Calculate the amount of cash from sale of machinery from the following items:
A machine costing 20,000 having book value of 15,000 is sold for
This question was previously asked in
Shift 11/06/2023 3:30 PM - 6:30 PM
Correct Answer
Detailed Explanation
To calculate the amount of cash from the sale of machinery, we need to consider the book value of the machinery, the sale price, and the depreciation charged during the year.
- Opening Balance in Machinery Account = Rs. 1,80,000
- Closing Balance in Machinery Account = Rs. 1,72,000
Now, let's calculate the original cost of the machine:
Original Cost = Opening Balance - Closing Balance Original Cost = 1,80,000 - 1,72,000 Original Cost = Rs. 8,000
Next, we need to account for the depreciation charged during the year, which was Rs. 8,000.
Book Value = Original Cost - Total Depreciation Book Value = 8,000 - 8,000 Book Value = Rs. 0
Now, the machine was sold for Rs. 12,000, but its book value was Rs. 0, so the cash received from the sale of machinery is Rs. 12,000.
So, the correct answer is: (1) 12,000
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