Question

The book value of furniture on 1st April, 2018 is ₹ 60,000. Half of this furniture is sold for ₹ 20,000 on 30th September, 2018. 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, 2019.

Answer 1

Furniture Account
Dr.							Cr.
Date		Particulars	Amount (₹)	Date	Particulars	Amount (₹)
2018				2018
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
				2019
				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, 2019
Dr.					Cr.
Expenditure		Amount (₹)	Income	Amount (₹)
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 (₹)
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, 2018	28,500
Less: Sale Value	20,000
Loss on Sale of Furniture	8,500