Question

Rectify the following entries :

(i) Purchase of building was passed through purchase book amounting to Rs 80,000.

(ii) Wages paid for construction of building was debited to wages account with Rs 20,000.

(iii) Expenses of erecting of a shed amounting to Rs 3,000 were debited to trade expenses account.

(iv) Wages paid for extension of building was debited to wages

Answer 1

In the books of Bajaj Ltd.

Machinery A/c

$\begin{array}{cccccc}\text{Date}& \text{Particulars}& \text{Amount}& \text{Date}& \text{Particulars}& \text{Amount}\\ & & & \text{(Rs)}& & \text{(Rs)}\\ 2010& & & 2010& & \\ 1\text{Jan.}& \text{To Balance b/d}& 5,00,000& 31\text{Dec.}& \text{By Balance c/d}& 5,00,000\\ & & \overline{\underset{–}{5,00,000}}& & & \overline{\underset{–}{5,00,000}}\\ 2011& & & 2011& & \\ 1\text{Jan.}& \text{To Balance b/d}& 5,00,000& 1\text{July}& \text{By Machinery Disposal A/c}& 60,000\\ 1\text{Jan.}& \text{To Bank A/c}& 80,000& \text{31 Dec.}& \text{By Balance c/d}& 5,20,000\\ & & \overline{\underset{–}{5,80,000}}& & & \overline{\underset{–}{5,80,000}}\\ 2012& & & & & \\ 1\text{Jan.}& \text{To Balance b/d}& 5,20,000& & & \end{array}$

Provision for Depreciation A/c

$\begin{array}{cccccc}\text{Date}& \text{Particulars}& \text{Amount}& \text{Date}& \text{Particulars}& \text{Amount}\\ & & \text{(Rs)}& & & \text{(Rs)}\\ 2010& & & 2010& & \\ 1\text{Jan.}& \text{To Balance c/d}& 1,71,500& 1\text{Jan.}& \text{By Balance b/d}& 1,35,000\\ & & & 31\text{Dec.}& \text{By Depreciation A/c}& 36,500\\ & & \overline{\underset{–}{1,71,500}}& & & \overline{\underset{–}{1,71,500}}\\ 2011& & & 2011& & \\ 1\text{July}& \text{To Machinery Disposal A/c}& 18,000& 1\text{Jan.}& \text{By Balance b/d}& 1,71,500\\ & (6,000\times 3)\text{years}& & 31\text{Dec.}& \text{By Depreciation A/c}& 36,650\\ 31\text{Dec.}& \text{To Balance c/d}& 1,90,150& & & \\ & & \overline{\underset{–}{2,08,150}}& & & \overline{\underset{–}{2,08,150}}\\ & & & 2012& & \\ & & & 1\text{Jan.}& \text{By Balance b/d}& 1,90,150\end{array}$

Machinery Disposal A/c

$\begin{array}{cccccc}\text{Date}& \text{Particulars}& \text{Amount}& \text{Date}& \text{Particulars}& \text{Amount}\\ & & \text{(Rs)}& & & \text{(Rs)}\\ 2011& & & 2011& & \\ 1\text{July}& \text{To Machinery A/c}& 60,000& 1\text{July}& \text{By Prov. for Dep. A/c}& 18,000\\ & & & 31\text{Dec.}& \text{By Balance c/d}& 42,000\\ & & \overline{\underset{–}{60,000}}& & & \overline{\underset{–}{60,000}}\\ 2012& & & & & \\ 1\text{Jan.}& \text{To Balance b/d}& 42,000& & & \end{array}$

Note : As the machinery discarded is not yet sold, so the machinery’s book value is carried to next year. It is expected to realize ` 10,000, but that can not be recorded unless that is sold.