Editing Content :: Admin Scraper

Chapter

Content type

Position

Value

Depreciation, Provisions and Reserves 275 20. A Plant was purchased on 1st July, 2015 at a cost of ` 3,00,000 and ` 50,000 were spent on its installation. The depreciation is written off at 15% p.a. on the straight line method. The plant was sold for ` 1,50,000 on October 01, 2017 and on the same date a new Plant was installed at the cost of ` 4,00,000 including purchasing value. The accounts are closed on December 31 every year. Show the machinery account and provision for depreciation account for 3 years. (Ans: Loss on sale of Plant ` 81,875. Balance of Machine account as on 31.12.17 ` 4,00,000. Balance of Provision for Depreciation account as on 31.12.17 ` 15,000.). 21. An extract of Trial balance from the books of Tahiliani and Sons Enterprises on March 31, 2017 is given below: Name of the Account Debit Amount Credit Amount ` ` Sundry debtors. 50,000 Bad debts 6,000 Provision for doubtful debts 4,000 Additional Information: • Bad Debts proved bad but not recorded amounted to ` 2,000. • Provision is to be maintained at 8% of Debtors. Give necessary accounting entries for writing off the bad debts and creating the provision for doubtful debts account. Also show the necessary accounts. (Ans: New provision for Bad debts ` 3,840, profit and loss account [Dr.] ` 7,840.) 22. The following information are extract from the Trial Balance of M/s Nisha traders on 31 March 2017. Sundry Debtors 80,500 Bad debts 1,000 Provision for bad debts 5,000 Additional Information Bad Debts ` 500 Provision is to be maintained at 2% of Debtors. Prepare bad debts accound, Provision for bad debts account and profit and loss account. (Ans: New provision ` 1,600 Profit and loss account [Cr.] ` 1,900). Checklist to Test Your Understanding Test Your Understanding - I 1. T, 2. F, 3. F, 4. T, 5. T, 6. F, 7. T, 8. F, 9. F, 10. F, Test Your Understanding - II Depreciation for 1 year (2014-15) = ` 7500 (Charged for 9 months) Reprint 2026-27