# Shri Yashraj and Company, Kolhapur, Purchased Furniture for Rs 60,000 on 1.4.2007.On 1.10.2009 the Company Sold Out a Part of the Furniture for Rs 6,000, the Original Cost of Which on 1.4.2007 - Book Keeping and Accountancy

Shri Yashraj and Company, Kolhapur, purchased furniture for Rs 60,000 on 1.4.2007.On 1.10.2009 the company sold out a part of the furniture for Rs 6,000, the original cost of which on 1.4.2007 was Rs 12,000.

The company charges depreciation at the rate of 10% p.a. on Reducing Balance method. The financial year of the company ends on 31st March, every year.

Prepare: Furniture Account and Depreciation Account for the years 2007-08, 2008-09, 2009-10.

#### Solution

 In the books of Shri Yashraj and Company Furniture Account Dr. Cr. Date Particulars Amount (Rs) Date Particulars Amount (Rs) 2007 2008 Apr. 01 Bank A/c Mar. 31 Depreciation A/c 1/5 of F1 12,000 1/5 of F1 1,200 4/5 of F1 48,000 60,000 4/5 of F1 4,800 6,000 Balance c/d 1/5 of F1 10,800 4/5 of F1 43,200 54,000 60,000 60,000 2008 2009 Apr. 01 Balance b/d Mar. 31 Depreciation A/c 1/5 of F1 10,800 1/5 of F1 1,080 4/5 of F1 43,200 54,000 4/5 of F1 4,320 5,400 Balance c/d 1/5 of F1 9,720 4/5 of F1 38,880 48,600 54,000 54,000 2009 2009 Apr. 01 Balance b/d Oct. 01 Depreciation A/c (1/5 F1) 486 1/5 of F1 9,720 Bank A/c (Sale of 1/5 F1) 6,000 4/5 of F1 38,880 48,600 Profit & Loss A/c (Loss on Sale) 3,234 2010 Mar. 31 Depreciation A/c (4/5 F1) 3,888 Balance c/d (4/5 F1) 34,992 48,600 48,600

 Depreciation Account Dr. Cr. Date Particulars Amount (Rs) Date Particulars Amount (Rs) 2008 2008 Mar. 31 Furniture A/c 6,000 Mar. 31 Profit and Loss A/c 6,000 6,000 6,000 2009 2009 Mar. 31 Furniture A/c 5,400 Mar. 31 Profit and Loss A/c 5,400 5,400 5,400 2010 2010 Mar. 31 Furniture A/c(486 + 3,888) 4,374 Mar. 31 Profit and Loss A/c 4,374 4,374 4,374

Working Notes:

WN1 Calculation of Profit or Loss on Sale

 Particulars Amount Value of 1/5 of F1 as on April 01, 2009 9,720 Less: Depreciation for 6 months 486 Value of 1/5 of F1 as on Oct. 01, 2009 9,234 Less: Sale Value 6,000 Loss on Sale 3,234

WN2 Calculation of Depreciation

 Year Depreciation on 1/5 of F1 Depreciation on 4/5 of F1 2007-08 1200 x 10/100= Rs 1,200 48,000 x 10/100= Rs 4,800 2008-09 10,800 x 10/100=Rs 1,080 43,200 x 10/100=Rs 4,320 2009-10 9,720 x 10/100= Rs 486 38,880 x 10/100= Rs 3,888
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