Q. 1 Attempt any FOUR sub-questions of the following: (20)
A] Answer in ‘One’ sentence each: (5)
(1) What is Partnership Deed?
Ans: A partnership deed is a written agreement duly stamped, signed and registered document containing the terms and conditions of the partnership.
(2) What is CPU?
Ans: The central processing unit is that hardware part of a computer that controls the entire working of the computer, processes the commands and data, and outputs the result.
(3) What do you mean by Scrap Value of an asset?
Ans: The net amount which is expected to be realised on the final disposal of a fixed asset is called ‘scrap value’.
(4) What are Noting Charges?
Ans: Noting charges are the fees charged by the Notary Public for noting the dishonour on the face of the bill and in his official register.
[5] What is the relationship between the Co-ventures?
Ans: The relationship between the co-ventures is similar to that of temporary partners i.e., principal and agent.
B] Write a word / term / phrase which can substitute each of the following statements: (5)
(1) An intangible asset which has realisable value:- Goodwill.
(2) An organisation not having object of earning profit:- Not for Profit Concern / Non-trading organisation.
(3) Credit balance on Joint Venture Account:- Profit on Joint Venture.
(4) A system which have no hard and fast rules for accounting:- Single Entry System.
(5) A movable mark on the display screen of computer:- Cursor.
C] Match the following pairs:
(5)
Group ‘A’ | Answers |
(1) Fixed Asset (2) Statement of Affairs (3) Co-venturers’ Liabilities (4) Dishonour of Bill (5) Active Partner | - Plant & Machinery - Single Entry System - Unlimited - Noting Charges - Takes Active Part in the Partnership |
D] Select the most appropriate alternative from those given below and rewrite the sentences: (5)
(1) Single entry system is Incomplete.
(a) Complete (b) Scientific (c) Incomplete (d) Accurate
(2) Credit balance of Trading account shows Gross Profit.
(a) Net Profit (b) Net loss (c) Gross Profit (d) Gross loss
(3) A person to whom a bill is endorsed is the Endorsee
(a) Endorser (b) Endorsee (c) Drawer (d) Drawee
(4) Income and expenditure account is Nominal Account.
(a) Real A/c (b) Nominal A/c (c) Personal A/c (d) Capital A/c
(5) Amount contributed by co-venturer’s is debited to Joint Bank Account.
(a) Joint venture account (b) Joint Bank account (c) Co-venturer’s account (d) Shares’ account
E] State with reasons whether the following statements are True / False: (5)
(1) Public Library is a “Not for Profit” concern.
Ans: This statement is TRUE.
Public Library is setup not to earn profit but to serve the society. Hence, it is a not for profit concern.
(2) Payment of bill after due date is called “Retirement of Bill”.
Ans: This statement is FALSE.
Payment of the bill before the due date is called Retirement of Bill.
F] Preparation a Formate of Bill of Exchange from the following information: (5)
(1) Drawer:- Ankur Shah, Anand Park, Borivali (W), Mumbai: 90.
(2) Drawee:- Sharad Shah, Anand Sadan, Bandra (W), Mumbai: 50.
(3) Payee:- Anish Shah, Anand Mahal, Kandiwali (W), Mumbai: 57.
(4) Amount:- Rs. 15,555.
(5) Period : 3 months.
(6) Date of Bill:- 1st January, 2008.
(7) Date of Acceptance:- 3rd January, 2008
(8) Accepted for :- Rs. 12,000.
Q. 2 Shantikunj Company, Rajoli purchased furniture worth Rs. 38,400 and paid Rs.1,600 for installation charges on 1st January, 2004. (10)
On 31stMarch every year, the company charged depreciation @ 10% p.a. on original cost.
On 1stOct.2004 the company purchased an additional furniture costing Rs.24,000.
The company sold furniture for Rs. 31,500 on 31stDecember 2005, which was purchased on 1st January 2004.
Company purchased a new furniture worth Rs. 20,000 on 31stMarch, 2006.
You are required to prepare Furniture account and depreciation account for the years 2003-2004, 2004-2005 and 2005-2006.
In the books of Shantikunj Company
Date | Particulars | JF | Amt Rs. | Date | Particulars | JF | Amt Rs. |
1-1-04 | To Cash / Bank A/c | By Depreciation A/c By Balance c/d | 1,000 39,000 | ||||
40,000 | 31-3-04 31-3-04 | ||||||
40,000 | 40,000 | ||||||
1-4-04 1-10-04 | To balance b/d To Cash / Bank A/c | 39,000 24,000 | 31-3-05 31-3-05 | By Depreciation A/c (4000 + 1200) By Balance c/d | 5,200 57,800 | ||
63,000 | 63,000 | ||||||
1-4-05 31-3-06 | To balance b/d To Cash / Bank | 57,800 20,000 | 31-12-05 31-12-05 31-12-05 31-3-06 31-3-06 | By Cash / Bank A/c By Profit & Loss A/c By Depreciation A/c By Depreciation A/c By Balance c/d | 31,500 500 3,000 2,400 40,400 | ||
77,800 | 77,800 | ||||||
1-4-06 | To balance b/d | 40,400 | |||||
40,400 | 40,400 |
Depreciation A/c.
Date | Particulars | JF | Amt Rs. | Date | Particulars | JF | Amt Rs. |
31-3-04 | To Furniture A/c | 1,000 | 31-3-04 | By Profit & Loss A/c | 1,000 | ||
1,000 | 1,000 | ||||||
31-3-05 | To Furniture A/c | 5,200 | 31-3-05 | By Profit & Loss A/c | 5,200 | ||
5,200 | 5,200 | ||||||
31-12-05 | To Furniture A/c To Furniture A/c | 3,000 2,400 | 31-3-06 | By Profit & Loss A/c | 5,400 | ||
5,400 | 5,400 |
OR
Q. 2 A] Calculate the value of goodwill at 3 times the average profit of last 5 years. The profits were:
Year | Profit / Loss Amount |
2001 – 2002 2002 – 2003 2003 – 2004 2004 – 2005 2005 – 2006 | Rs. 14,500 Profit Rs. 9,000 Loss Rs. 16,700 Profit Rs. 9,500 Profit Rs. 13,300 Profit |
Solution:
M/s _______________________
VALUATION OF GOODWILL
AVERAGE PROFIT METHOD
Average Profit = Total Profit – Total Losses
No. of years
= 54,000 – 9,000
5
= 45000 = Rs. 9000
5
Goodwill = Average Profit ´ No. of years Purchase
= 9,000 ´ 3
= Rs. 27,000
B] What are the features of Accounting Software Tally? (5)
Ans: Tally is very popular software package for Financial Accounting and Inventory Management. The salient features of Tally are:
(1) It is simple and at the same time can be customized according to the individual needs of the user. It can prepare, compare and consolidate the accounts of different branches of the same company as well as those of different companies under the same management simultaneously.
(2) As the accounting information is keyed in, Tally posts them to the respective ledger accounts.
(3) In Tally, it is possible to manifest one single transaction in multiple currencies and to view all reports in terms of one or more currency.
(4) Tally can record and maintain various ledgers. It can prepare Trial Balance. It can also prepare income statements, i.e. Trading Account and Profit and Loss Account as well as financial statements including Balance Sheet. Cash flow and Fund flow statements can also be generated as and when required.
(5) Tally can also prepare Bank Reconciliation Statement.
Q. 3 Bhagyashri sold goods worth Rs. 24,000 to Rupa. (12)
On the next day Rupa paid Rs. 10,000 in cash and accepted 4 months bill for the balance amount drawn by Bhagyashri.
Bhagyashri discounted the bill at 10% p.a. after one month with her bank.
On due date Rupa dishonoured her acceptance and noting charges amounted to Rs. 200.
Rupa paid half the amount of the bill and full amount of noting charges.
Rupa accepted a new bill at 2 months for the balance amount plus interest Rs. 100.
Pass necessary journal entries in the books of Bhagryashri.
In the books of Bhagyashri
Journal Entries
Date | Particulars | LF | Debit (Rs.) | Credit (Rs.) |
? 1 | Rupa A/c………………………………Dr. To Sales A/c (Being goods sold) | 24,000 | 24,000 | |
2 | Cash A/c………………………………Dr. To Rupa A/c (Being cash received from Rupa) | 10,000 | 10,000 | |
3 | Bills Receivable A/c…………………Dr. To Rupa A/c (Being bill drawn and accepted due after 4 months) | 14,000 | 14,000 | |
4 | Bank A/c………………………………Dr. Discount A/c…………………………Dr. To Bills Receivable A/c (Being bill discounted with bank @ 10% after one month) | 13650 350 | 14,000 | |
5 | Rupa A/c……………………………….Dr. To Bank A/c (Being bill dishonoured and incurred noting charges) | 14,200 | 14,200 | |
6 | Cash / Bank A/c……………………..Dr. To Rupa A/c (Being part payment received along with noting charges) | 7,200 | 7,200 | |
7 | Rupa A/c………………………………..Dr. To Interest A/c (Being interest received) | 100 | 100 | |
8 | Bills Receivable A/c…………………..Dr. To Rupa A/c (Being new bill drawn and accepted due after 2 months along with interest) | 7,100 | 7,100 | |
90,600 | 90,600 |
OR
Q. 3 Journalise the following transactions in the books of Kantilal. (12)
(a) Sandhya informed Kantilal that Sawan’s acceptance for Rs. 16,000 endorsed to Sandhya has been dishonoured. Noting charges amounted to Rs. 300.
(b) Nalini renews her acceptance to Kantilal for Rs. 6,000 by paying Rs. 2,000 in cash and accepting a fresh bill for the balance plus interest at 12% p.a. for 3 months.
(c) Punam’s acceptance to Kantilal Rs. 10,000 retired one month before the due date at a discount of 6% p.a.
(d) Bank informed Kantilal that the bill of Rs. 8,000 has been dishonoured by Meenakshi which was sent to bank for collection.
In the books of Kantilal
Date | Particulars | LF | Debit (Rs.) | Credit (Rs.) |
a | Sawan A/c……………………………..Dr. To Sandhya A/c (Being endorsed bill dishonoured and incurred noting charges) | 16,300 | 16,300 | |
b (i) | Nalini A/c……………………………….Dr. To Bills Receivable A/c (Being bill dishonoured) | 6,000 | 6,000 | |
(ii) | Nalini A/c……………………………….Dr. To Interest A/c (Being interest due) | 120 | 120 | |
(iii) | Cash A/c………………………………..Dr. To Nalini A/c (Being part payment received) | 2,000 | 2,000 | |
(iv) | Bills Receivable A/c…………………..Dr. To Nalini A/c (Being new bill drawn and accepted along with interest due after 3 months) | 4,120 | 4,120 | |
c | Cash / Bank A/c……………………..Dr. Discount A/c…………………………..Dr. To Bills Receivable A/c (Being bill retired) | 9,950 50 | 10,000 | |
d | Meenakshi A/c…………………………Dr. To Bank for collection A/c (Being bill sent to bank for collection dishonoured) | 8,000 | 8,000 | |
46540 | 46540 |
Q. 4 Shrimant and Ramakant of Aurangabad entered into a Joint Venture to sell computers and share the profit or loss in the proportion of 1 : 2. (12)
Shrimant contributed Rs. 7,50,000 and Ramakant contributed Rs. 15,00,000 and the amount was deposited into Joint Bank Account.
Shrimant bought 60 computers at Rs. 35,000 each and paid for them from Joint Bank Account.
Ramakant bought 15 computers at Rs. 30,000 each and paid Rs. 15,000 for insurance and Rs. 6,000 for freight from his private cash.
60 computers were sold for Rs. 38,500 each 15 computer damaged in transit were repaired by Shrimant at a total cost of Rs. 15,000 from his private cash.
They were finally sold by Shrimant at Rs. 40,000 each.
The accounts between parties were duly settled.
Prepare:
(1) Joint Venture A/c (2) Co-venturer’s A/c (3) Joint Bank A/c
Joint Venture Account
Particulars | Rs. | Particulars | Rs. | ||
To Joint Bank A/c (Purchase) To Ramakant A/c Purchase Insurance Freight To Shrimant A/c (Repairs) To Profit A/c Shrimant Ramakant | 450000 15000 6000 108000 216000 | 21,00,000 471000 15000 324000 | By Joint Bank A/c By Joint Bank A/c | 23,10,000 600000 | |
2910000 | 2910000 |
Co-ventures A/c
Particulars | Shrimant | Ramakant | Particulars | Shrimant | Ramakant |
To Joint Bank A/c | 873000 | 2187000 | By Joint Bank A/c By Joint Venture A/c By Joint Venture A/c By Joint Venture A/c | 750000 15000 108000 | 1500000 471000 216000 |
873000 | 2187000 | 873000 | 2187000 |
Joint Bank A/c
Particulars | Rs. | Particulars | Rs. |
To Shrimant A/c To Ramakant A/c To Joint Venture A/c To Joint Venture A/c | 750000 1500000 2310000 600000 | By Joint Venture A/c By Shrimant A/c By Ramakant A/c | 2100000 873000 2187000 |
5160000 | 5160000 |
Q. 5 Mr. Anand gives you the following information: (10)
Particulars | 31-03-2003 (Rs.) | 31-03-2004 (Rs.) |
Cash | 5,000 | 6,000 |
Bank | 15,000 | 18,000 |
Debtors | 10,000 | 8,000 |
Stock | 8,000 | 12,000 |
Furniture | 12,000 | 12,000 |
Creditors | 2,000 | 6,000 |
Bills Payable | 2,000 | - |
During the year Mr. Anand introduced Rs. 4,000 as further capital in the business. He has withdrawn cash Rs. 20,000 out of which he spent Rs. 15,000 on 1-10-2003 for purchase of scooter for business use.
Adjustments:
(1) Depreciate furniture @ 10% p.a.
(2) Depreciate scooter @ 20% p.a.
(3) Create provision for doubtful debts @ 5% of the debtors as on 31-03-2004.
(4) Provide interest on capital at 10% p.a.
Prepare:
(1) Statement of Affairs as on 31-03-2003.
(2) Statement of Affairs as on 31-03-2004.
(3) Statement of Profit or loss for the year ended 31-03-2004.
Opening Statement of Affairs as on 31-3-2003
Opening Statement of Affairs as on 31-3-2003
Liabilities | Rs. | Rs. | Assets | Rs. | Rs. |
Capital Creditors Bills Payable | 46,000 2,000 2,000 | Cash Bank Debtors Stock Furniture | 5,000 15,000 10,000 8,000 12,000 | ||
50,000 | 50,000 |
Closing Statement of Affairs as on 31-3-2003
Liabilities | Rs. | Rs. | Assets | Rs. | Rs. |
Capital Creditors | 61,900 6,000 | Cash Bank Debtors Less: New R.D.D. Stock Scooters (1-10-03) Less: Depreciation Furniture Less: Depreciation | 8,000 400 15,000 1,500 12,000 1,200 | 6,000 18,000 7,600 12,000 13,500 10,800 | |
67,900 | 67,900 |
Statement of Profit or Loss for the year ended 31-3-2004
Particulars | Rs. | Rs. |
Closing capital balance as on 31-3-04 Add: Drawings Less: (1) Further capital introduced (2) Interest on capital Less: Opening capital balance as on 31-3-2003 | 4,000 4,600 | 61900 20000 81900 8600 73300 46000 |
Profit | 27300 |
Q. 6 From the following Receipt and Payment account of Patan Sports Association, Patan and the adjustments. You are required to prepare Income and Expenditure Account for the year ended 31st March, 2004 and a Balance sheet as on that date. (16)
Receipts and Payments Account for the year ended 31st March 2004.
Receipts | Amt. (Rs.) | Payments | Amt. (Rs.) |
To Balance b/d | 4,160 | By Salaries | 5,500 |
To Subscription: | By Entertainment Exp. | 2,580 | |
2003-04 16,000 | By Lighting | 1,000 | |
2004-05 412 | 16,412 | By General Expenses | 1,536 |
To Donation | 2,000 | By Taxes | 500 |
To Receipt from Entertainment | 3,644 | By Investments | 12,000 |
To Interest on Investment | 324 | By Printing & Stationery | 944 |
To Entrance Fees | 4,500 | By Expenses of 2002-03 | 2,400 |
To Price Fund | 3,000 | By Fixed Deposit | 4,000 |
By Bank Balance | 3,000 | ||
By Balance c/d | 580 | ||
34,040 | 34,040 |
Adjustments:
(1) There are 450 members paying an annual subscription of Rs. 40 each.
(2) Salary outstanding on 31st March, 2004 was Rs. 1,000.
(3) Building stood in books Rs. 60,000 and furniture at Rs. 4,600 on 1st April, 2003. Write off depreciation on these assets @ 2% and 10% respectively.
(4) Interest on investment @ 5% has accrued for 3 months.
(5) The capital fund was Rs. 66,360 on 1st April, 2003.
(6) 60% of the entrance fee is to be capitalised.
Income & Expenditure A/c for the years ended 31-3-2004
Expenditure | Rs. | Rs. | Income | Rs. | Rs. |
To Entertainment Exp. To Salaries Add: Outstanding To Lighting To General Expenses To Taxes To Printing & Stationery To Depreciation Building Furniture To Surplus | 5,500 1,000 1,200 460 | 2,580 6,500 1,000 1,536 500 944 1,660 11198 | By Donation By Receipt from Entertainment By Interest on Investment Add: Interest By Entrance Fees Less: Capitalised By Surplus | 324 150 4,500 2,700 | 2,000 3,644 474 1,800 18,000 |
25,918 | 25,918 |
Balance Sheet as on 31-3-2004
Liabilities | Rs. | Rs. | Assets | Rs. | Rs. |
Capital Fund Add: Entrance Fees Add: Surplus Price Fund Outstanding Salary Subscription paid in advance | 66,360 2,700 69,060 11198 | 80258 3000 1000 412 | Building Less: Depreciation Furniture Less: Depreciation Investments Add: Interest Fixed Deposit Bank Balance Cash Subscription receivable | 60,000 1,200 4,600 460 12,000 150 | 58,800 4,140 12,150 4,000 3,000 580 2,000 |
84670 | 84670 |
Q. 7 From the following Trial Balance of Kamlesh and Maharajan and given adjustments, prepare a Trading Account, Profit and Loss account for the year ended 31stMarch, 2007 and a Balance Sheet as on that date. (20)
Dr. Trial Balance as on 31st March 2007 Cr.
Particulars | Amt. (Rs.) | Particulars | Amt. (Rs.) |
Opening Stock | 45,000 | Capital A/c | |
Purchases | 2,25,000 | Kamlesh | 25,000 |
Plant and Machinery | 75,000 | Mahajan | 20,000 |
Carriage | 16,800 | Sales | 4,50,000 |
Factory Rent | 1,500 | Discount Received | 750 |
Insurance | 1,050 | Sundry Creditors | 15,000 |
Sundry Debtors | 60,000 | Bad debts Reserve | 200 |
Office Rent | 3,000 | Bills Payable | 2,000 |
Printing & Stationery | 600 | ||
Advertisement | 15,000 | ||
Bills Receivable | 3,000 | ||
Drawings: Kamlesh | 3,500 | ||
Mahajan | 2,500 | ||
Salaries | 18,000 | ||
Wages | 20,000 | ||
Furniture | 7,500 | ||
Royalty | 1,000 | ||
Cash at Bank | 14,500 | ||
5,12,950 | 5,12,950 |
The following adjustment are required:
(1) Closing stock was valued at Cost price Rs. 35,000 and Market Price 40,000.
(2) Plant– Machinery & Furniture are to be depreciated at 6% & 10% p.a respectively.
(3) Maintain Reserve for Doubtful Debts @ 2 ½ % on Sundry Debtors.
(4) Outstanding Expenses: Factory Rent Rs. 300; Office Rent Rs. 600.
(5) Interest on capital to be allowed at 6% p.a.
(6) Prepaid insurance was Rs. 100.
Trading Account for the year ended 31-3-2007
Particulars | Rs. | Rs. | Particulars | Rs. | Rs. |
To Opening Stock To Purchases To Carriage To Factory Rent Add: Outstanding To Wages To Royalty To Gross Profit c/d | 1,500 300 | 45,000 2,25,000 16,800 1,800 20,000 1,000 1,75,400 | By Sales By Closing Stock | 4,50,000 35,000 | |
4,85,000 | 4,85,000 |
Profit and Loss A/c for the year ended 31-3-2007
Particulars | Rs. | Rs. | Particulars | Rs. | Rs. |
To Insurance Less: Prepaid To Office Rent Add: Outstanding To Printing & Stationery To Advertisement To Salaries To Bad Debts Add: New Bad Debts Add: New R.D.D. Less: Old R.D.D. To Depreciation Plant & Machinery Furniture To Interest on Capital Kamlesh Mahajan To Net Profit Kamlesh Mahajan | 1,050 100 3,000 600 - - - 1,500 1,500 200 4,500 750 1,500 1,200 64,375 64,375 | 950 3,600 600 15,000 18,000 1,300 5,250 2,700 1,28,750 | By Gross Profit b/d By Discount Received | 1,75,400 750 | |
1,76,150 | 1,76,150 |
Balance Sheet as on 31-3-2007
Liabilities | Rs. | Rs. | Assets | Rs. | Rs. |
Capital Kamlesh Mahajan Sundry Creditors Bills Payable Outstanding Expenses Factory Rent Office Rent | 87,375 83,075 300 600 | 1,70,450 15,000 2,000 900 | Plant & Machinery Less: Depreciation Sundry Debtors Less: New R.D.D. Bills Receivable Furniture Less: Depreciation Cash at Bank Closing Stock Prepaid Insurance | 75,000 4,500 60,000 1,500 7,500 750 | 70,500 58,500 3,000 6,750 14,500 35,000 100 |
1,88,350 | 1,88,350 |
Partner’s Capital A/c
Particulars | Kamlesh | Mahajan | Particulars | Kamlesh | Mahajan |
To Drawings To Balance c/d | 3,500 87,375 | 2,500 83,075 | By Balance b/d By Interest on Capital By Net Profit b/d | 25,000 1,500 64,375 | 20,000 1,200 64,375 |
90,875 | 85,575 | 90,875 | 85,575 |
OMTEX CLASSES | I ST PRELIMINARY EXAMINATION | BOOK KEEPING & ACCOUNTANCY | GROUP: A |
TIME: - 3 HRS | DATE: - 16.11.2010 | DAY - TUESDAY | MARKS: -100 |
Q1. Answer Any four of the following. (20 marks)
A. Answer the following. (5)
- What is Balance Sheet?
Ans. A balance sheet is a statement showing the financial position of the business in the form of its assets and liabilities on a particular date.
- Who is co – venture?
Ans. A co – venture is a temporary partner of joint – venture business only.
- What is Super Profit?
Ans. Super profit is the profit earned over and above the normal return on the capital employed by the business firm.
- What is Endorsement of Bill?
Ans. Endorsement of a bill is the holder’s signing on its back with the intention of transferring its title or ownership to another.
- What is Good will of the firm?
Ans. Goodwill is the monetary value of the reputation of a firm as measured in terms of its expected future profits.
B. Write word/term/phrase which can substitute each of the followings: (5)
- Reputation of a firm expressed in terms of money.
Ans. Goodwill.
- Payment of expenses before they have become due.
Ans. Prepaid Expenses.
- Payment of bill of exchange before its due date at rebate.
Ans. Retirement of Bill of Exchange.
- The person on whom the bill of exchange is drawn.
Ans. Drawee.
- The account that is credited when depreciation is charged.
Ans. Respective Assets Account.
C. Match the pairs. (5)
A | B (Answers) | ||
1. 2. 3. 4. 5. | Depreciation Dishonour of bill Joint Venture Goodwill Co – Ventures | 1. 2. 3. 4. 5. | Wear and tear Notary Public Temporary partnership Intangible Asset Temporary Partners |
D. Select the most appropriate alternative from those given below: (5)
- Debit Balance in Profit and Loss Account shows _______________
- Net profit
- Gross profit
- Net loss
- Gross loss
- A bill of exchange must be accepted by ___________________
- A drawer
- A payee
- An endorsee
- A drawee
- At the end of the financial year balance of Depreciation account is transferred to _______________
- Depreciation account
- Asset account
- Trading account
- Profit and loss account.
- In the absence of partnership deed the partners share the profit and loss of the firm _____________
- In the ratio of capital
- Equally
- As per rights in management
- On the basis of experience.
- ____________ has to ultimately bear the noting charges.
- Drawer
- Drawee
- Endorser
- Bank
E. State True / False with reasons. (Any Two) (5)
- Under fixed capital method for each partner two accounts are maintained.
Ans. The given statement is true because of the following reasons.
i. Under fixed capital method each and every transactions of partners are transferred to their current account and not in their capital account.
ii. It becomes compulsory for the partners to maintain two accounts for their transactions. Once is capital account to record additional capital introduced and current account as well.
- Under fixed instalment method depreciation is charged on the diminishing value of the asset.
Ans. The above statement is false because of the following reasons.
i. Under fixed instalment method depreciation is charged on the original value of the assets and the amount of depreciation will remain constant for each year.
ii. Under Diminishing balance method only the depreciation on fixed asset is charged on the written down value of fixed asset every year.
- Interest on partner’s drawings is debited to Profit and loss appropriation account.
Ans. The above statement is false because of the following reasons.
i. Profit and loss appropriation account is another profit and loss account prepared especially to record the transactions pertaining to the partners.
ii. Thus Interest on Partner’s drawings is credited to the profit and loss account (or) profit and loss appropriation account and it will be debited to Partners capital account in the case of fluctuating capital method and to Partners current account in the case of fixed capital method.
F. Prepare a bill of exchange from the following information:
Drawer: Vilas Patil, 21. M.G. Road, Pune
Drawee: Vikas Pawar, 31. S.V. Road, Nasik.
Payee: Viraj Potade, 41, A.B. Road, Sholapur,
Period: 2 months
Amount: Rs. 7,500/-
Date of Bill: 1st January, 2007.
Date of acceptance: 3rd January, 2007.
ANS.
Q2. Ravindra Trading company. Ambajogai Purchased machinery for Rs. 55,000/- on 1st April, 1996 and spent Rs. 5,000/- on its fixation and erection. In the same year on 1st October, additional machinery costing Rs. 40,000/- was purchased. On 1st October, 1998 the machinery purchased on 1st April, 1996 became obsolete and was sold for Rs. 43,000/- On 1st January, 1999, a new machinery was also purchased for Rs. 20,000.
Depreciation was provided annually on 31st March at the rate of 10% per annum on Fixed Instalment Method. Prepare Machinery A/c and Depreciation A/c for the years 1996 – 97, 1997-98, 1998-99. (March 2005 Board exam Question).
Ans.
M/s Ravindra Trading Co.
Machinery Account.
Date | Particulars | J F | Amount | Date | Particulars | J F | Amount |
1.4.1996 | To cash / bank a/c [machinery purchased] | 55000 | 31.3.1997 | By Depreciation a/c | 8000 | ||
1.4.1996 | To cash / bank a/c [fixation and erection] | 5000 | |||||
1.10.1996 | To cash / bank a/c [marhinery purchased] | 40000 | 31.3.1997 | By Balance c/d | 92000 | ||
100000 | 100000 | ||||||
1.4.1997 | To balance b/d | 92000 | 31.3.1998 | By depreciation a/c | 10000 | ||
31.3.1998 | By balance c/d | 82000 | |||||
92000 | 92000 | ||||||
1.4.1998 | To balance b/d | 82000 | 1.10.1998 | By depreciation a/c | 3000 | ||
1.10.1998 | By cash/ bank a/c [Machinery sold] | 43000 | |||||
1.10.1998 | By profit / loss a/c [ loss on machinery sold] | 2000 | |||||
31.3.1999 | By depreciation a/c | 4500 | |||||
31.3.1999 | By balance c/d | 49500 | |||||
102000 | 102000 | ||||||
1.4.1999 | To balance b/d | 49500 |
Depreciation account
Date | Particulars | J F | Amount | Date | Particulars | J F | Amount |
31.3.1997 | To machinery a/c | 8000 | 31.3.1997 | By profit & loss a/c | 8000 | ||
8000 | 8000 | ||||||
31.3.1998 | To Machinery a/c | 10000 | 31.3.1998 | By profit & loss a/c | 10000 | ||
10000 | 10000 | ||||||
1.10.1998 | To Machinery a/c | 3000 | |||||
31.3.1999 | To Machinery a/c | 4500 | 31.3.1999 | By profit & loss a/c (balancing figure) | 7500 | ||
7500 | 7500 |
OR
Q2. (A) The books of a business showed that the capital employed on 31st December, 1992 was Rs.1, 00,000/-. Profits for the last five years are_1988, 1989, 1990, 1991 & 1992 were Rs, 60,000, Rs, 55,000, Rs, 75,000, Rs, 85,000 & Rs, 65,000 respectively. Goodwill is valued at 2 years purchase of the Super profit of the business. NRR is 10%.
Q2. (B) Importance of computer in accounting.
Ans.
The role of computer in accounting is explained as follows.
1. For various reasons, every business organization is required to prepare and maintain various books of account. The computer is used by many business organizations to carry out accounting operations at a greater speed and accuracy.
2. The computer is useful for classifying, processing, analyzing, tabulating, recording and interpreting the accounting data for various purposes.
3. It is useful for improving the financial system of the organization.
4. With the help of the computer, accountants can easily, accurately and speedily prepare the different source documents like voucher, invoice, quotation, receipt, etc.
5. The computer is useful for recording accounting entries in the journal and posting such entries in the ledger. It is also used to prepare trial balance, final account, accounting statements like Balance sheet, etc.
Q3. Anil sold goods to Ravindra for Rs. 6000. Ravindra accepted Anil’s bill for Rs. 6000 payable after 3 months. After a month, Anil discounted the bill with his bank at 10% p.a. On the due date, Ravindra dishonoured his acceptance. Ravindra paid Rs. 3000 to Anil and accepted a fresh bill for 3 months for the balance including interest @ 8% p.a. Anil sent the bill to bank for collection. On due date, Ravindra honoured the bill. Pass the journal entries in the books of Anil. (October 2002 board exam questions).
Ans.
Journal of Anil
Date | Particulars | L F | Debit | Credit |
? 1 | Ravindra’s A/c………Dr. To Sales A/c (Being the goods are sold) | 6000 | 6000 | |
2 | Bills Receivable A/c ……… Dr. To Ravindra’s A/c (Being the bill is drawn) | 6000 | 6000 | |
3 | Cash/ Bank A/c ……… Dr. Discount A/c ………… Dr. To Bills Receivable A/c (being the bill is discounted) | 5900 100 | 6000 | |
4 | Ravindra’s A/c ……… Dr To Cash/Bank A/c (being the bill is dishonored) | 6000 | 6000 | |
5 | Cash/ bank a/c………… Dr To Ravindra’s A/c (being the part payment is made) | 3000 | 3000 | |
6 | Ravindra’s A/c ……… Dr. To Interest a/c (being the interest is charged on balance amount) | 60 | 60 | |
7 | Bills Receivable A/c ………… Dr. To Ravindra’s A/c (being the new bill is drawn along with interest) | 3060 | 3060 | |
8 | Bank for collection A/c ……… Dr. To Bills Receivable a/c (being the bill is send to bank for collection) | 3060 | 3060 | |
9 | Cash/ bank a/c ……… Dr. To Bank for collection a/c (being the sent to bank for collection bill is honored) | 3060 | 3060 |
OR
Q3. Journalize the following transactions in the books of Motilal:
a. Bhavna informed Motila that Jyoti’s acceptance for Rs. 3600 endorsed to Bhavna has been dishonoured and noting charges have been Rs. 150.
b. Anil renews his acceptance to Motilal for Rs. 3400 by paying Rs. 900 in cash and accepting a new bill for the balance plus interest at 8% p.a. for 3 months.
c. Prabhakar retired his acceptance to Motilal for Rs. 4000 by paying Rs. 3850 in cash.
d. Bank informed Motilal that Arun’s acceptance of Rs. 7000 which was discounted with bank has been dishonoured with noting charges Rs. 100. (March 2008 board exam questions)
Ans.
Date | Particulars | L F | Debit | Credit |
a | Jyoti’s A/c ……… Dr. To Bhavna’s (being the endorsed bill is dishonored along with noting charges) | 3750 | 3750 | |
b i. | Anil’s A/c ……… Dr. To Bills Receivable a/c (being the bill is dishonored) | 3400 | 3400 | |
ii. | Cash / bank a/c ……… Dr. To Anil’s a/c (being the part payment is made) | 900 | 900 | |
iii. | Anil’s A/c ……… Dr. To Interest A/c (being the interest is charged on balance amount) | 50 | 50 | |
iv. | Bills receivable a/c ……… Dr. To Anil’s A/c (being the new bill is drawn along with interest) | 2550 | 2550 | |
c | Cash/ bank a/c ……… Dr. Rebate’s A/c ……… Dr. To Bill’s Receivable A/c (being the bill is retired) | 3850 150 | 4000 | |
d | Arun’s A/c ………… Dr. To Cash/ bank A/c (bein the discounted bill is dishonored along with noting charges) | 7100 | 7100 |
Q4. Ajay and Abhijeet were partners in a Joint Venture sharing profits and losses in the proportion of 4/5 and 1/5 respectively. Ajay supplied goods to the value of Rs. 25000 and incurred expenses amounting to Rs. 2700. Abhijeet also supplied goods to the value of Rs. 7000 and his expenses amounted to Rs. 400. Abhijeet sold all the goods for Rs. 46000. Abhijeet is entitled to a commission at 5% on sales. Abhijeet settled Ajay’s account by bank draft. Prepare Joint venture account and Abhijeet account in the books of Ajay. (March 2006 board exam questions.)
In the books of Ajay
Joint venture account
Particulars | Amount | Amount | Particulars | Amount | Amount |
To Goods a/c To cash/bank a/c To Abhijeet’s a/c To Abhijeet’s a/c To Abhijeet’s a/c To profit on joint venture transferred to Profit / loss A/c Abhijeet’s A/c | 6880 1720 | 25000 2700 7000 400 2300 8600 | By Abhijeet’s A/c | 46000 | |
46000 | 46000 |
Abhijeet’s Account
Particulars | Amount | Amount | Particulars | Amount | Amount |
To Joint venture a/c | 46000 | By Joint venture a/c By Joint venture a/c By Joint venture a/c By Joint venture a/c (profit) By cash/ bank a/c (balancing figure) | 7000 400 2300 1720 34580 | ||
46000 | 46000 |
Q5. Mrs. Archana keeps her books on single entry system and gives the following information: (March 2008 board exam question)
Particulars | 31.3.2006 | 31.3.2007 |
Cash at bank Sundry debtors Stock in trade Furniture Machinery Bills payable Sundry creditors | 5000 25000 30000 20000 50000 5000 15000 | 32000 40000 50000 20000 50000 5000 20000 |
Further information:
1. Mrs. Archana withdrew from business Rs. 15000 for personal use.
2. She further introduced fresh capital of Rs. 25000.
3. Depreciation is to be charged @ 10% p.a. on Furniture and Machinery.
Prepare : (1) statement of affairs as on 31.3.2006. (2) statement of affairs as on 31.3.2007. (3) statement of profit and loss for the year ended on 31.3.2007.
ANS.
In the books of Mrs. Archana
Statement of affairs as on 31st March, 2006
Liabilities | Amount | Assets | Amount |
Bills payable Sundry creditors Capital at the beginning of the year | 5000 15000 110000 | Machinery Furniture Stock in trade Sundry debtors Cash at bank | 50000 20000 30000 25000 5000 |
130000 | 130000 |
Statement of affairs as on 31st March, 2007
Liabilities | Amount | Assets | Amount |
Bills payable Sundry creditors Capital at the end of the year | 5000 20000 167000 | Machinery Furniture Stock in trade Sundry debtors Cash at bank | 50000 20000 50000 40000 32000 |
192000 | 192000 |
Statement of profit or loss for the year ended 31st March, 2007
Particulars | Amount |
Capital at the end of the year | 167000 |
Add: Drawings | 15000 |
Less: Additional capital introduced | 182000 25000 |
Less: Capital at the beginning of the year | 157000 110000 |
GROSS PROFIT Less: Depreciation On Machinery = (50000)(10/100)(12/12) = 5000 On Furniture = (20000)(10/100)(12/12)=2000 | 47000 7000 |
NET PROFIT | 40000 |
Q6. Sanjay, Ajay and Vijay undertook the construction of building at a contract price of Rs. 6,00,000 payable in cash Rs. 4,00,000 and in the form of debentures of company Rs. 2,00,000. They shared profits and losses in the ration of 3:2:1 respectively. They opened a Joint Bank account wherein they deposited the following amounts. Sanjay Rs. 3,00,000, Ajay Rs. 2,00,000 and Vijay Rs. 1,00,000.
The following payments are made out through Joint bank account.
1. Purchase of materials Rs. 2,50,000.
2. Payment of wages Rs. 77,000.
3. Purchase of plant Rs. 45,000 and
4. Other charges Rs. 11,000.
Sanjay bring the truck of Rs. 40,000. Ajay brings in the material of Rs. 55,000. Vijay brings mixer worth Rs. 10,000. At the close of venture the unused materials were taken by Sanjay for Rs. 5,000. Ajay took over the mixer and plant for Rs. 27,000. The truck was sold in the market for Rs. 22,000. The contract price was received as per ther agreement and Vijay agreed to take over the debentures at Rs. 1,90,000.
Prepare : Joint venture account, Joint Bank account and Co – ventureres account. (March 2008 board exam questions)
In the books of Joint venture
Joint venture account
Particulars | Amount | Amount | Particulars | Amount | Amount |
To Join bank a/c Materials Wages Plant Other charges To Sanjay’s A/c (Truck) To Ajay’s A/c (materials) To Vijay’s A/c (mixture) To Debentures A/c (discount on debenture) To profit on joint venture transferred to Sanjay Ajay Vijay | 250000 77000 45000 11000 78000 52000 26000 | 383000 40000 55000 10000 10000 156000 | By Joint Bank a/c (contract price) By Debentures a/c (contract price) By joint bank a/c (truck sold) By Sanjay’s A/c (Materials taken over) By Ajay’s A/c (Mixer and plant) | 400000 200000 22000 5000 27000 | |
654000 | 654000 |
CO – VENTURERS’ ACCOUNT
Particulars | Sanjay | Ajay | Vijay | Particulars | Sanjay | Ajay | Vijay |
To Joint venture a/c To debenture a/c To joint bank a/c | 5000 413000 | 27000 280000 | 190000 | By joint bank a/c By joint venture A/c By joint venture A/c By joint Bank A/c | 300000 40000 78000 | 200000 55000 52000 | 100000 10000 26000 54000 |
418000 | 307000 | 190000 | 418000 | 307000 | 190000 |
Joint Bank A/c
Particulars | Amount | Particulars | Amount |
To Sanjay’s A/c To Ajay’s A/c To Vijay’s A/c To joint venture A/c To Joint Venture A/c To Vijay’s A/c | 300000 200000 100000 400000 22000 54000 | By joint venture a/c By Sanjay’s A/c By Ajay’s A/c | 383000 413000 280000 |
1076000 | 1076000 |
Debentures A/c
Particulars | Amount | Particulars | Amount |
To Joint venture A/c | 200000 | By Vijay’s A/c By Joint Venture A/c (balancing figure) | 190000 10000 |
200000 | 200000 |
Q7. Following is the Trial Balance of Premlal and Sundarlal as on 31st March 2006.
Trial balance as on 31st March, 2006.
Particulars | Amount | Particulars | Amount |
Stock on 1-4-2005 Purchases Drawings: Premlal Sundarlal Sales return Wages : productive Unproductive Salaries Rent, rates and insurance Bad debts Discount allowed Machinery Building Sundry debtors Cash Government bonds | 90000 225000 33000 30000 7200 10500 1800 18600 10200 1200 3900 45000 108600 153000 1000 2000 | Sales Purchase returns Discount received Sundry creditors Capital : Premlal Sundarlal Bank overdraft | 375000 3000 3000 90000 105000 135000 30000 |
741000 | 741000 |
1. Closing stock was valued on 31.3.2006 at market price Rs. 60,000 which was 20% above its cost price.
2. Outstanding productive wages Rs. 600
3. Rent, Rates and insurance include insurance Rs. 1600 paid for one year ending on 30th June 2006.
4. Maintain Reserve for doubtful debts at 5% on debtors.
5. Depreciate buildings by 5% and machinery at 10% p.a.
6. Goods costing Rs. 2500 were distributed as free samples for which no record has been made in the books.
7. Six months interest is due on Bank Overdraft at 10% p.a.
Prepare trading and profit and loss account for the year ended 31st March 2006 and Balance Sheet as on that date. (September 2008 board exam questions)
In the books of Premlal and Sunderlal
Trading account for the year ended 31st March, 2006.
Particulars | Amount | Amount | Particulars | Amount | Amount |
To opening stock To purchases (-)return To productive wages (+) outstanding To Gross profit c/d | 225000 (3000) 10500 600 | 90000 222000 11100 97200 | By sales (-) return By goods distributed as free samples By closing stock | 375000 (7200) | 367800 2500 50000 |
420300 | 420300 |
Profit and loss account for the year ended 31st March, 2006
Particulars | Amount | Amount | Particulars | Amount | Amount |
To Salaries To unproductive wages To rent, rates and insurance (-) prepaid insurance To bad debts (+) FBD (+)NRDD (-) ORDD To discount allowed To advertisement To depreciation: Buildings Machinery To interest on bank over draft To net profit c/d Premlal Sundarlal | 10200 (400) 1200 NIL 7650 NIL 5430 4500 21660 21660 | 18600 1800 9800 8850 3900 2500 9930 1500 43320 | By gross profit b/d By discount received | 97200 3000 | |
100200 | 100200 |
Partners’ capital accounts
Particulars | Premlal | Sunderlal | Particulars | Premlal | Sunderlal |
To drawings To balance c/d | 33000 93660 | 30000 126660 | By balance b/d By Net profit b/d | 105000 21660 | 135000 21660 |
126660 | 156660 | 126660 | 156660 |
Balance sheet as on 31st March, 2006
Liabilities | Rs. | Rs. | Assets | Rs. | Rs. |
Capital account Premlal Sunderlal Sundry creditors Bank overdraft Add: interest Outstanding productive wages | 93660 126660 30000 1500 | 220320 90000 31500 600 | Buildings (-) Deprn@5% Machinery (-) Deprn@10% Sundry Debtors (-) N.R.D.D. @5% Closing stock Cash Prepaid insurance Government Bonds | 108600 5430 45000 4500 153000 7650 | 103170 40500 145350 50000 1000 400 2000 |
342420 | 342420 |