ns ACCOUNTING EQUA TIONS ILLUSTRATION 4 Transactions of M/s Vipin Traders are given below : Show the effects on Assets, Liabilities and Capital wi equation, (4) Business started with cash (b) Purchased goods for cash accounting Rs. 1,25,000 000, ith the help of (c) Purchased furniture from R.K. Fumiture 10,000 (d) Sold goods to Parul Traders (Costing Rs. 7,000 vide bill no. 5,674) 9,000, (e) Paid cartage 100 (/) Cash Paid to R.K. Furniture in full settlement 9,700 (g)_ Cash sales (costing Rs. 10,000) 12,000 (h) Rent received 4,000 (i) Cash withdrew for personal use 3,000 (Solution on Next Page) Scanned with CamScannerILLUSTRATION 6 Show the effect of following transactions on the accounting equation @ (b) (c) (@d) (e) 0) (g) (A) ky w) v/) (A) @) (m) (2) (0) Seay Manoj started business with (i) Cash. (ii) Goods (ii) Building He purchased goods for cash He sold goods (costing Rs. 20,000) He purchased goods from Rahul He sold goods to Varun (costing Rs. 52,000) He paid cash to Rahul in full settlement Salary paid by him . Received cash from Varun in full settlement Rent outstanding, Prepaid Insurance Coffimission received by him Amount withdrawn by him for personal use Depreciation charged on building Fresh capital invested Purchased goods from Rakhi (Solution on Page 6.17) Rs. 2,30,000 1,00,000 2,00,000 50,000 35,000 55,000 60,000 53,000 20,000 59,000 3,000 2,000 13,000 20,000 10,000 50,000 6,000 Scanned with CamScannerQ-26. Y started a business on Ist January, 1998 with a Capital of Rs. 2,00,000 and a loan of Rs. 75,000 from the bank. During the year, he had introduced additional capital of Rs. 60,000 and had withdrawn Rs. 36,000 for personal purposes. On 31st Dec,, 1998 his assets were Rs. 3,80,000. Find out his Capital as on 31st Dec., 1998 and profit eared during the year 1998. [Ans. Closing Capital Rs. 3,05,000; Profit Rs. 81,000.] Scanned with CamScanner5 Q. aD Open ‘T’ shape account for Furniture and write the following on the proper side: . Furniture purchased for Rs. 50,000 . Furniture sold costing Rs. 20,000 . Furniture destroyed by fire Rs. 16,000 . Furniture again purchased Rs. 32,000 . Old furniture discarded Rs. 2,000 6. Value of furniture was reduced by Rs. 5,000 {Ans. Debit side : 1, 4; Credit side : 2, 3, 5, 6.] ARwYNe Scanned with CamScannerbe recorded in the accoum vs «* TEA iv will not Hint : Item No. iv Ram’ and write the following Q. 30. Open ‘T’ shape account of our Debtor transactions on the proper side :— Re 20,000 (i) Sold goods to Ram on Credit 15,000 (ii) Received from Ram F000 (iii) Ram returned goods to us 2 OD (iv) Again sold goods to Ram on Credit 5 (v) Ram returned goods to us 1,000 [Ans. Debit side : (i), (iv); Credit side : (ii), (iit), (v).J Q.31, Put the following on the proper side of Cash Account, Debtor's Account and Creditor’s Account :-— Rs. (a) Sold goods to Shankar on Credit 50,000 (b) Sold goods to Ghanshyam for Cash 30,000 (c) Purchased goods from Mohan on Credit 25,000 (@) Received from Shankar 29,000 (e) Shankar returned goods 1.000 (1) Sold goods to Shankar for Cash : (g) Retumed goods to Mohan 000 (h) Paid Rent 2,000 [Ans, Cash Ale Dr, (0), 0), C “one Shankar py (a) ri) Mohan Br. gy Cr. (d), (e) Cr. (c)] Scanned with CamScannerin the Cash Book with Cash and Bank Q. SX(A) Enter the following particula Aolumns 1985 April 1 Balance of cash in hand Rs. 2,000 and at Bank Rs, 12,000, Received cash from Madhav Rs. 1,800, Cash Sales Rs. 1,000 Purchases by cheque Rs, 745. Paid into Bank Rs, 1,850. 10. Paid cash for freight Rs. 54, 12. Drew from Bank for office use Rs. 600, 13. Issued a cheque in favour of M/s Arun & Sons for Rs. 985, 16 Paid into Bank Rs. 715. 17 Drew Cash for his son's birthday party Rs. 175, 19 Received a cheque from Navin for Rs. 380 and deposited it into bank on the same day. 20 Cash Sales Rs. 200. 25 Drew from Bank for office use Rs. 200. 26 Purchased furniture for Rs. 1,000 and Payment made by cheque. 27 Navin’s cheque dishonoured, Bank charges Rs, 5. 29 Purchased business premises, payment made by cheque Rs. 12,000, 30 Received cheque for Rs. 675 from Harish. [Ans. Cash in hand Rs. 3,006; Bank Overdraft Rs. 295.) nw wa Scanned with CamScanner_ 7. B) Prepare a Cash Book with Cash and Bank Columns :-— 1993 Jan. 1 Cash in hand Bank Overdraft Paid to Hari in full settlement Received from Ram, who owes Rs. 5,000, Rs. 2,000 only on account. [Ans. Cash in hand Rs. 7,500; Bank Rs. 5,000.} ; Oth : Rs. 2,000 will be recorded on the debit side of the cash book, as Hint :— January t b only Rs. 2,000 have been received from Ram out of the total amount of Rs. 5,000 due from him. 2 Paid Wages 3 Deposited into Bank 4 Cash sales 5 Sold goods for cheque which was deposited in bank on the same day 6 Purchased goods from Hari on credit 7 Drew from Bank for personal use peed 8 3,500 9 Scanned with CamScannerCASI! BOOK 8.50 . 7 i ‘ash and Ba Q.,9. (B) Enter the following transactions in a Cash Book with Cash and Bank Colunins :— Rs, 1989 50,000 Dee. 1. Started business with cash 29.000 2 Pays into Bank 800 3 Received cheque from Raja & Co. 20 Discount allowed 5 Withdrew cash from bank for private use a 14 Received cheque from Kamla aoa Discount allowed CS 16 Kamla’s cheque endorsed to Bala in fill settlement of her account of Rs. 425 29 Paid rent by cheque 1,000 30. Deposited into bank, balance of cash in excess of 450 [Ans. Cash Balance (Dr.) Rs. 450; Bank Balance (Dr.) Rs. 49,110: Excess Cash deposited into Bank on 30th December Rs. 20,550.] Hint + On Dec. 3, there is no information about the date of deposit of the cheque of Rs, 800 Hence, it has been assumed that the cheque has been deposited on the same day. Scanned with CamScannerQ. 11. (A) Prepare a Cash Book with Cash and Bank Columns from the following, transactions A los : March 1 Cash in hand Rs. 1,800 and at Bank Rs. 11,000, 5 Received a cheque for commission Rs, 3,960, Cheque was immediately deposited into bank. 7 Bought goods for cheque Rs. 7,000. 8 Bought goods for cash Rs. 500. 10 Purchased Typewriter and payment made by cheque of Rs. 5,000. 14 Paid Trade Expenses Rs. 105, 16 Paid into Bank Rs. 1,000. 18 Ramesh who owed us Rs. 500 became bankrupt and paid us 50 paise in a rupee 20 Reecived Rs. 400 from Manohar and allowed him discount Rs. 10. 23. Withdrew from Bank Rs. 400. 23 Paid Rs. 300 to Ghanshyam Dass & Co. They allowed us discount Rs. 10, 24 Received Rs. 2,000 from Hari Ram and deposited the same into Ba 25 Withdrew from Bank for private expenses 27 Sold goods for cash Rs. 200. 28 Received cheque for goods sold Rs. 9,000. 29 Reccived repayment of a loan of Rs. 5,000 and deposited Rs. 3,000 out of it into Bank. 30 Bank charges as per Pass Book Rs. 5. Cash in hand Rs. 3,145; Bank Balance Rs. 17,255.] On 18th March : the amount of bad debts will not be recorded in the Cash Book. On 28th March : Iwill be assumed that the cheque has been deposited into the bank on the same day. Scanned with CamScannerCASH BOOK ae Petty Cash Book Q. 13, Prepare a Petty Cash Book on the Imprest System from the following : 1999 April 1 Received Rs. 2,000 for Petty Cash. Paid Cartage Rs. 100. Paid Bus Fare Rs. 20; Speed Post Rs. 80. Paid for Stationery Rs. 120. Paid for Courier Services Rs. 50. 9. Paid for Taxi fare Rs. 180; STD call charges Rs. 96. 10 Paid for Telegram Rs. 75; Charity Rs. 101, L 11. Paid for Newspaper Rs. 200. 12 Paid for soap Rs. 40; Speed post charges Rs. 60. 13 Paid for Postage Rs. 150, 14. Paid for Repairs of Chairs Rs. 200. 15 Paid for Refreshment to customers Rs. 120. [Ans. Petty Cash balance Rs. 408. Postage Rs. 340; Telephone and Telegram Rs. 171; Conveyance Rs. 200; Stationery Rs. 120; Miscellaneous Expenses Rs. 761.] ise YAR Scanned with CamScannerQ. 15. Mr. Yadav, the petty cashier of M/s Triputi Traders received Rs. 2,500 on Apfil 1, 2006 from the Head Cashier. Following were the petty expenses :-— 2006 Apnl 2 20 Taxi fare Refreshments Registered postal charges Telegram Auto fare Courier charges Postal Stamps Eraser/Sharpeners/Pencils Speed Post charges Cartage Computer Stationery STD Call charges Rs, 220 90 38 38 50 65 150 210 90 70 200 45 Scanned with CamScanner7. Rectify the following errors :— A sale of goods to Raja Ram for Rs. 2,500 was passed through the Purchases ook. 2. Salary of Rs. 800 paid to Hari Babu was wrongly debited to his personal account. 3. Furniture purchased on credit from Mohan Singh for Rs. 1,000 was entered in the Purchases Book. 4. Rs, 5,000 spent on the extension of buildings was debited to Buildings Repairs Account. 5. Goods returned by Mani Ram Rs. 1,200 were entered in the Returns Outwards Book. Q. 8. Rectify the following errors : “(@) Fumiture purchased for Rs. 10,000 wrongly debited to Purchases Account. (b) Machinery purchased on credit from Raman for Rs. 20,000 was recorded through Purchases Book. (c) Repairs on machinery Rs. 1,400 debited to Machinery Account. (d) Repairs on overhauling of second hand machinery purchased Rs. 2,000 was debited to Repairs Account. / (e) Sale of old machinery at book value of Rs. 3,000 was credited to Sales Account. Scanned with CamScanner_Q. 10. Rectify the following errors :— 1. Rs. 4,500 spent on the extension of Buildings were debited to Repairs Alc. 2. Wages paid to the firm’s own workmen Rs. 3,600 for the installation of a new machinery were posted to Wages Account. 3. Contractor’s bill for the construction of a godown at a cost of Rs. 10,000 has. been charged to ‘Repairs’ A/c. 4, Rs. 1,500 paid as Wages to a worker ‘Bahadur Singh’, has been debited to his personal account. 5. Old furniture sold for Rs. 500 has been credited to Sales Account. 6. Acheque of Rs. 620 received from Ram, has been wrongly credited to Shyam Scanned with CamScannerOne-Sided Errors Q. 12. Rectify the following errors which were detected before preparing the Trial Balanee : () Purchase book has been overcast by Rs. 1,000. (i) Purchase from Ram Rs. 20,000 has been omitted to be posted to his account. Scanned with CamScannerRECTIFICATION OF ERRORS 13.39 (iii) Purchase from Shyam Rs. 15,000 has been posted to the debit side of his account. (iv) Purchase from Ghanshyam Rs. 10,000 has been posted to his account as Rs. 1,000, (v) Purchase from Sita Ram Rs. 5,000 hasbeen posted to his account as Rs. 50,000 Scanned with CamScanner__Q+24. Trial Balance of Madan did not agree and he put the difference to Suspense Account. He discovered the following errors : (a) Sales Returns book overcast by Rs. 800. (6) Purchases returns to Sahu Rs. 2,000 were not posted to his account. (©) Goods purchased on credit from Narula Rs, 4,000 though taken into stock, but no entry was passed in the books, (@ Installation charges on new machinery purchased Rs. 500 were debited to sundry expenses account as Rs, 50. (©) Rent paid for residential accommodation of Madan (the proprietor) Rs. 1,400 was debited to Rent A/c as Rs. 1,000. Rectify the errors and prepare Suspense Account to ascertain the difference in Trial Balance. [Ans. Opening Dr. Balance of Suspense Account Rs. 2,050; Total of Suspense Account Rs. 2,850.] Q,25. There was an error in the Trial Balance of Mr. Steel on 31st March, 2002, and-the difference in Books was carried to a Suspense Account. On going through the Books you find that : (@)_ Rs. 5,400 received from Mr. A was posted to the debit of his account. (i) Rs. 1,000 being purchases return were posted to the debit of Purchases Account. (iii) Discount received Rs. 2,000 was posted to the debit of Discount Account. (iv) Rs. 2,740 paid for Repairs to Motor Car was debited to Motor Car Account as Rs. 1,740. (») Rs. 4,000 paid to B was debited to 4’s Account. Give Journal Entries to rectify the above errors and ascertain the amount transferred to Suspense Account on 31st March, 2002 by showing the Suspense Account, assuming that the Suspense Account is balanced after the above corrections. (C.A.P.E.I. May 2002) [Ans. Opening Cr. Balance of Suspense A/e Rs. 15,800; Total of Suspense Ae Rs. 16,800. Scanned with CamScanneres _. 31, In taking out a Trial Balance, an Accountant finds an excess debit of Rs. 1,098. Being desirous of closing his books, he places the difference to Suspense Alc. Later on he detects the following errors :-— a 2. oF Goods purchased from Surinder for Rs. 350 has been credited to his account as Rs. 530. Goods sold to Dinesh for Rs. 800 have been debited to his account as Rs. 880. Accheque of Rs. 1,250 received from a debtor had been correctly entered in the cash book but posted to his Personal A/c as Rs. 1,200. . Rs. 780, paid for freight on machinery purchased was debited to Freight Account as Rs. 708. Goods to the value of Rs. 130 returned by a customer Navin Kumar had been posted to the debit of his account. Scanned with CamScanner6. Rs. 1,440 paid for repairs to Motor Car were di as Rs, 1,400. 7. Rs. 500 being purchase return were posted to the debit of Purchase A/c, Give necessary rectifying entries and Prepare suspense account. [Ans. Suspense A/c tallies; total of Suspense A/c Rs. 1,390.] lebited to Motor Car A/c Q.32A Book-keeper finds that the totals of his trial balance disagree by Rs. 2,800. He temporarily debits a Suspense Account with this amount and closes the books. On an examination of the books, the following errors are discovered :-— 1. The total of Purchase Return Book Rs. 710 was posted Twice. 2. Goods costing Rs. 800 were distributed as free samples but no entry was. passed in the books. Purchase of Machinery for Rs. 5,600 on credit was recorded in Purchase Book 4. 00 were recorded in Cash Book as well as in Sales Book and were posted from both, 5. ng Stock has been overvalued by Rs. 1,500. 6. Sales Return Book was untotalled, though personal accounts were posted Rs. 1,580. No entries have been made in the Cash Book for the Insurance Premium directly paid by bank Rs. 700 and interest charged on overdraft Rs. 320, 8. A sum of Rs. 200 for Drawings on the Credit Side of Cash Book was not posted to the Drawings account. ss entries to rectify the above errors. Close the Suspense Account already =I opened. {Ans. All errors have not been discovered, as Suspense A/c still shows a Dr. balance of Rs. 310, (See Illustration 25 for Solution).] (1) In item No. 1, Purchase Retum A/c will be debited and Suspense A/c will be Hints credited. (2) In item No. 6, Sales Retum A/c will be debited and Suspense A/c will be credited. (3) In item No. (7), Insurance Premium A/c and Interest A/c will be debited and Bank A/e Will be credited. Scanned with CamScannerQ. 6. A Company purchased on Ist January, 1990, a machinery for Rs. 80,000. On IstJuly, 1991, it purchased another machine for Rs. 50,000 and on Ist July, 1992, it sold off the first machine purchased in 1990 for Rs. 23,000. Depreciation was provided on the machinery at the rate of 20% P.a. on the original cost annually. Give the Machinery Account for four years commencing from Ist January, 1990, [Ans. Loss on sale of machinery Rs. 17,000; Balance of machinery on 1-1-1994, Rs. 25,000.] Q.7. Bhushan & Company purchased a Machinery on Ist January, 1990, for Rs-54,000 and spent Rs. 6,000 on its installation. On 1st September, 1991, it purchased another machine for Rs. 30,000. On 31st March, 1992, the first machine purchased on Ist January, 1990, is sold for Rs. 36,000 and on the same date it purchased a new machinery for Rs. 80,000. On September 1, 1993, the second machine (purchased on September 1, 1991) was also sold off for Rs. 26,000. Depreciation was provided on machinery @ 10% p.a. on Original Cost Method annually on 31st December. Give the machinery account from 1990 to 1993, [Ans, Loss on sale of First Machine Rs. 10,500; Profit on sale of Second Machine Rs. 2,000, Balance of Machine A/c on 31st December, 1993, Rs. 66,000.] Scanned with CamScannerQ. 30. The following balances appear in the books of Y Lid.: Rs. Machinery A/c as on 1-4-2001 8,00,000 Provision for Depreciation A/c as on 1-4-2001 3,10,000 On 1-7-2001, a machinery which was purchased on 1-4-1998 for Rs. 1,20,000 was sold for Rs. 50,000 and on the same date another machinery was purchased for Rs. 3,20,000. The firm has been charging depreciation at 15% p.a. on Original Cost Method and closes its books on 31st March every year. Prepare the Machinery A/c and Provision for Depreciation A/c for the year ending 31st March 2002. (Delhi 2008) [Ans. Balance of Machinery A/c on 31st March 2002 Rs. 10,00,000; Balance of Provision for Depreciation A/c on 31st March 2002 Rs. 3,94,000; Loss on sale of Machinery Rs. 11,500.] Q. 31. Books of Mumbai Chemicals Ltd. showed the following balances on 1 January 2001 : ‘Machinery A/e Rs. 10,00,000 Provision for Depreciation A/c Rs. 4,05,000 On Ist January 2001, a machine which had a cost of Rs. 2,00,000 on Ist July 1998 was sold for Rs. 80,000. The firm writes off depreciation @ 10% p.a. under the Reducing Balance Method and its accounts are made up on 31st December each year. You are required to prepare the Machinery A/c and Provision for Depreciation A/c for the year ending 31st Dec., 2001. [Ans. Balance of Machinery A/c on 31st Dec., 2001 Rs. 8,00,000. Balance of Provision for Depreciation A/c on 31st Dec., 2001 Rs. 4,03,010; Loss on sale of Machinery Rs. 73,900.] Scanned with CamScannerS eerie Bl March 1999, Kedarnath Bros, eee c epreciation is provided @ 10% p.a. on diminishing balance method ee = closed on 31st Dec. cach year. On Ist July 2001, a part of the ma ty ia hased on Ist March 1999 for Rs. 6,00,000 was sold for Rs. 3,50,000 and Same date another machinery was purchased for Rs, 8,00,000. You are required ° anew. (i) Machinery A/c, (ii) Provision for Dep. A/c, and (iii) Machinery Disposal purchased a machinery for [Ans. Balance of Machinery A/c on 31st Dec., 2001 Rs. 29,00,000; Balance of Provision for Dep. A/c on 31st Dec., 2001 Rs. 5,80,750; Loss on sale of Machinery Rs. 1,20,250.] _ Q.35. On Ist Jan, 1999, Panjim Dryfruits Ltd. bought a plant for Rs. 15,00,000. The company writes off depreciation @ 20% p.a. on Written Down Value Method and closes its books on 31st March every year. On Ist Oct. 2001, a part of the plant purchased on 1st Jan. 1999 for Rs. 3,00,000 was sold for Rs. 1,75,000. On 1st Jan. 2002 a fresh plant was purchased for Rs. 5,00,000. Prepare Plant A/c, Provision for Dep. Ale and Plant Disposal A/c. [Ans. Balance of Plant A/c on 31st March 2002 Rs. 17,00,000; Balance of Provision for Dep. A/c on 31st March 2002 Rs. 6,41,320; Gain on sale of plant Rs. 10,840.] Scanned with CamScannerQ. 2:Find out the due dates of the bills in the following cases : Date of the Bills Period I. 29th May, 1993 4 months II. 3ist March, 1993 1 month Il. 21st July, 1993 60 days IV. 14th May, 1993 90 days V. 28th January, 1992 1 month VI. 31st January, 1992 1 month Emergency holiday 22nd September. [Ans. (I) 1st October, 1993 (IV) 14th August, 1993 (0) 3rd May, 1993 (V) 2nd Mareh, 1992 (Il) 23rd September, 1993 (VI) 3rd March, 1992] Hint :— The year 1992 is leap year. Scanned with CamScannerEndorsement of a Bill Q. 7. B owed Rs. 5,100 to 4. On 15th January, 1994, he accepted a bill for RS. 5,000 for two months drawn by 4 in full settlement of his debt. On 18th January, 1994, A endorsed the bill to his creditor C. The bill was duly met on the date of maturity. Pass Journal entries in the books of A, B and C. Scanned with CamScanner-Q. 15. On Ist January, 1994, Dinesh purchased goods from Chander for Rs. 6,000 ad accepts a bill drawn by Chander payable after two months. On the due date Dinesh is able to manage Rs. 2,000 in cash and he arranges with Chander for the retirement of the bill in consideration of this payment and a fresh bill at four months for the balance plus interest at 18% per annum. The second bill is duly met on maturity. Make the necessary Journal entries in the books of Chander and Dinesh. Hint :— Amount of Renewed Bill Rs. 4,240. Dishonour of the Bill discounted from the Bank ~Q. 16. A sells goods for Rs. 3,000 to B on Ist January, 1986 and on the same day draws a bill on B at three months for the amount. B accepts it and returns it to A, who discounts it on 4th February, 1986 with his bank at 18% per annum. The acceptance is dishonoured on the due date, the noting charges paid by the bank being Rs. 20. On 4th April, 1986, B accepts a new bill at two months for the amount then due to A together with interest at 12 per cent per annum, Make Journal entries to record these transactions in the books of A and B. Hint :— Amount of the new bill = Rs. 3,080.40, Scanned with CamScannerThree Bills of Exchange Q. 27. On Ist Jan., 1980, Satish drew on Harish three bills of exchange in full settlement of claims, the first for Rs. 1,400 at one month; the second for Rs. 1,600 a two months and the third for Rs. 1,800 at three months. The bills were duly accepted by Harish. The first bill was endorsed by Satish to his creditor Rajnish on 3rd Jan., 1980, The second bill was discounted on 15th Jan, for Rs. 1,590 and the third bill was sent to bank for collection on 4th Feb. All the bills were met on maturity except the second bill h was dishonoured, noting charges being paid Rs. 24. Satish charged Rs. 30 for from Harish and drew on him a fourth bill for two months for Rs. 1,654. The fourth bill was duly met on maturity. Give Journal entries in the books of Satish and Harish. Scanned with CamScannerccepts s it to 4, who the latter for the amount. B accepts it and retums 1 ania cer for Rs. 7.850. On the due date the bill is dishonoured. c bank . 7,85 sno Noting charges of Rs. 150 were paid by the bank. B then pays Rs. 3,000 in cash and accepts a new bill at three months for Rs. 5,350. Before maturity, 8 became insolvent anda final dividend of 50 paise in the rupee was received. Give journal entries to record these transactions in the books of 4 and B. (Chandigarh 2008) {Ans. Bad-debts Rs. 2,675.) Hint : Renewed bill includes Rs. 200 as interest. os “Asells goods for Rs. 8,000 to B on Jan. 1, 2004 and on the same date draws a bill for Q,31. On ist August, 2008, Pradeep drew a bill on Raju for Rs. 75,000 for 3 This was for the amount which Raju owed to Pradeep. On Aug. 4, 2008, Pradecp discounted the same at 14% p.a. from Bank. On November 1, 2008, Raju requested Pradeep for renewal of the bill. Pradeep agreed on the condition that Rs. 35,000 be paid immediately together with interest on the remaining amount (@) 18% pa. for 3 months and that for the remaining amount Raju should accept a new bill for 3 months. These arrangements were duly carried out. The new bill was dishonoured on due date as Ra; ise i fee as Raju became insolvent. Pradeep received 40 Palse in a rupee from Raju’s Show the entries in the books of both the Parties, [Ans. Bad Debts Rs, 24,000) Scanned with CamScannerILLUSTRATION 15. _- State with reasons whether the following are capital or revenue expenditure : (i) Custom duty paid on import of a machinery. (ii) Wages paid in connection with the erection of a new machinery. (iit) Rs. 5,000 spent on repainting the factory. (iv) Repairs Rs. 2,000 necessitated by negligence of an operator of machine. (v) Rs. 10,000 paid for electricity bill. (Delhi 2097) Scanned with CamScannerQ, 6. From the following figures prepare the Trading and Profit and Loss Account forthe year ended-31st March, 2001 and the Balance Sheet as on that date :-— Rs. Rs. Stock (Ist April, 2000) 75,000| Sundry Debtors 82,000 Purchases 8,00,000] Loan from X 10,000 Sales + |12,00,000 | Interest on X Loan 1,500 Motor Car 1,50,000| Furniture 20,000 Car Expenses 42,000 | Land and Building 2,00,000 Rent 5,500 | Capital 2,50,000, Salaries 35,200] Sundry Creditors 91,300 Bad Debts 1,500| Returns Inward 7,500 Provision for bad debts 8,100| Retums Outward 6,000 Commission (Cr.) 4,600| Cash in hand 16,400 Wages 1,25,000 Insurance 8,400 Adjustments : (i) Commission include Rs. 1,600 being commission received in advance. (ii) Write off Rs. 2,000 as further Bad-debts and maintain Bad-debts provision at 5% on debtors. (iii) Expenses paid in advance are : Wages Rs. 5,000 and Insurance Rs. 1,200. (iv) Rent and Salaries have been paid for 11 months. (v) Loan from X has been taken at 18% p.a. interest. (vi) Depreciate furniture by 15% p.a, and Motor Car by 20% p.a. (vii) Closing Stock was valued at Rs. 60,000. [Ans. G.P. Rs. 2,63,500; N.P. Rs. 1,38,700 and B/S Total Rs. 4,95,600.] Hint : Net amount shown on the Cr. side of P & L A/c will be Rs, 600 calculated as follows: Old Provision Rs. 8,100 N Badsdebts Rs. 3,500 K New Provision Rs. 4,000. Scanned with CamScannerQ: 8. Give journal entries for the following adjustments in final accounts () Salaries Rs. 5,000 are outstanding. (ii) Insurance amounting to Rs. 2,000 is paid in advance. (iii) Rs. 4,000 for rent have been received in advance. (iv) Commission eared but not received Rs. 1,000. (v) Interest on capital Rs. 1,500. (v7) Interest on Drawings Rs. 300. (wit) Write off Rs. 2,000 as further bad-debts. Scanned with CamScannerQ. 14. (A) On 31st December, 1990 the following Trial Balance was extra fromtlie books of Sh. Ghanshyam Das :— Dr. Rs. | Cr Rs, Capital Account 2,00,0 Debtors and Creditors 40,000) 25, Loan on Mortgage 30,0 Interest on Loan 2,250 Discount 18 Stock on Ist Jan., 1990 20,000 Motor Vehicle 50,000 Cash at Bank 4,450 Investments 16,000 Wages 18,000 Land and Building 2,80,000 Bad-Debts 1,500 Purchases and Sales 2,50,000| 4,80,001 Purchases and Sales Retums 12,000] 10,00 Carriage Outward 8,000 6,500 Carriage Inward Salaries 7,200 Outstanding Salaries 60 Rates, Taxes and Insurance 15,000 Advertising 5,000 General Expenses 6,400 Bills Receivable and Payable 7,500) 5A 3,000 Prepaid Insurance 7,52,80 Prepare Trading and Profit & Loss Account for the year ended 31st Dec., 1990 Balance Sheet as on that date, after making adjustments for the following matters : 1. Depreciate Land and Building at 2.5% and Motor Vehicles at 20%. 2. Interest on Loan at 15% p.a. is unpaid for six months. Scanned with CamScannerQ.17. xtracts of Trial Balance as on 31st March, 2009 : Dr. Rs. | Cre Rs. Sundry Debtors (including Dewan for dishonoured bill of Rs. 20,000) 4,80,000 > Provision for Doubtful Debts 24,000 Bad Debts 10,000. Adjustments (04th of Dewan's bill is irrecoverable, GO Show the effect on Profit and Loss Account and Balance Sheet. [Ans. Net amount appearing on the Dr. side & P & L A/c Rs. 28,600; Net amount of Sundry Debtors appearing on the Assets side Rs. 4,37,400.] ate a provision of 6% on Sundry Debtors. Scanned with CamScannerThe following balances were taken from the books of Shri R. Lal on 31g 3 he iS ; — Rs. Rs i (up eassne = 1,00,000 | Rent (Cr.) 2100 17,600 | Railway Freight on sales 16.949 | 80,000 Carriage Inwards 2310 1,40,370 | Office Expenses 1.340 2,820 | Printing & Stationery 660 11,460 | Postage & Telegrams 820 1,400 | Sundry Debtors 62,070 eserve on 1.1.2000 3,240 | Sundry Creditors 18,920 Rates & Insurance 1,300} Cash at Bank 12,400 Discount (Cr.) . 190] Cash in Hand 2210 Bills Receivable. 1,240 | Office Furniture 3,300 Sales Retums 4,240 | Salaries & Commission 9,870 Wages 6,280 | Addition to Building 7,000 Building 25,000 Prepare Trading and Profit & Loss A/c anda Balance Sheet as on 31.12.2000, after” Keeping in view the following adjustments : () Depreciate old Building at 22% and addition to Building at 2% and Office Fumiture at 5%, (i) Write off further Bad-debts Rs. 570, iii) Increase the Bad-debts Reserve to 6% of Debtors. (*) On 3ist Dec. 2000 Rs, 570 are outstanding for salary. (*) Rent receivable Rs, 200 on 31.12.2000. (v2) Interest on capital at 5% to be charged, (Oi) Unexpired Insurance Rs. 240, (Hi) Stock was valued at Rs. 14,290 on 31.12.2000, (Dethi 2001) an Profit Rs. 53, 190; Net Profit 16,060; Balance Sheet Tot! Scanned with CamScanner[LLUSTRATION 2. Mr, Kulbhushan does not keep proper books of accounts. He gives 5 a you the ing information : following in! | Rs. Capital at the beginning of the year 70,000 Further capital introduced during the year 17,500 Stock 59,500 Sundry Debtors 25,900 Business premises 8,600 Machinery 2,100 Sundry Creditors 33,400 Withdrew for household expenses during the year 26,400 You are required to calculate profit or loss during the year. SOLUTION : STATEMENT OF AFFAIRS at the end of the year Liabilities Amount Assets Amount Rs. Rs. Sundry Creditors 33,400 | Stock 59,500 Capital (Balancing figure) 62,700 | Sundry Debtors 25,900 Business premises 8,600 Machinery 2,100 96,100 96,100 STATEMENT OF PROFIT OR LOSS Capital at the end ddd : Drawings (Household expenses) Less : Additional Capital introduced Less : Capital at the beginning Profit made during the year Scanned with CamScannerILLUSTRATION 9. Ashoka Electronics does not keep proper records. From the following information find out profit and aiso prepare final statement of affairs for the year ended 31st December 2005 : Dec. 31, 2004 Dec. 31, 2005 Rs. Rs. Cash in hand 6,000 24,000 Bank Overdraft 30,000 = Stock 50,000 80,000 Sundry Creditors 26,000 40,000 Sundry Debtors 60,000 1,40,000 Bill Payable 6,000 12,000 Furniture 40,000 60,000 Bill Receivable 8,000 28,000 Machinery 50,000 1,00,000 Investments 30,000 80,000 Drawing Rs. 10,000 p.m. for personal use; Fresh Capital introduced during the year Rs. 2,00,000. A Bad debts of Rs. 2,000 and a provision of 5% is to be made on debtors. O/s Salary Rs. 2,400, Prepaid Insurance Rs. 700, Depreciation Charged on furniture and Machine @ 10% p.a. Scanned with CamScannerpLUSTRATION 10. yt January, 1993 was as follows : as 0B a: Liabilities Amount Rs. Creditors 5,000 Capital 70,000 As Cash in Hand Cash at Bank Debtors. Stock Furniture Plant and Machinery Pawan Kumar keeps incomplete records, The Statement of Affairs of his business Amount Rs, 400 1,600 17,000 20,000 6,000 30,000 75,000 His position at the end of the year was :— Cash in hand Rs. 1,000; Cash at Bank Rs. 2,000; B/R Rs. 4,000; Debtors Rs. 21,000; Stock Rs. 32,000; Furniture Rs. 8,000; Plant and Machinery Rs. 40,000 and Creditors Rs. 18,000. He withdrew during the year Rs. 30,000, out of which he spent Rs. 18,000 for purchasing a scooter for the business. Calculate his net profit for the year after the following adjustments and prepare a final Statement of Affairs as at 31st December, 1993 (1) Depreciate furniture and scooter @ 20%; (2) 5% of the debtors are doubtful and Rs. 800 are absolutely bad. (3) Make a provision of 5% on Bills Receivable also. Scanned with CamScannerPREPARATION OF TOTAL DEBTORS ACCOUNT ILLUSTRATION 12. Find out the credit sales from the particulars piven below : Rs, Balance of Debtors On Ist April, 2006 36,000 Balance of Debtors On 31st March, 2007 54,000, received [rom Debtors 150,000 returned to Debtors 2,000 Scanned with CamScannercouNTS FROM INCOMPLETE RECORDS 20.21 acc’ 6,099 1,500 19,000 3,000 5,000 t 6,009 Debts , Bee aeons previously written off, now recovered 1,206 Bod-Debts pre Y TOTAL DEBTORS ACCOUNT 229,500 T Rs. R | By Cash received 150,000 36,000 | By Sales Returns | "6,000 2,000 | By Discount allowed | 1,300 3,000 | By BIR received 10,000 By Bad-Debts | 2,000 188,500 | By Balance c/d 31-3-2007 (Closing Debtors) | 54,000 500 Note :— There are some items which do not affect the Total Debtors Account and as such, they ere not recorded in the Total Debtors Account. These iterns may be enumerated as follows (1) Cash Sales (2) B/R Discounted (3) Provision (or Reserve) for Bad & Doubiful Debts. (4) Bad-Debts previously written off, now recovered :-— € already been credited to Debtors Account when Previously. Hence, the recovery of such Bad-Del The amount of such bad-debts these were actually treated as bts will not affect the Debtors (5) Cash received from B/R. PREPARATION OF TOTAL CREDITORS ACCOUNT ILLUSTRATION 13. Find out the credit purchases and total purchases from the following Particulars : Rs Balance of Creditors On Ist April, 2006 30,000 Balance of Creditors On 31st March, 2007 24,000 Cash paid to Creditors 120,000 8 issued to Creditors 40,000 Returns Outwards 5,000 Discount received from Creditors 7 3,600 BIP given to Creditors 8,500 BP Dishonoured 2,000 -d to Creditors 3,000 to Creditors Dishonoured 1,200 Cash purchases 50,000 Scanned with CamScannerQ.3. Tulsi started business on Jan. 01, 2005 with a capital of Rs. 4,50,000. On Dec. 31, 2005 her position was as under : Scanned with CamScanner. Rs, Cash 99,000 Bills Receivable 75,000 Stock 48,000 Land and Building 180,000 Furniture 50,000 She owed Rs. 45,000 to her friend Parvati on that date. She withdrew Rs, 8,000 per month for houschold purposes. Ascertain his profit or loss for the year ended Dee. 31, 2005. \Ans. Closing capital Rs. 4,07,000; Profit Rs. 53,000] Hint : Re 45 000 will he chown on Hahilitine cists Scanned with CamScanner