Page 111 - DEBK-XI(2020)

14.12 Double Entry Book Keeping—CBSE XI

Dr. PROVISION FOR DEPRECIATION ACCOUNT Cr.
Date Particulars ` Date Particulars `
2010 2010
Dec. 31 To Machinery Disposal A/c (WN 3) 9,722 April 1 By Balance b/d 37,400
Dec. 31 By Depreciation A/c 2,860
2011 2011
March 31 To Balance c/d 36,917 March 31 By Depreciation A/c (WN 2) 6,379
46,639 46,639

Dr. MACHINERY DISPOSAL ACCOUNT Cr.
Date Particulars ` Date Particulars `
2010 2010
Dec. 31 To Machinery A/c 45,000 Dec. 31 By Bank A/c (Sale Proceeds) 23,600
By Provision for Depreciation A/c 9,722
By Loss on Sale of Machinery A/c 11,678
(Profit and Loss A/c) (WN 1)
45,000 45,000

BALANCE SHEET as at 31st March, 2011
Liabilities ` Assets `
Machinery 1,17,000
Less: Provision for Depreciation 36,917 80,083

Working Notes:
1. Calculation of profit or loss on Sale of Machinery on 31st December, 2010: `
1st September, 2008 Purchased 45,000
31st March, 2009 Less: Depreciation @ 10% p.a. for 7 months 2,625
1st April, 2009 Book Value 42,375
31st March, 2010 Less: Depreciation @ 10% p.a. 4,237
1st April, 2010 Book Value 38,138
31st December, 2010 Less: Depreciation @ 10% p.a. for 9 months 2,860
Book Value on the date of sale 35,278
Less: Sale Proceeds 23,600
Loss on sale of machinery 11,678

2. Calculation of depreciation on the remaining machinery:
Written down value of Machinery Account balance on 1st April, 2010 (` 94,000 – ` 37,400) 56,600
Less: Book value (on 1st April, 2010) of the machine sold (as per WN 1) 38,138
Book value of the remaining old machinery 18,462
Depreciation on the remaining old machinery of ` 18,462 @ 10% p.a. 1,846
Depreciation on the machine purchased for ` 68,000 on 31st July, 2010 @ 10% p.a.
for 8 months 4,533
6,379

3. Accumulated depreciation balance of the machine sold transferred from Provision for Depreciation
Account to Machinery Disposal Account = ` 2,625 + ` 4,237 + ` 2,860 = ` 9,722.