Advertisements
Advertisements
Question
M/s Omkar Enterprise Jalgaon acquired a Printing Machine for ₹ 75,000 on 1st Oct 2015 and spent ₹ 5,000 on its transport and installation. Another Machine for ₹ 45,000 was purchased on 1st Jan 2017. Depreciation is charged at the rate of 20% on Written Down Value Method, on 31st March every year.
Prepare Printing Machine Account for the first four years.
Advertisements
Solution
| In the books of M/s Omkar Enterprise Jalgaon. | |||||||
| Dr. | Printing Machine Account | Cr. | |||||
| Date | Particulars | J.F. | Amt (₹) | Date | Particulars | J.F. | Amt (₹) |
| 2015 | 2016 | ||||||
| Oct, 1 | To Cash/Bank A/c | 80,000 | Mar, 31 | By Depreciation A/c | 8,000 | ||
| Mar, 31 | By Balance c/d | 72,000 | |||||
| 80,000 | 80,000 | ||||||
| 2016 Apr, 1 | To Balance b/d | 72,000 |
2017 Mar, 31 |
By Depreciation A/c (14,400 + 2,250) | 16,650 | ||
| 2017 Jan, 1 | To Cash/Bank A/c | 45,000 | Mar, 31 | By Balance c/d | 1,00,350 | ||
| 1,17,000 | 1,17,000 | ||||||
| 2017 Apr, 1 | To Balance b/d | 1,00,350 | 2018 Mar, 31 | By Depreciation A/c | 20,070 | ||
| Mar, 31 | By Balance c/d | 80,280 | |||||
| 1,00,350 | 1,00,350 | ||||||
| 2018 Apr, 1 |
To Balance b/d | 80,280 | 2019 Mar, 31 |
By Depreciation A/c | 16,056 | ||
| Mar, 31 | By Balance c/d | 64,224 | |||||
| 80,280 | 80,280 | ||||||
| 2019 Apr.1 | To Balance b/d | 64,224 | |||||
Working Note:
1)
I = `80,000xx20/100 = 16,000` p.a
`16,000xx6/12 = 8,000`
2) `72,000xx20/100 = 14,400`
3) `45,000xx20/100xx3/12 = 2,250`
4) `1,00,350xx20/100 = 20,070`
5) 1,00,350 − 20,070 = 80,280
6) `80,280xx20/100= 16,056`
7) 80,280 − 16,056 = 64,224
APPEARS IN
RELATED QUESTIONS
Answer in One Sentence only:
What is a ‘Scrap Value’ of an asset?
Answer in One Sentence only:
Which account is debited when expenses are paid on installation of Machinery?
Write the word/term/phrase which can substitute the following statement:
The period for which the asset remains in working condition.
Write the word/term/phrase which can substitute the following statement:
The method of depreciation in which the total depreciation is equally spread over the life of the asset.
Write the word/term/phrase which can substitute the following statement:
The method of depreciation in which the rate of depreciation is fixed but the amount of depreciation reduces every year.
Write the word/term/phrase which can substitute the following statement:
Excess of Selling price of fixed asset over its Written Down Value.
Write the word/term/phrase which can substitute the following statement:
Method of depreciation that cannot reach to zero value.
State whether the following statement is True or False with reasons:
Depreciation is charged on fixed assets.
State whether the following statement is True or False with reasons:
The Profit or Loss on sale of fixed asset is ascertained only after charging depreciation.
State whether the following statement is True or False with reasons:
Wages paid for installation of Machinery are debited to Wages A/c.
For which of the following assets, the depletion method is adopted for writing off cost of the asset?
If the rate of depreciation is the same, then the amount of depreciation under straight-line method vis-à-vis written down value method will be ______.
State the limitations of written down value method of depreciation.
Calculate the rate of depreciation under straight-line method from the following information:
Purchased second-hand machinery on 1.1.2018 for ₹ 38,000
On 1.1.2018 spent ₹ 12,000 on its repairs
Expected useful life of the machine is 4 years
Estimated residual value ₹ 6,000.
An asset is purchased on 1.1.2016 for ₹ 50,000. Depreciation is to be provided annually according to the straight-line method. The useful life of the asset is 10 years and its residual value is ₹ 10,000. Accounts are closed on 31st December every year. You are required to find out the rate of depreciation and give journal entries for first two years.
From the following particulars, give journal entries for 2 years and prepare machinery account under straight-line method of providing depreciation:
Machinery was purchased on 1.1.2016
Price of the machine ₹ 36,000
Freight charges ₹ 2,500
Installation charges ₹ 1,500
Life of the machine 5 years
A manufacturing company purchased on 1st April 2010, a plant and machinery for ₹ 4,50,000 and spent ₹ 50,000 on its installation. After having used it for three years, it was sold for ₹ 3,85,000. Depreciation is to be provided every year at the rate of 15% per annum on the fixed installment method. Accounts are closed on 31st March every year. Calculate profit or loss on sale of machinery.
A firm acquired a machine on 1st April 2015 at a cost of ₹ 50,000. Its life is 6 years. The firm writes off depreciation @ 30% p.a. on the diminishing balance method. The firm closes its books on 31st December every year. Show the machinery account and depreciation account for three years starting from 1st April 2015.
A machine costing ₹ 23,000 is estimated to have a life of 7 years and the scrap value is estimated at ₹ 2,000 at the end of its useful life. Find out the amount of depreciation p.a.
Mr. ‘X’ purchased Furniture on 1st October 2015 at ₹ 2,80,000 and spent ₹ 20,000 on its installation. He provides depreciation at 6% under the straight-line method on 31st March 2016. Calculate the amount of depreciation.
On 1st April 2015, Farid of Nasik purchased a Motor Car for ₹ 55,000. The scrap value of the Motor Car was estimated at ₹ 10,000 and its estimated life is 10 years. The Registration charge for the Motor Car was ₹ 5,000.
Show Motor Car Account for first four years, assuming that the books of accounts are closed on 31st March every year.
M/s Omkar Enterprise Jalgaon acquired a Printing Machine for ₹ 75,000 on 1 Oct 2015 and spent ₹ 5,000 on its transport and installation. Another Machine for ₹ 45,000 was purchased on 1st Jan 2017. Depreciation is charged at the rate of 20% on Written Down Value Method, on 31st march every year.
Prepare Printing Machine Account for the first four years.
On 1st April 2015, Farid of Nasik purchased a Motor Car for ₹ 55,000. The scrap value of the Motor Car was estimated at ₹ 10,000 and its estimated life is 10 years. The Registration charge for the Motor Car was ₹ 5,000.
Show Motor Car Account for first four years, assuming that the books of accounts are closed on 31st March every year.
The Annuity Method is most suitable when:
Which depreciation method helps a firm accumulate funds for replacing an asset after its useful life?
Under which method might two identical machines purchased at the same cost show different depreciation expenses in two companies?
The Sum-of-the-Years’-Digits Method results in:
