The following balances appear in the books of Sankalp on 01-01-2015 Machinery A/c Rs. 8,00,000, Provision for Depreciation a/c Rs. 3,18,000. On 01-01-2015 they decided to sell a machine for Rs. 34,500. This machine was purchased for Rs. 1,20,000 on 01-01-2011. Show the machinery A/c, Provision for Depreciation A/c for the year ended Dec 31, 2015 assuming that depreciation was charged at 10% p.a. on Written Down value method.
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Answer:
Machinery Accounts
Date Particular Amount Date Particular Amount
01-01-2015 To Balance b/d $8,00,000.00 01-01-2015 By Bank $34,500.00
By Provision for Depreciation $41,268.00
By Loss on Sales $44,232.00
By Balance C/d $6,80,000.00
Total $8,00,000.00 Total $8,00,000.00
Accumulated Depreciation
Date Particular Amount Date Particular Amount
01-01-2015 To Machinery Account($12000+$10800+$9720+$8748) $41,268.00 01-01-2015 By Balance b/d $3,18,000.00
31-12-2015 To Balance C/d $3,17,058.80 31-12-2015 By Depreciation $40,326.80
Total $3,58,326.80 $3,58,326.80
Book Value of Machinery sold
01-01-2011 Cost $1,20,000.00
31-12-2011 Depreciation($120000*10%) $12,000.00
31-12-2011 Ending WDV $1,08,000.00
01-01-2012 Beginning WDV $1,08,000.00
31-12-2012 Depreciation($108000*10%) $10,800.00
31-12-2012 Ending WDV $97,200.00
01-01-2013 Beginning WDV $97,200.00
31-12-2013 Depreciation($97200*10%) $9,720.00
31-12-2013 Ending WDV $87,480.00
01-01-2014 Beginning WDV $87,480.00
31-12-2014 Depreciation($97200*10%) $8,748.00
31-12-2014 Ending WDV $78,732.00
01-01-2015 Beginning WDV of assets sold $78,732.00
01-01-2015 Other Assets=($800000-$120000)= $6,80,000.00
Total Provision of depreciation= $3,18,000.00
Less: Total Depreciation on Machinery sold $41,268.00
Balance Depreciation for other assets $2,76,732.00
WDV of other assets=($680000-$276732) $4,03,268.00
31-12-2015 Depreciation on 31/12/2015=($403268*10%) $40,326.80
Profit /Loss o sales
Sales Price $34,500.00
Less: WDV $78,732.00
Loss on Sale $44,232.00
Explanation: