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Question

The book value of furniture on 1st April, 2017 is ₹ 60,000. Half of this furniture is sold for ₹ 20,000 on 30th September,2017. Depreciation is to be charged on furniture @ 10% p.a.
Calculate loss on sale of furniture . Show how the loss on sale and depreciation on furniture will be shown in the Income and Expenditure Account for the year ended 31st March, 2018.

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Solution

Furniture Account

Dr.

Cr.

Date

Particulars

Amount

(Rs)

Date

Particulars

Amount

(Rs)

2017

2017

April 01

Balance b/d

Sept.30

Depreciation (i) (for 6 Months)

1.500

(i) 30,000

Sept.30

Bank (Sale) (i)

20,000

(ii) 30,000

60,000

Sept.30

Income and Expenditure (Loss on Sale)

8,500

2018

March 31

Depreciation (ii) (for whole year)

3,000

Balance c/d (ii) (30,000 – 3,000)

27,000

60,000

60,000

Income and Expenditure Account

for the year ended March 31, 2018

Dr.

Cr.

Expenditure

Amount

(Rs)

Income

Amount

(Rs)

Depreciation on Furniture

(1,500 + 3,000)

4,500

Loss on Sale of Furniture

8,500

Working Note:

Calculation of Profit or Loss on Sale of Furniture

Particulars

Amount

(Rs)

Book Value of Furniture Sold as on April 01, 2018

30,000

Less: Depreciation (for 6 Months) (3,000 × 10% × 6/12)

1,500

Book Value of Furniture as on Sept. 30, 2017

28,500

Less: Sale Value

20,000

Loss on Sale of Furniture

8,500


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