Question

Question: On January 1, 2001. Satkar Transport Ltd purchased 3 buses for Rs$10,00,000$ each. On July 1, 2003, one 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

Answer :
Dr Bus Account Cr

Date	Particulars	JF	Amt.(Rs)	Date	Particulars	JF	Amt.(Rs)
2001 Jan 1	To Bank A/c		$30,00,000$	2001 Dec 31	By Depreciation A/c (@$15\%$)		$4,50,000$
					By Balance c/d		$25,50,000$
			$30,00,000$				$30,00,000$
2002 Jan 1	To Balance b/d		$25,50,000$	2002 Dec 31	By Depreciation A/c (@ $15\%$ on $25,50,000$)		$3,82,500$
				Dec 31	By Balance c/d		$21,67,500$
			$25,50,000$				$25,50,000$

Date	Particulars	JF	Amt.(Rs)	Date	Particulars	JF	Amt.(Rs)
2003 Jan 1	To Balance b/d		$21,67,000$	2003 Jul 1	By Depreciation A/c (6 months)		$54,188$
Jul 1	To Profit & Loss A/c (Profit)		$31,688$	Jul 1	By Bank A/c (Insurance Claim)		$7,00,000$
				Dec 31	By Depreciation A/c		$2,16,750$
				Dec 31	By Balance c/d		$12,28,250$
			$21,99,188$				$21,199,188$
2004 Jan 1	To Balance b/d		$12,28,250$	2004 Dec 31	By Depreciation A/c (@$15\%$)		$1,84,237$
				Dec 31	By Balance c/d		$10,44,013$
			$12,28,250$				$12,28,250$

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.$2,16,750$