Question

A limited company purchased on 01-01-2009 a plant for ₹ 38,000 and spent ₹ 2,000 for carriage and brokerage. On 01-04-2010 it purchased additional plant costing ₹ 20,000. On 01-08-2011 the plant purchased on 01-04-2009 was sold for ₹ 25,000. On the same date, the plant purchased on 01-04-2010 was sold at a profit of ₹ 2,800. Depreciation is provided @10% per annum on diminishing balance method every year. Accounts are closed on 31st December every year. Show the plant A/c for 3 years.

Answer 1

Plant Account
Dr.				Cr.
Date	Particulars		Amount (Rs)		Date	Particulars		Amount (Rs)
2009					2009
Jan. 01	Bank A/c (P1) (38,000 + 2,000)		40,000		Dec. 31	Depreciation A/c		4,000
						Balance c/d		36,000
			40,000					40,000
2010					2010
Jan. 01	Balance b/d		36,000		Dec. 31	Depreciation A/c
Apr .01	Bank A/c (P2)		20,000			P1	3,600
						P2 (for 9 months)	1,500	5,100
					Dec. 31	Balance c/d
						P1	32,400
						P2	18,500	50,900
			56,000					56,000
2011					2011
Jan. 01	Balance b/d				Aug. 01	Depreciation A/c (P1)		1,890
	P1	32,400				Bank A/c (Sale of P1)		25,000
	P2	18,500	50,900			Profit and Loss A/c (Loss on Sale of P1)		5,510
Aug. 01	Profit and Loss A/c (Profit on Sale of P2)		2,800		Aug. 01	Depreciation A/c (P2)		1,080
						Bank A/c (Sale of P2)		20,220
			53,700					53,700

Working Notes:

WN1: Calculation of Profit & Loss on Sale of P1

Particulars	Amount
Value of Plant on Apr. 01, 2011	32,400
Less: Depreciation for 7 months	1,890
Value of Plant on Aug. 01, 2011	30,510
Less: Sale Value	25,000
Loss on Sale	5,510

WN2: Calculation of Sale Price of P2

Particulars	Amount
Value of Plant on Apr. 01, 2011	18,500
Less: Depreciation for 7 months	1,080
Value of Plant on Aug. 01, 2011	17,420
Add: Profit on Sale	2,800
Sale Value	20,220