PICT-SITM

PGDBM –I (Batch 2008-2010)

Financial Accounting
Exercises
Classroom Teaching:
Journalising:

1.) Amol commenced business with cash Rs. 10,000 and machinery Rs. 20,000.
He bought goods from Mr. Ravi Rs. 7,55 on credit.
Sold goods for cash to Mr. Bajaj for cash worth Rs. 5,000
Sold goods on credit to Mr. Naidu for Rs.6,500
Received commission Rs. 500
Received from Mr. Naidu Rs. 6,500
Paid salaries in cash Rs. 4,000
Returned goods to Mr. Ravi Rs. 1,250
Paid Mr. Ravi Rs. 6,250 by cheque.

Simple Entries :
Financial Accounting & Financial Statement Analysis (FA&FSA)

Simple Entries: Classroom Teaching:

2.)
1. AB Ltd. Received Rs.5, 000 from Geet & Co. on 5/1/2000.
2. X Ltd. Received Rs. 15,000 from Gupta & Co. on 10/2/2000
3.PQR Ltd. purchased Rs.6000 worth of goods from Y & Co. on 2/4/2000.
4.XYZ Ltd paid salaries of Rs.15,500 through bank on 7/5/2000.

Solution:
1.AB Ltd. Received Rs.5, 000 from Geet & Co. on 5/1/2000.
Recording the journal entry in the books of AB Ltd.
5/1/2000 Cash A\c ----- Dr. 5,000
To Geet & Co. a\c 5,000

2. X Ltd. Received Rs. 15,000 from Gupta & Co. on 10/2/2000

Recording the entry in the books of X Ltd.

10/2/2000 Cash a\c ------Dr. 15,000

To Gupta & co. a\c 15,000
3.PQR Ltd. purchased Rs.6000 worth of goods from Y & Co. on 2/4/2000.
Recording the entry in the books of PQR Ltd.

2/4/2000 Purchases A\c ---Dr. 6000

To Y & Co. 6000

4.XYZ Ltd paid salaries of Rs.15,500 through bank on 7/5/2000.

Recording the entry in the books of XYZ Ltd.

7/5/2000 Salaries a\c ------Dr. 15,500

To Bank a\c. 15,500

3.) Journalize the following transactions in the books of Dixit Enterprises.

1. Started business with a capital of Rs.7, 50,000 on 3/4/2000
2. Opened a bank a\c with State Bank of India for Rs 2, 00,000 on 4/4/2000
3. Purchased goods from Tandon & Co. for cash Rs. 1, 00,000 on 6/4/2000
4. Purchased goods from Burman for Rs 2,00,000 on 21/4/2000
5. Goods returned to Burman Rs. 50, 000 on 23/4/2000
6. Paid Mr. Dharam , the landlord Rs.50,000 towards rent on 25/4/2000
7. Sold goods to Mr. Karan for cash Rs. 2, 50,000 on 5/6/2000
8. Sold goods to Mr Dean on credit Rs. 1, 00,000 on 10/6/2000
9. Goods returned by Mr. Dean for Rs.25, 000 on 12/6/2000
10. Paid cartage on goods purchased Rs. 35,000 on 21/4/2000
11. Paid cartage on goods sold Rs. 80,000 on 5/6/2000
12. Purchased furniture for office purpose Rs. 1, 00,000 on 2/7/2000

1. Started business with a capital of Rs.7, 50,000 on 3/4/2000

3/4/2000 Cash a\c ---------Dr. 7, 50,000
To Capital a\c 7, 50,000
2. Opened a bank a\c with State Bank of India for Rs 2, 00,000 on 4/4/2000
4/4/2000 Bank a\c ---------Dr. 2, 00,000
To Cash a\c 2, 00,000
3. Purchased goods from Tandon & Co. for cash Rs. 1, 00,000 on 6/4/2000
6/4/2000 Purchase a\c --------Dr. 1, 00,000
To Cash a\c 1, 00,000
4. Purchased goods from Burman for Rs 2,00,000 on 21/4/2000
21/4/2000 Purchase a\c -------Dr.2, 00,000
To Burman a\c 2,00,000
5. Goods returned to Burman Rs. 50, 000 on 23/4/2000
23/4/2000 Burman a\c --------Dr. 50,000
To Return Outwards a\c 50,000
6. Paid Mr. Dharam , the landlord Rs.50,000 towards rent on 25/4/2000
25/4/2000 Rent a\c ----------Dr. 50,000
To Cash a\c 50,000
7. Sold goods to Mr. Karan for cash Rs. 2, 50,000 on 5/6/2000
5/6/2000 Cash a\c --------Dr. 2,50,000
To Sales a\c 2, 50,000
8.Sold goods to Mr Dean on credit Rs. 1,00,000 on 10/6/2000
10/6/2000 Mr. Dean a\c ------Dr. 1,00,000
To Sales a\c 1, 00,000
9. Goods returned by Mr. Dean for Rs.25, 000 on 12/6/2000
12/6/2000 Returns Inwards a\c ----Dr. 25,000
 To Mr. Dean A\c 25,000
10. Paid cartage on goods purchased Rs. 35,000 on 21/4/2000
21/4/2000 Cartage Inwards a\c -------Dr. 35,000
To Cash a\c 35,000
11. Paid cartage on goods sold Rs. 80,000 on 5/6/2000
5/6/2000 Cartage Outwards a\c ----Dr. 80,000
To Cash a\c 80,000
12. Purchased furniture for office purpose Rs. 1, 00,000 on 2/7/2000
2/7/2000 Furniture a\c ---------Dr. 1, 00,000
To Cash a\c 1, 00,000

Journal Entries:
Special & Compound Entries:
4.) 1. Paid Rs. 1, 10,000 to Mr. Rehman in full settlement of his dues on 30/4/2000 of Rs.
1, 25,000.
2. Withdrawn cash for household expenses Rs.60, 000 on 2/6/2000
3. Received cash from Mr. Dean Rs. 90,000 in full settlement on 25/6/2000 of Rs.
1,05,0000.

5.) Journalize the entries in the books of Accenture Ltd.

1. Withdrawn goods for personal use (Sale price Rs.1, 500, Cost price Rs.1, 250) on
2/1/2001
2. Goods distributed to children in an orphanage on 8/1/2001
(Sale price Rs.2000, Cost price Rs.1, 700)
3. Goods distributed as free samples on 10/1/2001
(Sale price Rs. 1, 200; Cost price Rs. 1000)
4. Goods stolen on 11/1/2001 (Sale price Rs. 1000; Cost price Rs. 800)
5. Goods destroyed by fire on 12/1/2001(Sale price Rs.1500; Cost price Rs.1250)
6. Goods used in furnishing the office (Sale price Rs.2000; Cost price Rs. 1750)
on 15/1/2001
6. Rs 250 payable by Rakesh was written off as bad on 22/1/2001
7. Recovered from Pramod on 25/1/2001 half the amt which was written off as bad
Rs.300 earlier.

Solution:
1. Withdrawn goods for personal use (Sale price Rs.1, 500, Cost price Rs.1, 250) on
2/1/2001
2/1/2001 Drawings a\c ---------Dr. 1,250
To Purchase a\c 1,250
2. Goods distributed to children in an orphanage on 8/1/2001
(Sale price Rs.2000, Cost price Rs.1, 700)
8/1/2001 Donation a\c ------------Dr. 1700
To Purchase a\c 1700
3. Goods distributed as free samples on 10/1/2001
(Sale price Rs. 1200; Cost price Rs. 1000)
10/1/2001 Sales Promotion a\c --------Dr. 1000
To Purchase a\c 1000
4. Goods stolen on 11/1/2001 (Sale price Rs. 1000; Cost price Rs. 800)
11/1/2001 Loss by theft a\c --------Dr. 800
To Purchase a\c 800
5. Goods destroyed by fire on 12/1/2001( Sale price Rs.1500 ; Cost price Rs.1250 )
12/1/2001 Loss by fire a\c --------Dr. 1250
To Purchase a\c 1250
6. Goods used in furnishing the office ( Sale price Rs.2000 ; Cost price Rs. 1750 )
on 15/1/2001
15/1/2001 Office furniture a\c ------Dr. 1750
To Purchase a\c 1750
7. Rs 250 payable by Rakesh was written off as bad on 22/1/2001
22/1/2001 Bad Debts a\c ------------Dr. 250
To Rakesh a\c 250
8. Recovered from Pramod on 25/1/2001 half the amt which was written off as bad
Rs.300 earlier
25/1/2001 Cash a\c --------------Dr. 150

6.) Journalize the following transactions in the books of Mr. Singh.

1. 2/1/2002 Purchased goods from Arora at the list price of Rs.8, 000. A trade discount of
10% was allowed.
2. 8/1/2002 Sold goods to Flora at a list price of Rs.4000.A trade discount of 5% was
allowed.
3. 15/1/2002 Received a cheque from Flora for Rs.3600 in full settlement.
4. Paid Arora Rs.7, 000 in full settlement by cheque on 20/1/2002
5. 25/1/2002 Sham is declared insolvent, and 60 paise in a rupee on a debt of Rs.2500
recovered.
Journalize the following transactions in the books of Mr.Singh.
1. 2/1/2002 Purchased goods from Arora at the list price of Rs.8000. A trade discount of
10% was allowed.
2/1/2002 Purchase a\c -------------Dr. 7200
To Arora a\c 7200
2. 8/1/2002 Sold goods to Flora at a list price of Rs.4000.A trade discount of 5% was
allowed.
8/1/2002 Flora a\c ------------------Dr. 3800
To Sales a\c 3800
3. 15/1/2002 Received a cheque from Flora for Rs.3600 in full settlement.
15/1/2002 Bank a\c --------------------Dr. 3600
Discount Allowed a\c -----Dr. 200
To Flora a\c 3800
4. Paid Arora Rs.7, 000 in full settlement by cheque on 20/1/2002
20/1/2002 Arora a\c ------------------Dr. 7200
To Bank a\c 7000
To Discount Received 200
5. 25/1/2002 Sham is declared insolvent, and 60 paise in a rupee on a debt of Rs.2500
recovered.
25/1/2002 Cash a\c ----------------Dr. 1500
Bad debts a\c ----------Dr.1000
To Sham a\c 2500
To Sham a\c 2500

Special & Compound Entries :

7.)
1. Paid Rs. 1, 10,000 to Mr. Rehman in full settlement of his dues on 30/4/2000 of Rs.
1, 25,000
30/4/2000 Rehman a\c -------Dr. 1, 25,000
To Cash a\c 1, 10,000
To Discount Received a\c 15,000
2. Withdrawn cash for household expenses Rs.60, 000 on 2/6/2000
2/6/2000 Drawings a\c ------Dr. 60,000
To Cash a\c 60,000
3. Received cash from Mr. Dean Rs. 90,000 in full settlement on 25/6/2000 of Rs.
1,05,000
25/6/2000 Cash a\c ---------------------Dr. 90,000
Discount allowed a\c -----Dr. 15,000
To Mr. Dean A\c 1, 05,000

Ledger:
8.)
Exercise No.3.) on Dixit Enterprises:
Prepare Ledger Accounts.
Trial Balance:
FA& FSA Page 159- Illus. 2.6
9.)
Prepare the correct Trial Balance as on 30/12/2006.

Particulars Debit Credit

RS. RS.
Capital 8,950
Drawings 1,050
Opening Inventory 3,725
Purchases 23,100
Sales 34,425
Salaries 6,205

Lighting 310
Equipments 3,600
Freights 230

Sales Returns 105

Purchase Return 290
Return
Postage 350
Discount Allowed 285
Discount Recd. 315
Insurance 1,115
Motor Vehicles 1,475
Cash 110
Receivables 18,920
Accounts Payable 4,925
Bank Overdraft 975

55,230 55,230
FA & FSA Page 50- Problem 23
10.)
Prepare a Trial Balance as on 31.3.2007 from the following data for Sun Systems.

Particulars Rs Particulars
RS
Purchases 1,65,625 Trade expenses 2,314
Sales 2,56,650 Rent, 3,517
Sales returns 4,250 Bad debts 525
Purchase returns 3,120 Interest on investments 800
Stock 1.4.2006 26,725 Loan to A 3,000
Sundry debtors 40,200 Investments 11,500
Wages 20,137 Capital 28,000
Salaries 8,575 Outstanding wages 2,017
Furniture 6,575 Outstanding rent 750
Bad debts reserve 5,200 Prepaid insurance 524
Sundry creditors 25,526 Bank balance 5,725
Patents 4,500 Bills receivables 17,070
Postage 3,226 Drawings 6,000
Bills payable 8,950 Depreciation on furniture675
Lighting 350
FA& FSA Page 159- Illus. 2.6
11.)
Prepare the correct Trial Balance.

Particulars Debit Credit

RS. RS.
Capital 8,950
Drawings 1,050
Opening Inventory 3,725
Purchases 23,100
Sales 34,425
Salaries 6,205

Lighting 310
Equipments 3,600
Freights 230

Sales Returns 105

Purchase Return 290
Return
Postage 350
Discount Allowed 285
Discount Recd. 315
Insurance 1,115
Motor Vehicles 1,475
Cash 110
Receivables 18,920
Accounts Payable 4,925
Bank Overdraft 975

55,230 55,230

Trading Account and Profit & Loss Account:

12.)
Prepare Trading Account of Markon Electric as on 31/12/2005.

Opening stock 25,000

Purchases 42 000
Carriage Inward 1,200
Freight 1,700
Return outward 5,000
Sales 82,700
Custom Duty 1,500
Return Inward 2,700
Closing Stock 18,300

13.)
The following is the trial balance of Gupta as on 30th June, 2005

Trial Balance Of Gupta For The Year Ending 30TH June ,2005

Dr Rs Cr Rs

Cash 540 Sales 98,780

Bank 2,630 Return Outwards 500
Purchases 40,675 Capital 62,000
Return Inwards 680 Accounts Payable 6,300

Wages 8,480 Rent 9,000

Fuel and Power 4,730
Carriage on purchases 2,040
Buildings 32,000
Freehold land 10,000
Machinery 20,000
Patents 75,000
Salaries 15,000
General Expenses 3,000
Insurance 600
Drawings 5,245
Accounts Receivables 14,500
Carriage on sales 3,200
Inventory 1/7/2004 5,760

1, 76,580 1,76,580
Taking into account the following adjustments prepare the Trading, Profit and Loss
Account as on 30TH June, 2005.
1. Inventory on hand on 30TH June ,2005 is Rs 6,800
2. Machinery to be depreciated at the rate of 10% and patents at the rate of 20%
3. Salaries for the month of June 2005 amounting to Rs1, 500 were unpaid.
4. Insurance includes an annual premium of Rs 170 on a policy expiring on 31ST
December ,2005
5. Bad debts to be written off are Rs 725
6. Rent receivableRs1, 000.

14.) Page 52-problem 31

Given below is the Trial Balance of Sunshine & Co as on 31st December, 2004.

Particulars Rs Particulars Rs
Land 30,600 Sales 82,920
Purchases 42,400 Return outwards 840
Salaries 4,400 Interest 480
Rent 1,200 Accounts payable 9,840
Postage 600 Loan 6,000
Stationary 480 Capital 24,000
Wages 10,400
Carriage on purchases 1,120
Miscellaneous expenses 1,000
Carriage on sales 1,600
Repairs 1,800
Bad debts 240
Opening Inventory 6,200
Buildings 3,400
Furniture 2,000
Accounts receivables 12,000
Cash in hand 2,600
Return inwards 2,040

1, 24,080 1,24,080

In addition, the following information is also given:-

1. A provision at 5% for doubtful debts has to be made.
2. The value of inventory on 31st December, 2001 was estimated as Rs 5,960.
3. Depreciation on buildings was to be charged at 10%.
4. Salaries for the month of December amounting to Rs 400 are still to be paid.

From the above information, prepare a Trading and Profit and Loss account of Sunshine
and Co.
15.)
Page: 187; Illustration: 11.6;
The following is the Trial Balance of Evergreen & Co. as on December 31, 2005.

Dr. Rs. Cr. Rs.

Opening Inventory 72,000 Capital 5, 00,000

Purchases 2, 25,000 Sales 3, 50,000
Furniture 15,000 Purchase returns 1,800
Motor car 30,000 Creditors 63,500
Buildings 4, 25,000
Commission 7,500
Advertisements 22,000
Repairs and maintenance13, 000
General expenses 16,000
Insurance 7,000
Cash in hand 3,500
Cash at bank 6,000
Salaries 30,000
Debtors 43,300

9, 15,300 9,15,300

You are required you draft Profit and Loss accounts and Balance sheet as on 31st
December 2005.

1. Closing Inventory as at 31.12.2005, Rs 80,000.

2. Prepaid advertisements RS2, 000.
3. Goods used for domestic purpose RS 1,800.
4. Outstanding salaries RS3, 000.
5. Depreciation on buildings at 5%, furniture 5%, and Motor car at 10%.
16.)
Page: 183; Illustration: 11.1
From the following trial balance of Ultratech Co.prepare trading and profit and loss
account and balance sheet.

Trial balance as on December 31, 2003

Particulars Dr. Cr.

Rs Rs
Cash in hand 3,600
Purchases 3, 60,000
Stock as on 1-1-20x1 1, 05,000
Debtors 1, 50,000
Plant and machinery 1, 80,000
Furniture 45,000
Bills receivable 60,000
Rent 30,000
Wages 48,000
Salaries 56,400
Capital 3, 00,000
Bills payable 66,000
Creditors 72,000
Sales 6, 00,000

Total 10, 38,000 10, 38,000

Additional Information:

1. Closing Inventory as on 31st December ,2003,RS 75,000

2. Outstanding wages RS 7,500
3. Depreciation on Plant and Machinery at 10% and Furniture at 5%