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11th Standard English Medium Accountancy Subject Depreciation Accounting Book Back 5 Mark Questions with Solution Part - II updated Book back Questions

Published on: 13/05/2022

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Questions:

Generic 5

5 x 5 = 25

A Ltd., purchased a machine on 1st January 2014 for Rs. 60,000. On 1st July 2014, it purchased another machine for Rs. 50,000. On 1st July 2015, the company sold the machine purchased on 1st January 2014 for Rs. 40,000. It was decided that the machine be depreciated at 10% per annum on diminishing balance method. Show the machinery account for the years 2014 to 2016. The accounts are closed on December 31st, every year.

Anand bought a machinery for Rs.1,00,000 on 1-1-2015. On 1-6-2016, he bought another machine for Rs.50,000. On 1-10-2017, he purchased another machine for Rs.20,000. Provide depreciation at 10% p.a. on straight line method. Prepare machinery account for the years 2015 to 2017 by using accounts by assuming accounts are closed on 31^st December every year.

Ramu Brothers purchased a machine on 1st July 2016 at a cost of Rs.14,000 and spent Rs.1,000 on its installation. The firm writes off depreciation at 10% of original cost every year. The books are closed on 31st December every year. Give journal entries and prepare machinery account and depreciation account for 2 years

Raj & Co purchased a machine on 1st January 2014 for Rs. 90,000. On 1st July 2014, they purchased another machine for Rs. 60,000. On 1st January 2015, they sold the machine purchased on 1st January 2014 for Rs. 40,000. It was decided that the machine be depreciated at 10% per annum on diminishing balance method. Accounts are closed on 31st December every year. Show the machinery account for the years 2014 and 2015.

On 1^st January 2015, a second hand machine was purchased for Rs. 58,000 and Rs. 2,000 was spent on its repairs. On 1^stJuly 2017, it was sold for Rs. 28,600. Prepare the machinery account for the years 2011 to 2013 under written down value method by assuming the rate of depreciation as 10% p.a. and the accounts are closed on 31^st December every year.

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Answers Key:

Generic 5

5 x 5 = 25

Ledger accounts

**Dr. Machinery Account Cr.**
Date	Particulars		Date	Particulars
2015			2014
Jan 1	To Bank A/c	60,000	Dec 31	By Depreciation A/c	8,500
July 1	To Bank a/c	50,000	Dec 31	By Balance c/d	1,01,500
		1,10,000			1,10,000
2015 Jan 1	To Balance b/d	1,01,500	2015 July 1	By Depreciation A/c	2,700
			July 1	By Bank A/c	40,000
			July 1	BY Profit and Loss A/c	11,300
			Dec 31	By Depreciation A/c*	4,750
			Dec 31	By Balance c/d	42,750
		1,01,500			1,01,500
2016 Jan 1	To Balance b/d	42,750	Dec 31	By Depreciation A/c	4,275
				(42,750 \(\times\)10%)
			Dec 31	By Balance c/d	38,475
		42,750			42,750
2017 Jan 1	To Balance b/d	38,475

Note:
1. Computation of depreciation for the year 2014
Asset purchased on 1.1.14: 60,000 x 10% = 6,000
Asset purchased on 1.7.14: 50,000 x 10% x 6/12 = 2,500 Rs. 8,500
2. Computation of depreciation on the asset sold on 1.7.2015
Original cost on 1.1.2014 = 60,000
Less: Depreciation for 2014 (60,000 x 10%) = 6,000
Written down value on 1.1.2015 = 54,000
Less: Depreciation for 2015 upto 1.7.2015
(54,000 x 10% x 6/12) = 2,700
Book value 51,300
Sale price 40,000
Loss on sale of asset 11,300
3. Depreciation for 2015 for the asset purchased on 1.7.2014
Original cost on 1.7.2014 = 50,000
Less: Depreciation for 2014 (50,000 x 10% x 6/12) = 2,500
Written down value on 1.1.2015 47,500
Less: Depreciation for 2015 (47,500 x 10%) = 4,750

Dr. Machinery Account Cr
Date	Particulars	Rs	Date	Particulars	Rs
2015			2015
Jan 1	To Bank A/c	1,00,000	Dec 31	By Depreciation A/c	10,000
			Dec 31	By Balance c/d	90,000
		1,00,000			1,00,000
2016			2016
Jan 1	To Balance b/d	90,000	Dec 31	By Depreciation A/c	12,500
June 1	To Bank A/c	50,000	Dec 31	By Balance c/d	1,27,500
		1,40,000			1,40,000
2017			2017
Jan 1	To Balance b/d	1,27,500	Dec 31	By Depreciation A/c	15,500
Oct 1	To Bank A/c	20,000	Dec 31	By Balance c/d	1,32,000
		1,47,500			1,47,500
2018 Jan1	To Balance b/d	1,32,000

Cost of the asset = Purchase price + Installation cost
= 14,000 + 1,000 = Rs.15,000
Journal entries

Date	Particulars		Debit	Credit
2016	Machinery A/c	Dr	14,000
July 1	To Bank A/c			14,000
	(Machinery bought)
July 1	Machinery A/c	Dr	1,000
	To Bank A/c			1,000
	(Installation expenses on machinery incurred)
December 31	Depreciation A/c	Dr	750
	To Machinery A/c			750
	(15,000 × 10/100 × 6/12)
	(Depreciation provided)
December 31	Profit and Loss A/c Dr.	Dr	750
	To Depreciation A/c			750
	(Depreciation transferred to profit and loss account)
2017 December 31	Depreciation A/c (15,000 × 10/100)	Dr	1,500
	To Depreciation A/c			1,500
	(Depreciation transferred to profit and loss account)
December 31	Profit and Loss A/c	Dr	1,500
	To Depreciation A/c (Depreciation transferred to profit and loss account)			1,500

Ledgers

Dr Machinery Account Cr
Date	Particulars	Rs	Date	Particulars	Rs
2016			2016
July 1	To Cash A/c	15,000	Dec 31	By Depreciation A/c	750
				By Balance c/d	14,250
		15,000			15,000
2017	To Balance b/d	14,250	2017
Jan 1			Dec 31	By Depreciation A/c	1,500
				By Balance c/d	12,750
		14,250			14,250
2018
Jan 1	To Balance b/d	12,750

Dr. Depreciation Account Cr
Date	Particulars	Rs	Date	Particulars	Rs
2016			2016
Dec 31	To Machinery A/c	750	Dec 31	By Profit and Loss A/c	750
		750			750
2017			2017
Dec 31	To Machinery A/c	1,500	Dec 31	By Profit and Loss A/c	1,500
		1,500			1,500

Particulars	Amt(Rs.)
1. Calculation of Profit or Sale of the Machinery
Machinery purchased on 1.1.2014 \(90,000\times\frac{10}{100}\)	9,000
Machinery purchased on 1.7.2014 \(60,000\times\frac{10}{100}\times\frac{6}{12}\)	3,000
		12,000
2. Computation of depreciation on the asset sold on 1.7.2015
Original cost on 1.1.2014	90,000
Less: Depreciation for 2014 \((90,000\times\frac{10}{100})\)	9,000
Written down value on 1.1.2015	81,000
Less: Depreciation for 2015 upto 1.7.2015 \((81,000\times\frac{10}{100}\times\frac{6}{12})\)	4,050
Book value	76,950
Sales price	40,000
Loss on sale of asset	36,950
3. Depreciation for 2015 for the machine purchased on 1.7.2014
Original cost on 1.7.2014	60,000
Less: Depreciation for 2014\((60,000\times\frac{10}{100}\times\frac{6}{12})\)	3,000
Written down value on 1.1.2015	57,000
Less: Depreciation for 2015\((57,000\times\frac{10}{100})\)	5,700
	51,300

Dr. Ledger Account Machinery Account Cr.
Date	Particulars	Amount Rs.	Date	Particulars	Amount Rs.
2014 Jan 1	To Bank A/c	90,000	2014 Dec 31	By Depreciation A/c	12,000
July 1	To Bank A/c	60,000	Dec 31	By Balance c/d	1,38,000
		1,50,000			1,50,000
2015 Jan 1	To Balance b/d	1,38,000	2015 July 1	By Depreciation A/c	4,050
			July 1	By Bank A/c(sales)	40,000
			July 1	By Profit and loss A/c	36,950
			Dec 31	By Depreciation A/c	5,700
			Dee 31	By Balance c/d	51,300
		1,38,000.			1,38,000.
2016 Jan 1	To Balance b/d	51,300

Calculation of Profit or Loss on Sale of Machinery
Date	Particulars	Amount Rs.
2015 Jan 01	Cost Price (58,000 + 2,000)	60,000
2015 Dec 31	Less: Depreciation\([60,000\times\frac{10}{100}]\)	6,000
		54,000
2016 Dec 31	Less: .Depreciation\([54,000\times\frac{10}{100}]\)	5,400
		48,600
2017 July 01	Less: Depreciation\([48,600\times\frac{10}{100}\times\frac{6}{12}]\)	2,430
	Book Value of the Machinery	46,170
	Sales	28,600
	Loss on sale	17,570

Dr. Machinery Account Cr.
Date	Particulars	Amount Rs.	Date	Particulars	Amount Rs.
2015 Jan 01	To Bank A/c	60,000	2015 Dec 31	By Depreciation A/c	6,000
			2015 Dec 31	By Balance c/d	54,000
		60,000			60,000
2016 Jan 01	To Balance b/d	54,000	2016 Dec 31	By Depreciation A/c	5,400
			2016 Dec 31	By Balance c/d	48,600
		54,000			54,000
2016 Jan 01	To Balance b/d	48,600	2017 Dec 31	By Depreciation A/c	2,430
			2017 Dec 31	By Bank A/c	28,600
			2017 Dec 31	By Profit & LossA/c	17,570
		48,600			48,600