Page 107 - DEBK-XI(2020)

14.8 Double Entry Book Keeping—CBSE XI

Dr. DEPRECIATION ACCOUNT Cr.
Date Particulars ` Date Particulars `

2010 2010
Dec. 31 To Machinery A/c 3,102 Dec. 31 By Profit and Loss A/c 3,102
2011 2011
Dec. 31 To Machinery A/c 7,517 Dec. 31 By Profit and Loss A/c 7,517

Notes:
1. Calculation of Depreciation for the year 2010: `
Depreciation on ` 32,600 for 7 months @ 10% 1,902
Depreciation on ` 48,000 for 3 months @ 10% 1,200
3,102
2. Calculation of Depreciation for the year 2011:
Depreciation on ` 48,000 for full year @ 10% 4,800
Depreciation on ` 32,600 for 10 months @ 10% 2,717
7,517
3. Calculation of profit /loss on Sale of Machine:
Value of the machine on 1st April, 2010 32,600
Less: Depreciation for 7 months @ 10% 1,902
Book Value on 1st January, 2011 30,698
Less: Depreciation for 10 months @ 10% 2,717
Book Value of the machine on the date of sale 27,981
Less: Sale Proceeds 27,400
Loss on Sale of Machine 581

6. You are given the following balances as on 1st April, 2013:
Machinery A/c ` 5,00,000
Provision for Depreciation A/c ` 1,16,000
Depreciation is charged on machinery @ 20% p.a. by the Diminishing Balance
Method. A piece of machinery purchased on 1st April, 2011 for ` 1,00,000 was sold
on 1st October, 2013 for ` 60,000. Prepare Machinery Account and Provision for
Depreciation Account for the year ended 31st March, 2014. Also, prepare Machinery
Disposal Account.

Solution:
Dr. MACHINERY ACCOUNT Cr.
Date Particulars ` Date Particulars `
2013 2013
April 1 To Balance b/d 5,00,000 Oct. 1 By Machinery Disposal A/c 1,00,000
2014
March 31 By Balance c/d 4,00,000
5,00,000 5,00,000
2014
April 1 To Balance b/d 4,00,000