CA FOUNDATION

PRINCIPLES AND PRACTICE

OF ACCOUNTING

Mr. ABDUL MUNEER

Student’s Name ……………………………………………..

Batch Name …………………………………………………

Subject ………………………………………………………

Address ……………………………………………………..

……………………………………………………………….

……………………………………………………………….

Contact Number ……………………………………………..

PRINCIPLES AND PRACTICE
OF ACCOUNTING
 CAPITAL AND REVENUE EXPENDITURE

1. State whether the following are capital, revenue or deferred revenue

expenditure.
a) Carriage of ₹ 7,500 spent on machinery purchased and installed.
b) Heavy advertising costs of ₹ 20,000 spent on the launching of a company’s
new product.
c) 200 paid for servicing the company vehicle, including ₹ 50 paid for
changing the oil.
d) Construction of basement costing ₹ 1,95,000 at the factory premises

2. State whether the following are Capital Expenditure or Revenue Expenditure:

a) Expenses incurred in connection with obtaining a licence for starting the
factory were ₹ 10,000.
b) 1,000 paid for removal of stock to a new site.
c) Rings and Pistons of an engine were changed at a cost of ₹ 5,000 to get full
efficiency.
d) 2,000 spent as lawyer’s fee to defend a suit claiming that the firm’s factory
site belonged to the Plaintiff. The suit was not successful.
e) 10,000 were spent on advertising the introduction of a new product in the
market, the benefit of which will be effective during four years.
f) A factory shed was constructed at a cost of ₹ 1,00,000. A sum of ₹ 5,000
had been incurred for the construction of the temporary huts for storing
building materials.

3. Classify each of the following transactions into capital or revenue transactions:

1) Inauguration expenses of a new manufacturing unit in an existing Business.
2) Installation of a new central heating system.
3) Repainting of a delivery van.
4) Providing drainage for a new piece of water-extraction equipment.
5) Legal fees on the acquisition of land.
6) Carriage costs on a replacement part for a piece of machinery.

4. Classify the following expenditures as capital or revenue expenditure:

a) An extension of railway tracks in the factory area.
b) Amount spent on painting the factory.
c) Payment of wages for building a new office extension.
d) Amount paid for removal of stock to a new site.
e) Rings and Pistons of an engine were changed to get full efficiency
f) Legal fees on the acquisition of land.
g) Complete repaint of existing building.
h) Repainting of a delivery van.
i) Providing drainage for a new piece of water-extraction equipment.
j) Carriage costs on a replacement part for a piece of machinery
k) Travelling expenses of the directors for trips abroad for purchase of capital
assets.
l) Amount spent to reduce working expenses.
m) Amount paid for removal of stock to a new site.
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 n) Cost of repairs on second-hand car purchased to bring it into working
condition.

5. State which of the following expenditures are capital, revenue, and capital loss:
1. Cost of overhauling and painting a second-hand truck newly purchased.
2. Cost of making more exits in a cinema hall under order of the Government.
3. 25,000 were spent on air conditioning the office of the General Manager.
4. An old machine which stood in the books at ₹ 15,000 was sold for ₹ 13,000
5. 2,000 were paid as municipal tax in connection with a building which was
purchased last year for ₹ 2,00,000.
6. 30,000 were spent on heavy advertising in connection with the introduction
of a new product.
7. 500 was paid out in connection with carriage on goods purchased.
8. A temporary room constructed for ₹ 25,000 for storing raw material for the
construction of a big building.
9. 5,00,000 was spent on putting up a gallery in a theatre hall.
10. Freight and cartage amounting to ₹ 4,000 were paid on purchase of a new
plant and a sum of ₹ 2,000 was spent as erection charges of that plant.
11. M/s Capital Properties, property dealers, purchased ten flats @ ₹ 7,00,000
each.
12. Compensation paid to undesirable employees.
13. 12,000 paid to Mahanagar Telephone Nigam Ltd. for installing a telephone
in the office.
14. Damages paid on account of breach of contract to supply certain goods.
15. Imported goods worth ₹ 1,75,000 confiscated by customs authorities for
non-disclosure of material facts.
16. 20,000 spent for the trial run of newly installed machinery

Basic accounting Procedure, Journal entries.

6. Journalise the following transactions,

Jan. 1 Started business with cash 2,00,000
Jan. 3 Purchased goods for cash 60,000
Jan. 5 Sold goods to Shyam 60,000
Jan. 6 Sold goods for cash 20,000
Jan. 9 Received cash from Shyam 40,000
Jan. 13 Goods purchased from Ram 40,000
Jan. 20 Cash paid to Ram 20,000
Jan. 25 Paid office rent 4,000
Jan. 31 Paid salaries to staff 20,000
Jan. 31 Returned goods by Shyam 10,000

7. Enter the following transactions in the Journal of Bhagwat and sons.

January 1 Tarun started business with cash 1,00,000
January 2 Goods purchased for cash 20,000
January 4 Machinery Purchased from Vibhu 30,000
January 6 Rent paid in cash 10,000
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 January 8 Goods purchased on credit from Anil 25,000
January 10 Goods sold for cash 40,000
January 15 Goods sold on credit to Gurmeet 30,000
January 18 Salaries paid. 12,000
January 20 Cash withdrawn for personal use 5,000

8. Enter the following transactions in Journal

January 1 Sushil & Co. started business with cash 1,00,000
” 2 Paid into Bank 60000
” 4 Purchased Machinery and paid by cheque 30,000
” 6 Bought goods from Naresh 20,000
” 14 Paid salaries 5,000
” 15 Sold goods to Rajesh Kumar 15,000
” 17 Paid for Sundry Expenses 8,500
” 18 Cash deposited into Bank 20,000
” 19 Received Rent 6,000
” 22 Paid Naresh by cheque in full settlement of his A/c 19,750
” 24 Withdrawn cash for personal use 8,000
” 26 Salary paid in advance to Surjeet 2,500
” 28 Rajesh made the payment on A/c 10,000
” 30 Cash Sales for the month 16,500

9. Journalise the following transactions in the books of Shri Ganesh.

1. Shri Ganesh started his business with Cash 50,000
2. Purchased goods 5,000
3. Purchased goods for Cash 10,000
4. Purchased goods from Mr Sun for Cash 15,000
5. Sold goods 6,000
6. Sold goods for Cash 12,000
7. Sold goods to Mr Sky for Cash 18,000
8. Purchased goods from Mr Moon 10,000
9. Purchased goods from Mr Star on Credit 20,000
10. Sold goods to Mr Sea 12,500
11. Sold goods to Mr Ocean on Credit 25,000
12. Mr Sea returned goods 2,500
13. Returned goods to Mr Moon 2,000
14. Received from Mr Sea 9,900 Allowed him discount 100
15. Paid Mr Moon 7,880 Discount allowed by him 120
16. Withdrew for personal use 1,000
17. Withdrew goods for private use (Cost 500. Selling Price 600)
18. Paid Salary to Mr Sevakram an employee 500
19. Paid Rent to Mr Estate, landlord 500

10. The following are the transactions of Kumar Swami for the month of January.
Journalise these transactions. 2006
January l Capital paid into Bank 3,00,000
” 1 Bought Stationery for cash 400
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 ” 2 Bought Goods for cash 25,000
” 3 Bought Postage Stamps 8,00
” 5 Sold Goods for Cash 10,000
” 6 Bought Office Furniture from Mahendra. 40,000
” 11 Sold goods to Jacob 12,000
” 12 Received cheque from Jacob 12,000
” 14 Paid Mahendra by cheque 40,000
” 16 Sold goods to Ramesh 5,000
” 20 Bought from Seth 15,000
” 23 Bought Goods for cash from Narain 22,000
” 24 Sold Good to Prakash 17,000
” 26 Ramesh Paid on account 2,500
” 28 Paid Seth by cheque in full settlement 14,800
” 31 Paid Salaries 2,800
” 31 Rent paid to Sharma 2,000

11. Journalize the following transactions in the books of Gaurav, post them into ledger
June 1: Gaurav started business with ₹ 10,00,000 of which 25% amount was borrowed
from wife.
June 4: Purchased goods from Aniket worth ₹ 40,000 at 20% TD and 1/5th amount paid
in cash.
June 7: Cash purchases ₹ 25,000.
June 10: Sold goods to Vishakha ₹ 30,000 at 30% TD and received 30% amount in
cash.
June 12: Deposited cash into bank ₹ 20,000.
June 15: Uninsured goods destroyed by fire ₹ 5,500.
June 19: Received commission ₹ 3,500.
June 22: Paid to Aniket ₹ 25,500 in full settlement of A/c.
June 25: Cash stolen from cash box ₹ 1,000.
June 27: Received from Vishakha ₹ 14,500 and discount allowed ₹ 200.
June 30: Interest received ₹ 2,400 directly added in our bank account.

12. Journalize the following transactions in the books of M/s Kothari & Sons, post
them into ledger for April 2013:
Apr. 1: Commenced business with ₹ 40,000.
Apr. 4: Bought goods for cash ₹ 4,000
Apr. 7: Sold goods ₹ 700
Apr. 10: Bought goods from M/s Bhandari Bros. ₹ 3,000 at 10% trade discount.
Apr. 14: Purchased machinery of ₹ 5,000 from M/s Kirloskar Bros.
Apr. 16: Paid for transportation of machinery ₹ 500 & installation charges ₹
300 on it.
Apr. 20: Paid quarterly interest of 150 on borrowed amount.
Apr. 24: Supplied goods to M/s Kunal & Sons ₹ 3,500.
Apr. 27: Paid to M/s Bhandari Bros. ₹ 2600 in full settlement of account.
Apr. 28: M/s Kunal & Sons returned goods worth ₹ 300 & paid for ₹ 1,200 on
account.
Apr. 29: Received commission ₹ 250.
Apr. 30: Paid conveyance to manager ₹ 450

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13. Journalise the following transactions in the Journal of Mr T.
1) Started business with Cash 2,00,000, Goods 1,00,000, Furniture 50,000.
2) Opened Current Account with 1,00,000.
3) Placed an order with Ritik Roshan for the supply of goods of the list price of 1,00,000.
In this connection, we paid 9% of the list price as an advance by cheque.
4) Roshan supplied goods of the list price of 1,00,000 less 12% trade discount.
5) Purchased goods from Murali of the list price of 1,00,000 less 12% trade discount and
paid him by cheque under a cash discount of 5%.
6) Received an order from Shyam for supply of goods of the list price of 1,00,000 with
an advance of 10% of list price.
7) Supplied the above goods at 10% trade discount.
8) Goods costing 80,000 sold to Mr X at a profit of 20,000 less 10% trade discount and
received a cheque under 2% Cash discount.
9) Goods (Cost 3,000, Sale Price 4,000) taken away by the proprietor for his personal
use.
10) Shyam became insolvent and paid 80 paise in a rupee in full & final settlement
11) Paid Roshan 80% on account.
12) Goods (Cost 3000, Sale Price 4,000) stolen.
13) Paid Life Insurance Premium 1,000.
14) Cash embezzled by an employee 1,000.

14. Journalise the following transactions in the books of Bharat S,

1. Received 9,000 from Hari Krishan in full settlement of his account for 10,000.
2. Received 9,000 from Shyam on his account for 10,000.
3. Received a first and final dividend of 90 paise in the rupee from the Official Receiver of
Mr Rajah who owed us 10,000.
4. Paid 9,000 to Mohan in full settlement of his account for 10,000.
5. Paid 9,000 to Sohan on his account for 10,000.
6. Withdrawn for personal use: Goods (Sale Price 8,000, Cost 6,000), Cash 1,000
7. Goods costing 9,000 given as charity. (Sale Price 12,000)
8. Goods costing 3,000 distributed as free samples. (Sale Price 4,000)
9. Goods stolen in transit; (Sale Price 8,000, Cost 6,000)
10. Goods destroyed by fire (Sale Price 4,000, Cost 3,000)
11. Goods stolen by an employee (Sale Price 8,000, Cost 6,000), Cash embezzled by
an employee 1,000.
12. Goods used in making of Furniture (Sale Price 12,000, Cost 9,000)
13. Paid Rent of building 50,000 half of the building is used by the proprietor for
residential use.
14. Paid Fire Insurance of the above building 20,000.
15. Paid Life Insurance Premium 20,000.
16. Paid Income tax 50,000
17. Salary due to clerk 30,000.
18. Received commission 1,00,000
19. Purchased Second-hand Machinery from Jawahar for 30,000 against a cheque.

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20. Goods used in repairs of Machinery. (Sale Price 12,000, Cost 9,000)
21. Paid Installation Charges of Machinery 1,000.

15. Journalise the following transactions in the books of Mr. Roy 2013 April
1) He started business with a capital of – Plant ₹ 10,000, Bank ₹ 8,000, Stock ₹ 12,000
2) Bought furniture for resale ₹ 5,000, Bought furniture for Office decoration ₹ 3,000
3) Paid rent out of personal cash for ₹ 2,000
4) Sold furniture out of those for resale ₹ 6,000
5) Paid Salary to Mr. X for ₹ 1,200
6) Purchased goods from Mr. Mukherjee for cash ₹ 3,000
7) Sold goods to Mr. Sen on credit for ₹ 8,000
8) Mr. Sen returned goods valued ₹ 1,000
9) Received cash from Mr. Sen of ₹ 6,500 in full settlement
10) Bought goods from Mr. Bose on credit for ₹ 5,000
11) Returned goods to Mr. Bose of ₹ 500 and paid to Mr. Bose ₹ 4,000 in full settlement.

16. Journalise the following transactions:

1. Commenced business with cash 2,50,000

2. Purchased furniture for cash 20,000
3. Cash purchases 1,45,000
4. Deposited with bank 30,000
5. Purchase from Patil 40,000
6. Sold to Natarajan for cash 14,300
7. Stationery purchased 1,050
8. Purchase from Salil 26,000
9. Sold to Mukherjee 8,080
10. Rent paid 24,000
11. Drawings by the proprietor for household expenses 4,000
12. Goods taken out by the proprietor for domestic use 500
13. Cash withdrawn from Bank 25,000
14. Sold to Mathur on credit 9,850
15. Purchases made, payment through cheque 2,900
16. Cash received from Patil on account 10,000
17. Cash paid to Salil after deduction of discount ₹1300 24,700
18. Cash received from Mathur in full settlement of his account 9,750
19. Mukherjee becomes insolvent. A dividend of 50 paise in a rupee is received 4,040
20. Purchase of a Scooter for cash 30,000
21. Sold goods to Aggarwal 8,640
22. Sales to Nayak 3,780
23. Cartage paid in cash 150
24. Repairs to Scooter 170
25. Payment of cash for petrol 550
26. Purchases of goods for cash 12,000
27. Purchases of Office Equipment for cash 12,100
28. Repairs bill paid in cash 170
29. Aggarwal returns goods 400
30. Salary paid 1,800
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31. Bank charges for the month 50
32. Salil agrees to take some defective goods purchased
from him and immediately refunds the money 700

17. Give Journal entries for the following Transactions

July 1: Invested ₹50,000 in cash to start a new business.
July 3: Purchased office furniture for ₹5,000 in cash.
July 5: Sold goods worth ₹10,000 for cash.
July 7: Paid ₹3,000 in cash for rent.
July 10: Received ₹8,000 in cash from a customer as payment for a previous credit
sale.
July 12: Bought inventory for ₹15,000 on credit from Supplier A.
July 15: Paid ₹2,500 in cash to Supplier A as a partial payment for the inventory
purchased on credit.
July 18: Received ₹500 in cash as interest income from a bank deposit.
July 20: Paid ₹1,200 in cash for electricity expenses.
July 22: Sold goods worth ₹12,000 on credit to Customer B.
July 25: Received ₹4,000 in cash from Customer B as a partial payment for the
credit purchase.
July 27: Purchased a delivery van for ₹300,000 by making a down payment of
₹100,000 in cash and the rest on credit.
July 29: Paid ₹1,500 in cash for office maintenance services.
August 2: Sold goods worth ₹8,500 for cash.
August 5: Paid ₹7,500 in cash to Supplier A, settling the remaining amount due
for the inventory purchased on credit.
August 8: Received ₹6,000 in cash from Customer B, completing the payment for the
credit purchase.
August 10: Paid ₹1,000 in cash for advertisement expenses.
August 12: Purchased new office furniture for ₹20,000 in cash.
August 15: Sold goods worth ₹15,000 on credit to Customer C.
August 18: Received ₹9,000 in cash as repayment of a loan given to an
employee.
August 20: Paid ₹2,500 in cash for telephone and internet expenses.
August 23: Received ₹3,500 in cash from a customer as an advance payment for an
upcoming order.
August 25: Paid ₹6,000 in cash for salaries and wages to employees.
August 30: Received ₹2,000 in cash as interest income from a short-term
investment.
September 1: Sold goods worth ₹18,000 for cash.
September 5: Paid ₹5,000 in cash for repair and maintenance of equipment.
September 10: Paid ₹10,000 in cash for rent.
September 15: Received ₹5,500 in cash from Customer C, settling the credit
sale.
September 18: Purchased computer software for ₹7,500 in cash.
September 20: Paid ₹3,000 in cash for insurance premiums.
September 22: Received ₹4,500 in cash from a customer as a refund for returned
goods.
September 25: Paid ₹2,200 in cash for office stationery.
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 September 28: Sold goods worth ₹14,000 on credit to Customer D.
September 30: Paid ₹1,800 in cash for miscellaneous expenses.
October 2: Received ₹10,000 in cash as a capital contribution owner.
October 5: Paid ₹3,500 in cash for advertising expenses.
October 8: Sold goods worth ₹20,000 on credit to Customer E.
October 10: Paid ₹6,000 in cash for insurance policy.
October 12: Received ₹8,000 in cash from a customer as a down payment for an order
to be delivered next month.
October 15: Purchased new machinery for ₹100,000 by making a partial
payment of ₹30,000 in cash and the rest on credit.
October 18: Paid ₹4,500 in cash for repair and maintenance of the machinery.
October 20: Received ₹5,000 in cash from a customer who had previously purchased
goods on credit.
October 25: Paid ₹2,500 in cash for office expenses.
October 28: Sold goods worth ₹22,000 on credit to Customer F.
November 1: Purchased raw materials for ₹50,000 in cash.
November 5: Paid ₹7,000 in cash for repair and maintenance of the delivery
van.

18. Journalise the following transactions:

2021 Particulars ₹ 2021 Particulars ₹

Jan 3 Received cash from 15,000 Jan. Receive from Hari 1,100
Ram 17
4 Purchased goods for 2,500 20 Bought Furniture 2,200
cash from Ram
11 Sold goods to Hari 3,200 27 Paid rent 480
13 Paid Ramesh 1,400 30 Paid salary 1,100

19. Journalise the following transactions

2021 Particulars ₹ 2021 Particulars ₹
Jan 1 Started business 50,000 Jan.1 Paid to M/s Singh & 21,000
with cash 5 Co.

2 Paid into bank 36,000 Discount allowed by 1,000

them
3 Bought goods from 22,000 25 Sold goods to M/s 5,000
M/s Singh & Co. on Ray & Co.
credit
4 Purchased furniture 4,200 26 Received Cheque 4,560
from M/s Sharda &
co. in full settlement
of amount due by
them

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 Purchased adding 8,400 31 Paid for: Electric 100
machine & Charges
typewriter
(Payment made by
cheque)
6 Paid for postage 215 Paid salary 1,500
8 Sold goods for cash 5,400 Paid rent by cheque 2,000

9 Sold goods on 4,600 Drew for private use 3,500

credit to M/s
Sharda & co.

20. Journalise the following transactions in the Books of Rama & Co.
2021 Particulars ₹ 2021 Particular ₹
s
Jan 1 Business started with 50,000 Jan1 Cash paid to Z in full settlement 8,800
5 of
his account
Cash deposited in Bank 20,000 16 Cash received from Y in full 24,500
settlement of his account
Goods purchased 10,000 20 Goods sold to B 6,000
2 Furniture purchased 3,000 Goods purchased 9,000
for cash
Office Stationery 2,000 25 Cash withdrawn from bank 5,000
purchased for cash
3 Goods purchased from 20,000 Cash paid to X 4,000
X Allowed us a discount 100
5 Goods sold to Y 25,000 28
Paid rent 1,000 Cash received from B 3,000
8 Paid for repairs 800 30 Allowed a discount 200
9 Paid for advertisement 1,500 31 Cash deposited in bank 4,000
Cash paid to X 10,000 Cash paid for electricity 400
discount received 50 Cash paid for Salaries 1,000
10 Good purchased from Z 9,000 Wages paid 500
Goods purchased in 6,000 Rent paid 400
cash from A

Ledger

21. Journalize the following transactions in the books of M/s Kothari & Sons, post
them into ledger and prepare trial balance for April 2021:
a) Commenced business with ₹ 40,000.
b) Bought goods for cash ₹ 4,000
c) Sold goods ₹ 700
d) Bought goods from M/s Bhandari Bros. ₹ 3,000 at 10% trade discount.
e) Purchased machinery of ₹ 5,000 from M/s Kirloskar Bros.

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f) Paid for transportation of machinery ₹ 500 & installation charges ₹ 300 on it.
g) Paid interest 150.
h) Supplied goods to M/s Kunal & Sons ₹ 3,500.
i) Paid to M/s Bhandari Bros. ₹ 2,600 in full settlement of account.
j) M/s Kunal & Sons returned goods worth ₹ 300 & paid for ₹ 1,200 on account.
k) Received commission ₹ 250.
22. Journalize the following transactions, post them in the Ledger and balance the
accounts on 31st December
1. X started business with a capital of ₹ 20,000
2. He purchased goods from Y on credit ₹ 4,000
3. He paid cash to Y ₹ 2,000
4. He sold goods to Z ₹ 4,000
5. He received cash from Z ₹ 6,000
6. He further purchased goods from Y ₹ 4,000
7. He paid cash to Y ₹ 2,000
8. He further sold goods to Z ₹ 4,000
9. He received cash form Z ₹ 2,000

23. Journalize the following transactions, post them into ledger and prepare trial
balance.
1) Started with cash 2,00,000 21) Salary paid 3500
2) Deposited cash in to bank 75,000 22) Rent paid 4500
23) Cheque issued to Ram 9,800 and
3) Purchased machinery for 30,000
discount received from him 200
4) Transportation charges of machinery 24) Cheque received from Shyam 15,200
5,000 and discount allowed to him 800
25) Furniture purchased and issued cheque
5) Installation charges of Machinery 3,000
15000
26) Wages paid for installation of furniture
6) Purchased goods 30,000
1500
7) Purchased goods from Anil 50,000 27) Goods returned to Ram 2000
8) Purchased goods for cash 20,000 28) Goods returned from Shyam 2400
9) Goods sold for cash 60,000 29) Goods withdrawn by owner 4000
10) Goods sold to Shyam 25000 @ 10%
30) Commission received 8000
trade discount
11) Goods purchased from Ram 30000
31) Cash withdrawn from bank 3500
@15% trade discount
12) Salary paid 3000 32) Ram deposited 6000 in our bank account
33) Goods sold to Shyam 30,000 @ 20% TD
13) Drawings by owner 5000
and received 50 % amount in cash
34) Additional capital contributed by owner
14) Cash sales 12,000
100000
35) Cash received from Shyam 10000 and
15) Rent paid 8,000
discount allowed 500
36) Cash paid to Ram 15000 and discount
16) Cash paid to Ram 25,000
received 500

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 17) Cheque received from Shyam 30,000 37) Wages paid 9000
18) Stationery Purchased for 4500 38) Cash withdrawn by owner 25000
19) Good returned by Shyam 3000 39) Rant paid 4000
20) Goods returned to ram 2500 40) Salary paid 3000

24. From the following transaction prepare Anil A/c, Mohan A/c, Cash A/c and Bank
A/c
1. Cash in hand 25,000
2. Cash at Bank 30,000
3. Balance due from Anil 35,000
4. Balance Due to Mohan 50,000
5. Goods purchased from Mohan 30,000 at 30% TD
6. Goods sold to Anil 50,000 at 20 % TD
7. Cash received from Anil 35000
8. Cheque issued to Mohan 45000
9. Goods purchased from Mohan 25000 which is sold to Anil at a profit of 5000
10. Goods returned to Mohan 4000
11. Goods returned from Anil 5000
12. Anil deposited to Bank account 5000
13. Cash received from Anil 5600 and discount allowed to him 400
14. Cheque received from Anil 8600 and Discount allowed to him 400
15. Cash paid to Mohan 8200 and discount allowed by him 900
16. Cheque issued to Mohan 3400 and received discount of 600
17. Good sold to Mohan for cash 6000
18. Goods sold to Anil 5000 and received cheque
19. Goods purchased from Mohan for cash 8000
20. Goods purchased from Anil and issued cheque 10000
21. Cash withdrawn from bank 8000
22. Cash deposited in to bank 3000
23. Stationery purchased for 1800
24. Discount allowed to Anil 3200
25. Discount received from Mohan 800

25. Prepare the Ledger account of Mr. Solkar from the following:
2021 Debit balance to his account ₹ 2,000.
March 1
3 Sold goods on credit to him worth ₹ 10,800
8 Received cash from him ₹12,600 and allowed discount of ₹ 200.
10 Solkar bought goods on credit ₹ 3,000.
15 Received cash from him ₹ 2,900 and allowed him discount ₹ 100
20 Purchased goods on credit from Solkar worth ₹ 2,000
25 Paid cash to Solkar ₹ 1,000

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 28 Returned goods to him ₹ 200.
31 Paid cash to him in full settlement of his account ₹ 780.

26. Prepare Ledger Accounts for the following transactions

Debit Balance on January 1, 2021:
Cash in Hand ₹ 8,000.
Cash at Bank ₹ 25,000,
Building ₹ 10,000.
Trade receivables:
Vijay ₹ 2,000
Madhu ₹ 2,000
Credit Balance on January 1, 2021:
Trade Payables:
Anand ₹ 5,000,
Capital ₹ 55,000
Following were further transactions in the month of January, 2021:
Jan. 1 Purchased goods worth ₹ 5,000 for cash less 20% trade discount and 5% cash
discount.
Jan. 4 Received ₹ 1,980 from Vijay and allowed him ₹ 20 as discount
Jan. 8 Purchased plant from Mukesh for ₹ 5,000 and paid ₹ 100 as cartage for
bringing the plant to the factory and another ₹ 200 as installation charges.
Jan. 12 Sold goods to Rahim on credit ₹ 600
Jan. 15 Rahim became insolvent and could pay only 50 paise in a rupee
Jan. 18 Sold goods to Ram for cash ₹ 1,000.

Trial balance

Heads of Accounts Side of Trial Balance Reasons

Cash in hand
Cash at Bank
Cash at Bank (overdrawn)
Bank Overdraft
Capital
Opening stock
Wages
Purchase
Carriage Inwards
Freight
Royalty on production
Gas, Water, Fuel
Motive Power
Import Duty
Sales
Discount Allowed

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Discount Received
Bad Debts
Commission Received
Salaries
Commission paid
Rent, rates, and taxes
Repairs and maintenance
Insurance
Carriage outward
Trade charges
Royalty on sales
Interest paid
Interest received
Advertisement
Sundry expenses
Miscellaneous expenses
Miscellaneous receipts
Income tax
L.I.C. Premium
Office expenses
Export duty
Allowances
Rebates
Sales tax
Horses and Carts
Watch Dag Squad
Loan Secured
Loans Advanced
Building
Land
Plant
Machinery
Furniture & fittings
Motor vehicles
Computer
Office equipment
Goodwill
Patent rights
Copyrights
Trade marks
Investments
Shares & Securities
Sundry debtors
Sundry creditors
Bill Receivable
Bills Payable
Lighting and Heating
Drawings
Depreciation
Returns Inwards
13
 Returns Outwards
Freehold Property
Premises
Leasehold Property
Loose Tools
Petty Cash
Loan on Mortgage
Bad Debts Recovered
Books
Newspaper and Magazine
Postage and Telegram
Travelling & Conveyance

27. Prepare a Trial Balance from the following information:

Particulars (₹)
Cash A/c 9,46,400
Capital A/c 7,50,000
Loan A/c 2,50,000
Purchases A/c 51,500
Sales A/c 21,000
Bank A/c 22,400
Loss by Fire A/c 5,500
Commission Received A/c 3.500
Discount Allowed A/c 100
Loss by Theft A/c 1,000
Interest Received A/c 2,400

28. Prepare a Trial Balance from the following information

Particulars Amount
Cash A/c 34,150
Capital A/c 40,000
Purchases A/c 6700
Sales A/c 4,200
Machinery A/c 5,800
Creditors A/c 5,000
Interest Allowed A/c 150
Debtors A/c 2,000
Discount Received A/c 100
Return Inwards A/c 300
Commission Received A/c 250
Conveyance A/c 450

14
29. From the following ledger balances, prepare a trial balance of Anuradha Traders
as on 31st March, 2020:

Account Head ₹
Capital 1,00,000
Sales 1,66,000
Purchases 1,50,000
Sales return 1,000
Discount allowed 2,000
Expenses 10,000
Trade receivables 75,000
Trade payables 25,000
Investments 15,000
Cash at bank and in hand 37,000
Interest received on 1,500
investments
Insurance paid 2,500

30. From the following information, draw up a Trial Balance in the books of Shri M
as on 31st March,2021:

Particulars Amount (₹) Particulars Amount (₹)

Capital 1,40,000 Purchases 36,000
Discount Allowed 1,200 Carriage Inward 8,700
Carriage Outwards 2,300 Sales 60,000
Return Inward 300 Return Outwards 700
Rent and Taxes 1,200 Plant and 80,700
machinery
Stock on 1st April 15,500 Sundry Debtors 20,200
2020
Sundry Creditors 12,000 Investments 3,600
Commission 1,800 Cash in Hand 100
Received
Cash at bank 10,100 Motor Cycle 34,600
Stock on 31st March, 20,500
2021
15
31. One of your clients, Mr. Singhania has asked you to finalise his accounts for the year
ended 31st March, 2020. 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. Cr.
Balance 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
Trade payables 528
Trade expenses 700
Cash at bank 226
Bills payable 100
Salaries and wages 600
Inventories (1.4.2019) 264
Rent and rates 463
Sales return 98
5,454 5,454
The closing inventory on 31st March, 2020 was valued at ₹ 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.

32. An inexperienced book keeper has drawn up a Trial balance for the year
ended 31st March, 2019.
Particulars Debit (₹) Credit
Provision for Doubtful Debts 250 -(₹)
Cash Credit Account 1,654 -
Capital - 4,591
Trade payables - 1,637
Due from customers 2,983 -
Discount Received 252 -
Discount Allowed - 733

16
 Drawings 1,200 -
Office Furniture 2,155 -
Carriage Inward - 829
Purchases 10,923 -
Returns Inward - 330
Rent & Rates 314 -
Salaries 2,520 -
Sales - 16,882
Inventory 2,418 -
Provision for Depreciation on Furniture 364 -
Total 25,033 25,002
Draw up a corrected Trial Balance by debiting or crediting any residual
errors to a suspense account.

33. One of your client Mr X asked you to finalize his account for the year ended 31st
march 2022 as abasis for audit Mr x furnished you with the following statement
Dr Cr
X Capital 4,668
X Drawings 1,692
Leasehold premises 2,250
Sales 8,250
Due from customers 1,590
Purchases 3,777
Purchase return 792
Loan from bank 768
Trade expense 2,100
Trade payable 1,584
Bills payable 300
Salaries and Wages 1,800
Cash at Bank 678
Opening inventory 792
Rent and Rates 1,389
Sales return 294
16,362 16,362

The closing inventory was 1,722 Mr X claims that he has recorded every
transaction correctly as the trial balance is tallied. Check the accuracy of the
above trial balance and give reasons for the errors, if any.

17
 Subsidiary books

34. From the following information prepare a cash book

January 1 Opening cash balance was ₹ 3,800 and bank balance was ₹ 27,500
January 4 Wages paid in cash ₹ 1,500
January 5 received cheque of ₹ 19,800 from KBK enterprises after allowing discount
of ₹ 200
January 7 Paid to consultancy charges by cheque for ₹ 7,500
January 10 Cash of ₹ 2,500 withdrawn from bank
January 12 Received a cheque for ₹ 4,500 in full settlement of the account
of Mr. X at a discount of 10% and deposited the same into the Bank.
January 15 X’s cheque returned dishonoured by the Bank

35. From the following transactions, prepare the Purchases Returns Book of Alpha
& Co., a saree dealer and post them to ledger :
Date Debit Particulars
Note No.
04.01.2020 101 Returned to Goyal Mills, Surat – 5 polyester sarees
@ ₹ 100.
09.01.2020 Garg Mills, Kota – accepted the return of sarees
(which were purchased for cash) – 5 Kota sarees @
₹ 40.
16.01.2020 102 Returned to Mittal Mills, Bangalore –5 silk sarees @
₹ 260.
30.01.2020 Returned one typewriter (being defective) @
₹ 3,500 to B & Co.

36. Enter the following transactions in Sales Book of Gurgaon Engineers, Gurgaon
for January 2022:
2022
January
5 Sold to Praneet Electricals 10 pieces of microwaves@ ₹ 8,500/- each
less trade discount 15%
10 Sold to Ajanta plaza 8 pieces of Mixer grinders@ ₹ 12,500/- each less
trade discount 10%.
20 Sold to Naveen traders, 15 pieces of juicers@ ₹ 5,500/- each less trade
discount 5%

18
37. Enter the following transactions in the subsidiary books of Soundarya Saree
Shop.
2021 Purchased from Pathi Silk Kendra, 100 Silk sarees at ₹ 250 each.
Aug 1
5 Purchased from NSR and company, 200 Kanchi Silk sarees at ₹ 1,000 each
7 Sold to Kumar on account, 50 printed sarees at ₹ 300 and 100 Kanchi sarees at ₹ 1,000
each
8 Claimed for damages from Pathi Silk Kendra ₹ 500
9 Returned damaged goods to NSR and Co. 5 Kanchi sarees
12 Purchased from Sudharshan Silks 150 Mysore Silk at ₹ 250 each, 100 Handloom sarees
at
₹ 750 each, less trde discount at 10%
16 Sold to Kala on account 20 printed sarees at ₹ 300 each, 25 Kanchi sarees at ₹ 1,300
each, 20 Mysore Silk sarees at ₹ 300 each, less trade discount at 5%.
20 Sold to Kusum sarees, 40 Handloom sarees at ₹ 1,000 each
21 Kumar returned, 10 printed sarees and 20 Kanchi sarees
25 Returned to Sudharshan’s Silk, 25 Mysore Silk
27 Returned from Kusum sariees, 10 handloom sarees
30 Purchased from Nandi Silk, 400 Nandi brand sarees at ₹ 500 each

38. Enter the following transactions in Simple Cash Book and post them into ledger:
2021 Balance of cash in hand ₹ 15,000
July 1
8 Purchased goods for cash from X for ₹ 3,200
15 Sold goods for cash ₹ 4,800
20 Received commission ₹ 650
Paid commission ₹ 550
22
Paid salary to the office clerk ₹ 1,000 and office rent ₹ 600
31

39. Enter the following transactions in a two (Cash & discount) Column and post
them into Ledger Accounts
202 Particulars ₹ 2021 Particulars ₹
1
Dec. Commenced business with 50,000 Dec.16 Paid into bank 10,000
1 cash
2 Brought goods for cash 28,000 18 Cash sales 2,500
5 Received cash from Arun 2,000 20 Purchased stationery for 250
cash
7 Paid cash to Sanjay 2900 23 Paid suresh cash 3900
Discount allowed by him 100 Discount allowed 100
10 Paid wages 3000 26 Received from Rajesh 1,900
14 Received from Rajesh cash 950 Allowed him discount 100
Allowed him discount 50 30 Paid salaries 2,000

19
40. Prepare a Three Column Cash Book from following transactions and bring down
the balance for the start of next month.
2022 Particulars ₹ 2022 Particulars ₹
Aprl.1 Cash in hand 2,500 Aprl.1 Paid into Bank 400
9
1 Cash at bank 10,000 23 Withdrew from Bank for 600
private exp.
2 Paid into Bank 1,000 24 Received cheque from Patel 1,430
5 Bought furniture and issued 2,000 Allowed him discount 20
cheque
8 Purchased goods for cash 500 26 Deposited Patel’s cheque
into bank
12 Received from Mohinder 980 28 Withdrew cash from Bank for 2,000
the office use
14 Cash sales 4,000 30 Paid rent by cheque 800
16 Paid to Amarnath by cheque 1,450
Discount allowed 50

41. Prepare a Three Column Cash Book from following transactions having cash,
bank and discount columns:
2022 Balance of cash in hand ₹ 400, overdraft at Bank ₹ 5,000
Aprl.1
4 Invested further capital ₹ 10,000 out of which ₹ 6,000 deposited bank
5 Sold goods for cash ₹ 8,000
6 Collected from Sridhar a debtor of last year ₹ 8,000 discount allowed ₹
200
7 Paid Ramvilas out creditor, ₹ 2,500, discount allowed by him ₹ 65
13 Commission paid to Robert our agent ₹ 530
14 Office furniture purchased from Keshar ₹ 200
17 Draw cheque for personal use ₹ 700
18 Collection from Atal ₹ 4,000; deposited in the bank on 19 th
20 Draw from bank for office use ₹ 500
21 Draw cheque for petty cash ₹ 150
29 Drew from the bank and paid salary of office staff ₹ 1,500
30 Deposited cash in the bank ₹ 10,000

20
42. Prepare a Triple Column Cash Book from the following transactions and bring
down the balance for the start of next month:
2019 ₹

Nov. 1 Cash in hand 3,000

1 Cash at bank 12,000
2 Paid into bank 1,000
5 Bought furniture and issued cheque 1,500
8 Purchased goods for cash 500
12 Received cash from Mohan 980
Discount allowed to him 20
14 Cash sales 5,000
16 Paid to Amar by cheque 1,450
Discount received 50
19 Paid into Bank 500
23 Withdrawn from Bank for Private expenses 600
24 Received cheque from Parul 1,430
Allowed him discount 20
26 Deposited Parul’s cheque into Bank
28 Withdrew cash from Bank for Office use 2,000
30 Paid rent by cheque 800

43. Prepare a Triple Column Cash Book from the following transactions and bring
down the balance for the start of next month:
2020 ₹

Sep. 1 Cash in hand 6,000

1 Cash at bank 24,000
2 Paid into bank 2,000
5 Bought furniture and issued cheque 3,000
8 Purchased goods for cash 1,000
12 Received cash from Mohan 1,960
Discount allowed to him 40
14 Cash sales 10,000
16 Paid to Amar by cheque 2,900
Discount received 100
19 Paid into Bank 1,000
23 Withdrawn from Bank for Private expenses 1,200
24 Received cheque from Parul 2,860
Allowed him discount 40
26 Deposited Parul’s cheque into Bank
28 Withdrew cash from Bank for Office use 4,000
30 Paid rent by cheque 1,600

21
44. Enter the following transactions in Cash Book with Discount and Bank Columns.
Cheques are first treated as cash receipt.
2020 ₹
Jan.1 Chandrika commences business with Cash 20,000
“3 He paid into Current A/c 19,000
“4 He received cheque from Kirti & Co. on account 600
“7 He pays in bank Kirty & Co.’s cheque 600
“ 10 He pays Rattan & Co. by cheque and is allowed discount ₹ 20 330
“ 12 Tripathi & Co. pays into his Bank A/c 475
“ 15 He receives cheque from Warshi and allows him discount ₹ 35 450
“ 20 He receives cash ₹ 75 and cheque ₹ 100 for cash sale
“ 25 He pays into Bank, including cheques received on 15th and 20th 1,000
“ 27 He pays for cash purchase 275
“ 30 He pays sundry expenses in cash 50

22
Rectification of errors
1. How would you rectify the following errors in the book of Rama & Co.?
a) The total to the Purchases Book has been under cast by ₹100.
b) The Returns Inward Book has been under cast by 50.
c) A sum of 250 written off as depreciation on Machinery has not been debited to
Depreciation Account.
d) A payment of ₹75 for salaries (to Mohan) has been posted twice to Salaries
Account.
e) The total of Bills Receivable Book ₹ 1,500 has been posted to the credit of Bills
Receivable Account.
f) An amount of ₹151 for a credit sale to Hari, although correctly entered in the Sales
Book, has been posted as ₹115.
g) Discount allowed to Satish ₹ 25 has not been entered in the Discount Column of
the Cash Book. the amount has been posted correctly to the credit of his personal
account.

2. The following errors were found in the book of Ram Prasad & Sons. Give the
necessary entries to correct them.
a) 500 paid for furniture purchased has been charged to ordinary Purchases Account.
b) Repairs made were debited to Building Account for₹ 50.
c) An amount of ₹100 withdrawn by the proprietor for his personal use has been
debited to Trade Expenses Account.
d) ₹100 paid for rent debited to Landlord’s Account.
e) Salary ₹125 paid to a clerk due to him has been debited to his personal account.
f) ₹100 received from Shah &Co. has been wrongly entered as from Shaw &Co.
g) ₹ 700 paid in cash for a typewriter was charged to Office Expenses Account.

3. Give journal entries to rectify the following:

i. A purchase of goods from Ram amounting to ₹150 has been wrongly entered
through the Sales Book.
ii. A Credit sale of goods amounting ₹120 to Ramesh has been wrongly passed
through the Purchase Book.
iii. On 31st December, 2016 goods of the value of ₹300 were returned by Hari Saran
and were taken inventory on the same date but no entry was passed in the books.
iv. An amount of ₹ 200 due from Mahesh Chand, which had been written off as a
Bad Debt in a previous year, was unexpectedly recovered, and had been posted
to the personal account of Mahesh Chand.
v. A Cheque for ₹100 received from Man Mohan was dishonoured and had been
posted to the debit of Sales Returns Account

4. Correct the following errors found in the books of Mr. Dutt. The Trial Balance was
out by ₹ 493 excess credit. The difference thus has been posted to a Suspense
Account.
a. An amount of ₹100 was received from D. Das on 31st December, 2015 but has
been omitted to enter in the Cash Book.
b. The total of Returns Inward Book for December has been cast₹100 short.
23
 c. The purchase of an office table costing ₹ 300 has been passed through the
Purchases Day Book.
d. ₹ 375 paid for Wages to workmen for making show-cases had been charged to
“Wages Account”.
e. A purchase of ₹67 had been posted to the trade payables’ account as ₹60.
f. A cheque for₹200 received from P.C. Joshi had been dishonoured and was passed
to the debit of “Allowances
g. ₹ 1,000 paid for the purchase of a motor cycle for Mr. Dutt had been charged to
“Miscellaneous Expenses Account”.
h. Goods amounting to ₹100 had been returned by customer and were taken in to
inventory, but no entry in respect thereof, was made into the books.
i. A sale of ₹ 200 to Singh & Co. was wrongly credited to their account. Entry was
made correctly made in sales book.

5. The following errors, affecting the account for the year 2015 were detected in the
books of Jain Brothers, Delhi:
(i) Sale of old Furniture ₹150 treated as sale of goods.
(ii) Receipt of ₹500 from Ram Mohan credited to Shyam Sunder.
(iii) Goods worth ₹100 brought from Mohan Narain have remained unrecorded so far.
(iv) A return of ₹120 from Mukesh posted to his debit.
(v) A returnof₹90 to Shyam Sunder postedas₹9 in his account.
(vi) Rent of proprietor’s residence, ₹600 debited to rent A/c.
(vii) Apaymentof₹215toMohammadSadiqpostedtohis creditas₹125.
(viii) Sales Book added ₹900 short.
(ix) The total of Bills Receivable Book ₹ 1,500 left un posted
You are required to pass the necessary rectifying entries and show how the trial
balance would be affected by the errors

6. Correct the following errors (i) without opening a Suspense Account and (ii) with
opening a Suspense Account:
a. The sales book has been totaled ₹ 2,100 short.
b. Goods worth ₹ 1,800 returned by Gaurav & Co. have not been recorded anywhere.
c. Goods purchased ₹ 2,250 have been posted to the debit of the supplier Sen
Brothers.
d. Furniture purchased from Mary Associates, ₹ 15,000 has been entered in the
purchase Daybook.
e. Discount received from Black and White ₹ 1,200 has not been entered in the books.
f. Discount allowed to Radhe Mohan & Co. ₹ 180 has not been entered in the
Discount Column of the Cashbook. The account of Radhe Mohan & Co. has,
however, been correctly posted.

7. Write out the Journal Entries to rectify the following errors, using a Suspense Account.
a. Goods of the value of ₹100 returned by Mr. Sharma were entered in the Sales Day
Book and posted therefrom to the credit of his account;
b. An amount of ₹150 entered in the Sales Returns Book, has been posted to the debit
of Mr. Philip, who returned the goods;

24
 c. A sale of ₹ 200 made to Mr. Ghanshyam was correctly entered in the Sales Day
Book but wrongly posted to the debit of Mr. Radheshyam as ₹ 20;
d. Bad Debts aggregating ₹450 were written off during the year in the Sales ledger
but were not adjusted in the General Ledger; and
e. The total of “Discount Allowed” column in the Cash Book for the month of
September, 2015 amounting to 250 was not posted.

8. Pass journal entries to Rectify the following errors:

1) A credit sale of goods of 423 to Krishan omitted to be recorded.
2) A credit sale of goods of 423 to Krishan entered as 432.
3) A credit sale of goods of 423 to Krishan entered as sale to Kishan.
4) A credit sale of goods of 423 to Krishan entered as sale to Kishan 432.
5) A credit sale of goods of 423 to Krishan passed through the Purchases Book.
6) A credit sale of goods of 423 to Krishan entered in Purchases Book as 32.
7) A credit sale of goods of 423 to Krishan entered as purchase from Kishan.
8) A credit sale of goods of 423 to Krishan entered as purchase from Kishan
432
9) Sales Book overcast by 9.
10) Total of Sales Book 423 on page 5 is brought forward on page 6 as 432.
11) Total of Sales Book 423 omitted to be posted.
12) A credit sale of goods of 423 to Krishan omitted to be posted.
13) A credit sale of goods of 423 to Krishan posted as 432.
14) A credit sale of goods of 423 to Krishan credited to his account.
15) A credit sale of goods of 423 to Krishan credited to his account as 432.
16) A credit sale of goods of 423 to Krishan posted to the debit of Kishan.
17) A credit sale of goods of 423 to Krishan posted to be debit of Kishan as 432.
18) A credit sale of goods of 423 to Krishan posted to the credit of Kishan.
19) A credit sale of goods of 423 to Krishan posted to the credit of Kishan as
432.
20) A credit sale of an old machine of 423 to Krishan recorded as sale of goods.
21) A credit sale of goods of 423 to Krishan passed through the purchases book
and posted therefrom to the debit of Krishan.
22) A credit sale of goods of 423 to Krishan entered in the purchases book as
432 and posted therefrom to the credit of Kishan as 423.
23) Goods (Cost 423. Sale Price 432) taken by Ganesh, the proprietor for his
personal use recorded in the sales book.
24) Goods (Cost 423, Sale Price 432) given away as free samples to Mahesh, a
customer recorded in the sales book.

9. The following mistakes were located in the books of a concern after its books were
closed and a Suspense Account was opened in order to get the Trial Balance agreed:
(i) Sales Day Book was overcast by ₹ 1,000.
(ii) A sale of ₹ 5,000 to X was wrongly debited to the Account of Y.
(iii) General expenses ₹ 180 was posted in the General Ledger as ₹ 810.
(iv) A Bill Receivable for ₹ 1,550 was passed through Bills Payable Book. The Bill
was given by P.
25
 (v) Legal Expenses ₹ 1,190 paid to Mrs. Neetu was debited to her personal account.
(vi) Cash received from Ram was debited to Shyam ₹ 1,500.
(vii) While carrying forward the total of one page of the Purchases Book to the next,
the amount of ₹ 1,235 was written as ₹ 1,325.
Find out the nature and amount of the Suspense Account and Pass
entries (including narration) for the rectification of the above errors in
the subsequent year’s books

10. Give journal entries (with narrations) to rectify the following errors located in the
books of a Trader after preparing the Trial Balance:
i. An amount of ₹ 4,500 received on account of Interest was credited to Commission
account.
ii. A sale of ₹ 2,760 was posted from Sales Book to the Debit of M/s Sobhag Traders
at ₹ 2,670
iii. ₹ 35,000 paid for purchase of Air conditioner for the personal use of proprietor
debited to Machinery A/c.
iv. Goods returned by customer for ₹ 5,000. The same have been taken into stock but
no entry passed in the books of accounts.
11. M/s. Applied Laboratories were unable to agree the Trial Balance as on 31st March, 2020
and have raised a suspense account for the difference. Next year the following errors
were discovered:
(i) Repairs made during the year were wrongly debited to the building A/c - ₹ 12,500.
(ii) The addition of the 'Freight' column in the purchase journal was short by ₹ 1,500.
(iii) Goods to the value of ₹ 1,050 returned by a customer, Rani & Co., had been posted
to the debit of Rani & Co. and also to sales returns.
(iv) Sundry items of furniture sold for ₹ 30,000 had been entered in the sales book, the
total of which had been posted to sales account.
(v) A bill of exchange (received from Raja & Co.) for ₹ 20,000 had been returned by
the bank as. dishonoured and had been credited to the bank and debited to bills
receivable account.
You are required to pass journal entries to rectify the above mistakes

12. Mr. Joshi's trial balance as on 31st March, 2020 did not agree. The difference was put
to a Suspense Account. During the next trading period, the following errors were
discovered:
(i) The total of the Purchases Book of one page, ₹ 5,615 was carried forward to
the next page as ₹ 6,551.
(ii) A sale of ₹ 281 was entered in the Sales Book as ₹ 821 and posted to the credit
of the customer.
(iii) A return to creditor, ₹ 295 was entered in the Returns Inward Book; however,
the creditor's account was correctly posted.
(iv) Cash received from Senu, ₹ 895 was posted to debit of Sethu.
(v) Goods worth ₹ 1,400 were dispatched to a customer before the close of the
year but no invoice was made out.
26
 (vi) Goods worth ₹ 1,600 were sent on sale or return basis to a customer and entered
in the Sales Book at the close of the year, the customer still had the option to
return the goods. The gross profit margin was 20% on Sale.
(vii) ₹ 600 due from Mr. Q was omitted to be taken ·to the trial balance.
(viii) Sale of goods to Mr. R for ₹ 3,000 was omitted to be recorded.
You are required to give journal entries to rectify the errors in a way so as
to show the current year's profit or loss correctly.

13. Pass necessary journal entries to rectify the following errors:

a) An amount of ₹ 200 withdrawn by owner for personal use was debited to trade
expenses.
b) Purchase of goods of ₹ 300 from Nathan was wrongly entered in sales book.
c) A credit sale of ₹ 100 to Santhanam was wrongly passed through purchase book.
d) 150 received from Malhotra was credited to Mehrotra.
e) 375 paid as salary to cashier Dhawan was debited to his personal A/c.
f) A bill of ₹ 2,750 for extension of building was debited to building repairs A/c
g) Goods of ₹ 500 returned by Akashdeep were taken into stock, but returns were not
posted.
h) Old furniture sold for ₹ 200 to Sethi was recorded in sales book.
i) The period end total of sales book was under cast by ₹ 100
j) Amount of ₹ 80 received as interest was credited to commission

14. Pass the necessary journal entries to rectify the following errors:
a) A cash sale of Goods to X 17,000 posted as 71,000
b) A credit sale of Goods to Y 17,000 posted as 71,000.
c) A credit sale of Furniture to Z for 17,000 posted as 71,000.
d) Bills Receivable from Henry of 16,000 posted to the credit of Bills Payable Account
and also credited to Henry.
e) Discounts received of 14,200 had been debited to discount allowed.
f) A credit sale of Goods of 4,230 to Krishan passed through the Purchase Book as
4,320 and posted therefrom to the credit of Kishan as 4,230
g) Goods (Cost 4,230, Sale Price 4,320) taken by Ganesh, the proprietor for his
personal use recorded in the Sales Book.
h) An amount of 8,000 owing by a customer had been omitted from the list of Sundry
Debtors.
i) A credit sale of old furniture to Fatheh for 17,000 omitted to be posted.
j) Bills payable worth 3,000 accepted in favour of Muraly, was passed through bills
receivable book with 300 and Muraly’s account was debited with 3,000.

15. Give journal entries (narrations not required) to rectify the following:
i. Purchase of Furniture on credit from Nigam for ₹ 3,000 posted to
Subham account as ₹ 300.
ii. A Sales Return of ₹ 5,000 to Jyothy was not entered in the financial
accounts though it was duly taken in the stock book.
iii. Investments were sold for ₹ 75,000 at a profit of ₹ 15,000 and

27
 passed through Sales account.
iv. An amount of ₹ 10,000 withdrawn by the proprietor (Darshan) for his
personal use has been debited to Trade Expenses account.

16. Miss Daisy was unable to agree the Trial Balance last year and wrote off the difference
to the profit and loss account of that year. On verifying the old books by a Chartered
Accountant next year, the following mistakes were found.
I. Purchase account was undercast by ₹ 8,000.
II. Sale of goods to Mr. Rahim for ₹ 2,500 was omitted to be recorded.
III. Receipt of cash from Mr. Ashok was posted to the account of Mr. Anbu
₹ 1,200.
IV. Amount of ₹ 4,167 of sales was wrongly posted as ₹ 4,617.
V. Repairs to Machinery was debited to Machinery Account ₹ 1,800.
VI. A credit purchase of goods from Mr. Paul for ₹ 3,000 entered as sale.
Suggest the necessary rectification entries.

17. Mr. Ratan was unable to agree the Trial Balance last year and wrote off the difference to
the Profit and Loss Account of that year. Next year, he appointed a Chartered Accountant
who examined the old books and found the following mistakes:
I. Purchase of a scooter was debited to conveyance account ₹ 30,000. Mr. Ratan
charges 10% depreciation on scooter.
II. Purchase account was over cast by ₹ 1,00,000.
III. A credit purchase of goods from Mr. X for ₹ 20,000 was entered as sale.
IV. Receipt of cash from Mr. Anand was posted to the account of Mr. Bhaskar ₹
10,000.
V. Receipt of cash from Mr. Chandu was posted to the debit of his account, ₹ 5,000.
VI. ₹ 5,000 due by Mr. Ramesh was omitted to be taken to the Trial Balance.
VII. Sale of goods to Mr. Ram for ₹ 20,000 was omitted to be recorded.
VIII. Amount of ₹ 23,950 of purchase was wrongly posted as ₹ 25,930.
Suggest the necessary rectification entries.

18. Rectify the following errors:

1) A Credit Sale of goods to X ₹ 3,000 posted as ₹ 30,000.
2) A Cash Sale of goods to Y ₹ 3,000 posted as ₹ 30,000.
3) A Credit Sale of Furniture to Z ₹ 3,000 posted as ₹ 30,000.
4) A Credit Sale of goods of ₹ 3,000 to Krishan entered in the purchases book, as
5) ₹ 30,000 and posted therefrom to the credit of Kishan as ₹ 3,000.
6) A Cash Sale of goods of ₹ 3,000 to Krishan posted to the credited of Kishan as ₹
30,000.
7) A Credit Purchase of old machinery from Sohan for ₹ 17,000 was entered in the
Purchases Book as purchase from Mohan for ₹ 71,000.
8) ₹ 3,000 paid as Repair Charges of this Machinery debited to General Expenses
Account.
9) A Bill drawn on Meenu for ₹ 30,000 was passed through bills payable book with ₹
3,000 and posted therefrom to the credit of Meena as ₹ 300.
28
 10) Sales included a sale of furniture having a book of value of ₹ 900 for ₹ 850 on 31st
March, 2018.

19. Give journal entries (with narrations) to rectify the following errors located in the books
of a Trader after preparing the Trial Balance:
a) 35,000 paid for purchase of Air conditioner for the personal use of proprietor
debited to Machinery A/c.
b) Goods returned by customer for ₹ 5,000. The same have been taken into stock but
no entry passed in the books of accounts.
c) An amount of ₹ 4,500 received on account of Interest was credited to Commission
account.
d) A sale of ₹ 2,760 was posted from Sales Book to the Debit of M/s Sobha Traders
at ₹ 2,670

20. Before preparation of the Trial Balance, the following errors were found in the books of
Hare Rama & Sons. Give the necessary entries to correct them.
(i) Minor Repairs made to the building amounting to ₹ 1,850 were debited to the
Building Account.
(ii) An amount of ₹ 3,000 due from Shayam Lal, which had been written off as bad
debts in the previous year, recovered in the current year, and had been posted to
the personal Account of Shayam Lal.
(iii) Furniture purchased for office use amounting to ₹ 20,000 has been entered in the
purchase day book.
(iv) Goods purchased from Ram Singh amounting to ₹ 8,000 have remained
unrecorded so far.
(v) College fees of proprietor's son, ₹ 15,000 debited to the Audit fees Account.
(vi) Receipt of ₹ 4,500 from Meet Kumar credited to the Pinki Rani.
(vii) Goods amounting to ₹ 6,200 had been returned by a customer and were taken
into inventory, but no entry was made in the books.
(viii) ₹ 1500 paid for wages to workmen for making office furniture had been charged
to wages account.
(ix) Salary paid to a clerk ₹ 12,000 has been debited to his personal account.
(x) A purchase of goods from Raghav amounting to ₹ 20,000 has been wrongly
entered through the sales book

29
 Bank reconciliation
1. Prepare a bank reconciliation statement from the following particulars as on 31st March,
2018
Particulars (₹)
Debit balance as per bank column of the cash book 18,60,000
Cheque issued to creditors but not yet presented to the Bank for 3,60,000
payment
Dividend received by the bank but not entered in the Cash book 2,50,000
Interest allowed by the Bank 6,250
Cheques deposited into bank for collection but not collected by bank 7,70,000
up to this date
Bank charges not entered in Cash book 1,000
A cheque deposited into bank was dishonoured, but no intimation 1,60,000
received
Bank paid house tax on our behalf, but no intimation received form 1,75,000
bank in this connection

2. Prepare the Bank Reconciliation Statement of M/s. R.K. Brothers on 30th June 2018 from
the particulars given below:
(i) The Bank Pass Book had a debit balance of ₹ 25,000 on 30th June, 2018.
(ii) A cheque worth ₹ 400 directly deposited into Bank by customer but no entry was
made in the Cash Book.
(iii) Out of cheques issued worth ₹ 34,000, cheques amounting to ₹ 20,000 only were
presented for payment till 30th June, 2018.
(iv) A cheque for ₹ 4,000 received and entered in the Cash Book but it was not sent to
the Bank.
(v) Cheques worth ₹ 20,000 had been sent to Bank for collection but the collection was
reported by the Bank as under.
1. Cheques collected before 30th June, 2018, ₹ 14,000
2. Cheques collected on 10th July, 2018, ₹ 4,000
3. Cheques collected on 12th July, 2018, ₹ 2,000.
(vi) The Bank made a direct payment of ₹ 600 which was not recorded in the Cash Book.
(vii) Interest on Overdraft charged by the bank ₹ 1,600 was not recorded in the Cash
Book.
(viii) Bank charges worth ₹ 80 have been entered twice in the cash book whereas Insurance
charges for ₹ 70 directly paid by Bank was not at all entered in the Cash Book.

30
 (ix) The credit side of bank column of Cash Book was under cast by ₹ 2,000.

May 2019

3. On 30th September, 2018, the bank account of XYZ, according to the bank column of the
cash book, was overdrawn to the extent of ₹ 8,062. An examination of the Cash book and
Bank Statement reveals the following:
i. A cheque for ₹ 11,14,000 deposited on 29th September, 2018 was credited by the
bank only on 3rd October, 2018.
ii. A payment by cheque for ₹ 18,000 has been entered twice in the Cash book.
iii. On 29th September, 2018, the bank credited an amount of ₹ 1,15,400 received from
a customer of XYZ, but the advice was not received by XYZ until 1st October, 2018.
iv. Bank charges amounting to ₹ 280 had not been entered in the cash book.
v. On 6th September 2018, the bank credited ₹ 30,000 to XYZ in error.
vi. A bill of exchange for ₹ 1,60,000 was discounted by XYZ with his bank. The bill
was dishonoured on 28th September, 2018 but no entry had been made in the books
of XYZ.
vii. Cheques issued up to 30th September,2018 but not presented for payment upto that
date totalled ₹ 13,46,000.
viii. A bill payable of ₹ 2, 00,000 had been paid by the bank but was not entered in the
cash book and bill receivable for ₹ 60,000 had been discounted with the bank at a
cost of ₹ 1,000 which had also not been recorded in cash book.
You are required:
To show the appropriate rectifications required in the cash book of XYZ, to arrive at
the correct balance on 30th September, 2018 and to prepare a Bank Reconciliation
Statement as on that date.
Nov 2019
4. On 31-3-2020, Mahesh's Cash Book Showed a Bank overdraft of ₹ 98,700. On
comparison he finds the following :
1. Out of the total cheques of ₹ 8,900 issued on 27th March, one cheque of₹ 7,400
was presented for payment on 4th April and the other cheque of₹ 1,500 handed over
to the customer, was returned by him and in lieu of that a new cheque of the same amount
was issued to him on 1st April. No entry for the return was made.
2. Out of total cash and cheques of ₹ 6,800 deposited in the Bank on 24th March, one cheque
of ₹ 2,600 was cleared on 3rd April and the other cheque of ₹ 500 was returned
dishonoured by the bank on 4th April.
3. Bank charges ₹ 35 and Bank interest ₹ 2,860 charged by the bank appearing in the
passbook are not yet recorded in the cash book.
4. A cheque deposited in his another account of ₹ 1,550 wrongly credited to this account by
the bank.
5. A cheque of ₹ 800, drawn on this account, was wrongly debited in another account by the
bank.

31
 6. A debit of ₹ 3,500 appearing in the bank statement for an unpaid cheque returned for being
'out of date' had been re-dated and deposited in the bank account again on 5th April 2020.
7. The bank allowed interest on deposit ₹ 1,000.
8. A customer who received a cash discount of 4% on his account of ₹ 1,00,000 paid a cheque
on 20th March, 2020. The cashier erroneously entered the gross amount in the bank
column of the Cash Book.
Prepare Bank Reconciliation Statement as on 31-3-2020 Nov 2020

5. Prepare a Bank Reconciliation Statement from the following particulars as on

31st December, 2020
Particulars ₹

Bank Balance as per Cash Book (Debit) 1,98,000

Bank Charges debited by the bank not recorded in Cash Book 34,000

Received from debtors vide RTGS on 31st December, 2020 not recorded 1,00,000
in Cash Book

Cheque issued but not presented for payment 45,000

Cheque deposited but not cleared 25,000

Cheque received and deposited but dishonoured. Entry for dishonor not
made in the Cash Book 5,000

Instruction for payment given to the bank on 31st December, 2020 but the 4,000
same effected by the Bank on 01st January, 2021

Jan 2021
6. From the following information (as on 31.3.2020), prepare a bank reconciliation
statement after making necessary adjustments in the cash book
Particulars
Bank balances as per the cash book (Dr.) 32,50,000
Cheques deposited, but not yet credited 44,75,000
Cheques issued but not yet presented for payment 35,62,000
Bank charges debited by bank but not recorded in the cash-book 12,500
Dividend directly collected by the bank 1,25,000
Insurance premium paid by bank as per standing instruction not 15,900
intimated
Cash sales wrongly recorded in the Bank column of the cash-book 2,55,000
Customer’s cheque dishonoured by bank not recorded in the cash-book 1,30,000

32
 1. Wrong credit given by the bank 2. 1,50,000

Also show the bank balance that will appear in the trial balance as on 31.3.2020

RTP MAY 21

7. The Bank Pass Book of Account No.5678 of Mrs. Rani showed an overdraft of ₹ 33,575 on
31st March 2018. On going through the Pass Book, the accountant found the following:
I. A Cheque of Rs,1,080 credited in the pass book on 28th March 2018 being
dishonoured is debited again in the pass book on 1st April 2018. There was
no entry in the cash book about the dishonour of the cheque until 15 th April
2018.
II. Bankers had credited her account with ₹ 2,800 for interest collected by them
on her behalf, but the same has not been entered in her cash book.
III. Out of ₹ 20,500 paid in by Mrs. Rani in cash and by cheques on 31 st March
2018 cheques amounting to ₹ 7,500 were collected on 7th April, 2018.
IV. Out of Cheques amounting to ₹ 7,800 drawn by her on 27th March, 2018 a
cheque for ₹ 2,500 was encashed on 3rd April, 2018.
V. Bankers seems to have given here wrong credit for ₹ 500 paid in by her in
Account No. 8765 and a wrong debit in respect of a cheque for ₹ 300 against
her account No.8765.
VI. A cheque for ₹ 1,000 entered in Cash Book but omitted to be banked
on 31st March, 2018.
VII. A Bill Receivable for ₹ 5,200 previously discounted (Discount ₹ 200) with
the Bank had been dishounoured but advice was received on 1st April, 2018.
VIII. A Bill for ₹ 10,000 was retired /paid by the bank under a rebate of ₹ 175 but
the full amount of the bill was credited in the bank column of the Cash Book.
IX. A Cheque for ₹ 2,400 deposited into bank but omitted to be recorded in Cash
Book and was collected by the bank on 31st March, 2018.
Prepare Bank Reconciliation Statement as on 31st March, 2018.

8. From the following information, ascertain the Cash Book balance of Mr. Bajaj as on 31st
March, 2021:
I. Debit balance as per Bank Pass Book ₹ 3,500.
II. A cheque amounting to ₹ 2,500 deposited on 15th March, but the same was
returned by the Bank on 24th March for which no entry was passed in the
Cash Book.
III. During March, two bills amounting to ₹ 2,500 and ₹ 500 were collected by
the Bank but no entry was made in the Cash Book.
IV. A bill for ₹ 5,000 due from Mr. Balaji previously discounted for ₹ 4,800
was dishonoured. The Bank debited the account, but no entry was passed in
the Cash Book.
V. A Cheque for ₹ 1,500 was debited twice in the cash book.

33
9. The Bank statement of Mr. J. White dated 31.12.2013 showed a balance with his Bank of ₹
924, when checked with his Cash Book the following were noted :
a) During December, the Bank had paid ₹200 for a yearly contribution of Mr. White, made
to a local charity, as per his standing order. This amount appeared in the Bank statement
but not in the Cash Book.
b) The Bank had credited his account with ₹28 interest and had collected on his behalf ₹
230 as dividends. No corresponding entries were made in the Cash Book.
c) A cheque of ₹ 65 deposited into the Bank on 28.12.2013 was not cleared by the Bank till
after 31.12.2013.
d) A cheque of ₹150 deposited into and cleared by the Bank before 31.12.2013 was not
entered in the Cash Book, through an oversight.
e) Cheques drawn by and posted to parties by Mr. White on 31.12.2013 for ₹73, ₹119 and
₹ 46 were presented for payment to the Bank only on 3.1.2014.

10. From the following particulars of M/s Suresh enterprises, prepare a Bank reconciliation
statement:
1) Bank overdraft as per Pass Book as on 31st March 2013 was ₹ 8,800
2) Cheques deposited in Bank for ₹ 5,800 but only ₹ 2,000 were cleared till 31st March
3) Cheques issued were ₹ 2,500, ₹ 3,800 and ₹ 2,000 during the month. The cheque of ₹
5,800 is still with supplier.
4) Dividend collected by Bank ₹ 1,250 was wrongly entered as ₹ 1,520 in Cash Book.
5) Amount transferred from fixed deposit A/c into the current A/c ₹ 2,000 appeared only in
Pass Book
6) Interest on overdraft ₹ 930 was debited by Bank in Pass Book and the information was
received only on 3rd April 2013.
7) Direct deposit by M/s Rajesh Traders ₹ 400 not entered in Cash Book.
8) Corporation tax ₹ 1,200 paid by Bank as per standing instruction appears in PB only.

11. Prepare a Bank Reconciliation Statement from the following data as on 30.11.2013:
1) Balance as per Pass Book on 30.11.2013, overdrawn ₹ 9,204.
2) Cheques drawn on 30.11.2013 but not cleared till December 2013, ₹3,225; ₹ 745 and
₹926.
3) Bank Overdraft interest charged on 28.11.2013, not entered in Cash Book ₹ 1,610.
4) Cheques received on 29.11.2013 entered in Cash Book but not deposited to Bank till 3rd
December 2013, ₹11,322 and ₹1,730.
5) Cheque received amounting to ₹35 entered in the Cash Book twice.
6) Bills Receivable due on 29.11.13 was sent to Bank for collection on 28.11.13, and was
entered in Cash Book forthwith but the proceeds were not credited in Bank Pass Book
till 3rd Dec. 2013, ₹ 2,980.
7) A periodic payment by Bank for ₹ 80 under standing instruction not entered in Cash
Book.
8) Cheque deposited on 30th Nov.2013 dishonoured but the entry, therefore, was not made
in the Cash Book ₹ 1,890.

34
12. The cash book of Shri Gupta showed an overdraft of ₹ 30,000 on 31.3.2013. The scrutiny of
the entries in the cash book and the pass book revealed that:
a) On 22nd March, cheques totaling ₹ 6,000 were sent to bankers for collection, out of
these, a chequ for ₹ 1,000 was wrongly recorded on the credit side of the cash book and
cheques amounting to ₹ 300 could not be collected by bank within the accounting year.
b) A cheque for ₹ 4,000 was issued to a supplier on 28th March, 2013. The cheque was
presented to bank on 4th April, 2013.
c) There were debits in the pass book for interest ₹ 2,000 on overdraft and bank charges
₹ 600 not recorded in the cash book.
d) The credit side of the bank column of the cash book was under cast by ₹ 100.
e) A cheque for ₹ 1,000 was issued to a creditor on 27th March, but the same was not
recorded in the cash book. The cheque was, however, duly en-cashed before 31st
March.
f) As per standing instructions, the banker collected dividend of ₹ 500 on behalf of Gupta
and credited the same to his account within 31st March, 2013. The fact was, however,
intimated to Gupta on 3rd April, 2013.

13. From the following information supplied by Shri Mehta, prepare his bank reconciliation
statement as on 31st March, 2013
1. Bank overdraft as per bank statement 1,65,000
2. Cheques issued but not yet presented for payment 87,500
3. Cheques deposited with the bank but not yet collected 1,05,000
4. Cheque recorded in the bank column of the cash book but not sent to the bank for
collection 20,000
5. Payments received from customers direct by the bank 35,000
6. Bank charges debited in the statement 200
7. A bill for ₹ 30,000 (discounted with the bank in February at ₹ 29,780) dishonoured
on 31st March and noting charges paid by the bank 100
8. Premium on life policy of Mehta paid by the bank on standing advice 1,800
9. Overdraft (credit) on 25.3.2013, ₹ 80,000 carried over as debit balance on the next
day.

14. On 31st March, 2013, the cash book of Ajay Ghosh showed a bank overdraft of ₹ 3,458. On
examination of the cash book and bank statement, the following discrepancies were noted:
1) Cheques issued for ₹1,200 were entered in the cash book but were not presented at the
bank till first week of April, 2013.
2) Cheques amounting to ₹ 1,000 were entered in the cash book on 30th March, 2013 but
were banked on 2nd April, 2013.
3) Cheques amounting to ₹ 500 were deposited in the bank but were not collected till March
31st, 2011.
4) A cheque for ₹ 300 received from Mr. Dass Gupta and deposited in the bank was
dishonoured but advice of non-payment was not received from the bank upto 31st March.

35
 5) ₹ 3,000 being the proceeds of a bill collected on 20th March did not appear in the cash
book.
6) ₹ 300 being the proceeds of a bill collected on 20th March were omitted to be credited
in the pass book.
7) The pass book showed an amount of ₹ 340, being rent which his tenant Madan Gopal
had directly deposited on the bank on 30th March, 2013. The item did not appear in cash
book.
8) A bill payable of ₹ 600 was duly paid off on 30th March according to the instructions of
Ajay Ghosh but this was not entered in cash book before 1st April, 2013.
9) Bank charges of ₹ 30 and interest an overdraft ₹ 170 appeared in the pass book but not
in the cash book.
Prepare a bank reconciliation statement and find out the balance as per pass book

15. From the following particulars, prepare a Bank Reconciliation Statement for Jindal offset Ltd.
I. Balance as per cash book is ₹ 2,40,000
II. Cheques issued but not presented in the bank amounts to ₹ 1,36,000.
III. Cheques deposited in bank but not yet cleared amounts to ₹ 90,000.
IV. Bank charges amounts to ₹ 300.
V. Interest credited by bank amounts to ₹ 1,250.
VI. The balance as per pass book is ₹ 2,86,950.

16. On 31st March 2019, the Bank Pass Book of Namrata showed a balance of ₹ 1,50,000 to her
credit while balance as per cash book was ₹ 1,12,050. On scrutiny of the two books, she
ascertained the following causes of difference:
a) She has issued cheques amounting to ₹ 80,000 out of which only ₹ 32,000 were presented
for payment.
b) She received a cheque of ₹ 5,000 which she recorded in her cash book but forgot to
deposit in the bank.
c) A cheque of ₹ 22,000 deposited by her has not been cleared yet.
d) Mr. Gupta deposited an amount of ₹ 15,700 in her bank which has not been recorded by
her in Cash Book yet.
e) Bank has credited an interest of ₹ 1,500 while charging ₹ 250 as bank charges.

17. From the following particulars ascertain the balance that would appear in the Bank Pass Book
of A on 31st December, 2019.
1. The bank overdraft as per Cash Book on 31st December, 2019 ₹ 6,340.
2. Interest on overdraft for 6 months ending 31st December, 2019 ₹ 160 is entered in Pass
Book.
3. Bank charges of ₹ 400 are debited in the Pass Book only.
4. Cheques issued but not cashed prior to 31st December, 2019, amounted to ₹ 11,68,000.
5. Cheques paid into bank but not cleared before 31st December, 2019 were for ₹ 22,17,000.
6. Interest on investments collected by the bank and credited in the Pass Book ₹ 12,00,000.

36
18. On 30th September, 2019, the bank account of X, according to the bank column of the Cash-
Book, was overdrawn to the extent of ₹ 4,062. On the same date the bank statement showed a
credit balance of ₹ 20,758 in favour of X. An examination of the Cash Book and Bank
Statement reveals the following:
a) A cheque for ₹ 13,14,000 deposited on 29th September, 2019 was credited by the bank
only on 3rd October, 2019.
b) A payment by cheque for ₹ 16,000 has been entered twice in the Cash Book.
c) On 29th September, 2019, the bank credited an amount of ₹ 1,17,400 received from a
customer of X, but the advice was not received by X until 1st October, 2019.
d) Bank charges amounting to ₹ 580 had not been entered in the Cash Book.
e) On 6th September, 2019, the bank credited ₹ 20,000 to X in error.
f) A bill of exchange for ₹ 1,40,000 was discounted by X with his bank. This bill was
dishonoured on 28th September, 2019 but no entry had been made in the books of X.
g) Cheques issued upto 30th September, 2019 but not presented for payment up to that date
totalled 13,26,000
You are required :

➢ to show the appropriate rectifications required in the Cash Book of X, to arrive at the
correct balance on 30th September, 2019 and
➢ to prepare a bank reconciliation statement as on that date.

19. On 30th December, 2019 the bank column of A. Philip’s cash book showed a debit balance of
₹ 4,610. On examination of the cash book and bank statement you find that:
1) Cheques amounting to ₹ 6,30,000 which were issued to trade payables and entered in the
cash book before 30th December, 2019 were not presented for payment until that date.
2) Cheques amounting to ₹ 2,50,000 had been recorded in the cash book as having been
paid into the bank on 30th December, 2019, but were entered in the bank statement on1st
January, 2020.
3) A cheque received for ₹ 73,000 had been dishonoured prior to 30th December, 2019, but
no record of this fact appeared in the cash book.
4) A dividend of ₹ 3,80,000, paid direct to the bank had not been recorded in the cash book.
5) Bank interest and charges amounting to ₹ 4,200 had been charged in the bank statement
but not entered in the cash book.
6) No entry had been made in the cash book for a trade subscription of ₹ 10,000 paid vide
banker’s order in November, 2019.
7) A cheque for ₹ 27,000 drawn by B. Philip had been charged to A. Philip’s bank account
by mistake in December, 2019.
You are required:

➢ to make appropriate adjustments in the cash book bringing down the correct balance,
and

37
 ➢ to prepare a statement reconciling the adjusted balance in the cash book with the balance
shown in the bank statement.
➢
20. From the following information, prepare a Bank reconciliation statement as at 31st December,
2019 for Messrs New Steel Limited :
(1) Bank overdraft as per Cash Book on 31st December, 2019 22,45,900

(2) Interest debited by Bank on 26th December, 2019 but no advice received 2,78,700

(3) Cheque issued before 31st December, 2019 but not yet presented to Bank 6,60,000

(4) Transport subsidy received from the State Government directly by the Bank14,25,000

but not advised to the company

(5) Draft deposited in the Bank, but not credited till 31st December, 2019 13,50,000

(6) Bills for collection credited by the Bank till 31st December, 2019 but no advice
8,36,000

received by the company

(7) Amount wrongly debited to company account by the Bank, for which no details
7,40,000

are available

21. The Cash Book of Mr. Gadbadwala shows ₹ 8,36,400 as the balance at Bank as on 31st
December, 2019, but you find that it does not agree with the balance as per the Bank Pass
Book. On scrutiny, you find the following discrepancies:
1. On 15th December, 2019 the payment side of the Cash Book was undercast by ₹ 10,000.
2. A cheque for ₹ 1,31,000 issued on 25th December, 2019 was not taken in the bank
column.
3. One deposit of ₹ 1,50,000 was recorded in the Cash Book as if there is no bank column
therein.
4. On 18th December, 2019 the debit balance of ₹ 15,260 as on the previous day, was
brought forward as credit balance.
5. Of the total cheques amounting to ₹ 11,514 drawn in the last week of December, 2019,
cheques aggregating ₹ 7,815 were encashed in December.
6. Dividends of ₹ 25,000 collected by the Bank and subscription of ₹ 1,000 paid by it were
not recorded in the Cash Book.
7. One out-going Cheque of ₹ 3,50,000 was recorded twice in the Cash Book.
Prepare a Reconciliation Statement.

22. When Nikki & Co. received a Bank Statement showing a favourable balance of ₹ 10,39,200
for the period ended on 30th June, 2019, this did not agree with the balance in the cash book.
An examination of the Cash Book and Bank Statement disclosed the following :

38
 1) A deposit of ₹ 3,09,200 paid on 29th June, 2019 had not been credited by the Bank until
1st July, 2019.
2) On 30th March, 2019 the company had entered into hire purchase agreement to pay by
bank order a sum of ₹ 3,00,000 on the 10th of each month, commencing from April, 2019.
No entries had been made in Cash Book.
3) A customer of the firm, who received a cash discount of 4% on his account of ₹ 4,00,000
paid the firm a cheque on 12th June. The cashier erroneously entered the gross amount in
the bank column of the Cash Book.
4) Bank charges amounting to ₹ 3,000 had not been entered in Cash-Book.
5) On 28th June, a customer of the company directly deposited the amount in the bank ₹
4,00,000, but no entry had been made in the Cash Book.
6) ₹ 11,200 paid into the bank had been entered twice in the Cash Book.
7) A debit of ₹ 11,00,000 appeared in the Bank Statement for an unpaid cheque, which had
been returned marked ‘out of date’. The cheque had been re-dated by the customer and
paid into Bank again on 5th July, 2019.
Prepare Bank Reconciliation Statement on 30 June, 2019.

23. The bank column of cash book of Mukesh was balanced on 31st March, 2019. It showed
an overdraft of ₹ 5,000. This did not agree with the balance shown by bank statement of
Mukesh. You are required to prepare a bank reconciliation statement taking the following
into account :
1) Cheques issued but not presented for payment till 31.3.2019 ₹ 12,00,000.
2) Cheques deposited but not collected by bank till 31.3.2019 ₹ 20,00,000.
3) Interest on term-loan ₹ 10,00,000 debited by bank on 31.3.2019 but not accounted in
Mukesh’s book.
4) Bank charges ₹ 2,500 was debited by bank during March, 2019 but accounted in the
books of Mukesh on 4.4.2019.
5) An amount of ₹ 30,68,000 representing collection of Remesh’s cheque was wrongly
credited to the account of Mukesh by the bank in their bank statement.

24. From the following particulars prepare a bank reconciliation statement as on 31st December
2019:
i) On 31st December, 2019 the cash-book of a firm showed a bank balance of ₹ 60,000
(debit balance).
ii) Cheques had been issued for ₹ 15,00,000, out of which cheques worth ₹ 4,00,000 only
were presented for payment.
iii) Cheques worth ₹ 11,40,000 were deposited in the bank on 28th December, 2019 but had
not been credited by the bank. In addition to this, one cheque for ₹ 5,00,000 was entered
in the cash book on 30th December, 2019 but was banked on 3rd January, 2020.
iv) A cheque from Susan for ₹ 4,00,000 was deposited in the bank on 26th December 2019
but was dishonoured and the advice was received on 2nd January, 2020.
v) Pass-book showed bank charges of ₹ 2000 debited by the bank.

39
 vi) One of the debtors deposited a sum of ₹ 5,00,000 in the bank account of the firm on 20th
December, 2019 but the intimation in this respect was received from the bank on 2nd
January, 2020.
vii) Bank pass-book showed a debit balance of ₹ 3,82,000 on 31st December, 2019.

25. The Cash-book of M/s Rajat shows ₹ 1,10,280 as the balance at Bank as on 31st March, 2022.
But this does not agree with balance as per the Bank Statement. On scrutiny following
discrepancies were found:
(i) Subsidy ₹ 41,000 received from the government directly by the bank, but not advised
to the company.
(ii) On 15th March,2022 the payments side of the Cash-book was under cast by ₹ 1400.
(iii) On 20th March,2022 the debit balance of ₹ 8624 as on the previous day, was brought
forward as credit balance in Cash-book.
(iv) A customer of the M/s Rajat, who received a cash discount of 5% on his account of ₹
80,000, paid to M/s Rajat a cheque on 24th March,2022. The cashier erroneously
entered the gross amount in the Cash-Book.
(v) On 10th March,2022 a bill for ₹ 22,800 was discounted from the bank, entered in Cash-
book, but proceeds credited in Bank Statement amounted to ₹ 22,000 only.
(vi) A cheque issued amounting to ₹ 6,900 returned marked ‘out of date’. No entry made
in Cash-book.
(vii) Insurance premium ₹ 3,024 paid directly by bank under a standing order. No entry
made in cash-book.
(viii) A bill receivable for ₹6,120 discounted for ₹ 6,000 with the bank had been
dishonoured on 30th March,2022, but advice was received on 1st April,2022.
(ix) Bank recorded a Cash deposit of ₹ 6,550 as ₹ 6,505.
Prepare Bank Reconciliation Statement on 31st March,2022.

26. From the following information prepare a Bank Reconciliation Statement as on 31st March
2022 for A Ltd.
₹

Bank overdraft as per cash book as 31st March, 2022 15,50,750

1. Cheques deposited on 15th February, 2022 credited on 5th April, 2022 12,50,000

2. Interest debited by bank on 31st March, 2022 but not entered in Cash Book 1,75,500

3. Cheques issued before 31st March, 2022 but not yet presented 7,75,000

4. On 10th March, 2022 bank credited to A Ltd. in error 1,50,000

5. Draft deposited in bank but not credited till 31st March, 2022 12,75,000

6. Bills for collection credited by bank but no advice received by the company 9,45,000

7. Bank charges charged by bank but not entered in cash book 2,85,000

8. Transport subsidy received from the state government directly by the bank 17,50,000
not advised to the company

40
27. The cash book of Mr. Karan shows ₹ 2,60,400 as the balance of bank as on 31st December,
2021 but you find that it does not agree with the balance as per the bank pass book. On analysis,
you found the following discrepancies:
(i) On 15th December, 2021 the payment side of the cash book was overcast by
(ii) ₹ 10,000.
(iii) A Cheque for ₹ 1,18,000 issued on 6th December, 2021 was not taken in the bank
Column.
(iv) On 20th December, 2021 the debit balance of ₹ 8,460 as on the previous day, was
brought forward as credit balance in the cash book.
(v) Of the total cheques amounting to ₹ 12,370 drawn in the last week of December
2021, cheques aggregating ₹ 9,360 were encashed in December, 2021.
(vi) Dividends of ₹ 35,000 collected by the bank and fire insurance premium of ₹ 7,900
paid by the bank were not recorded in the cash book.
(vii) A Cheque issued to a creditor of ₹ 1,75,000 was recorded twice in the cash book.
(viii) Bill for collection amounting to ₹ 53,000 credited by the bank on 21st December,
2021 but no advice was received by Mr. Karan till 31st December, 2021.
(ix) A Customer, who received a cash discount of 3% on his account of ₹ 60,000 paid
a cheque on 10th December, 2021. The cashier erroneously entered the gross
amount in the bank column of the cash book.
You are required to prepare the bank reconciliation statement as on 31st
December, 2021.

28. According to the cash-book of G there was balance of ₹ 4,45,000 in his bank on 30th June,
2021 On investigation you find that :
1) Cheques amounting to 60,000 issued to creditors have not been presented for
payment till the date
2) Cheques paid into bank amounting to 1,10,500 out of which cheques amounting
to ₹ 55,000 only collected by bank up to 30th June 2021
3) A dividend of ₹ 4,000 and rent amounting to 60,000 received by the bank and
entered in the pass-book but not recorded in the cash book.
4) Insurance premium (up to 31st December, 2020) paid by the bank ₹ 2,700 not
entered in the cash book.
5) The payment side of the cash book had been under cast by ₹ 500
6) Bank charges ₹ 150 shown in the pass book had not been entered in the cash book.
7) A bill payable of ₹ 20,000 had been paid by the bank but was not entered in the
cash book and bill receivable for ₹ 6,000 had been discounted with the bank at a
cost of ₹ 100 which had also not been recorded in cash book.
You are required:
A. To make the appropriate adjustments in the cash book, and
B. To prepare a statement reconciling it with the bank pass book.

41
 Valuation of Inventory
1. Raj Ltd. prepared their accounts financial year ended on 31st March 2019. Due to
unavoidable circumstances actual stock has been taken on 10th April 2019, when it was
ascertained at ₹ 1,25,000. It has been found that;
a) Sales are entered in the Sales Book on the day of dispatch and return inwards in the Returns
Inward Book on the day of the goods received back.
b) Purchases are entered in the Purchase Book on the day the Invoices are received.
c) Sales between 1st April 2019 to 9th April 2019 amounting to ₹ 20,000 as per Sales Day
Book.
d) Free samples for business promotion issued during 1st April 2019 to 9th April 2019
amounting to ₹ 4,000 at cost.
e) Purchases during 1st April 2019 to 9th April 2019 amounting to ₹ 10,000 but goods amounts
to ₹ 2,000 not received till the date of stock taking.
f) Invoices for goods purchased amounting to ₹ 20,000 were entered on 28th March 2019 but
the goods were not included in stock.
g) Rate of Gross Profit is 25% on cost.
Ascertain the value of Stock as on 31st March 2019. May 2019

2. Physical verification of stock in a business was done on 23rd February, 2020. The value
of the stock was ₹ 28,00,000. The following transactions took place from 23rd February
to 29th February, 2020 :
a) Out of the goods sent on consignment, goods at cost worth ₹ 2,30,000 were unsold.
b) Purchases of ₹ 3,00,000 were made out of which goods worth ₹ 1,20,000 were delivered
on 5th March, 2020.
c) Sales were ₹ 13,60,000 which include goods worth ₹ 3,20,000 sent on approval. Half of
these goods were returned before 29th February, 2020, but no information is available
regarding the remaining goods.
d) Goods are sold at cost plus 25%. However, goods costing ₹ 2,40,000 had been sold for ₹
1,50,000.
Determine the value of stock on 29th February, 2020 Nov 2020
3. From the following particulars ascertain the value of inventories as on 31st March,
2020 :
Inventory as on 1st April, 2019 ₹ 3,50,000
Purchase made during the year ₹ 12,00,000
Sales ₹ 18,50,000
Manufacturing Expenses ₹ 1,00,000
Selling and Distribution Expenses ₹ 50,000
Administration Expenses ₹ 80,000
At the time of valuing inventory as on 31st March, 2019, a sum of ₹ 20,000 was written
off on a particular item which was originally purchased for ₹ 55,000 and was sold during

42
 the year for ₹ 50,000. Except the above-mentioned transaction, gross profit earned during
the year was 20 on sales.
Jan 2021
4. Closing stock is valued by Zebra Stores on generally accepted accounting principles.
Stock taking for the year ended 31st March, 2020 was completed by 10th April, 2020,
the valuation of which showed a stock figure of ₹ 5,02,500 at cost as on the completion
date. After the end of the accounting year and till the date of completion of stock
taking, sales for the next year were made for ₹ 20,625, profit margin being 33.33
percent on cost. Purchases for the next year included in the stock amounted to ₹ 27,000
at cost less trade discount 10 percent. During this period, goods were added to stock
of the markup price of ₹ 900 in respect of sales returns. After stock taking it was found
that there were certain very old slow moving items costing ₹ 3,375 which should be
taken at₹ 1,575 to ensure disposal to an interested customer. Due to heavy floods,
certain goods costing ₹ 4,650 were received from the supplier beyond the delivery date
of customer. As a result, the customer refused to take delivery and net realizable value
of the goods was estimated to be ₹ 3,750 on 31st March, 2020.You are required to
calculate the value of stock for inclusion in the final accounts for the year ended 31st
March, 2020
5. Physical verification of stock in a business was done on 23rd June, 2020. The value of
the stock was ₹ 48,00,000. The following transactions took place between 23rd June
to 30th June, 2020:
i) Out of the goods sent on consignment, goods at cost worth ₹ 2,40,000 were unsold.
ii) Purchases of ₹ 4,00,000 were made out of which goods worth ₹ 1,60,000 were
delivered on 5th July, 2020.
iii) Sales were ₹ 13,60,000, which include goods worth ₹ 3,20,000 sent on approval. Half
of these goods were returned before 30th June, 2020, but no information is available
regarding the remaining goods.
iv) Goods are sold at cost plus 25%. However, goods costing ₹ 2,40,000 had been sold for
₹ 1,20,000.
Determine the value of stock on 30th June, 2020.
6. The Profit and loss account of Hanuman showed a net profit of ₹ 6,00,000, after
considering the closing stock of ₹ 3,75,000 on 31st March, 2020. Subsequently the
following information was obtained from scrutiny of the books:
I. Purchases for the year included ₹ 15,000 paid for new electric fittings for the shop.
II. Hanuman gave away goods valued at ₹ 40,000 as free samples for which no entry was
made in the books of accounts.
III. Invoices for goods amounting to ₹ 2,50,000 have been entered on 27th March, 2020,
but the goods were not included in stock.
IV. In March, 2020 goods of ₹ 2,00,000 sold and delivered were taken in the sales for
April, 2020.
V. Goods costing ₹ 75,000 were sent on sale or return in March, 2020 at a margin of profit
of 33-1/3% on cost. Though approval was given in April, 2020 these were taken as
sales for March, 2020.

43
 Calculate the value of stock on 31st March, 2020 and the adjusted net profit for the
year ended on that date.
7. X who was closing his books on 31.3.2020 failed to take the actual stock which he did
only on 9th April, 2020, when it was ascertained by him to be worth ₹ 2,50,000.
It was found that sales are entered in the sales book on the same day of dispatch and
return inwards in the returns book as and when the goods are received back. Purchases
are entered in the purchases day book once the invoices are received.
It was found that sales between 31.3.2020 and 9.4.2020 as per the sales day book are
₹ 17,200. Purchases between 31.3.2020 and 9.4.2020 as per purchases day book are ₹
1,200, out of these goods amounting to ₹ 500 were not received until after the stock
was taken.
Goods invoiced during the month of March, 2020 but goods received only on 4th April,
2020 amounted to ₹ 1,000. Rate of gross profit is 33-1/3% on cost.
Ascertain the value of physical stock as on 31.3.2020
8. From the following information, ascertain the value of stock as on 31.3.2020:
Value of stock on 1.4.2019 7,00,000
Purchases during the period from 1.4.2019 to 31.3.2020 34,60,000
Manufacturing expenses during the above period 7,00,000
Sales during the same period 52,20,000
At the time of valuing stock on 31.3.2019 a sum of ₹ 60,000 was written off a particular
item which was originally purchased for ₹ 2,00,000 and was sold for ₹ 1,60,000. But
for the above transaction the gross profit earned during the year was 25% on cost.
9. The following are the details of a spare part of Sriram Mills:

1-1-2020 Opening Inventory Nil

1-1-2020 Purchases 100 units @ ₹ 30 per unit
15-1-2020 Issued for consumption 50 units
1-2-2020 Purchases 200 units @ ₹ 40 per unit
15-2-2020 Issued for consumption 100 units
20-2-2020 Issued for consumption 100 units
Find out the value of Inventory as on 31-3-2020 if the company follows Weighted
Average basis.
10. A trader prepared his accounts on 31st March, each year. Due to some unavoidable
reasons, no inventory taking could be possible till 15th April, 2020 on which date the
total cost of goods in his godown came to ₹ 5,00,000. The following facts were
established between 31st March and 15th April, 2020.

44
 Sales ₹ 4,10,000 (including cash sales ₹ 1,00,000), Purchases ₹ 50,340 (including cash
purchases ₹ 19,900), Sales Return ₹ 10,000. Goods are sold by the trader at a profit of
20% on sales. You are required to ascertain the value of inventory as on 31st March,
2020.

11. A trader prepared his accounts on 31st March, each year. Due to some unavoidable
reasons, no stock taking could be possible till 15th April,2022 on which date the total
cost of goods in his Godown came to ₹ 2,50,000. The following facts were established
between 31st March and 15th April,2022.
I. Sales ₹ 2,05,000 (including cash sales ₹ 50,000)
II. Purchases ₹ 25,170 (including cash purchases ₹ 9,950)
III. Sales Return ₹ 5,000
IV. On 15th March, goods of the sale value of ₹ 50,000 were sent on sale or return basis
to a customer, the period of approval being four weeks. He returned 40% of the goods
on 10th April, approving the rest; the customer was billed on 16th April.
V. The trader had also received goods costing ₹ 40,000 in March, for sale on consignment
basis; 20% of the goods had been sold by 31st March, and another 50% by the 15th
April. These sales are not included in above sales.
Goods are sold by the trader at a profit of 20% on sales.
You are required to ascertain the value of Inventory as on 31st March, 2022.

12. The Profit and Loss account of Ram showed a net profit of ₹ 5,75,000 after considering
the closing stock of ₹ 2,55,000 on 31st March 2022. Subsequently the following
information was obtained from scrutiny of the books.
(i) Purchases for the year included ₹ 10,500 paid for electrical fittings of the shop.
(ii) Ram gave goods worth of ₹ 25,000 as free samples for which no entry was made.
(iii) Invoices for goods amounting to ₹ 1,85,000 have been entered on 29th March 2022 but
were not included in the stock.
(iv) Sales amounting to ₹ 2,05,000 were dispatched on 27th March but were included in
sales of April, 2022.
(v) Goods costing ₹ 55,000 were sent on sale or return basis in March, 2022 at a margin
of profit of 33½ % on cost. Approval was given in April, 2022 but these were
considered as sales in March, 2022.
Calculate. the value of stock as on 31st March, 2022 and the adjusted net profit for the
year ended on that date

13. Zed Enterprises furnishes the following information for the year ended 31st
March,2021.

Particulars Amount (₹)

Value of Stock as on 1st April,2020 28,00,000
Purchases during the year 1,38,40,00
Manufacturing Expenses during the 0
year Sales during the year 28,00,000

45
 2,08,80,00
0

The following further information is also provided:

a) At the time of valuing stock on 31st March,2020 a sum of ₹ 2,40,000 was written off
for a particular item which was originally purchased for ₹ 8,00,000. This item was sold
during the year ended 31st March,2021 for ₹ 6,40,000.
b) Except for the above transaction, the rate of gross profit during the year was 1/3rd on
cost.
Ascertain the value of Stock as on 31st March,2021.
Accounting for Depreciation
1. A Plant & Machinery costing ₹ 10,00,000 is depreciated on straight line assuming
10 year working life and zero residual value, for four years. At the end of the fourth
year, the machinery was revalued upwards by ₹ 40,000. The remaining useful life was
reassessed at 8 year. Calculate Depreciation for the fifth year. Nov 2018

2. A Firm purchased an old Machinery for ₹ 37,000 on 1st January, 2015 and spent ₹ 3,000
on its overhauling. On 1st July 2016, another machine was purchased for ₹ 10,000. On
1st July 2017, the machinery which was purchased on 1st January 2015, was sold for
₹ 28,000 and the same day a new machinery costing ₹ 25,000 was purchased. On 1st
July, 2018, the machine which was purchased on 1st July, 2016 was sold for ₹ 2,000.
Depreciation is charged @ 10% per annum on straight line method. The firm changed
the method and adopted diminishing balance method with effect from 1st January, 2016
and the rate was increased to 15% per annum. The books are closed on 31st December
every year.
Prepare Machinery account for four years from 1st January, 2015.
May 2019

3. X purchased a machinery on 1st January 2017 for ₹ 4,80,000 and spent ₹ 20,000 on its
installation. On July 1, 2017 another machinery costing ₹ 2,00,000 was purchased. On
1st July, 2018 the machinery purchased on 1st January, 2017 having become scrapped
and was sold for ₹ 2,90,000 and on the same date fresh machinery was purchased for₹
5,00,000. Depreciation is provided annually on 31st December at the rate of 10% p.a.
on written down value.
Prepare Machinery account for the years 2017 and 2018.
Nov 2019

46
4. M/s. Dayal Transport Company purchased 10 trucks @ ₹ 50,00,000 each on 1st July
2017. On 1st October, 2019, one of the trucks is involved in an accident and is
completely destroyed and ₹ 35,00,000 is received from the insurance in full settlement.
On the same date, another truck is purchased by the company for the sum of ₹ 60,00,000.
The company writes off 20% of the original cost per annum. The company observes the
calendar year as its financial year.
Give the motor truck account for two years ending 31st December, 2020.
Jan 2021

5. M/s Roxy purchased a brand new machinery on 1st January 2017 for ₹ 3,20,000 and
also incurred ₹ 80,000 on its installation. Another machinery was purchased on 1st July
2017 for ₹ 1,60,000. On 1st July 2019, the machinery purchased on 1st January 2017
was sold for ₹ 2,50,000. Another machinery was purchased and installed on 30th
September 2019 for ₹ 60,000.
Under existing practice, the company provides for depreciation @10% p.a. on Original
cost. However, from the year 2020 it decided to adapt WDV method and charge the
depreciation @ 15% p.a. You are required to show the Machinery Account for the years
2019 and 2020 considering the books of accounts are closed on 31st December each
year.
RTP MAY 21

6. M/s. Green Channel purchased a second-hand machine on 1st January, 2015 for ₹
1,60,000. Overhauling and erection charges amounted to ₹ 40,000. Another machine
was purchased for ₹ 80,000 on 1st July, 2015. On 1st July, 2017, the machine installed
on 1st January, 2015 was sold for ₹ 1,00,000. Another machine amounted to ₹ 30,000
was purchased and was installed on 30th September, 2017.
Under the existing practice the company provides depreciation @ 10% p.a. on original
cost. However, from the year 2018 it decided to adopt WDV method and to charge
depreciation @ 15% p.a. You are required to prepare Machinery account for the years
2015 to 2018

7. M/s Ewaan Traders & Co. commenced business on 1st January 2017, when they
purchased plant and equipment for ₹ 8,00,000. They adopted a policy of charging
depreciation at 15% per annum on diminishing balance basis and over the years, their
purchases of plant have been:
Date Amount
1-1-2018 2,50,000
1-1-2021 4,00,000
On 1-1-2021 it was decided to change the method and rate of depreciation to straight
line basis. On this date remaining useful life was assessed as 5 years for all the assets
purchased before 1.1.2021 with no scrap value and 12 years for the asset purchased on
1.1.2021.

47
 Required
Prepare Machinery account for the year 2021

8. The Machinery Account of a Factory showed a balance of ₹ 20,00,000 on 1st January,

2019. Its accounts were made up on 31st December each year and depreciation are
written off at 10% p.a. under the Diminishing Balance Method.
On 1st June 2019, a new machinery was acquired at a cost of ₹ 3,00,000 and installation
charges incurred in erecting the machine works out to ₹ 20,000 on the same date. On 1st
June, 2019 a machine which had cost ₹ 4,50,000 on 1st January 2017 was sold for ₹
75,000. Another machine which had cost ₹ 4,00,000 on 1st January, 2018 was scrapped
on the same date and it realized nothing.
Write a plant and machinery account for the year 2019, allowing the same rate of
depreciation as in the past calculating depreciation to the nearest multiple of a Rupee.

9. Amazing group had Property, Plant & Equipment (PP&E) with a book value of ₹
45,00,000 on 31st December 2019. The balance in Revaluation Surplus on that date was
₹ 5,00,000. As part of their practice of revaluing the assets on yearly basis, another
revaluation was carried out on 31st December 2019. Evaluate the impact of Revaluation
if the Fair Value as a result of Revaluation done on 31st December 2019 was (a) ₹
47,00,000 (b) ₹ 42,00,000 and (c) ₹ 38,00,000. Also, give the journal entries.

10. The Machinery Account of a Factory showed a balance of ₹ 95 Lakhs on 1st April,2020.
The Books of Accounts
Depreciation is written off of the Factory are closed on 31st March every year and @
10% per annum under the Diminishing Balance Method. On 1st September,2020 a new
machine was acquired at a cost of ₹ 14 Lakhs and ₹ 44,600 was incurred on the same
day as installation charges for erecting the machine. On 1st September,2020 a machine
which had cost ₹ 21,87,000 on 1st April,2018 was sold for ₹ 3,75,000. Another machine
which had cost ₹ 21,85,000 on 1st April,2019 was scrapped on 1st September,2020 and
it realized nothing.
Prepare Machinery Account for the year ended 31st March,2021. Allow the same rate
of depreciation as in the past and calculate depreciation to the nearest multiple of a
rupee. Also show all the necessary working notes.

11. The following balances appear in the books of Dheeraj Enterprises:

₹
Machinery account as on 01.04.2021 12,00,000
Provision for depreciation account as on 01.04.2021 4,65,000
On 1st October, 2021 the Machinery which was purchased on 1st April, 2018 for ₹
2,00,000 was sold for ₹ 1,10,000 and on the same date another Machinery was purchased
for ₹ 4,80,000. The firm has been charging depreciation at 10% p.a. on written down

48
 value of the Machinery every year. Prepare the Machinery account, Provision for
Depreciation account and Machinery disposal account for the year ending 31st March,
2022.

12. A purchased a machinery for ₹ 1,30,000 on 1st April, 2019 and paid ₹ 20,000 for freight
& installation charges. On 1st October, 2021 another machine was purchased for 50,000
and sold old machinery for ₹ 1,00,000. The machine purchased on 1st October, 2021
was installed on 1st January, 2022.
Under existing practice, the company is charging depreciation @ 20% p.a. on the
original cost. However, from 1st April, 2021 it decided to adopt WDV method and
charge depreciation @15% p.a. You are required to prepare Machinery Account from
1st April, 2019 to 31st March, 2022.

13. On 1st January, 2019 Kohinoor Transport Company purchased a Bus for ₹ 8,00,000. On
1st July, 2020 this bus was damaged due to fire and was completely destroyed and ₹
6,00,000 were received by a cheque from the Insurance Company in full settlement on
1st October, 2020. On 1st July, 2020 another Bus was purchased by the company for₹
10,00,000.
The Company charges Depreciation @ 20% per annum under the WDV Method.
Calculate the amount of depreciation for the year ended 31 st March, 2021 and gain or
loss on the destroyed Bus
Bill of exchange
1. On 1st January 2018, Akshay draws two bills of exchange for ₹ 16,000 and ₹
25,000.
The bill of exchange for ₹ 16,000 is for two months while the bill of exchange for
₹ 25,000 is for three months. These bills are accepted by Vishal. On 4th March,
2018, Vishal requests Akshay to renew the first bill with interest at 15% p.a. for a
period of two months. Akshay agreed to this proposal. On 25th March, 2018,
Vishal retires the acceptance for ₹ 25,000, the interest rebate i.e. discount being ₹
250. Before the due date of the renewed bill, Vishal becomes insolvent and only
50 paisa in a rupee could be recovered from his estate.
Show the Journal Entries (with narrations) in the books of Akshay. May 2019

2. Suresh draws a bill for ₹15,000 on Anup on 15th April, 2020 for 3 months, which
is returned by Anup to Suresh after accepting the same. Suresh gets it discounted
with the bank for ₹ 14,700 on 18th April, 2020 and remits one-third amount to
Anup. On the due date Suresh fails to remit the amount due to Anup, but he accepts
bill of ₹ 17,500 for 3 months, which Anup discounts for ₹ 17,100 and remits₹ 2,825
to Suresh. Before the maturity of the renewed bill Suresh becomes insolvent and
only 50% was realized from his estate on 31st October,2020.
Pass necessary Journal entries for the above transactions in the books of Suresh.
Nov 2020

49
 3. Prepare Journal entries for the following transactions in Samarth’s books.
1) Samarth’s acceptance to Aarav for ₹ 1,250 discharged by a cash payment of ₹ 500
and a new bill for the balance plus ₹ 25 for interest.
2) G. Gupta’s acceptance for ₹ 4,000 which was endorsed by Samarth to Sahni was
dishonoured. Sahni paid ₹ 20 noting charges. Bill withdrawn against cheque.
3) Harshad retires a bill for ₹ 5,000 drawn on him by Samarth for ₹ 20 discount.

4) Samarth’s acceptance to Patel for ₹ 19,000 discharged by Sandeep Chadha’s

acceptance to Samarth for a similar amount. RTP MAY 21

4. Prepare Journal entries for the following transactions in David’s books.

i. David’s acceptance to Samuel for ₹ 5,000 discharged by a cash payment of ₹ 1,000
and a new bill for the balance plus ₹ 100 for interest.
ii. Samantha’s acceptance for ₹ 8,000 which was endorsed by David to Flex was
dishonoured. Flex paid ₹ 50 noting charges. Bill withdrawn against cheque.
iii. Simon retires a bill for ₹ 2,000 drawn on him by David for ₹ 20 discount.
iv. David’s acceptance to Ralph for ₹ 20,000 discharged by Ralph’s Kent’s acceptance
to David for a similar amount. RTP NOV 21

5. Mr. B accepted a bill for ₹ 10,000 drawn on him by Mr. A on 1st August, 2017 for
3 months. This was for the amount which B owed to A. On the same date Mr. A
got the bill discounted at his bank for ₹ 9,800. On the due date, B approached A for
renewal of the bill. Mr. A agreed on condition that ₹ 2,000 be paid immediately
along with interest on the remaining amount at 12% p.a. for 3 months and that for
the remaining balance B should accept a new bill for 3 months. These arrangements
were carried through. On 31st December, 2017, B became insolvent and his estate
paid 40%.

6. Priya owed ₹5,00,000 to Pratika. On 1st October, 2022, Priya accepted a bill drawn
by Pratika for the amount at 3 months. Pratika got the bill discounted with his bank
for ₹4,95,000 on 3rd October, 2022. Being unable to pay the amount on due date,
Priya approached Pratika for renewal of the bill. Pratika agreed on the conditions
that ₹ 2,50,000 be paid immediately together with interest on the remaining amount
at 10% per annum for 3 months and for the balance, Priya should accept a new bill
at three months. These arrangements were carried out. But afterwards, Priya
became insolvent and 60% of the amount could be recovered from his estate.
Pass journal entries (with narration) in the books of Pratika.
You are required to prepare Journal Entries in the books of Mr. A

7. Mr. David draws two bills of exchange on 1.1.2020 for ₹6,000 and ₹10,000. The
bills of exchange for ₹6,000 is for two months while the bill of exchange for
₹10,000 is for three months. These bills are accepted by Mr. Thomas. On 4.3.2020,
Mr. Thomas requests Mr. David to renew the first bill with interest at 18% p.a. for
a period of two months. Mr. David agrees to this proposal. On 20.3.2020, Mr.

50
 Thomas retires the acceptance for ₹10,000, the interest rebate i.e. discount being
₹100. Before the due date of the renewed bill, Mr. Thomas becomes insolvent and
only 50 paise in a rupee could be recovered from his estate.
You are to give the journal entries in the books of Mr. David.

8. On 1st July, 2019 Gorge drew a bill for ₹1,80,000 for 3 months on Harry for mutual
accommodation. Harry accepted the bill of exchange. Gorge had purchased goods
worth ₹1,81,000 from Jack on the same date. Gorge endorsed Harry’s acceptance
to Jack in full settlement. On 1st September, 2019, Jack purchased goods worth
₹1,90,000 from Harry. Jack endorsed the bill of exchange received from Gorge to
Harry and paid ₹ 9,000 in full settlement of the amount due to Harry. On 1st
October, 2019, Harry purchased goods worth ₹2,00,000 from Gorge. Harry paid
the amount due to Gorge by cheque. Give the necessary Journal Entries in the books
of Harry and Gorge.

9. For the mutual accommodation of ‘X’ and ‘Y’ on 1st April, 2019, ‘X’ drew a four
months’ bill on ‘Y’ for ₹4,000. ‘Y’ returned the bill after acceptance of the same
date. ‘X’ discounts the bill from his bankers @ 6% per annum and remit 50% of
the proceeds to ‘Y’. On due date ‘X’ is unable to send the amount due and therefore
‘Y’ draws a bill for ₹7,000, which is duly accepted by ‘X’. ‘Y’ discounts the bill
for ₹6,600 and sends ₹1,300 to ‘X’. Before the bill is due for payment ‘X’ becomes
insolvent. Later 25 paise in a rupee received from his estate. Record Journal entries
in the books of ‘X’.

10. Anil draws a bill for ₹9,000 on Sanjay on 5th April, 2019 for 3 months, which
Sanjay returns it to Anil after accepting the same. Anil gets it discounted with the
bank for ₹ 8,820 on 8th April, 2019 and remits one-third amount to Sanjay. On the
due date Anil fails to remit the amount due to Sanjay, but he accepts a bill for
₹12,600 for three months, which Sanjay discounts it for ₹ 12,330 and remits ₹ 2,220
to Anil. Before the maturity of the renewed bill Anil becomes insolvent and only
50% was realized from his estate on 15th October, 2019. Pass necessary Journal
entries for the above transactions in the books of Anil.

11. On 12th May, 2020 A sold goods to B for 36,470 and drew upon the later two bills
one for ₹ 16,470 at one month and the other for ₹ 20,000 at three months. B accepted
both the bills. On 5th June, 2020 A sent both the bills to his banker for collection
on the due dates. The first bill was duly met. But due to some temporary financial
difficulties, B failed to honour the second bill on the due date and the bank had to
pay ₹ 20 as noting charges. However, on 16th August, 2020 it was agreed between
A and B that B would immediately pay ₹ 8,020 in cash and accept a new bill at 3
months for ₹ 12,480 which included interest for postponement of the part payment
of the dishonoured bill. A immediately sent new acceptance to its bank for
collection on the due date. On 1st October,2020 B approached A offering ₹ 12,240
for retirement of his acceptance A accepted the request.
You are required to pass journal entries of all the above transactions in the books

51
 of A.

12. Mr. Tanu accepted a bill for ₹ 1,00,000 drawn on him by Mr. Manu on 1st
August,2021 for 3 months. This was for the amount which Tanu owed to Manu. On
the same date Mr. Manu got the bill discounted at his bank for ₹ 98,000.
On the due date, Tanu approached Manu for renewal of the bill. Mr. Manu agreed
on condition that ₹ 20,000 be paid immediately along with interest on the remaining
amount at 12% p.a. for 3 months and that for the remaining balance Tanu should
accept a new bill for 3 months. These arrangements were carried through. On 31st
December,2021, Tanu became insolvent and his estate paid 40%.
Prepare Journal Entries in the books of Mr. Manu.

13. T draws on J a bill of exchange for ₹ 1,80,000 on 1st April, 2022 for 3 months. J
accepts the bill and sends it to T, who gets it discounted from his banker for ₹
1,72,800. T 'immediately remits ₹ 57,600 to J. On the due date, T, being unable to
remit the amount due, accepts a bill for ₹ 2,52,000 for three months, which is
discounted by J from his banker for ₹ 2,40,660. J sends ₹ 40,440 to T. Before the
maturity of the bill, T becomes bankrupt and his estate paying fifty paisa in a rupee.
Give the journal entries in the books of T and J.

Final accounts
1. Following is the trial balance of M/s. Chandu traders as on 31st march 2021. Prepare
Trading and Profit& Loss Account for the year ended 31st march 2021 and Balance sheet
as on that date.
Particulars Debit Credit
Capital 9,00,000
Building 3,15,000
Drawings 1,18,000
Furniture and fittings 17,500
Motor van 1,25,000
Loan from Hari 1,50,000
Interest paid on above 9,000
Sales 10,00,000
Purchase 7,50,000
Opening stock 2,50,000
Establishment expenses 1,15,000
Wages 12,000
Insurance 11,000
Commission received 24,500

52
 Sundry debtors 3,28,100
Bank balance 2,46,900
Sundry creditors 2,10,000
Interest 13,000
Total 22,97,500 22,97,500
The value of inventory on 31/03/2021 was 3,20,000
2. The following is the trial balance of Mahesh on 31st march 2019
Particulars Debit Credit
Capital 2,00,000
Inventory on 01.04.2018 2,40,000
Plant and machinery 2,50,000
Furniture and fittings 13,000
Debtors and creditors 2,28,500 2,60,000
Purchase and sales 10,67,500 24,00,000
Bills receivable and bills payable 36,000 28,000
Return inwards and return outward 46,500 27,500
Discount 32,500 18,500
Bad debt 12,500
General expenses 5,000
Insurance 31,500
Electricity charges 4,000
Rent 30,000
Drawings 35,000
Profit on sale of fixed Furniture 12,500
Salaries 70,000
Wages 7,50,000
Cash at bank 32,500
Cash in hand 2,000
Motor vehicle 60,000
Total 29,46,500 29,46,500
Inventory on 31/03/2019 was 2,60,000
You are required to prepare Trading and Profit and Loss account for the year ended
31/03/2019 and balance sheet as on that date.

53
3. Following is the Trial Balance of M/s kasturi Agencies as on 31st March, 2015. Prepare
Trading, Profit and Loss Account for the year ended 31st March, 2015 and a Balance Sheet
on that date.
Particulars ₹ ₹
Capital 1,00,000

Buildings 15,000

Drawings 18,000

Furniture & Fittings 7,500

Motor van 25,000

Loan from Hari 15,000

Interest paid on above 900

Sales 1,00,000

Purchases 75,000

Opening stock 25,000

Establishment expenses 15,000

Wages 2,000

Insurance 1,000

Commission received 4,500

Sundry debtors 28,100

Bank balance 20,000

Sundry creditors 10,000

Interest 3,000

2,32,500 2,32,500

The value of stock on 31-3-2015 was ₹32,000.

4. Following particulars are extracted from the books of Mr. Vaid for the year ended
31st March, 2021.

54
 Particulars Amount Particulars Amount
Debit Balances: Rs. Credit Balances: Rs.
Cash in hand 3,000 Capital 32,000
Purchase 24,000 Bank overdraft 4,000
Sales return 2,000 Sales 18,000
Salaries 5,000 Purchase return 4,000
Tax and Insurance 1,000 Interest 2,000
Bad debts 1,000 Creditors 4,000
Debtors 10,000 Commission 1,000
Investments 8,000 Bills payable 5,000
Opening stock 2,800
Drawings 4,000
Furniture 3,200
Bills receivables 6,000
70,000 70,000
Closing stock was valued at Rs. 9,000.
You are required to prepare the final accounts after making above adjustments.

5. The following are the balances extracted from the books of Shri Raghuram as on
31.03.2018, who carries on business under the name and style of M/s Raghuram and
Associates at Chennai:
Particulars Debit (₹) Credit (₹)
Capital A/c 14,11,400
Purchases 12,00,000
Purchase Returns 18,000
Sales 15,00,000
Sales Returns 24,000
Freight Inwards 62,000
Carriage Outwards 8,500
Rent of Godown 55,000
Rates and Taxes 24,000
Salaries 72,000
Discount allowed 7,500
Discount received 12,000
Drawings 20,000
Printing and Stationery 6,000
Insurance premium 48,000

55
 Electricity charges 14,000
General expenses 11,000
Bank charges 3,800
Bad debts 12,200
Repairs the Motor vehicle 13,000
Interest on loan 4,400
Profit on sale of investment 10,000
Loan from Mr. Rajan 60,000
Sundry creditors 62,000
Motor vehicles 1,00,000
Land and Buildings 5,00,000
Office equipment 2,00,000
Furniture and Fixtures 50,000
Stock as on 31.03.2017 3,20,000
Sundry debtors 2,80,000
Cash at Bank 22,000
Cash in Hand 16000
Total 16,000
30,73,400 30,73,400
Prepare Trading and Profit and Loss Account for the year ended 31.03.2018 and the
Balance Sheet as at that date after making provision for the following:
Value of stock at the close of the year was ₹ 4,10,000.
6. From the following information prepare trading and profit and loss account and Balance
sheet for the year ended 31st March 2017
Particulars Debit Credit
Capital. 5,00,000
Loan from Bank 5,00,000
Investment in Gvt Securities 4,50,000
Sales 39,00,000
Returns 90,000 1,44,000
Purchase 20,10,000
Wages 2,40,000
Salaries 2,00,000
Carriage inward 1,20,000
Carriage outward 90,000
Freight 43,000
Printing and stationery 22,000

56
 Profit on sale of furniture 12,000
Sundry debtors 4,00,000
Trade payables 2,40,000
Rent 1,20,000
Discount 39,000 34,000
Opening inventory 1,40,000
Drawings 1,60,000
Plant and machinery 4,00,000
Furniture and fixtures 2,40,000
Trademark 4,11,000
Commission 1,92,000 52,000
Interest 50,000 35,000
54,17,000 54,17,000

Closing Inventory valued at 1,20,000

7. Following is the Trial Balance of M/s Brijesh and Sons. Prepare final accounts for the year
ended on 31st March 2013.
Particulars Debit (₹) Credit (₹)
Stock as on 01.04.2012: Finished goods 2,00,000
Purchases and Sales 22,00,000 35,00,000
Bills receivables 50,000
Returns 1,00,000 50,000
Carriage Inwards 50,000
Debtors and Creditors 2,00,000 4,00,000
Carriage Outwards 40,000
Discounts 5,000 5,000
Salaries and wages 2,20,000
Insurance 60,000
Rent 60,000
Wages and salaries 80,000
Bad debts 10,000
Furniture 4,00,000

57
 Brijesh’s capital 5,00,000
Brijesh’s drawing 70,000
Loose tools 1,00,000
Printing & stationery 30,000
Advertising 50,000
Cash in hand 45,000
Cash at bank 2,00,000
Petty Cash 5,000
Machinery 3,00,000
Commission 10,000 30,000
Total 44,85,000 44,85,000
Adjustments: (i) Finished goods stock. Stock on 31st March was valued at 400,000.

8. Mr. Arvindkumar had a small business enterprise. He has given the trial balance as at 31st
March 2013
Particulars Debit (₹) Credit (₹)
Mr. Arvinkumar’s Capital 1,00,000
Machinery 36,000
Depreciation on machinery 4,000
Repairs to machinery 5,200
Wages 54,000
Salaries 21,000
Income tax of Mr. Arvindkumar 1,000
Cash in had 4,000
Land & Building 1,49,000
Depreciation on building 5,000
Purchases 2,50,000
Purchase returns 3,000
Sales 4,98,000
Citi Bank 7,600
Accrued Income 3,000
Salaries outstanding 4,000

58
 Bills receivables 30,000
Discount 10,000
Bills payable 16,000
Bad debts 2,000
Discount on purchases 7,080
Debtors 70,000
Creditors 62,520
Opening stock 74,000
Total 708200 708200
Additional information:
Stock as on 31st March 2013 was valued at ₹ 60,000

9. The following is the trial balance of Hari as on 31st March, 2014. You are requested to
prepare the trading and profit and loss account for the year ended 31st March, 2014 and a
balance sheet as on that date after making the necessary adjustments
Particular Amount Amount
Purchases 3,10,000
Sales 4,20,000
Discount on sales 20,000
Stock of goods as on 1.4.13 50,000
Cash in hand 2,100
Cash at bank 12,000
Mr. Hari’s capital 2,88,600
Drawings 4,000
Rates and taxes 5,000
Salaries 32,000
Postage and telephones 11,500
Commission paid to salesmen 35,000
Insurance 9,000
Furniture and fittings 22,000
Advertising 17,000
Printing and stationery 3,000

59
 Motor car 48,000
Bad debts 2,000
Cash discounts 4,000
General expenses 14,000
Carriage inwards 22,000
Carriage outwards 10,000
Wages 20,000
Sundry creditors 40,000
Sundry debtors 96,000
7,48,600 7,48,600
The following adjustments are to be made:
Stock on 31st March, 2014 was valued at ₹ 1,45,000.

10. Following is the trial balance of Amar as on 31st March, 2013

Particulars Debit Credit
Capital Account 8,00,000
Drawing Account 60,000
Stock (1.4.2012) 4,50,000
Purchases 26,00,000
Sales 31,00,000
Furniture 1,00,000
Sundry Debtors 4,00,000
Freight and Octroi 46000
Trade Expenses 5,000
Salaries 55,000
Rent 24,000
Advertising Expenses 50,000
Insurance Premium 4,000
Commission 13,000
Discount 2,000
Bad Debts 16,000
Provision for Bad Debts 9,000

60
 Creditors 2,00,000
Cash in hand 52,000
Bank 58,000
Goodwill (at cost) 2,00,000
4122000 41,22,000

Adjustments:
Stock on 31st March, 2013 was valued at ₹ 5,30,000.
Prepare trading and profit and loss account for the year ended 31st March, 2013 and
balance sheet as on that date.

11. Following particulars are extracted from the books of Mr. Sandeep for the year ended
31st December, 2018.
Particulars Amount Particulars Amount
Debit Balances: ₹ Credit Balances: ₹
Cash in hand 1,500 Capital 16,000
Purchase 12,000 Bank overdraft 2,000
Sales return 1,000 Sales 9,000
Salaries 2,500 Purchase return 2,000
Tax and Insurance 500 Interest 1,000
Bad debts 500 Creditors 2,000
Debtors 5,000 Commission 500
Investments 4,000 Bills payable 2,500
Opening stock 1,400
Drawings 2,000
Furniture 1,600
Bills receivables 3,000
35,000 35,000
Other information
Closing stock was valued at ₹ 4,500
You are required to prepare the final accounts after making above adjustments.

12. From the following Trial Balance of Bharat Tushar as on 31st March, 2019, you are
required to prepare a Trading and Profit & Loss Account for the year ended 31st March,
2019 and Balance Sheet as on that date,

61
 Particulars Debit Balance (₹)Credit Balance (₹)
Capital and Drawings 24,000 1,60,000
Furniture and Fixtures 8,000 -
Plant and Machinery 60,000 -
Patents 40,000 -
Opening Stock 40,000 -
Purchases and Sales 1,70,000 2,64,000
Salaries 14,800 -
Wages 30,000 -
Sundry Debtors and Creditors 20,400 24,000
Land 28,350 -
Loan from Shyam - 20,000
Postage and Fax 3,000 -
Rent, Rates and Taxes 7,200 -
Bad Debts 800 -
Discount - 1,200
Carriage Inward 400 -
Interest on loan 300 -
Insurance 1,600 -
Travelling expenses 1,000 -
Sundry expenses 600 -
Cash and Bank 33,750 -
Bank Overdraft - 15,000
Total 4,84,200 4,84,200
Closing Stock is valued at ₹ 30,000.

13. The following information have been obtained from the trail balance of Shiv&co
Name of accounts Dr Cr
Wages 1,80,000
Salaries 3,43,000
Rent received 2,70,000
Repair 6,000
Insurance premium 48,000
8% investment 15,00,000
Interest on investment 60,000
Adjustments.

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 1) Wages for two month is outstanding
2) Salaries include prepaid salaries for two months
3) Rent received for 18 months
4) Outstanding repair 6,000
5) Only 2/3 of insurance premium is related to current year
6) Interest on investment is accrued for 6 months
Give necessary entries for above adjustments. also prepare Adjusted Trial balance.

14. Max & Co. employs a team of 9 workers who were paid ₹ 40,000 per month each in the
year ending 31st December, 2018. At the start of 2019, the company raised salaries by
10% to ₹ 44,000 per month each.
On 1 July, 2019 the company hired 2 trainees at salary of ₹ 21,000 per month each.
The work force are paid salary on the first working day of every month, one month
in arrears, so that the employees receive their salary for January on the first
working day of February, etc.

You are required to calculate :

i. Amount of salaries which would be charged to the profit and loss account for the
year ended 31st December, 2019.
ii. Amount actually paid as salaries during 2019.
iii. Outstanding salaries as on 31st December, 2019. Nov 2020

15. Mr. K is engaged in business of selling magazines. Several of his customers pay money
in advance for subscribing his magazines. Information related to year ended 31st March,
2020 has been given below:
On 1st April, 2019 he had a balance of ₹ 3,00,000 advance from customers of
which ₹ 2,25,000 is related to year 2019-20 while remaining pertains to year 2020-
21- During the year 2019-20 he made cash sales of ₹ 7,50,000.

You are required to compute:

Total income for the year 2019-20.

Total money received during the year, if the closing balance as on 31st March,
2020 in Advance from Customers Account is ₹ 2,55,000.

16. Following is the trial balance of M/s. Chandu traders as on 31st march 2021. Prepare
Trading and Profit& Loss Account for the year ended 31st march 2021 and Balance sheet
as on that date.

63
 Particulars Debit Credit
Capital 9,00,000
Building 3,15,000
Drawings 1,18,000
Furniture and fittings 17,500
Motor van 1,25,000
Loan from Hari @12% 1,50,000
Interest paid on above 9,000
Sales 10,00,000
Purchase 7,50,000
Opening stock 2,50,000
Establishment expenses 1,15,000
Wages 12,000
Insurance 11,000
Commission received 24,500
Sundry debtors 3,28,100
Bank balance 2,46,900
Sundry creditors 2,10,000
Interest 13,000
Total 22,97,500 22,97,500
Adjustments
1. The value of inventory on 31/03/2021 was 3,20,000
2. Outstanding wages 1500
3. Prepaid insurance 3,000
4. Commission received in advance 13,000
5. Allowed interest on capital @ 10%
6. Depreciate building 10% Furniture 10% Motor van 15 %
7. Charge interest on drawings 5,000
8. Accrued interest 2,500

17. The following is the trial balance of Mahesh on 31st march 2019

64
 Particulars Debit Credit
Capital 2,00,000
Inventory on 01.04.2018 2,40,000
Plant and machinery 2,50,000
Furniture and fittings 13,000
Debtors and creditors 2,28,500 2,60,000
Purchase and sales 10,67,500 24,00,000
Bills receivable and bills payable 36,000 28,000
Return inwards and return outward 46,500 27,500
Discount 32,500 18,500
Bad debt 12,500
General expenses 5,000
Insurance 31,500
Factory lighting 4,000
Rent 30,000
Drawings 35,000
Provision for doubtful debt 12,500
Salaries 70,000
Wages 7,50,000
Cash at bank 32,500
Cash in hand 2,000
Motor vehicle 60,000
Total 29,46,500 29,46,500

The following adjustments are to be made

a) Inventory on 31/03/2019 was 2,60,000
b) Furniture to be depreciated by 5 %
c) Depreciation to be charged @ 15% on plant and machinery and motor vehicle
d) Factory lighting is due for 3 months but not paid 1,500
e) Write off further bad debt 3,500
f) The provision for bad debt to be increased to 15,000
g) During the year machinery was purchased for 1,00,000 but it was debited to purchase
account

65
 You are required to prepare Trading and Profit and Loss account for the year ended
31/03/2019 and balance sheet as on that date.

18. Following is the Trial Balance of M/s kasturi Agencies as on 31st March, 2015. Prepare
Trading, Profit and Loss Account for the year ended 31st March, 2015 and a Balance Sheet
on that date.

Particulars ₹ ₹
Capital 1,00,000

Buildings 15,000

Drawings 18,000

Furniture & Fittings 7,500

Motor van 25,000

Loan from Hari @ 12% interest 15,000

Interest paid on above 900

Sales 1,00,000

Purchases 75,000

Opening stock 25,000

Establishment expenses 15,000

Wages 2,000

Insurance 1,000

Commission received 4,500

Sundry debtors 28,100

Bank balance 20,000

Sundry creditors 10,000

Interest 3,000

2,32,500 2,32,500

Adjustments: (a) The value of stock on 31-3-2015 was ₹32,000. (b) outstanding wages
₹500 (c) Prepaid Insurance ₹300. (d) Commission received in advance ₹ 1,300 (e) Allow
interest on capital @ 10%. (f) Depreciate building 2½%. Furniture & Fitting 10%, Motor

66
 van 10%. (g) charge interest on drawings ₹ 500. (h) Accrued Interest ₹ 500.

19. Following particulars are extracted from the books of Mr. Vaid for the year ended
31st March, 2021.
Particulars Amount Particulars Amount
Debit Balances: Rs. Credit Balances: Rs.
Cash in hand 3,000 Capital 32,000
Purchase 24,000 Bank overdraft 4,000
Sales return 2,000 Sales 18,000
Salaries 5,000 Purchase return 4,000
Tax and Insurance 1,000 Provision for Bad debts 2,000
Bad debts 1,000 Creditors 4,000
Debtors 10,000 Commission 1,000
Investments 8,000 Bills payable 5,000
Opening stock 2,800
Drawings 4,000
Furniture 3,200
Bills receivables 6,000
70,000 70,000

Other information :
a) Closing stock was valued at Rs. 9,000.
b) Goods withdrawn by Mr. Vaid for own consumption Rs. 4000 included in purchases.
c) Salary of Rs. 200 and Tax of Rs. 400 are outstanding whereas insurance Rs. 100 is prepaid.
d) Commission received in advance is Rs. 200.
e) Interest accrued on investment is Rs. 420.
f) Interest on overdraft is unpaid Rs. 600.
g) Provision for bad debts is to be kept at Rs. 2,000.
h) Depreciation on furniture is to be charged @ 10%.
You are required to prepare the final accounts after making above adjustments.

20. The following are the balances extracted from the books of Shri Raghuram as on
31.03.2018, who carries on business under the name and style of M/s Raghuram and
Associates at Chennai:

67
 Particulars Debit (₹) Credit (₹)
Capital A/c 14,11,400
Purchases 12,00,000
Purchase Returns 18,000
Sales 15,00,000
Sales Returns 24,000
Freight Inwards 62,000
Carriage Outwards 8,500
Rent of Godown 55,000
Rates and Taxes 24,000
Salaries 72,000
Discount allowed 7,500
Discount received 12,000
Drawings 20,000
Printing and Stationery 6,000
Insurance premium 48,000
Electricity charges 14,000
General expenses 11,000
Bank charges 3,800
Bad debts 12,200
Repairs the Motor vehicle 13,000
Interest on loan 4,400
Provision for Bad-debts 10,000
Loan from Mr. Rajan 60,000
Sundry creditors 62,000
Motor vehicles 1,00,000
Land and Buildings 5,00,000
Office equipment 2,00,000
Furniture and Fixtures 50,000
Stock as on 31.03.2017 3,20,000
Sundry debtors 2,80,000
Cash at Bank 22,000
Cash in Hand 16,000
Total 16,000
30,73,400 30,73,400

Prepare Trading and Profit and Loss Account for the year ended 31.03.2018 and the
Balance Sheet as at that date after making provision for the following:
a) Depreciate Building by 5%, Furniture and Fixtures by 10%, Office Equipment by 15%
and Motor Car by 20%.

68
b) Value of stock at the close of the year was ₹ 4,10,000.
c) One month rent for godown is outstanding.
d) Interest on loan from Rajan is payable @ 10% per annum. This loan was taken on
01.07.2017
e) Reserve for bad debts is to be maintained at 5% of Sundry debtors.
f) Insurance premium includes ₹ 42,000 paid towards proprietor's life insurance policy and
the balance of the insurance charges cover the period from 01.04.2017 to 30.06.2018.

21. From the following information prepare trading and profit and loss account and Balance
sheet for the year ended 31st March 2017

Particulars Debit Credit

Capital. 5,00,000
Loan from Bank @12% 5,00,000
Investment in Gvt Securities @ 9% 4,50,000
Sales 39,00,000
Returns 90,000 1,44,000
Purchase 20,10,000
Wages 2,40,000
Salaries 2,00,000
Carriage inward 1,20,000
Carriage outward 90,000
Freight 43,000
Printing and stationery 22,000
Provision for Bad debt 12,000
Sundry debtors 4,00,000
Trade payables 2,40,000
Rent 1,20,000
Discount 39,000 34,000
Opening inventory 1,40,000
Drawings 1,60,000
Plant and machinery 4,00,000
Furniture and fixtures 2,40,000
Trademark 4,11,000

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 Commission 1,92,000 52,000
Interest 50,000 35,000
54,17,000 54,17,000

Additional information;
Depreciation Plant and machinery 20%, Furniture and fixtures 10%, Provision to be
created @ 5 % on debtors, Closing Inventory valued at 1,20,000

22. The balance sheet of S on 1st April, 2021 was as follows:

Particulars Amount (₹) Particulars Amount

(₹)
Trade Payables 6,50,000 Furniture and Fixtures 6,50,000
Expenses Payable 75,000 Vehicle 2,75,000
Capital 22,00,000 Trade Receivable 11,00,000
Cash at Bank 4,75,000
Inventories 4,25,000
29,25,000 29,25,000

During 2021-22, his profit and Loss Account revealed a net profit of ₹ 6,70,000. This was
after allowing for the following:
i. Commission paid to selling agent ₹ 65,000
ii. Discount received from creditors ₹ 75,000
iii. Purchased a vehicle of ₹ 50,000 on 31st March, 2022
iv. Depreciation on Furniture and Fixtures @ 10% and on Vehicle @ 20%
v. A provision for doubtful debts @ 3% of the trade receivables as at 31st March, 2022
But while preparing the Profit and Loss Account he had forgotten to provide for
1. prepaid expenses ₹ 15,000 and
2. outstanding commission₹ 35,000.
His current assets and liabilities on 31st March, 2022 were: Inventories ₹ 6,50,000. Trade
Receivables 13,00,000 (before provision for doubtful debts), cash at Bank 5,50,000 and
Trade Payables ₹ 1,46,000.
During the year he introduced further capital of ₹ 3,00,000 into the business.
You are required to prepare the balance sheet as at March 31, 2022.

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23. Following is the Trial Balance of M/s Brijesh and Sons. Prepare final accounts for the year
ended on 31st March 2013.
Particulars Debit (₹) Credit (₹)
Stock as on 01.04.2012: Finished goods 2,00,000
Purchases and Sales 22,00,000 35,00,000
Bills receivables 50,000
Returns 1,00,000 50,000
Carriage Inwards 50,000
Debtors and Creditors 2,00,000 4,00,000
Carriage Outwards 40,000
Discounts 5,000 5,000
Salaries and wages 2,20,000
Insurance 60,000
Rent 60,000
Wages and salaries 80,000
Bad debts 10,000
Furniture 4,00,000
Brijesh’s capital 5,00,000
Brijesh’s drawing 70,000
Loose tools 1,00,000
Printing & stationery 30,000
Advertising 50,000
Cash in hand 45,000
Cash at bank 2,00,000
Petty Cash 5,000
Machinery 3,00,000
Commission 10,000 30,000
Total 44,85,000 44,85,000

Adjustments: (i) Finished goods stock. Stock on 31st March was valued at Cost price
₹ 4,20,000 and market price ₹ 400,000. (ii) Depreciate furniture @ 10% p.a. and
machinery @ 20% p.a. on reducing balance method. (iii) Rent of ₹ 5,000 was paid in

71
 advance. (iv) Salaries & wages due but not paid ₹ 30,000. (v)Make a provision for
doubtful debts @ 5% on debtors. (vi) Commission receivable ₹ 5,000.
24. Mr. Arvindkumar had a small business enterprise. He has given the trial balance as at 31st
March 2013
Particulars Debit (₹) Credit (₹)

1,00,000
Mr. Arvinkumar’s Capital
Machinery 36,000
Depreciation on machinery 4,000
Repairs to machinery 5,200
Wages 54,000
Salaries 21,000
Income tax of Mr. Arvindkumar 1,000
Cash in had 4,000
Land & Building 1,49,000
Depreciation on building 5,000
Purchases 2,50,000
3,000
Purchase returns
4,98,000
Sales
7,600
Citi Bank
Accrued Income 3,000
4,000
Salaries outstanding
Bills receivables 30,000
10,000
Provision for doubtful debts
16,000
Bills payable
Bad debts 2,000
7,080
Discount on purchases
Debtors 70,000
62,520
Creditors

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 Opening stock 74,000
708200
Total 708200
Additional information:
a) Stock as on 31st March 2013 was valued at ₹ 60,000
b) Write off further ₹ 6,000 as bad debt and maintain a provision of 5% on doubtful debt.
c) Goods costing ₹ 10,000 were sent on approval basis to a customer for ₹ 12,000 on
30th March, 2013. This was recorded as actual sales.
d) ₹ 2,400 paid as rent for office was debited to Landlord’s A/c and was included in
debtors.
e) General Manager is to be given commission at 10% of net profits after charging his
commission.
f) Works manager is to be given a commission at 12% of net profit before charging
General Manager’s commission and his own.
You are required to prepare final accounts in the books of Mr. Arvindkumar.
25. The following is the trial balance of Hari as on 31st March, 2014. You are requested to
prepare the trading and profit and loss account for the year ended 31st March, 2014 and a
balance sheet as on that date after making the necessary adjustments
Amount
Particular Amount
Purchases 3,10,000
4,20,000
Sales
Discount on sales 20,000
Stock of goods as on 1.4.13 50,000
Cash in hand 2,100
Cash at bank 12,000
2,88,600
Mr. Hari’s capital
Drawings 4,000
Rates and taxes 5,000
Salaries 32,000
Postage and telephones 11,500
Commission paid to salesmen 35,000
Insurance 9,000
Furniture and fittings 22,000

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 Advertising 17,000
Printing and stationery 3,000
Motor car 48,000
Bad debts 2,000
Cash discounts 4,000
General expenses 14,000
Carriage inwards 22,000
Carriage outwards 10,000
Wages 20,000
40,000
Sundry creditors
Sundry debtors 96,000
7,48,600
7,48,600
The following adjustments are to be made:
a) Stock on 31st March, 2014 was valued at ₹ 1,45,000.
b) Mr. Hari has taken out for personal use goods costing ₹ 5,000 out of purchases during
the year.
c) Furniture purchased for ₹ 10,000 was wrongly included in purchases.
d) ₹ 5,000 due from a debtor included in sundry debtors has become bad.
e) Creditors include a balance of ₹ 4,000 to the credit of Mr. Ram in respect of which it
has been settled that only ₹ 1,000 is to be paid to him.
f) Provision for bad debts to be created at 5% on sundry debtors.
g) Depreciate furniture and fittings by 10% and motor car by 25%.
h) The salesmen are entitled to a commission of 10% on sales
26. Following is the trial balance of Amar as on 31st March, 2013
Particulars Debit Credit
Capital Account 8,00,000
Drawing Account 60,000
Stock (1.4.2012) 4,50,000
Purchases 26,00,000
Sales 31,00,000
Furniture 1,00,000
Sundry Debtors 4,00,000
Freight and Octroi 46000
Trade Expenses 5,000
Salaries 55,000
Rent 24,000

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 Advertising Expenses 50,000
Insurance Premium 4,000
Commission 13,000
Discount 2,000
Bad Debts 16,000
Provision for Bad
9,000
Debts
Creditors 2,00,000
Cash in hand 52,000
Bank 58,000
Goodwill (at cost) 2,00,000
4122000 41,22,000

Adjustments:
a) Stock on 31st March, 2013 was valued at ₹ 5,30,000.
b) Salaries have been paid only for 11 months.
c) Unexpired insurance included in the figure of ₹ 4,000 appearing in trial balance is ₹ 1,000.
d) Commission earned but not yet received amounting to ₹ 1,220 is to be recorded in books of
account.
e) Provision for bad debts is to be brought upto 3% of sundry debtors.
f) Manager is to be allowed a commission of 10% of net profits after charging such commission.
g) Furniture is depreciated @10% per annum.
Prepare trading and profit and loss account for the year ended 31st March, 2013 and
balance sheet as on that date.

27. Following particulars are extracted from the books of Mr. Sandeep for the year ended
31st December, 2018.
Particulars Amount Particulars Amount
Debit Balances: ₹ Credit Balances: ₹
Cash in hand 1,500 Capital 16,000
Purchase 12,000 Bank overdraft 2,000
Sales return 1,000 Sales 9,000
Salaries 2,500 Purchase return 2,000
Tax and Insurance 500 Provision for Bad debts 1,000
Bad debts 500 Creditors 2,000
Debtors 5,000 Commission 500
Investments 4,000 Bills payable 2,500
Opening stock 1,400
Drawings 2,000
Furniture 1,600

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 Bills receivables 3,000
35,000 35,000
Other information

1. Closing stock was valued at ₹ 4,500

2. Salary of ₹ 100 and Tax of ₹ 200 are outstanding whereas insurance ₹ 50 is
prepaid.
3. Commission received in advance is ₹ 100.
4. Interest accrued on investment is ₹ 210
5. Interest on overdraft is unpaid ₹ 300
6. Reserve for bad debts is to be kept at ₹ 1,000
7. Depreciation on furniture is to be charged @ 10%
You are required to prepare the final accounts after making above adjustments.

28. The balance sheet of Mittal on 1st January, 2018 was as follows:

Liabilities Amount ₹ Assets Amount ₹

Trade payables 16,00,000 Plant & Machinery 31,00,000
Expenses payable 2,50,000 Furniture & Fixture 4,00,000
Capital 51,00,000 Trade receivables 14,50,000
Cash at bank 7,00,000
Inventories 13,00,000
69,50,000 69,50,000
During 2018, his profit and loss account revealed a net profit of ₹ 15,10,000. This
was after allowing for the following:
(i) Interest on capital @ 6% p.a.
(ii) Depreciation on plant and machinery @ 10% p.a. and on Furniture and Fixtures @
5% p.a..
(iii) A provision for Doubtful debts @ 5% of the trade receivables as at 31st December
2018.
But while preparing the profit and loss account he had forgotten to provide for
(1) outstanding expenses totalling ₹ 1,85,000 and
(2) prepaid insurance to the extent of ₹ 25,000.
His current assets and liabilities on 31st December, 2018 were:
Trade receivables ₹ 21,00,000; Cash at bank ₹ 5,20,000 and Trade payables ₹
13,84,000. During the year he withdrew ₹ 6,20,000 for domestic use. Closing
inventories is equal to net trade receivables at the year-end.
You are required to draw up revised Profit and Loss account and Balance Sheet at

76
 the end of the year.

29. Karuna decided to start business of fashion garments under the name of M/s. Designer
Wear on 1st April, 2020. She had a saving of about ₹ 10,00,000. She invested ₹ 3,00,000
out of her savings and borrowed equal amount from bank. She purchased a commercial
space for ₹ 5,00,000 and further spent ₹ 1,00,000 on its renovation to make it ready for
business
Loan and interest repaid by her in the first year are as follows:
30th June, 2020 - ₹ 15,000 principal+ ₹ 9,000 interest

30th September, 2020 - ₹ 15,000 principal+ ₹ 8,550 interest

31st December, 2020 - ₹ 15,000 principal+ ₹ 8,100 interest

31st March, 2021 - ₹ 15,000 principal+ ₹ 7,650 interest.

In view of further capital requirement, she transferred ₹ 2,00,000 from her saving
bank account to the bank account of the business. She paid security deposit of ₹
7,000 for telephone connection. Furniture of ₹ 10,000 was purchased, All
payments were made by cheque and all receipts in cash were deposited in the bank.

At the end of the year, her business showed the following results:

Particulars Amount Particulars Amount

Total Sales 20,00,00 Total Purchases 17,00,00
0 0
Electricity Expenses 40,000 Telephone Charges 50,000
paid
Cartage Outwards 60,000 Travelling Expenses 45,000
Entertainment 5,000 Maintenance Expenses 25,000
Expenses
Misc. Expenses 15,000 Electricity Expenses 20,000
Payable
Other Information:

She withdrew ₹ 5,000 by cheque each month for her personal expenses.

Depreciation on building @ 5% p.a. and oil furniture @ 10% p.a.

Closing stock in hand as on 31st March, 2021: ₹ 5,50,000

Prepare trading account, profit and loss account for the year ended 31-3-2021 and
Balance Sheet as on that date.

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30. On 31st march 2021 the Trial balance of Mr Black was as follows.
Particulars Debit Particulars Credit
Stock on 01/04/2020 Sundry creditors 1,50,000
Raw materials 2,10,000 Bills payable 75,000
Work in progress 95,000 Sale of scrap 25,000
Finished goods 1,55,000 Commission received 4,500
Sundry debtors 2,40,000 Provision for doubtful debt 16,500
Carriage on purchase 15,000 Capital 10,00,000
Bills receivable 1,50,000 Sales 16,72,000
Wages 1,30,000 Bank overdraft 85,000
Salaries 1,00,000
Telephone and postage 10,000
Repair to office furniture 3,500
Cash at bank 1,70,000
Office furniture 1,00,000
Repair to plant 11,000
Purchase 8,50,000
Plant and machinery 7,00,000
Rent 60,000
Lighting 13,500
General expenses 15,000
30,28,000 20,28,000
The following additional information available
Stock on 31st march 2021 is follows
Raw material 1,62,000
Finished goods 1,81,000
Work in progress 78,000
Salaries and wages unpaid for the year ended 31st march 2021 were respectively, 9,000
and 20,000. Machinery is to be depreciated by 10% , and office furniture by 7.5%. a
provision for doubtful debt is to be maintained at 1% of sales. Rent to be charged as ¾ to
factory and ¼ to office. lighting is to be charged as to 2/3 to factory and 1/3 to office
Prepare Manufacturing account, Trading and profit & loss account for the year ended 31st
march 2021.

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31. Mr. Shyamal runs a factory, which produces detergents. Following details were available
in respect of his manufacturing activities for the year ended 31-03-2019.
Opening work-in-progress (9000 units) 26,000
Closing work-in-progress (14,000 units) 48,000
Opening inventory of Raw Materials 2,60,000
Closing inventory of Raw Materials 3,20,000
Purchases 8,20,000
Hire charges of Machinery @ ₹ 0.70 per unit
manufactured
Hire charges of factory 2,60,000
Direct wages-contracted@ ₹ 0.80 per unit
manufactured and @ ₹ 0.40 per unit of closing W.I.P.
Repairs and maintenance 1,80,000
Units produced - 5,00,000 units
You are required to prepare a Manufacturing Account of Mr. Shyamal for the year
ended 31-03-2019.

32. Following are the Manufacturing A/c, Creditors A/c and Raw Material A/c provided by
M/s. Shivam related to financial year 2019-20. There are certain figures missing in these
accounts.
Raw Material A/c

Particulars Amount Particulars Amount

(₹) (₹)

To Opening Stock 1,27,000 By Raw Materials Consumed

A/c
- By Closing Stock -
To Creditors A/c

Creditors A/c

Particulars Amount Particulars Amount

(₹) (₹)
To Bank A/c 23,50,000 By Balance b/d 15,70,000
To Balance c/d 6,60,000 -

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 Manufacturing A/c
Particulars Amount Particulars Amount
(₹) (₹)

To Raw Material - By Trading A/c 17,44,000

A/c 3,65,000
To Wages 2,15,000
To Depreciation 2,49,000
to Direct Expenses
Additional Information:
(i) Purchase of machinery worth ₹ 12,00,000 on 1st April; 2019 has been omitted,
Machinery is chargeable at a depreciation rate of 15%.
(ii) Wages include the following:
Paid to factory workers - ₹ 3,15,000
Paid to labour at office - ₹ 50,000
(iii) Direct expenses included the following :
Electricity charges - ₹ 80,000 of which 25% pertained to office

Fuel charges - ₹ 25,000

Freight inwards - ₹ 32,000

Delivery charges to customers - ₹ 22,000
You are required to prepare revised Manufacturing A/c and Raw Material A/c.
Nov 2020

33. On 31st March, 2020 the Trial Balance of Mr. White were as follows:
Trial Balance as on 31st March 2020
Particulars Dr. ₹ Particulars Cr. ₹
Stock on 1st April 2019
Raw Materials 21,000 Sundry Creditors 15,000
Work in Progress 9,500 Bills Payable 7,500
Finished goods 15,500 Sale of Scrap 2,500
Sundry Debtors 24,000 Commission Received 450
Carriage on Purchases 1,500 Provision for doubtful 1,650
Bills Receivable 15,000 debts
Capital Account 1,00,0
Wages 13,000 Sales 00
1,67,2
Salaries 10,000 00

80
 Telephone, Postage etc. 1,000 Bank Overdraft 8,500
Repairs to Office Furniture 350
Cash at Bank 17,000
Office Furniture 10,000
Repairs to Plant 1,100
Purchases 85,000
Plant and Machinery 70,000
Rent 6,000
Lighting 1,350
General Expenses 1,500
3,02,800 3,02,8
00
The following additional information is available:
Stocks on 31st March, 2020 were:
Raw Materials ₹16,200 Finished goods ₹18,100 Semi-finished goods ₹ 7,800
Salaries and wages unpaid for March 2020 were respectively, ₹ 900 and ₹ 2,000
Machinery is to be depreciated by 10% and office furniture by 71/2 % Provision
for doubtful debts is to be maintained @ 1% of sales, Office premises occupy 1/4
of total area. Lighting is to be charged as to 2/3 to factory and 1/3 to office.
Prepare the Manufacturing Account Trading Account, Profit and Loss Account and
the Balance Sheet relating to 31st March 2020.

34. The following the trial balance of Mr B for the year ended 31st march 2021

Particulars Dr Particulars Cr

Opening stock Sundry creditors 1,75,000

Raw Material 5,25,000 Purchase return 17,500

Finished Goods 2,62,500 Capital 3,50,000

Purchase of Raw
material 17,50,000 Bills payable 84,000

Land & building 3,50,000 long Term Loan 7,00,000

provision for Bad
Loos Tools 1,05,000 debts 7,000
Plant & Sales

81
Machinery 1,05,000 29,75,000

Investments 87,500 Bank Overdraft 80,500

Cash in Hand 70,000

Cash at bank 17,500

Furniture and
Fixtures 52,500

Bills Receivables 52,500

Sundry Debtors 1,40,000

Drawings 70,000

Salaries 70,000

Coal and Fuel 52,500

Factory rent and
rates 70,000

General Expense 14,000

Advertisement 17,500

Sales Return 35,000

Bad Debt 14,000

Direct Wages
(Factory) 2,80,000

Power 1,05,000

Interest paid 24,500

Discount allowed 10,500

Carriage Inward

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 52,500

Carriage outward 24,500

Commission
Paid 17,500

Dividend paid 14,000

43,89,000 43,89,000
Additional Information
a) Stock of finished goods at the end of the year was 3,50,000
b) A provision for bad debt is to be created @5% on Sundry Debtors. Provide
Depreciation on building 3,500 and Machinery 10,500
c) Accrued commission 43,750 Interest has accrued on investment 52,500
d) Salary outstanding is 7,000 and prepaid interest is 5,250
You are required to prepare manufacturing account and Profit & Loss account for
the Year ended 31st march 2021 and Balance sheet as at that date.

Partnership
1) Good, Better and Best are in partnership sharing profits and losses in the ratio 3:2:4.
Their capital account balances as on 31st March, 2012 are as follows:
Good 1,70,000 (Cr)
Better 1,10,000 (Cr)
Best 1,22,000 (Cr)
Following further information provided:
(i) ₹ 22,240 is to be transferred to General Reserve.
(ii) Good, Better and Best are paid monthly salary in cash amounting ₹ 2,400, ₹ 1,600
and ₹ 1,800 respectively.
(iii) Partners are allowed interest on their closing capital balance @ 6% p.a. and are
charged interest on drawings @ 8% p.a.
(iv) Good and Best are entitled to commission @ 8% and 10% respectively of the net
profit before making any appropriation.
(v) Better is entitled to commission @ 15% of the net profit before charging Interest
on Drawings but after making all other appropriations.
(vi) During the year Good withdraw ₹ 2,000 at the beginning of every month, Better
(vii) ₹ 1,750 at the end of every month and Best ₹ 1,250 at the middle of every month.
(viii) Firm's Accountant is entitled to a salary of ₹ 2,000 per month and a commission of

83
 12% of net profit after charging such commission.
The Net Profit of the firm for the year ended on 31st March, 2012 before providing
for any of the above adjustments was ₹ 2,76,000.
You are required to prepare Profit and Loss Appropriation Account for the year
ended on 31st March, 2012

2) A,B and C were partners their capital were 30,000 and 10,000 respectively.
According to the partnership deed, they were entitled to interest on capital@5%
per annum. In addition, B also entitled to draw salary of 500 pm. C was entitled
commission of 5% on the profit after charging the interest on capital but before
charging the salary payable to B
The net profit for the year were 30,000 distributed in their capital without providing
for any of the above adjustments. The profit were to be shared in the ratio of 2:2:1
pass adjustment entries

3) A, B and C are partners in a firm. On 1st April 2019 their fixed capital stood at ₹
50,000, ₹ 25,000 and ₹ 25,000 respectively.
As per the provision of partnership deed:
1. C was entitled for a salary of 5,000 p.a.
2. All the partners were entitled to interest on capital at 5% p.a.
3. Profits and losses were to be shared in the ratio of Capitals of the partners.
Net Profit for the year ended 31st March, 2020 of ₹ 33,000 and 31st March,2021
of ₹ 45,000 was divided equally without providing for the above adjustments.
You are required to pass an adjustment journal entry to rectify the above errors

4) A, B and C entered into partnership on 1.1.2019 to share profits and losses in the
ratio of 5 : 3 : 2. A personally guaranteed that C’s share of profit after charging
interest on capitals at 5% p.a. would not be less than ₹ 30,000 in any year. Capitals
of A, B and C were ₹ 3,20,000, ₹ 2,00,000 and ₹ 1,60,000 respectively.
Profits for the year ending 31.12.2019 before providing for interest on partners
capital was ₹ 1,59,000.
You required to prepare the Profit and Loss Appropriation Account.

5) Rose, Lilly and Lotus start business with capital of ₹ 2,00,000/-, ₹ 3,00,000/- and
₹4,00,000 on 1st April 2019. Lotus is entitled to a salary of ₹ 50,000 per annum.
Interest is allowed on capitals at 12% p.a. and is charged on drawings at 12% per
annum. Profits are to be distributed in the ratio 1:2:3 after the above-mentioned
adjustments. Rose was given guarantee of minimum profit of ₹ 50,000 by Lotus.
Partners drawings during the year were Rose ₹ 40,000/-Lilly ₹ 30,000/- Lotus

84
 ₹ 20,000/-. Lotus had paid ₹ 10,000/- as tuition fees of his son on 31st March 2020,
which was wrongly debited to salaries account. The profit for the year 2019-20
before allowing interest on capital and charging interest on drawings and salary
paid to Lotus was ₹3,34,600/-. Assuming the capitals to be fixed, prepare the Profit
and Loss Appropriation Account and the Capital and Current Accounts relating to
the partners.

6) A and B are partners in a firm sharing profits and losses equally. On 1st April, 2020
the balance of their Capital Accounts were : A ₹ 50,000 and B ₹ 40,000. On that
date the balances of their Current Accounts were: A ₹ 10,000 (credit) and B ₹ 3,000
(debit). Interest @ 5% p.a. is to be allowed on the balance of Capital Accounts as
on 1.4.2020. B is to get annual salary of ₹ 3,000 which had not been withdrawn.
Drawings of A and B during the year were ₹ 1,000 and ₹ 2,000 respectively. The
profit for the year ended 31st March, 2021 before charging interest on capital but
after charging B’s salary was ₹ 70,000. It is decided to transfer 10% of divisible
profit to a Reserve Account. Prepare Profit & Loss Appropriation Account for the
year ended 31st March, 2021 and show Capital and Current Accounts of the
Partners for the year.

7) X and Y were partners in a firm, sharing profit and losses in the ratio of 3: 2. They
admit Z for 1/6th share in profits and guaranteed that his share of profits will not
be less than 50,00,000. Total profits of the firm for the year ended 31st March,
2022 were 1,80,00,000.
Calculate share of profit for each partner when:
a) Guarantee is given by firm
b) Guarantee is given by X* and Y* equally.

8) Mr. X gives the following particulars in respect of business carried on by him:

Particulars Amount
(₹)
Capital Invested in business 9,00,000
Market rate of interest on investment 8%
Rate of risk return on capital invested in 3%
business
Remuneration per annum from alternative 36,000
employment of proprietor if he was not engaged
in business
The business earned profits of ₹ 2,40,000, ₹ 2,16,000 and ₹ 3,00,000 in the years
2018, 2019 and 2021 respectively but made a loss of ₹ 36,000 in the year 2020.
Compute the value of Goodwill on the basis of 6 years' purchase of super profits

85
 of the business, calculated on the basis of average profit of last four years.

9) J and K are partners in a firm. Their capital are J ₹ 3,00,000 and K ₹ 2,00,000.
During the year ended 31st March, 2019 the firm earned a profit of ₹ 1,50,000.
Assuming that the normal rate of return is 20%, calculate the value of goodwill on
the firm:
➢ By Capitalization Method; and
➢ By Super Profit Method if the goodwill is valued at 2 years’ purchase of Super Profit.

10) A and B are partners sharing Profits and Losses in the ratio of 3:1. Their capitals
were ₹ 3,00,000 and ₹ 2,00,000 respectively. As from 1st April, 2009, it was agreed
to change the profit sharing ratio to 3:2. According to the partnership deed,
goodwill should be valued at two years‟ purchase of the average of three years‟
profits. The profits of the previous three years ending 31st March were:
2007- ₹ 1,50,000 (including insurance claim received against loss of machinery
20,000)
2008 - ₹ 2,50,000 including voluntary compensation paid 50,000)
2009 - ₹ 2,10,000. (Including profit on sale of fixed assets 10,000)
Pass the necessary journal entry to give effect to the above arrangement in the
capital accounts of the partners.

11) The profits and losses for the previous years are: 2017 Profit ₹ 5,000, 2018 Loss ₹
8,500, 2019 Profit ₹ 25,000, 2020 Profit ₹ 37,500. The average Capital employed
in the business is ₹ 1,00,000. The rate of interest expected from capital invested is
10%. The remuneration from alternative employment of the proprietor ₹ 3,000 p.a.
Calculate the value of goodwill on the basis of 3 years’ purchases of Super Profits
based on the average of 4 years.

12) Vasudevan, Sunderarajan and Agrawal are in partnership sharing profit and losses
at the ratio of 2:5:3. The Balance Sheet of the partnership as on 31.12.2019 was as
follows:
Balance Sheet of M/s Vasudevan, Sunderarajan & Agrawal

Liabilities ₹ Assets ₹
Capital A/cs Sundry fixed assets 5,00,000
Vasudevan 85,000 Inventory 1,00,000
Sunderarajan 3,15,000 Trade receivables 50,000
Agrawal 2,25,000 Bank 5,000

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 Trade payables 30,000
6,55,000 6,55,000
The partnership earned profit ₹ 2,00,000 in 2019 and the partners withdrew
₹ 1,50,000 during the year. Normal rate of return 30%.
You are required to calculate the value of goodwill on the basis of 5 years' purchase
of super profit. For this purpose, calculate super profit using average capital
employed.

Admission of Partner
13) A, B and C are partners sharing profits in the ratio of 3:2:1. Their Balance Sheet as
at 31st March, 2018 stood as:
Liabilities ₹ Assets ₹

Capital Accounts Building 10,00,00

8,00,0 0
A Furniture 2,40,000
00
B 4,20,0 Office 2,80,000
00 equipment
C 4,00,0 16,20,00 Stock 2,50,000
00 0 3,00,0
Sundry Creditors 3,70,000 Sundry debtors
00
Workman 3,40,000 Less: Provision
compensation for
Doubtful debts 30,000 2,70,000
fund
Joint life policy 1,60,000
20,000
Outstanding Cash at Bank
expense 1,50,000
23,50,00 23,50,00
0 0

The following adjustments made in the books of accounts:

1) Building revalued to 12,00,000
2) Furniture revalued upward by 60,0000
3) Depreciate office equipment by 15%
4) Provision for doubtful debt created @ 15%
5) Surrendered value of Joint life policy 1,50,000
6) Stock revalued to 2,20,000
7) Creditors include 20,000 due to Ram not to be paid off.
8) Credit purchase of 50,000 omitted to be recorded in the books.

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9) There is no liability towards workman compensation.
10) Outstanding expense includes 15,000 due to Shyam paid by Mr.A
Pass journal entries, Prepare Revaluation account and balance sheet after
revaluation.

14) A and B are in partnership sharing profits and losses in the ratio of 3:2. The capitals
of A and B are ₹ 80,000 and ₹ 60,000 respectively. They admit C as a partner who
contributes ₹ 35,000 as capital for 1/5th share of profits to be acquired equally from
both A & B. The capital accounts of old partners are to be adjusted on the basis of
the proportion of C‟s capital to his share in the business. Calculate the amount of
actual cash to be paid off or brought in by the old partners for the purpose and pass
the necessary journal entries.

15) Dinesh, Ramesh and Naresh are partners in a firm sharing profits and losses in the
ratio of 3:2:1. Their Balance Sheet as on 31st March, 2018 is as below:

Liabilities Assets
Trade payables 22,500 Land & Buildings 37,000
Outstanding 2,200 Furniture & Fixtures 7,200
Liabilities
General Reserve 7,800 Closing stock 12,600
Capital Accounts: Trade Receivables 10,700
Dinesh 15,000 Cash at bank 5,000
Ramesh 15,000
Naresh 10,000 40,000
72,500 72,500
The partners have agreed to take Suresh as a partner with effect from 1st April,
2018 on the following items:
(i) Suresh shall bring ₹ 8,000 towards his capital.
(ii) The value of stock to be increased to ₹ 14,000 and Furniture & Fixtures to be
depreciated by 10%.
(iii) Reserve for bad and doubtful debts should be provided at 5% of the Trade
Receivables.
(iv) The value of Land & Buildings to be increased by ₹ 5,600 and the value of the
goodwill be fixed at ₹ 18,000.
(v) The new profit sharing ratio shall be divided equally among the partners.
The outstanding liabilities include ₹ 700 due to Ram which has been paid by Dinesh.
Necessary entries were not made in the books.

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 Prepare (i) Revaluation Account, (ii) Capital Accounts of the partners, (iii) Balance
Sheet of the firm after admission of Suresh

16) A and B are partners, sharing profits and losses in the proportion of 3/4th and 1/4th
As at 31st March, 2021, following is the Balance Sheet of A and B.
Balance Sheet as at 31st March, 2021
Liabilities (₹) Assets (₹)
Capital Cash in hand 1,15,000
accounts
A 2,85,00 Cash at bank 1,10,000
0
B 1,55,00 4,40,000 Sundry Debtors 1,60,000
0
Creditors 3,75,000 Stock 2,00,000
General 60,000 Bills receivable 30,000
reserve
Land and 2,50,000
building
Office furniture 10,000
8,75,000 8,75,000
They agreed to take C into Partnership on 1st April, 2021 on the following terms:
I. Goodwill is to be valued at ₹ 2,00,000. C is unable to bring cash for his share of
goodwill. So, it was decided that due credit for goodwill be given to A and B for
their sacrifice in favour of C through C’s current account.
II. C pays ₹ 1,40,000 as his capital for 1/5th share in the future profits.
III. Stock and Furniture to be reduced by 10%.
IV. A provision @ 5% for doubtful debts to be created on debtors.
V. Land and building to be appreciated by 20%.
VI. Capital Accounts of the partners be readjusted on the basis of their profit sharing
arrangement and any excess or deficiency is to be transferred to their Current
Accounts.
Prepare Revaluation Account and Partners Capital Accounts.

17) X and Y are in partnership business sharing profits and losses in the ratio of 2:3.
Their Balance Sheet as at 31st March, 2022 is as follows:

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 Liabilities Amount (₹) Assets Amount
(₹)
Capital Accounts: Building 60,000
X 60,000 Plant 45,000
Y 1,40,000 Furniture 23,500
General Reserve 40,000 Debtors 38,400
Creditors 42,600 Bills receivable 12,500
Bills payable 15,400 Stock 42,600
Salary payable 2,000 Bank 78,000
3,00,000 3,00,000
On 1st April, 2022 they decided to admit Z into the partnership giving him 1/5th
share in the future profits. He brings in ₹ 1,00,000 as his share of capital. Goodwill
was valued at ₹ 1,20,000 at the time of admission of Z. The partners decided to
revalue the assets and liabilities as follows:
(i) Plant ₹ 40,000, Stock ₹ 42,000, Furniture ₹ 20,000 and Bills Receivable ₹ 12,000.
(ii) Out of total Debtors, ₹ 2400 is bad and 5% provision is to be provided for bad and
doubtful debts.
(iii) Building is to be appreciated by 75%.
(iv) Actual liability towards salary payable is ₹ 1200 only
You are required to show the following accounts in the books Of the firm:
1. Revaluation Account
2. Partner's Capital Accounts
3. Balance sheet of the Firm after Admission of Z.

18) Moscow and Danial are partners of the firm MD & Co., from 1.4.2017. Initially
both of them contributed Rs. 1,00,000 each as capital. They did not contribute any
capital thereafter. They maintain accounts of the firm on mercantile basis. They
were sharing profits and losses in the ratio of 5:4. After the accounts for the year
ended 31.3.2021 were finalized, the partners decided to share profits and losses
equally with effect from 1.4.2017.
It was also discovered that in ascertaining the results in the earlier years certain
adjustments, details of which are given below, had not been noted.
2018 2019 2020 2021
Year ended 31st March
Rs. Rs. Rs. Rs.

Profit as per accounts prepared 70,000 1,30,0 1,60,0 1,80,00

and finalized 00 00 0

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 Expenses not provided for (as 15,000 10,000 18,000 12,000
at 31st March)
Incomes not taken into account 9,000 7,500 6,000 10,500
(as at 31st March)
The partners decided to admit Spinny as a partner with effect from 1.4.2021. It was
decided that Spinny would be allotted 20% share in the firm and he must bring
20% of the combined capital of Moscow and Danial.
Following is the Balance sheet of the firm as on 31.3.2021 before admission of
Spinny and before adjustment of revised profits between Moscow and Danial.
Balance Sheet of MD & Co. as at 31.3.2021
Liabilities Rs. Assets Rs.
Capital Accounts: Plant and machinery 30,000
Moscow 1,05,750 Cash on hand 5,000
Danial 75,750 Cash at bank 2,500
Trade Payables 1,13,500 Stock in trade 1,55,000
Trade Receivables 1,02,500
2,95,000 2,95,000
You are required to prepare:
1. Profit and Loss Adjustment account;
2. Capital accounts of the partners; and
3. Balance sheet of the firm after admission

19) Anik and babul were carrying on business in partnership sharing profits and losses
in the ratio of 3:2. On December 31, 2017 their balance Sheet was as follows:
Balance Sheet
Liabilities ₹ Assets ₹

Capital : Anik 30,200 Land and 40,000

Building
Babul 35,400 Furniture 10,600

Bank Loan 20,000 Stock 38,500

Sundry Creditors 20,800 Debtors 19,000

Bills payable 10,000 Cash 20,300

Workmen compensation 12,000

fund
Total 1,28,400 Total 1,28,400

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 On January 1, 2018 Charu was admitted to partnership on the following conditions:
a) Charu would be entitled to 1/3rd share in profits.
b) Charu would bring ₹30,000 as his capital.
c) He would not be able to bring his share of Goodwill in cash for ₹10,000.
d) The book value of land and building will be increased by ₹10,000, that of furniture
would be reduced to
e) ₹10,000 and stock would be reduced by 10%.
f) A provision for bad debts @ 5% of sundry debtors would be created
g) The actual liability of workmen compensation fund is estimated at ₹2,000.
h) Bank loan would be paid off.
Prepare Revaluation Account, Partners Capital Accounts and the Balance sheet of
the new firm.

20) Ramu and Mamu were partners in a firm sharing profits and losses in the ratio 3:2
Their Balance Sheet as on 31st March, 2020 was as follows:
Liabilities ₹ Assets ₹
Capital : Land & 1,50,000
Ramu 2,10,00 Building 1,80,000
Mamu 0 Machinery 44,000
General Reserve 1,90,00 Furniture 42,800
0 Trade
Loan from LFC bank 65,200
60,000 Receivables
Trade Payables 24,000
25,000 Inventory
5,06,00 5,06,000
21,000 Bank
0 from 1st April, 2020 on the following terms:
Damu was admitted as partner
(1) He shall bring ₹ 1,50,000 as capital and goodwill.
(2) He shall get 1/5th share in future profits, to be acquired equally from Ramu and
Mamu.
(3) Goodwill of the firm to be valued at ₹ 2,50,000. It was agreed that goodwill shall
not appear in the books of accounts.
(4) Land & Building is to be appreciated by 50% and inventory is revalued at ₹ 60,000
(5) Machinery to be depreciated by 20%. Debtors of ₹ 2,800 are to be written off as
bad debts and a Reserve for doubtful debts should be created @ 5% of debtors.
(6) Furniture to be reduced to ₹40,000.
(7) After admission of Damu, capitals of the partners’ to be adjusted in their new profit
sharing ratio, taking Damu’s capital as base.
You are required to prepare:

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➢ Revaluation account
➢ Partners’ capital accounts.
➢ Cash and bank account.
➢ Balance Sheet after admission

Retirement of Partner
21) On 31st March,2022, the Balance Sheet of Aadi, Arnav and Aarush sharing profits
and losses in proportion to their Capital stood as below:
Liabilities ₹ Assets ₹
Capital Account: Land and Building 1,20,000
Mr. Aadi 80,000 Plant and Machinery 80,000
Mr. Arnav 1,20,00 Stock of goods 48,000
0
Mr. Aarush 80,000 Sundry debtors 44,000
Sundry Creditors 40,000 Cash and Bank Balances 28,000
3,20,00 3,20,000
0
On 1st April, 2022, Aadi desired to retire from the firm and remaining partners
decided to carry on the business. It was agreed to revalue the assets and liabilities
on that date on the following basis:
1) Land and Building be appreciated by 20%. Plant and Machinery be depreciated by
30%.
2) Stock of goods to be valued at ₹40,000. Old credit balances of Sundry creditors,
₹8,000 to be written back.
3) Provisions for bad debts should be provided at 5%. Joint life policy of the partners
surrendered and cash obtained ₹ 30,200.
4) Goodwill of the entire firm is valued at ₹56,000 and Aadi’s share of the goodwill
is adjusted in the A/cs of Arnav and Aarush, who would share the future profits
equally. No goodwill account being raised.
5) The total capital of the firm is to be the same as before retirement. Individual capital
is in their profit sharing ratio.
6) Amount due to Mr. Aadi is to be settled on the following basis: @ 50% on
retirement and the balance 50% within one year.
Prepare (a) Revaluation Account, (b) Capital Accounts of the partners, (c) Cash
and Bank Account and (d) Balance Sheet of the new firm M/s Arnav & Aarush as
on 1.04.2022.

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22) A, B and C are partners sharing profits in the ratio of 3:2:1. Their Balance Sheet as
at 31st March, 2018 stood as:
Liabilities ₹ Assets ₹
Capital Building 10,00,0
Accounts
A 8,00,000 Furniture 00
2,40,00
B 4,20,000 Office 02,80,00
C 4,00,000 equipment
Stock 02,50,00
16,20,0
Sundry 00
3,70,00 Sundry 0
3,00,00
Creditors
General 03,60,00
16,20,0 debtors
Less: 0
Reserves 000 Provision for
Doubtful 30,000
3,00,00 2,70,00
debts
Joint life 0 0
1,60,00
policy
Cash at Bank 0
23,50,0 1,50,00
23,50,0
000
B retired on 1st April, 2018 subject 00
to the following conditions:
(i) Office Equipment revalued at ₹ 3,27,000.
(ii) Building revalued at ₹ 15,00,000. Furniture is written down by ₹ 40,000 and Stock
is reduced to Rs,2,00,000 .
(iii) Provision for Doubtful Debts is to be created @ 5% on Debtors.
(iv) Joint Life Policy will appear in the Balance Sheet at surrender value after
B's retirement. The surrender value is ₹ 1,50,000
(v) Goodwill was to be valued at 3 years purchase of average 4 years profit which
were:

Year ₹
2014 90,000
2015 1,40,000
2016 1,20,000
2017 1,30,000
(vi) Amount due to B is to be transferred to his Loan Account.
Prepare the Revaluation Account, Partners' Capital Accounts and the Balance
Sheet immediately after B's retirement.

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23) M/s. TB is a partnership firm with the partners A, B and C sharing profits and
losses in the ratio of 3:2:5. The balance sheet of the firm as on 30th June, 2020 was
as under:
Balance Sheet of M/s. TB as on 30-6-2020

Liabilities Amount Assets Amount

(') (')

A's Capital A/c 1,24,000 Land 1,20,000

B's Capital A/c 96,000 Building 2,20,000
C's Capital A/c 1,60,000 Plant & 4,00,000
Machinery
Long Term Loan 4,20,000 Investments 42,000
Bank Overdraft 64,000 Inventories 1,36,000
Trade Payables 2,13,000 Trade Receivables 1,59,000
10,77,000 10,77,000

It was mutually agreed that B will retire from partnership and in his place, D will
be admitted as a partner with effect from 1st July, 2020. For this purpose, following
adjustments are to be made:
a) Goodwill of the firm is to be valued at ₹ 3 lakhs due to the firm's location advantage
but the same will not appear as an asset in the books of the reconstituted firm.
b) Building and Plant & Machinery are to be valued at 95% and 80% of the respective
balance sheet values. Investments are to be taken over by the retiring partner at ₹
46,000. Trade receivables are considered good only up to 85% of the balance
sheet figure. Balance to be considered bad.
c) In the reconstituted firm, the total capital will be 4 lakhs, which will be contributed
by A, C and D in their new profit-sharing ratio, which is 3:4:3.
d) The amount due to retiring partner shall be transferred to his loan account.
You are required to prepare Revaluation Account and Partners' Capital Accounts
after reconstitution, along with working notes.

24) Acme & Co. is a partnership firm with partners Mr. A, Mr. B and Mr. C, sharing
profits and losses in the ratio of 10:6:4. The balance sheet of the firm as at 31 st
March, 2021 is as under:
Liabilities ₹ Assets ₹
Capitals: Land 30,000
Mr. A 2,40,00 Buildings 6,00,00
0 0

95
 Mr. B 60,000 Plant and 3,90,00
machinery 0
Mr. C 90,000 3,90,00 Furniture 1,29,00
0 0
Reserves Investments 36,000
(un-appropriated 60,000 Inventories 3,90,00
profit) 0
Long Term Debt 9,00,00 Trade receivables 4,17,00
0 0
Bank Overdraft 1,32,00
0
Trade payables 5,10,00
0
19,92,0 19,92,0
00 00
It was mutually agreed that Mr. B will retire from partnership and in his place Mr.
F will be admitted as a partner with effect from 1st April, 2021. For this purpose,
the following adjustments are to be made:
Goodwill is to be valued at ₹3 lakh but the same will not appear as an asset in the
books of the reconstituted firm.
Buildings and plant and machinery are to be depreciated by 5% and 20%
respectively. Investments are to be taken over by the retiring partner at ₹ 45,000.
Provision of 20% is to be made on Trade receivables to cover doubtful debts.
In the reconstituted firm, the total capital will be ₹ 6 lakhs which will be contributed
by Mr. A, Mr. C and Mr. F in their new profit-sharing ratio, which is 2:2:1.
The surplus funds, if any, will be used for repaying bank overdraft.
The amount due to retiring partner shall be transferred to his loan account.
You are required to prepare
Revaluation account;
Partners capital accounts;
Bank account; and
Balance sheet of the reconstituted firm as on 1st April, 2021.

25) On 31st March, 2020, the Balance Sheet of P, Q and R sharing profits and losses
in proportion to their Capital stood as below:

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 Liabilities ₹ Assets ₹
Capital Land and Building 30,000
Account:
Mr. P 20,000 Plant and Machinery 20,000
Mr. Q 30,000 Stock of goods 12,000
Mr. R 20,000 Sundry debtors 11,000
Sundry 10,000 Cash and Bank 7,000
Creditors 80,000 Balances 80,000

On 1st April, 2020, P desired to retire from the firm and remaining partners decided
to carry on the business. It was agreed to revalue the assets and liabilities on that
date on the following basis:
I. Land and Building be appreciated by 20%.
II. Plant and Machinery be depreciated by 30%.
III. Stock of goods to be valued at ₹10,000.
IV. Old credit balances of Sundry creditors, ₹2,000 to be written back.
V. Provisions for bad debts should be provided at 5%.
VI. Joint life policy of the partners surrendered and cash obtained ₹ 7,550.
VII. Goodwill of the entire firm is valued at ₹14,000 and P’s share of the goodwill is
adjusted in the A/cs of Q and R, who would share the future profits equally. No
goodwill account being raised.
VIII. The total capital of the firm is to be the same as before retirement. Individual
capital is in their profit sharing ratio.
IX. Amount due to Mr. P is to be settled on the following basis: 50% on retirement and
the balance 50% within one year.
Prepare (a) Revaluation account, (b) The Capital accounts of the partners, (c)
Cash account and (d) Balance Sheet of the new firm M/s Q & R as on 1.04. 2020.

26) X, Y and Z are partners sharing profits and losses in the ratio of 1:2:3. Their
Balance Sheet as on 31st March,2021 was as follows:

Liabilities Amount (₹) Assets Amount (₹)

Capitals: Building 2,50,000
XYZ 1,75,000 Machiner 3,37,500
General Reserve 2,50,000 y 3,25,000
Trade Creditors 4,00,000 Debtors 4,00,000
3,00,000 Stock 62,500
2,50;000 Bank
Total 13,75,000 Total 13,75,000

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 Z retired from business on 1st April,2021 on the following terms:
(i) Building to be appreciated by 25%.
(ii) X and Y to bring in additional capital of ₹ 5,00,000 each.
(iii) Machinery to be depreciated by 10%.
(iv) Stock is revalued at ₹ 3,72,250.
(v) Provision for Doubtful Debts to be created at 4%.
(vi) Goodwill was to be valued at 3 years' purchase of average profits of past 3 years.
The profits of past 3 years were ₹ 2,75,000, ₹ 2,50,000 and ₹ 1,95,000 respectively.
(vii) Goodwill was not to be raised in the Books of Accounts.
(viii) Balance payable to Z was to be paid immediately.
Prepare Revaluation Account, Bank Account and Partners' Capital Accounts after
giving effect to Z's retirement, Also show the valuation of Goodwill and pass a
Journal Entry for adjustment of Goodwill.

Death of Partner
27) Monika, Yedhant and Zoya are in partnership, sharing profits and losses equally.
Zoya died on 30th June 2018. The Balance Sheet of Firm as at 31st March 2018
stood as
Liabilities Amount Assets Amoun
t
Creditors 20,000 Land and Building 1,50,00
0
General Reserve 12,000 Investments 65,000
Capital Accounts: Stock in trade 15,000
Monika 1,00,000 Trade receivables 35,000
Yedhant 75,000 Less: Provision for doubtful 33,000
(2,000)
Zoya 75,000 Cash in hand 7,000
debt (2,000)
Cash at bank 12,000
2,82,000 2,82,000

In order to arrive at the balance due to Zoya, it was mutually agreed that:
(1) Land and Building be valued at ₹ 1,75,000
(2) Debtors were all good, no provision is required
(3) Stock is valued at ₹ 13,500
(4) Goodwill will be valued at one Year's purchase of the average profit of the past
five years. Zoya's share of goodwill be adjusted in the account of Monika and
Yedhant.

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 (5) Zoya's share of profit from 1st April 2018, to the date of death be calculated on
the basis of average profit of preceding three years.
(6) The profit of the preceding five years ended 1st March were:

2018 2017 2016 2015 2014

25,000 20,000 22,500 35,000 28,75
0
You are required to prepare
Revaluation account
Capital accounts of the partners and
Balance sheet of the Firm as at 1st July 2018.

28) Arup and Swarup were partners. The partnership deed provides inter alia:
I. That the annual accounts be balanced on 31st December each year;
II. That the profits be allocated as follows:
Arup: One-half; Swarup: One-third and -Carried to reserve account: One sixth;
III. That in the event of death of a partner, his executor will be entitled to the following:
a) The capital to his credit at the date of death;
b) His proportionate share. of profit to date of death based on the average profits of
the last three completed years; and
c) His Share of goodwill based on three years' purchase of the average profits for the
three preceding completed years.
Trial Balance as on 31st December, 2018
Particulars Debit (₹) Credit (₹)

Arup's Capital 90,000

Swarup's Capital 60,000

Reserve 45,000
Bills receivable 50,000
Investment 55,000
Cash 1,10,000
Trade payables 20,000
Total 2,15,000 2,15,000
The profits for the three year were 2016: ₹ 51,000; 2017: ₹ 39,000 and

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 2018:
₹ 45,000. Swarup died on 1st May 2019.
Show the calculation of Swarup (A) Share of profits; (B) Share of Goodwill; (C)
Draw up Swarup's Executor Account as would appear in the firms' ledger
transferring the amount to the Loan account.

29) The partnership deed of a firm consisting of 3 partners - P, Q and R (profit sharing
ratio being 2:1:1) and whose fixed capitals are ₹ 30,000, ₹ 12,000 and ₹ 8,000
respectively provides as follows:
(i) The partners be allowed interest @ 8% p.a. on their fixed capitals, but no interest
to be allowed on undrawn profits or charged on drawings.
(ii) That upon the death of a partner, the goodwill of the firm be valued at 2 years
purchase of the average net profit (after charging interest on capital) for the 3 years
to 31st December preceding the death of a partner.
(iii) That an insurance policy of ₹ 25,000 each was taken in individual names of each
partner. The premium was charged against the profits of the firm. The surrender
value of the policy was 20% of the sum assured.
(iv) Upon the death of a partner, he is to be credited with his share of the profits,
interest on capitals, etc. calculated upto 31st December following his death.
(v) That the share of the partnership policy and goodwill be credited to a deceased
partner as on 31st December following his death.
(vi) That the partnership books to be closed annually on 31st December.
P died on 30th September, 2020. The amount standing to the credit of his current
account as on 31st December, 2019 was ₹ 5,000 and from that date to the date of
death he had withdrawn₹ 30,000 from the business.
An unrecorded liability of ₹ 6,000 was discovered on 30th September, 2020 and it
was decided to record it and immediately pay it off.
The trading results of the firm (before charging interest on capital) had been as
follows: 2017 Profit ₹ 29,340
2018 Profit ₹ 26,470
2019 Loss ₹ 8,320
2020 Profit ₹ 13,470
You are required to prepare an account showing amount due to P's legal heir as on
31st December, 2020.
Note: Impact for unrecorded liability not to be given in earlier years.

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30) It was provided under the Partnership Agreement between Ram, Laxman and
Bharat that in the event of death of a partner, the survivors would have to purchase
his share in the firm on the following terms:
(i) Goodwill is to be valued at 3 year's purchase of simple average profits of last 4
completed years.
(ii) Outstanding amount due to the representative of a deceased partner shall be paid
in 4 equal half yearly installments commencing 6 months after the death plus
interest @ 5% p.a. on the outstanding dues.
They shared profit and loss in the ratio 9:4:3.
Ram died on 30th September 2020 and Partner's Capital account balances on that
date were: Ram - ₹ 21,600, Laxman - ₹ 12,800 and Bharat - ₹ 7,200. Ram's current
account on 30th September, 2020 after crediting his share of profit to that date,
however showed a debit balance of ₹ 1,920.
Firm profits were for the year ended
- 31st March, 2017 ₹ 70,400
- 31st March, 2018 ₹ 56,320
- 31st March, 2019 ₹ 48,160
- 31st March, 2020· ₹ 17,408
Show Ram’s Capital Account and Executor's Account (of Ram) till full payment
is made to Ram's Executor.

31) The following is the Balance Sheet of M/s. TMR as at 31st March,2021 they share
profit equally:
Balance Sheet as at 31st March, 2021
Liabilities ₹ Assets ₹
Capital Tina 24,60 Machinery 30,00
0 0
Meen 24,60 Furniture 16,80
a 0 0
Rita 27,00 Fixture 12,60
0 0
General 9,000 Cash 9,000
Reserve
Trade payables 14,10 Inventories 5,700
0
Trade receivables 27,00
Less: 01800 25,20
Provisiondebts
Doubtful for 0

99,30 99,30
0 0

101
 Rita died on 5th April, 2021 and the following agreement was to be put into effect.
a) Assets were to be revalued: Machinery to ₹ 35,100; Furniture to ₹ 13,800;
Inventory to ₹ 4,500.
b) Goodwill was valued at ₹ 18,000 and was to be credited with his share, without
using a Goodwill Account.
c) ₹ 6,000 was to be paid away to the executors of the dead partner on 8th April, 2021.
d) After death of Rita, Tina and Meena share profit equally.
Prepare Revaluation Account and Capital Accounts of the partners and also
show Journal Entry for Goodwill adjustment.

32) The following is the Balance Sheet of M/s. LMN Bros as at 31st December, 2017,
they share profit equally:
Balance Sheet as at 31st December, 2017
Liabilities ₹ Assets ₹
Capital Machinery 10,0
L 8,20 Furniture 00
M 0 Fixture 5,60
8,20 0
N
0 4,20
General Reserve 3,00 Cash 3,00
9,00 0
Trade
\ payables 04,70 Inventories 01,90
0
0 Trade 0
9,0
receivables
Less: 00
60 8,40
9,00 Provision 0 0
n 0

33,1 33,1
N died on 3rd January, 2018 and00
the following agreement was to be 00
put into effect.
Assets were to be revalued: Machinery to ₹ 11,700; Furniture to ₹ 4,600; Inventory
to ₹ 1,500. Goodwill was valued at ₹ 6,000 and was to be credited with his share,
without using a Goodwill Account. ₹ 2,000 was to be paid away to the executors
of the dead partner on 5th January, 2018. After death of N, L and M share profit
equally. You are required to prepare:
Journal Entry for Goodwill adjustment.
Revaluation Account and Capital Accounts of the partners

102
33) A, B and C were trading in partnership sharing profits and losses in the proportion
of 4:3:3. The balances in the books of the firm as on 31st December, 2022 subject
to final adjustment were as under:
Debit Credit
Amount ₹ Amount
₹
Capital Accounts
A 2,25,000
B 1,12,500
C 1,35,000
Current Account
A 36,000
B 54,000
C 54,000
Land and Building 1,80,000
Furniture and Fixtures 33,750
Stock 2,81,250
Debtors 45,000
Bank Account 90,000
Profit for the year before charging interest 2,34,000
Creditors 67,500
Total 7,74,000 7,74,000
Goodwill may be recorded separately, instead of through Revaluation Account. C
died on 30th June, 2022. The Partnership deed provided that:
a) Interest was credited on Capital Account of Partners as @ 12% per annum on the
balance at the beginning of the year.
b) On the death of partner
(i) Goodwill was to be valued at three years purchase of average annual profits of
three years up to the death, after deducting interest on capital employed at 10%p.a.
and a fair remuneration for each of the partners.
(ii) Fixed assets were to be valued by an independent valuer and all other assets and
liabilities to be taken at book value, and
c) Whenever necessary, profit or loss should be apportioned on a time basis. You
ascertain that:
(i) Profit for three years, before charging partners' interest were:
20192,52,000

103
 20202,83,500
20212,70,000
(ii) The independent valuation on the date of death revealed:
Land and Building ₹ 2,25,000
Furniture and Fixtures ₹ 22,500
(iii) For valuation of goodwill a fair remuneration for each of the partners would be ₹
56,250 per annum and that the capital employed in the business to be taken as
5,85,000 throughout.
It was agreed between the partners that:
1) Goodwill was not be shown as an asset of the firm as on 31st December, 2022.
Therefore, adjustment for goodwill was to be made in Capital Accounts.
2) The amount due to C's Estate was to remain as loan with the firm carrying interest
at 12% p.a.
3) A and B would share profits equally from the date of death of C.
4) Depreciation on revised value of assets would be ignored.
You are required to prepare:
A. Partners' Capital Account and Current Account; and
B. Balance Sheet of the firm as on 31st December, 2022.
Working should be done correct to the nearest rupee.

Financial statement of not-for-profit organization

1. The following information of M/s. TT Club are related for the year
ended 31st March, 2020:
Balances As on 01-04- As on 31-3-
2019 2020
Stock of Sports Material 75,000 1,12,500
Amount due for Sports Material 67,500 97,500
Subscription due 11,250 16,500
Subscription received in advance 9,000 5,250
Subscription received during the year ₹ 3,75,000
Payments for Sports Material during the year ₹ 2,25,000
You are required to:
▪ Calculate the amount of Subscription and Sports Material that will appear in
Income & Expenditure Account for the year ended 31.03.2020 and
▪ Also show how these items would appear in the Balance Sheet as on 31.03. 2020.

104
 2. From the following receipts and payments account of Pune Club, prepare income
and expenditure account for the year ended 31.03.2021 and its balance sheet as on
that date:

Receipts ₹ Payments ₹
Cash in hand 4,000 Salary 2,000
Cash at bank 10,000 Repair expenses 500
Donations 5,000 Purchase of furniture 6,000
Subscriptions 12,000 Misc. expenses 500
Entrance fees 1,000 Purchase of investments 6,000
Interest received from 500 Insurance premium 200
bank
Sale of old newspaper 150 Snooker table 8,000
Sale of drama tickets 1,050 Stationary 150
Drama expenses 500
Cash in hand (closing)₹ 2,650
Cash at bank (closing) 7,200
33,700 33,700
The following adjustments are to be made while drawing up the accounts:
i. Subscriptions in arrear for year 2020-21 ₹900 and subscriptions in advance for
2021-22 ₹ 350.
ii. Insurance premium outstanding ₹ 40 and Misc. expenses prepaid ₹90.
iii. 50% of donation is to be capitalized.
iv. Entrance fees are to be treated as revenue income.
v. 8% interest has accrued on investment for five months.
vi. Snooker table costing ₹ 30,000 was purchased on 31st March,2020 and ₹22,000
were paid for it.
3. From the following data, prepare an Income and Expenditure Account for the year
ended 31st December 20, and Balance Sheet as at that date of the Jeevan Hospital:
Receipts and Payments Account for the year ended 31 December, 2019

105
 Receipts ₹ Payments ₹
T Balance b/d B Salaries:
o Cash 800 y (₹ 7,200 for 2018) 31,20
Bank 5,2 6,000 By Hospital Equipment 017,00
To Subscriptions: 00 By Furniture purchased 0
For 2018 5,100 By Additions to Building 6,000
For 2019 24,50 By Printing and Stationery 50,00
0 0
For 2020 By Diet expenses
2,400 2,400
To Government By Rent and rates
Grant: 15,60
(₹ 300 for 2020) 0
For building 80,00 By Electricity and water
0 2,000
For maintenance charges
To Fees from sundry 20,00 By office expenses
Patients 0 2,400
By Investments
To Donations (not 2,000
4,800 By Balances:
to be capitalized) 20,00
8,000 Cash 1,400 0
To Net collections
from benefit shows Bank 6,800

Additional information: 6,000 ₹

1,56,8
Value of building under construction as on 31.12.2019 8,200
1,40,0
00
Value of hospital equipment on 31.12.2019 00
51,00
1,56,8
Building Fund as on 1.1. 2019 080,00
00
Subscriptions in arrears as on 31.12.2018 0
6,500
Investments in 8% Govt. securities were made on 1st July, 2019.

4. The Receipts and Payments account of Peppapig Club prepared on 31st March,
2021 is as follows:
Receipts and Payments Account

106
 Receipts ₹ Amou Payments Amoun
nt t₹
T Balance b/d ₹900 B Expenses (including
o Annual Income y Payment for sports
from Subscription material ₹ 5,400)
9,18 12,600
Add: Outstanding 0 Loss on Sale of
Furniture (cost 360
T of last year B
received this year price
o y
₹ 900)
360
9,54 Balance c/d 1,80,90
0 0
Less:
B
Prepaid
last year of 180 9,360 y
T Other fees 3,600
o
T Donation for 1,80,0
o Building 00
1,93,8 1,93,86
60 0
Additional information:
Peppapig club had balances as on 1.4.2020 : -
Furniture ₹ 3,600; Investment at 5% ₹ 54,000; Sports material ₹ 13,320;
Balance as on 31.3.2021 :
Subscription Receivable ₹ 540 Subscription received in advance ₹ 180; Stock of
sports material ₹3,600.
Do you agree with above Receipts and Payments account? If not, prepare correct
Receipts and Payments account and Income and Expenditure account for the year
ended 31st March, 2021 and Balance Sheet on that date.

5. The following is the Receipt and Payment Account of Park View Club in respect
of the year ended 31st March, 2012.
Receipt Amount Payments Amount
(₹) (₹)
To Balance b/d 1,02,500 By Salaries 2,08,000
To Subscriptions By Stationery 40,000
2010-11 4,500 By Rent 60,000
2011-12 2,11,000 By Telephone expenses 10,000
2012-13 7,500 2,23,000 By Investment 1,25,000

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 To Profit on sports meet 1,55,000 By Sundry expenses 92,500
To Income 1,00,000 By Balance c/d 45,000
from
5,80,500 5,80,500
investments
Additional information:
There are 450 members each paying an annual subscription of ₹500. On 1st April, 2011
outstanding subscription was ₹5,000.
There was an outstanding telephone bill for ₹3,500 on 31st March, 2012.
Outstanding sundry expenses as on 31st March, 2011 totalled ₹7,000.
Stock of stationery:
On 31st March, 2011 ₹ 5,000
On 31st March, 2012 ₹ 9,000
On 31st March, 2011 building stood in the books at ₹ 10,00,000 and it was subject to
depreciation @ 5% per annum.
Investment on 31st March, 2011 stood at ₹20,00,000.
On 31st March, 2012, income accrued on the investments purchased during
the year amounted to ₹ 3,750.
You are required to prepare income and expenditure account and balance sheet

6. Income and Expenditure Account for the year ended 31st March, 2012 of South
Asia Club is given below:
Expenditure ₹ Income ₹
T Salaries & wages 47,500 By 75,000
o Miscellaneous 5,000 Subscription 2,500
T expenses Audit fee 2,500 By Entrance 7,500
o Executive’s honorarium 10,000 fee
T Sports day expenses 5,000 By Contribution for annual
o day(After deducting
T expenses
o ₹7,500)
T
o

T Printing & stationary 4,500

o
T Interest on bank loan 1,500
o
T Depreciation on sports 3,000
o

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 equipment
T Excess of income over
o
expenditure 6,000
85,000 85,000
Following additional information are also available
31.3.2011 31.3.2012
₹ ₹
(1) Subscription received in advance 4,500 2,700
(2) Subscription outstanding 6,000 7,500
(3) Salaries outstanding 4,000 4,500
(4) Sports equipment (After deducting depreciation)26,000 27,000

Cash in hand on 31-3-12 was ₹16,000. The club took a 5% loan of ₹ 30,000 from a bank
during 2010-11 for which interest was not paid in the financial year 2011-12.
Prepare Receipts and Payments account of South Asia Club for the year ending 31st March
2012.

7. Summary of receipts and payments of Bombay Medical Aid society for the year
ended 31.12.2011 are as follows:
Opening cash balance in hand ₹ 8,000, subscription ₹ 50,000, donation ₹ 15,000, interest on
investments @ 9% p.a. ₹ 9000, payments for medicine supply ₹ 30,000 Honorarium to
doctor 10,000, salaries ₹ 28,000, sundry expenses ₹ 1,000, equipment purchase ₹ 15,000,
charity show expenses ₹ 1,500, charity show collections ₹ 12,500.
Additional information:
1.1.2011 31.12.2011
Subscription due 1,500 2,200
Subscription received in advance 1,200 700
Stock of medicine 10,000 15,000
Amount due for medicine supply 9,000 13,000
Value of equipment 21,000 30,000
Value of building 50,000 48,000

You are required to prepare receipts and payments account and income and expenditure
account for the year ended 31.12.2011 and balance sheet as on 31.12.2011.

109
8. You are provided the following information related to Krishna sports club:
31st Dec. 31st Dec. 2016
2015
Building (subject to 10% depreciation for 60,000 ?
current year)
Furniture (subject to 10% depreciation for - 20,000
current year)
Stock of Sports Materials 5,000 2,000
Prepaid Insurance 3,000 6,000
Outstanding Subscription 12,000 8,000
Advance Subscription 6,000 4,000
Outstanding Locker Rent 6,000
Advance Locker Rent received - 2,000
Outstanding Rent for Godown 6,000 3,000
12% General Fund Investments 2,00,000 2,00,000
Accrued Interest on above (for 2 months) - 4,000
Cash Balance 1,000 64,000
Bank Balance 2,000 -
Bank Overdraft 2,000
Entrance Fees received ₹ 20,000, Life Membership Fees received ₹ 20,000, surplus from
Income & expenditure Account ₹ 60,000. It is the policy of the club to treat 60% of entrance
fees and 40% of Life Membership Fees as of revenue nature. The furniture was purchased
on 1.01.2016
You are required to prepare the opening and closing balance sheets of Krishna sports club
as on 1st January, 2016 and 31st December, 2016.

9. You are provided with the following:

Balance Sheet as on 31st March, 2017
Liabilities (₹) Assets (₹)
Capital Fund 1,06,20 Building 1,50,00
Subscription receivedin 06,000 Outstanding 03,800
Advance
Outstanding Expenses 14,000 Subscription
Outstanding Locker 2,400
Loan 40,000 Rent
Cash in hand 20,000
Sundry Creditors 10,000
Total 1,76,20 1,76,20
0 0
The Receipts and Payment Account for the year ended on 31st March,
2018

Receipt Payment
To Balance b/d 20,000 By Expenses:
To Subscriptions: For 2017 12,000

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 For 2017 2000 For 2018 20,000 32,000
For 2018 21,000 By Land 40,000
For 2019 1,000 24,000 By Interest 4,000
To Entrance Fees 38,000 By Miscellaneous 4,700
Expenses
To Locker Rent 7,000 By Balance c/d 18,300
To Sale proceeds of 1,000
old newspapers
To Miscellaneous 9,000
Income
99,000 99,000
You are required to prepare Income and Expenditure account for the year ended 31st
March, 2018 and a Balance Sheet as at 31st March, 2018 (Workings should form part of
your answer).

10. From the following information supplied by M.B.S. Club, prepare Receipts and
Payments account and Income and Expenditure Account for the year ended 31st
March 2019.
01.04.2018 31.03.2019
₹ ₹
Outstanding subscription 1,40,000 2,00,000
Advance subscription 25,000 30,000
Outstanding salaries 15,000 18,000
Cash in Hand and at Bank 1,10,000 ?
10% Investment 1,40,000 70,000
Furniture 28,000 14,000
Machinery 10,000 20,000
Sports goods 15,000 25,000
Subscription for the year amount to ₹ 3,00,000/-. Salaries paid ₹ 60,000. Face value of the
Investment was ₹ 1,75,000, 50% of the Investment was sold at 80% of Face Value. Interest
on investments was received ₹ 14,000. Furniture was sold for ₹ 8000 at the beginning of
the year. Machinery and Sports Goods purchased and put to use at the last date of the year.
Charge depreciation @ 15% p.a. on Machinery and Sports goods and
@10% p.a. on Furniture.
Following Expenses were made during the year:
Sports Expenses: ₹ 50,000
Rent: ₹ 24,000 out of which ₹ 2,000 outstanding
Misc. Expenses: ₹ 5,000 May 2019

111
11. From the following Income and Expenditure account and the Balance sheet of a
club, prepare its Receipts and Payments Account and subscription account for the
year ended 31st March, 2019:
Income & Expenditure Account for the year 2018-19
Particulars ₹ Particulars ₹
To Upkeep of ground 11,000 By Subscriptions 19,052
To Printing 1,100 By Sale of Newspapers (Old) 286
To Salaries 11,100 By Lectures (Fee) 1,650
To Depreciation on furniture 1,100 By Entrance Fee 2,145
To Rent 1,660 By Misc. Income 440
By Deficit 2,387
25,960 25,960
Balance sheet as at 31st March 2019
Liabilities ₹ Assets ₹
Subscription in advance 110 Furniture 9,900
(2019-20)
Prize fund: Ground and 51,700
Opening balance Add: 27,500 Building 22,000
Interest 1,100
Prize Fund
28,600
Investment 2,530
Less: Prizes given 2,200 26,400
Cash in Hand
General Fund: 770
Opening balance 62,062 Subscription

Less: Deficit 2,387 (outstanding)

59,675 (2018-2019)

Add: Entrance Fee 715 60,390

86,900 86,900
The following adjustments have been made in the above accounts:
a) Upkeep of ground ₹ 660 and printing ₹ 264 relating to 2017-18 were paid in 2018-
19.
b) One fourth of entrance fee has been capitalized by transfer to General Fund.
c) Subscription outstanding in 2017-18 was ₹ 880 and for 2018-19 ₹ 770.
d) Subscription received in advance in 2017-18 was ₹ 220 and in 2018-19 for 2019-20
was ₹ 110.
e) Furniture was purchased during the year. Nov 2019

112
12. From the following balances and particulars of AS College, prepare Income &
Expenditure Account for the year ended March, 2020 and a Balance Sheet as on
the date
Particulars Amount Amount
Security Deposit - Students -(₹) 1,55,000
(₹)
Capital Fund - 13,08,000
Building Fund 19,10,000
Tuition Fee Received 8,10,000
Government Grants 5,01,000
Interest & Dividends on Investments 1,75,000
Hostel Room Rent - 1,65,000
Mess Receipts (Net) - 2,05,000
College Stores - Sales 7,60,000
Outstanding expenses - 2,35,000
Stock of Stores and Supplies (opening) - 3,10,000 -
Purchases - Stores & Supplies 8,20,000 -
Salaries - Teaching 8,75,000 -
Salaries - Research 1,25,000 -
Scholarships 85,000 -
Students Welfare expenses 37,000 -
Games & Sports expenses 52,000 -
Other investments 12,75,000 -
Land 1,50,000 -
Building 15,50,000 -
Plant and Machinery 8,50,000 -
Furniture and Fittings 5,40,000 -
Motor Vehicle 2,40,000 -
Provision for Depreciation :
Building - 4,90,000
Plant & Equipment - 5,05,000
Furniture & Fittings 3,26,000
Cash at Bank 3,16,000 -
Library 3,20,000

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 75,45,000 75,45,000

Adjustments :
(a) Materials & Supplies consumed (From college stores):
Teaching ₹ 52,000.
Research - ₹ 1,45,000
Students Welfare - ₹ 78,000
Games or Sports - ₹ 24,000
(b) Tuition fee receivable from Government for backward class Scholars ₹ 82,000.
(c) Stores selling prices are fixed to give a net profit of 15% on selling price:
Depreciation is provided on straight line basis at the following rates
Building 5%
Plant & 10%
Nov 2020
Equipment
Furniture & 10%
Fixtures
Motor Vehicle 20%

13. Dr. Deku started private practice on 1st April, 2019 with ₹ 2,00,000 of his own
fund and ₹ 3,00,000 borrowed at an interest of 12 p.a. on the security of his life
policies. His accounts for the year were kept on a cash basis and the following is
his summarized cash account:
Receipts ₹ Payments ₹
Own Capital 2,00,000 Medicines Purchased 2,45,000
Loan 3,00,000 Surgical Equipment 2,50,000
Prescription Fees 6,60,000 Motor Car 3,20,000
Visiting Fees 2,50,000 Motor Car Expenses 1,20,000
Lecture Fees 24,000 Wages and Salaries 1,05,000
Pension Received 3,00,000 Rent of Clinic 60,000
General Charges 49,000
Household 1,80,000
Expenses 25,000
Household 2,15,000
Furniture
Expenses on 36,000
1,10,000
Daughter's Marriage
19,000

114
 17,34,000 Interest on 17,34,00
Loan Balance 0
at Bank
1/3rd of the motor car expenses may be treated Cash in to the private use of car
as applicable
and ₹ 30,000 of salaries are in respect of domestic
Hand servants. The stock of medicines
in hand on 31st March, 2020 was valued at ₹ 95,000.
You are required to prepare his private practice income and expenditure account and
capital account for the year ended 31st March, 2020. Ignore depreciation on fixed
assets.
Jan 2021

14. From the following Income and Expenditure Account and additional information
of A TK Club, prepare Receipts and Payments Accounts and Balance Sheet of the
club as on 31st March, 2020.
Income and Expenditure Account for the year ending 31st March, 2020
Expenditure ₹ Income ₹
To Salaries 4,80,000 By Subscription 6,80,000
To Printing and Stationery 24,000 By Entrance Fees 16,000
To Postage 2,000 By Misc. Income 1,44,000
To Telephone 6,000
To Office expenses 48,000
To Bank Interest 22,000
To Audit Fees 10,000
To Annual General Meeting Exp. 1,00,000
To Depreciation (Sports Equipment) 28,000
To Surplus 1,20,000
8,40,000 8,40,000
Additional Information:
Particulars As on 31st As on 31st
March, 2019 March, 2020
Subscription Outstanding 64,000 72,000
Subscription Received in advance 52,000 33,600
Salaries Outstanding 24,000 32,000
Audit Fees Payable 8,000 10,000
Bank Loan 1,20,000 1,20,000
Value of Sports Equipment 2,08,000 2,52,000
Value of Club Premises 7,60,000 7,60,000
Cash in Hand ? 1,14,000
Jan 2021

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15. The Income and Expenditure Account of the Women Club for the Year ended on
December 31, 2021 is as follows.
Expenditure ₹ Income ₹
To Salaries 47,500 By Subscription 75,000
To General Expenses 5,000 By Entrance Fees 2,500
To Audit Fee 2,500 By Contribution for Annual 10,000
Dinner
To Secretary’s honorarium 10,000 By Annual Sports Meet 7,500
Receipts
To Stationary and Printing 4,500
To Annual Dinner 15,000
Expenses
To Interest and bank 1,500
charges
To Depreciation 3,000
To Surplus 6,000
95,000 95,000
This account had been prepared after the following adjustments:

₹
Subscription outstanding at the end of 2020 6,000
Subscription received in advance on 31st December,2020 4,500
Subscription received in advance on 31st December, 2021 2,700
Subscription outstanding on 31st December,2021 7,500
Salaries outstanding at the beginning and end of the year 2021 were respectively ₹
4,000 and ₹ 4,500. General Expenses include insurance prepaid to the extent of ₹
600. Audit fee for the year 2021 is as yet unpaid. During the year 2021 audit fee for
the year 2020 was paid amounting to ₹ 2,000
The Club owned a freehold lease of ground valued at ₹ 1,00,000. The club had sports
equipment on 1st January, 2021 valued at ₹ 26,000. At the end of the year 2021,
after depreciation, this equipment amounted to ₹27,000. In the year 2020, the Club
had raised a bank loan of ₹20,000.This was outstanding throughout the year 2021.On
31st December, 2021 in hand was ₹ 16,000.
You are required to:
Prepare the Receipts and Payments Account for the year ended on December 31,
2021 and the Balance Sheet as on that date.

116
16. Summary of Receipts and Payments of AMA Society for the year ended 31st
March, 2021 are as follows:
Receipts Amount Payments Amount
Subscription Received 5,00,000 Payment for Medicine 3,00,000
Donation Raised for 1,50,000 Supply
Honorarium to Doctors 1,00,000
meeting revenue
expenditure
Interest on Investments 90,000 Salaries 2,80,000
@ 9% p.a.
Charity Show Collection 1,25,000 Sundry Expenses 10,000
Equipment Purchase 1,50,000
Charity Show Expenses 15,000

Additional Information:
Particulars 01.04.2020 31.03.2021

Subscription due 15,000 22,000

Subscription received in advance 12,000 7,000
Stock of medicine 1,00,000 1,50,000
Amount due for medicine supply 90,000 1,30,000
Value of equipment 2,10,000 3,00,000
Value of building 5,00,000 4'80 '000
Cash Balance 80,000 90,000
Opening Balance of Capital Fund 18,03,000
You are required to prepare:
Income and Expenditure Account for the year ended 31st March, 2021.
Balance Sheet as on 31st March, 2021

17. The following is the Receipts and Payments Account of Mumbai Club for the year
ended March 31, 2021:
Receipt and Payment Account of Mumbai Club
Receipts Amou Payments Amou
nt nt
(₹) (₹)
Cash in hand 20,000 Ground man's Fee 75,000
Balance at Bank as Purchase of Equipment’s 1,55,0
perPass Book: 00
Saving Account 1,93,0 Rent of Ground 25,000

117
 00
Current Account 60,000 Club night expenses 38,000
Bank Interest 5,000 Printing and Office Expenses 30,000
Donations and Subscriptions 2,50,0 Repairs to Equipment 50,000
00
Entrance fees 18,000 Honorarium to 40,000
Secretary(2019-20)
Contribution to Club night 10,000 Balance at Bank as per
Pass Book:
Sale of Equipment 8,000 Saving Account 2,04,0
00
Bar Room receipts 20,000 Current Account 20,000
Proceeds from club night 78,000 Cash in hand 25,000
6,62,0 6,62,0
00 00
You are given the following additional information (All figures are in ₹)

01.04.20 31.03.21
Subscription due 15,000 10,000
Amount due for printing etc. 10,000 8,000
Cheques unpresented being payment for 30,000 25,000
repairs
Interest not yet entered in the Pass book - 2,000
Estimated value of machinery and 80,000 1,75,000
equipment
For the year ended March 31, 2021, the honorarium to the Secretary is to be
increased by a total of ₹ 20,000 and Ground man is to receive a bonus of ₹ 20,000.
Prepare the Income and Expenditure Account for period ended 31st March,2021 and
the Balance Sheet as at that date

18. Following is the Receipts and Payments account of Pune Medical Aid Society for
the year ended 31-12-2022.
Receipts and Payments Account for the year ended 31-12-2022
Receipts Amount Payments Amou
₹ nt
₹
To Opening cash in hand 12,000 By Medicine supply 35,000
To Subscription 65,000 By Honorarium to 15,000
Doctors

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 To Donations 25,000 By Salaries 36,000
To Interest on Investment 10,000 By Sundry expenses. 950
(10%)
To Charity show collection 16,500 By Purchase of 25,000
Medical equipment
By Charity show 2,750
expenses
By Closing Cash in hand
13,800
1,28,500 1,28,50
0
The following is the additional information provided
01-01-2022 31-12-2022
Amount ₹ Amount ₹
Subscription due 2,500 3,100
Subscription received in advance 1,800 1,400
Stock of medicine 12,500 17,250
Amount due for medicine supply 12,000 16,500
Value of equipment 21,500 37,200
Value of building 65,000 61,750
You are required to prepare Income and Expenditure account, and Balance sheet as
on 31-12-2022.

19. The Income and Expenditure Account of the Young Boys Club for the rear 2022 is
as follows:
Expenditure Amount Income Amount
(₹) (₹)
To Salaries 3,750 By Subscription 8,500
To General Expenses 1,500 By Entrance Fees 250
To Audit fee 250 By Contribution
for
To Secretary's 1,000 Annual 1,000
Honorarium Dinner
To Stationery and 450 By Annual Sports
Printing
To Annual Dinner 1,500 meet receipts 750
expenses

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 To Interest and Bank 150
Charges
To Depreciation 400
To Surplus 1,500
10,500 10,500

This Account has been prepared after the following

adjustments: Amount
(₹)
Subscription outstanding on 31st December, 2021 700
Subscription received in advance on 31st December, 2021 550
Subscription received in advance on 31st December, 2022 370
Subscription outstanding on 31st December, 2022 750
Salaries outstanding at the beginning and at the end of 2022 were respectively ₹ 600
and ₹ 150. General Expense include insurance prepaid to the extent of ₹ 150. Audit
fee for 2022 is still unpaid. During 2022 audit fee for 2021 was paid amounting to ₹
200.
The club owned a freehold lease of ground valued at ₹ 20,000. The club had sports
equipment on 1 at January, 2022 valued at ₹ 2600. At the end of the year, after
depreciation, the balance of equipment amounted to, 3,600. In 2021, the club raised
a bank loan of ₹ 5,000, This was outstanding throughout 2022. On 31st December,
2022 cash in hand amounted to ₹ 1600.
You are required to prepare:
Receipts and Payments Account for 2022
Balance Sheet as on 31st December, 2022
Balance Sheet as on 31st December, 2021.

Accounting for share capital

1. Piyush Limited is a company with an authorized share capital of ₹ 2,00,00,000 in
equity shares of ₹ 10 each, of which 15,00,000 shares had been issued and fully paid
on 30th June, 2017. The company proposed to make a further issue of 1,30,000 shares
of ₹ 10 each at a price of ₹ 12 each, the arrangements for payment being:
i. ₹ 2 per share payable on application, to be received by 1st July, 2017;
ii. Allotment to be made on 10th July, 2017 and a further ₹ 5 per share (including the
premium) to be payable;
iii. The final call for the balance to be made, and the money received by 30th
April, 2018.
Applications were received for 4,20,000 shares and were dealt with as follows:

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 1) Applicants for 20,000 shares received allotment in full;
2) Applicants for 1,00,000 shares received an allotment of one share for every two applied
for; no money was returned to these applicants, the surplus on application being used to
reduce the amount due on allotment;
3) Applicants for 3,00,000 shares received an allotment of one share for every five shares
applied for; the money due on allotment was retained by the company, the excess being
returned to the applicants; and
4) The money due on final call was received on the due date.
You are required to record these transactions (including cash items) in the journal of
Piyush limited.

2. A Limited is a company with' an authorized share capital of ₹ 1,00,00,000 in equity

shares of ₹ 10 each, of which 6,00,000 shares had been issued and fully paid up on
31st March, 2020. The company proposes to make a further issue of 1,35,000 of these
₹ 10 shares at a price of ₹ 14 each, the arrangement of payment being :
1. ₹ 2 per share payable on application, to be received by 31st May, 2020;
2. Allotment to be made on 10th June, 2020 and a further ₹ 5 per share (including the
premium to be payable);
3. The final call for the balance to be made, and the money received by 31st
December, 2020.
Applications were received for 5,60,000 shares and dealt with as follows:
i. Applicants for 10,000 shares received allotment in full;
ii. Applicants for 50,000 shares received allotment of 1 share for every 2 applied for; no
money was returned to these applicants, the surplus on application being used to reduce
the amount due on allotment;
iii. Applicants for 5,00,000 shares 'received an allotment of 1 share for every 5 shares
applied for; the money due on allotment was retained by the company, the excess being
returned to the applicants; and
iv. The money due on final call was received on the due date.
You are required to record these transactions (including bank transactions) in the
Journal Book of A Limited

3. JHP Limited is a company with an authorised share capital of 10,00,000 in equity

shares of 10 each, of which 6,00,000 shares had been issued and fully paid on 30 th
June, 2016. The company proposed to make a further issue of 1,00,000 of these 10
shares at a price of ₹14 each, the arrangements for payment being:
a) 2 per share payable on application, to be received by 1 st July, 2016;
b) Allotment to be made on 10 th July, 2016 and a further 5 per share (including the
premium) to be payable;

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c) The final call for the balance to be made, and the money received by 30th April, 2017.
Applications were received for 3,55,000 shares and were dealt with as follows:
1) Applicants for 5,000 shares received allotment in full;
2) Applicants for 30,000 shares received an allotment of one share for every two applied
for; no money was returned to these applicants, the surplus on application being used
to reduce the amount due on allotment;
3) Applicants for 3,20,000 shares received an allotment of one share for every four
applied for; the money due on allotment was retained by the company, the excess being
returned to the applicants; and
4) The money due on final call was received on the due date.
You are required to record these transactions (including cash items) in the Journal of
JHP Limited

4. X Ltd issued 20,000 shares of 10 each at a premium of 4 amount payable were,

On application 5,
On allotment 4,
On first call 3
Balance on final call
Application received for 30,000 shares and directors decided to reject 5000 application
balance made allotment on pro-rata basis. Pass journal entries

5. X Ltd issued 25,000 shares of 20 each at premium of 25% amount payable as follows
15/07/2023 application money 8 including premium 2
01/08/2023 allotment money 7 including premium 3
31/08/2023 first call money 5
30/09/2023 Final call money 5
Application received for 30,000 shares and directors decided to reject all excess
applications.
X who allotted 1,000 shares failed to pay allotment and first call money but he paid it
with final call money.
Y who allotted 2,000 shares failed to pay first call and final call but he paid it on
15/10/2023
Z who allotted 3,000 shares failed to pay final call money but he paid it on 31/10/2023
Pass journal entries in the books of the company.

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6. X Ltd issued 50,000 shares of 10 each at a premium of 3 amount payable were,
1/4/2023 application 5
1/05/2023 allotment 4
01/07/2023 First call 2
01/09/2023 final call 2
Application received for 80,000 shares and directors made allotment on pro-rata basis.
X who allotted 2,000 shares failed to pay allotment money and first call but he paid it
with final. Y who applied for 2,400 shares filed to pay first call and final call but he
paid it on 30/09/2023.
Pass journal entries in the books of the company.

7. X Ltd issued 25,000 shares of 100 each at par amount payable as follows.
01/04/2023 application 20 per share
01/05/2023 allotment 20 per share
01/07/2023 First call 30 Per share
01/08/2023 final call 30 per share
All the shares are fully subscribed and monies are duly received.
X who allotted 3,000 shares paid the entire amount of his share holdings along with
allotment money. Company allows interest on calls in advance at 12% p.a. pass journal
entries in the books of the company.

8. Alankit Limited issued at par 2,00,000 Equity shares of ₹ 100 each payable ₹ 25 on
application; ₹ 30 on allotment; ₹ 20 on first call and balance on the final call. All the
shares were fully subscribed. Mr. Dhawan who held 40,000 shares paid full remaining
amount on first call itself. The final call which was made after 3 months from first call
was fully paid except a shareholder having 4,000 shares who paid his due amount after
2 months along with interest on calls in arrears. Company also paid interest on calls in
advance to Mr. Dhawan.
You are required to prepare journal entries to record these transactions.

9. Konica Limited registered with an authorized equity capital of ₹ 2,00,000 divided into
2,000 shares of ₹ 100 each, issued for subscription of 1,000 shares payable at ₹ 25 per
share on application, ₹ 30 per share on allotment, ₹ 20 per share on first call and the
balance as and when required. Application money on 1,000 shares was duly received
and allotment was made to them. The allotment amount was received in full, but when
the first call was made, one shareholder failed to pay the amount on 100 shares held
by him and another shareholder with 50 shares, paid the entire amount on his shares.
The company did not make any other call. Give the necessary journal entries in the
books of the company to record these transactions.

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10. A limited Company was registered with a capital of ₹ 5,00,000 in share of ₹ 100 each
and issued 2,000 such shares at a premium of ₹ 20 per share, payable as ₹ 20 per share
on application, ₹ 50 per share on allotment (including premium) and ₹ 20 per share on
first call made three months later. All the money payable on application, and allotment
were duly received but when the first call was made, one shareholder paid the entire
balance on his holding of 30 shares, and another shareholder holding 100 shares failed
to pay the first call money. Required: Give Journal entries to record the above
transactions.

11. On 1st May 2022 Superman Ltd. issued 5,000 Equity Shares of ₹ 100 each payable as
follows: On application 20 On 1st Call 20 (Last date fixed for payment 31st July) On
allotment 30 On Final Call 30 (Last date fixed for payment 30th August) Applications
were received on 15th May 2022 for 6,000 shares and allotment was made on 1st June
2022. Applicants for 2,500 shares were allotted in full, those for 3,000 shares were
allotted 2,500 shares and applications for 500 shares were rejected. Balance of amount
due on allotment was received on 15th June. The calls were duly made on 1st July,
2022 and 1st August 2022 respectively. One shareholder did not pay the 1st Call money
on 150 shares which he paid with the final call together with interest at 10% p.a.
Another shareholder holding 100 shares did not pay the final call money till end of the
accounting year which ends on 31st October.
Required: Show the Cash Book and Journal Entries.

12. A Limited issued 20,000 Equity shares of, 10 each at a premium of 10%, payable ₹ 2
on application; ₹ 4 on allotment (including premium); ₹ 2 on first call and balance on
the final call. All the shares were fully subscribed. Mr. M who held 2000 shares paid
full remaining amount on first call itself. The final call which was made after 4 months
from the first call was fully paid except a shareholder having 200 shares and one
another shareholder having 100 shares. They paid their due amount after 3 months and
4 months respectively along with interest on calls in arrears, Company also paid
interest on calls in advance to Mr. M. The Company maintains Calls in Arrear and
Calls in Advance A/c. Give journal entries to record these transactions. Show workings
of Interest calculation. (Ignore dates).

13. Give journal entries for the following:

1) PK Ltd. forfeited 10,000 equity shares of ₹ 10 each for non payment of first call of ₹
2 and final call of ₹ 3 per share. These shares were reissued at a discount of ₹ 3.50 per
share.
2) KP Ltd. forfeited 20,000 equity shares of ₹ 15 each (including ₹ 5 per share as
premium), for non payment of final call of ₹ 3 per share. Out of these 10,000 shares
were reissued at a discount of ₹ 4 per share.
3) KP Ltd. forfeited 15,000 equity shares of ₹ 15 each (including ₹ 5 per share as
premium), for non payment of allotment money ₹ 8 (including premium money) and
first & final call of ₹ 5 per share. Out of these 10,000 shares were reissued at ₹ 14 per

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 share.

14. Give necessary journal entries for the forfeiture and re-issue of shares:
(i) X Ltd. forfeited 300 shares of ₹ 10 each fully called up, held by Ramesh for non-
payment of allotment money of ₹ 3 per share and final call of ₹ 4 per share. He paid
the application money of ₹ 3 per share. These shares were re-issued to Suresh for
₹ 8 per share.
(ii) X Ltd. forfeited 200 shares of ₹ 10 each (₹ 7 called up) on which Naresh had paid
application and allotment money of ₹ 5 per share. Out of these, 150 shares were
re- issued to Mahesh as fully paid up for ₹ 6 per share.

15. Bhagwati Ltd. invited applications for issuing 2,00,000 equity shares of ₹ 10 each.
The amounts were payable as follows:
On application - ₹ 3 per share
On allotment - ₹ 5 per share
On first and final call - ₹ 2 per share
Applications were received for 3,00,000 shares and pro-rata allotment was made to all
the applicants. Money overpaid on application was adjusted towards allotment money.
B, who was allotted 3,000 shares, failed to pay the first and final call money. His shares
were forfeited. Out of the forfeited shares, 2,500 shares were reissued as fully paid-up
@ ₹ 6 per share.
Pass necessary Journal entries to record the above transactions in the books of Bhagwati
Ltd.

16. B Limited issued 50,000 equity shares of ₹ 10 each payable as ₹ 3 per share on
application, ₹ 5 per share (including ₹ 2 as premium) on allotment and ₹ 4 per share on
call. All these shares were subscribed. Money due on all shares was fully received except
from X, holding 1000 shares who failed to pay the allotment and call money and Y,
holding 2000 shares, failed to pay the call money. All those 3,000 shares were forfeited.
Out of forfeited shares, 2,500 shares (including whole of X's shares) were subsequently
re-issued to Z as fully paid up at a discount of ₹ 2 per share.
Pass necessary journal entries in the books of B limited. Also prepare Balance Sheet
and notes to accounts of the company.

17. ABC Limited issued 20,000 equity shares of ₹ 10 each payable as:
₹ 2 per share on application
₹ 3 per share on allotment
₹ 4 per share on first call
₹ 1 per share on final call

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 All the shares were subscribed. Money due on all shares was fully received except for
Mr. Bird, holding 300 shares, who failed to pay first call and final call money. All these
300 shares were forfeited. The forfeited shares of Mr. Bird were subsequently re-issued
to Mr. John.as fully paid up at a discount of ₹ 2 per share.
Pass the necessary Journal Entries to record the above transactions in the books of ABC
Limited.

18. Samuel who was the holder of 12,000 preference shares of ₹ 100 each, on which ₹ 75
per share has been called up could not pay his dues on Allotment and First call each at
₹ 25 per share. The Directors forfeited the above shares and reissued 10,000 of such
shares to Mr. Robort at ₹ 65 per share paid-up as ₹75 per share.
You are required to prepare journal entries to record the above forfeiture and re-issue
in the books of the company.

19. Mr. Hello who was the holder of 4,000 preference shares of ₹ 100 each, on which ₹ 75
per share has been called up could not pay his dues on Allotment and First call each at
₹ 25 per share. The Directors forfeited the above shares and reissued 3,000 of such
shares to Mr. X at ₹ 65 per share paid-up as ₹75 per share.
You are required to prepare journal entries to record the above forfeiture and re-issue
in the books of the company.

20. X limited invited for applications for issuing 75,000 equity shares of 10 each at a
premium of 5 per share. The amount was payable as follows.
- 9 per share (including premium) on application and allotment
- Balance on the first and final call
Application for 3,00,000 shares received. Application for 2,00,000 shares rejected and
money refunded. Shares were allotted on pro-rata basis to remaining applicants. The
first and final call was made. The amount was duly received except on 1500 shares
applied by Raj his share were forfeited. The forfeited shares reissued at discount of 4
per share.
Pass necessary journal entries on the above transaction in the books of X Limited.

21. SOS Limited issued a prospectus inviting applications for 6,000 shares of ₹ 10 each at
a premium of ₹ 2 per share, payable as follows;
On application ₹ 2 per share; On allotment ₹ 5 per share (including premium): On 1st
call ₹ 3 per share; On Second and Final Call ₹ 2 per share.,
Applications were received for 9,000 shares and allotment was made pro-rata to the
applicants of 7,500 shares, the remaining applicants were refused allotment. Money
overpaid on applications were applied towards sums due on allotment.
D to whom 100 shares were allotted, failed to pay the allotment money and on his

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 subsequent failure to pay the first call, his shares were forfeited.
Z,the holder of 200 shares, failed to pay both the calls, and his shares were forfeited
after the second and final call.
Of the shares forfeited 200 shares were sold to C credited as fully paid up for ₹ 8.50
per share, the whole of Ds shares being included.

22. Alpha Ltd issued a prospectus inviting applications for 2,000 shares of ₹ 10 each at a
premium of ₹ 2 per share, payable as follows:
On Application ₹ 2 On Allotment ₹ 5 (including premium)
On First Call ₹ 3 On Second & Final Call ₹ 2
Applications were received for 3,000 shares and pro rata allotment was made on the
applications for 2,400 shares. It was decided to utilize excess application money
towards the amount due on allotment. Mohit, to whom 40 shares allotted, failed to pay
the allotment money and on his subsequent failure to pay the first call, his shares were
forfeited.
Jagat, the holder of 60 shares failed to pay the two calls and on his such failure, his
shares were forfeited.
Of the shares forfeited, 80 shares were sold to Rishav credited as fully paid for ₹ 9 per
share, the whole of Mohit’s shares being included.
Required: Give Journal Entries to record the above transactions (including cash
transactions)

23. Nivedita Fertilizers Ltd. issued a prospectus inviting applications for 20,000 shares of
₹ 10 each at a premium of ₹ 2 per share, payable as follows:
On Application 3 (including ₹ 1 premium)
On Allotment 4 (including ₹ 1 premium)
On First Call 3 On Second & Final Call 2
Applications were received for 30,000 shares and pro rata allotment was made on the
applications for 24,000 shares. It was decided to utilize excess application money
towards the amount due on allotment.
Arunavo, to whom 400 shares were allotted, failed to pay the allotment money and on
his subsequent failure to pay the first call, his shares were forfeited.
Victor, who applied for 720 failed to pay the two calls and on his such failure, his
shares were forfeited.
Of the shares forfeited, 800 shares were sold to Srijita credited as fully paid for ₹ 9 per
share, the whole of Arunavo’s shares being included.
Required: Give Journal Entries to record the above transactions (including cash
transactions)

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24. BP Limited issued a prospectus inviting applications for 1,20,000 equity shares of ₹
10 each at a premium of ₹ 2 per share payable as follows:
On Application - ₹ 3 per share
On Allotment - ₹ 5 per share (including premium)
On First and Final Call - ₹ 4 per share
Applications were received for 3,60,000 equity shares. Applications for 80,000 shares
were rejected and the money refunded. Shares allotted to remaining applications as
follows:
Category No. of shares Applied No. of shares Allotted I
1,60,000 80,000
II 1,20,000 40,000
Excess money received with applications was adjusted towards sums due on Allotment
and the balance amount returned to the applicants. All calls were made duly received
except the final call by a shareholder belonging to Category I who has applied for 680
shares. His shares were forfeited. The forfeited shares were reissued at ₹ 13 per share
fully paid-up.
Pass necessary journal entries for the above transactions in the books of BP Ltd, Open
call in arrears account whenever required.

25. PQR Limited issued 2,00,000 equity shares of, 10 each payable as ₹ 3 per share on
application & ₹ 5 per share (including ₹ 2 as premium) on allotment and ₹ 4 per share
on call. All these shares were subscribed. Money due on all shares was fully received
except from Mr. J, holding 5,000 shares who failed to pay ·the allotment and call
money and Mr. K, holding 10,000 shares, who failed to pay the call money. All these
15,000 shares were forfeited. Out of the forfeited shares, 10,000 shares (including
whole of J's shares) were subsequently re-issued to Mr. L as fully paid up at a discount
of ₹ 1 per share.
Pass necessary journal entries in the books of PQR Limited. Also prepare Balance
Sheet and notes to accounts of the company.

26. Fashion Garments Ltd invited applications for issuing 10,000 Equity Shares of ₹ 10
each. The amount was payable as follows:
27. (On Application 28. ₹ 1 per share
29. On Allotment 30. ₹ 2 per share
31. (On First call 32. ₹ 3 per share
33. On Second and final Call 34. ₹ 4 per share
The issue was fully subscribed. Ram to whom 100 shares were allotted, failed to pay
the allotment money and his shares were forfeited immediately after the allotment.
Shyam to whom 150 shares were allotted, failed to pay the first call. His shares were
also forfeited after the first call. Afterwards the second and final call was made. Mohan

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 to whom 50 shares were allotted failed to pay the second and final call. His shares were
also forfeited. Al the forfeited shares were re-issued at ₹ 9 per share fully paid-up.
Pass necessary Journal entries in the books of Fashion Garments Ltd.
35. B Ltd purchase the assets of ₹ 10,80,000 from C Ltd. The cosideration was payable in
fully paid equity shares of ₹ 100 each.
Required: Show the necessary journal entries in books of B Ltd. assuming that —
a) Such shares are issued at par
b) Such shares are issued at premium of 20%

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