Question

The Sameer Transport Company purchased 10 Trucks at ₹ 90,000 each on 1st April 2011. On 1st October 2013 one of the Trucks was involved in an accident and is completely destroyed. ₹ 56,200 was received from the Insurance company in full settlement. On the same date another truck was purchased by the company for the sum of ₹ 1,00,000. The company writes off 20% per annum on the Diminishing Balance Method. The company maintains the calendar year as its financial year. Show the Truck Account for four years ending 31st December, 2014.

Answer 1

Truck Account
Dr.					Cr.
Date	Particulars		Amount (Rs)	Date		Particulars		Amount (Rs)
2011				2011
Apr. 01	Bank A/c			Dec. 31		Depreciation A/c
	T1	90,000				T1 (for 9 months)	13,500
	T2	8,10,000	9,00,000			T2 (for 9 months)	1,21,500	1,35,000
				Dec. 31		Balance c/d
						T1	76,500
						T2	6,88,500	7,65,000
			9,00,000					9,00,000
2012				2012
Jan. 01	Balance b/d			Dec. 31		Depreciation A/c
	T1	76,500				T1	15,300
	T2	6,88,500	7,65,000			T2	1,37,700	1,53,000
				Dec. 31		Balance c/d
						T1	61,200
						T2	5,50,800	6,12,000
			7,65,000					7,65,000
2013				2013
Jan. 01	Balance b/d			Oct. 01		Depreciation A/c (T1)		9,180
	T1	61,200		Oct. 01		Bank A/c (Sale of T1)		56,200
	T2	5,50,800	6,12,000	Dec. 31		Depreciation A/c
Oct. 01	Profit and Loss A/c (Profit on Sale of T1)		4,180			T2	1,10,160
Oct. 01	Bank A/c (T3)		1,00,000			T3 (for 6 months)	5,000	1,15,160
				Dec. 31		Balance c/d
						T2	4,40,640
						T3	95,000	5,35,640
			7,16,180					7,16,180
2014				2014
Jan. 01	Balance b/d			Dec. 31		Depreciation A/c
	T2	4,40,640				T2	88,128
	T3	95,000	5,35,640			T3	19,000	1,07,128
				Dec. 31		Balance c/d
						T2	3,52,512
						T3	76,000	4,28,512
			5,35,640					5,35,640

Working Note: Calculation of Profit & Loss on Sale of T1

Particulars	Amount
Value of Truck on Jan. 01, 2013	61,200
Less: Depreciation for 9 months	9,180
Value of Truck on Oct. 01, 2013	52,020
Less: Sale Value	56,200
Profit on Sale	4,180

Note: In order to make easy calculation, Truck purchased on April 01, 2011 has been divided into two parts i.e. T1 and T2.

Thus, T1: Rs 90,000 (sold for Rs 56,200)

T2: Rs 8,10,000 (includes the cost of 9 trucks)