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Question -

Carriage Transport Company purchased 5 trucks at the cost of Rs 2,00,000 each on April 01, 2011. The company writes off depreciation @ 20% p.a. on original cost and closes its books on December 31, every year. On October 01, 2013, one of the trucks is involved in an accident and is completely destroyed. Insurance company has agreed to pay Rs 70,000 in full settlement of the claim. On the same date the company purchased a second hand truck for Rs 1,00,000 and spent Rs 20,000 on its overhauling. Prepare truck account and provision for depreciation account for the three years ended on December 31, 2013. Also give truck account if truck disposal account is prepared.



Answer -

Books of Carriage Transport Company

Truck Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount

Rs

Date

Particulars

J.F.

Amount

Rs

2011

 

 

 

2011

 

 

 

Apr.01

Bank

 

10,00,000

Dec.31

Balance c/d

 

10,00,000

 

 

 

10,00,000

 

 

 

10,00,000

 

 

 

 

 

 

 

 

2012

 

 

 

2012

 

 

 

Jan.01

Balance b/d

 

10,00,000

Dec.31

Balance c/d

 

10,00,000

 

 

 

10,00,000

 

 

 

10,00,000

 

 

 

 

 

 

 

 

2013

 

 

 

2013

 

 

 

Jan.01

Balance b/d

 

10,00,000

Oct.01

Truck Disposal

 

2,00,000

Oct.01

Bank

 

1,20,000

Dec.31

Balance c/d

 

9,20,000

 

 

 

11,20,000

 

 

 

11,20,000

 

 

 

 

 

 

 

 

 

Provision for Depreciation Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount

Rs

Date

Particulars

J.F.

Amount

Rs

2011

 

 

 

2011

 

 

 

Dec.31

Balance c/d

 

1,50,000

Dec.31

Depreciation

 

1,50,000

 

 

 

1,50,000

 

 

 

1,50,000

 

 

 

 

 

 

 

 

2012

 

 

 

2012

 

 

 

Dec.31

Balance c/d

 

3,50,000

Jan.01

Balance c/d

 

1,50,000

 

 

 

 

Dec.31

Depreciation

 

2,00,000

 

 

 

3,50,000

 

 

 

3,50,000

 

 

 

 

 

 

 

 

2013

 

 

 

2013

 

 

 

Oct.01

Truck Disposal

 

1,00,000

Jan.01

Balance b/d

 

3,50,000

Oct.01

Balance c/d

 

4,46,000

Oct.01

Depreciation (9 Months)

 

30,000

 

 

 

 

Dec.31

Depreciation

 

 

 

 

 

 

 

(1,60,000 + 6,000)

 

1,66,000

 

 

 

 

 

 

 

 

 

 

 

5,46,000

 

 

 

5,46,000

 

 

 

 

 

 

 

 

 

Truck Disposal Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount 

Rs

Date

Particulars

J.F.

Amount 

Rs

2013

 

 

 

2013

 

 

 

Oct.01

Truck

 

2,00,000

Oct.01

Provision for Depreciation

 

1,00,000

 

 

 

 

Oct.01

Insurance Co. (Insurance Claim)

 

70,000

 

 

 

 

Oct.01

Profit and Loss (Loss)

 

30,000

 

 

 

 

 

 

 

 

 

 

 

2,00,000

 

 

 

2,00,000

 

 

 

 

 

 

 

 

 

Working Note:

Truckinvolved in accident

 

 

Opening Balance

 

Depreciation

 

Closing Balance

 

Apr.01, 2011

2,00,000

–

30,000

=

1,70,000

 

Jan.01, 2012

1,70,000

–

40,000

=

1,30,000

 

Jan.01, 2013

1,30,000

–

30,000

=

1,00,000

 

 

Accumulated Depreciation

=

1,00,000

 

 

 

 

 

Value on Oct.01, 2013

=

1,00,000

 

 

Less: Insurance Claim

=

70,000

 

 

Loss on Accident

 

30,000

 

 

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