Question

Question : On October 1, 2001, Juneja Transport Company purchased 2 trucks for Rs $10,00,000$ each. On July 1, 2003, one truck was involved in an accident and was completely destroyed and Rs$6,00,000$ were received from the insurance company in full settlement. On December 31, 2003, another truck was involved in an accident and destroyed partially, which was not insured. It was sold off Rs $1,50,000$. On January 31, 2004, company purchased a fresh truck for Rs $12,00,000$. Depreciation is to be provided at $10\%$ per annum on the written down value every year. The books are closed every year on March 31. Give the Truck account from 2001 to 2004.

Answer 1

Answer
Dr Truck Account Cr

Date	Particulars	JF	Amt.(Rs)	Date	Particulars	JF	Amt.(Rs)
2001 Oct 1	To Bank A/c		$20,00,000$	2001 Mar 31	By Depreciation A/c (@ $10\%$ for 6 months)		$1,00,000$
				Mar 31	By Balance c/d		$19,00,000$
			$20,00,000$				$20,00,000$
2002 Apr	To Balance b/d		$19,00,000$	2003 Mar 31	By Depreciation A/c (@$10\%$ for a year)		$1,90,000$
				Mar 31	By Balance c/d		$17,10,000$
			$19,00,000$	Mar 31			$19,00,000$
2003 Apr 1	To Balance b/d		$17,10,000$	2003 Jul 1	By Depreciation A/c (for 3 months @ $10\%$ on $8,55,000 )		$21,375$
2004 Jan 31	To Bank A/c (Purchase of New Truck)		$12,00,000$	Jul 1	By Bank A/c (Insurance Company)		$6,00,000$
				Jul 1	By Profit & Loss A/c (Loss)		$2,33,625$
				Dec 31	By Depreciation A/c (for 9 months @ $10\%$ on $8,55,000$)		$64,125$
				Dec 31	By Bank A/c		$1,50,000$
				Dec 31	By Profit & Loss A/c (Loss)		$6,40,875$
				2004 Mar 31	By Depreciation A/c (@$10\%$ for 2 months on $12,00,000$)		$20,000$
				Mar 31	By Balance c/d		$11,80,000$
			$29,10,000$				$29,10,000$

Working Note
Loss on Sale on 1st Truck
Value of Truck on 1st Apr, 2003 = $17,10,000$ divided by 2 = $8,55,000$
(-) Dep for 3 months @ $10\%$ on $8,55,000$ $21,375$
Value at the time of disposal $8,33,625$
(-) Insurance Claim received $6,00,000$
Loss on Settlement of 1st Truck $2,33,625$.
Loss on Sale of IInd Truck
Value of Truck as on 1 Apr 2003 = $17,10,000$ divided by 2 = $8,55,000$
(-) Dep for 9 months @$10\%$ on $8,55,000$ $64,125$
Value of Truck at the time of disposal $7,90,875$
(-) Value received from Insurance Company $1,50,000$
Loss on Sale of IInd Truck Rs.$6,40,875$
Computation of Depreciation on IIIrd Truck
It was purchased on Jan 1, 2004. Hence, Dep will be charged for 2 months only i.e., Feb and Mar
Dep= $[12,00,000\times \frac{10}{100}\times \frac{2}{12}]$