TS Grewal Solutions for Class 11 Accountancy Chapter 11

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Class 11 Accountancy Chapter 11 – Depreciation

Question 1

Under Straight Line Method calculate the rate of depreciation for the following.

Bought a second- hand machine for ₹96,000 spent 24,000 on its installation, cartage, and repair, estimated useful life of machinery 4years. Estimated residual value ₹72,000.

Solutions:

Amount of Depreciation =
Cost of a machine – Scrape value of Machine
Life in Years

 

1,20,000 – 7,200
₹ 12,000
4

 

Rate of Depreciation =
Amount of Depreciation
X 100
Cost of Machine

 

12,000
X 100= 10%pa.
1,20,000

 

Question 2:

Company A bought a machine for ₹4,00,000 and spent ₹50,000 on its installation on 1st April 2015. Total of 10 years is the estimated life of the machinery, after which its reselling value will be ₹50,000 only. According to the Fixed installment method and prepare machine account for the first three years find out the amount of annual depreciation. Every year the books are closed on 31st March.

Solutions:

In the book of company A Machinery Account
Date Particulars J.F Date Particulars J.F
2015
April 01
April 01
To Bank A/c
To Bank A/c (Erection Expense)
4,00,000
50,000
2016
March 31
Bt Depreciation A/c
By Balance c/d
40,000
4,10,000
4,50,000 4,50,000
2016
April 01
To Balance b/d 4,10,000 2017
March 31
Bt Depreciation A/c
By Balance c/d
40,000
3,70,000
4,10,000 4,10,000
2017
April 01
To Balance b/d 3,70,000 2018
March 31
Bt Depreciation A/c
By Balance c/d
40,000
3,30,000
3,70,000 3,70,000

 

Calculation of Depreciation.

Depreciation p.a. =
4,00,000+50,000-50,000(scrap value)
10 years

= ₹ 40,000 p.a

Question 3:

Prepare a machinery account for the year end 31st March 2018 from the below-mentioned transaction.

1st April 2017- Bought second-hand machinery for 40,000

1st April 2017- Spent ₹10,000 on repairs for making it serviceable

30th September 2017- Bought additional new machinery ₹ 20,000

31st December 2017 – Renewals and repair of machinery ₹3,000

31st March 2018- Depreciate the machinery @ 10%

Solution:

Machinery Account
Date Particulars J.F Date Particulars J.F
2017
April 1
To Bank A/c
Machinery 1
50,000 2018
March 31
By Depreciation A/c
Machinery 1 5,000
Machinery 2 1,000
6,000
Sept 30 To Bank A/c
Machinery 2
20,000 March 31 By Balance c/d
Machinery 1 45,000
Machinery 2 19,000
64,000
70,000 70,000

 

Question 4:

On 1st April Raul & brothers sold a machine for ₹5,00,000. They purchased the machine 1st April 2013 at the cost of ₹7,50,000. Arrange the machinery account and provision for Depreciation account as on 31st March 2017. Assume that the company was charging depreciation @ 10% on a straight line method.

Mentioned below are the balances of Raul & Brothers.

2016
1st April
Machinery A/c
Provision for Depreciation A/c

20,00,000
8,00,000

 

Solution:

In the book of Raul & Brothers
Date Particulars J.F Date Particulars J.F
2016
April 01
To Balance
b/d
20,00,000 2016
April 01
April 01
April 01
2017
March 31
By provision for Depreciation A/c
By Bank A/c
By profit & loss A/c(Loss)
By Balance c/d
2,25,000
5,00,000
25,000
12,50,000
20,00,000 20,00,000

 

Provision for Depreciation A/c
Date Particulars J.F Date Particulars J.F
2016
April 01
To Machinery A/c 2,25,000 2016
April 01
By Balance b/d 8,00,000
2017
March 31
To Balance c/d 7,00,000 2017
March 31
By Depreciation A/c 1,25,000
9,25,000 9,25,000

Working Note:

Profit & Loss calculation on a sale of machinery.

Particulars
The original cost of Machinery
Less: Accumulate Depreciation machinery sold for 3 years till March
(7,50,000 x 3 x 10%)
7,50,000
(2,25,000)
Book Value of Machinery sold
Less: Sale value
5,25,000
(5,00,000)
Loss on Sale 25,000

 

Question 5:

A printing machine was purchased from abroad for ₹10,000, forwarding and shipping charges ₹2,000, installation expense ₹1,000, import duty ₹7,000. Calculate depreciation for the first three years (separately) at the diminishing balance method of 10%.

Solution:

Printing Machine Account
Date Particulars J.F Date Particulars J.F
1st Year
Jan 01
To Bank A/c 20,000 1st Year
Dec 31
Dec 31
By Depreciation A/c
By Balance c/d
2,000
18,000
20,000 20,000
2nd Year
Jan 01
To Balance b/d 18,000 2ndYear
Dec 31
Dec 31
By Depreciation A/c
By Balance c/d
1,800
16,200
18,000 18,000
3rd Year
Jan 01
To Balance b/d 16,200 3rd Year
Dec 31
Dec 31
By Depreciation A/c
By Balance c/d
1,620
14,580
16,200 16,200

Goods cost= 10,000+2,000+7,000+1,000= ₹20,000

Question 6:

Babita bought a machine for ₹6,000 on 1st April 2016. She also bought another machine for ₹5,000. He purchased the machine bought on 1st April for ₹4,000 on 1st October 2017. Under the diminishing balance method, the depreciation was decided @ 10% p.a. Show the machinery account for the year 2017 and 2018 assuming the accounts were closed on the year end 31st March.

Solution:

Printing Machine Account
Date Particulars J.F Date Particulars J.F
2016
April 01
Oct 01
To Bank A/c Machinery 1
To Bank A/c Machinery 2
6,000
5,000
2017
Mar 31
By Depreciation A/c
Machinery 1 600
Machinery 2 (6months) 250
By Balance c/d
Machinery 1
Machinery 2
850
5,400
4,750
11,000 11,000
2017
April
01
To Balance b/d
Machinery 1
Machinery 2
5,400
4,750
2017
Oct 01
Oct 01
Oct 01
By Depreciation A/c
Machinery 1 (6months)
By Bank A/c
By Profit & Loss A/c
270
4,000
1,130
2018
March 31
March 31
By Depreciation A/c
Machinery 2
By Balance c/d Machinery 2
475
4,275
10,150 10,150

Working Note.

Profit & Loss calculation on a sale of machinery.

Particulars
Book value of Machinery 1st April 2017
Less: Depreciation A/c (6months)
5,400
(270)
Book Value of Machinery 1st Oct 2017
Less: Sale
5,130
(4,000)
Loss on sale on Machinery 1,130

 

Question 7:

Komal traders bought second-hand machinery for ₹23,000 on 1st April 2015 and spent ₹2,000 on repairs. Om diminishing balance method, it was decided to depreciate the machinery @ 20% on 31st March every year.

Prepare machinery account from every year on 31st March from the year 2016 to 2018. Show the profit & loss as the machine was sold for ₹10,800 on 31st March 3018.

Solution:

Printing Machine Account
Date Particulars J.F Date Particulars J.F
2015
Apr 01
To Bank A/c (23,000+2,000) 25,000 2016
Mar 31
Mar 31
By Depreciation A/c (25,000×20%)
By Balance c/d
5,000
20,000
25,000 25,000
2016
Apr 01
To Balance b/d 20,000 2017
Mar 31
Mar 31
By Depreciation A/c (20,000×20%)
By Balance c/d
4,000
16,000
20,000 20,000
2017
Apr 01
To Balance b/d 16,000 2018
Mar 31
Mar 31
Mar 31
By Depreciation A/c (16,000×20%)
By Balance c/d
By Profit & Loss A/c
3,200
10,800
2,000
16,000 16,000

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