Question

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 2007-08, 2008-09, 2009-10.

Answer 1

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