Page 119 - ISCDEBK-XI

15.4 Double Entry Book Keeping—ISC XI

Dr. DEPRECIATION ACCOUNT Cr.
Date Particulars ` Date Particulars `
2019 2019
March 31 To Machinery A/c 3,102 March 31 By Profit & Loss A/c 3,102
2020 2020
March 31 To Machinery A/c 7,517 March 31 By Profit & Loss A/c 7,517

Notes:
1. Calculation of Depreciation for the year ended 31st March, 2019: `
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 ended 31st March, 2020:
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 gain (profit)/loss on Sale of Machine:
Value of the machine on 1st July, 2018 32,600
Less: Depreciation for 7 months @ 10% 1,902
Book Value on 1st April, 2019 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
Illustration 3.
You are given the following balances as on 1st April, 2019:
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, 2017 for ` 1,00,000 was sold on 1st October, 2019 for
` 60,000. Prepare Machinery Account and Provision for Depreciation Account for the year
ended 31st March, 2020.
Solution:
Dr. MACHINERY ACCOUNT Cr.
Date Particulars ` Date Particulars `
2019 2019
April 1 To Balance b/d 5,00,000 Oct. 1 By Provision for Depreciation A/c 42,400
April 1 To Gain (Profit) on Sale of Machine A/c 2,400 Oct. 1 By Bank A/c 60,000
(Profit & Loss A/c) 2020
March 31 By Balance c/d 4,00,000
5,02,400 5,02,400
2020
April 1 To Balance b/d 4,00,000