You are given the following balances as on April1,2019:
Machinery A/c Rs. 500,000
Provision for Depreciation a/c Rs. 1,16,000
Depreciation is charged at 20% p.a. by the diminishing balance method. A piece of
machinery purchased on April 1,2017 for Rs. 100,000 was sold on October for Rs.
60,000. A new machine worth Rs. 1,00,000 was purchased on the same date.
Prepare the machinery a/c and Provision for Depreciation a/c for the year ended 31st
March, 2020. Also prepare Machinery Disposal a/c.ink
Answers
Answer:
2.
(Ans. Realisation Profit to A 73,000 and B 21,000, Total Profit - 240.000
Verma and Sharma were partners sharing profits in the ratio of 3 1. On 31-3-2011
their Balance Sheet was as follows:
Balance Sheet of Verma & Sharma (as at 31.3.2011)
Liabilities
Assets
Amount
₹
Amount
3
70.000
Capital :
Verma
Sharma
Creditors
Land and Building
1,20,000
Machinery
80.000 2,00.000 Debtors
70.000 Bank
2.70.000
80.000
60.000
2.70.000
The firm was dissolved on 1-4-2011 and the Assets and Liabilities were setties
follows:
(i) Creditors of 50.000 took over Land and Building in full settlement of their
claim.
(ii) Remaining Creditors were paid in cash.
(iii) Machinery was sold at a depreciation of 30%
(iv) Debtors were collected at a cost of 500
(v) Expenses of realisation were 1.700.
Preparation of machinery account, provision for depreciation account and machinery disposal account.
Explanation:
Working Notes-
1. Calculation of Profit or Loss on Sale:
Value of M1 as on Apr. 01, 2005 64,000
Less: Depreciation for 6 months (6,400)
Value of M1 as on Mar. 01, 2012 57,600
Less: Sale Value (60,000)
Profit on Sale 2,400
2. Depreciation on the machinery sold:
Book value of the machine as on 1st April 2003 = Rs 1, 00,000
Less: Depreciation for 2003-2004 = Rs (20,000)
Book value on 1st April 2004 = Rs 80,000
Less: Depreciation for 2004-2005 = Rs (16,000)
Book value on 1st April 2005 = Rs 64,000
Less: Depreciation for 6 months = Rs 6,400
Book value on 1st October 2005 = Rs 57,600
3. Depreciation provided on the remaining machinery
= Rs 1, 16,000- Rs 20,000- Rs 16,000
= Rs 80,000
Cost of the machine = Rs 4, 00,000
Less: Depreciation =Rs (80,000)
Book value of machine = Rs 3, 20,000
Depreciation on the existing machine for this year
= Rs 3, 20,000 x
= Rs 64,000
Pls refer to the attached pic below
