Question

5. Furniture (book value) Rs.5,000 were sold for Rs.4,500. New furniture
worth Rs.10,000 were purchased during the year. The amount which is
to be debited to income and expenditure account is:
a) Profit on sale Rs.500
b) Loss on sale Rs.500
c) Sale of Furniture Rs.4,500
d) Purchase of furniture:10,000​

Answer 1

The amount to be debited is Loss on sale Rs.500.

• The  income and expenditure account records all the revenue and expenses of a firm in a financial calendar year.
• The book value of the furniture is Rs, 5000, whereas it has been sold for Rs. 4500.
• Thus, the difference = 5000 - 4500 = 500
• Since, the firm is incurring a loss, thus the loss amount of Rs 500 will be debited to  income and expenditure account

Answer 2

Unused furniture sold for RS 4000 (book value Unused furniture sold for RS 4000 (book value 4500) 4500)