreciation (II) (for 3 months)

 

300

 

II

10,500

 

29,475

June 30

Profit and Loss (Loss)

 

2,200

July 01

Bank (III)

 

5,000

2018

 

 

 

July 01

Creditors for plant (III)

 

10,000

Mar.31

Depreciation

 

 

 

 

 

 

 

I

2,300

 

 

 

 

 

 

 

III (on 15,000 for 8 months)

1,125

 

3,425

 

 

 

 

 

Balance c/d

 

 

 

 

 

 

 

I

16,675

 

 

 

 

 

 

 

III

13,875

 

30,550

 

 

 

44,475

 

 

 

44,475

 

 

 

 

 

 

 

 

 

Working Notes

1. Calculation of Depreciation

2.     Calculation of profit on loss on sale of Machine (II)

 

Particulars

Amount (Rs)

Book Value of Machine (II) on April 01, 2017

10,500

Less: Depreciation for 3 Months

(300)

Book Value on June 30

10,200

Less: Sale

(8,000)

Loss on Sale

2,200

Page No 14.50:

Question 10:

On 1st April, 2015, Shivam Enterprise purchased a second-hand machinery for ₹ 52,000 and spent ₹ 2,000 on cartage, ₹ 3,000 on unloading, ₹ 2,000 on installation and ₹ 1,000 as brokerage of the middle man. It was estimated that the machinery will have a scrap value of ₹ 6,000 at the end of its useful life, which is 10 years. On 31st December 2015, repairs and renewals amounted to ₹ 2,500 were paid. On 1st October, 2017, this machine was sold for ₹ 30,600 and an amount of ₹ 600 was paid as commission to an agent. Calculate the amount of annual depreciation and rate of depreciation. Also prepare the Machinery Account for first 3 years, assuming that firm follows financial year for accounting.

Answer:

Amount of Depreciation=Cost of MachineScrap Value of Machine Life in Years                                       =60,000 (Note)6,00010=Rs 5,400Rate of Depreciation=Amount of DepreciationCost of Machine×100                                  =5,40060,000×100=9% p.a.
 

Machinery Account

Dr.

Cr.

Date

Particulars

Amount

(Rs)

Date

Particulars

Amount

(Rs)

2015

 

 

2016

 

 

Apr. 01

Bank A/c

60,000

Mar. 31

Depreciation A/c

5,400

 

 

 

Mar. 31

Balance c/d

54,600

 

 

60,000

 

 

60,000

2016

 

 

2017

 

 

Apr. 01

Balance b/d

54,600

Mar. 31

Depreciation A/c

5,400

 

 

 

Mar. 31

Balance c/d

49,200

 

 

 

 

 

 

 

 

54,600

 

 

54,600

2017

 

 

2017

 

 

Apr. 01

Balance b/d

49,200

Oct. 01

Depreciation A/c (for 6 months)

2,700

 

 

 

 

Bank A/c (Sale)

30,000

 

 

 

 

Profit and Loss A/c (Loss on Sale)

16,500

 

 

 

 

 

 

 

 

49,200

 

 

49,200

 

 

 

 

 

 

             

 

Working Notes: Calculation of Profit or Loss on Sale

Particulars

Amount

Value of Machine as on Apr. 01, 2017

49,200

Less: Depreciation for 6 months

2,700

Value of M1 as on Oct. 01, 2017

46,500

Less: Sale Value

30,000

Loss on Sale

16,500

 

 

 

Note:

1. All the expenses incurred up to the date at which machine is put in use will be added to cost of machine.
2. The amount spent on repairs is a recurring nature expenses. So, it will not be added to Machine A/c.
3. Cost of Machine = 52,000 + 2,000 + 3,000 + 2,000 + 1,000 = Rs 60,000



Page No 14.51:

Question 11:

Modern Ltd. purchased a machinery on 1st August, 2015 for ₹ 60,000. On 1st October, 2016, it purchased another machine for ₹ 20,000 plus CGST and SGST @ 6% each. On 30th June, 2017, it sold the first machine purchased in 2015 for ₹ 38,500 charging IGST @ 12%. Depreciation is provided @ 20% p.a. on the original cost each year. Accounts are closed on 31st March every year. Prepare the Machinery A/c for three years.

Answer:

Books of Modern Ltd.

Machinery Account 

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2015

 

 

 

2016

 

 

 

Aug.01

Bank (M1)

 

60,000

March 31

Depreciation

 

 

 

 

 

 

 

M1 (for 8 months)

 

8,000

 

 

 

 

March 31

Balance c/d

 

52,000

 

 

 

60,000

 

 

 

60,000

2016

 

 

 

2017

 

 

 

April 01

Balance b/d

 

52,000

March 31

Depreciation

 

 

Oct. 01

Bank (M2)

 

20,000

 

M1

12,000

 

 

 

 

 

 

 

M2 (6 months)

2,000

 

14,000

 

 

 

 

March 31

Balance c/d

 

 

 

 

 

 

 

M1

40,000

 

 

 

 

 

 

 

M2

18,000

 

58,000

 

 

 

72,000

 

 

 

72,000

2017

 

 

 

2017

 

 

 

April 01

Balance b/d

 

 

June 30

Depreciation (M1) (for 3 months)

 

3,000

 

M1

40,000

 

 

June 30

Bank (M1)

 

38,500

 

M2

18,000

 

58,000

2018

 

 

 

June 30 Profit and Loss (profit)   1,500 Mar.31 Depreciation (M2)   4,000

 

 

 

 

Mar.31

Balance c/d

 

14,000

 

 

 

59,500

 

 

 

59,500

 

 

 

 

 

 

 

 

Working Notes

1. Calculation of Annual Depreciation

Particulars

Amount

(Rs)

Value on Apr 01, 2017

40,000

Depreciation for 3 Months

(3,000)

Value on June 30, 2017

37,000

Less: Sales Value of Machine

(38,500)

Profit on sale of Machine 1

1,500


3. Journal entries for purchase and sale with GST
Journal
Date
Particulars
L.F.
Debit
Amount
(₹)
Credit
Amount
(₹)
2016
 
 
 
 
 
Oct 01
Machinery A/c
Dr.
 
20,000
 
 
Input CGST A/c
Dr.
 
1,200
 
 
Input SGST A/c
Dr.
 
1,200
 
 
  To Bank A/c
 
 
 
22,400
 
(Machinery purchased with CGST and SGST @ 6% each paid)
 
 
 
 
 
 
 
 
 
 
2017
 
 
 
 
 
Jun 30
Bank A/c
Dr.
 
43,120
 
 
  To Machinery A/c
 
 
 
38,500
 
  To Output IGST A/c
(Machinery purchased on 1st Aug, 2015 sold with IGST @ 12%.)
 
 
 
4,620
 
 
 
 
 
 
 
 
 
 
 
 

Page No 14.51:

Question 12:

On 1st July, 2015, Sohan Lal & Sons purchased a plant costing ₹ 60,000. Additonal plant was purchased on 1st January, 2016 for ₹ 40,000 and on 1st October, 2016, for ₹ 20,000, paying CGST and SGST @ 6% each. On 1st April, 2017, one-third of the plant purchased on 1st July, 2015, was found to have become obsolete and was sold for ₹ 6,000, charging CGST and SGST @ 6% each.
Prepare the Plant Account for the first three years in the books of Sohan Lal & Sons. Depreciation is charged @ 10% p.a. on Straight Line Method. Accounts are closed on 31st March each year.

Answer:

Books of Sohan Lal & Sons

Plant Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2015

 

 

 

2016

 

 

 

July 01

Bank (I)

 

60,000

March 31

Depreciation

 

 

 

 

 

 

 

(I) for 9 months

4,500

 

 

2016

 

 

 

 

(II) for 3 months

1,000

 

5,500

Jan. 01

Bank (II)

 

40,000

March 31

Balance c/d

 

 

 

 

 

 

 

(I)

55,500

 

 

 

 

 

 

 

(II)

39,000

 

94,500

 

 

 

1,00,000

 

 

 

1,00,000

2016

 

 

 

2017

 

 

 

April 01

Balance b/d

 

 

March 31

Depreciation

 

 

 

(I)

55,500

 

 

 

(I)

6,000

 

 

 

(II)

39,000

 

94,500

 

(II)

4,000

 

 

Oct. 01

Bank (III)

 

20,000

 

(III) for 6 months

1,000

 

11,000

 

 

 

 

March 31

Balance c/d