The balance of property at cost has been Rs. 20,000 and Rs. 17,000 in 2015 and 2016, respectively. The…
Opening Property at cost (2015) = Rs. 20,000; adding new property purchased in 2016 (Rs. 5,000) gives Rs. 25,000. Deducting the closing balance at cost in 2016 (Rs. 17,000)…
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The balance of property at cost has been Rs. 20,000 and Rs. 17,000 in 2015 and 2016, respectively. The profit on the sale of property of Rs. 2,000 is credited to Capital Reserve Account. New property costing Rs. 5,000 was bought in 2016. Determine the sale proceeds from property.
Answer and explanation
Correct answer C
Opening Property at cost (2015) = Rs. 20,000; adding new property purchased in 2016 (Rs. 5,000) gives Rs. 25,000. Deducting the closing balance at cost in 2016 (Rs. 17,000) yields the cost of property sold = Rs. 8,000; adding the profit on sale of Rs. 2,000 credited to Capital Reserve gives total sale proceeds = Rs. 8,000 + Rs. 2,000 = Rs. 10,000.
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UGC NET Commerce