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Question 21 Chapter 11 – Unimax Publications of Class 11
The following balance appear in the books of Gupta Ltd.
Machinery A/c as on 1.4.2019 = ₹ 8,00,000povision for depreciation as on 1.4.2019 = ₹ 3,10,000
On 1.7.2019 a machinery which was purchased on 1.4.2017 for ₹ 1,20,000 was sold for ₹ 50,000 and on the same date anther machinery was purchased was purchased for ₹ 32,000. The firms charges depreciation @ 15% p.a. on original method and closed its books on 31st March every year. Prepare the ‘Machinery A/c’ and ‘ Provision for depreciation A/c’ for the year 2019-2020.
Show your working clearly. Also give the journal entries for the sale of machinery.
The solution of Question 21 Chapter 11 – Unimax Publications of Class 11
| Dr. | Machine A/c | Cr. | |||||
| Date | Particulars | J.F. | Amount | Date | Particulars | J.F. | Amount |
| 01/04/19 | To Balance b/d | 8,00,000 | 01/07/19 | By Provision for Deprecation A/c | 40,500 | ||
| 01/07/19 | To Bank A/c | 32,000 | 01/07/19 | By Bank A/c | 50,000 | ||
| 01/07/19 | By Profit & Loss A/c | 29,500 | |||||
| 31/03/20 | By Balance C/d | 7,21,000 | |||||
| 8,32,000 | 8,32,000 | ||||||
| Dr. | Provision for Depreciation A/c | Cr. | |||||
| Date | Particulars | J.F. | Amount | Date | Particulars | J.F. | Amount |
| 01/07/19 | To Machinery A/c | 40,500 | 01/04/19 | To Balance b/d | 3,10,000 | ||
| 31/03/20 | To Balance c/d | 3,79,600 | 31/03/20 | By Depreciation A/c | 1,10,100 | ||
| 4,20,100 | 4,20,100 | ||||||
Working Note:
(1) Book value of machinery sold on July 1,2019 = ₹ 79,500.
(2) Loss on sale of machinery = ₹ (79,500-50,000) = ₹ 29,500.
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