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Welcome back to Learn At Ur Desk! We are doing textbook solution series for TS Intermediate 2nd year Accountancy. We have started solving Chapter 1 Depreciation Problems and in my Last Post I have posted the solution for problem #9 and today we are going to solve Problem #10.
Textbook Solution Series (TBS Series)
for Telangana State Board of Intermediate Education (TSBIE) Second Year Accountancy.
Chapter 1: Depreciation
Page #40 problem #10.
Neelima traders purchased furniture ₹20,000 on 1st
April 2006. Additions are made to the furniture on 30th September
2007 for ₹10,000. On 31st December 2019, Furniture purchased on 1st
April 2006 was sold for ₹7000. Depreciation is charged at 10% on fixed
instalment method. The firm closes its books at the end of financial year.
Prepare furniture account for four years.
Working Notes.
Cost of Furniture (F1) = 20,000
Depreciation for 2007, 2008 & 2009
20,000 × 10 ÷ 100 = 2,000
Since Furniture 1 is sold on 31 December 2009
(middle of the year). Hence Depreciation will be charged till that date i.e.,
for 9 Months.
20,000 × 10 ÷ 100 × 9 ÷ 12 = 1,500
Calculation of profit/loss on sale of Furniture 1
Cost – Accumulated Depreciation = Book Value
20,000 – (2000 + 2000 + 2000 + 1500) = 12,500
Book Value – Sale = Profit/Loss
12,500 – 7,000 = 5,500 Ã Loss is credited.
Cost of Furniture (F2) = 10,000.
Furniture 2 is bought in the middle of the year i.e., 30th September 2007.
Hence, Depreciation for the year ending 31st
March 2008 will be only for 6 Months not for an year
Depreciation for 2008 = 6 Months
10,000 × 10 ÷ 100 × 6 ÷ 12 = 500.
Depreciation for 2009 & 2010.
10,000 × 10 ÷ 100 = 1,000.
Ok that's
it in this problem!
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Click here for Depreciation Problem #9 solution
Click here
for Depreciation Problem #11 solution
If you are
TS Intermediate 1st Year student then go to TSBIE Accountancy I Recording Business Transactions problem
# 1solved!
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