Question : Furniture as of 1st April, 2019—Rs. 2,20,000; Furniture (having book value as on 1st April, 2019—Rs. 20,000) sold at a gain (profit) of 20% on 31st December, 2019. Furniture purchased on 1st October, 2019 for Rs. 1,00,000; Charge depreciation @ 10% p.a. on furniture. How much the amount is to be shown in the Income and Expenditure Account?
Option 1: Profit Rs 3,700 credited to Income and Expenditure Account. Depreciation charged Rs 26,500 debited to Income and Expenditure Account.
Option 2: Profit Rs.3,700 credited to Income and Expenditure Account Rs.1,500 depreciation debited to Income and Expenditure Account
Option 3: Loss Rs. 3,700 debited to Income and Expenditure Account Rs. 20,000 depreciation debited to Income and Expenditure Account
Option 4: None of the above
Correct Answer: Profit Rs 3,700 credited to Income and Expenditure Account. Depreciation charged Rs 26,500 debited to Income and Expenditure Account.
Solution : FURNITURE ACCOUNT
Working Note: 1. Book Value as on 1/4/19 = 20,000 (-) Depreciation @10% = (1,500) [For 9 months] Book Value as on 31/12/19 = 18,500 (+) Gain (20% x 18,500) = 3,700 Sale = 22,200 2. Total depreciation on all 3 furniture = Rs.1,500 + Rs.25,000 = Rs.26,500. Hence, the correct option is 1.
Question : Furniture as on 31st March, 2019—Rs. 4,40,000; Furniture (having book value as on 1st April, 2019—Rs. 40,000) sold at a loss of 20% on 31st December, 2019. Furniture is to be depreciated @ 10% p.a. Furniture costing Rs. 3,00,000 was also purchased on
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