Question

On January 1, 2001, Satkar Transport Ltd purchased 3 buses for Rs.10,00,000 each.On July 1, 2003, one bus was involved in an accident and was completely destroyed and Rs,7,00,000 were received from the Insurance Company in full settlement. Depreciation is written off @ 15% per annum on diminishing balance method. Prepare Bus account from 2001 to 2004. Books are closed on December 31st every year.

Answer 1

$\text{Dr}\text{Bus Account}\text{Cr}\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{JF}& \text{Amt.(Rs.)}& \text{Date}& \text{Particulars}& \text{JF}& \text{Amt.(Rs.)}\\ 2001& & & & 2001& & & \\ \text{Jan 1}& \text{Bank A/c}& & 30,00,000& \text{Dec 31}& \text{Depreciation}& & \\ & & & & & \text{A/c}\left(@15\%\right)& & 4,50,000\\ & & & & \text{Dec 31}& \text{balance b/d}& & 25,50,000\\ & & & \overline{\underset{–}{\underset{–}{30,00,000}}}& & & & \overline{\underset{–}{\underset{–}{30,00,000}}}\\ 2002& & & & 2002& & & \\ \text{Jan 1}& \text{Balance b/d}& & 25,50,000& \text{Dec 31}& \text{Depreciation}& & \\ & & & & & \text{A/c}(@15\%on& & \\ & & & & & 25,50,000)& & 3,82,500\\ & & & & \text{Dec 31}& \text{Balance b/d}& & 21,67,500\\ & & & \overline{\underset{–}{\underset{–}{25,50,000}}}& & & & \overline{\underset{–}{\underset{–}{25,50,000}}}\\ 2003& & & & 2003& & & \\ \text{Jan 1}& \text{Balance b/d}& & 21,67,500& \text{Jul 1}& \text{Depreciation}& & \\ \text{Jul 1}& \text{Profit}\&& & & & \text{A/c}\text{(6 months)}& & 54,188\\ & \text{Loss A/c (Profit)}& & 31,688& \text{Jul 1}& \text{Bank A/c}& & \\ & & & & & \text{(Insurance}& & \\ & & & & & \text{Claim)}& & 7,00,000\\ & & & & \text{Dec 31}& \text{Depreciation}& & \\ & & & & & \text{A/c}& & 2,16,750\\ & & & & \text{Dec 31}& \text{Balance c/d}& & 12,28,250\\ & & & \overline{\underset{–}{\underset{–}{21,99,188}}}& & & & \overline{\underset{–}{\underset{–}{21,99,188}}}\\ 2004& & & & 2004& & & \\ \text{Jan 1}& \text{Balance b/d}& & 12,28,250& \text{Dec 31}& \text{Depreciation}& & \\ & & & & & \text{A/c}\left(@15\%\right)& & 1,84,237\\ & & & & \text{Dec 31}& \text{Balance c/d}& & 10,44,013\\ & & & \overline{\underset{–}{\underset{–}{12,28,250}}}& & & & \overline{\underset{–}{\underset{–}{12,28,250}}}\end{array}$

Working Note

Cost of Accidental Bus on 1 Jan,2003=$\frac{21,67,500}{3}=Rs.7,22,500$

Dep on Accidental Bus on 1 Jul,2003=7,22,500 @ 15% for 6 months=Rs.54,188

Value of Bus as on 1 Jul,2003=7,22,500-54,188=Rs.6,68,312

Profit on Accidental Bus=7,00,000-6,68,312=Rs.31,688

Dep on Rest Two Busses=(21,67,500-7,22,500)=Rs.14,45,000

Dep=14,45,000 @ 15%=Rs.2,16,750