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Question 20 Chapter 11 – Unimax Publications of Class 11
On 1st Jan., 2017 a company purchased a machinery for ₹ 10,000. It spent ₹ 2,000 on its erection. On 1st July,2017 it purchased another machinery for ₹ 4,000. On 1st Jan., 2019 the machinery purchased on 1st Jan. 2017 ₹ was sold for ₹ 4,600. The company writes on depreciation a 10% p.a. on the diminishing balance method. Prepare machinery account for three years ending 31st Dec., 2019.
The solution of Question 20 Chapter 11 – Unimax Publications of Class 11
| Dr. | Machine A/c | Cr. | |||||
| Date | Particulars | J.F. | Amount | Date | Particulars | J.F. | Amount |
| 01/04/17 | To Bank A/c | 10,000 | 31/12/17 | By Deprecation A/c | 1,400 | ||
| 01/10/17 | To Bank A/c | 2,000 | 31/12/17 | By Balance C/d | 14,600 | ||
| 01/10/17 | To Bank A/c | 4,000 | |||||
| 16,000 | 16,000 | ||||||
| 01/01/18 | To Balance b/d | 14,600 | 31/12/18 | By Deprecation A/c | 1,460 | ||
| 31/12/18 | By Balance C/d | 13,140 | |||||
| 14,600 | 14,600 | ||||||
| 01/01/19 | To Balance b/d | 13,140 | 31/10/19 | By Bank A/c | 4,600 | ||
| 31/10/19 | By Profit & Loss A/c | 5,120 | |||||
| 31/12/19 | By Deprecation A/c | 342 | |||||
| 31/12/19 | By Balance C/d | 3,078 | |||||
| 13,140 | 13,140 | ||||||
Working Note:
(1) Depreciation on machinery purchased on Jan. 2017:
Dep. On 31/12/2017 = ₹ 1,200.
Dep. On 31/12/2018 = ₹ 1,080.
(2) Book value of machinery purchased on Jan.1,2017 at, date Jan.1,2019 ₹ = 9,720.
(3) Loss on sale machinery = ₹ (9,720-4,600) = ₹ 5,120.
(4) Depreciation on machinery purchased on July 1,2017:
Dep. On 31/12/2017 = ₹ 200
Dep. On 31/12/2018 = ₹ 380
Dep. On 31/12/2019 = ₹ 342
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