Jung Traders purchased an equipment on lst July, 2015 for R 28,000 and spent2,000 for
its carriage and installation. On 1st October, 2015 and on 1st Jan., 2016 additional
equipments were bought for 40,000 and 10,000 respectively. On 31st March, 2017, first
equipment was auctioned for ? 20,000 and replaced by a new one for 20,000 on the same
day. On 30th September, 2018, the second equipment was taken away at home at 60% of
the book value. On 31st March, 2019, third equipment was heavily damaged and could not
fetch anything. Depreciation was charged at 20% p.a. on reducing instalment basis.
Prepare Equipment Account till March 31, 2019 with all workings, financial year being
followed.
Answers
Answer:
Question : On July 1, 2000, Ashok Ltd purchased a machine for Rs 1,08,000 and spent Rs. 12,000 on its installation. At the time of purchase, it was estimated that the effective commercial life of the machine will be 12 years and after 12 years its salvage value will be Rs. 12,000.
Prepare Machine account and Depreciation account in the books of Ashok Ltd. For first three years, if depreciation is written off according to straight line method. The accounts are closed December 31st, every year.
Explanation:
Answer
Dr Machinery Account Cr
Date Particulars JF Amt. (Rs) Date Particulars JF Amt. (Rs)
2000 Jul 1 To Bank A/c 1,20,000 2000 Dec 31 By Depreciation A/c 4,500
Dec 31 By Balance c/d 1,15,500
1,20,000 1,20,000
2001 Jan 1 To Balance b/d 1,15,500 2001 Dec 31 By Depreciation A/c 9,000
Dec 31 By Balance c/d 1,06,500
1,15,500 1,15,500
2002 Jan 1 To Balance b/d 1,06,500 2002 Dec 31 By Depreciation A/c 9,000
Dec 31 By Balance c/d 97,500
1,06,500 1,06,500
2003 Jan 1 To Balance b/d 97,500
Dr Depreciation Account Cr
Date Particulars JF Amt. (Rs) Date Particulars JF Amt (Rs)
2000 Dec 31 To Machinery A/c
4,500 2000 Dec 31 By Profit & Loss A/c 4,500
4,500 4,500
2001 Dec 31 To Machinery A/c 9,000 2001 Dec 31 By Profit & Loss A/c 9,000
9,000 9,000
2002 Dec 31 To Machinery A/c 9,000 2002 Dec 31 By Profit & Loss A/c 9,000
9,000 9,000
Working Note
Computation of Annual Amount of Depreciation =
12
(1,08,000+12,000−12,000)
=9,000
For the first year, machine has been used for half year that's why half depreciation has been charged i.e., Rs 4,500.
Hope it helps you
Explanation:
34. Jung Traders purchased an equipment on 1st July, 2015 for 28,000 and spent 2,000 for its carriage and installation. On 1st October, 2015 and on 1st Jan., 2016 additional equipments were bought for 40,000 and 10,000 respectively. On 31st March, 2017, first equipment was auctioned for 20,000 and replaced by a new one for 20,000 on the same day. On 30th September, 2018, the second equipment was taken away at home at 60% of the book value. On 31st March, 2019, third equipment was heavily damaged and could not fetch anything. Depreciation was charged at 20% p.a. on reducing instalment basis. Prepare Equipment Account till March 31, 2019 with all workings, financial year being followed.
