NCERT Solution (Part - 2) - Depreciation, Provisions and Reserves | Accountancy Class 11 - Commerce PDF Download

Q5: Ganga Ltd. purchased a machinery on January 01, 2014 for Rs 5,50,000 and spent Rs 50,000 on its installation. On September 01, 2014 it purchased another machine for Rs 3,70,000. On May 01, 2015 it purchased another machine for Rs 8,40,000 (including installation expenses). Depreciation was provided on machinery @10% p.a. on original cost method annually on December 31. Prepare: 
(a) Machinery account and depreciation account for the years 2014, 2015, 2016 and 2017.
(b) If depreciation is accumulated in provision for Depreciation account then prepare machine account and provision for depreciation account for the years 2014, 2015, 2016 and 2017.
Ans:
(a) Books of Ganga Ltd.

(b)

Q6: Azad Ltd. purchased furniture on October 01, 2014 for Rs. 4.50.000. On March 01, 2015 it purchased another furniture for Rs. 3.00. 000. On July 01,2016 it sold off the first furniture purchased in 2014 for Rs. 2,25,000. Depreciation is provided at 15% p.a. on written down value method each year. Accounts are closed each year on March 31.
Prepare furniture account, and accumulated depreciation account for the years ended on March 31, 2015, March 31, 2016 and March 31, 2017.
Also give the above two accounts if furniture disposal account is opened.
Ans: Books of Azad Ltd.

Working Note: 
Furniture (i)

Q7: M/s Lokesh Fabrics purchased a Textile Machine on April 01, 2011 for Rs. 1,00,000. On July 01, 2012 another machine costing Rs. 2,50,000 was purchased. The machine purchased on April 01, 2011 was sold for Rs. 25,000 on October 01, 2015. The company charges depreciation @15% p.a. on straight line method. Prepare machinery account and machinery disposal account for the year ended March 31, 2016.
Ans:

Q8: The following balances appear in the books of Crystal Ltd, on Jan 01, 2015.
On April 01,2015 a machinery which was purchased on January 01,2012 for Rs. 2,00,000 was sold for Rs. 75,000. A new machine was purchased on July 01, 2015 for Rs. 6,00,000. Depreciation is provided on machinery at 20% p.a. on Straight line method and books are closed on December 31 every year. Prepare the machinery account and provision for depreciation account for the year ending December 31, 2015.
Ans:

Working Note: Machine Sold on July 01, 2015

Q9: M/s. Excel Computers has a debit balance of Rs. 50,000 (original cost Rs. 1,20,000) in computers account on April 01, 2010. On July 01, 2010 it purchased another computer costing Rs. 2,50,000. One more computer was purchased on January 01, 2011 for Rs. 30,000. On April 01, 2014 the computer which has purchased on July 01, 2010 became obsolete and was sold for Rs. 20,000. A new version of the IBM computer was purchased on August 01, 2014 for Rs. 80,000. Show Computers account in the books of Excel Computers for the years ended on March 31 2011, 2012, 2013, 2014 and 2015. The computer is depreciated @10 p.a. on straight line method basis.
Ans:

Note: As per the solution, the closing balance, as on 31st March, 2005 is Rs. 91,917; however, as per the book it is Rs. 83,917.

Q10: Carriage Transport Company purchased 5 trucks at the cost of Rs. 2,00,000 each on April 01, 2011. The company writes off depreciation @ 20% p.a. on original cost and closes its books on December 31, every year. On October 01, 2013, one of the trucks is involved in an accident and is completely destroyed. Insurance company has agreed to pay Rs. 70,000 in full settlement of the claim. On the same date the company purchased a second hand truck for Rs 1,00,000 and spent Rs. 20,000 on its overhauling. Prepare truck account and provision for depreciation account for the three years ended on December 31, 2013. Also give truck account if truck disposal account is prepared.
Ans:

Working Note:

Q11: Saraswati Ltd. purchased a machinery costing Rs. 10,00,000 on January 01, 2011. A new machinery was purchased on 01 May, 2012 for Rs. 15,00,000 and another on July 01, 2014 for Rs. 12,00,000. A part of the machinery which originally cost Rs. 2,00,000 in 2011 was sold for Rs. 75,000 on October 31, 2014. Show the machinery account, provision for depreciation account and machinery disposal account from 2011 to 2015 if depreciation is provided at 10% p.a. on original cost and account are closed on December 31, every year.
Ans: Books of Saraswati Ltd.

Working Note:

Q12: On July 01, 2011 Ashwani purchased a machine for Rs. 2,00,000 on credit. Installation expenses Rs. 25,000 are paid by cheque. The estimated life is 5 years and its scrap value after 5 years will be Rs. 20,000. Depreciation is to be charged on straight line basis. Show the journal entry for the year 2011 and prepare necessary ledger accounts for first three years.
Ans:

Working Note: 
Calculation of annual depreciation Depreciation 
= (200000+25000- 20000)/(5)=Rs.41000 p.a

Q13: On October 01, 2010, a Truck was purchased for Rs. 8,00,000 by Laxmi Transport Ltd. Depreciation was provided at 15% p.a. on the diminishing balance basis on this truck. On December 31, 2013 this Truck was sold for Rs. 5,00,000. Accounts are closed on 31st March every year. Prepare a Truck Account for the four years.
Ans: Books of Laxmi Transport Ltd.

Note: As per the solution, the profit on the sale of truck, as on December 31, 2013 is Rs 25,498; however, the answer given in the book is Rs 58,237.

Q14: Kapil Ltd. purchased a machinery on July 01, 2011 for Rs. 3,50,000. It purchased two additional machines, on April 01, 2012 costing Rs. 1,50,000 and on October 01, 2012 costing Rs. 1,00,000. Depreciation is provided @10% p.a. on straight line basis. On January 01, 2013, first machinery become useless due to technical changes. This machinery was sold for Rs. 1,00,000, prepare machinery account for 4 years on the basis of calendar year.
Ans:

Q15: On January 01, 2011, Satkar Transport Ltd, purchased 3 buses for Rs. 10,00,000 each. On July 01, 2013, one bus was involved in an accident and was completely destroyed and Rs. 7,00,000 were received from the Insurance Company in full settlement. Depreciation is writen off @15% p.a. on diminishing balance method. Prepare bus account from 2011 to 2014. Books are closed on December 31 every year.
Ans:

Q16: On October 01, 2011 Juneja Transport Company purchased 2 Trucks for Rs. 10,00,000 each. On July 01, 2013, One Truck was involved in an accident and was completely destroyed and Rs. 6,00,000 were received from the insurance company in full settlement. On December 31, 2013 another truck was involved in an accident and destroyed partially, which was not insured. It was sold off for Rs. 1,50,000. On January 31, 2014 company purchased a fresh truck for Rs. 12,00,000. Depreciation is to be provided at 10% p.a. on the written down value every year. The books are closed every year on March 31. Give the truck account from 2011 to 2014.
Ans:

Truck - 1

Truck - 2
Q17: A Noida based Construction Company owns 5 cranes and the value of this asset in its books on April 01, 2017 is Rs. 40,00,000. On October 01, 2017 it sold one of its cranes whose value was Rs. 5,00,000 on  April 01, 2017 at a 10% profit. On the same day it purchased 2 cranes for Rs. 4,50,000 each. Prepare cranes account. It closes the books on December 31 and provides for depreciation on 10% written down value.
Ans:

Q18: Shri Krishan Manufacturing Company purchased 10 machines for Rs. 75,000 each on July 01, 2014. On October 01, 2016, one of the machines got destroyed by fire and an insurance claim of Rs. 45,000 was admitted by the company. On the same date another machine is purchased by the company for Rs. 1,25,000. The company writes off 15% p.a. depreciation on written down value  basis.
The company maintains the calendar year as its financial year. Prepare the machinery account from 2014 to 2017.
Ans:

Working Note: Machine Costing Rs 75,000 sold on Oct.01,2002

Q19: On January 01, 2014, a Limited Company purchased machinery for Rs. 20,00,000. Depreciation is provided @15% p.a. on diminishing balance method. On March 01, 2016, one fourth of machinery was damaged by fire and Rs. 40,000 were received from the insurance company in full settlement. On September 01, 2016 another machinery was purchased by the company for Rs.15,00,000. 
Write up the machinery account from 2010 to 2013. Books are closed on December 31, every year.
Ans:

Working Note:
Machine (i)

l/4th of Machine (i)

Q20: A Plant was purchased on 1st July, 2015 at a cost of Rs. 3,00,000 and Rs. 50,000 were spent on its installation. The depreciation is written off at 15% p.a. on the straight line method. The plant was sold for Rs. 1,50,000 on  October 01, 2017 and on the same date a new Plant was installed at the cost of Rs. 4,00,000 including purchasing value. The accounts are closed on December 31 every year.
Show the machinery account and provision for depreciation account for 3 years.
Ans:

Q21: An extract of Trial balance from the books of Tahiliani and Sons Enterprises on March 31, 2017 is given below:

Additional Information:

• Bad Debts proved bad but not recorded amounted to ` 2,000.
• Provision is to be maintained at 8% of Debtors.

Give necessary accounting entries for writing off the bad debts and creating the provision for doubtful debts account. Also show the necessary accounts.
Ans:

Q22: The following information are extract from the Trial Balance of M/s Nisha traders on 31 March 2017.
Sundry Debtors - Rs. 80,500
Bad Debts - Rs. 1,000 
Provision for Bad Debts - Rs. 5,000
Additional Information:
Bad Debts Rs. 500 Provision is to be maintained at 2% of Debtors.
Prepare bad debts account, Provision for bad debts account and profit and loss account.
Ans: