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 |
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Furniture Account |
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Dr. |
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Cr. |
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Date |
Particulars |
Amount (Rs) |
Date |
Particulars |
Amount (Rs) |
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2007 |
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2008 |
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Apr. 01 |
Bank A/c |
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Mar. 31 |
Depreciation A/c |
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1/5 of F1 |
12,000 |
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1/5 of F1 |
1,200 |
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4/5 of F1 |
48,000 |
60,000 |
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4/5 of F1 |
4,800 |
6,000 |
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Balance c/d |
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1/5 of F1 |
10,800 |
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4/5 of F1 |
43,200 |
54,000 |
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60,000 |
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60,000 |
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2008 |
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2009 |
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Apr. 01 |
Balance b/d |
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Mar. 31 |
Depreciation A/c |
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1/5 of F1 |
10,800 |
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1/5 of F1 |
1,080 |
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4/5 of F1 |
43,200 |
54,000 |
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4/5 of F1 |
4,320 |
5,400 |
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Balance c/d |
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1/5 of F1 |
9,720 |
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4/5 of F1 |
38,880 |
48,600 |
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54,000 |
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54,000 |
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2009 |
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2009 |
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Apr. 01 |
Balance b/d |
|
Oct. 01 |
Depreciation A/c (1/5 F1) |
486 |
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1/5 of F1 |
9,720 |
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Bank A/c (Sale of 1/5 F1) |
6,000 |
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4/5 of F1 |
38,880 |
48,600 |
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Profit & Loss A/c (Loss on Sale) |
3,234 |
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2010 |
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Mar. 31 |
Depreciation A/c (4/5 F1) |
3,888 |
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Balance c/d (4/5 F1) |
34,992 |
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48,600 |
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48,600 |
Depreciation Account |
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Dr. |
Cr. |
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Date |
Particulars |
Amount (Rs) |
Date |
Particulars |
Amount (Rs) |
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2008 |
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2008 |
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Mar. 31 |
Furniture A/c |
6,000 |
Mar. 31 |
Profit and Loss A/c |
6,000 |
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|
6,000 |
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6,000 |
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2009 |
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2009 |
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Mar. 31 |
Furniture A/c |
5,400 |
Mar. 31 |
Profit and Loss A/c |
5,400 |
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|
5,400 |
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|
5,400 |
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2010 |
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2010 |
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Mar. 31 |
Furniture A/c |
4,374 |
Mar. 31 |
Profit and Loss A/c |
4,374 |
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|
4,374 |
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|
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 |