Question

On January 1, 1992, there was a balance of Rs. 4,000 in the plant and machinery account. An addition of Rs. 2,000 was made on July 1, 1992. Accounts were closed for the year on December 31, 1992. If depreciation was charged at 10% per annum, the balance in the plant and machinery account on the closing date would be:

• A. Rs. 5,300
• B. Rs. 5,400
• C. Rs. 5,500
• D. Rs. 5,600

Answer 1

The correct option is C Rs. 5,500

Option C is correct.
Depreciation on 4000 of 10% = 400.
On 2000 depreciation will be calculated for 6 months.
2000*10%*6/12 = 100.
Total Depreciation = 500.
Balance in plant and machinery account on the closing date would be
4000+2000 - 500 = 5500.