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 31^{st} March, every year.
Prepare: Furniture Account and Depreciation Account for the years 200708, 200809, 200910.
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 
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 
200708  1200 x `10/100`= Rs 1,200  48,000 x `10/100`= Rs 4,800 
200809  10,800 x `10/100`=Rs 1,080  43,200 x `10/100`=Rs 4,320 
200910  9,720 x `10/100`= Rs 486  38,880 x `10/100`= Rs 3,888 