Question

Azad Ltd purchased furniture on October 1, 2002, for Rs 4,50,000. On March 1, 2003, it purchased another furniture for Rs 3,00,000. On July 1, 2004, it sold it off the first furniture purchased in 2002 for Rs 2,25,000. Depreciation is provided at $15\%$ per annum 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, 2003, March 31, 2004, and March 31, 2005. Also, give the above two accounts if Furniture disposal account is opened.

Answer 1

Dr Furniture Account Cr
$\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{JF}& \text{Amt.(Rs)}& \text{Date}& \text{Particulars}& \text{JF}& \text{Amt.(Rs)}\\ 2002& & & & 2003& & & \\ \text{Oct 1}& \text{Bank A/c}& & & \text{Mar 31}& \text{Balance c/d}& & 7,50,000\\ & \left(F1\right)& & 4,50,000& & & & \\ 2003& \text{Bank A/c}& & & & & & \\ \text{Mar 1}& \left(F2\right)& & 3,00,000& & & & \\ & & & \underset{–}{\overline{7,50,000}}& & & & \underset{–}{\overline{7,50,000}}\\ 2003& & & & 2004& & & \\ \text{Apr 1}& \text{Balance b/d}& & & \text{Mar 31}& \text{Balance c/d}& & \\ & F1=4,50,000& & & & F1=4,50,000& & \\ & F2=\underset{–}{3,00,000}& & 7,50,000& & F2=\underset{–}{3,00,000}& & 7,50,000\\ & & & \underset{–}{\overline{7,50,000}}& & & & \underset{–}{\overline{7,50,000}}\\ 2004& & & & 2004& & & \\ \text{Apr 1}& \text{Balance b/d}& & & \text{Jul 1}& \text{Furniture}& & \\ & F1=4,50,000& & & & \text{Disposal A/c}& & \\ & F2=\underset{–}{3,00,000}& & 7,50,000& & \left(F1\right)& & 4,50,000\\ & & & & 2005& & & \\ & & & & \text{May 31}& \text{Balance c/d}& & \\ & & & & & \left(F2\right)& & 3,00,000\\ & & & \underset{–}{\overline{7,50,000}}& & & & \underset{–}{\overline{7,50,000}}\end{array}$

Dr Accumulated Depreciation Account Cr
$\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{JF}& \text{Amt.(Rs)}& \text{Date}& \text{Particulars}& \text{JF}& \text{Amt.(Rs)}\\ 2003& & & & 2003& & & \\ \text{Mar 31}& \text{Balance c/d}& & 37,500& \text{Mar 31}& \text{Depreciation A/c}& & \\ & & & & & F1=33,750& & \\ & & & & & F2=\underset{–}{3,750}& & 37,500\\ & & & \underset{–}{\overline{37,500}}& & & & \underset{–}{\overline{37,500}}\\ 2004& & & & 2003& & & \\ \text{Mar 31}& \text{Balance c/d}& & 1,44,376& \text{Apr 1}& \text{Balance b/d}& & 37,500\\ & & & & 2004& & & \\ & & & & \text{Mar 31}& \text{Depreciation A/c}& & \\ & & & & & F1=62,438& & \\ & & & & & F2=\underset{–}{44,438}& & 1,06,876\\ & & & \underset{–}{\overline{1,44,376}}& & & & \underset{–}{\overline{1,44,376}}\\ 2004& & & & 2004& & & \\ \text{Jul 1}& \text{Furniture}& & & \text{Apr 1}& \text{Balance b/d}& & 1,44,376\\ & \text{Disposal A/c}& & 1,09,456& \text{Jul 1}& \text{Depreciation A/c}& & 13,268\\ 2005& & & & 2005& & & \\ \text{Mar 31}& \text{Balance c/d}& & 85,960& \text{Mar 31}& \text{Depreciation A/c}& & 37,772\\ & & & \underset{–}{\overline{1,95,416}}& & & & \underset{–}{\overline{1,95,416}}\end{array}$

Dr Furniture Disposal Account Cr
$\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{JF}& \text{Amt.(Rs)}& \text{Date}& \text{Particulars}& \text{JF}& \text{Amt.(Rs)}\\ 2004& & & & 2004& & & \\ \text{Jul 1}& \text{Furniture A/c}& & 4,50,000& \text{Jul 1}& \text{Accumulated}& & \\ & & & & & \text{Dep A/c}& & 1,09,456\\ & & & & \text{Jul 1}& \text{Bank A/c}& & \\ & & & & & \text{(Sales Proceed)}& & 2,25,000\\ & & & & \text{Jul 1}& \text{Profit}\&\text{Loss A/c}& & \\ & & & & & \text{(Loss on Sale)}& & \\ & & & & & \text{of Furniture)}& & 1,15,544\\ & & & \underset{–}{\overline{4,50,000}}& & & & \underset{–}{\overline{4,50,000}}\end{array}$

Working Note:

Computation of Profit or Loss on Sale of Furniture

Depreciation Charged

$\begin{array}{cc}\text{31 March, 2003}& 33,750\\ \text{31 March, 2004}& 62,438\\ \text{1 July, 2004}& 13,268\\ & \underset{–}{\overline{Rs.1,09,456}}\end{array}$

Cost of furniture at the date of disposal i.e., July 1, 2004

$\begin{array}{cc}\text{Cost of Furniture}& 4,50,000\\ (-)\text{Dep}& \underset{–}{1,09,456}\\ & 3,40,554\\ (-)\text{Sales Proceed}& 2,25,000\\ \text{Loss}& \underset{–}{\overline{Rs.1,15,544}}\end{array}$