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SUBJECT- ACCOUNT
Test Code – CNU 2112
(Date :)
(Marks - 50)
TOPIC : Average Due Date, Account Current, Sale or return basis

(Time allowed : 1.5 hours)

Q. 1. Answer the following:

(a) A merchant trader having accepted the following several bills falling due on different
dates, now desires to have these bills cancelled and to accept a new bill for the whole
amount payable on the average due date:

S. No. Date of Bills Amount Usance of the bill

1 1st May, 2016 500 2 months
2 10th May, 2016 300 3 months
3 5th June, 2016 400 2 months
4 20th June, 2016 375 1 months
5 10th July, 2016 500 2 months

You are required to find the said average due date. (Let base date be 04-7-2016)
Any fraction of a day arising from the calculation to be considered as full day.
(5 Marks)

(b) On 1st January 2018, X's Account in Y's Ledger showed a debit balance of Rs 5,000. The
following transactions took place between Y and X during the quarter ended 31st March
2018:

2018 Particulars Rs.

Jan. 11 Y sold goods to X 6,000
Jan. 24 Y received a Promissory Note from X, 3 months date 5,000
Feb. 01 X sold goods to Y 10,000
Feb. 04 Y sold goods to X 8,200
Feb. 07 X returned 'goods to Y 1,000
March 01 X sold goods to Y 5,600
March 18 Y sold goods to X 9,200
March 23 X sold goods to Y 4,000

Accounts were settled on 31st March 2018, by means of a cheque. Prepare an Account
Current by product method to be submitted by Y to X as on 31st March 2018, taking
interest into account at 10% per annum. Calculate Interest to the nearest multiple of a
rupee by product method.
(5 Marks)

Q. 2. Answer the following:

(a) Mr. Bhide sends goods to his customers on Sale or Return. The following transactions
took place during the month of December 2020.
 December 2 Sent goods to customers on sale or return basis at cost plus Rs. 1,70,000
25%
December 10 Goods returned by customers Rs. 70,000
December 17 Received letters from customers for approval Rs. 70,000
December 23 Goods with customers awaiting approval Rs. 30,000

Mr. Bhide records sale or return transactions as ordinary sales.

You are required to pass the necessary Journal Entries in the books of Mr. Bhide assuming
that the accounting year closes on 31st Dec. 2020.
(5 Marks)

(b) State with reasons, whether the following statements are True or False:

1. Interest will be recovered by receiver if payment is made later than the average due
date.
2. In case the due date of a bill falls after the date of closing the account, the interest from
the date of closing to such due date is known as Red-Ink interest.
(4 Marks)

Q. 3. Answer the following:

(a) Mr. Ganesh sends out goods on approval to few customers and includes the same in
the Sales Account. On 31.03.2018, the Trade Receivables balance stood at Rs.
75,000 which included Rs. 6,500 goods sent on approval against which no intimation
was received during the year. These goods were sent out at 30% over and above cost
price and were sent to-
Mr. Adhitya Rs. 3,900 and Mr. Bakkiram Rs.2,600.

Mr. Adhitya sent intimation of acceptance on 25th April, 2018 and Mr. Bakkiram
returned the goods on 15th April, 2018.

Make the adjustment entries and show how these items will appear in the Balance
Sheet as on 31st March, 2018. Show also the entries to be made during April, 2018.
Value of Closing Inventories as on 31st March, 2018 was Rs. 50,000.
(8 Marks)
(b) Mehnaaz accepted the following bills drawn by Shehnaaz.

On 8th March, 2018 Rs.4,000 for 4 months

On 16th March, 2018 Rs. 5,000 for 3 months
On 7th April, 2018 Rs. 6,000 for 5 months.

On 17th May, 2018 Rs. 5,000 for 3 months.

He wants to pay all the bills on a single day. Find out this date. Interest is charged @
18% p.a. and Mehnaaz wants to save Rs. 157 by way of interest. Calculate the date
on which he has to effect the payment to save interest of Rs. 157.
 (8 Marks)
(c) Mr. A owed Rs. 4,000 on 1st January, 2020 to Mr. X. The following transactions took
place between them. It is agreed between the parties that interest @ 10% p.a. is to be
calculated on all transactions.

Rs.

15 January, 2020 Mr. X sold goods to Mr. A 2,230

29 January, 2020 Mr. X bought goods from Mr. A 1,200

10 February, 2020 Mr. A paid cash to Mr. X 1,000

13 March, 2020 Mr. A accepted a bill drawn by Mr. X for one month 2,000

They agree to settle their complete accounts by one single payment on 15th March, 2020.

Prepare Mr. A in Account Current with Mr. X by product methods and ascertain the amount
to be paid. Ignore days of grace. Assume 1 year = 366 Days by product method.

(5 Marks)
Q. 4. (a) State with reasons, whether the following statements are True or False:

(i) The customer retains the goods even after the expiry of the mentioned term,
but this act does not confirm to sale of goods as there is no express consent
given.
(ii) No entry needs to be passed in the books of the seller, when the customer
rejects the goods awaiting approval after the closing of the books of the
seller.
(4 Marks)

(b) Define Account Current. Explain ways of preparing an Account Current. (3 Marks)

(c) When ‘sale or return basis’ transactions are numerous, what books are
maintained by the business entity. (3 Marks)