Question

On 1st July, 2005, Geeta Paper Limited purchased a Plant for ₹ 1,50,000 and paid ₹ 10,000 as freight on its carriage. Depreciation was provided at 10% p.a. on the Written Down Value Method on this plant. On 1st Oct., 2008, this plant was sold for ₹ 80,000.
Prepare Plant A/c for 4 years, assuming that the books are closed on 31st March every year.

Answer 1

Plant Account
Dr.				Cr.
Date	Particulars	Amount (Rs)	Date		Particulars	Amount (Rs)
2005			2006
July 01	Bank A/c (1,50,000 + 10,000)	1,60,000	Mar. 31		Depreciation A/c (for 9 months)	12,000
					Balance c/d	1,48,000
		1,60,000				1,60,000
2006			2007
Apr. 01	Balance b/d	1,48,000	Mar. 31		Depreciation A/c	14,800
			Mar. 31		Balance c/d	1,33,200
		1,48,000				1,48,000
2007			2008
Apr. 01	Balance b/d	1,33,200	Mar. 31		Depreciation A/c	13,320
			Mar. 31		Balance c/d	1,19,880
		1,33,200				1,33,200
2008			2008
Apr. 01	Balance b/d	1,19,880	Oct. 01		Depreciation A/c	5,994
					Bank A/c (Sale)	80,000
					Profit and Loss A/c (Loss on Sale)	33,886
		1,19,880				1,19,880

Working Note: Calculation of Profit or Loss on Sale

Particulars	Amount
Value of Plant on Apr. 01, 2008	1,19,880
Less: Depreciation for 6 months	5,994
Value of Plant on Oct. 01, 2008	1,13,886
Less: Sale Value	80,000
Loss on Sale	33,886