TS Grewal Accountancy Class 11 Solution Chapter 11 Depreciation

Read TS Grewal Accountancy Class 11 Solution Chapter 11 Depreciation 2023 2024. Students should study TS Grewal Solutions Class 11 Accountancy available on Studiestoday.com with solved questions and answers. These chapter-wise answers for Class 11 Accountancy have been prepared by expert teachers of Grade 11. These TS Grewal Class 11 Solutions have been designed as per the latest accountancy TS Grewal Book for Class 11 and if practiced thoroughly can help you to score good marks in standard 11 Accounts class tests and examinations.

Class 11 Accounts Chapter 11 Depreciation TS Grewal Solutions

TS Grewal Solutions for Chapter 11 Depreciation Class 11 Accounts have been provided below based on the latest TS Grewal Class 11 book. The answers have been prepared based on the latest 2023 2024 book for the current academic year. TS Grewal Solutions Class 11 will help students to improve their concepts and easily solve accountancy questions for Class 11. Class 11 Grewal solutions should be revised regularly as more practice will help you get a better rank and easily solve more questions.

Chapter 11 Depreciation TS Grewal Class 11 Solutions

Question 1:

Calculate the Rate of Depreciation under Straight Line Method (SLM) from the following:

Purchased a second-hand machine for Rs 96,000, spent Rs 24,000 on its cartage, repairs and installation, estimated useful life of machine 4 years. Estimated residual value Rs 72,000.

Answer 1:

Calculation of Rate of Depreciation by Straight line Method

Amount of Depreciation

=

Cost of Asset

-

Estimated Scrap Value

Number of year of life of Asset

Amount of Depreciation

=

1,20,000

-

72,000

4

 

 

Rate of Depreciation

=

Amount of Depreciation

×

100

 

Cost of Asset

 

Rate of Depreciation

=

12,000

×

100

=

10% P.A.

1,20,000

                 

Point of Knowledge:-

Cost of Assets = Purchases Price of Machine + Repairs and installation Charge.

PAGE NO 14.48:

Question 2:

On 1st April, 2015, X Ltd. purchased a machine costing Rs 4, 00,000 and spent Rs 50,000 on its installation. The estimated life of the machinery is 10 years, after which its residual value will be Rs 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 2:

Book of X Ltd.

Machinery Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2015

 

 

 

2016

 

 

 

April 01

To Bank a/c

 

4,50,000

Mar.31

By Depreciation a/c

 

40,000

 

(Cost of Asset+ Expense)

 

 

Mar.31

By Balance c/d

 

4,10,000

 

 

 

4,50,000

 

 

 

4,50,000

2016

 

 

 

2017

 

 

 

April 01

To Balance b/d

 

4,10,000

Mar.31

By Depreciation a/c

 

40,000

 

 

 

 

Mar.31

By Balance c/d

 

3,70,000

 

 

 

4,10,000

 

 

 

4,10,000

2017

 

 

 

2018

 

 

 

April 01

To Balance b/d

 

3,70,000

Mar.31

By Depreciation

 

40,000

 

 

 

 

Mar.31

By Balance c/d

 

3,30,000

 

 

 

3,70,000

 

 

 

3,70,000

 2018

 

 

 

 

 

 

 

April 01

To Balance b/d

 

3,30,000

 

 

 

 

 

Point of Knowledge:-

Cost of Assets = Purchases Price of Machine + Repairs and installation Charge

 

= 4, 00,000+50,000

= 4, 50,000

 

Working Note:-

 

Calculation of Depreciation:-

Amount of Depreciation

=

Cost of Asset

+

Installation Charge

-

Scrap Value

Number of year of life of Asset

 

Amount of Depreciation

=

4,00,000

+

50,000

-

50,000

10

 

=

40,000 P.A.

       
                   

 

 

PAGE NO 14.48:

 

Question 3:

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

 

Answer 3:

In the Books of.....

Furniture Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2014

 

 

 

2015

 

 

 

April 01

To Bank a/c -1

 

55,000

March 31

By Depreciation a/c -1

 

5,000

 

 

 

 

March 31

Balance c/d -1

 

50,000

 

 

 

55,000

 

 

 

55,000

2015

 

 

 

2016

 

 

 

April 01

To Balance b/d -1

 

50,000

March 31

By Depreciation a/c

 

 

April 01

To Bank a/c -2

 

9,500

 

1

Rs.5,000

 

 

 

 

 

 

 

2

Rs.900

 

5,900

 

 

 

 

March 31

By Balance c/d

 

 

 

 

 

 

 

1

Rs.45,000

 

 

 

 

 

 

 

2

Rs.8,600

 

53,600

 

 

 

59,500

 

 

 

59,500

2016

 

 

 

2017

 

 

 

April 01

To Balance b/d

 

 

March 31

By Depreciation a/c

 

 

 

1

Rs.45,000

 

 

 

1

Rs.5,000

 

 

 

2

Rs.8,600

 

53,600

 

2

Rs.900

 

5,900

 

 

 

 

March 31

By Balance c/d

 

 

 

 

 

 

 

1

Rs.40,000

 

 

 

 

 

 

 

2

Rs.7,700

 

47,700

 

 

 

53,600

 

 

 

53,600

2017

 

 

 

2018

 

 

 

April 01

To Balance b/d

 

 

March 31

By Depreciation a/c

 

 

 

1

Rs.40,000

 

 

 

1

Rs.5,000

 

 

 

2

Rs.7,700

 

47,700

 

2

Rs.900

 

 

Oct. 01

To Bank a/c -3

 

8,400

 

3

Rs.400

 

6,300

 

 

 

 

 

 

 

 

 

 

 

 

March 31

By Balance c/d

 

 

 

 

 

 

 

1

Rs.35,000

 

 

 

 

 

 

 

2

Rs.6,800

 

 

 

 

 

 

 

3

Rs.8,000

 

49,800

 

 

 

56,100

 

 

 

56,100

 

 

 

 

 

 

 

 

Working Notes:-

(1) Calculation of Depreciation

 

Amount of Depreciation

=

Cost of Asset

-

Scrap Value

Number of year of life of Asset

For Furniture_1

Amount of Depreciation

=

55,000

-

5,000

10

 

=

5000 P.A.

   
             

For Furniture_2

Amount of Depreciation

=

9,500

-

500

10

 

=

900 P.A.

   
             

For Furniture_3

Amount of Depreciation

=

8,400

-

400

10

 

=

800 P.A.

   
             

 

Depreciation for Furniture_3 (for Six Months)

=

800×

 

=

400

PAGE NO 14.49:

Question 4:

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

Answer 4:

Machinery Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2014

 

 

 

2015

 

 

 

April 01

To Bank a/c -1

 

2,50,000

March 31

By Depreciation a/c

 

 

Oct. 01

To Bank a/c -2

 

1,00,000

 

1

Rs.12,500

 

 

 

 

 

 

 

(6 Months) 2

Rs.2,500

 

15,000

 

 

 

 

March 31

By Balance c/d

 

 

 

 

 

 

 

1

Rs.2,37,500

 

 

 

 

 

 

 

2

Rs.97,500

 

3,35,000

 

 

 

3,50,000

 

 

 

3,50,000

2015

 

 

 

2016

 

 

 

April 01

To Balance b/d

 

 

March 31

By Depreciation a/c

 

 

 

1

Rs.2,37,500

 

 

 

1

Rs.12,500

 

 

 

2

Rs.97,500

 

3,35,000

 

2

Rs.5,000

 

17,500

 

 

 

 

 

 

 

 

 

 

 

 

March 31

By Balance c/d

 

 

 

 

 

 

 

1

Rs.2,25,000

 

 

 

 

 

 

 

2

Rs.92,500

 

3,17,500

 

 

 

3,35,000

 

 

 

3,35,000

2016

 

 

 

2016

 

 

 

April 01

To Balance b/d

 

 

Oct. 01

By Depreciation a/c

(For 6months)

 

6,250

 

1

Rs.2,25,000

 

 

Oct. 01

By Bank a/c -1

 

1,43,000

 

2

Rs.92,500

 

3,17,500

Oct. 01

By P&L a/c(loss on sale)

 

75,750

 

 

 

 

 

2017

 

 

 

July 01

To Bank a/c -3

 

2,00,000

March 31

By Depreciation a/c

 

 

 

 

 

 

 

2

Rs.5,000

 

 

 

 

 

 

 

(6 months)3

Rs.5,000

 

10,000

 

 

 

 

March 31

By Balance c/d

 

 

 

 

 

 

 

2

Rs.87,500

 

 

 

 

 

 

 

3

Rs.1,95,000

 

2,82,500

 

 

 

5,17,500

 

 

 

5,17,500

2017

 

 

 

2018

 

 

 

April 01

To Balance b/d

 

 

March 31

By Depreciation a/c

 

 

 

2

Rs. 87,500

 

 

 

2

Rs.5,000

 

 

 

3

Rs.1,95,000

 

2,82,500

 

3

Rs.10,000

 

15,000

 

 

 

 

March 31

By Balance c/d

 

 

 

 

 

 

 

2

Rs.82,500

 

 

 

 

 

 

 

3

Rs.1,85,000

 

2,67,500

 

 

 

2,82,500

 

 

 

2,82,500

 

 

 

 

 

 

 

 

                         

Point of Knowledge:-

Cost of Assets = Purchases Price of Machine + Repairs and installation Charge

 

= 2, 40,000 + 10,000

= 2, 50,000

Working Notes:-

(1) Calculation of Deprecation

 

Amount of Depreciation

=

Cost of Asset

×

Rate of Depreciation

 
 

For Machine_1

Amount of Depreciation

=

2,50,000

×

5

=

12,500 P.A.

100

For Machine_2

Amount of Depreciation

=

1,00,000

×

5

=

5,000 P.A.

100

For Machine_2 (Six Month)

Amount of Depreciation

=

1,00,000

×

5

×

6

=

2,500

100

12

For Machine_3

Amount of Depreciation

=

2,00,000

×

5

=

10,000 P.A.

100

(2) Calculation of Profit or Loss on sale of Machine -1

Particulars

Amount (Rs.)

Value of Machinery on 01 April,2016

2,25,000

(-) Total Depreciation on Machine 1

6,250

Value of Machinery on 01 Oct,2016

2,18,750

(-) Sales Price

1,43,000

Loss on Sale of Machinery

75,750

 PAGE NO 14.49:

Question 5:

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

 

1st April, 2017

:

Purchased a second-hand machinery for Rs 40,000

1st April, 2017

:

Spent ₹ 10,000 on repairs for making it serviceable.

30th September, 2017

:

Purchased additional new machinery for Rs 20,000.

31st December, 2017

:

Repairs and renewals of machinery Rs 3,000.

31st March, 2018

:

Depreciate the machinery at 10% p.a.

Answer 5:

Machinery Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particular

J.F.

Amount

(Rs)

2017

 

 

 

2018

 

 

 

Apr.01

To Bank a/c -1

 

50,000

Mar.31

By Depreciation a/c

 

 

Sept 30

To Bank a/c -2

 

20,000

 

1

Rs.5,000

 

 

 

 

 

 

 

(6 months) 2

Rs.1,000

 

6,000

 

 

 

 

Mar.31

By Balance c/d

 

 

 

 

 

 

 

1

Rs.45,000

 

 

 

 

 

 

 

(6 months) 2

Rs.19,000

 

64,000

 

 

 

70,000

 

 

 

70,000

 

 

 

 

 

 

 

 

                   

Point of Knowledge:-

If the Repair & Renewal Charge made on same day, when the machinery was purchases then it should be added in the cost of machinery. But after purchasing date, expenses on machinery should not be recorded in the Machinery Account.

 

PAGE NO 14.49:

Question 6:

An asset was purchased for Rs 10,500 on 1st April, 2011. The scrap value was estimated to be Rs 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 Rs 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 6:

Asset Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2011

 

 

 

2012

 

 

 

April 01

To Bank a/c

 

10,500

Mar.31

By Depreciation a/c

 

1,000

 

 

 

 

Mar.31

By Balance c/d

 

9,500

 

 

 

10,500

 

 

 

10,500

2012

 

 

 

2013

 

 

 

April 01

To Balance b/d

 

9,500

Mar.31

By Depreciation a/c

 

1,000

 

 

 

 

Mar.31

By Balance c/d

 

8,500

 

 

 

9,500

 

 

 

9,500

2013

 

 

 

2014

 

 

 

April 01

To Balance b/d

 

8,500

Mar.31

By Depreciation a/c

 

1,000

 

 

 

 

Mar.31

By Balance c/d a/c

 

7,500

 

 

 

8,500

 

 

 

8,500

2014

 

 

 

2015

 

 

 

April 01

To Balance b/d

 

7,500

Mar.31

By Depreciation a/c

 

1,000

 

 

 

 

Mar.31

By Balance c/d

 

6,500

 

 

 

7,500

 

 

 

7,500

2015

 

 

 

2016

 

 

 

April 01

To Balance b/d

 

6,500

Mar.31

By Depreciation a/c

 

1,000

 

 

 

 

Mar.31

By Balance c/d

 

5,500

 

 

 

6,500

 

 

 

6,500

2016

 

 

 

2017

 

 

 

April 01

To Balance b/d

 

5,500

Mar.31

By Depreciation a/c

 

1,000

 

 

 

 

Mar.31

By Balance c/d

 

4,500

 

 

 

5,500

 

 

 

5,500

2017

 

 

 

2018

 

 

 

April 01

To Balance b/d

 

4,500

Mar.31

By Depreciation a/c

 

1,000

 

 

 

 

Mar.31

By Bank a/c

 

600

 

 

 

 

Mar.31

By P & L a/c (Loss)

 

2,900

 

 

 

4,500

 

 

 

4,500

 

 

 

 

 

 

 

 

 

(i) Depreciation expense for the year ended 31st March, 2012

 

Amount of Depreciation

=

Cost of Asset

-

Scrap Value

Number of year of life of Asset

 

Amount of Depreciation

=

10,500

-

500

10

 

=

1000 P.A.

 

 

             

 

(ii) The Net book value of the assets on 31st March, 2016

 

Net Book Value = Cost Price – Depreciation till date

= Rs. 10,500 – (1,000×5)

= Rs. 5,500

 

(iii) Calculation of Profit or Loss on the sale of Asset.

Particulars

Amount (Rs.)

Value of Assets on 01 April,2017

10,500

(-) Total Depreciation (1000×7)

7,000

Net Book value of Asset

3,500

(-) Sales Price

600

Loss on Sale of Machinery

2,900

PAGE NO 14.49:

Question 7:

A Van was purchased on 1st April, 2015 for Rs 60,000 and Rs 5,000 was spent on its repair and Registration. On 1st October, 2016 another van was purchased for Rs 70,000. On 1st April, 2017, the first van purchased on 1st April, 2015 was sold for Rs 45,000 and a new van costing Rs 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 7:

Van Account 

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2015

 

 

 

2016

 

 

 

April 01

To Bank a/c -1

 

65,000

March 31

By Depreciation a/c -1

 

6,500

 

 

 

 

March 31

By Balance c/d

 

58,500

 

 

 

65,000

 

 

 

65,000

2016

 

 

 

2017

 

 

 

April 01

To Balance b/d -1

 

58,500

March 31

By Depreciation a/c

 

 

Oct. 01

To Bank a/c -2

 

70,000

 

1

6,500

 

 

 

 

 

 

 

(6 month) 2

3,500

 

10,000

 

 

 

 

March 31

By Balance c/d

 

 

 

 

 

 

 

1

52,000

 

 

 

 

 

 

 

2

66,500

 

1,18,500

 

 

 

1,28,500

 

 

 

1,28,500

2017

 

 

 

2017

 

 

 

April 01

To Balance b/d

 

 

April 01

By Bank a/c -1

 

45,000

 

1

52,000

 

 

April 01

By P & L a/c (Loss on Sale)

 

7,000

 

2

66,500

 

1,18,500

2018

 

 

 

 

   

 

 

March 31

By Depreciation a/c

 

 

April 01

To Bank a/c -3

 

1,70,000

 

2

7,000

 

 

 

 

 

 

 

3

17,000

 

24,000

 

 

 

 

March 31

By Balance c/d

 

 

 

 

 

 

 

2

59,500

 

 

 

 

 

 

 

3

1,53,000

 

2,12,500

 

 

 

2,88,500

 

 

 

2,88,500

 

 

 

 

 

 

 

 

                       

Working Notes:-

(1) Calculation of Depreciation:-

 

Amount of Depreciation

=

Cost of Asset

×

Rate of Depreciation

 
 

For VAN_1

Amount of Depreciation

=

65,000

×

10

=

6,500 P.A.

100

For VAN_2

Amount of Depreciation

=

70,000

×

10

=

7,000 P.A.

100

For VAN_2 (Six Month)

Amount of Depreciation

=

70,000

×

10

×

6

=

Rs.3,500

100

12

For VAN_3

Amount of Depreciation

=

1,70,000

×

10

=

17,000 P.A.

100

 

(2) Calculation of Profit and loss on sale of Van _1 

 

 

 

Particulars

Amount (Rs.)

Value of Machinery on 01 April,2016

65,000

(-) Total Depreciation on Van 1

13,000

Value of Machinery on 01 April,2016

52,000

(-) Sales Price

45,000

Loss on Sale of Machinery

7,000

       

 

PAGE NO 14.50:

Question 8:

A company whose accounting year is a financial year, purchased on 1st July, 2014 machinery costing Rs 30,000.
It purchased further machinery on 1st January, 2015 costing Rs 20,000 and on 1st October, 2015 costing Rs 10,000.
On 1st April, 2016, one-third of the machinery installed on 1st July, 2014 became obsolete and was sold for Rs 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 8:

Machinery Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)s

2014

 

 

 

2015

 

 

 

July 01

To Bank a/c -1

 

30,000

March 31

By Depreciation a/c

 

 

2015

 

 

 

 

 

 

 

Jan. 01

To Bank a/c -2

 

20,000

 

(9 months) 1

2,250

 

 

 

 

 

 

 

2

500

 

2,750

 

 

 

 

March 31

By Balanced c/d

 

 

 

 

 

 

 

1

27,750

 

 

 

 

 

 

 

2

19,500

 

47,250

 

 

 

50,000

 

 

 

50,000

2015

 

 

 

2016

 

 

 

April01

To Balance b/d

 

 

March 31

By Depreciation a/c

 

 

 

1

27,750

 

 

 

1

3,000

 

 

 

2

19,500

 

47,250

 

2

2,000

 

 

 

 

 

 

 

3

500

 

5,500

Oct. 01

To Bank a/c -3

 

10,000

March 31

By Balance c/d

 

 

 

 

 

 

 

1

24,750

 

 

 

 

 

 

 

2

17,500

 

 

 

 

 

 

 

3

9,500

 

51,750

 

 

 

57,250

 

 

 

57,250

2016

 

 

 

2016

 

 

 

April01

To Balance b/d

 

 

April 01

By Bank a/c 1 (1/3rd portion)

 

3,000

 

1

24,750

 

 

April 01

By P&L a/c (Loss on Sale)-1

 

5,250

 

2

17,500

 

 

2017

 

 

 

 

3

9,500

 

 51,750

March 31

By Depreciation a/c

 

 

 

   

 

 

 

(2/3rdportion) 1

2,000

 

 

 

 

 

 

 

2

2,000

 

 

 

 

 

 

 

3

1,000

 

5,000

 

 

 

 

March 31

By Balance c/d

 

 

 

 

 

 

 

(2/3rdportion) 1

14,500

 

 

 

 

 

 

 

2

15,500

 

 

 

 

 

 

 

3

8,500

 

38,500

 

 

 

51,750

 

 

 

51,750

 

 

 

 

 

 

 

 

                     

Working Notes:-

 

1. Calculation of Depreciation

 

Amount of Depreciation

=

Cost of Asset

×

Rate of Depreciation

 
 


Amount of Depreciation_ for Machinery 1

Amount of Depreciation

=

30,000

×

10

=

Rs. 3,000 P.A.

100


Amount of Depreciation_ for Machinery 1 (For 9 Months)

Amount of Depreciation

=

30,000

×

10

×

9

=

Rs. 2,250

100

12

 

Amount of Depreciation_ for Machinery 2

Amount of Depreciation

=

20,000

×

10

=

2,000 P.A.

100

 

Amount of Depreciation_ for Machinery 3

Amount of Depreciation

=

10,000

×

10

=

1,000 P.A.

100

 

(2) Calculation of Profit & Loss on sale of 1/3rd Part of Machine-1

Particulars

Amount (Rs.)

Value of Machinery on 01 April,2016

30,000

(-) Total Depreciation on Machinery 1

5,250

Value of Machinery on 01 April,2016

24,750

Value of 1/3rd Part of Machinery on 01 April,2016 (24,750×1/3)

8,250

(-) Sales Price

3,000

Loss on Sale of Machinery

5,250

 

 PAGE NO 14.50:

Question 9:

On 1st July, 2015, A Co. Ltd. purchases second-hand machinery for Rs 20,000 and spends Rs 3,000 on reconditioning and installing it. On 1st January, 2016, the firm purchases new machinery worth Rs 12,000. On 30th June, 2017, the machinery purchased on 1st January, 2016, was sold for Rs 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

Rs 5,000

30th June, 2018

Rs 6,000

30th June, 2019

Rs 5,500


Payments in 2018 and 2019 include interest of Rs 1,000 and Rs 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 9:

Books of A. Co. Ltd

Machinery Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2015

 

 

 

2016

 

 

 

July 01

To Bank a/c -1

 

23,000

Mar.31

By Depreciation a/c

 

 

2016

 

 

 

 

(9 months) 1

1,725

 

 

Jan.01

To Bank a/c -2

 

12,000

 

(3 months) 2

300

 

2,025

 

 

 

 

Mar.31

By Balance c/d

 

 

 

 

 

 

 

1

21,275

 

 

 

 

 

 

 

2

11,700

 

32,975

 

 

 

35,000

 

 

 

35,000

2016

 

 

 

2017

 

 

 

April 01

To Balance b/d

 

 

Mar.31

By Depreciation a/c

 

 

 

1

21,275

 

 

 

1

2,300

 

 

 

2

11,700

 

32,975

 

2

1,200

 

3,500

 

 

 

 

Mar.31

By Balance c/d

 

 

 

 

 

 

 

1

18,975

 

 

 

 

 

 

 

2

10,500

 

29,475

 

 

 

32,975

 

 

 

32,975

2017

 

 

 

2017

 

 

 

April 01

To Balance b/d

 

 

June 30

By Bank a/c -2

 

8,000

 

1

18,975

 

 

June 30

By Depreciation a/c -2

(3 months)

 

300

 

2

10,500

 

29,475

June 30

By P&L a/c (Loss on Sale)

 

2,200

July 01

To Bank a/c -3

 

5,000

2018

 

 

 

July 01

To Creditors a/c -3

 

10,000

Mar.31

By Depreciation a/c

 

 

 

 

 

 

 

1

2,300

 

 

 

 

 

 

 

(9 months) 3

1,125

 

3,425

 

 

 

 

 

By Balance c/d

 

 

 

 

 

 

 

1

16,675

 

 

 

 

 

 

 

3

13,875

 

30,550

 

 

 

44,475

 

 

 

44,475

 

 

 

 

 

 

 

 

Point of Knowledge:-

(1) Cost of Assets = Purchases Price of Machine + installation Charge

= 20,000 + 3,000

=Rs. 23,000

(2) Calculation of Creditors

Calculation of Creditors

Total Value of New Machinery

=

15000

Less: Cash Payment

=

5000

Pending Amount of Machinery

=

10000

1st Installment Excluding Interest paid on 30 June 2018 (6000-1000)

=

5000

2nd Installment Excluding Interest paid on 30 June 2018 (5500-500)

=

5000

Working Notes:-

1. Calculation of Depreciation

Amount of Depreciation

=

Cost of Asset

×

Rate of Depreciation

 
 

Amount of Depreciation_ for Machinery 1

Amount of Depreciation

=

23,000

×

10

=

Rs. 2,300 P.A.

100

 

 

Depreciation on Machinery 1 for 9 Months

2300

×

9

=

Rs. 1725

12

 Amount of Depreciation_ for Machinery 2

Amount of Depreciation

=

12,000

×

10

=

1,200 P.A.

100

Depreciation on Machinery 2 for 3 Months

1,200

×

3

=

Rs. 300

12


Amount of Depreciation_ for Machinery 3

Amount of Depreciation

=

15,000

×

10

=

1,500 P.A.

100

 

Depreciation on Machinery 3 for 9 Months

1,500

×

9

=

Rs. 1125

12

 

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

 

Particulars

Amount (Rs.)

Value of Machinery on 01 July,2015

12,000

(-) Total Depreciation on Machinery 2

1,800

Value of Machinery on 01 April,2017

10,200

(-) Sales Price

8,000

Loss on Sale of Machinery

2,200

 

PAGE NO 14.50:

Question 10:

On 1st April, 2015, Shivam Enterprise purchased second-hand machinery for Rs 52,000 and spent Rs 2,000 on cartage, Rs 3,000 on unloading, Rs 2,000 on installation and Rs 1,000 as brokerage of the middle man. It was estimated that the machinery will have a scrap value of Rs 6,000 at the end of its useful life, which is 10 years. On 31st December 2015, repairs and renewals amounted to Rs 2,500 were paid. On 1st October, 2017, this machine was sold for Rs 30,600 and an amount of Rs 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 10:

Calculation of Depreciation

Amount of Depreciation

=

Cost of Asset

+

Installation Charge

-

Scrap Value

Number of year of life of Asset



Amount of Depreciation

=

60,000

+

0

-

6,000

10

 

=

5,400

       


Calculation of Rate of Depreciation

Rate of Depreciation

=

Amount of Depreciation

×

100

Cost of Asset



Rate of Depreciation

=

5,400

×

100

=

9%

60,000


 

Machinery Account

Dr.

Cr.

Date

Particulars

Amount

(Rs)

Date

Particulars

Amount

(Rs)

2015

 

 

2016

 

 

Apr. 01

To Bank A/c

60,000

Mar. 31

By Depreciation A/c

5,400

 

 

 

Mar. 31

By Balance c/d

54,600

 

 

60,000

 

 

60,000

2016

 

 

2017

 

 

Apr. 01

To Balance b/d

54,600

Mar. 31

By Depreciation A/c

5,400

 

 

 

Mar. 31

By Balance c/d

49,200

 

 

 

 

 

 

 

 

54,600

 

 

54,600

2017

 

 

2017

 

 

Apr. 01

To Balance b/d

49,200

Oct. 01

By Depreciation A/c (6 months)

2,700

 

 

 

 

By Bank A/c (Sale)

30,000

 

 

 

 

By P&L A/c (Loss on Sale)

16,500

 

 

 

 

 

 

 

 

49,200

 

 

49,200

 

 

 

 

 

 

             

Working Notes:- 

(1) Cost of Machinery: -

52,000+2,000+3,000+2,000+1,000 = Rs. 60,000/-

(2) Calculation of Profit or Loss on Sale

Particulars

Amount (Rs.)

Value of Machinery on 01 April,2015

60,000

(-) Total Depreciation on Machinery

13,500

Value of Machinery on 01 Oct.,2017

46,500

(-) Sales Price

30,000

Loss on Sale of Machinery

16,500

Point of Knowledge:-

1. If the nature of Expense is recurring it will not be added to Machinery A/c.

2. All the expenses which incurred on the date of purchases will be added to cost of machine.


PAGE NO 14.51:

Question 11:

Modern Ltd. purchased a machinery on 1st August, 2015 for Rs 60,000. On 1st October, 2016, it purchased another machine for Rs 20,000 plus CGST and SGST @ 6% each. On 30th June, 2017, it sold the first machine purchased in 2015 for Rs 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 11:

Books of Modern Ltd.

Machinery Account 

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2015

 

 

 

2016

 

 

 

Aug.01

To Bank a/c -1

 

60,000

March 31

By Depreciation a/c -1

(8 months)

 

8,000 

 

 

 

 

March 31

Balance c/d

 

52,000

 

 

 

60,000

 

 

 

60,000

2016

 

 

 

2017

 

 

 

April 01

To Balance b/d

 

52,000

March 31

By Depreciation a/c

 

 

Oct. 01

To Bank a/c -2

 

20,000

 

1

12,000

 

 

 

 

 

 

 

(6 months) 2

2,000

 

14,000

 

 

 

 

March 31

By Balance c/d

 

 

 

 

 

 

 

1

40,000

 

 

 

 

 

 

 

2

18,000

 

58,000

 

 

 

72,000

 

 

 

72,000

2017

 

 

 

2017

 

 

 

April 01

To Balance b/d

 

 

June 30

By Depreciation a/c -1

(3 months)

 

3,000

 

1

40,000

 

 

June 30

By Bank a/c -1

 

38,500

 

2

18,000

 

58,000

2018

 

 

 

June 30

To P&L a/c (profit)

 

1,500

Mar.31

By Depreciation a/c -2

 

4,000

 

 

 

 

Mar.31

By Balance c/d

 

14,000

 

 

 

59,500

 

 

 

59,500

 

 

 

 

 

 

 

 

                     


Working Notes:-

(1). Calculation of Depreciation

Amount of Depreciation

=

Cost of Asset

×

Rate of Depreciation

 
 


Amount of Depreciation for Machinery 1

 

Amount of Depreciation

=

60,000

×

20

=

12,000 P.A.

100


Depreciation on Machinery 1 for 8 Months

 

12000

×

8

=

Rs. 8,000

12


Depreciation on Machinery 1 for 3 Months

 

12000

×

3

=

Rs. 3,000

12

 

Amount of Depreciation_ for Machinery 2

 

Amount of Depreciation

=

20,000

×

20

=

4,000 P.A.

100

 

Depreciation on Machinery 1 for 6 Months

4000

×

6

=

Rs. 8,000

12


(2). Calculation of Profit or Loss on Sale

Particulars

Amount (Rs.)

Value of Machinery on 01 April,2015

60,000

(-) Total Depreciation on Machinery

23,000

Value of Machinery on 01 Oct.,2017

37,000

(-) Sales Price

38,500

Profit on Sale of Machinery

1,500

Total Depreciation = 8,000 + 12,000 + 3,000 = 23,000


(3). Journal entries for purchase and sale.

Journal

 

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

 

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

 

 

(Being Purchased Machinery, CGST & SGST @ 6% paid)

 

 

 

 

 

 

 

 

 

 

2017

 

 

 

 

 

Jun 30

Bank A/c Dr.

 

 43,120

 

 

 

  To Machinery A/c

 

 

38,500

 

 

  To Output IGST A/c

 

 

4,620

 

 

(Being Machinery sold & IGST @ 12% charged) 

 

 

 

 

 

 

 

 

 

 

             

PAGE NO 14.51:

Question 12:

On 1st July, 2015, Sohan Lal & Sons purchased a plant costing Rs 60,000. Additonal plant was purchased on 1st January, 2016 for Rs 40,000 and on 1st October, 2016, for Rs 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 Rs 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 12:

Books of Sohan Lal & Sons

Plant Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2015