Question

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.

Answer 1

Books of Carriage Transport Company
Truck Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2011				2011
Apr.01	Bank		10,00,000	Dec.31	Balance c/d		10,00,000
			10,00,000				10,00,000
2012				2012
Jan.01	Balance b/d		10,00,000	Dec.31	Balance c/d		10,00,000
			10,00,000				10,00,000
2013				2013
Jan.01	Balance b/d		10,00,000	Oct.01	Truck Disposal		2,00,000
Oct.01	Bank		1,20,000	Dec.31	Balance c/d		9,20,000
			11,20,000				11,20,000

Provision for Depreciation Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2011				2011
Dec.31	Balance c/d		1,50,000	Dec.31	Depreciation		1,50,000
			1,50,000				1,50,000
2012				2012
Dec.31	Balance c/d		3,50,000	Jan.01	Balance c/d		1,50,000
				Dec.31	Depreciation		2,00,000
			3,50,000				3,50,000
2013				2013
Oct.01	Truck Disposal		1,00,000	Jan.01	Balance b/d		3,50,000
Oct.01	Balance c/d		4,46,000	Oct.01	Depreciation (9 Months)		30,000
				Dec.31	Depreciation
					(1,60,000 + 6,000)		1,66,000
			5,46,000				5,46,000

Truck Disposal Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2013				2013
Oct.01	Truck		2,00,000	Oct.01	Provision for Depreciation		1,00,000
				Oct.01	Insurance Co. (Insurance Claim)		70,000
				Oct.01	Profit and Loss (Loss)		30,000
			2,00,000				2,00,000

Working Note:

Truck involved in accident

	Opening Balance					Depreciation		Closing Balance
Apr.01, 2011	2,00,000				–	30,000	=	1,70,000
Jan.01, 2012	1,70,000				–	40,000	=	1,30,000
Jan.01, 2013	1,30,000				–	30,000	=	1,00,000
	Accumulated Depreciation				=	1,00,000
Value on Oct.01, 2013		=	1,00,000
Less: Insurance Claim		=	70,000
Loss on Accident			30,000