Question

On 1st April, 2010, following balances appeared in the books of M/s Krishna Traders:

	₹
Furniture Account	50,000
Provision for Depreciation on Furniture Account	22,000

On 1st October, 2010 a part of Furniture purchased for ₹ 20,000 on 1st April, 2006 was sold for ₹ 5,000. On the same date a new furniture costing ₹ 25,000 was purchased.
The depreciation was provided @ 10% p.a. on original cost of the asset and no depreciation was charged on the asset in the year of sale. Prepare 'Furniture Account' and 'Provision for Depreciation Account' for the year ending 31st March, 2011.

Answer 1

Furniture Account
Dr.				Cr.
Date	Particulars	Amount (Rs)	Date		Particulars	Amount (Rs)
2010			2010
Apr. 01	Balance b/d (30,000 + 20,000)	50,000	Oct. 01		Provision for Depreciation A/c	8,000
Oct. 01	Bank A/c	25,000	Oct. 01		Bank A/c (Sale )	5,000
			Oct. 01		Profit and Loss A/c (Loss on Sale)	7,000
			2011
			Mar. 31		Balance c/d	55,000
		75,000				75,000

Provision for Depreciation Account
Dr.				Cr.
Date	Particulars	Amount (Rs)	Date		Particulars	Amount (Rs)
2010			2010
Oct.01	Furniture A/c	8,000	Apr.01		Balance b/d	22,000
2011			2011
Mar.31	Balance c/d	18,250	Mar.31		Depreciation A/c (WN2)	4,250
		26,250				26,250

Working Notes:

WN1: Calculation of Profit & Loss on Sale

Particulars	Amount
Value of Furniture on Apr. 01, 2006	20,000
Less: Depreciation for 4 Years @ 10%	8,000
Value of Furniture on Oct. 01, 2010	12,000
Less: Sale Value	5,000
Loss on Sale	7,000

WN2: Depreciation charged during the year

Particulars	Amount
On Rs 30,000 @ 10%	3,000
On Rs 25,000 @ 10% for 6 months	1,250
	4,250