Commerce Accountancy · Economics

Journal Entries and Depreciation

650 Questions

Journal entries and depreciation are core accountancy topics involving the systematic recording of financial transactions and the calculation of asset value reduction over time. Students must solve problems related to bad debts, provision calculations, and error rectification. These questions are essential for candidates appearing in commerce and accounting competitive exams.

Bad debts provisionAsset depreciation calculationPurchase return errorsTrial balance rectificationDebenture issuance

Journal Entries and Depreciation Questions

Multiple choice

The goods of invoice price Rs. 1, 25,000 were issued to Ajay by Vijay for which consignee paid advance covering 80% of invoice value. 3/5th of the goods were sold by consignee. Calculate the proportionate amount of advance to be retained with consignor.

  1. Rs. 60, 000

  2. Rs. 40, 000

  3. Rs. 75, 000

  4. Rs. 50, 000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Total advance received = Rs.1, 00,000 (80% of 1, 25,000)             Balance of goods = 1- 3/5 = 2/5             Advance to retain = 2/5th of 1, 00,000 = 40,000 Rs. 60,000 is the amount of advance adjusted. If calculation is made out of Rs.1, 25,000 then adjustment amount would be Rs.75, 000 and Rs.50, 000 respectively.

Multiple choice

Rajeev drew a bill on Vaibhav on 12th May for Rs. 20,000 payable 3 months after the date. The bill was accepted on 16th May. The date of maturity will be

  1. 15 August

  2. 16 August

  3. 14 August

  4. 19 August
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

If a bill is payable after sight, then the number of days are counted from the date of accepting it but if it is payable after date, then the days are counted from the date of drawing. Thus, in this case, the days will be counted from 12th May and 3 months after the date would be 12th August + 3 days of grace. Thus the bill becomes due on 15th August which is a public holiday. In such case, the bill is payable one day before i.e. 14th August. In case of a sudden holiday, the bill is payable on the next working day.

Multiple choice

A bill of 3 months for Rs. 20, 000 was dishonoured on the due date. The drawee paid 40% amount in cash and for the balance, he accepted a two months bill along with 18% interest. Calculate the amount of new bill.

  1. Rs. 12, 540

  2. Rs. 12, 360

  3. Rs. 8, 240

  4. Rs. 8, 360
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Total amount due = Rs. 20, 000             Paid in cash = Rs. 8, 000             Balance = Rs. 12, 000             Interest = 12,000*18%*2/12 = Rs. 360             Amount of bill = 12000 + 360= Rs. 12, 360 If the new bill is for 3 months, then its amount will be Rs. 12, 540 If the new bill is 8000 + Interest, then its amount will be Rs. 8,240 for 2 months bill and Rs. 8,360 for 3 months bill.

Multiple choice

A machine costing Rs. 2,00,000 having scrap value of Rs. 50,000 after 5 years is to be depreciated under sum of digit method. The depreciation to be charged in the 2nd year will be

  1. Rs. 20,000

  2. Rs. 40,000

  3. Rs. 10,000

  4. Rs. 30,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Sum of digits = 5 + 4 + 3 + 2 + 1 = 15 Depreciation in 2nd year = 4/15 of (2, 00, 000 - 50, 000) = Rs. 40, 000 Rs. 20, 000 is the depreciation for the 4th year, Rs. 10, 000 in the last year. Rs. 30, 000 is the depreciation as per straight line method.

Multiple choice

A machine costing Rs. 4,50,000 and having scrap value of 20% of cost after 5 years was purchased on 31 July, 2009. It is to be depreciated under straight line method. The depreciation to be charged for year ending 31 March, 2010 will be

  1. Rs. 48,000

  2. Rs. 72,000

  3. Rs. 54,000

  4. Rs. 42,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Annual depreciation = (4, 50, 000 - 90, 000)/5 = 72, 000. Depreciation for 31 July to 31 March i.e. 8 months = 72, 000*8/12 = Rs.48, 000 Rs.72, 000 is depreciation for the full year, Rs.54, 000 for 9 months and 42, 000 for 7 months.

Multiple choice

A machine costing Rs. 9,60,000 was purchased on 15 July, 2009. It is to be depreciated at12.5% P.A. under diminishing balance method. The depreciation to be charged for year ending 31 March, 2010 will be

  1. Rs. 1,20,000

  2. Rs. 85,000

  3. Rs. 75,000

  4. Rs. 95,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Annual depreciation = 9, 60, 000*12.5% = 1, 20, 000 Depreciation for 8.5 months = 1, 20, 000*8.5/12 = Rs. 85, 000 Rs. 1, 20, 000 is the depreciation for full year, Rs. 75, 000 for 7.5 months and Rs. 95, 000 for 9.5 months.

Multiple choice

A machine costing Rs. 6,60,000 was purchased on 1 April, 2009. It has estimated scrap value of Rs. 60,000. It is estimated that it will produce 60,000 units during its working life. It produced 4,800 units during the year ending 31 March, 2010. The depreciation to be charged for the year ending 31 March, 2010 will be

  1. Rs. 52,800

  2. Rs. 24,000

  3. Rs. 48,000

  4. Rs. 6,00,000
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Total depreciation during working life = 6,60,000 - 60,000 = 6,00,000 Depreciation per unit = 6, 00, 000/60,000 = Rs.10 Thus, chargeable depreciation = 4800*10 = 48, 000 If depreciation per unit is taken as 6, 60, 000/60,000 = Rs. 11, then depreciation 4800*11 = 52, 800 24,000 is the depreciation @ Rs. 5 while Rs. 6, 00, 000 is the depreciation of full life.

Multiple choice

A machine costing Rs. 3,60,000 was purchased on 1 April, 2009. It has estimated scrap value of Rs. 30,000. It is estimated that it will be used for 30,000 hours during its working life. It worked for 10 hours a day for 300 days during the year. The depreciation to be charged for year ending 31 March, 2010 will be

  1. Rs. 33,000

  2. Rs. 36,000

  3. Rs. 30,000

  4. Rs. 3,30,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Total depreciation during working life = 3, 60, 000 - 30, 000 = 3, 30, 000 Depreciation per hour = 3, 30, 000/30,000 = Rs.11 Thus, chargeable depreciation = 3000*11 = 33,000 If depreciation per unit is taken as 3, 60, 000/60,000 = Rs. 12, then depreciation 3000*12 = 36, 000 Rs.30, 000 is the depreciation @ Rs.10 while Rs. 3, 30, 000 is the depreciation of full life.

Multiple choice

A machine costing Rs. 10,00,000 was purchased on 1 July, 2008. It is to be depreciated @12.5% P.A. under diminishing balance method. The machine was sold on 31 March, 2010 for Rs. 7,00,000. Find out the profit or loss on sale of machine.

  1. Rs. 50,000 profit

  2. Rs. 50,000 loss

  3. Rs. 65,625 profit

  4. Rs. 92,969 loss
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Cost of Machine            =                                  Rs. 10, 00, 000 Less: Depreciation for 08-09 ( for 9 months)      = Rs.     93,  750                          W.D.V.             =                       Rs.  9, 06, 250 Less: Depreciation for 09-10      =                        Rs. 1, 13, 281                         W.D.V.              =                       Rs. 7, 92, 969                         S.P.                 =                        Rs. 7, 00, 000 Thus, Loss = Rs.92,969

Multiple choice

A machine costing Rs. 10,00,000 was purchased on 1 April, 2008. It is to be depreciated at15% P.A. under straight line method. The machine was sold on 31 July, 2010 for Rs. 7,00,000. Find out the profit or loss on sale of machine.

  1. Rs. 50,000 profit

  2. Rs. 50,000 loss

  3. Rs. 1,50,000 profit

  4. Rs. 1,50,000 loss
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Cost of machine                        =          Rs. 10, 00, 000 Less: depreciation for 2 years, 4 months= Rs. 3, 50, 000                                     W.D.V. =             Rs. 6, 50, 000                                     S.P.                 =  Rs. 7, 00, 000 Thus, profit = Rs. 50, 000

Multiple choice

The overdraft as per pass book is Rs. 3,245. A debit balance of Rs. 2,380 was recorded as Rs. 3,280 in the cash book and a debit entry of Rs. 3,500 was recorded on the credit side by error. Find the balance as per cash book.

  1. Rs. 4,645

  2. Rs. 1,855

  3. Rs. 11,115

  4. Rs. 9,345
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

(A) 3,245 - 900 - 7,000 = Rs. 4,645 (B) 3,245 + 900 - 7,000 = Rs. 1,855 (C) 3,245 + 900 + 7,000 = Rs. 11,115 (D) The entries are to be recorded from cash book angle. Overdraft balance Rs. 3,245 - 900 + 7,000 = Rs. 9,345 

Multiple choice

Overdraft as per the cash book on 31st March, 2009, was Rs. 20,000. It was found that the bank charges of Rs. 500 recorded in the cash book were not adjusted in the cash book, while other charges of Rs. 800 were recorded twice in the cash book. In addition, a cheque of Rs. 1000 discounted with bank for Rs. 980 was recorded without adjusting the discount. Calculate the pass book overdraft figures.

  1. Rs. 20,320

  2. Rs. 20,280

  3. Rs. 18,720

  4. Rs. 19,720
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

(A)       20, 000 + 500 + 800 + 20 = 20, 320 (B)       20, 000 + 500 + 800 - 20 = 20, 280         (C)       20, 000 - 500 - 800 + 20 = 18, 720 (D)       The entries are recorded from the angle of pass book. Overdraft Rs. 20, 000 + 500 – 800 + 20 = Rs.19, 720

Multiple choice

The balance as per the pass book is Rs. 9,750. A debit balance of Rs. 4,680 is recorded as Rs. 6,840 in the cash book and a credit entry of Rs. 3,500 on credit side is recorded on the debit side by error. Find the balance as per cash book.

  1. Rs. 14, 590

  2. Rs. 4, 910

  3. Rs. 590

  4. Rs. 18, 910
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

(A)       9, 750 - 2, 160 + 7, 000 = Rs. 14, 590 (B)       9, 750 + 2, 160 - 7, 000 = Rs. 4, 910 (C)       9, 750 - 2, 160 - 7, 000 = Rs. 590 (D)       The entries are to be recorded from cash book angle. Balance Rs. 9, 750 + 2, 160 + 7, 000 = Rs. 18, 910