Accounting Problems

Q.1. Perfect Repairs Company was formed on October 1, 2016. The following
transactions occurred during October 2016:

1 October – Capital brought into business by Mr. Shah, the owner of Perfect Repairs
Company Rs.180,000.
2 October – Paid an amount of Rs.6,800 as hire charges, for a derrick and pulley
assembly, for six months.
4 October – Signed an agreement with Automatic Electric Limited to repair their office
building roof for Rs.200.000, work to be completed by December 2011
5 October – Bought Building Repair Materials:
Rs.50, 000 – Paid in cash
Rs.126, 000 – On credit from Construction Materials Pvt. Ltd.
6 October – Received an advance of Rs.20,600 from Alarcrity Consultants towards
renovation work to be done in mid- November.
7 October – Completed roofing repair work for Adriot Engineers & Co., worth
Rs.15,000. Billed them for Rs.15,000. The customer promised to pay on November 5.
11 October – Paid miscellaneous expenses – Rs.2, 950.
12 October – Bought a concrete-mixer for Rs.85, 600. Paid a sum of Rs.20, 800 on
account. Balance amount payable to Ready-Mix Co Ltd. On November 10.
15 October – Paid on account to Mehta Associates, the RCC specialists a sum of
Rs.15,000 for their professional services in relation to RCC work.
16 October – Billed Automatic Electrical Ltd. For a part of the repair work already
completed – Rs.26,800.
19 October – Paid Rs,1,900 for a newspaper advertisement.
20 October – Paid a sum of Rs.26,000 to Construction Materials Pvt. Ltd. For the
amount due to them.
23 October – Paid office rent for 3 months ( October to December) – Rs.6,900.
25 October – Purchased an office typewriter for Rs5,900. Payment made in cash.
29 October – Paid Salaries and Wages for October – Rs.26,450.
31 October – Received Rs26,800 as payment from Automatic Electric Limited.

You are required to :

(a) Journalize the transactions

(b) Post to ledger accounts
(c) Prepare a trial balance as on October 31, 2016.

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Q.1 Following are the applications of some accounting assumptions or principles. State
the name of the relevant accounting assumptions or principles applied herein.
1) Classification of assets as current assets and fixed assets.
2) Appending notes to the financial statements.
3) Accounting of a small calculator as an expense and not as an asset.
4) Following the WDV method of depreciating a particular asset year after year.
5) Valuation of stock at lower of cost or net realisable value.
6) Making provision for doubtful debts.

Question Bank
Finance and Cost accounting

Journal

Q1. Journalise the following transactions. Also state the nature of each account involved
in the Journal entry.

1. December 1, 2005, Ajit started business with Cash Rs.40,000.

2. December 3, he paid into the Bank Rs. 2,000.
3. December 5, he purchased goods for cash Rs.15,000.
4. December 8, he sold goods for cash Rs.6,000.
5. December 10, he purchased furniture and paid by cheque Rs.5,000.
6. December 12, he sold goods to Arvind Rs.4,000.
7. December 14, he purchased goods from Amrit Rs.10,000.
8. December 15, he returned goods to Amrit Rs.5,000.
9. December 16, he received from Arvind Rs.3,960 in full settlement.
10. December 18, he withdrew goods for personal use Rs.1,000
11. December 20, he withdrew cash from business for personal use Rs.2,000.
12. December 24, he paid telephone charges Rs.1,000.
13. December 26, cash paid to Amrit in full settlement Rs.4,900.
14. December 31, paid for stationery Rs.200, rent Rs.500, and salaries to staff Rs. 2,000.
15. December 31, goods distributed by way of free samples Rs.1,000.

Q.2

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Classify the following accounts:
1. According to traditional approach
2. According to modern approach

Capital bought in Drawings A/c Building purchased Purchases A/c

Sales A/c Carriage inward paid Carriage outward paid Cash received

Cash paid Interest paid Interest received Commission paid

Commission Discount allowed Discount received Conveyance charges

received
Sales promotion Entertainment Subscription paid Subscription received
expenses expenses
Light ,power and Telephone and postage Repairs incurred Insurance premium paid
electricity
Bad debts written Bad debts recovered Printing and stationery Wages and salaries
of
Furniture and Bank A/c Sales return Purchases return
fixtures
Bank overdraft Out standing salary A/c Pre paid rent A/c Interest received in adva

Interest accrued Travelling charges A/c Current A/c of a partner Loan A/c Of a partner
A/c

Q2. Transactions of Ramesh for April are given below. Journalise them.

2006 Rs.
April 1 Ramesh started business with cash 10,000
“ 2 Paid into bank 7,000

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“ 3 Bought goods for cash 500
“ 5 Drew cash from bank for Personal use 100
“ 13 Sold to Krishna goods on credit 150
“ 20 Bought from Shyam goods on credit 225
“ 24 Received from Krishna 145
“ Allowed him discount 5
“ 28 Paid Shyam cash 215
“ Discount Received 10
“ 30 Cash sales for the month 800
Paid rent 50
Paid salary 100

Ledger

Q1. Prepare the Stationary Account of a firm for the year ended 31-12-2005 duly balanced off,
from the following details:

2005 Rs.
Jan. 1 Stock in hand 480
April 5 Purchase of stationery by cheque 800
Nov. 15 Purchase of stationery on credit from Five Star Stationery Mart 1,280
Dec. 31 Stock in hand 240

Q2. Journalise the following transactions in the books of a trader:

Debit balance on January 1, 2006:

Cash in hand Rs.8,000, Cash at bank Rs.25,000, Stock of goods Rs.20,000, Building
Rs.10,000, Sundry Debtors: Vijay Rs.2,000 and Madhu Rs.2,000.

Credit balances on January 1, 2006:

Sundry Creditors: Anand Rs.5,000.
Following were further transactions in the month of January, 2006:
Jan. 1 Purchased goods worth Rs.5,000 for cash less 20% trade discount and 5% cash
discount.
Jan. 4 Received Rs.1,980 from Vijay and allowed him Rs.20 as discount.
Jan. 8 Purchased plant from Mukesh for Rs.5,000 and paid Rs.100 as cartage for bringing the
plant to the factory and another Rs.200 as installation charges.
Jan. 12 Sold goods to Rahim on credit Rs.600.
Jan. 15 Rahim became insolvent and could pay only 50 paise in a rupee.
Jan. 18 Sold goods to Ram for cash Rs.1,000.

Trial Balance

Q1. From the following ledger balances, prepare a trial balance of Anuradha Traders as on 31st
March, 2006:

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 Account Head Rs.
Capital 1,00,000
Sales 1,66,000
Purchases 1,50,000
Sales Return 1,000
Discount allowed 2,000
Expenses 10,000
Debtors 75,000
Creditors 25,000
Investments 15,000
Cash at bank in hand 37,000
Interest received on investments 1,500
Insurance paid 2,500

Q2. One of your clients, Mr. Singhania has asked you to finalise his accounts for the year ended
31st March, 2005. Till date, he himself has recorded the transactions in books of accounts. As a
basis for Audit, Mr. Singhania furnished you with the following statement.

Dr. Balance Cr. Balance

Singhania’s Capital 1,556
Singhania’s Drawings 564
Leasehold premises 750
Sales 2,750
Due from customers 530
Purchases 1,259
Purchases return 264
Loan from bank 256
Creditors 528
Trade expenses 700
Cash at bank 226
Bills payable 100
Salaries and wages 600
Stock (1.4.2004) 264
Rent and rates 463
Sales return 98
5,454 5,454

The closing stock on 31st March, 2005 was valued at Rs.574. Mr. Singhania claims that he has
recorded every transaction correctly as the trial balance is tallied. Check the accuracy of the
above trial balance.

Final Accounts

Q1. Shri Mittal gives you the following Trial Balance and some other information:

Trial Balance as on 31st March, 2006

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 Dr. Rs. Cr.Rs.
Capital 8,70.000
Purchases and Sales 6,05,000 12,10,000
Opening Stock 72,000
Debtors and Creditors 90,000 1,70,000
14 % Bank Loan 2,00,000
Overdrafts 1,12,000
Salaries 2,70,000
Advertisements 1,10,000
Other Expenses 60,000
Returns 40,000 30,000
Furniture 4,50,000
Building 8,90,000
Cash in hand 5,000
25,92,000 25,92,000

Closing stock on 31st March, 2006 was valued at Rs.1,00,000. Prepare his final accounts.

Q2. Mr. Mohan gives you the following trial balance and some other information:

Trial Balance as on 31st March, 2006

Dr. Rs. Cr. Rs.
Capital 6,50,000
Sales 9,70,000
Purchases 4,30,000
Opening Stock 1,10,000
Freights Inward 40,000
Salaries 2,10,000
Other Administration Expenses 1,50,000
Furniture 3,50,000
Debtors and Creditors 2,10,000 1,90,000
Returns 20,000 12,000
Discounts 19,000 9,000
Bad Debts 5,000
Investments in Government Securities 1,00,000
Cash in hand and cash at bank 1,87,000
18,31,000 18,31,000

Other information:

(1) Closing stock was Rs.1,80,000

(2) Depreciate Furniture @ 10 % p.a.

You are required to prepare Trading and Profit and Loss Account for the year ended on
31.3.2006 and Balance Sheet of Mr. Mohan as on that date.

Q3.From the following Trial Balance prepare a Trading and Profit and Loss Account for the year
ending 31st December, 2006 and a Balance Sheet as on that date:

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 Rs. Rs.
Debit Balance:
Sundry Debtors 3,500 Salaries 2,200
Stock 1st January, 2006 5,000 Purchases 12,500
Cash in Hand 5,600 Plant and Machinery 15,700
Wages 3,000 Credit Balance:
Bad Debts 500 Capital 25,000
Furniture and Fixtures 1,500 Sundry Creditors 9,000
Depreciation 1,500 Sales 17,000

On 31st December, 2006 the stock was valued at 10,000.

Q4. Mr. James submits you the following information for the year ended 31.3.2006:

Rs.
Stock as on 1.4.2005 1,50,500
Purchases 4,37,000
Manufacturing expenses 85,000
Expenses on sale 33,000
Expenses on administration 18,000
Financial charges 6,000
Sales 6,25,000
Gross profit is 20% of sales
Compute the net profit of James for the year ended
31.3.2006

Q.5.M/S Mittal Enterprise gives you the following Trial Balance and some other information:

Trial Balance as on 31st March, 2006

Dr. Rs. Cr.Rs.
Capital 8,70.000

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Purchases and Sales 6,05,000 13,22,000
Opening Stock 72,000
Debtors and Creditors 90,000 1,70,000
14 % Bank Loan 2,00,000
Salaries 2,70,000
Advertisements 1,10,000
Other Expenses 60,000
Returns 40,000 30,000
Furniture 4,50,000
Building 8,90,000
Cash in hand 5,000
25,92,000 25,92,000

1. Closing stock on 31st March, 2006 was valued at Rs.1,00,000. Prepare his final accounts.
2. Interest is outstanding for one year on Bank Loan.
3. Salaries Rs. 1,000 Is Outstanding.
4. Charge Depreciation on furniture@5% and on Building @5%.
5. Other expenses include Pre- Paid Insurance for Rs. 20,000.
Prepare Final accounts of M/S Mittal Enterprise.

Q.5. Sen Gupta & co. employs of a team of 8 workers who were paid Rs.3,000 per Month each
in the year ending 31st March,2016.On 1st April 2016, the company raised salaries by 10% to Rs.
3,300 per Month each.
On October 1, 2016 the company hired two trainees at the salary of
Rs.2,100 per Month each. The work force is paid salary on first working day of every Month.
One Month in arrears, so that employees receive their salary of April on the first working day of
May etc.

Calculate: - 1. Amount actually paid as salaries during 2016-17.

2. Amount of salaries which would be charged in profit & loss a/c for the year ended 2017.

Vivek Construction Company was formed on 1st December 2016. The owner Mr. Vivek
Singh contributed in his business Rs.1.5 crores as his capital. The following transactions
and events were occurred during an accounting year from 1st December 2016 to 31st
March 2017.
Date Transactions and Events

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December He opened a current account in bank and deposited Rs.1.4 crores.
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December He signed an agreement with his cousin Mr. Mohan Singh to

3 purchase the land for Rs.80 lacs. He paid to him on account Rs.10
lacs by cheque.

December He registered the documents of the land and paid remaining

8 amount by cheque to Mr. Mohan. He also paid the registration
charges of Rs.10 lacs and fees of advocate Rs.2 lacs by cheque.

December He took an office on rent at the rate of Rs.10 thousand per month
9 and paid six months advance rent to the landlord by cheque.

December He appointed a clerk and an office assistant for salaries of Rs.7000

15 and Rs.5000 respectively. Salaries to them are payable to first week
of the next month.

December He signed a contract with Mr. Sohan to develop the land for Rs.25
15 lacs and paid him on account Rs.5 lacs by cheque.

December He took a loan of Rs.35 lacs from the bank at the interest rate 14%
15 p.a. for developing the land and for constructing office building.

January Paid Rs.10 lacs to Mr. Sohan against the account by cheque.
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January He paid Rs.2 lacs to contractor Krishna as an advance for the

16 construction of an office building.

January Land was developed and he paid remaining amount to Mr. Sohan by
31st cheque. On the same date land was divided into 20 plots.

February He paid Rs.1 lac for advertisement expenses for selling the plots by
2 cash.

February Sold 14 plots at the rate of Rs.12 lacs each and 1 plot to his close
10 friend Mr. Aman at Rs.10 lacs. He received the full payment from all
customers by cheques. He wrote sell agreement letters for all
customers and delivered the incidental documents thereof to all
customers, however, it was decided that the the documents will be
registered in the name of the customers on 26 th April 2017.
Registration charges will be paid by customers.

February He signed an agreement with Keshav to purchase the land for Rs.1
28 crore and paid on account Rs.20 lacs by cheque.

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 March 15 Construction of the office building was completed and he paid Rs.8
lacs by cheque to the contractor for full and final settlement.

March Loan amount along with interest was paid to the bank.
31st

You are required to pass the journal entries, post in the ledger, prepare trial balance and
final accounts for the year ended 31st March 2017.
On 31st March 2017, market value of each plot was Rs.14 lacs.

Q.9. Journalize the following transactions in the books of Shri Ganesh:

2016 Particulars Amount

April1 Shri Ganesh started his Business with Cash 50,000

April2 Purchased Goods 5,000

April3 Purchased Goods for Cash 10,000

April4 Purchased goods from Mr.Sun for Cash 15,000

April5 Sold goods 6,000

April6 Sold goods for cash 12,000

April8 Sold goods to Mr. Sky for cash 18,000

April9 Purchased goods from Mr. Moon 10,000

April10 Purchased goods from Mr. Star on credit 20,000

April11 Sold goods to Mr. Sea 12,500

April12 Sold goods to Mr. Ocean on Credit 25,000

April13 Mr. Sea returned goods 2,500

April15 Returned goods to Mr. Moon 2,000

April16 Received from Mr. Sea 9,900

Allowed him discount 100

April17 Paid Mr. Moon 7,880

Discount allowed by him. 120

April29 Withdrew for personal use 1,000

April30 Withdrew goods for private use(cost Rs.. 500,

Selling price Rs. 600)

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April30 Paid Salary to Mr. Sevakram, an employee 500

April30 Paid rent to Mr. Estate, Landlord 500

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