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BOOK KEEPING & ACCOUNTANCY
OMTEX CLASSES
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BOOK KEEPING AND ACCOUNTANCY
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Preface
It gives us great pleasure to present this thoroughly revised edition of
Omtex Classes Book Keeping and Accountancy for Standard XII,

prepared according to the pattern prescribed by the board. A thorough study and practice of this edition with the help of Omtex Classes guidance (teaching + coaching) will enable the students to pass the
HSC examination with better marks.

Meticulous care has been taken to make this edition of
Omtex
Classes Book
welcome.
Keeping and Accountancy perfect and useful in
every respect. However, suggestions, if any, for its improvement are most
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Note: - Every part of this book may be copied, adapted, abridged or translated, stored in any retrieval system, computer system, photographic or other system or transmitted in any form or by any means without a prior written permission of the Omtex classes. This permission is given to help students in achieving their success.
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CH. 1.
VALUATION OF GOODWILL [Q. 2 (A) :
5 MARKS]
Note: - One practical problem on Valuation of Goodwill carrying 5 marks will be asked in Q. 2 of the Board Paper. Valuation of Goodwill: - As prescribed in the syllabus, the value of goodwill as on a particular date is ascertained by using any one of the following methods: i. The Average Profit Method and ii. The Super Profit Method. INTRODUCTION Definition: Goodwill is an intangible (non visible) fixed asset having a realizable (economic) value. It is the reputation of business. Valuation of goodwill is very important in the case of admission, retirement and death of partners. IMPORTANT FORMULAE
PROBLEMS 1. The profits of the firm for the last five years are 2002 Rs. 20,000; 2003 Rs. 16,000; 2004 Rs. 24,000; 2005 Rs. 8000; 2006 Rs. 12,000. Calculate the goodwill of the firm. [Ans. Rs. 16,000]
2. Calculate the good will from the following information goodwill is valued at three years
purchase of average profit of the last six years. Profit and losses of the business in the last six years are as follows, [Ans. Rs. 95,000] 1st year, Rs, 40,000(Profit) 2nd Year, Rs, 60,000(Profit) 3rd Year, Rs, 10,000(Loss) th Year, 4 Rs, 50,000(Profit) 5th Year, Rs, 30,000 (Loss) 6th Year, Rs, 80,000(Profit)
3. Calculate the value of goodwill according to average profit method. Goodwill is valued at three
years purchase of last four year average profit. The profits and losses for the last four years are. [Ans. Rs. 27,000] 1st Year Rs, 10,000(Profit)
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2nd Year Rs, 3rd Year Rs, 4th Year Rs,
12,000(Profit) 4,000(Loss) 18,000(Profit)
4. The profit of a firm for the four years from 1991 to 1994 where_ [Ans. Rs. 1, 02,000]
1991 Rs, 40,000 1992 Rs, 45,000 1993 Rs, 55,000 1994 Rs, 53,000 Calculate the goodwill of the firm at 2yrs. Purchase of the average profit for the last three years.
5. Mr. X a businessperson has earned the following profits in the last five years.
1995 1, 05,800 1994 1, 02,600 1993 98,400 1992 96,800 1991 95,500 Value goodwill of Mr. X on the basis of three years purchase of average of the past five years. [Ans. Rs. 2,99,460]
6. Good will is valued at three years purchase of last five years average profit. The profits for the
last five years are. [Ans. 0] 1st Year 4,800(p) 2nd Year 7,200(L) 3rd Year 10,000(L) 4th Year 3,000(P) th Year 5 5,000(L) Note: - Since the companys average profit is negative. Therefore the firms goodwill is zero.
7. Compute the goodwill the following case good will is valued at three years purchase of
average profit of five years. The Profit of the five years were_ [Ans. Rs. 26,400] 1st Year 5,800 2nd Year 7,400 3rd Year 20,000 th Year 4 3,500 5th Year 7,300
8. Sales of trader for 3years ended 30th June 1995 are as follows [Ans. Rs. 1, 22,680]
1995 Rs, 5, 50,000 1994 Rs, 5, 46,000 1993 Rs, 5, 25,000 The profit margin for the 3 years ended 30th June 1995 was 10%, 12%, 12% respectively. For the purpose of selling the business of the trader, goodwill is to be valued at 2years purchase of the average profit of the last 3years. Find the value of good will.
9. From the following particulars, value good will of 2yrs. Purchase of last 5 years. [Ans. Rs.
70,326] Year ended Turn over Net profit 31-12-1990 5,15,000 5%
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31-12-1991 31-12-1992 31-12-1993 31-12-1994 5,45,600 5,35,800 5,40,900 5,60,800
6% 7% 7.5% 7%
10. A firm with an average capital employed of Rs. 1, 60,000 is expected to earn Rs, 40,000 per
annum in future. Calculate goodwill at three times the super profit taking the normal rate of return as 15%. [Ans. Rs. 48,000]
11. Capital employed on 31st December, 1990 was Rs, 1, 00,000/-. The Profits earned by the
business for the last 5 years where. [Ans. Rs. 87,000] 1986 30,000 1987 40,000 1988 50,000 1989 40,000 1990 60,000 Normal rate of return is 15%. Good will is valued at 3 years purchase of the super profits of the business. Find out the value of goodwill.
12. The books of a business showed that the capital employed on 31st December, 1992 was Rs.1,
00,000/-. Profits for the last five years are_1988, 1989, 1990, 1991 & 1992 were Rs, 60,000, Rs, 55,000, Rs, 75,000, Rs, 85,000 & Rs, 65,000 respectively. Goodwill is valued at 2 years purchase of the Super profit of the business. NRR is 10%. [Ans. Rs. 1, 16,000] 13,000. Rs, 12,000 and Rs, 8,000. The capital investment made in the firm was Rs, 50,000. N.R.R on capital is 15%. The remuneration of the partners during the period is Rs, 500 p.a. Good will is valued at 2 Yrs purchase of Average super profit of the above mentioned years. [Ans. Rs. 4,000]
13. M/s XYZ partnership firm earned net profit during the last four years were Rs, 7,000. Rs,
14. M/s Vijay trading company earned net profit during the last four years was follows.
1st Year Rs, 57,000 2nd Year Rs, 44,000 3rd Year Rs, 61,000 4th Year Rs, 58,000 The capital investment made by the company is Rs, 1, 50,000. Normal Rate of return on capital is 20%. The remuneration of the partners during this period is Rs, 500 p.m. Good will is valued at 2years purchase of Average Super profit of above mentioned period. [Ans. Rs. 38,000]
15. The average net profit expected in the business by ABC firm is Rs, 36,000 per year. The
average capital employed in the business by the firm is Rs, 2, 00,000. The Rate of interest expected from capital invested in the business is 10%. The remuneration of the partners is estimated to Rs, 6,000 P.a. Calculate the value of goodwill based on 2years purchase of super profit. [Ans. Rs. 20,000]
16. M/s Rajesh Trading company earned net profit during the last four years were Rs, 15,000, Rs,
28,000, Rs, 30,000 & Rs, 40,000. The capital investment made by the company is 1, 00,000. Normal rate of return on capital is 15 %. The remuneration of the partners during this period is Rs, 1,000p.a. Good will is valued at 2 years purchase of average super profit of the above mentioned period. [Ans. Rs. 24,500]
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17. The present average net profit of Prabhu & Shobha partnership firm before detecting
partners remuneration is Rs, 27,000 p.a. The capital employed in the business by the partner Prabhu is Rs, 1, 00,000 & Shobha is Rs, 50,000. The profit expected from the total capital invested is 10% p.a. The total remuneration is estimated to be Rs, 6,000 per annum. Find out the value of goodwill on the basis of 2 years purchase of super profit. [Ans. Rs. 12,000]
18. The following balance sheet of Kantilal, Chandrakant.
Balance sheet as on 31st March, 1995 Liabilities Amount Assets Amount Capital Machinery 50,000 Kantilal 90,000 Building 41,000 Chandrakant 70,000 Investments 30,000 Reserve Fund 44,000 Stock 20,000 Creditors 38,000 Debtor 66,000 Bank 30,000 Profit/loss A/c 5,000 2,42,000 2,42,000 The net profits of the firm for the year ended 31st March, 1995 were Rs, 15,000 Rs, 25,000 Rs, 26,000. Ascertain the value of good will at 2 years purchase of the super profit of the 3years taking the normal rate of return on capital employed is 10%. [Ans. Rs. 4,200]
19. The following is the balance sheet of M/s Kanna and Bhim as on 31st March 1995.
Balance sheet as on 31st march, 1995. Liabilities Amount Assets Amount Capital Machinery 10,000 Kanna 1,64,000 Building 26,000 Bhim 40,000 Plant 56,000 Creditors 35,000 Stock 56,000 Profit/ Loss A/c 3,040 Debtor 19,040 Bank 75,000 2, 42, 040 2, 42, 040 Net profits for the past 3years are 1st year Rs, 43,350, 2nd year Rs, 36870, 3rd year Rs, 32,280. Normal rate of return on capital employed is 10%. Calculate the value of goodwill at 2years purchase of the average super profit. [Ans. Rs. 33,592] HOME WORK SECTION 1. Mahipati and Ganpati are partners sharing profits and losses in the ratio of 4:3. They admitted in partnership Shripati for 1/8 share. For the purpose of admission of Shripati, goodwill of the firm should be valued on the basis of 2 years purchase of the last 5 years average profit. Calculate the goodwill of the firm. [Ans. Rs. 2,00,000] 1991 92 Rs. 75,000 1992 93 Rs. 1,00,000 1993 94 Rs. 1,25,000 1994 95 Rs. 85,000 1995 96 Rs. 1,15,000 2. Jaya and Maya are carrying on a business in partnership for last 12 years. Goodwill of the firm is to be valued at 3 years purchase of the average profit of last 6 years. 2000-01 Rs. 2,20,000(Profit) 2001-02 Rs. 1,20,000(Loss) 2002-03 Rs. 2,60,000(Profit)
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2003-04 Rs. 1,80,000(Loss) 2004-05 Rs. 2,90,000(Profit) 2005-06 Rs. 3,20,000(Profit) 2006-07 Rs. 2,10,000(Profit) You are required to calculate the value of Goodwill of the firm. [Ans. Rs. 4,55,000] [Note: - Last 6 years are to be counted in reverse order of years given. Therefore, profit given for the year (2000 01) is to be ignored]. 3. Vijay and Azim carrying on a business in partnership for last 5 years. Goodwill of the firm is to be valued at 3 years purchases of the average profits of last 5 years. The profits and losses for the last 5 years were: 1996-97 (Profit) Rs. 32,000 1997-98 (Profit) Rs. 30,000 1998-99 (Loss) Rs. 16,000 1999-2000 (Profit) Rs. 14,000 2000-01 (Profit) Rs. 20,000 You are required to calculate the value of goodwill of the firm. [Ans. Rs. 48,000] 4. The following is the Balance Sheet of Ashok and Nayan: Balance Sheet as on 31st March 2007. Liabilities Amount Assets Amount Capital Plant and Machinery 1,78,000 Ashok 1,00,000 Furniture 62,000 Nayan 1,20,000 Stock 48,000 General Reserve 78,000 Debtors 40,000 Profit & Loss A/c 56,000 Bank 35,000 Sundry Creditors 36,000 Prepaid Expenses 27,000 3,90,000 3,90,000 The trading result for the last four years was 2003 04: Rs. 65,000 (Profit), 2004 05: Rs. 5,000(loss), 2005 06: Rs. 78,000 (Profit) and 2006 07: Rs. 92,000 (Profit). Calculate the value of goodwill of the firm at 2 years purchases of the super profit considering the Normal rate of return on the capital employed is 13%. [Ans. Rs. 37,475] 5. Calculate the value of goodwill of the firm from the following information: i. Total capital employed in the business Rs. 4,00,000. ii. Net profits of the firm or the past three years were Rs. 53,800, Rs. 45,350, Rs. 56,250. iii. Normal rate of return at 10%. iv. Goodwill is to be valued at three years purchase of super profit. [Ans. Rs. 35,400] 6. Following is the Balance Sheet of Mr. Atul as on 31st March, 1993: Liabilities Amount Assets Amount Capital 77,500 Fixed Assets 85,000 General Reserve 22,500 Current Assets 50,000 Creditors 40,000 Prepaid Advertisement 10,000 Bills Payable 5,000 1,45,000 1,45,000 The net profits for the last three years were Rs. 19,500; Rs. 22,500; Rs. 30,000. Calculate the value of goodwill at two times of super profit, taking into consideration the standard rate of return on the capital employed is 15%. [Ans. Rs. 21,000]
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7. Following is the Balance sheet of Usha and Sushila who share profits and losses equally. Balance sheet as on 31st March, 2010 Liabilities Amount Assets Amount Capital: Land and Building 150000 Usha 200000 Machinery 100000 Sushila 100000 Debtors 80000 Creditors 60000 Stock 40000 Bills Payable 40000 Bank 30000 400000 400000 The net profits for the last three years were Rs. 60,000, Rs. 80,000 and Rs. 1,00,000. It was decided to calculate the value of goodwill at 2 years purchase of super profit taking into consideration the standard rate of return on the capital employed at 15%. Calculate the value of goodwill. (March 2012)
Note: Capital Employed = Partners Capital + General Reserve + Accumulated Profit Unadjusted losses Expenses yet to be written off.
IMPORTANT POINTS TO REMEMBER If Number of Years of purchase is not given then assume it as 1 years purchase. Any Number which is followed by the word Years Purchase / Times / Thrice / Twice are considered as number of years purchase. If there is a continuous loss in the Firm then the Goodwill of the Firm would be Zero (0). If the total Profits and Loss are negative then also the goodwill would be Zero. If the super profit is negative then also the goodwill would be zero.
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CH. 2. COMPUTER AWARENESS [Q. 2 (B): 5 MARKS] Answer the following questions
1. Explain the future prospects of computers. Or State the technologies envisaged in future computers. Ans. Over the past several decades, technological advances have dramatically boosted the speed, computational power and reliability of computers, while their size, power consumption and cost of computers have been reduced sharply. The technologies involved in the future computing devices based on artificial intelligence include speech processing, vision systems, robotics, expert systems, quantum computing and nanotechnology. Some of these technologies are already being used today. i. Artificial intelligence (AI): - The goal is to develop computers that respond to natural language as input, and are capable of learning and self organization. These computers will be able to learn from experience and change the stored programs according to the requirements. An AI powered expert system emulates (copies) the behavior of a human advisor or consultant. Speech recognition: - Today, there are voice recognition systems which can recognize spoken words. These systems take dictation or they can be accessed by voice commands through telephones or microphone. However, they do not understand what is being said. Future computing devices are being designed to understand human languages which come under a field of computer science called natural language processing. Robotics: A robot is a programmable machine that imitates the actions or appearance of a human. To qualify as a robot, a machine must be able to do two things: 1. Get information from its surroundings. 2. Do some physical activities such as move or manipulate objects. Quantum computing: - Physicists are hotly pursing the construction of quantum computers, in which atoms, protons or fabricated nanostructures would be used to store and process data using the rules of quantum mechanics. In a little of over half a century, the number of transistors on a silicon chip has grown from just one to nearly a billion. Nanotechnology would have to be used to further shrunk the transistors and pack more of them onto a chip to maintain technological progress.
ii.
iii.
iv.
2. Explain the salient features of computer. OR. What are the characteristics of computers? (March 09) OR. Explain in brief the importance of computers in the modern age. (March,08,11) Explain the advantages of a computer. i. Speed : A computer works at an incredible speed and can do millions of calculations in just a fraction of a seconds. ii. Storage capacity: A computer has a vast memory. It can store a huge quantity of information in its secondary memory devices. iii. Versatility: A computer is very versatile. It can do any type of work once it has been introduced to a series of logical and systematic steps.
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iv. v.
Accuracy: Since a computer works according to a well defined logic, it never misses out on even a minor step. Consistent uniform quality of work: Unlike human beings, a computer does not get tired or bored; it gives the same quality of work and level of speed, accuracy and neatness after several hours of continuous work.
3.
What do you mean by computer hardware and software? Give their uses. (September 09) Ans. A computer system has two components. Hardware and software. They depend on each other. i. Hardware : All the physical components which make up a computer system and which we can see and touch are called hardware. It consists of a. The central processing unit (CPU) b. The peripheral devices that are connected to a computer around its periphery. c. The memory or storage devices. Uses : The CPU processes the data according to a program or commands given to it and outputs the result. The peripheral devices are used for input and output and communication. It consists of keyboard, mouse, microphone web camera, monitor, printer, etc. Memory devices such as hard disk, CD, DVD and pendrive store the raw and processed data as well as the softwares. ii. Software: Software, which we cannot see or touch, is the set of instructions needed by a computer for its functioning as well as accomplishing and assigned task. Uses: The system software or operating system is the first software to run when a computer is switched on. An application software is a user friendly program which is designed to perform specific application.
4. Explain about the components of computer hardware? Ans. The computer hardware comprises of the following components. a. Input devices: - The data is required to be transmitted to computer for processing. It is done with the help of input devices like punch card reader, paper tape reader, mark and character reader, keyboard, speech recognizer etc. b. Central processing Unit: - This unit processes raw data according to the instructions given to the computer. It has mainly three parts. Control unit, Arithmetic / Logic unit and memory unit. It is popularly known as the heart, Brain and Nervous system of the computer. It provides central control of the operation of the whole computing machine. The CPU is known as a part of the computer system. The CPU consists of a memory unit, control unit and An Arithmetic and logic unit. i. Memory unit: - A memory unit of the central processing unit is a place where the computer program and data are stored during processing. A memory unit is a random access storage device comprising number of storage locations. The data which is to be stored in the memory unit for processing are fixed by the computer program. The main or internal memory is called as primary storage. It normally consists of the program to be executed and the data required by the program. ii. The Control Unit: - All the operations carried out by the computer are directed by the control unit. A control unit is called as the nerve centre of the computer since it controls and co ordinates all hardware operations. The program and data are transferred from the input device into the memory as directed by the control unit during the execution of the program each instruction is retrieved in turn from the memory and interpreted. A control unit informs the Arithmetic logic unit as to how precisely the operation to be
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preformed. It directs the transfer to the Arithmetic logic unit of any item of data that is required for operation. iii. The Arithmetic Logic Unit (ALU): - The arithmetic logic unit comprises a number of accumulators and registers. Accumulator means a register and associated equipment in the arithmetic unit of the computer where arithmetic and logical operations are performed. A register is a hardware device for holding data to be operated upon. The ALU obtains the data from the main memory as per the direction given by the controlling unit based on the program given to it. This data is loaded into accumulators in the ALU. The ALU operates on the data which is available in the main memory. The ALU after processing the data sent to output device. c. Output devices: - The processed data is to be made available to the user in the form required by him. For this purpose the following devices are used. Printers, visual display unit etc. This is necessary to provide backup storage. It may be in the form magnetic tapes, magnetic disk, floppies, C.D.s etc.
5. EXPLAIN THE ROLE OF COMPUTER IN ACCOUNTING. Ans. The role of computer in accounting is explained as follows. 1. For various reasons, every business organization is required to prepare and maintain various books of account. The computer is used by many business organizations to carry out accounting operations at a greater speed and accuracy. 2. The computer is useful for classifying, processing, analyzing, tabulating, recording and interpreting the accounting data for various purposes. 3. It is useful for improving the financial system of the organization. 4. With the help of the computer, accountants can easily, accurately and speedily prepare the different source documents like voucher, invoice, quotation, receipt, etc. 5. The computer is useful for recording accounting entries in the journal and posting such entries in the ledger. It is also used to prepare trial balance, final account, accounting statements like Balance sheet, etc.
6. Explain the use of computers in office administration. Ans. Use of computers in office administration. 1. Paperless office: Word processors and spreadsheet programs can be used to create all types of letters, reports, proposals and accounting documents in an office. Thus, computers have enabled a neat paperless office environment. 2. Electronic administration or e administration: This encompasses both intra office and inter office communications of an organization through networked computers and over the internet. This works out to huge savings in time and cost for any organization. 3. E governance: The computerization of government agencies, i.e. e government, brings about public sector modernization, more efficient government management and better delivery of government services to citizens, business and industry.
7. Describe the advantages of computerized accounting system. Ans. A computerized accounting system has its advantages. i. Accuracy: - Accounting information for each transaction needs to be entered by once. The software automatically posts the transaction to the respective ledger accounts.
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ii. iii. iv. v.
Hence, there is less scope of errors as compared to making the same entry separately into different ledgers manually. Automatic updating: - Accounting records are automatically updated so that the account balances, debtors and stores ledgers, etc. are always up to date. Cost savings: Up to date accurate record keeping prevents accountants from fraudulent practices so that auditing becomes quick and easy. Multiple currency capability: An accounting software takes care of exchange rate changes and allows a business organization to trade in multiple currencies. Document generation: An accounting software can generate accurate and legible documents such as invoices, credit and debit notes, purchase orders, vouchers, payroll and pay slips, etc.
8. Describe the limitations of a computerized accounting system. (March 2012) Ans. A computerized accounting system has its limitations. 1. Power outages can entirely stop the accounting work and access to accounting information. 2. Computer viruses can erase or damage vital business and accounting information. 3. Hackers can clandestinely gain access to top secret business and accounting data if proper care of database security and access control is not exercised. 4. Accuracy of computerized output depends critically on the correctness of data entered. i.e. garbage in garbage out (GIGO). 5. Advantages of computerized accounting can be weighed down by i. an accounting software which is inappropriate for the business, buggy or inappropriately set up. ii. Obsolete or no working hardware. iii. Poorly trained personnel.
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CH. 3. BILLS OF EXCHANGE [Q.3: 17 MARKS]

Note: - In Q.3 of the Board paper, one problem on Renewal of bills of exchange and another problem on dealing of multiple bills by a drawer (one drawer and multiple drawees) will be asked. Students are required to attempt any one out of these two. DEFINITION:BILLS OF EXCHANGE: - A Bills of Exchange is a Negotiable (exchangeable) Instrument, containing an unconditional order signed by the maker (drawer) directing a certain person (drawee) to pay a certain sum of money only to the bearer of the Instrument. THERE ARE THREE PARTIES IN THE BILL OF EXCHANGE. DRAWER: - The drawer is the person or the party who draws the bill. He is the creditor and he has to receive the money from other person. DRAWEE: - The drawee is the person or the party on whom the bill is drawn. He is a debtor and he has to pay the amount to the drawer. Once he accepts the bill he becomes an Acceptor. PAYEE: - The payee is the person or the party to whom the bill is made payable. If the bill is made payable to the drawer himself, the drawer and the payee are the same person. TERM OF THE BILL: -A bill of exchange is subject to certain terms and conditions. Such terms and conditions include period of the bill, place of payment, amount of the bill, etc. GRACE DAYS/ DAYS OF GRACE: - While calculating the due date of any time bill, three extra days knows as days of grace should be added to the specified period mentioned in the bill. For example, a bill drawn on 15th January, 2007 for two month will become due on 18th March, 2007. DUE DATES / MATURITY DATES: - The date on which the Bill is ready for the payment is known as due date or maturity date of that Bill. If the due date falls on Sunday or any other public holiday the payment of the bill should be made on the immediately preceding working day. If a bill falls due for payment on 15 th August, it must be paid on 14th August. If a bill falls due on 26th January, it must be paid on 25th January. In case 25th January is Sunday the payment must be made on 24th January. HONOUR OF THE BILL: - When the bill is paid on the due date is known as honour of the Bill. DISHONOUR OF THE BILL: - When the Bill is not paid on the due date then it is known as dishonour of the
bill.
RETIREMENT OF THE BILL: - When the Bill is paid before the due date then it is known as retirement of the
Bill.
HUN DIES: - When the subject matter of the Bill is in Indian language say Tamil, Telungu, Guajarati, Hindi etc. then it is known as handier. ACCEPTANCE OF THE BILL: - When the drawee puts the signature on the bill then it is known as acceptance of the bill. THERE ARE TWO TYPES OF ACCEPTANCE GENERAL ACCEPTANCE: - When the bill is accepted without any terms and conditions then it is known as general acceptance.
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QUALIFIED ACCEPTANCE: - When the bill is accepted with certain terms and conditions then it is known as qualified acceptance. DRAFT: - Before the acceptance of the bill, it is known as draft. ENDORSEMENT OF BILL: - When the ownership of the bill is transferred then it is known as endorsement of Bill. There are two parties in the endorsement of Bill. ENDORSER: - A person who transfers the ownership of the bill is known as endorser. ENDORSEE: - A person on whom the bill has been transferred is known as endorsee. TYPES OF BILL: - There are two types of Bill INLAND BILL: - A bill which is drawn & made payable in the same country, it is known as Inland bill. FOREIGN BILL: - A bill which is drawn in one country & made payable in another country then it is known as foreign bill. NOTING CHARGES: - It is a fee charged by the Notary Public, In case of dishonour of Inland bill. Notary Public is a government officer who is appointed to register the dishonour bill. PROTESTING: - It is also a fee charged by the government in case of foreign bill.
Important Journal Entries to Remember.

Journal Entries in the books of Drawer 1. When the goods are Sold. Debtors A/c Dr. To Sales A/c [the person who purchases the goods he is known as debtor] 2. When the bill is drawn. Bills Receivable A/c Dr. To Drawees A/c 3. Different ways of keeping Bill. a. Kept with Drawer himself. No entry b. Discounted with the bank. Cash / Bank A/c Dr. Discount A/c Dr. To Bills Receivable A/c c. Endorsed Endorsees A/c Dr. To Bills Receivable A/c d. Sent to bank for collection. Bank for collection A/c Dr. To Bills Receivable A/c 4. When the Bill is Dishonoured. www.omtexclasses.com Journal Entries in the Books of Drawee 1. When the goods are purchased. Purchase A/c Dr. To Creditors A/c [the person who sells the goods he is known as creditor] 2. When the bill is drawn. Drawers A/c Dr. To Bills payables A/c 3. Different ways of keeping Bill. a. Kept with Drawer himself. No entry b. Discounted with the bank. No entry
c. Endorsed No entry d. Sent to bank for collection. No entry 4. When the Bill is Dishonoured.
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a. Kept with Drawer himself. Drawees a/c Dr. To Bills Receivable A/c b. Discounted with the bank. Drawees a/c Dr. To Cash / Bank A/c c. Endorsed Drawees a/c Dr. To Endorsees A/c d. Sent to bank for collection. Drawees a/c Dr. To Bank for collection A/c 5. When the Bill is Honoured. a. Kept with Drawer himself. Cash / Bank A/c Dr. To Bills receivable A/c b. Discounted with the bank. No entry c. Endorsed No entry d. Sent to bank for collection. Cash /Bank A/c Dr. To Bank for collection A/c 6. When the part payment is made Cash / bank A/c Dr. To Drawees A/c 7. When the interest is charged. Drawees A/c Dr. To Interest A/c 8. When the Bill is retired. Cash / Bank A/c Dr. Rebates A/c Dr To Bills Receivable A/c 9. When the drawee become insolvent. Cash / bank A/c Dr. Bad debts A/c Dr. To Drawees A/c 10. When the noting charge is charged.
The amount of noting charges will be added to the dishonoured bill and no separate entry would be passed.
a. Kept with Drawer himself. Bills payable a/c Dr. To Drawers A/c b. Discounted with the bank. Bills payable a/c Dr. To Drawers A/c c. Endorsed Bills payable a/c Dr. To Drawers A/c d. Sent to bank for collection. Bills payable a/c Dr. To Drawers A/c 5. When the Bill is Honoured. a. Kept with Drawer himself.
Bills payables A/c Dr. To Cash/ Bank A/c Bills payables A/c Dr. To Cash/ Bank A/c
b. Discounted with the bank.
c. Endorsed
Bills payables A/c Dr. To Cash/ Bank A/c
d. Sent to bank for collection.

Bills payables A/c Dr. To Cash/ Bank A/c
6. When the part payment is made

Drawers A/c Dr. To Cash/ Bank A/c
7. When the interest is charged.

Interest A/c Dr. To Drawers A/c
8. When the Bill is retired.

Bills payables A/c Dr. To Cash / Bank A/c To Discount A/c
Drawers A/c Dr. To Cash/ Bank A/c
9. When the drawee become insolvent. To Deficiency A/c 10. When the noting charge is charged.
Noting charges a/c Dr. To Drawers A/c
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Pro Forma of a bill of exchange

BILL OF EXCHANGE
________________ ________________ (Drawers Name & Address) _______________ (Date of Bill drawn) ______________ after date, pay __________________________________________________ _________________________ or his / her order, the sum of Rupees _____________________ _______________________________________________ only for value received. STAMP Rs. ______________/Sd /_______________ (Drawers Name) Accepted Sd/_______________ (Drawees name) _______________ (Date of acceptance)
To ___________________ (Drawees Name) ___________________ ___________________ (Drawees Address)
Notes: 1. If the question includes Prepare a demand bill or if the term is On demand, or if the period is not given at all, the wording will be: On demand, pay 2. If the term given in 45 days after acceptance/sight, the wording will be: Forty five days after acceptance / sight, pay 3. If instead of the term, the due date itself is given the wording will be: On such and such a date, pay
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PREPARE A BILL OF EXCHANGE FROM THE FOLLOWING DETAILS. [Q. 1. (F) - 5 Marks]
1. Drawer Drawee Payee Period Amount Date of bill Accepted on
: : : : : : :
Soundariya, Neelam Bhawan, Kalyan Sugandi, Dastur Nagar, Amaravati Umesh , Deogad 90 days Rs. 7,555 15th March 1995 20th March 1995
2. On 10th March, 1995 Rajesh Bhoyar, Gandhinagar, Nagpur draws a 2 months bill for Rs. 3,000 on Samir Choudhary, Main Road, and Belapur. Samir Choudhary accepted the bill on 15 th March 1995 3. Drawer Drawee Amount Period Date of Bill Date of Acceptance 4. Drawer Drawee Payee Period Date of Bill Date of Acceptance Amount of the Bill 5. Drawer Drawee Payee Amount Period Date of Bill Bill accepted 6. Drawer Drawee Payee Amount Period Date of Bill Accepted on 7. Drawer Drawee Amount of Bill Period Date of Bill Date of Acceptance : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : Mr. Avadhoot Raktade, (March 2012) 586. Main Road, Ajara Mr. Mukund Aglawe 133, Chandni Chowk, Panvel. Rs. 8,800. Two Months. 1 st May, 2010. 5 th May, 2010. Vilas Ptil, 44, M.G. Road, Nanded. Pankaj Pawar, 70, Bhavani Galli, Solapur. Ramchandra Rampure, Rampur. 60 days. 28th January, 1995 29th January, 1995 Rs. 2,800/Shekhar Desai, Shastri Road, Mahad. Sharad Verma, Narayanpeth, Pune Mukund Pande, Panel. Rs. 3,500/3months. 21st June, 1995 For 3,000 on 25th June, 1995. Vijay Bhat, Main Road, Nagpur. Ashok Kulkarni, M.G. Road, Nagpur. Anil Jadhav, Pune. Rs. 6,950. 80 days. 7th March, 1996. 10th March, 1996. For 90 days. Priti Chavan, Chandika Road, Malvan. Snehlata Patil, Prashant Nagar, Ambajogai Rs, 10,000/2 months. 1st January, 1996 5th January, 1996
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: : : : : : : : : : : : : : : :
8. Drawer Drawee Payee Amount Period Date of Bill Date of Acceptance 9. Drawer Drawee Payee Amount Period Term Date of Bill Drawn Date of Acceptance Accepted bill for Rs.
Shri Ravindra Patil, Housing Society, Ambajogai Shri Bhaurao Deshmukh, Bazar Chauk, Dhamangaon Shri Prasad Shendage, Malvan Rs. 7,500/3 months 1st January, 1995 5th January, 1995 Abhijit Patil, Vikram nagar, Patna. Tejas Kapare, Kothrud, Pune. Amey Patki, Nagpur. Rs. 7500 60 days After sight 1st June 2006 11th June 2006 7000 only.
10. Drawer: Yamini Gupta, Sarvapriya Vihar, Delhi Drawee Kamini Sharma, Raj baug, Agra. Period 100 days. Term After acceptance Date of Bill 1st January, 2007 Amount Rs. 10,500/Date of Acceptance 3rd January, 2007
TRADE BILLS {IN THE BOOKS OF DRAWER & DRAWEE

1. On 1st March, Ramchandra sold goods to Raman worth Rs. 8,000/- and Raman accepted the Bill for Rs. 8,000/- at 3 months drawn by Ramchandra. Ramchandra discounted the bill with his bank @ 6% p.a. On due date the bill was dishonoured and Raman requested Ramchandra to accept Rs. 4,000/immediately and draw upon him a new bill for the remaining amount at 3 months together with an interest @ 10% p.a. Ramchandra agreed. The second Bill was duly honoured. Give Journal entries in the books of Ramchandra. Note: - Here 1st part payment is made and then the interest is charged. Premlal sold goods to Sunderlal worth Rs. 10,000/- and Sunderlal accepted the bill for Rs. 10,000/- at 3 months drawn by Premlal. Premlal discounted the bill with his bank @ 6 % p.a. On due date the bill was dishonoured and Sunderlal requested Premlal to accept Rs. 4,000 immediately and draw upon him a new bill for the remaining amount at 3months together with an interest at 10% p.a. Premlal agreed and the second bill was duly honoured. Give the Journal entries in the books of Premlal. Note: - Here 1st part payment is made and then the interest is charged. Archana purchased goods from Babita on credit for Rs. 20,000. On next day Archana paid Rs. 10,000 to Babita and accepted a bill drawn by Babita for the balance amount for four months. Babita discounted the bill with her bank for Rs. 9600/-. Before the due date Archana approached Babita with a request to renew the Bill. Babita agreed with the condition that Archana should pay Rs. 6000 along with interest of Rs. 120 and accept a new bill for the balance. These arrangements were duly carried out. New bill is met on the due date. Pass journal entries in the books of Babita. Note: - Here 1st interest is charged and then the part payment is made. Bhagyashri sold goods to Rupa worth Rs. 24,000 to Rupa. On the next day Rupa paid Rs. 10,000 in cash and accepted 4 months bill for balance amount drawn by Bhagyashri. Bhagyashri discounted the bill at 10% p.a. after one month with her bank. On due date Rupa dishonoured her acceptance and noting charges amounted to Rs. 200. Rupa paid half the amount of the bill and full amount of noting charges. Rupa accepted a new bill at 2 months for the balance amount plus interest Rs. 100. Pass necessary journal entries in the books of Bhagyashri. (September 2011)
2.
3.
4.
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Note: - Here 1st part payment is made and then the interest is charged. Baloo owes Kaloo Rs.8000. Kaloo then draws a bill for Rs. 8000 on Baloo for a period of three months. Baloo accepts and return it to Kaloo. Kaloo discounted the bill with his bank @ 12 % p.a. On due date, the bill was dishonoured noting charges amount to Rs. 30. Kaloo then draws a bill for the balance plus interest of Rs. 170. Before the due date of this bill Baloo pays the amount at a discount of Rs. 40 to retire the bill. Pass Journal Entries in the books of Kaloo. Note: - Here only the interest is charged and there is no part payment occurs. Minal draws a bill on Usha for Rs. 5,000 at 3 months. Usha accepts the bill and return to Minal. Minal discounted the bill @ 12 % p.a. with the bank. On Maturity Usha finds herself unable to make payment of the bill and requested Minal to renew the bill. Minal accepts the proposal on the condition that Usha should Pay Rs. 2,000 in cash and accept a new bill at one month along with interest at 10% p.a. These arrangements were carried through. Usha retires the bill by paying Rs. 3015/- Pass Journal Entries in the books of Minal. Note: - Here 1st part payment is made and then the interest is charged. Sonia draws a bill on Moni for Rs. 6,000 at 4 months. Moni accepts the bill and returns it to Sonia who discounts the bill with the bank at a discount of 8% p.a. Before the due date of Bill Moni requested Sonia to accept Rs. 4000 in cash and draw a bill for the balance plus interest at 12% p.a. for two months. Sonia draws a bill as the request is agreed. The bill is sent to bank for collection. On the due date the bill was honoured. Pass the necessary journal entries in the books of Sonia. Vicky owes Rs. 12,000 to Bunty and accepts 3 months bill drawn by Bunty who discounts the same after a month at 10% p.a. with his bank. On due date the bill has been dishonoured and noting charges amounted to Rs. 100. Vicky then paid 25% of the amount of the bill and full amount of noting charges by crossed cheque and accepted a new bill for the balance plus interest at 12% p.a. for 3 months. New bill was sent to the bank for collection by Bunty. On due date the bank collected the amount of the new bill from Vicky and debited the bank charges Rs. 70 to Buntys account. Pass Journal Entries in the books of Bunty and Buntys account in the ledger of Vicky. [March 2012]
6.
7.
8.
MISCELLANEOUS PROBLEM 9. Rupali accepted a bill for Rs. 2,000/- drawn by Deepali at three months. Deepali got the bill discounted with her bank for Rs. 1,900. Before the due date Rupali approached Deepali for renewal of the bill. Deepali agreed on the condition that Rs. 1,000/- be paid immediately together with interest on the remaining amount at 6% p.a. For balance Rupali should accept a new bill for three months. These arrangements were carried through but afterwards, Rupali become Insolvent and only 40 % of the amount could be recovered from her estate. Give journal entries in the books of Deepali. 10. Chanda accepted a bill for Rs. 6,000 drawn by Nanda at three months. Nanda got the bill discounted with his bank for Rs. 5,700. Before the due date, Chanda approached Nanda for renewal of the Bill. Nanda agreed on the condition that Rs. 3,000 is paid immediately together with an interest on remaining amount at 18% p.a. for four months and for the balance Chanda should accept a new bill. But afterwards Chanda become insolvent and only 25% of the amount could be recovered from her estate. Pass journal entries in the books of Nanda. 11. Pankaj draws a bill on Anil worth Rs. 8,000 for three months which was accepted by Anil. On the same date Pankaj discounted the bill with his bank @ 10 % p.a. On the due date Anil dishonoured his acceptance. Anil paid Rs. 4,000/- to Pankaj and accepted a fresh bill for two months for the balance including interest of Rs. 40. Anil became insolvent before the maturity of the bill and 50 paise in a rupee was received at first and final dividend from his estate. Give Journal entries in the books of Pankaj. 12. Prakash drew a bill for Rs. 4,000 on Anand on 1 st May, 1976 for three months. This was for the amount which Anand owed to Prakash. Anand accepts the same and return it to Prakash who discounted at his bank for Rs. 3,900. On 1st Aug, 1976 Anand requested Prakash to renew the bill and Prakash agreed on the condition that Rs. 1,000 is paid immediately and Anand should accept the new bill for 3 months for the balance payable plus interest of Rs. 45. These arrangements were carried through. However, on 1 st October, 1976, Anand retired his acceptance for Rs. 3, 035. Pass journal entries in the books of Prakash. 13. On 1st January, 1988 Vandana drew a bill for Rs. 6,000 for 2 months periods on Lata. Lata duly accepted the bill. On 4th January 1988 Vandana discounted the bill with her bank for Rs. 5850. However, on the due date the bill was dishonoured. Lata agreed to accept a new bill with an interest of Rs. 100 for a
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period of one month. The bill was duly met on the due date. Give the journal entries in the books of Vandana and show Vandanas account in the books of Lata. 14. Mukund owes (be obligated) Prakash Rs. 4000 for which Prakash draws a bill for 2 months on 1 st February, 1989. Mukund accepts it and returns it to Prakash. On 4 th March, 1989, Mukund approaches Prakash and request him to accept Rs. 1000 in cash and draw a fresh bill for 3 months for the balance plus interest @ 10% p.a. Prakash accepts the request and draw a bill accordingly which is accepted by Mukund. On 1st June 1989 Mukund retired his acceptance under discount of Rs. 30/-. Pass journal entries in the books of Prakash and prepare Prakash account in the ledger of Mukund. 15. Krishna accepted a bill for three months drawn by Rama for Rs. 4000. Rama discounted the bill with the bank at Rs. 3900. On the date of maturity, the bill was dishonoured. Rama paid noting charges for Rs. 20. Krishna paid half the amount for the bill and full amount of the noting charges and accepted a bill for the balance including interest of Rs. 50. The second bill was duly honoured. Pass necessary journal entries in the books of Rama and show Krishnas account. 16. Jain purchased goods worth Rs. 3,000 from Sharma on 1st June 1977 and gave him acceptance on 3rd June for a period of three months. On 15th June Sharma discounted the bill for Rs. 2980. On 6th September, when the bill was presented for payment. Jain dishonoured the same. Rs. 20 was paid as noting charges. Pass journal entries in the books of Sharma and Sharmas account in the books of Jain. 17. Sagar owes Sindhu Rs. 8000 Sagar accepted a bill for 3 months by Sindhu for Rs. 8000. Sindhu discounted the bill with bank at Rs. 7800. On the due date, the bill was dishonoured. Noting charges amounted to Rs. 20. Sagar Paid half the amount of the bill and full amount of the noting charges including interest of Rs. 100. Pass journal entries in the books of Sindhu and show the account of Sagar. 18. Ameet draws a bill for Rs. 7500 on Tushar for four months. Ameet discounts the bill with the bank at 8%p.a. On the due date Tushar requested Ameet to accept Rs. 4,700 (including Rs. 200 for interest) and to draw a bill for the balance of three months. Ameet agrees this proposal. Before the due date of the new bill Tushar retires the bill for Rs. 2960. Pass the journal entries in the books of Tushar and open Tushars account in the books of Ameet. 19. Journalize the following transactions in the books of Kamesh: a. Nanda informs Kamesh that Shantis acceptance for Rs. 4,000 endorsed to Nanda has been dishonoured and noting charges have been Rs. 100 b. Ashok renews his acceptance to Kamesh for Rs. 2400 by paying Rs. 800 in cash and accepting a new bill for the balance plus interest @ 12 p.a. for 3 months. c. Devas acceptance to Kamesh Rs. 12,000 is retired one month before its due date at a discount of 12% p.a. d. The bank informs Kamesh that Sudhakars acceptance for Rs. 4,000 has been dishonoured and it has paid noting charges Rs. 80. 20. Journalise the following transactions in the books of Bhaskar. a. Suresh informed Bhaskar that Nishads acceptance for Rs. 2500 endorsed to Suresh has been dishonoured and noting charges amounted to Rs. 25. b. Rajesh renews his acceptance to Bhaskar for Rs. 7500 by paying Rs. 2500 in cash and accepting a fresh bill for the balance plus interest @ 10% p.a. for three months. c. Mandar retired his acceptance to Bhaskar for Rs. 3,800 by paying Rs. 3750 in cash. d. Bhaskar sent a bill of Dayaram for Rs. 5000 to the bank for collection. But the bank informed that the bill has been dishonoured by Dayaram. [March 2012] 21. Journalise the following transactions in the books of Rahul. a. Pradeep informed Rahul that, Vijays acceptance for Rs. 1,000 endorsed to Pradeep has been dishonoured. Noting charges amounted to Rs. 50. b. Nilesh renews his acceptance to Rahul for Rs. 600 by paying Rs. 200 in cash and accepting a fresh bill for balance plus interest at 12% p.a. for 3 months. c. Prashants acceptance to Rahul for Rs. 3,000 retired one month before due date at a discount of 12% p.a. d. Bank informs Rahul as to the dishonour of Avirajs acceptance for Rs. 1,000 to Rahul, discounted with the bank. Noting charges are Rs. 20.
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22. Journalize the following transactions in the books of Maharaja. a. Ayub informs Maharaja that Sadashivs acceptance for Rs. 2,000 endorsed to Ayub has been dishonoured, noting charges amounted to Rs. 150 b. Pankaj renews his acceptance to Maharaja for Rs. 1200 by paying Rs. 400 in cash and accepting a fresh bill for the balance plus interest at 12% p.a. for 3 months. c. Vaibhavs acceptance to Maharaja for Rs. 6000 retired one month before the due date at a discount of 12%p.a. d. Bank informs Maharaja as to the dishonour of Kasams acceptance for Rs. 2000 to Maharaja discounted with Bank noting charges Rs. 200. 23. Journalise the following transactions in the books of Mr. Ashok Agrawal. a. The bank informed Mr. Ashok Agrawal that Kamleshs acceptance for Rs. 12,000 sent to bank for collection had been honoured and bank charges debited were Rs. 60. b. Discharged Dr. Ashok Agrawals acceptance to Mahesh for Rs. 15,250 by endorsing Prakashs acceptance to Mr. Ashok Agrawal for Rs. 15,100. c. Vishal renewed his acceptance to Mr. Ashok Agrawal for Rs. 11,200 by paying Rs. 6000 in cash and accepting a fresh bill for the balance plus interest @ 12% p.a. for three months. d. Dinesh who had accepted Mr. Ashok Agrawals bill of Rs. 14,000 was declared bankrupt and only 45% of the amount due could be recovered from his estate. 24. Journalise the following transactions in the books of Ashwin. a. Bank informed that Sachins acceptance for Rs. 5,750 sent to bank for collection had been honoured and bank charges debited were Rs. 50. b. Nitin renewed his acceptance for Rs. 7,200 by paying Rs. 2,200 in cash and accepting a new bill for the balance plus interest @8% p.a. for 3 months. c. Discharged our acceptance to Pravin for Rs. 4,250 by endorsing Bhavins acceptance to us for Rs. 4,000. d. Jatin who had accepted Ashwins bill of Rs. 8,500 was declared insolvent and only 40% of the amount due could be recovered from his estate. 25. Journalise the following transactions in the books of Kamalakar. a. Nisha informs Kamalakar that Shantis acceptance for Rs. 14,000 endorsed to Nisha has been dishonoured and noting charges have been paid Rs. 200. b. Asha renews hare acceptance to Kamalakar for Rs. 12400 by paying Rs. 6000 in cash and accepting a new bill for the balance plus interest @ 12% p.a. for 3 months. c. Devikas acceptance to Kamalakar for Rs. 42000 is retired one month before its due date at a discount of 12% p.a. d. The bank informs Kamalakar that Sindhus acceptance for Rs. 15000 has been dishonoured and it has paid noting charges Rs. 100. e. Bank informs Kamalakar that Sangitas acceptance for Rs. 12000 which was sent to bank for collection has been dishonoured. 26. Journalise the following transactions in the books of Ranbir. a. Sonam informs Ranbir that Salmans acceptance for Rs. 3200 endorsed to Sonam has been dishonoured and the noting charges amounted to Rs. 80. b. Ravindra renews his acceptance to Ranbir for Rs. 4,800 by paying Rs. 1800 in cash and accepted a fresh bill for the balance, plus interest @ 12% p.a for 2 months. c. Dilips acceptance to Ranbir for Rs 8000 is retired one month before the due date at a discount of 12% p.a. d. The bank informs Ranbir that Shirins acceptance for Rs 5500 to Ranbir discounted with the bank earlier has been dishounred and the noting charges Rs. 100.
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CH. 4. DEPRECIATION [Q. 2 : 10 MARKS]

What is depreciation? Continuous, gradual and permanent reduction in the value of a fixed asset brought about by the factors like wear and tear, passage of time or similar other factors, etc., is called depreciation. Note: - The students are required to study the following two methods of depreciation only, viz. i. ii. Fixed Installment Method / Original Cost Method / Straight Lime Method / Equal Installment method. Reducing Balance Method / Written Down Value Method / Diminishing Balance Method.
Pro Forma journal entries in the books of a Business Enterprise: 1. For purchase of fixed asset on cash: Fixed Asset A/c Dr. To Cash /Bank A/c 2. For purchase of fixed asset on credit: Fixed Asset A/c Dr. To Seller of Asset A/c 3. For Payment of installation charges. Fixed Asset A/c Dr. To Cash / Bank A/c 6. For closing Depreciation A/c and transferring its balance to Profit & Loss A/c Profit & Loss A/c Dr. To Depreciation A/c 7. For sale of fixed asset on cash: Cash/ Bank A/c Dr. To Fixed Asset A/c 8. For sale of fixed asset on credit: Purchasers A/c Dr. To Fixed Asset A/c
4. For payment of reconditioning or repairing charges of asset purchased. 9. For loss incurred on sale of fixed asset. Fixed Asset A/c Dr. Profit & Loss A/c Dr. To Cash / Bank A/c To Fixed Asset A/c 5. For depreciation charged on asset. Depreciation A/c Dr. To Fixed Asset A/c PROBLEMS 10. For profit earned on sale of fixed asset. Fixed Asset A/c Dr. To Profit & Loss A/c
1. M/s J.P. Company, Sakri, Purchased a motor lorry for Rs. 8,00,000 on 1st April, 2007. Company
purchased a second hand motor lorry for Rs. 3,60,000 on 1st October, 2008. The company charges depreciation @ 10% p.a. on the original cost. The financial year of the company ends on 31st March every year. On 30th September 2009, the second hand motor lorry was sold for Rs. 2,80,000. Prepare Motor Lorrys Account for the years 2007 2008, 2008 2009 and 2009 2010 and Journal Entries for the year 2009 2010. [F.I.M.] [March 2012] 2. M/s Modern company purchased Machinery worth Rs. 2, 00,000 on 1st April, 2006. Accounting year of the Company closes on 31st March every year. Company provides depreciation at 10% p.a. on the original cost. On 31st March, 2008 the machinery was sold for Rs. 1, 20,000. Give the machinery Account and depreciation account for two years. [F.I.M]
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3. M/s Classic Company purchased Machinery worth Rs. 1, 00,000 on 1st April, 2006. Accounting
year of the Company closes on 31st March every year. Company provides depreciation at 10% p.a. on the original cost. On 31st March, 2008 the machinery was sold for Rs. 20,000. Give the machinery Account and Depreciation account for two years [F.I.M.]
4. Shri Yuvraj and company, Kolhapur, purchased furniture for Rs. 60,000 on 1.4.2007. On
1.10.2009 the company sold out a part of the furniture for Rs. 6000, the original cost of which on 1.4.2007 was Rs. 12,000. The company charges depreciation at the rate of 10% p.a. on Original Cost method. The financial year of the company ends on 31st March, every year. Prepare: Furniture account and depreciation account for the years 2007 2008-, 2008 2009, 2009-2010. [F.I.M] furniture on 1 10 1977 worth Rs. 16,000. They charged depreciation at 15% p.a. on Fixed Instalment basis. On 1 10 1979 they sold out one cupboard for Rs. 2,200 original cost of which on 1-4-1977 was 4,000. On the same date a new cupboard was purchased for Rs. 8,000. Show the furniture account and depreciation account for the year 1977-78, 1978-79 and 1979-80 assuming that the financial year closes on 31st March every year. [F.I.M] he had spent Rs. 36,000 on materials and Rs. 16,000 on wages. He estimated he life of the furniture to be 10years. He also estimated that its expected scrap value at the end of its life would be Rs. 12,000. He closed his books of accounts on 31st March every year. He sold the entire furniture for Rs. 40,000 on 1st October 1978. Show the furniture account and depreciation account for the year ended 31st March, 1976, 31st March 1977, 31st March 1978 and 31st March 1979. [F.I.M] towards installation charges. The company depreciates the machinery at the rate of 10% p.a. on original cost. On 1-10-1989 the company sold out a part machinery for Rs. 3,200. The original cost of the sold machinery on 1-4-1987 was Rs. 6,000. On 1-10-89 the company purchased machinery for Rs. 10,000. As the company closes the financial year 31 st March every year. Prepare Machinery account and the deprecation account for the years 1987-88, 1988-89 and 1989-90. [F.I.M] on the same date. The installation expenses amounted to Rs. 4,000. The firm decided to charge depreciation at 10% p.a. on straight line method. On 1-10-91 a part of machinery with an original price of Rs. 6,000/- (including the installation charges) was sold for Rs. 3,200 and a new machinery costing Rs. 10,000 was purchased on the same date. The firm closes its books of accounts on 31st March every year. Prepare Machinery account and Depreciation account for the year 1989-90, 1990-91 and 1991-92 in the books of the firm. [F.I.M]. 1987. Estimated life of the Furniture is 10 years and scrap value Rs. 24,000. The Furniture was sold on 31st December 1990 for Rs. 70,000. The accounts are closed on 31st March every year. From the above information prepare Furniture account and Depreciation account for the years 1987, 1988, 1989 and 1990, by charging depreciation under Fixed Instalment Method. [F.I.M] purchased additional machinery for Rs. 36,000 on 1st October, 2003. The company charges depreciation @10% p.a. on the original cost. The financial year of the Company ends on 31st March every year. On 30th September, 2004 a part of the machinery, original cost of which
5. M/s. Deepali International bought furniture worth Rs. 24,000 on 1 4 1977 and additional
6. Janab Hasansab of Hyderabad made furniture for his own office on 1st October 1975. For this
7. The company purchased machinery worth Rs. 36,000 on 1-4-1987 and spent Rs. 4,000
8. Shirish Enterprises purchased a machinery costing Rs. 36,000 on 1-4-1989 and was installed
9. S. Narayan from Mumbai purchased Furniture for his office costing Rs. 1,04,000 on 1st July
10. M/s J.K. Company, Maroda, purchased machinery for Rs. 80,000 on 1st April 2002. Company
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1st
was Rs. 30,000 on April, 2002 was sold by the Company for Rs. 22,000. Prepare Machinery account for 3 years and give journal entries for the year 2002 2003. [F.I.M] [MARCH 2009].
11. M/s Dolphin, New Delhi, showed a debit balance of Rs. 32,000 to the Machinery A/c on 1st
April, 2001(Original cost of the Machinery was Rs. 40,000). On 1st October, 2001 the Mill bought additional Machinery for Rs. 15,000 and spent Rs. 1,000 for its installation. One more machinery costing Rs. 20,000 was purchased on 31st March, 2003. Depreciation is charged on 31st March, every year at 10% p.a. under the straight line method. On 31st March, 2004, the machinery which was purchased on 1st October, 2001 was sold for Rs. 12000. Prepare Machinery A/c and Depreciation A/c for the years 2001 2001, 2002 2003 and 2003 2004. [F.I.M] year of the Company closes on 31st March every year. Company provides depreciation at 10% p.a. on the written down value. On 31st March, 2008 the machinery was sold for Rs. 1, 20,000. Give the machinery Account and depreciation Account for two years. [W.D.V.]
12. M/s Philips company purchased Machinery worth Rs. 2, 00,000 on 1st April, 2006. Accounting
13. M/s View Sonic company purchased Machinery worth Rs. 1, 00,000 on 1st April, 2006.
Accounting year of the Company closes on 31st March every year. Company provides depreciation at 10% p.a. on the Diminishing balance method. On 31st March, 2008 the machinery was sold for Rs. 20,000. Give the machinery Account and Depreciation account for two years. [W.D.V.] the rate of 10% on the Reducing Balance method. On 1 7 75, he sold out a part of the Furniture for Rs. 2,000, the original cost of which on 1 4 73 was Rs. 4,000. The financial year of Aurangabadkar ends on 31st March every year. You are required to prepare his furniture account for the first four years, and to pass journal entries for the transactions of the third year. [W.D.V.] an extension was made to the above building by spending Rs. 4,00,000. On 1st October 1994, half of the building was sold through a broker for Rs. 5,60,000 and brokerage at 2% of the selling price was paid. Depreciation is charged on 31st March every year at 10% p.a. under the Diminishing Balance Method. Prepare the Building Account and the Depreciation account for three years. [W.D.V.]
14. Aurangabadkar purchased furniture worth Rs. 20,000 on 1-4-73. He charges depreciation at
15. On 1st July, 1992, Ajanta Traders, Pune, acquired a building for Rs. 8,00,000. On 1st April, 1993,
16. M/s Jalaram Mill, Mulund, showed a debit balance of Rs. 32,000 to the Machinery A/c on 1 st
April, 2001(Original cost of the Machinery was Rs. 40,000). On 1st October, 2001 the Mill bought additional Machinery for Rs. 15,000 and spent Rs. 1,000 for its installation. One more machinery costing Rs. 20,000 was purchased on 31st March, 2003. Depreciation is charged on 31st March, every year at 10% p.a. under the Diminishing Balanced Method. On 31st March, 2004, the machinery which was purchased on 1st October, 2001 was sold for Rs. 12000. Prepare Machinery A/c and Depreciation A/c for the years 2001 2001, 2002 2003 and 2003 2004. (February, 2008) [W.D.V.] October, 2004 they purchased one more computer for Rs. 40,000. On 1st October, 2006 they sold one computer, which was purchased on 1st April, 2004 for Rs. 18,780. Depreciation on computers was provided @ 10% p.a. on diminishing balance method and the financial year closes on 31st March every year. Prepare computer A/c depreciation A/c for years 2004 05, 2005 06 and 2006 07. (September. 2008) [W.D.V.] 1.10.2009 the company sold out a part of the furniture for Rs. 6000, the original cost of which
17. On 1st April, 2004 Saikripa enterprises purchased two computers of Rs. 40,000 each. On 1st
18. Shri Yashraj and company, Kolhapur, purchased furniture for Rs. 60,000 on 1.4.2007. On
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on 1.4.2007 was Rs. 12,000. The company charges depreciation at the rate of 10% p.a. on Reducing balance method. The financial year of the company ends on 31st March, every year. Prepare: Furniture account and depreciation account for the years 2007 2008-, 2008 2009, 2009-2010. [W.D.V] [FEBRUARY 2011].
19. M/s J.K. Company, Maroda, purchased machinery for Rs. 80,000 on 1st April 2002. Company
purchased additional machinery for Rs. 36,000 on 1st October, 2003. The company charges depreciation @10% p.a. on the diminishing balance. The financial year of the Company ends on 31st March every year. On 30th September, 2004 a part of the machinery, original cost of which was Rs. 30,000 on 1st April, 2002 was sold by the Company for Rs. 22,000. Prepare Machinery account for 3 years and give journal entries for the year 2002 2003. [W.D.V.]
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CH. 5. JOINT VENTURE ACCOUNTS [Q. 4: 12 MARKS]

What is a joint venture? (Sept. 09, March 2010) A joint venture is a temporary partnership for carrying out a specific business without the use of a firm name.
Method I When Separate set of Books is maintained.

1. Dimple and Simple entered into a joint venture. They agreed to share profits and losses in the proportion of their initial contributions to the joint venture. They opened a joint Bank A/c. and deposited Rs. 60,000 and Rs. 40,000 respectively as initial contributions. They made cash purchases of Rs. 70,000. They also paid Rs. 4,500 for insurance and freight and Rs. 1,750 for sundry expenses. At the end of the venture, the sales amounted to Rs. 1, 10,000/- There was unsold stock of goods worth Rs. 5000. Simple took over the unsold stock. The Joint Venture was closed. You are asked to prepare Joint Venture A/c. Joint Bank A/c and Co ventures A/c.
2. A and B entered in to Joint Venture to construct a building for X enterprises limited. The contract price was Rs. 2, 50,000. They opened joint bank account and deposited Rs. 1,20,000 and Rs. 60,000 respectively and agreed to share profits and losses in the ratio 3 : 2. The following transactions were made from Joint Bank A/c: Wages Rs. 70,000 and Material purchases Rs. 1,25,000. Apart from this A supplied material of Rs. 12,000 and B paid the architect fees of Rs. 2,500 on completion of construction. X enterprises Ltd. paid the full amount and unsold stock was taken over by B at an agreed value of Rs. 15,000. Prepare Joint venture A/c, Joint Bank A/c and Co venturers A/c.
3. Suresh and Ramesh entered into a joint venture to construct a building at a contract price of Rs. 7,00,000. They agreed to share profits and losses in the ratio of 2:1. Suresh deposited Rs. 5,00,000 and Ramesh Rs. 1,00,000 into joint bank. The transactions were as follows. Purchase of materials Rs. 3,50,000 Tools and equipment Rs. 1,00,000. Wages Rs. 1,20,000 Architect fees Rs. 25,000 Besides these, Suresh supplied material worth Rs. 15,000 and Ramesh supplied material worth Rs. 13,500. Building was ready and contract price received. Prepare Joint venture A/c, Joint Bank A/c & Co Venturers A/c.
4. Ashok, Kishor & Anup undertook the construction of an office building at a contract price of Rs. 10,00,000. Receivable in cash Rs. 6,00,000 and Rs, 4,00,000 in shares. They agreed to share profits and losses equally. They opened the joint bank a/c and contributed the following amount. Ashok Rs. 3,00,000, Kishor - Rs. 3,00,000, and Anup Rs.2,00,000. Ashok paid Rs. 10,000 as architect fees, Kishor brought in the venture mixture of Rs. 25,000 and Anup brought in motor truck of Rs. 55,000. The following transactions were made from Joint bank A/c. Purchase of material Rs. 4, 50,000, Plant Rs. 30,000 and freight and wages Rs. 1, 50,000. At the close of the venture, Ashok took away the unused material worth Rs. 8,000. Kishor took away the mixture worth Rs. 15,000 and Anup took away the truck worth Rs. 35,000. The scrap value realised of the plant was Rs. 6,000. The Contract price was received in
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full and Kishor took over the shares for Rs. 4,10,000. Prepare Joint Venture A/c, Joint Bank A/c & co ventures A/c.
5. Sanjay, Ajay and Vijay entered into a Joint venture for construction of a building for contract price of Rs. 6, 00,000. Payable in cash Rs. 4,00,000 and Rs. 2,00,000 in debentures. They decided to share profits and losses in the ratio of their initial contributions. They opened Joint Bank A/c. where Sanjay deposited Rs. 3,00,000 Ajay Deposited Rs. 2,00,000 and Vijay deposited Rs. 1,00,000. The following payments are made out through Joint Bank A/c . Purchase of material Rs. 2,50,000, Plant Rs. 45,000, Wages Rs. 77,000 and other charges Rs. 11,000. Sanjay brings truck of Rs. 40,000. Ajay brings materials of Rs. 55,000 and Vijay brings mixture of Rs. 10,000. At the end of the venture unused material was taken over by Sanjay for Rs. 5,000. Ajay took over mixture for Rs. 15,000 and Vijay took over Plant for Rs. 12,000. The truck was sold in the market for Rs. 22,000. Contract price was received and debentures were taken over by Vijay for Rs. 1,90,000. Prepare Joint Venture A/c., Joint Bank A/c., and Co ventures A/c.
6. X,Y and Z entered into a Joint Venture to sell a certain plot of land. They contributed Rs. 25,000 each. They purchased land of 5,000 sq. m. at Rs. 10 per sq. m. 1/5th of the land was left over for public roads and the balance was divided into 8 plots of equal size. A plan was got prepared for Rs. 2,000 and other expenses were Rs. 3,500. 5 plots were sold @ Rs, 15 per sq. m. and 3 plots were sold @ Rs. 14 per sq. m. Prepare joint venture A/c Joint Bank A/c and Co Venturers A/c. Pass journal entries.
7. Ram and Rajiv entered into a Joint venture to construct a conference hall at a contract price of Rs. 3,00,000. Ram contributed Rs. 1,00,000 and Rajiv contributed Rs. 1,50,000. Ram brought in material worth Rs. 2,000 and Rajiv Paid transportation charges worth Rs. 6,000 Plant was purchased for Rs. 50,000 and material worth Rs. 2,00,000 were also purchased. On completion, plant was sold for Rs. 20,000. Due to certain defect, one bill of Rs. 20,000 was not recovered and the balance was received in cash. Venturers share profits in the ratio of their initial contributions. Prepare Joint Venture A/c, Joint Bank A/c and Co venturers A/c and pass Journal entries.
8. A and B entered into a Joint venture. They contributed Rs. 75,000 each and purchased a plot of 6,000 sq. m. @ Rs. 20 per sq. m. Besides this A got the plan prepared for Rs. 2,000 and B paid the stamp duty of Rs. 3,000. Fencing expenses were Rs. 5,000 and other expenses amounting to Rs. 3,000 were paid from Joint Bank A/c. Later on, 1/6th of the land was left over for roads and the balance was divided into 10 equal plots. 5 plots were sold for Rs. 30 per sq. m. and 4 plots were sold for Rs. 40 per sq. m. Remaining one plot was taken over by A for Rs. 10,000. Prepare Joint Venture A/c. Joint Bank A/c and Co Venturers A/c. Also pass the necessary Journal Entries.
9. Pramod and Amit jointly undertook to construct a factory building for a limited company. The contract price was Rs. 5, 00,000 and was received after work has been completed. They contributed_ Pramod Rs. 80,000 & Amit Rs. 40,000 and deposited in Joint Bank Account. They
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agreed to share profit or Loss in the capital ratio. Pramod got plans ready and paid Rs. 5, 000 for that Amit brought into the venture Plant and Machinery valued at Rs. 20, 000 and a motor truck at Rs. 16, 000. For the purpose of erection of factory building, materials of the value of Rs. 3, 50, 000 were purchased and wages paid Rs. 60, 000. They also paid other sundry expenses amounting to Rs. 25, 000. The contract was completed and the company settled their account fully. Uninsured Material valued at Rs. 4, 000 was taken over by Pramod. The plant and Machinery was sold as scrap for Rs. 3, 000 and Amit took back the motor truck at an agreed value of RS. 5000. You are required to show Joint venture A/c, Joint Bank A/c in the books of the Joint venture. 10. Raghu and Ramesh entered into a joint venture to produce an advertisement film for Bharati Traders, at a contract price of 40,000. Raghu contributed Rs. 10, 000 and Ramesh Rs. 20,000 and opened a joint account in the bank with these contributions. Raghu purchases from his own funds raw film for Rs. 8, 000 and a Camera for Rs. 7,000 for joint venture. They Paid from the Joint Bank Account: Artists fees Rs. 18, 000, Hire of sets Rs. 2,000 and technician Charges RS. 10,000. The firm was completed but due to certain defects in the firm, the contract Price was reduced by 10% the amount being received by cheque from Bharati Traders. At the end of venture, the camera was sold for Rs. 5,000 and Ramesh took over the unused film for Rs. 400. Raghu and Ramesh shared profit and losses in the proportion of 1:2 and settled account of the venture. Prepare the Joint venture Account the Joint Bank account and the accounts of the Co ventures. 11. Shri Nandkarni of Nanded and Shri Kulkarni of Kolhapur undertook in January 1983 the construction of Ajanta Market Hall for Rs. 5, 00, 000 to be completed within one year. On the same date Nandkarni brought in Rs. 5, 000 and Kulkarni brought Rs. 10,000. These amounts were deposited in a Joint Bank account which was newly opened by them for the purpose. Both agreed to share profits and losses equally. The work was completed in time and the following expenses were incurred and paid from Bank accounts, Material Rs. 2,30,000; Wages, Rs. 1,90,000 and Plant Rs. 40,000. The payments were received in instalments but due to certain defects a bill of Rs. 15,000 was not paid. When the work was over, as half of plant was taken over by Nandkarni @ 20% below while the other half could be sold for Rs. 15,000. Prepare: Joint venture A/c, Joint Bank A/c, Accounts of Co- ventures.
Method II: When no Separate set of Books is maintained. Or. Individual Books of
Accounts are maintained. 12. Abhay Kumar and Jaywant entered into a joint venture to share profits and losses in equal proportion. The following transactions were made: Abhay Kumar brought goods for Rs. 60,000/Abhay Kumar paid for expenses incurred on the above purchases Rs. 3,500/Jaywant supplied goods of Rs. 24,000 from the stock. Jaywant had to pay Rs. 600/- and Rs. 700/- for loading and freight respectively on supply of goods. Abhay Kumar sold goods for Rs. 1,20,000/Jaywant sold goods for Rs. 10,000/The unsold stock of goods was taken over by Jaywant for Rs. 5,000/You are asked to prepare Joint Venture account and Jaywant A/c in the books of Abhay Kumar 13. A and B entered into a joint venture to sell carpets. A purchased 200 carpets at Rs. 20 each and B purchased 100 at Rs. 25 each. A paid transportation expenses Rs. 500 and also paid freight Rs. 200. B Paid advertising expenses Rs. 100. Later on A sold 150 carpets for Rs. 35 each and B sold 125 carpets for Rs. 30 each. Remaining 25 carpets were taken over by B for Rs. 500. Venturers settle their accounts. You are asked to prepare Joint Venture account and
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Bs Account in the books of A.

14. Ramrao and Shamrao decided to undertake a business venture jointly. They agreed to share the profits and losses in the proportion of 2/3 and 1/3 respectively. Ramrao supplied goods for the joint venture worth Rs. 15,000 and paid Rs. 650 for carriage and freight. Shamrao supplied goods worth Rs. 12,000 and spent Rs. 500 for sundry expenses. Shamrao sold goods for Rs. 35,000. Shamrao is entitled to get a commission of 10% on sales as per agreement. Shamrao settled the account of Ramrao by remitting the amount due by bank draft. Open the necessary ledger account in the books of Ramrao. 15. East and West entered into a joint venture to share profits and losses in the ratio 2:1 to sell rice. East purchased 100 bags of rice at Rs. 200 each. He also paid packing charges Rs. 2000 and freight Rs. 300. West paid warehousing charges Rs. 1000 and sold all the bags for Rs. 300 each. He was entitled to a commission of 5% on sales. They settled their account by a draft. Prepare necessary ledger accounts in the books of west.
16. Jaganlal of Mumbai purchases cotton goods and supplied them to Babanlal of Delhi for sale on joint venture basis. They have agreed to share the profits and losses equal proportion. Jaganlal bought goods worth Rs. 35,000/- and sent them to Babanlal in Delhi. Jaganlal paid Rs. 2500 towards the freight charges. Jaganlals bill of exchange for Rs. 20000 payable after 3 months drawn on Babanlal was accepted by Babanlal. Jaganlal discounted the same bill with bank for Rs. 18200. Babanlal informed Jaganlal that he had incurred Rs. 4500 expenses and the entire goods were sold for Rs. 50,000. Babanlal remitted the required amount to Jaganlal. You are required to prepare Joint venture A/c and Coventurers account in the books of Jaganlal of Mumbai. 17. Satish and Ramesh enter into a joint venture to deal in TV. Sets. Satish is to purchase TV sets in Mumbai and sent it to Ramesh in Pune. They agreed to share profits and losses in the ratio of 3:1. Satish purchased 50 TV sets in Mumbai costing Rs. 7000 each and paid Rs. 10,000 as transportation cost. Ramesh received the consignment and sold all the TV sets at a lump sum price of Rs. 4, 45,000. Ramesh sent a draft of Rs. 75,000 to Satish as an advance. The expenses incurred by Ramesh were Rs. 6000 to sell the TV sets. Venturers settle their accounts. You are requested to open Joint Venture A/c and Ramesh A/c in the books of Satish. 18. Usha and Subha decided to undertake a venture jointly. They agreed to share profits and losses in the ratio of and respectively. Usha supplied from her own stock goods worth Rs. 90,000 and paid Rs. 3,600 for freight. Subha supplied goods worth Rs. 72,000 and spent Rs. 3,000 for sundry expenses. Usha drew a 4 months bill on Subha for Rs. 12,000 as an advance. The same was discounted by her at 15% p.a. and discount was charged to Joint Venture A/c. Subha sold all the goods for Rs. 2,10,000. At the end of the venture, the accounts were settled. Give journal entries in the books of Usha.
19. Pritam of Sindhudurg and Prasad of Ratnagiri entered into a joint venture to consign 100 computers to Priti of Mumbai to sell at their joint risk which is in proportion of 2/3 and 1/3 respectively. Pritam supplied 55 computers at Rs. 25,000 each paying freight of Rs. 7,500 and other charges Rs. 1,500. Prasad supplied 45 computers at Rs. 24,000 each paying insurance Rs. 750, freight Rs. 350 and other charges Rs. 1,800. Pritam advanced to Prasad Rs. 25,000 on account of venture. All the computers were sold by Priti for Rs. 28,00,000 out of which she deducted 2% for her expenses and 2% for her commission on total sales. Priti remitted Rs. 13,00,000 to Pritam by bank draft and balance to Prasad by accepting a bill drawn by Prasad for one month. Pass Journal Entries in the books of Pritam assuming that all accounts have been finally settled. 20. Ramsingh of Rampur and Narsingh of Nagpur entered into Joint Venture. They decided to send 500 TV sets to Harsingh of Hyderabad on their joint risk. They share profits and losses in the ratio of 3/5 and 2/5 respectively. Ramsingh sent 300 sets at Rs. 2,500/- each and paid Rs. 17,000/- for the expenditure of sending the goods. Narsingh sent 200 TV sets at Rs, 2,000/- each and paid Rs. 13,000 for the expenditure of sending the goods. Ramsingh advanced to Narsingh Rs. 50,000/- on account of Joint Venture. All the TV sets were sold by Harsingh for Rs. 14,00,000/- from which he deducted 3% for his expenses and 2% commission on total sales and he remitted Rs. 10,00,000 to Ramsingh and the balance amount to Narsingh. The co venturers closed their venture and
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settled their accounts. Prepare: Joint Venture A/c, Narsingh A/c, Harsingh A/c in the books of Ramsingh. 21. Anil and Sunil entered in to a joint venture to consign 500 bales of cotton to Mukesh to be sold on their joint risk. Anil sends 150 bales at Rs. 300 each and pays Rs. 2000 for freight and insurance. Sunil purchases 350 bales at Rs. 250 each paying for insurance and other charges Rs. 4000. Anil advances a cheque of 12,000 to Sunil and also accepts a bill for the same amount drawn by Sunil which was discounted by Sunil@ 90% of its value. Mukesh sold all the bales @ Rs. 400 each. The expenses incurred by Mukesh are Rs. 5000 and his commission was 10% of the sales value. Mukesh remits Rs. 100000 to Sunil and the balance to Anil by a cheque. Venturers settle their accounts by a draft. Prepare joint ventures account and Sunils account in the books of Anil. 22. Nagpurkar of Warud and Warudkar of Akola entered into joint venture to sent oranges to M/s Modern Fruit Co., Amrutsar on their Joint risks for sale. They decided to share profits and losses equally. Nagpurkar purchased oranges of Rs. 2,40,000and paid for transportation, packing and insurance Rs. 70,000. Warudkar purchased oranges of Rs. 3,70,000 and paid for transportation, packing and insurance Rs. 1,00,000. All the oranges were sold by M/s Modern Fruit Co. For Rs. 10,00,000 from which company deducted Rs. 25,000 for expenses and 5% commission on sale proceeds and remitted Rs. 5,00,000 to Warudkar and remaining amount to Nagpurkar. The co ventures closed their venture and settled their accounts. Prepare Joint venture account, Warudkar account, M/s Modern Fruit co. Account in the books of Nagpurkar. 23. Arun of Solapur and Dhanaji of Sangli entered into Joint venture to send 100 bales of cotton to Shivaji of Mumbai to be sold at their equal joint risks. Arun sends 60 bales at Rs. 12,000 each and pays Rs. 18000 for freight and other charges. Dhanaji sends 40 bales at Rs. 11,000 each and pays Rs. 10,000 for freight and other charges. Shivaji sold all the bales of cotton at Rs. 15,00,000. He charges Rs. 10,000 as his commission and other expenses and remits the balance due fully to Dhanaji. Dhanaji settled account of Arun by remitting to him the balance due. You are required to prepare Joint venture account, Dhanaji account, Shivaji account in the books of Arun. 24. Vitthal of Bombay and Kailash of assai entered into Joint Venture to purchase and sell cycles. They decided to share profits and losses equally. Vitthal purchased 200 cycles at Rs. 500 each and spent Rs. 2000 for carriage, Rs. 4000 for insurance and draws a bill for Rs. 20000 on Kailash, which is duly accepted by Kailash. Kailash purchased 140 cycles at Rs. 600 each and spent Rs. 10 per cycles for carriage and Rs. 2000 for selling expenses. Vitthal sold 180 cycles at Rs. 750 each. All the remaining cycles of venture were sold by Kailash at Rs. 550 each. Joint venture was completed and both the parties settled their accounts. You are required to pass journal entries in the books of Vitthal. 25. Yashpal of Udgir and Balu of Latur entered into Joint Venture to consign 300 machines to Amol of Amravati to be sold on their joint risk which is in the proportion of 2:3 respectively. Yashpal sent 180 machines at Rs. 300 each and paid freight Rs. 700 and sundry expenses Rs. 300. Balu sent 120 machines at Rs. 250 each and paid for insurance Rs. 500 and carriage Rs. 500. Amol sold all the machines at Rs. 400 each. He spent Rs. 4,000 for advertisement and Rs. 1,000 for godown charges. Amol deducted 5% commission on sales and sent Rs. 80,000 to Yashpal and balance to Balu by bank draft. Prepare: Joint venture A/c, Balus A/c, Amols A/c in the ledger of Yashpal. 26. Surekha and Sangita decided to undertake a venture jointly. They agreed to share profits and losses in the ration of 3:2. Surekha supplied from her own stock goods worth Rs. 4,00,000 and paid Rs. 9,900 for freight and Rs. 2400 for insurance. Sangita purchased goods of Rs. 3,90,000 for the venture and paid Rs. 14,000 for selling expenses. Sangita accepted a bill for 3 months of Rs. 1,90,000 drawn by Surekha as an advance. The bill was discounted immediately by Surekha for Rs. 1,84,000 and the amount of discount was charged to Joint Venture Account. Sangita sold all the goods for Rs. 10,00,000. At the end of the venture, the accounts were settled. Give journal entries in the books of Surekha. [March 2012]s
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CH. 6. SINGLE ENTRY SYSTEM [Q. 5: 10 MARKS]

Pro Forma of Statement of Profit or Loss: Particulars Capital at the end of the account year. Add : Drawings made by the proprietor Less: Additional Capital introduced by the proprietor Less: Capital at the beginning of the account year. Trading Profit Less : Depreciation Less: Bad debts Less: R.D.D. Less: Discount on debtors Silent adjustments Extra Adjustments Less: Interest on Capital Add : Interest on Drawings Net Profit Amount Amount 0111 0222 0333 0444 0555 0666 0777 0888 0999 0000 0000 0111 0222 0333
Proprietary concerns
1. Following records of Mr. Raj were kept on single entry system. (March 2009) Particular 31.3.2006 31.3.2007 Stock 15000 Furniture 53500 Plant and Machinery 42500 Loan taken 21000 Bank Balance 1900 Debtors 43000 Creditors 18000 Mr. Raj invested Rs. 4000 in the business. Also he had withdrawn Rs. 15,000 for his private expenses from business. Rs. 500 to be provided for bad debts. Depreciate plant and machinery @ 5% and furniture @5% Prepare: i. Statement of Affairs as on 31.3.2006.
14000 44000 55500 21000 2100 35000 14900
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ii. iii.
Statement of Affairs as on 31.3.2007. Statement of Profit and Loss for the year ended on 31.3.2007.
2. The following information is available from Rams records: Particular 1.4.06 31.3.07 Creditor 5,000 8,000 Bank overdraft 15,000 Bank balance 10,000 Plant and machinery 10,000 20,000 Furniture 4,000 4,000 Debtors 30,000 52,000 Stock 34,000 28,000 Ram had withdrawn Rs.5000 for personal expenses and Rs. 4000 for sons marriage. Out of business funds, he had also purchased a residential building costing Rs.20000, which is not shown in the above balance. Additions to Machinery were made on 1/04/06. Dep. at 10 %p.a. should be provided on plant and machinery. Find out Rams net profit for the year ended 31st march 07. 3. On 01/04/06, Mr. Bannerjee commenced business with a capital of Rs.25,000. During the year 2006-07, he withdrew for his personal use goods worth Rs.2, 000 and cash Rs.3,000. He also gave a donation of Rs. 500 to Shri Ramakrishna mission. He paid Life Insurance premium of Rs.1000. During the year, he received a gift of Rs.5000 from his father by cheque which was deposited in the bank account of the business. On 31/3/07; his position was as under: Particulars RS Machinery 20,000 Furniture 2,000 Stock 5,000 Debtors 8,000 Balance at bank 1,500 Prepaid insurance 200 Payable to creditors 3,000 Liabilities for expenses 700 Find out the profit earned by him after providing for depreciation at 10% on plant & Machinery and furniture and Rs.400 as reserve for Doubtful Debt. Also prepare statement of affair as on 31.03.07. 4. Rani keeps her books on single entry & following information is disclosed. Particulars 31.3.06 31.3.07 Cash 18,000 27,000 Stock 15,000 18,750 Debtors 30,000 45,000 Furniture 7,500 7,500 Sundry creditors 26,250 31,500 Bills payable 9,000 Loan from y 3,000 Investments 15,000 Rani transferred Rs150 each month during first half year and Rs.100 each month for the remaining period from her business to her private banking account by way of drawing, and took away Rs.350 worth of goods for private use. She sold her private car for Rs.3, 500 and proceeds were utilised for business. Furniture to be depreciated by 10% and Reserve for Doubtful debts to 9th year of success
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be maintained at 5% on debtors. Prepare opening and closing statement of affairs and also profit and loss statement for the year ending 31/03/07. 5. Mr. Ganesh keeps his books by single entry method. His financial position on 1.01.04 and 31.12.04 was as under. Particulars 1.1.04 31.12.04 Cash 10,000 16,000 Bank 20,000 36,000 Stock 16,000 24,000 Debtors 24,000 30,000 Creditors 15,000 18,000 Plant and machinery 60,000 90,000 Furniture and fitting 18,000 18,000 During the year Mr. Ganesh withdrew Rs.8,000 for his private purpose and he had used 2,000 worth of stock also for his private purpose. On 1.10.03 he sold some of his house hold furniture for Rs.2,000 and paid this amount into his Bank A/c of business. Prepare a statement of profit & loss for the year ended 31.12.04 and a statement of affairs after taking into consideration the following: 1. Provide interest on capital @ 5% p.a on opening balance and Interest on drawing ( only on cash drawings) @10% p.a. (on an average of 6 months) 2. Depreciate plant and machinery @10 %( assuming addition were made on 1.10.04) and furniture at 5%. 3. stock on 31.12.04 was overvalued by Rs.2,000 4. Write off bad debts Rs.2,000 and provide Reserve for Doubtful debts at 10 % on debtors.
6. Mr. Prabhakar is a retail trader. He had no proper methods of accounting. But the following information is made available to you. [March 2012] Particulars Amount Rs. Amount Rs. 1.4.2009 31.3.2010 Sundry Debtors 45000 50000 Sundry Creditors 60000 70000 Bank Overdraft 80000 40000 Stock 65000 80000 Cash in hand 2000 8000 Bills Receivable 60000 80000 Furniture 10000 10000 Motor van 80000 80000 Computer 60000 120000 10% Govt. Bonds 10000 Adjustments. 4. On 1st October, 2009 Mr. Prabhakar had withdrawn Rs. 40000 for his personal use. 5. 10% Government Bonds were purchased of Rs. 10,000 on 1st October, 2009. 6. He had also withdrawn Rs. 30000 for his daughters marriage. 7. Depreciate furniture by 10% and write off Rs. 2000 from motor van. 8. Rs. 2000 is written off as bad debts and provide 5% R.D.D. on debtors. 9. Allow interest on capital at 10% p.a. 10. Charge interest on drawings Rs. 2,000. Prepare after taking into consideration the adjustments. Opening statement of affairs of 1.4.2009. Closing statement of affairs of 31.3.2010. Statement showing Profit or Loss for the year ended on 31.3.2010.
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7. Prem a trader keeps his books by the single entry Method. His financial position on 1st April 06 and on 31st March, 07 were as follows: Particulars 1.04.06 31.03.07 Cash in hand 1,500 1,600 Bank balance 1,200(Dr.) 1,800(Cr.) Stock in trade 4,000 4,650 Debtors 3,400 3,800 Creditors 2,400 3,600 Plant and machinery 6,000 8,000 Furniture 1,200 1,600 During the year, Prem had withdrawn Rs.75 per month for his household use. From the above information ascertain his profit or loss for the year ended and also give his statement of affairs as on 31.03.07 after taking into account the following further information: 1. Depreciate plant and machinery by 15% and furniture by 12 % p.a (assume the addition on 30th September,2006) 2. Of the debtors Rs100 are bad and to be written off. 3. Create a reserve for Discount on Debtors at 2% and a reserve for Doubtful debts at 5%. 4. Allow interest on capital at 5% and charge interest on Drawing at 6%p.a 8. Mr. Gopal maintained his books on single entry. The following statement of affairs had been Prepared as on 31.03.06 Liabilities Amt Asset Amt Capital account 28,000 Leasehold land 2,075 Sundry creditors 3,170 Plant and Machinery 4,940 Bill payable 2,150 Stock in trade 9,673 Book debts 15,550 Cash in hand 1,082 33,320 33,320 On 31.03.07 it was learnt that he had introduced further capital of Rs1,000 on 1st july,06 and he drawn Rs1,580 on various dates during the year. It was also ascertained that the proprietor had taken Rs.75 worth of goods for his own use. Statement prepared on the same date disclosed that book debts were Rs.14,640, Creditors were Rs.2,309 and Bills payable were Rs.1,775. The stock was valued at Rs.11,417 and cash in hand amounted Rs.917 on the same date. Prepare: 1. Statement of profit for the year 06-07 2. Statement of affairs as on 31.03.07 taking in to consideration the following: 5% Reserve to be created on Book debts. 5% Depreciation to be written off on plant and machinery. Rs.125 to be written off the lease. Interest at 5% p.a. to be provided on the capital. 9. Mr. Suryakant maintains books on single entry and who gives you the following information. (September 2008) Particulars Cash in hand Cash at bank Stock Sundry debtors Investments Furniture Machinery Sundry creditors 31-3-2006 500 2500 20000 25000 20000 10000 25000 10000 31-3-2007 2000 5000 30000 40000 20000 25000 40000 10000
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Outstanding expenses Additional information
3000
2000
1. Mr. Suryakant introduced further capital of Rs. 20000 on 1st July, 2006 and had withdrawn Rs. 10,000 during the year. 2. Interest on capital is allowed at 10% p.a. 3. Additions to furniture and machinery were made on 1st October, 2006 4. Write of deprecation on furniture and machinery at 10% p.a. 5. Create reserve for doubtful debts at 5% on sundry debtors. 6. Prepare: a. Statement of affairs. B. Statement of profit and loss for the year ended 31st March, 2007.
10. Mrs. Archana keeps her books on single entry system and gives the following information. (March 2008) Particulars Cash at bank Sundry debtors Stock in trade Furniture Machinery Bills payable Sundry creditors Additional information 31-3-2006 5000 25000 30000 20000 50000 5000 15000 31-3-2007 32000 40000 50000 20000 50000 5000 20000
Mrs. Archana withdrew from business Rs. 15,000 for personal use. She further introduced fresh capital of Rs. 25,000. Depreciation is to be charged @10% p.a. on Furniture and Machinery. Prepare: (i) Statement of Affairs as on 31-3-2006 (ii) Statement of Affairs as on 31-3-2007 (iii) Statement of profit or loss for the year ending 31-3-2007.
Partnership Firms 11. Sameer and Ashok are partners in a partnership form sharing profits and losses in the ration of 2:1. They maintain their books of accounts under single entry system. The following information is available from their records. Liabilities Capital accounts Sameer Ashok 12% Loan from Sameer Bills Payable Sundry Creditors Bank Overdraft Amt 270000 145000 50000 18000 24000 17000 Asset Buildings Machinery Furniture Stock in Trade Sundry Debtors Cash in Hand Goodwill Profit and Loss A/c Amt 250000 100000 59000 16000 22000 15800 46200 15000 35
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524000
524000
Further information On 31st March, 2009 their assets and liabilities were: Buildings Rs. 300000, Machinery Rs. 160000, Furniture Rs. 59,000, Stock in Trade Rs. 24,000, Sundry Debtors Rs. 23,000, 12% Loan from Sameer Rs. 50,000, Bills Payable Rs. 19,000, Sundry Creditors Rs. 21,500, Bank over draft Rs. 15000, Profit and Loss A/c (Dr. Balance) Rs. 10,000, Cash in hand Rs. 20,000 and Prepaid insurance Rs. 5400. Additions were made to Buildings and Machinery on 1st July, 2008 and 1st September 2008 respectively. Prepare a Profit or Loss Statement for the year ended 31st March, 2009 and a closing Statement of Affairs as on that date by considering the following adjustments. Adjustments: i. Buildings and Machinery are to be depreciated by 5% p.a. and 10% p.a. respectively. ii. Bad debts are written off Rs. 5000 and provision for Bad and Doubtful debts be made at 5% on debtors. iii. Goodwill is valued at Rs. 40,000 and furniture are valued at Rs. 55,000. iv. During the year 2008 2009, Sameer and Ashok had withdrawn Rs. 24,000 and Rs. 25,000 respectively. v. During the year 2008 2009, Sameer and Ashok had introduced Rs. 20,000 and Rs. 35,000 respectively as further capital. 12. Usha, Asha and Harsha were partners in a firm sharing profit and losses as 2/5, 2/5 and 1/5 respectively. They kept their books on single entry system. The following information is available from their records. Liabilities Amt Amt Asset Amt Amt Capital accounts Land & buildings 90000 Usha 90000 Plant & machinery 60000 Asha 90000 Furniture & fixtures 40000 Harsha 63000 243000 12% investments 20000 Sundry Creditors 8000 Stock in Trade 15000 Bills Payable 6000 Bills Receivable 5600 Outstanding Salaries 1200 Sundry Debtors 18000 10% Bank Loan 8400 Less: R.D.D. (600) 17400 Cash in hand 8000 Cash at bank 10000 Prepaid Rent 600 266600 266600 Further information (1) During the accounting year 2001 2005 Usha, Asha and Harsha had withdrawn Rs. 8,000, Rs. 6,000 and Rs. 7,000 respectively for their personal use. On 1st October, 2004 Usha, Asha and Harsha had introduced Rs. 14,000, Rs. 13,000 and Rs. 10,000 respectively as further capital. (2) Interest on capital @12% p.a. and on drawing @10% p.a. is provided. (3) As Usha was working as managing partner, she was given salary of Rs. 1,200 p.m. and Asha was given commission @ 2% on gross profit. (4) Provide for Bad debts Rs. 600 and maintain R.D.D. @ 5% on debtors. (5) The financial position of the firm as on 31st March 2005 was on follows: Land & Building Rs. 90,000, Plant & machinery Rs. 70,000 and Furniture & Fixtures Rs. 40,000, 12% Investments Rs. 30,000, Stock in trade Rs. 14,000, Bills Receivable Rs. 10,200, Sundry Debtors Rs. 25,000, cash in hand Rs. 15,000, Cash at Bank Rs. 16,000,
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Prepaid Rent Rs. 1,600, Sundry creditors Rs. 6,500, Bills Payable Rs. 5,000, Outstanding salaries Rs. 1,800, 10% Bank Loan Rs. 10,000. (6) Additions to Plant & Machinery, Investments and Bank Loan were made on 1st July 04, 1st August 04 and 1st October 04 respectively. (7) Provide depreciation @10% p.a. on Plant and Machinery and 5% p.a. on Furniture and Fixtures. You are required to prepare : (1) Statement of Profit or Loss for the year ended 31 st March, 2005 and (2) Closing Statement of Affairs as on same date.
13. Sharma and Varma were partners in the Partnership Firm, sharing profits and losses in the ratio of 2:3 respectively. They kept their books under single entry system. The following information is available from their records. Particulars Cash in hand Cash at bank Prepaid insurance Outstanding wages 12% investments Stock in trade Sundry debtors Sundry creditors Bills receivable Goodwill Patents Bills payable Furniture & fixtures Plant & Machinery Land & Buildings Adjustments 1-4-2003 (Rs.) 17500 18500 6200 7800 45000 28000 16000 17000 15000 42000 32000 12500 51000 85000 120000 31-3-2004 (Rs.) 28600 25200 8500 6700 40000 36000 21000 15000 18000 42000 32000 9600 51000 85000 120000
(1) On the revaluation of assets and liabilities it is found that land and building is valued at
Rs. 2,00,000 while Machinery & furniture valued at Rs. 78,000 and Rs. 47,000 respectively. (2) Bad debts incurred during the year 2003 04 are Rs. 2800 and it is decided to create RDD at 5% on debtors. (3) Interest on capital is allowed @ 12% p.a. while interest on partners drawings is charged @ 10% p.a. (4) Additions to investments were made on 1st July 2003 at the same rate of interest. (5) During the accounting year 2003 04, Sharma and Varma had withdrawn Rs. 28,200 and Rs. 24,000 respectively for their personal use. (6) Write off Goodwill and Patents @ 10% and 5% respectively. Prepare: (1) Opening and closing statement of Affairs and (2) Statement of Profit or Loss for the year ended 31st March, 2004.
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CH. 7. FINAL ACCOUNTS OF NPO [NOT FOR PROFIT ORGANISATION] [Q. 6: 16 MARKS]
Introduction: Profitable organisations are those organisations in which their main motive is to earn profit and Not for Profit Organisations (NPO) are those organisations in which their main motive is not to earn profit but to render services to their members. Profitable organisations prepare Profit & Loss account for the year ended to know the result of the business and a balance sheet as on that date to know the financial position of the business. NPO prepares Income & Expenditure account for the year ended to know the surplus or deficit of the organisation and a balance sheet to know the financial position of the organisation. Examples of profitable organisations are: Sole trading concerns, Partnership firms, Companies, etc. Examples of NPO are: Schools, Colleges, Hospitals, Sports club, etc.
In simple, A concern or an organisation which is formed and established to serve society or general public by undertaking various activities without any profit motive is called a not for profit concern.
1. Dr. Narendra commenced practice in the month of April 2007. He prepared the following Receipts & Payments Account for the year ended 31st March, 2008. Receipts and Payments A/c For the year ended 31st March, 2008
Receipts To Cash To Visits To Sundry Receipts Amount 10000 7000 400 Payments By Furniture By Equipment By Drugs By Salaries By Rent By conveyance By Stationery By Lighting By periodicals By Drawings By Balance c/d Amount 1500 2500 2000 1000 500 700 100 125 100 4375 4500 17400
17400
Rs 200 were to be received on account of visits. Unpaid Salaries Rs. 200 60% of conveyance is for private purposes. Value of drugs on hand was estimated at Rs. 1,000. Depreciate furniture and equipment by 10% Prepare Income and Expenditure account and balance sheet. 2. Dr. Subhash Raje started practice as a medical practitioner on 1st April, 2007. He gives you the Receipts & Payments Accounts for the year 2007 08 and the adjustments to be made. Prepare his Income and Expenditure Account and Balance sheet for 2007 -08. Receipts and payments account for the year ended 31st March, 2008. 9th year of success
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Amount 107500 84000 64000 12000
BOOK KEEPING & ACCOUNTANCY Payments By Furniture By Equipment By Drugs By Salary By Rent By Conveyances By Stationery By Lighting By Journals By Drawings By Balance c/f Amount 50000 40000 35000 24000 6000 18000 5600 10000 1200 37700 40000 267500
Receipts To Cash Introduced To Visits To Receipts From Dispensary To Sundry Receipts
267500
Adjustments: 1. Receipts in arrears are: Visits Rs. 11,500 and Dispensary Rs. 9,000. 2. The outstanding salaries are Rs. 1,800 and the outstanding expenses on drugs are also Rs. 3,000. 3. 40% of the amount spent on conveyance was for domestic use. 4. Stock of drugs in hand at the close of the year was worth Rs. 4,200. 5. Depreciate furniture at 5% p.a. and equipments at 10% p.a. Furniture and equipment purchased on 1st April 2007. 3. Dr. Arjun Patil commenced Medical practice on 1.4.2006. He has prepared the following Receipts and payments account for the years 31.3.2007. [September, 2009] Receipts and payments account for the year 31st March 2007
Receipts To cash introduced (Capital fund) To income from visits To Receipts from Dispensary To Miscellaneous receipts To Interest on Investments To Receipts from Operation fees Amount 30000 40000 80000 1000 500 10000 Payments By Furniture By Honorarium to Doctor By Equipments By Purchase of Drugs By Compounders Salary By Rent of Dispensary By Conveyance charges By Stationary By Operation Expenses By Lighting By Journals and Newspapers By Telephone expenses By Investments By Balance c/d (Closing Balance) Amount 40000 10000 50000 10000 12000 6000 2000 600 8000 400 800 500 7200 14000 161500
161500
Adjustments. i. Rs. 5000 were still to be received on account of the visits. ii. Compounder salary of Rs. 3000 and Bill of stationary Rs. 1000 and Rent of dispensary Rs. 1000 are outstanding. iii. 25% amount of conveyance charges were for private use. iv. Stock of Drugs on hand was estimated at Rs. 2000. v. Furniture and Equipments are to be depreciated at 10%. Prepare Income and expenditure account for the year ended 31st March 2007 and Balance sheet as on that date from the above information. 4. From the following Receipts and payments account of Western Gymkhana for the year ended 31st March, 2007 and other information, prepare Income and Expenditure account for the year ended on and a Balance Sheet as at that date. (March 2008, modified)
Receipts Amount Payments Amount
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1,040 85 4000 103 1200 876 81 1000 8385
BOOK KEEPING & ACCOUNTANCY By salaries By Entertainment Expenses By Electric charges By General Expenses By Rates and Taxes By Investments By Stationery and Printing By Expenses of 2006 By Fixed Deposit By Balance c/f 1300 645 234 350 120 3000 241 600 1000 895 8385
To Balance B/F T Subscriptions for: 2006 2007 2008 To Donations To Entertainment Receipts To Interest To Entrance Fees
i. ii. iii. iv. v. vi. vii.
The Gymkhana has 450 members paying an annual subscription of Rs. 10/- each. Rs. 20/- is still in arrears towards subscription for the year 2006. Carry forward Rs. 20/- or rates paid in advance. Provide Rs. 200/- for salaries outstanding. The Gymkhana owns Land and Building standing in the books of Rs. 15,000/- and Furniture standing at Rs. 1,150, on which depreciation at 5% and 20% respectively is to be written off. The Capital Fund as on 1st April, 2006 was Rs. 16,695/50% of the Entrance Fees is to be capitalised. Donations are capitalised.
5. Following is the Receipts and Payments Account and additional information of Kalpana Hospital, Sakri. (March 2012) Receipts and Payments account for the year ended 31st March, 2010
Receipts To Balance b/d To Subscriptions 200 8 2009 2009 2010 2010 2011 To Donations To Life Membership Fees To Hospital Receipts (Revenue) Amount 6000 7500 95000 15000 55000 25000 150000 353500 Payments By Medicines By Honorarium to Doctors By Ambulance Maintenance By Hospital Equipments Purchased By Furniture Purchased By Fixed Deposits By Balance C/d Amount 10000 75000 44000 30000 25000 100000 69500 353500
Additional Information: i. Outstanding subscription for 200 9 2010 is amounted to Rs. 5000. ii. Hospital Equipments and Furniture were purchased on 1.10.2009 and both were to be depreciated at 20% p.a. iii. Life membership fees are to be capitalized. iv. Donations represent donations for Building fund. v. Staff salary for the current year is outstanding Rs. 7500. vi. On 1.4.2009, the hospital had the following assets and liabilities: Land and Building Rs. 250000, Investments Rs. 50000, Ambulance Rs. 1,02,500, Bank Loan Rs. 2,00,000. vii. Capital fund as on 1.4.2009 was amounted to Rs. 2,16,000. Prepare: Income and Expenditure Account for the year ending 31st March, 2010 and the Balance Sheet as on that date. 6. From the following Receipts and Payments Accounts of Sangameshwar Sports Club for the year ending 31st March, 2007 and Balance Sheet as on that date. (September 2010) Receipts and Payments Account For the year ended on 31st March, 2007.
Receipts To Balance (1-4-06) Cash in Hand Cash at Bank To Subscriptions To Donations Amount 15000 215000 125000 225000 Payments By Salaries By Wages By Postage and Telegram By Printing and Stationery By Hire of Ground Amount 40,000 40,000 15,000 25,000 15,000
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125000 15000 15000 735000
BOOK KEEPING & ACCOUNTANCY By Sports Material (Purchased on 1-1-07) By Insurance By Balance (31.3.07) Cash in Hand Cash at bank 2,00,000 50,000 10000 340000 735000
To Entrance fees To interest To Miscellaneous Receipts
Adjustment i. Subscriptions include Rs. 2000 received for the year 2005 2006 and subscription of Rs. 5000 is due to for current year but not received yet. ii. Assets as on 1st April, 2006 were as follows. a. Building Rs. 300000 b. Sports Material Rs. 250000 c. Investments Rs. 150000 d. Furniture Rs. 150000. iii. Provide depreciation on Building, Sports Material and Furniture at 5% p.a. iv. Capitalise 50 % of Donations and Entrance Fees. v. Insurance of Rs. 5000 is paid in advance. vi. Salaries are outstanding at Rs. 5000 and Interest Rs. 5000 is due but not received. vii. Capital fund was Rs. 10,82,000 as on 1-4-2006. 7. Following is the summary of Receipts and Payments of Jay Bajrangbali Vyayam Shala, Ajara for the year ending 31.03.2007. (March 2010) Receipts and payments Account for the year ended on 31st March 2007.
Receipts To Balance b/d To Subscription 2005 06 2006 07 To Donation for Building To Receipts from Entertainments To Interest To Entrance Fees Amount 41600 4120 160000 50000 36440 3240 45000 340400 Payments By Salary By Lighting By General Expenses By Entertainment Expenses By Taxes Paid By Printing and Stationery By Expenses of 2005 2006 By Investment By Fixed Deposit with Ajara Urban Bank By Balance C/d Amount 55000 10000 15360 25800 5000 9440 24000 120000 40000 35800 340400
Adjustments: i. Jay Bajrangbali Vyayam Shala has 4500 members paying annual subscription of Rs. 40 each. ii. Provide for outstanding salary Rs. 5000. iii. On 1.4.2006 the assets stood as under: a. Land and building Rs. 60,000. b. Furniture Rs. 46000 Depreciate the above assets at 10% p.a. iv. Interest on Investment Rs. 2000 is not received. v. Capital Fund was Rs. 1,27,720 on 1-4-2006.. vi. 50% of the entrance fees is to be capitalised. Prepare: Income and Expenditure account for the year ended 31st march 2007 and balance sheet as on that date. 8. The following is the Receipts and payments Account of Modern Sports Club, Satara, for the year ended on 31st March, 2007. (March 2009) Receipts and Payments Account for the year ended on 31st March, 2007.
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1490 13600 520 840 5180 5000 26630
BOOK KEEPING & ACCOUNTANCY By Upkeep of Garden By wages By Salary By Ground rent By Printing By Postage By Bank balance By Balance c/d 9500 2360 7000 210 930 190 5000 1440 26630
To Balance b/d To Subscription To Entrance Fees To Interest on Investments To Proceeds from Matches To Life member fees
Adjustments: 1. Ledger balances of the club as on 31.3.2006 were Capital fund Rs. 66,430, Club house and ground Rs. 40,000, Investments Rs. 18,640, furniture Rs. 6,400, and outstanding subscription Rs. 600. 2. Printing includes Rs. 200, Upkeep of garden includes Rs. 500 and Subscription includes Rs. 400 for the previous year. 3. Entrance fees are to be capitalized. 4. The Rotary club of Satara owed Rs. 210 for the use of club hall. 5. Provide 10% depreciation on furniture. 6. Subscriptions outstanding for the current year were Rs. 1,000. Prepare _ Income and Expenditure account for the year ended 31st March, 2007 and Balance Sheet as on that date. 9. From the following Balance sheet and Receipts and Payments Account of Padmavati High School, Thane, prepare Income and Expenditure account for the year ended 31-03-2007 and balance sheet as on that date. (September 2008) Balance sheet as on 31st March, 2006
Liabilities Entrance fees Capital fund Amount (Rs.) 30000 519000 Assets Furniture Computer laboratory Library Investment Cash in hand Cash at bank Outstanding Tuition Fees Amount (Rs.) 84000 100000 125000 200000 5000 15000 20000 549000
549000
Receipts and Payment Account for the year ended 31st March, 2007
Receipts To balance b/d Cash in hand Cash at bank To Tuition Fees To Term Fees To Government Grant (salary) To Sundry receipts To sale of old newspapers To interest on investments To Donation of library Amount (Rs.) 5000 15000 400000 120000 104500 11000 500 10000 150000 816000 Payments By Furniture purchased By Salaries By rent By Sundry expenses By Stationery By Annual gathering expenses By repairs of buildings By Insurance By Balance c/d Cash in Hand Cash at Bank Amount (Rs.) 52000 300000 140000 27000 49000 24000 32500 20000 44500 127000 816000
Adjustments:
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1. 2. 3. 4. 5.
Tuition fees receivable Rs. 150000 Salary still payable Rs. 150000 Rent paid in advance Rs. 20000 Insurance premium is paid for one year ending 30-9-07 Depreciate furniture and library at 10% and computer laboratory at 20%. Depreciation is to be charged on the closing balance of assets.
10. Following is the Balance sheet and receipts and payments account of the Memorial Hospital, Sawantwadi. Prepare Income and expenditure account for the year ended on 31.3.2010 and the balance sheet as on that date. (March 2011) Balance sheet as on 1.4.2009
Liabilities Capital fund Outstanding Salaries Medical bill unpaid Amount (Rs.) 10,04,000 22000 6000 1032000 Assets Cash in hand Cash at bank Land and building Furniture Equipments Outstanding subscriptions Amount (Rs.) 6000 34000 800000 70000 120000 2000 1032000
Receipt and payments account For the year ending 31.3.2010

Receipts To balance b/d Cash in hand Cash at bank To subscription (includes Rs. 2000 received for previous year) To Sale of furniture (Book value Rs. 30000) To Donations (revenue) To Life membership fees Amount (Rs.) 6000 34000 130000 20000 44000 25000 259000 Payments By Salaries (including of the previous year) By Medicines By Equipments purchased By Taxes By General expenses By Balance c/d Cash in hand Cash at bank Amount (Rs.) 110000 52000 20000 3000 8600 15400 50000 259000
1. 2. 3. 4. 5. 6.
Consider the following adjustments. Outstanding subscription Rs. 12000. Capitalise the amount of membership fees. Prepaid taxes Rs. 500. Outstanding Salary Rs. 12000. Write off depreciation Rs. 20000 from Land and Building and Rs. 30000 from Equipments. Outstanding Medicine bill as on 1.4.09 is still due.
11. From the following balance Sheet and Receipts and Payments account of Nanavati Hospital, Bombay, prepare Income and Expenditure account for the year ending on 31st March, 2007 and the Balance sheet as on that date. Balance Sheet as on 1st April, 2006
Liabilities Amount Assets Amount
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2000 1500 383000
BOOK KEEPING & ACCOUNTANCY Cash Securities Furniture Land and Buildings Equipments Subscription Due Interest Accrued 11000 150000 4000 200000 15000 5000 1500
Salaries Unpaid Medicines Bill Unpaid Capital Fund
386500
386500
Receipts and Payment Account for the year ended 31st March, 2007
Receipts To Cash balance b/f To subscription To Interest (Rs. 1500/- last year) To Donations(Revenue) To Life Membership Fee Amount 11000 30000 5000 4300 10000 60300 Payments By Furniture (purchased on 1-4-2006) By Salaries (including Rs. 2000/- of last year) By Equipment (purchased on 1-4-06) By Dispensary expenses By Medicines By Taxes By Cash balance c/f Amount 1900 23000 7500 4700 5500 500 17200 60300
Adjustments. 1. Capitalise the amount of life membership fees. 2. Interest earned but not received Rs. 1,000/3. Subscription include Rs.1000/- for 2008 and outstanding subscription for 31st march, 2007 is 4,200 4. Unpaid salary for the year 2007 is Rs. 2500/5. Provide for depreciation on furniture 10%, Land and Building 5%, Equipments 20%. 6. Prepaid taxes Rs. 100/12. The Balance Sheet as at 1st April, 2006 and the Receipts and Payments account for the year ended 31st March, 2007 of the Young Sports Club, Dadar are as under. Young Sports Club Balance Sheet as on 1st April, 2006
Liabilities Capital Fund Outstanding Expenses: Salaries 400 Printing 300 Income and Expenditure A/c Amount 30000 700 23300 54000 Receipts To Opening Balance 4200 Cash in Hand 6300 To Subscriptions To Receipts from Cricket Tournament To Interest on Bank A/c Amount 10500 18000 4000 14520 300 Payments By Cricket Tournament Expenditure By Printing & Stationery By Salaries & Honorarium By Repairs to Building By Newspapers and Periodicals By Advertising Expenses By Insurance By Investments By Closing Balance Cash in Hand 5280 Cash in Bank 6450 Assets Building Furniture Entrance Fee receivable Subscriptions Fee receivable Sports Material & Equipments Cash in Hand Cash at Bank Amount 9500 5000 200 800 28000 4200 6300 54000 Amount 16460 860 1600 500 470 300 400 15000 11730
Young Sports Club, Dadar, Receipts and Payments A/c for the year ending 31st March, 2007
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47320
BOOK KEEPING & ACCOUNTANCY 47320
You are also given the following additional information. 1. Subscriptions of the amount of Rs. 800 were receivable as on 31st March, 2007 2. Subscriptions Rs. 200 and Entrance Fees Rs. 300 were received in advance. 3. Outstanding Expenses were: Salaries and Honorarium Rs. 100; Insurance Rs. 50; Cricket Tournament Expenses Rs. 250. You are required to prepare Income & Expenditure account for the year ending 31st March, 2007 and a Balance Sheet as on that date.
Home Work Section

1. The following is the Receipts and Payments A/c of the Saraswati Vidya Mandir, Latur. Receipts and Payments Account for 2007 08.
Receipts To Cash Balance b/f To Admission Fees To Tuition Fees To Donations To Govt. Grant To Life Members Fees To Term Fees To Examination Fees Amount 32,000 68,000 46,000 90,000 1,00.000 62,000 24,000 30,000 452000 Payments By Furniture (31-12-2007) By Salaries By Office Expenses By Sports Material By Printing & Stationery By Fixed Deposit(@10% on 1.10.2007) By Cash Balance c/f Amount 80000 124000 42000 48000 17000 100000 41000 452000
Additional Information: 1. The assets of the society on 1st April, 2007 were: Building Rs. 50,000 Furniture Rs. 47,000 Library Rs. 40,000 Laboratory Rs. 48,000 2. The tuition fees receivable from students for 2007 08 is Rs. 12,000. 3. Furniture and Building are to be depreciated at 10% p.a. each. 4. The 50% of donations and entire amount of Life Members Fees are to be capitalized. 5. Sports material is valued at Rs. 42,000 on 31-03-08. 6. The capital fund on 1st April, 2007 was Rs. 2,17,000. Prepare Income and Expenditure Account for the year ended 31st March, 2004 and a Balance sheet as on that date. 2. Girgaon Library showed the following position on 1st April, 2007. Balance Sheet as on 1st April, 2007
Liabilities Capital Fund Outstanding Liability for Expenses Amount Rs. 267650 2350 Assets Furniture Books Investments Cash at Bank Amount Rs. 82500 120000 45000 22500
270000
270000
Receipts and Payments Account for the year ended

Receipts To Opening Balance To Entrance Fes To subscriptions To Sale Proceeds of old papers To Hire of Lecture Hall To interest on investments Amount 22500 41500 50000 1275 21000 3400
31st
March, 2008
Amount 2360 1250 6250 33000 2350 14400
Payments By Electric Charges By Postage & Stationery By Telephone Charges By Purchase of Books By Expenses of 2006 07 By Rent
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BOOK KEEPING & ACCOUNTANCY By Investments By Salaries By closing Balance 42000 23300 14765
139675
139675
You are asked to prepare an Income and Expenditure A/c of the Library for the year ended 31st March, 2008 and a Balance Sheet as on that date after making the following adjustments. 1. Subscriptions include Rs. 12,500 received in advance and subscriptions of Rs. 27,500 in respect of current year are still receivable. 2. Outstanding Liabilities on 31st March, 2008 were Rent Rs. 4,000 and Salaries Rs. 3,000. 3. Books, excluding any additions during the year, are to be depreciated at 10% p.a. 4. 50% of the Entrance Fees are to be capitalized. 3. From the following Balance Sheet and Receipts and Payments Account of Ashwini Hospital, Mumbai, prepare an Income and Expenditure Account for 2007 08 and a Balance Sheet as on 31-03-2008. Balance Sheet as on 1-04-2007
Liabilities Salaries unpaid Medicines bill unpaid Capital fund Amount 12000 11500 446000 Assets Cash Securities Furniture Land and buildings Equipment Subscriptions due Interest accrued Amount 41000 150000 24000 200000 45000 5000 4500 469500
469500
Receipts and payments A/c for the year ended 31st March, 08
Receipts To Cash Balance b/f To Subscriptions To interest (including Rs. 4500 of last year) To Donations (Revenue) To Life Membership Fees Amount 41000 60000 15000 14300 40000 Payments By Furniture (Purchased on 1-4-07) By Salaries (Including Rs. 12000 of last year) By Equipment (purchased on 1-4-07) By Dispensary Expenses By Medicines By Taxes By Cash Balance c/f Amount 11900 48000 7500 24700 45500 4500 28200 170300
170300
Adjustments: Capitalize the entire amount of life membership fees. Interest earned but not received is Rs. 2,000. Subscriptions for 2007 08 are Rs. 4,200. Unpaid salary for the year 2007 08 is Rs. 12,500. Provide for depreciation on furniture at 10%, on land and buildings at 5% and on equipment at20%. Prepaid taxes are Rs. 400. 4. The following is the Receipts and Payments Account of the Shree Sports Club, Ahmednagar. Receipts and payments account for the year ended 31st March, 2008.
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7000 20000 3000 6000 12000 19000 22000 45000 134000
BOOK KEEPING & ACCOUNTANCY By Salaries By Badminton court By Insurance By Furniture By Sundry Expenses By Tournament Expenses By Printing Charges By Newspapers & Magazines By 12% Investments By Balance c/d Cash 8500 22000 3000 17000 6000 8000 1500 600 50000 17400 134000
To balance b/d Cash To subscriptions To interest on investments To Rent To Badminton Fees To Tournament Fees To Admission Fees To Donations.
On 31st March, 2007, the club owned a building worth Rs. 1,50,000. The capital fund on the same date was Rs. 1,57,000. Prepare and Income and Expenditure account for the year ended 31st March, 2008 and a Balance sheet as on that date after considering the following additional information. 1. Subscriptions received for 2008-09 Rs. 1500; subscriptions still due for 2007 08: Rs 4,000. 2. Outstanding salaries on 31st March, 2008: Rs. 3000 and Insurance premium is paid for one year ending 30th June, 2008. 3. Depreciation on building, badminton court and furniture @10%, p.a. each. 4. Capitalize 70% of the admission fees. 5. Donations are received for endowment fund. 6. Investments purchased on 1st July 2007. 5. From the following Receipts and payments Account of South Indian Cultural Society, Matunga, Mumbai, prepare Income and Expenditure Account for the year ended 31st March 2008 and a Balance Sheet as on that date:
Receipts To Opening Cash in Hand To Subscriptions 2006 07 2007 08 2008 - 09 To Proceeds from Dramas To Entrance Fees To Interest on Securities To Miscellaneous Income Amount 7420 7300 185500 5000 70000 30000 4200 7500 3,16,920 Payments By Opening Bank Overdraft By Investments in Securities By Purchase of Furniture By Salaries By Printing & Stationery By Cost of Staging Dramas By Sundry Expenses By Closing Balances Cash in hand Amount 92700 53000 41450 36200 1890 21710 14420 55550 3,16,920
Additional Information: 1. The society has 1000 members each paying an annual subscription of Rs. 200. Subscriptions of Rs. 9,000 are still in arrears in respect of 2006 07. Capital fund as on 1st April, 2007 was 1,22,950. 2. Stock of stationery amounted to Rs. 1,125 on 31-3-2007 and Rs. 2,087 on 31-3-2008. 3. Half the entrance fees are to be capitalized. 4. Salary for the year 2007 08 Rs. 1550 is outstanding. 5. Outstanding Sundry Expenses on 31-3-2007 had amounted to Rs. 1320. 6. Sundry expenses paid in 2006-07 included telephone charges Rs. 1125 relating to 200708. 7. On 31-3-2007, the society owned premises worth Rs. 124500. Billiard Table worth Rs. 40,000 and investments worth Rs. 26,500. 8. Both the premises and the Billiards Table at the end of the year are to be depreciated at 10% on the opening balances. 6. From the following information, prepare Income and Expenditure account for the year ended 31st March, 2008 and a Balance Sheet as on that date.
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Amount 1750 150 14100 75 2500 800 500 200 20075
BOOK KEEPING & ACCOUNTANCY Payments By Bank Overdraft By Salaries By Furniture By Investments in Securities By Printing and Stationery By Cost of Staging drama By Sundry Expenses By Cash at Bank By Cash in Hand Amount 2500 5300 2000 4000 800 1500 1300 2500 175 20075
Receipts To Cash in hand (1.4.2007) To Subscriptions 2006 07 2007 08 2008 09 To proceeds from Drama To Entrance Fees To Interest on Securities To sale of Old Furniture
1. The society has 1500 members, each paying an annual subscription of Rs. 12. 2. Subscriptions of Rs. 100 pertaining to the year 2006 07 are still in arrears. 3. Value of Stationery at hand on 31st March, 2007 was Rs. 200 and on 31st March, 2008 was Rs. 150. 4. Entrance fees are to be treated as Capital receipts. 5. Salary of Rs. 700 for the current year is unpaid. 6. Balances as on 31st March, 2007: Investment Rs. 4500, Building Rs. 25000, Furniture Rs. 200. 7. Depreciate building by 2 % and furniture by 5%. 7. From the following information, prepare Income and Expenditure account for the year ended 31st March, 2008 and a Balance Sheet as on that date.
Receipts To Cash in hand (1.4.2007) To Subscriptions 2006 07 2007 08 2008 09 To proceeds from Drama To Entrance Fees To Interest on Securities To sale of Old Furniture Amount 1775 150 14100 75 2500 800 500 200 20100 Payments By Bank Overdraft By Salaries By Furniture By Investments in Securities By Printing and Stationery By Cost of Staging drama By Sundry Expenses By Cash at Bank By Cash in Hand Amount 2300 5500 2000 4000 1000 1300 1300 2500 200 20100
2. The society has 1800 members, each paying an annual subscription of Rs. 10. 3. Subscriptions of Rs. 200 pertaining to the year 2006 07 are still in arrears. 4. Value of Stationery at hand on 31st March, 2007 was Rs. 100 and on 31st March, 2008 was Rs. 150. 5. 50% of Entrance Fees are to be treated as Capital receipts. 6. Salary of Rs. 700 for the current year is unpaid. 7. Balances as on 31st March, 2007: Investment Rs. 5000, Building Rs. 25000, Furniture Rs. 200. Depreciate building by 10 % and furniture by 5%.
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CH. 8. FINAL ACCOUNTS OF PARTNERSHIP FIRM [Q. 7: 20 MARKS]

1. From the following Trial Balance of M/s Sonia and Sufi, you are required to prepare Trading Profit and Loss Account for the year ended 31st December, 2004 and the Balance sheet as on that date. Trial Balance as on 31.12.2004 Particulars Debit (Rs.) Credit (Rs.) Sonias Capital 1, 80, 000 Sufis capital 1, 50, 000 Sonias Drawing 14, 450 Sufis Drawing 10, 000 Stock on 1 1 2004 2, 00, 000 Bills Receivable 25, 000 Purchases 2, 75, 000 Sales 4, 00, 000 Bills Payable 60, 000 Return In ward 5, 000 Return Outward 4, 500 Plant and Machinery 1, 00, 000 Loose Tools 25, 000 Patents 25, 000 Sundry Debtors 1, 25, 000 Sundry Creditors 1, 40, 000 Cash at Bank 77, 550 Wages 19, 000 Salaries 17, 500 Rent and Taxes 7, 500 Insurance 3, 000 Printing and Stationery 2, 000 Power and Fuel 3, 500 9, 34, 500 9, 34, 500 Adjustments: 1. Stock as on 31st December, 1978 Rs. 1, 30,000 and its market value were Rs. 1, 40,000. 2. Write off Rs. 1000 for bad & Provide for Bad and Doubtful debts at 5% on Sundry Debtors. 3. Goods worth Rs. 1000 were distributed as free samples. 4. Prepaid Insurance Rs. 750. 5. Depreciate Plant and Machinery by 10% p.a. and Patent by 15% p.a. 6. Outstanding expenses Salaries Rs. 2,500 Wages Rs. 1,000 Printing and Stationery Rs. 500. 7. Uninsured goods worth Rs 1200 were lost by fire.
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2. Misha and Latha are partners sharing profits and losses in the ratio of 2 : 1. From the following Trial Balance prepare Trading and Profit and loss account for the year ending 31 st December, 2004. Trial Balance as on 31.12.2004 Particulars Debit (Rs.) Credit (Rs.) Stock (1st January) 10, 000 Sundry Debtors 28, 000 Bills payable 10, 101 Purchases 40, 000 Wages 8, 500 Returns Outward 2, 500 Salaries 2, 700 Office Expenses 2, 446 Insurance 1, 300 Plant & Machinery 30, 000 Sundry Creditors 21, 500 Rent 1, 800 Sales 60, 000 Reserve for Doubtful Debts 400 Travelling Expenses 1, 400 Returns Inward 3, 500 Land and Building 44, 800 Bills Receivable 3, 400 Bank 6, 655 Mishas capital 60, 000 Lathas capital 30, 000 1, 84, 501 1, 84, 501 Adjustments: 1. Closing stock was valued at Rs. 26,500. 2. Provide 10% Depreciation on Plant and Machinery. 3. Goods worth Rs. 1000 were distributed as free samples. 4. Prepaid Insurance Rs. 300. 5. Maintain Reserve for Doubtful debts at 1% of Sundry debtors. 6. Outstanding rent for the current year Rs. 200. 7. Goods worth Rs. 100 were taken over by Latha for her personal use, but no entry is made in the books.
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3. Surya and Abhijeet are in a Partnership firm. The trial Balance of the firm on 31 st December, 2004 was as follows. Trial Balance as on 31st December, 2004 Particulars Debit (Rs.) Credit (Rs.) Capitals: Surya 15, 000 Abhijeet 10, 000 Drawings: Surya 500 Abhijeet 200 Buildings 20, 000 Plant and Machinery 6, 000 Cash at bank 600 Purchases and Sales 47, 500 75, 500 Returns 1, 500 1, 000 Carriage 350 Opening stock 11, 000 Wages 6, 000 Debtors & Creditors 17, 600 12, 600 Salaries 2, 500 Rent and Insurances 400 Postage and Telegrams 200 Bad Debts 250 Discounts 100 50 Reserve for Bad Debts 750 Outstanding Salaries 100 Trade Expenses 300 1, 15, 000 1, 15, 000 Adjustments: 1. Partners share Profits and Losses in the ratio of their capitals. 2. Write off Rs. 450 for Bad debts & Reserve for Bad and Doubtful Debts is to be maintained at 5% on the Debtors. 3. Depreciate Building @ 5% and Machinery @ 10% p.a. 4. Goods worth Rs. 1, 000 were destroyed by fire and the insurance company admitted a claim for Rs. 800. 5. Stock as on 31st December, 2004 was valued at Rs. 8, 000. 6. Goods worth Rs. 1000 were distributed as free samples. 7. Wages outstanding Rs. 1000. Prepare Trading and Profit & Loss account for the year ended 31st December, 2004 and a Balance sheet as on that date.
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OMTEX CLASSES BOOK KEEPING & ACCOUNTANCY 4. Agarkar and Dravid are in partnership sharing profit and losses in the ratio of 2: 1 from the following information of Trial balance and adjustments you are required to prepare profit and loss account, trading account and Balance sheet as on 31st march 2003. Trial Balance as on 31st March, 2003
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Particulars Prepaid Insurance Insurance R.B.D.D Discount Postage and Telephones Salaries Debtors Creditors Wages Opening Stock Carriage Return Inward Return Outward Purchase and sales Bank Overdraft Plant and Machinery Land and Building Drawings:Agarkar Dravid Capitals:Agarkar Dravid
Debit (Rs.) 400 1, 000 400 1, 600 28, 000 33, 000 12, 000 24, 000 500 2,800 96, 600 12, 000 88, 000 4,000 2,000
Credit (Rs.) 500
34, 000
4, 600 1, 50, 800 60, 400
3, 06, 300
30, 000 26, 000 3, 06, 300
Adjustments: 1. Write off Rs. 1,000 for bad debts and provide for R.B.D.D @ 5% on debtors. 2. Goods worth Rs. 2,000 were distributed as free samples. 3. Closing Stock 31 12- 2003 was valued at cost Rs. 28, 000 while its market value is Rs. 30,000/-. 4. Salaries were outstanding Rs. 1,000. 5. Depreciate Land and Building @ 5% p.a. and Plant and Machinery @ 10% p.a. 6. Goods worth Rs. 3,000 were destroyed by fire, but insurance company admitted the claim for Rs. 400 only. 7. Dravid had taken goods worth Rs. 1000 for his own use, but no entry is made in the books.
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OMTEX CLASSES BOOK KEEPING & ACCOUNTANCY 5. From the following information you are required to prepare the Trading account, profit and loss account and Balance sheet as on 31st March, 2005. Trial Balance as on 31st March, 2005
H.S.C.
Particulars Sachins Capital Gangulys capital Sachins Drawing Gangulys Drawing Stock on 1 1 2004 Bills Receivable Purchases Sales Bills Payable Return In ward Return Outward Plant and Machinery Loose Tools Patents Sundry Debtors Sundry Creditors Cash at Bank Wages Salaries Rent and Taxes Insurance Printing and Stationery Power and Fuel
Debit (Rs.) 4, 000 1, 000 2, 20, 000 5, 000 2, 95, 000
Credit (Rs.) 1, 00, 000 2, 30, 000
2, 00, 000 1, 60, 000 5, 000 1, 00, 000 24, 000 25, 000 1, 25, 000 77, 550 19, 000 17, 500 7, 950 3, 000 2, 000 3, 500 9, 34, 500 2, 40, 000 4, 500
9, 34, 500
Adjustment 1. Stock on 31st March, 2004 is valued at Rs. 30,000 but is market value is Rs. 35,000. 2. Depreciate plant and machinery @ 5% p.a. Patents by 20%. 3. Insurance were prepaid for Rs. 200. 4. Salaries outstanding amounted to Rs. 800. 5. Maintain Reserve for Doubtful debts at 10% of Sundry debtors. 6. Goods worth Rs. 5000 were destroyed by fire and the insurance company admitted a claim for Rs. 3000 only. 7. Sachin has withdrawn goods worth Rs. 500 for his own use, but no entry is passed in the books.
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OMTEX CLASSES BOOK KEEPING & ACCOUNTANCY 6. Mr. Kale and Mr. Gore were partners sharing profits and losses equally. The Trial Balance of their firm was as under: Prepare Trading and Profit and Loss Account for the year ended on 31st March, 2004 and Balance Sheet as on that date: Trial Balance as on 31st March, 2004.
H.S.C.
Debit Balance Opening Stock Wages Purchases Investments Postage Printing & Stationery Carriage Outwards Insurance Debtors Furniture Bad Debts Carriage Inwards Cash in Hand Machinery (Purchased on 1.7.03) Salaries (For 10 months) Sundry Expenses Bills receivable
Rs. 30000 9500 52500 10000 1000 2500 1300 3200 35000 5500 1200 1800 5400 32000 15000 2100 8500 216500
Credit Balance Capitals: Mr. Kale Mr. Gore Current Accounts: Mr. Kale Mr. Gore Bills Payable 10% Bank Loan(Taken on 1.10.2003) Bank Overdraft Creditors Sales R.D.D. Returns Outward
Rs. 30000 60000 2100 1400 7500 10000 6500 25000 70500 3000 500
216500
Adjustment 1. Closing stock was valued at Rs. 61,500. 2. Printing and Stationery included Rs. 500 paid for purchase of postal stamps. 3. Depreciate Furniture and Machinery at 10% p.a. 4. 5% interest is to be allowed on capital. 5. Of the debtors Rs. 500 were bad and should be written off, and R.D.D. should be maintained at 5%. 6. Goods of Rs. 7,500 were purchased on 30th March, 2004 and included in the closing stock but those purchases were not recorded in the books of accounts. 7. Bills receivable include a dishonoured bill of Rs. 500.
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7. Following is the Trial Balance of Kalavati and Lilavati as on 31st March, 2005 who share Profits and Loses to the ratio of 3:2. Interest on capital was allowed at 5% p.a. Trial Balance as on 31st March, 2005 Debit Balance Rs. Credit Balance Rs. Opening Stock 10000 Return Outward 1250 Sundry Debtors 14100 Sundry Creditors 15800 Purchases 20000 Sales 35000 Wages 4250 R.B.D.D. A/c. 200 Salaries 1350 Capital A/c. Office expenses 1223 Kalavati 35000 Discount 650 Lilavati 10000 Rent, Rates & Taxes 900 Loan at 9% 2000 Plant & Machinery 15000 (Taken on 1.10.2004) Return Inward 1750 Land & Building 20000 Cash at Bank 7327 Current A/c : Kalavati 2100 Lilavati 600 99250 99250 Additional Information 1. Closing stock was valued at Rs. 20,500. 2. Unpaid wages Rs. 750. 3. Outstanding salary Rs. 657. 4. Provide depreciation on Plant & Machinery at 10% p.a. and on land & building at 5% p.a. 5. Write of Rs. 100 as bad debts and provide R.B.D.D. at 5% on debtors. 6. Rent, Rates and Taxes prepaid Rs. 100. 7. Prepare Trading A/c and Profit & Loss A/c for the year ending 31st March, 2005 and a balance sheet as on that date.
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OMTEX CLASSES BOOK KEEPING & ACCOUNTANCY 8. Given below is the Trial Balance of M/s Radha and Krishna on 31st March, 2004. Partners share profit & losses in the ratio of 3:2 respectively. From the following trial balance and additional information, prepare a Trading & Profit & Loss account for the year ended 31st March, 2004 and a Balance sheet as on that date. Trial Balance as on 31st March, 2004.
H.S.C. Particulars(Debit) Partner's Current A/c Radha Partner's Drawings Radha Krishna Purchases Returns Debtors Furniture Premises Bad debts Discount Provident Fund Contribution Provident Fund Investment Salaries & Wages Opening Stock Cash in hand Royalties 15000 10000 120000 2500 65000 50000 160000 7500 5000 15000 60000 15003 80000 18000 4000 643003 643003 16000 Amount Radha Krishna Partners Current Account Krishna Sales Returns Creditors RDD Provident fund Interest on P.F. Investment Outstanding Salaries & Wages General Reserve 10000 365000 3500 10000 2000 65000 6000 6500 45003 Particulars(Credit) Partners Capital Account 80000 50000 Amount
Adjustments:
1. The closing stock was valued at marked price Rs. 90,000 which is 20% above cost. 2. Write off bad debts Rs. 1500 and make a provision for doubtful debts @5% on debtors. 3. Provide 2% Reserve for discount on debtors and creditors. 4. Interest on capital is allowed @ 10% p.a. and interest on drawings be charged @ 15% p.a. 5. Radha is entitled to receive rent for her premises at Rs. 300 p.m. where business is carried out and Krishna is to be given 5% commission on Gross Profit.
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9. Following is the Trial Balance of Vinod and Vikas sharing profits and losses equally. Prepare a
Trading and Profit & Loss account for the year ending 31st March, 1996 and a Balance Sheet as on that date after considering the adjustment given below. Trial Balance as on 31st March, 1996 Particulars(Debit) Stock (1-4-1995) Purchases Returns Inwards Carriage Motive Power Wages Trade Expenses Sundry Debtors Salaries Insurance Postage Commission Plant & Machinery Furniture Advertising Office Rent (10 months) Drawings Vinod Vikas Building Cash in Hand Amount 44000 170000 10000 4000 6000 56000 4000 72000 38000 2400 3600 5000 60000 16000 8000 10000 14000 6000 24000 3000 Particulars(Credit) Capital A/c Vinod Vikas Sales Creditors Commission Bank Loan Amount 80000 80000 320000 40000 4000 32000
556000 Adjustments
556000
1. Stock on 31.3.1996 was valued at cost price Rs. 80,000 and market price Rs. 72,000. 2. Depreciate Plant & Machinery and Building at 20% and 10% respectively. 3. Insurance has been paid for one year ending 31.6.1996. 4. Goods withdrawn by Vinod amounting to Rs. 10,000 during the year were not recorded in the
books.
5. Bad debts were Rs. 2000 and an R.D.D. is to be created at 5% on debtors. 6. Goods of Rs. 6000 were purchased on 30.3.1996 and also included in the closing stock, but the
purchase was not recorded in the books of account.
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10. From the following Trial Balance of Somnath and Ambadas being equal partners, you are
required to prepare Trading and Profit & Loss A/c for the year ended 31st March, 1996 and Balance Sheet as on that date after taking into consideration the additional information. Trial Balance as on 31st March, 1996
Particulars(Debit) Opening Stock Drawings: Somnath Ambadas Insurance Salaries and Wages Carriage Purchase Bills Receivable Rent Debtors Returns Machinery Travelling Expenses Cash at Bank Building Office Expenses Advertisement (for 3 years) Amount 60000 1000 1500 600 4500 2500 65000 600 3500 18000 1000 12000 3000 1000 30000 2700 3000 209900 Particulars(Credit) Capital A/c Somnath Ambadas Reserve Fund Sales Bills Payable Creditors Reserve for Bad and Doubtful Debts Returns Amount 22000 18000 21600 130000 1000 16000 800 500
209900
Adjustments: 1. Closing stock: cost Rs. 25,000 and market price Rs. 30,000. 2. Allow interest on capital at 10% p.a. 3. Prepaid insurance Rs. 50. 4. Provide for R.B.D.D. at 5% on debtors. 5. Uninsured goods costing Rs. 3000 were destroyed by fire. 6. Outstanding expenses: Salaries Rs. 1000; Rent Rs. 500. 7. Provide depreciation on Machinery at 20%; Building 2 %.
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11. Pradeep and Prashant are partners sharing profits and losses in equal ratio. From the
following Trial Balance you are required to prepare Trading and Profit & Loss account for the year ended 31st March, 1998 and Balance Sheet as on that date after taking into consideration the additional information. Trial Balance as on 31st March, 1998 Particulars(Debit) Land and Building Plant(Addition on 1st Jan. 98, Rs. 3,000) Drawings Pradeep Prashant Opening Stock Wages Purchases Carriage Office Expenses Rent, Rates and Taxes Insurance Motor van Salaries Bad debts Customers Account Cash at Bank Additional Information: 1. 2. 3. 4. 5. Closing stock on 31st March, 1998 was at cost Rs. 40,000 and Market price Rs. 50,000. Provide 10% p.a. interest on Capital. Charge interest on drawings: Pradeep Rs. 100 and Prashant Rs. 150. Depreciate plant at 10% p.a. Prashants withdrawal of goods worth Rs. 1,000 for personal use but not recorded in the books. Amount Particulars(Credit) 44500 Capitals 9750 Pradeep Prashant 3000 Sales 2000 Suppliers Account 26000 Reserve for Doubtful Debts 5000 Outstanding Expenses 34500 700 2270 1750 480 20000 1750 950 14600 250 167500 Amount 60000 40000 57000 9500 500 500
167500
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12. Given below is the Trial Balance of Sagar and Sindhu who are partners sharing profits and
losses in equal ratio. You are required to prepare a Trading and Profits and Losses in equal ratio. You are required to prepare a Trading and Profit & Loss A/c for the year ended 31st March, 2006 and a balance sheet as on that date after taking into account the given adjustments. Trial Balance as on 31st March, 2006.
Particulars(Debit) Amount Particulars(Credit) Amount
Purchases Patent Rights Buildings Opening sock Printing & Stationery Sundry Debtors Wages & Salaries Partners Drawings Sagar Sindhu Audit Fees Sundry Expenses Furniture & Fixtures 10% Investments (Purchased on 1st Oct. 2005) Conveyance Expenses Cash Provident Fund contribution Carriage Inwards Trade Expenses Goodwill Machinery Shop Fittings Bad Debts Bills Receivable
98000 4000 100000 15000 1750 35000 11000 4500 6500 700 3500 8000 10000 2000 4000 800 1300 2700 20000 20000 18000 250 9000
Capitals Sagar Sindhu Provident Fund Creditors Bank Loan Sales Reserve for Doubtful Debts Purchases Returns General Reserve Commission Bills Payable
30000 40000 17000 45000 42000 163250 6250 3500 10000 9000 10000
376000
376000
Adjustments 1. The closing stock at the end of the year was valued at market price Rs. 1,44,000 which is 20% above cost. 2. Commission includes Rs. 1,400 received in advance. 3. 1/6th shop fittings and 20% of goodwill were to be written of. The provision for Bad debts was to be maintained @ 5% on debtors. 4. Machinery and Buildings were to be depreciated at 15% and 20% respectively. Patent Rights and Furniture and Fixtures were valued at Rs. 2,000 and Rs. 5,000 respectively. 5. Bills Receivable includes a dishonoured bill for Rs. 2500. 6. An amount of Rs. 2,000 spent on repairs on machinery was wrongly included in machinery account.
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OMTEX CLASSES BOOK KEEPING & ACCOUNTANCY 13. Asha and Nirosha are the partners sharing profits and losses equally. You are required to
H.S.C.
prepare the Trading and profit and loss account for the year ended 31st December, 1997 and a Balance sheet as at that date after making the necessary adjustments. Trial Balance as on 31st December, 1997
Debit Balance Buildings Plant and Machinery Furniture Sundry Debtors Return Inwards Discount Printing and Stationery Insurance Charges Bad debts Salaries Purchases Cash at Bank Stock ( on 1.1.97) Carriage Inwards Legal Charges Ashas Drawings Niroshas Drawings
Amount 70000 60000 16000 28800 6000 2600 1500 1600 1400 19300 98000 25800 20000 2500 500 8000 6000 3,68,000
Credit Balance Ashas Capital Niroshas Capital Discount Received Loan From Vijay Sales Sundry Creditors Reserve for Bad Debts Return Outward
Amount 80000 100000 1800 30500 120000 30000 2000 3700
3,68,000
Adjustments: 1. The stock on 31.12.97 was of the value of Rs. 44,000 which is less than its market value by 2,000. 2. On 24th December, 1997 stock of the value of Rs. 6,000 was stolen Insurance company admitted the claim for Rs. 4,000 only and paid the amount on 7th Jan 1998. 3. Goods worth Rs. 4,000 were received on 31st December, 1997 and were included in the closing stock, but purchase invoice was omitted to be entered in the books. 4. Of the sundry Debtors Rs. 800 were bad debts and should be written off. 5. Make reserve for discount at 5% on debtors and creditors. 6. Depreciation Plant and Machinery by 10% and Furniture by 5%.
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14. From the following Trial Balance of M/s Kale and Gore your are required to prepare Trading
and Profit and Loss account for the year ended 31st December, 1997 and the Balance sheet as on that date after taking into account the necessary adjustments. Trial Balance as on 31st December, 1997
Particulars Kales Capital Gores capital Kales Drawing Gores Drawing Stock on 1 1 2004 Bills Receivable Purchases Sales Bills Payable Return In ward Return Outward Plant and Machinery Loose Tools Patents Sundry Debtors Sundry Creditors Cash at Bank Wages Salaries Rent and Taxes Insurance Printing and Stationery Power and Fuel
Debit (Rs.) 14, 450 10, 000 2, 00,000 25, 000 2, 75, 000 5, 000 1, 00, 000 25, 000 25, 000 55, 000 47, 550 19, 000 17, 500 7, 500 3, 000 2, 000 3, 500 8, 34, 500
Credit (Rs.) 1, 80, 000 1, 50, 000
4, 00, 000 60, 000 4, 500
40, 000
8, 34, 500
Adjustments: 1. Depreciate Plant and Machinery by 5% and Patents by 15%. 2. Provide for Bad and Doubtful debts @ 5% on Sundry debtors. 3. Prepaid Insurance Rs. 750 4. Outstanding expenses : a. Salaries Rs. 2,500 b. Wages Rs. 1,000 c. Printing and Stationery Rs. 500. 5. Stock as at 31st December 1997 Rs. 1,30,000. 6. Kale and Gore have taken goods worth Rs. 2,000 and Rs. 3,000 respectively for their personal use. No entry has been passed in the books.
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15. Keshav & Devidas are partners and the Trial Balance and the necessary adjustments of their
firm are given below. Trial Balance as at 31st March 1998
Debit Balance Purchases Sales return Debtors Opening Stock Wages Salaries Furniture( Balance as on 1.4.98) Rs. 6750 Add: Purchases On 31.2.98 Rs. 700 Machines Bad Debts Advt. (for 3years w.e.f. 1stOct. 97) Investments Insurance Drawings Keshav Devidas Cash and Bank Balances
Amount 1,25,225 4,250 50,200 28,788 20,167 13,677
Credit Balance Capital Keshav Devidas Sales Purchase Returns Commission Creditors Dividend in Investments Reserve for Doubtful debts 7,450 Devidas Loan 7,500 315 3000 9,500 320
Amount 27,000 35,000 2,05,000 3,230 245 21,073 825 500 10,000
3,000 1,500 27,981 3,02,873
3,02,873
Adjustments: 1. Closing Stock Rs. 15,000 2. Depreciation on Machines @ 5% and on furniture @ 10% p.a. 3. Deduct Rs. 200 for bad debts and provide 2% R.D.D 4. Interest on capital (Opening Balance) at 5% p.a. but on drawings at 10% p.a. 5. Keshav is to get 1% commission on Gross profit and Devidas is to be paid at Rs. 2,000 p.a. as a salary. 6. After considering the adjustment, prepare the Trading, Profit and Loss A/c for the year ending 31st March 1998 and a Balance sheet on that date.
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16. Pankaj and Bindas are partners sharing profits in the ratio of their capital. Their Trial Balance
as on 31.03.1997 is as under. Trial Balance as on 31.3.1997 is as under
Debit Balance Land and Building Plant and Machinery Purchases Wages Opening Stock Carriage Outward Sundry Debtors Interest on Loan Prepaid taxes Salary Commission Loss by fire Travelling Expenses Electricity Pankajs Drawings Bindass Drawings Cash on hand Sales Returns
Amount 1,00,000 30,000 1,20,000 3,500 10,000 400 25,000 250 200 4,500 700 2,000 3.400 650 2,000 3,000 10,000 2,000 3,17,600
Credit Balance Pankajs Capital Bindass Capital Bills Payable Creditors Outstanding commission 10% Loan (taken on 1.7.96) Sales Discount Commission Reserve for bad debts General Reserve
Amount 30,000 50,000 6,000 12,000 500 10,000 2,00,000 1,100 4,000 3,000 1,000
3,17,600
Prepare Trading and Profit and loss A/c for the year ended 31st March 1997 and the Balance sheet as on that date after taking into account the following adjustments. 1. Closing stock cost price Rs. 20,000 and Market price is less than the cost price by 5000. 2. Goods distributed as free samples Rs. 1,000. 3. Purchase returns of Rs. 2,000 on 30th March, 1997 have not been recorded in the books. 4. Wages included Rs. 1,000 paid for installation of Plant and Machinery. 5. Bills payable include a dishonoured bill of Rs. 1,000 6. Depreciate Machinery by 10% and Land & Building by 5% 7. Reserve for Bad debts is to be maintained at 5% on Debtors.
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17. Dalal & Raja are partners sharing profit and losses equally. From the following Trial Balance
of the firm, prepare Trading a/c Profit and Loss A/c and Balance sheet for the year ending 31.12.1997. Trial Balance as on 31.12.1997
Debit Stock Purchases Sales Return Debtors Wages Royalties Furniture Machinery Advertisement for 4 years Salary Provident fund contribution Provident fund investment Insurance Cash Drawings : Dalal Raja Rs. 20,000 1,30,200 500 20,000 6,000 1,000 5,000 30,000 4,000 3,000 500 2,000 500 3,000 3,500 1,500 2,30,700 Credit Capital Accounts: Dalal Raja Current Accounts Dalal Raja Sales Purchase Return Commission Provident Fund Interest on Provident fund investments. Reserve for Doubtful debts Creditors Rs. 15,000 15,000 2,000 2,000 1,70,500 3,200 300 2,000 200 500 20,000
2,30,700
Adjustments. 1. Closing stock: Cost price Rs. 25,000. Market Price Rs. 30,000/2. Dalal has taken goods worth Rs. 500 for his personal use. 3. Goods amounting Rs. 3,000 were sold and dispatched on 27.12.1997 but no entry was made in the sales book. 4. Prepaid insurance Rs. 100. 5. Depreciation Furniture by 15%, Machinery by 20% 6. Write off bad debts Rs. 400/- and provide for reserve for doubtful debts at 3% on debtors.
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18. Hira and Manik are partners in a firm sharing profits and losses in the ratio of their opening
capitals. Below given is their Trial Balance as on 31st March 1998. Trial Balance as at 31st March 1998
Debit Plant and Machinery Opening Stock Purchases Freehold Land & Building Carriage inwards Carriage outwards Wages Sundry Debtors Salaries Furniture Trade Expenses Return Inwards Advt. Suspense A/c Discount Partners Drawings: Hira Manik Bills Receivable Insurance Bad debts Cash at Bank
Rs. 50,000 30,000 80,000 85,000 1,700 2,500 16,000 50,000 12,000 18,000 6,000 950 12,500 900 3,000 2,000 20,000 1,200 1,000 5,000 3,97,750
Credit Sales Discount Sundry Creditors Bills Payable Hiras Loan A/c Capital A/c Hira Manik
Rs. 2,40,000 2,000 20,000 10,750 50,000 50,000 25,000
3,97,750
You are required to prepare the Trading and Profit and Loss account of the firm for the year ended 31st March 1998 and the Balance sheet as at that date after taking into consideration the following adjustments. 1. Closing stock Rs. 45,000 2. Depreciate Plant @10% p.a. and Furniture @20%p.a. 3. Appreciate Freehold Land & Building to Rs. 90,000 4. Advertisement Suspense A/c is to be written off against revenue over five years. 5. Partners Drawings are to bear interest @10% p.a. amounts were withdrawn evenly throughout the year. 6. Annual charge for insurance is Rs. 1,000 the balance represents amount paid in advance 7. Hira gave loan @ 10% to the firm on 30th September, 1997.
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19. Devi & Jaya were partners sharing profits and losses in ratio 3/5 & 2/5. Interest on Capital
was allowed @ 5% p.a. but interests on drawings were ignored. The following balances of accounts were given on 30.9.1997.
Debit Opening Stock Sundry Debtors Purchases Wages Salaries Office Expenses Conveyance Insurance Plant & Machinery Return Inward Land & Building Cash at Bank Bills Receivable Drawings : Devi Jaya
Rs. 20,000 28,200 40,000 8,500 2,700 2,446 1,300 1,800 30,000 3,500 40,000 2,654 12,000 4,200 1,200 1,98,500
Credit Return Outward Sundry Creditors Sales Reserve for Bad Debts Capital Account: Devi Jaya Loan @ 10% p.a. (Taken on 1.4.97)
Rs. 2,500 31,600 70,000 400 70,000 20,000 4,000
1,98,500
You are given the following additional information. 1. Closing stock was valued at Rs. 52,000/2. Bills Receivable includes a dishonoured bill of Rs. 2,000 3. Write off Rs. 200/- as further bad debts and provide 6% reserve for bad debts on Sundry debtors. 4. Devi was entitled to a salary @ Rs. 500 p.m. and Jaya was entitled to a commission of 5% on Gross profit. 5. Carriage inward included Rs. 1, 000 paid for transport charges and octroi on new machinery purchases on 1- 10 1996.
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20. Prepare Trading and Profit & Loss account for the year ended 31st December, 1996 and
Balance sheet as on that date from the following Trial Balance of Kaveri and Narmada
Debit Balance Kaveris Drawings Narmadas Drawings Land & Building Plant & Machinery Stock(1.1.1996) Purchases Wages Carriage Outward Carriage Inward Coal Salary Rent, Rates & Taxes Discount Allowed Cash & Bank Balance Sundry Debtors Printing & Stationery Bad Debts Advertisement Sales Return Furniture Bills Receivable
Rs. 4,000 4,000 21,000 12,600 8,000 12,000 5,000 500 400 1,260 7,500 560 300 5,080 9,000 460 240 1,750 400 1,240 1,600 96,890
Credit Balance Kaveris Capital Narmadas Capital Bills Payable Creditors Purchase Returns Sales
Rs. 12,000 20,000 6,790 14,600 500 43,000
96,890
Adjustments: 1. Closing Stock is valued at Rs. 10,000/- at cost whose market value was Rs. 15,000/2. Provision for doubtful debts should be maintained at 5% on sundry debtors. 3. Kaveri has withdrawn goods for his personal use Rs. 500 for which no entry is passed. 4. Fire occurred in the Godown and goods worth Rs. 5, 000 were destroyed, but Insurance Company admitted Claim for Rs. 3, 500. 5. Rates prepaid Rs. 60.
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21. Kamesh and Mani are partners sharing profits and losses in equal ratio. From the following
Trial Balance you are required to prepare Trading and profit and Loss Account for the year ended 31st December, 2005 and Balance sheet as on that date after taking into consideration the additional information.
Debit Balance Land and Building Plant (addition on 1st October, 2005 Rs. 3,000) Drawings: Kamesh Mani Opening Stock Wages Purchases Carriage inwards Office expenses Rent, Rates and Takes Insurance Motor Van ( addition on 1st June Rs. 10, 000) Salaries Bad debts Debtors Cash at Bank Amount 44, 500 9, 750 3, 000 2, 000 26, 000 5, 000 34, 500 700 2, 270 1, 750 480 20, 000 1, 750 950 14, 600 250 1, 67, 500 Credit Balance Capitals Kamesh Mani Sales Sundry Creditors Reserve for Doubtful Debts Outstanding Expenses Amount 60, 000 40, 000 57, 000 9, 500 500 500
1, 67, 500
Additional Information: 1. Closing stock on 31st December, 2005 was at cist Rs, 40, 000/- and Market price Rs. 50,000/2. Depreciate Plant at 10% p.a. and Land and Building @ 20% p.a. Depreciate Motor van by 10% p.a. 3. The goods for Rs. 5, 600 purchases and received on 25th December, 2002 were not recorded in the purchase book. 4. Insurance is paid for the year ended 31st March 2005.
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22. From the following Trial Balance of Shyam and Sundar, You are required to prepare a Trading
and Profit and Loss account for the year ended 31st December, 2002 and Balance sheet as on that date after taking into consideration the additional information. They share profits and losses in their capital ratio. Trial Balance as on 31st December, 2002
Particulars Drawings: Shyam Sundar Opening Stock Purchases Office Salaries Royalties Trade Expenses Advertisement Wages and Salaries Cash in Hand Debtors Bad Debts Investments Motor Van Furniture Office Rent Plant and Machinery Freehold Property Bills Receivable Discount
Amounts 2, 000 1, 000 12, 000 80, 000 6, 000 2, 000 1, 400 5, 200 10, 400 8, 000 50, 000 400 16, 000 30, 000 10, 000 3, 400 24, 000 16, 000 4, 000 1, 600 2, 83, 400
Particulars Capital Accounts: Shyam Sundar Creditors Sales R.D.D Return Outwards Bills Payable Reserve Fund
Amounts 40, 000 60, 000 30, 000 1, 40, 000 1, 000 2, 400 6, 000 4, 000
2, 83, 400
Adjustments: 1. Closing stock was valued at Rs. 17, 600 2. Audit Fee for the year was outstanding Rs. 2, 400 3. Create R.D.D at 5% on Debtors. 4. The goods for Rs. 5, 600 purchased and received on 25th December, 2002 were not recorded in the purchase book. 5. Depreciate freehold property at 10% and Motor Van at 25%
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23. Ram and Sham are partners sharing Profits & Losses in the ratio of 2:3. Their trial balance as
on 31st March, 2005 is given below. You are required to prepare Trading A/c and Profit & Loss A/c For the year ending 31st March, 2005 and a Balance sheet as on that date after taking into account the given adjustments. Trial Balance as on 31st March, 2005
Particulars Purchases Patent rights Buildings Stock(1-4-2004) Printing & Stationery Sundry Debtors Wages & Salaries Audit Fees Sundry Expenses Furniture 10% investment (purchased on 1-10-2004) Cash Provident fund contribution Carriage inward General expenses Amounts 98, 000 4, 000 1, 00, 000 15, 000 1, 750 35, 000 11, 000 700 3, 500 8, 000 10, 000 4, 000 800 1, 300 2, 700 295750 Particulars Capitals: Ram Sham Provident Fund Creditors Bank Loan Sales Reserve for doubtful debts Purchase Returns. Amounts 30000 40000 7000 45000 12000 158000 250 3500
295750
Adjustments
1. Closing stock is valued at cost Rs. 15, 000 while its market price Rs. 18, 000. 2. On 31st December 2004 the stock of stationery was Rs. 500. 3. Reserve for bad and doubtful debts at 5% on debtors. 4. Depreciate building at 5% and Patents at 10% 5. Interest on capital is to be allowed @5%. 6. Goods worth Rs. 10, 000 were destroyed by fire. The insurance company admitted a claim for
Rs. 8, 000/-.
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1. Swati, Swity and Sweta were partners sharing profits and losses equally. Following is their Trial Balance for the year ended 31st March, 2006. (March 2008) Trial Balance as on 31 st March, 2006 Particulars Purchase and Sales Salaries Stock (1.4.2005) Debtors and Creditors Bills Receivable and Bills Payable Land and Building Returns Wages Cash at Bank Insurance Advertisement Furniture Rent and Taxes Interest Capitals : Swati Swity Sweta Adjustments :
1. 2. 3. 4. 5. 6.
Debit Rs. 1,04,000 11,300 28,000 24,200 62,400 48,300 6,300 25,100 30,000 4,500 9,300 18,700 4,700
Credit Rs. 1,95,300 36,000 18,100 2,600
4,800 60,000 40,000 20,000 3.76,800 3,76,800
Closing stock is valued at Rs. 37,500. Depreciate Furniture @10% p.a. and Land and Building @5% p.a. Goods of Rs. 3,000 are purchased on 31.3.2006 are included in the closing stock but the entry is not passed in the books. Insurance is prepaid to the extent of Rs. 1,500. Salaries of Rs. 3,400 and wages of Rs. 4,700 are outstanding. Write off Rs. 1200 as bad debts from Debtors and provide 5% for Reserve for Doubtful Debts.
Prepare: Trading A/c and Profit and Loss A/c for the year ended 31st March, 2006 and Balance Sheet as on that date.
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2. Following is the Trial Balance of Premlal and Sundarlal as on 31 st March, 2006. (20) Trial Balance as on 31 st March, 2006 [September 2008] Debit Balance Stock on 1-4-2005 Purchases Drawings : Premlal Sundarlal Sales Return Wages :Productive Unproductive Salaries Rent, Rates and Insurance Bad Debts Discount allowed Machinery Building Sundry Debtors Cash Amount Rs. 90,000 2,25,000 33,000 30,000 7,200 10,500 1,800 18,600 10,200 1,200 3,900 45,000 1,08,600 1,53,000 3,000 7,41,000 Credit Balance Sales Purchase Returns Discount received Sundry Creditors Capital : Premlal Sundarlal Bank Overdraft Amount Rs. 3,75,000 3,000 3,000 90,000 1,05,000 1,35,000 30,000
7,41,000
Adjustments: 1. Closing stock was valued on 31-03-2006 at market price Rs. 60,000 which was 20% above its cost price. 2. Outstanding productive wages Rs. 600. 3. Rent, Rates and Insurance include Insurance Rs. 1,600 paid for one year ending on 30th June, 2006. 4. Maintain Reserve for doubtful debts at 5% on debtors. 5. Depreciate building by 5% and machinery at 10% p.a. 6. Goods costing Rs. 2500 were distributed as free samples for which no record has been made in the books. 7. Six months interest is due on Bank Overdraft at 10% p.a. Prepare: (1) Trading and Profit and Loss A/c for the year ended 31st March, 2006 and (2) Balance Sheet as on that date.
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OMTEX CLASSES BOOK KEEPING & ACCOUNTANCY 3. From the following Trial Balance and Adjustments of Kumbhar and Maroti you are required to prepare Trading and Profit and Loss Account for the year ended on 31st March, 2005 and Balance Sheet as on that date. [March 2009] Trial Balance as on 31st March, 2005
H.S.C. Debit Balance Stock (1.4.2004) Salary and Wages Cash Purchases Sundry expenses Wages Bills Receivable Travelling Expenses Bad Debts Factory Expenses Commission Investments Debtors Tools and Equipments Furniture Goodwill Building Rs. 35000 4200 10000 225200 13600 12000 6000 2000 3000 8000 4000 20000 40000 6000 12000 21000 50000 472000 Credit Balance Sales Discount Creditors Bank Overdraft Interest on Investment Capitals: Kumbhar Maroti Rs. 330000 4000 20000 10000 8000 60000 40000
472000
Adjustments 1. Partners share Profits and Losses in the ratio of their capitals. 2. Closing stock is valued at Cost Price Rs. 40,000 and at Market Price Rs. 45,000. 3. Kumbhar has withdrawn goods worth Rs. 1,200 for his own use, but no entry is made in the books. 4. Uninsured goods worth Rs. 12,000 were lost by fire. 5. Rs. 450 is to be written off as bad debts. 6. Unpaid expenses: Salary and Wages Rs. 800 Rent Rs. 1,200 Depreciate building @ 7 % p.a.
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4. Ganga and Godawari are partners sharing profits and losses equally the Trial Balance of their firm on 31st March, 2007 was as following. (20) [September, 2009] Trial Balance as on 31 st March, 2007 Particulars Stock (1-4-2006) Purchases and Sales Return Inward Carriage Power and Fuel Wages Trade Expenses Debtors and Creditors Salaries Insurance Postage Commission Plant and Machinery Furniture Advertisement Building Drawings : Ganga Godawari CAPITAL: Ganga Godawari 12% Bank loan taken on 1.10.2006 Cash in hand Debit Balance Rs. 80,000 4,00,000 30,000 7,500 40,000 35,000 8,000 80,000 72,000 6,000 3,000 8,000 2,00,000 80,000 15,000 4,00,000 8,000 10,000 2,50,000 2,50,000 1,50,000 14,90,000 Credit Balance Rs. 7,68,000
60,000
12,000
7,500 14,90,000
Adjustments: 1. Stock on 31.3.2007 was valued at Cost price Rs. 1,00,000 and Market price Rs. 1,20,000. 2. Depreciate plant and Machinery and Buildings at 20% and 10% respectively. 3. Insurance is paid for one year ending on 30.06.2007. 4. Goods withdrawn by Ganga for her personal use of Rs. 10,000 during the year were not recorded in the books. 5. Provide Rs. 10,000 as Bad debts and Reserve for Doubtful Debts is to be maintained at 5% on Debtors. Prepare : Trading Account, Profit and Loss Account for the year ending on 31st March, 2007 and Balance Sheet as on that date after making the above adjustments.
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5. Ashok and Tanaji are Partners sharing Profits and Losses in the ratio 2:3 respectively. (20) Trial Balance as on 31 st March, 2007 [March 2010] Particulars Purchases Patents Right Building Stock (1.4.2006) Printing and Stationery Sundry Debtors Wages and Salaries Audit fees Sundry expenses Furniture 10% Investment(Purchased on 30.09.2006) Cash Provident Fund Contribution Carriage Inwards Travelling Expenses Amount Rs. 98,000 4,000 1,00,000 15,000 1,750 35,000 11,000 700 3,500 8,000 10,000 4,000 800 1,300 2,700 2,95,750 Adjustments : 1. Closing stock is valued at the Cost of Rs.15,000 while its Market Price Rs.18,000. 2. On 31st March, 2007 the stock of stationery was Rs.500. 3. Provide reserve for bad and doubtful debts at 5% on debtors. 4. Depreciate building at 5% and patent rights at 10%. 5. Interest on capitals is to be provided at 5% p.a. 6. Goods worth Rs.10,000 were destroyed by fire. 7. The Insurance company admitted a claim for Rs.8,000. Particulars Capitals : Ashok Tanaji Provident Fund Creditors Bank Loan Sales Reserve for Doubtful Debts Purchase Returns Amount Rs. 30,000 40,000 7,000 45,000 12,000 1,58,000 250 3,500
2,95,750
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1. 2. 3. 4. 5.
6. From the following Trial balance of M/s Sanjay and Vijay, you are required to prepare Trading and Profit and Loss account for the year ended on 31st March, 2010 and Balance Sheet as on that date after taking into consideration the additional information given below. [March 2011] Trial balance as on 31st March, 2010 Particulars Debit balances Credit balances Sundry debtors and creditors 45800 72700 Bills Receivable and Bills Payable 28200 40000 Purchases and sales 98500 110000 Return inward 2000 Salaries and Wages 26000 Carriage outward 1800 Insurance premium 2200 Postage and Telegram 1750 Plant and machinery 70000 Advertisement 3000 Import duty 2100 Bad debts 1000 Printing and stationery 2400 Cash in Hand 1850 Leasehold premises 80000 Opening stock 12000 Dividend received 1500 Outstanding Audit fees 4400 10% bank Loan (Taken on 1.10.09) 60000 Capital : Sanjay 45000 Vijay 45000 378600 378600 Additional information: Closing stock was valued at Rs. 25000 Unused Postage Stamps of Rs. 250 Uninsured goods worth Rs. 8000 were stolen from the godown. Leasehold property is to be run for 10 years w.e.f. 1. 10. 2009. Depreciate Plant and Machinery at 10% p.a. Our customer Mr. Ajay Became insolvent and could not pay his debts of Rs. 2000.
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7. From the following Trial Balance of Kamlesh and Mahajan and given adjustments, prepare a Trading Account, Profit and Loss account for the year ended 31st March, 2007 and a Balance Sheet as on that date. [September 2011] (20) Dr. Trial Balance as on 31st March 2007 Cr. Particulars Amt. Rs. Particulars Amt. Rs. Opening Stock 45,000 Capital A/c Purchases 2,25,000 Kamlesh 25,000 Plant and Machinery 75,000 Mahajan 20,000 Carriage 16,800 Sales 4,50,000 Factory Rent 1,500 Discount Received 750 Insurance 1,050 Sundry Creditors 15,000 Sundry Debtors 60,000 Bad debts Reserve 200 Office Rent 3,000 Bills Payable 2,000 Printing & Stationery 600 Advertisement 15,000 Bills Receivable 3,000 Drawings: Kamlesh 3,500 Mahajan 2,500 Salaries 18,000 Wages 20,000 Furniture 7,500 Royalty 1,000 Cash at Bank 14,500 5,12,950 5,12,950 The following adjustments are required: (1) Closing stock was valued at Cost price Rs. 35,000 and Market Price 40,000. (2) Plant Machinery & Furniture are to be depreciated at 6% & 10% p.a respectively. (3) Maintain Reserve for Doubtful Debts @ 2 % on Sundry Debtors. (4) Outstanding Expenses: Factory Rent Rs. 300; Office Rent Rs. 600. (5) Interest on capital to be allowed at 6% p.a. (6) Prepaid insurance was Rs. 100.
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8. Following is the Trial Balance of Jitesh and Pritesh. The partners share profits and losses equally. [March 2012] Trial balance as on 31st March, 2010 Particulars Debit balances Credit balances Capital Jitesh 200000 Pritesh 120000 Bills Receivable and Bills Payable 40000 50000 Opening Stock 70000 Purchases and Sales 194000 Returns 3000 4000 Salaries 15600 Wages 28400 Conveyance 2200 Commission 6000 Miscellaneous Expenses 3200 Warehouse Rent 9000 Brokerage 3000 Dock charges 4200 Insurance 4800 Goodwill 76000 Land and Building 180000 Shares in Bajaj Ltd. 50000 Cash in hand 3600 Sundry Debtors and Creditors 56000 60000 Motor van 60000 803000 803000 Adjustments 1. 2. 3. 4. 5. Closing stock was valued at Rs. 75000. Depreciate land and building and motor van at 5% p.a. Insurance is paid for the year ended 31st May, 2010. Jitesh has taken goods of Rs. 3000 for his personal use. Books of Rs. 8,000 were destroyed by fire and the Insurance Company admitted a claim of Rs. 6,400 only. 6. Commission due but not received Rs. 1600 Prepare after taking into account the adjustments. Trading and Profit and Loss account for the year ended 31st March 2010 and Balance sheet as on that date.
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CH. 7. OBJECTIVES [Q. 1: 20 MARKS]

SET I
Answer the following questions in one sentence each. 1. What is partnership? Ans. Partnership is a form of business organisation in which two or more persons enter into an agreement, contribute certain capital, undertake certain lawful business to earn profit and share the profits or losses in agreed proportion. 2. What is partnership deed? Ans. A partnership deed is a written agreement duly stamped and signed document containing the terms and conditions of the partnership. 3. State the meaning of a Balance Sheet. Ans. A balance sheet is a statement showing the financial position of the business in the form of its assets and liability on a particular date. 4. When are partners current accounts opened? Ans. When partnership form adopts fixed capital method, it opens partners current accounts to record dealing of partners with partnership firm. 5. Write the meaning of bad debts? Ans. The debt or its part which cannot be recovered from a debtor is called bad debts. 6. State the meaning of closing stock. Ans. The unsold goods remained in the business at the end of the accounting year is known as closing stock. 8. How is closing stock valued? Ans. Closing stock is valued at cost price or market price whichever is less. 9. What is Trial Balance? Ans. Trial balance is a statement showing the list debit and credit balances of all the ledger accounts on a particular date. 10. What do you mean by Fluctuating Capital Method? Ans. Fluctuating capital method is one in which capital balances of the partners go on changing every year due to entries for adjustments like drawings, interest on capital and drawings, salaries, commission, allowances, etc. Recorded in their capital accounts. 11. If the partnership deed is silent, what is the profit sharing of the partners? www.omtexclasses.com
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OMTEX CLASSES BOOK KEEPING & ACCOUNTANCY Ans. If the partnership deed is silent, partners will share profits and losses in equal ratio.
12. Which account shows Net Profit or Net Loss of the business? Ans. Profit and Loss account shows Net Profit or Net Loss of the business. 13. What do you mean by direct expenses? Ans. The expenses which are directly related with production or purchase of goods or services are called direct expenses. 14. What do you mean by accrued income? Ans. The income which is due but not yet received is called accrued income. 15. To which account is gross profit transferred? Ans. Gross profit is transferred to Profit and Loss account. 16. A person who is engaged in day to day activities of the business. Ans. Active or Working Partner. 17. What type of institutions / concerns prepares Income and Expenditure Account? Ans. Not for profit concerns such as Sports clubs, Charitable Hospitals, Schools, Colleges, Universities, Welfare Associations, Religious Concerns, Professional Institutions, etc. Prepare Income and Expenditure Account. 18. What do you mean by non recurring expenses? Ans. Non recurring expenditure is any capital expenditure which is spent for acquisition of fixed assets like purchase of land or furniture, in order to run the concern and it gives benefits for a long period say more than 3 years. 19. What do you mean by recurring expenses? Ans. Recurring expenditure is that expenditure of which benefit lasts for a maximum period of one year and is incurred on purchase of goods or services, in order to carry out the main activity of the concern. 20. Which Final Accounts do the Not for Profit Concerns prepare? Ans. The Not for Profit concerns prepare Income and Expenditure Account and Balance sheet in their final accounts. 21. Which account is prepared by the Not for Profit concerns for finding out surplus or deficit of the financial year? Ans. Income and expenditure Account is prepared by the Not for Profit concerns to find out surplus or deficit of the financial year. 22. Which account Not for Profit concerns prepares instead of Cash account?
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OMTEX CLASSES BOOK KEEPING & ACCOUNTANCY Ans. Not for profit concerns prepare Receipts and Payments Account instead of Cash account.
23. What do you mean by Not for Profit concern? Ans. A concern or an organisation which is formed and established to serve society or general public by undertaking various activities without any profit motive is called a not for profit concerns. 24. State the meaning of Capital Receipts. Ans. Capital Receipts are those receipts which are non recurring in nature and not forming a part of regular flow of income of a concern. E.g. specific donation received for construction of a building. 25. Write the meaning of Revenue Receipts. Ans. Revenue Receipts are those receipts which are recurring in nature and such receipts give a regular flow of income of a concern, e.g. subscriptions received from members. 26. State the meaning of Revenue expenditure. Ans. An expenditure which is incurred for carrying day to day business activities and maintaining fixed assets in working condition is called revenuer expenditure. 27. What do you mean by Capital expenditure? Ans. An expenditure which is non recurring in nature and incurred to purchase new fixed assets to increase earning capacity, efficiency and working life of the existing fixed assets and to achieve economy of operation of an existing fixed assets is called capital expenditure. 28. What is Legacy? Ans. Any asset, property or amount of cash which Not for Profit concern receives as per the provisions made in the will of the donor after his death is called legacy. 29. What do you mean by capital fund? Ans. Capital fund consists of contributions, entrance fees, surplus income, legacies and donations specifically received for capital fund. 30. State the meaning of Entrance Fees. Ans. Specific amount received from the member only once usually at the time of his entry into Not for profit concern is called entrance fees. 31. What do mean by Special donation? Ans. Donations which are given for a specific purpose like donation for building fund are called as special donations and such donations are to be utilised for the same purpose for which they have been collected.
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OMTEX CLASSES BOOK KEEPING & ACCOUNTANCY 32. What is an Endowment Fund? Ans. A fund created by Not for profit concern from the gift or donation given by the donor, the income of which is used or devoted for specific purpose is called endowment fund.
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33. What is Life Membership Fee? Ans. The fee paid by a person who desired to become a member of the organisation for his whole life is called as Life Membership Fee. 34. What do you mean by Single Entry System? Ans. A book keeping system that only records one aspect of each business transaction. i.e. either debit or credit is called single entry system. 35. Which accounts are normally kept under the single entry system? Ans. Generally, the personal accounts relating to debtors and creditors and cash book are kept under the single entry system. 36. Which statement is prepared under the single entry system to ascertain the capital? Ans. Statement of Affairs is prepared under the single entry system to ascertain the capital. 37. What is Statement of Affairs? Ans. A statement which is prepared under the single entry system on the basis of estimated balances of various assets and liabilities is called Statement of Affairs. 38. Which statement is prepared under the single entry system to ascertain profit? Ans. Statement of Profit or Loss is prepared under the single entry system to ascertain profit. 39. What is depreciation? Ans. Continuous, gradual and permanent reduction in the value of fixed assets brought about by the factors like wear and tear, passage of time or similar other factors, etc is called depreciation. 40. What is fixed instalment method of depreciation? Ans. The method of depreciation in which depreciation is charged at a fixed percentage on the original cost of a fixed asset every year and as a result the amount of depreciation charged every year remains constant is called Fixed Instalment Method. 41. What is Reducing Balance method? Ans. The method of depreciation under which depreciation is charged at a fixed percentage on the written down value of the fixed asset at the beginning of each year, is called the Reducing Balance Method of Depreciation.
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OMTEX CLASSES BOOK KEEPING & ACCOUNTANCY 42. To which account an amount of depreciation is transferred? Ans. At the end of every financial year, the amount of depreciation is transferred to Profit & Loss account.
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43. What do you mean by scarp value? Ans. The net amount which is expected to be realised on the final disposal of a fixed asset is called scrap value. 44. Which account is credited when depreciation is charged? Ans. When depreciation is charged, relevant fixed asset account is credited. 45. What do you mean by qualified acceptance? Ans. If the drawee of a bill of exchange accepts it on condition that the time or amount of the bill be changed or adds some other conditions to the bill, his acceptance is called a qualified acceptance. 46. What is the term of the bill of exchange? Ans. The period for which the bill of exchange is drawn and accepted is called the term of the bill of exchange. 47. What is Joint venture? Ans. A Joint venture is a temporary partnership for carrying out a specific business without the use of the firm name. 48. Who is called Co venturer? Ans. Members or partners in a joint venture are individually called coventurer. 49. What is Joint Venture Account? Ans. An account operated by co venturers to record joint venture transactions and to find out profit or loss made on joint venture is called joint venture account. 50. To which account discount of discounted bill transferred in joint venture business? Ans. Discount of discounted bill is transferred to Joint venture A/c in joint venture business.
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Set II 1. Write word/term/phrase which can substitute each of the followings:

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Reputation of a firm expressed in terms of money. (Goodwill) Payment of expenses before they have become due. (Prepaid expenses) Payment of bill of exchange before its due date at rebate. (Retirement of bill of exchange) The person on whom the bill of exchange is drawn. (Drawee) The account that is credited when depreciation is charged. (Respective Asset A/c) A bill before acceptance. (Draft) Amount by which book value of fixed assets exceeds its selling price. (Loss on sale of asset) Expenses due but not paid. (Outstanding Expenses) Partners of joint venture business. (Co venturers) Normal Rate of Return x Capital employed. (Normal Profit) Which types of expenses are debited to Trading Account? (Direct expenses related to production) What are Not for Profit Concerns? (A concern or an organisation which is formed and established to serve society or general public by undertaking various activities without any profit motive is called a not for profit concern.) A partnership for specific purpose and for temporary period. (Joint venture) List of debit and credit balances of the ledger accounts. (Trial Balance) A person who accepts the bill. (Acceptor) Written agreement among the partners. (Partnership deed) The balance which cannot be recovered from the debtors. (Bad debts) The account that serves the purpose of P&L A/c for non trading organisation. (Income and expenditure account) The system of book keeping under which only one aspect of the transactions is recorded. (Single entry accounting system) The person on whom the bill of exchange is drawn. (Drawee) The account that is credited when depreciation is charged. (Respective Asset A/c) The present value of tangible trading assets less all the liabilities, which is required for valuation of goodwill. (Capital employed) Goods returned to the supplier. (Purchase Return) It is a stick or lever used to change the position of the cursor on a screen. (Joystick) A bill in which the period of the bill is counted from the date of the bill accepted. (After acceptance bill) The receipts that are an unusual nature not arising through named activities of the business. (Capital Receipts) A fixed asset which is not essential for conduct of business. (Goodwill) Debit balance of trading account. (Gross loss) Written terms of agreement between the partners. (Partnership deed) Summary of actual cash receipts and cash payments. (Receipts & Payment A/c) A system in which accounts are prepared from incomplete records. (Single entry accounting system) An account opened by covertures in the bank for recording cash transactions. (Joint Bank A/c) A statement showing financial position of the business. (Balance sheet) Making the payment of bill before its due date. (Retirement of Bill of exchange) Summary of actual cash receipts and cash payments. (Receipts and Payment A/c) The relationship between persons who have agreed to share profit or loss in Joint Venture Business. (Coventurers) A Partner who only lends his name to the firm. (Nominal Partner) Concerns established for providing services. (Not for profit concern) Profit earned over and above normal profit. (Super profit) A temporary partnership without firm name. (Joint venture) A person who endorses the bill. (Endorser) The balance which cannot be recovered from the debtors. (Bad debts) An accounting system where rules of debit and credit are not followed. (Single entry accounting system)
13. 14. 15. 16. 17.
18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43.
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44. Money value of business reputation. (Goodwill) 45. A person entered into a joint venture. (Coventurers) 46. The Gifts received from legal representative as per the will of a deceased person. (Legacies)
2. Match the following:

1. 2. 3. 4. 5. Group A Opening Stock Fixed instalment method Software Joint Bank Account Subscription a. b. c. d. e. f. g. h. Group B Amount of depreciation remains constant. Trading account Revenue income Capital income Balance sheet Converting symbolic language Separate set of books Utility programme
1. 2. 3. 4. 5.
Group A Unpaid expenses Single Entry System Computer Co Venture Maker of a bill
a. b. c. d. e. f. g. h.
Group B Electronic device Partnership firm Drawee Asset side Unscientific Liability side Drawer Joint venture
1. 2. 3. 4. 5.
Group A Not for profit concerns Fixed capital method. Unexpired expenses Temporary Partnership Pure Single Entry System
a. b. c. d. e. f. g. h.
Group B Capital A/c. of partner. Current A./c of Partner. Joint venture Asset Liability Only personal A/cs. Profit & Loss A/c. Income and Expenditure A/c.
1. 2. 3. 4. 5.
Group A Goodwill Discount to customers Statement of Affairs Income and Expenditure account Fixed Instalment Method.
a. b. c. d. e. f. g. h.
Group B Book Debts Sundry Creditors Tangible Asset Intangible Asset Single Entry System Double Entry System Original Cost Not for Profit concerns
1. 2. 3. 4. 5.
Group A Partners Salary Subscription received in advance for the current year. Dishonour of bill. Cash in hand. Unsold goods taken over by co ventures
a. b. c. d. e. f. g. h. a. b. c. d.
1. 2. 3. 4.
Group A RAM Co Ventures Goodwill Receipts & Payment A/c
Group B Balance sheet asset side. Current asset. Deducted from gross profit. Credited to joint venture account. Credited to covertures A/c Noting Charges. Closing balance sheet liability side. Fixed assets. Group B Intangible Asset Records all cash transactions Trading A/c cant be prepared Current asset
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5.
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Single Entry System of Book Keeping. e. f. g. h.

Temporary memory Uniformity maintaining accounts. Temporary partners Nominal A/c
1. 2. 3. 4. 5.
Group A Co - Venture Rebate Credit balance of Income & Expenditure Account Dormant Partner Trading Account
i. ii. iii. iv. v. vi. vii. viii.
Group B Limited liability Surplus Temporary partner Retirement of a bill Deficit Does not take active part in the business Account showing the net profit / net loss Power and Fuel / Gross profit.
A Group
1. 2. 3. 4. 5.
Not for profit concerns. Fixed Capital method. Unexpired expenses. Temporary partnership Pure single entry system.
a. b. c. d. e. f. g. h.
B Group Capital account of partner Current account of partner Joint venture Asset Liability Only Personal account Profit and Loss account. Income and expenditure account.
1. 2. 3. 4. 5.
A Interest on partners loan Excess of income over expenditure Legal due date Printing and Stationery Goods sold by consignee
1. 2. 3. 4. 5. 6. 7. 8.
B Deficit Before adding three grace days Not Exceeding 6% After adding three grace days. Surplus Trading Account Debited to Consignees Account. Profit / loss account.
A 1. 2. 3. 4. 5. Depreciation Dishonour of bill Joint Venture Goodwill Co Venturers 1. 2. 3. 4. 5. 6.
B Temporary Partners Intangible Asset Wear and tear Notary public Temporary partnership Tangible Asset
SET III
3. Select the most appropriate alternative from those given below

1. Debit Balance in Profit and Loss Account shows _______________ a. Net profit b. Gross profit c. Net loss d. Gross loss A bill of exchange must be accepted by _______________ a. A drawer b. A payee
2.
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3.
4.
5.
6.
7.
8.
9.
10.
11. 12. 13. 14. 15.
c. An endorsee d. A drawee At the end of the financial year balance of Depreciation account is transferred to _______ a. Depreciation account b. Asset account c. Trading account d. Profit and loss account. In the absence of partnership deed the partners share the profit and loss of the firm ____ a. In the ratio of capital b. Equally c. As per rights in management d. On the basis of experience. ____________ has to ultimately bear the noting charges. a. Drawer b. Drawee c. Endorser d. Bank The Indian Partnership Act came into force in ____________________. a. 1942 b. 1932 c. 1953 d. 1956 Excess of assets over liabilities is termed as ___________________. a. Endowment Fund b. Capital Fund c. Special Fund d. None of these Fixed Instalment method of depreciation is also called as _______________ a. Straight Line Method. b. Reducing Balance Method. c. Written down value method. d. Depreciation Fund Method. Drawing a fresh bill in cancellation of old bill is called as _________________. a. Retirement of Bill. b. Discounting of bill. c. Endorsement of Bill. d. Renewal of bill. When the co ventures incur the joint venture expenses from his pocket _________ A/c is credited. a. Joint Venture A/c b. Joint Bank A/c c. Co ventures A/c d. Consignees A/c The Indian Partnership Act is in force since ____________ a. 1932 b. 1942 c. 1952 d. 2002 Normally, Receipts and payments account shows ____________ balance. a. Debit b. Credit c. Nil d. Overdraft Excess of opening capital over the closing capital is considered as a. Income b. Profit c. Gain d. Loss Making payment of the bill before the due date is known as ____________ of a bill. a. Retirement b. Honouring c. Dishonouring d. Renewal If two or more persons come together to carry on a business activity for a short period, it is known as ____________
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17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
a. Joint venture b. Consignment c. Partnership firm. d. Co operative society. The interest on capital of a partner is _______ to profit & loss account. a. Credited b. Added c. Debited d. Divided If fixed capital method is adopted, Net profit is transferred to _______ account of the partner. a. Current b. Capital c. Balance sheet d. Trading Not for profit organisation prepares _________ to find out its financial position. a. Balance sheet b. Receipts & payments accounts. c. Trading account d. Income & Expenditure account. Wages paid for Installation of Machinery should be debited to the ____________ account. a. Installation b. Wages c. Salaries d. Machinery. There are ___________Parties to a bill of exchange. a. Four b. Three c. Two d. One. Persons entering into a joint venture are called _______________ a. Partners b. Co partners c. Co venturers d. Consignees The _________ has to ultimately bear the noting charges. a. Drawer b. Endorser c. Bank d. Drawee The component of CPU that controls the various input output devices is ___________ a. Memory unit, b. Control unit, c. arithmetic logical unit d. Key board Loss on sale of asset is debited to _______________ a. Assets A/c b. P&L A/c c. Depreciation A/c d. Trading A/c In the absence of partnership deed the partners share profit & loss of the firm ___________ a. In the ratio of capital b. Equally c. As per rights in management d. On the basis of experience Partners drawings are transferred to his __________ a/c under fixed capital method. a. Capital A/c b. Current A/c c. Trading A/c
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28.
29.
30.
d. Profit and loss A/c Sale of old materials must be shown on credit side of ____________ a. Cash book b. Income and expenditure account c. Balance sheet d. Receipt and Payments account Cost of asset = _____________ a. Purchase price + scrap value b. Purchase price + depreciation c. Purchase price + incidental cost d. None of the above A person in whose favour the bill is endorsed is called ___________ a. Endorsee b. Endorser c. Drawer d. None of the above Expenses incurred by covertures is debited to ___________
a. b.
31.
32.
33.
34.
c. d. Reserve for discount on ______________ has a debit balance. a. Debtors b. Creditors c. Bills Receivable d. Loan advanced. Income and Expenditure Account is a _______________ a. Personal account b. Real account c. Nominal account d. Asset account Under ____________ single entry system, no records are kept separately for impersonal accounts. a. Quasi b. Pure c. Simple d. Modern There are ___________ parties to a bill of exchange. a. Two b. Three c. Four d. Five
None of the below Consignees account Co venturers account Joint venture account.
35. Persons who enter into Joint Venture are called ___________ a. Co ventures b. Partners c. Shareholders d. Loan holders 36. Income Statements and Balance Sheet are prepared in a systematic and scientific manner under ________________ a. Double Entry System. b. Single Entry System c. Partial Entry System. d. Indian System. 37. Before accepting a bill, it is called a _________ a. Note b. Draft c. Hundi d. Request. 38. Valuation of goodwill depends upon ________ capacity of business. a. Normal
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39.
40.
41.
42.
43.
44.
45.
b. Repaying c. Earning d. Capital If two or more persons come together to carry on a business activity for a short period, it is known as ___________ a. Joint venture b. Consignment c. Partnership d. Stock exchange Subscription received in advance during the accounting year is ____________ a. an income b. an expense c. an asset d. a liability Depreciation is charged only on the ____________ a. Current asset b. Intangible assets c. Immovable assets d. Fixed assets Brain of computer is _____________ a. Micro processor (march 2008) b. RAM c. DRAM d. DOS Unsold stock of Joint Venture taken over by Co venture is credited to ___________ a. Co ventures A/c b. Joint Venture A/c c. Joint Bank A/c d. Stock A/c A one months bill drawn on 31st January, 2007 will be matured on ___________ a. 3rd March, 2007 b. 28th February, 2007 c. 29th February, 2007 d. 2nd March, 2007 Interest on the capital of partner is debited to _______________ a. Trading account b. Profit and loss account c. Partners capital account d. Partners current account
46. Computer is a / an ______________ a. Mechanical device b. Automation device c. Electronic device d. Electric device 47. Joint venture is a ________________ a. Trading concern b. Non trading concern c. Religious concern d. Public concern 48. A donation received for a specific purpose is a _______________ a. Capital receipt b. Revenue receipt c. Liability d. Asset 49. A bill drawn and accepted on 12th June 2007 for two months will be due for payment on ___________ a. 12th August, 2007
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b. 15th August, 2007 c. 16th August, 2007 d. 14th August, 2007
State True or False, With Reasons. 1. If the partnership deed is silent, partners share profits and losses in their capital ratio. Ans. This statement is False. Reason: i. The partners share profit and loss in their capital ratio, if such clause is included in the partnership deed. ii. In the absence of agreement or when partnership deep remains silent, the partners have to share profit and loss in equal ratio. This is as per the provisions of Partnership Act 1932. 2. The balance of capital account remains constant under fixed capital method. Ans. This statement is False. Reason: i. Under fixed capital method, along with partners capital account, a separate personal account, called current account is opened and operated for every partner. ii. Since all the entries for the transactions between partners and partnership form are passed through the respective partners current account under the fixed capital method, the balances show by their respective capital accounts remains constant. 3. All indirect expenses are debited to Trading Account. Ans. This statement is False. Reason: i. All the expenses relating to manufacturing and purchases are termed as direct expenses, e.g. cost of raw materials, cost of power and fuel consumed, cost of carriage, wages paid, etc. All direct expenses are debited to Trading account. ii. All the expenses relating to administration, selling and distribution are termed as indirect expenses, e.g. Salaries, rent, interest paid, etc. All indirect expenses are debited to Profit and Loss Account. 4. The interest on capital is an income of the partnership firm. Ans. This statement is False. Reason: i. Capital is contributed by the proprietor or partners. It constitutes liabilities of the business or partnership form. Naturally interest due or payable on capital becomes expense of partnership firm. ii. Interest on capital is paid to partners out of business revenue. Hence, it is an expense to the partnership firm. If it remains unpaid, it becomes liability. 5. Interest on drawings is an income of the partnership firm. Ans. This statement is true. Reason:
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Total amount in cash or kind withdrawn by a partner from the partnership firm for his / her personal use is called drawings. It is partners liability to repay the same or to pay interest at an agreed rate to the partnership firm. ii. Interest on drawings is adjusted with partners capital account. Hence interest on drawings is an income of the partnership firm.
i.
6. The Balance sheet is an account of business result. (March 09) Ans. This statement is False. Reason i. Summarised, systematic and classified records in relation to particular person, asset, or expenditure or income are called an account. Balance sheet is not an account. ii. It is a statement showing the financial position of a firm, as on a given date in the form of assets and liabilities. On the left hand aide of the Balance Sheet closing balances of all types of liabilities are shown an on the right hand side, closing balances of all types of assets are shown. 7. Debit balance of Trading Account indicates Net loss. (Sept. 10) Ans. This statement is False. Reason i. The debit balance of Trading account indicates gross loss suffered by the business concern, during the accounting year. Gross loss refer to excess of expenditures over incomes. ii. When the total of debit side of an account is greater than the total of credit side the resulting balance shown debit balance. i.e. gross loss. However, debit balance of Profit and Loss account indicates net loss. 8. Non commercial concerns with no profit base prepare income and expenditure account in place of profit and loss account. (March 09) Ans. This statement is True. Reason: i. Non commercial concerns with no profit base are established to render services to society and not for earning profit. They have incomes and they incur expenses. ii. As these organisations do not produce any tangible product, they are required to prepare Income and Expenditure Account instead of Trading and Profit and Loss Account to find out whether their incomes are sufficient to meet their expenses. 9. The expenditure incurred on installation of machinery is revenue expenditure. (Sept. 08) Ans. This statement is False. Reason: i. Expenses incurred on erection and electrification of fixed asset are called installation charges. ii. Installation charges are incurred or paid once and not every year. Hence they are non recurring in nature. i.e. capital expenditure and therefore added to the value of machinery. 10. The Receipts and Payments Account is a Nominal Account. (March 08)
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Ans. This statement is false. Reason i. An account prepared by a Not For Profit concern to record the summary of all types of cash receipts and cash payments is called the Receipts and Payments account. ii. In this account only summary of cash received and paid during the accounting year is recorded. Hence the Receipts and Payments Account is a Real account. 11. The Receipts and Payment account records only cash transactions. (Sept. 09) Ans. This statement is True Reason. i. Receipts and Payments account is similar to Cash Book and contains summary of cash and bank transactions. ii. It is prepared at the end of every financial year and includes only actual receipts and actual payments made during a particular period.
12. The main object of Not for Profit organisation is to earn profit. (March 10) Or Maximisation of profit is the motive of a Not for Profit Concern (Sept 10) Ans. This statement is False Reason. i. The main object of not for profit organisations is to provide services to the society without having objective of earning profit. ii. However, trading organisations are established with the main motive of earning profit. 13. Drawee has no right to discount the bill with the bank. (March 08) Ans. This statement is True. Reason. i. The person on whom the bill is drawn is called drawee of the bill. ii. Since drawee is a debtor and liable to pay the amount of the bill to the drawer, he has no right to discount the bill with the bank.
14. Drawer and Payee of a bill of exchange may be one and the same person. (March 11) Ans. This statement is True. Reason. i. Drawer is the person who drafts the bill and gives order to drawee to pay the amount either to the person (Payee) named therein or to himself. Payee is the person who receives the amount of the bill on the due date. ii. If the bill is retained by the drawer with himself till the due date, then the amount of such bill is paid by the drawee to the drawer. In such a case drawer and payee may be one and same person.
15. If discounted bill is honoured, the drawer does not record this transaction. (Sept. 08)
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Ans. This statement is True. Reasons: i. The bill is said to be honoured when drawee makes full payment on its due date. ii. When discounted bill is honoured by the drawee, the transaction takes place between drawee and the bank. Hence, drawer does not record this transaction in his books.
16. Noting charges should be borne by the drawee Ans. This statement is True Reason i. Fes charged by the Notary Public for establishing the facts of dishonour of a bill are called noting charges. ii. Drawee or acceptor who is ultimately responsible for dishonour of the bill, has to bear noting charges. 17. While calculating the average profit, the losses are ignored. (March 2011) Ans. This statement is False Reason: i. Total amount of profit earned by the business organisation over certain number of years is called total profit. ii. Since losses are treated as negative profits, such losses are required to be adjusted with the profits earned in the other years while finding out the total profit of the given number of years.
OMTEX WISHING YOU ALL THE VERY SUCCESS IN YOUR FORTH COMING BOARD EXAMINATON
BISMILLAH
Important points to remember

1. Bad debts = Trial balance amount (debit side) 2. Further bad debts = Adjustment Amount. 3. N.R.D.D. = Adjustment percentage 4. O.R.D.D. = Trial balance amount (credit side)
1. Interest on drawings is to be calculated for 6 months only. 2. If bills receivable is dishonoured then (-) from Bills receivable and (+) to debtors. 3. If bills payable is dishonoured then (-) from bills payable and (+) to creditors. 4. N.R.D.D. on debtors should be charged at second last. 5. Discount on debtors should be charged at last.
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Format of Trading Account

Dr Particulars Amount (Rs.) To Opening Stock Xxx To Purchases Xxx (-) Returns Xxx To wages/ Wages & Salaries Xxx To Productive wages Xxx To Octroi Duty Xxx To Royalties/Royalties on purchase Xxx To carriage inward Xxx To cleaning Charges Xxx To Factory Expenses Xxx To Motive Power Xxx To lighting & heating Xxx To Power & Fuels Xxx To factory insurance Xxx To custom duty Xxx To Factory electricity Xxx To Factory Manager expenses Xxx To Factory Rent Xxx To Factory Repairs Xxx To wages & Salaries Xxx To carriage Xxx To carriage on purchases Xxx To freight Charges Xxx To excise duty Xxx To Import duty Xxx To dock Charges Xxx To Cartage charges Xxx To Manufacturing expenses Xxx To Gas, Fuel Xxx To coal & Coke Xxx To ware housing charges Xxx Cr Amount (Rs.) By Sales Xxx (-) Returns Xxx By Goods loss by fire Xxx By Goods lost by theft Xxx By Goods Withdrawn by partner Xxx By Goods distributed as free samples Xxx By Closing Stock Xxx Particulars
To Gross Profit c/d
xxx By Gross loss c/d Xxx
xxx Xxx
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Dr Particulars
Format of profit & loss Account

Amount (Rs.) To Gross loss b/d Xxx To salaries Xxx To carriage outward Xxx To sundry expenses Xxx To printing & Stationery Xxx To electricity charges Xxx To miscellaneous expenses Xxx To advertisement Xxx To office expenses Xxx To office rent Xxx To office insurance Xxx To Royalty on sales Xxx To salary & Wages Xxx To Commission Xxx To Interest Xxx To Discount Xxx To Bad Debts Xxx (+) F.B.D. Xxx (+) N.R.D.D. Xxx (-) O.R.D.D. Xxx To entertainment expenses Xxx To Telephone Charges Xxx To Rent & Rates Xxx To Sales Tax. Xxx To Postage & Telegram Xxx To Office Manager Salary Xxx To Unproductive Wages Xxx To freight on sales Xxx To legal fees Xxx To Delivery van expenses xxx To conveyance Expenses xxx To Petty Cash expenses xxx To Administrative expenses xxx To Refreshment Expenses xxx To loss on sale of asset xxx To publicity expenses xxx To loading charges xxx To depreciation xxx To loss on sale of assets xxx To brokerage xxx To net profit c/d Cr Amount (Rs.) By Gross Profit b/d Xxx By income received Xxx By commission Xxx By interest Xxx By discount Xxx By premium Xxx By Rent Xxx By Sundry receivable Xxx By appreciation Xxx By Profit on sales of Assets Xxx By Sale of scrap Xxx Particulars
xxx By net loss c/d Xxx
xxx Xxx
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Dr Liabilities
Format of Balance Sheet

Amount (Rs.) Capital A/c Xxx A Xxx B Xxx Current A/c Xxx A Xxx B Xxx Reserves Xxx General Reserves Xxx Fund Xxx Reserve Fund Xxx Loan Xxx Loan from partners Xxx Bank Loan Xxx Bank overdraft xxx Sundry Creditors xxx Bills Payable xxx Outstanding expenses xxx Income received in advance xxx Cr Amount (Rs.) Good will Xxx Land & Buildings Xxx Free hold Premises Xxx Machinery Xxx Furniture Xxx Lease Hold Premises Xxx Office Equipments Xxx Sundry Debtors Xxx Cash in hand Xxx Cash at Bank Xxx Bill Receivable Xxx Live stock Xxx Shares & securities Xxx Prepaid expenses Xxx Loan Given Xxx Computer Xxx Copy right Xxx Patients Xxx Trade Mark Xxx Brand Name Xxx Loose Tools Xxx Fittings Xxx Fixed assets Xxx Current Assets Xxx Vehicles Xxx Income receivable Xxx Closing Stock Xxx Insurance claim receivable Xxx Patents & Patterns Xxx Premises Xxx Xxx Xxx Assets
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H.S.C.

BOOK KEEPING & ACCOUNTANCY

BOOK KEEPING AND ACCOUNTANCY

College Name: - ____________________________________________ Roll No. : -___________________________________________________

9th year of success

BOOK KEEPING & ACCOUNTANCY

Omtex Classes Book Keeping and Accountancy for Standard XII,

HSC examination with better marks.

Keeping and Accountancy perfect and useful in

9th year of success

BOOK KEEPING & ACCOUNTANCY

VALUATION OF GOODWILL [Q. 2 (A) :

9th year of success

BOOK KEEPING & ACCOUNTANCY

12,000(Profit) 4,000(Loss) 18,000(Profit)

9th year of success

BOOK KEEPING & ACCOUNTANCY

9th year of success

BOOK KEEPING & ACCOUNTANCY

18. The following balance sheet of Kantilal, Chandrakant.

9th year of success

BOOK KEEPING & ACCOUNTANCY

9th year of success

BOOK KEEPING & ACCOUNTANCY

9th year of success

BOOK KEEPING & ACCOUNTANCY

9th year of success

BOOK KEEPING & ACCOUNTANCY

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BOOK KEEPING & ACCOUNTANCY

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BOOK KEEPING & ACCOUNTANCY

ii. iii. iv. v.

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BOOK KEEPING & ACCOUNTANCY

CH. 3. BILLS OF EXCHANGE [Q.3: 17 MARKS]

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BOOK KEEPING & ACCOUNTANCY

Important Journal Entries to Remember.

BOOK KEEPING & ACCOUNTANCY

b. Discounted with the bank.

Bills payables A/c Dr. To Cash/ Bank A/c

d. Sent to bank for collection.

6. When the part payment is made

7. When the interest is charged.

8. When the Bill is retired.

9th year of success

BOOK KEEPING & ACCOUNTANCY

Pro Forma of a bill of exchange

To ___________________ (Drawees Name) ___________________ ___________________ (Drawees Address)

9th year of success

BOOK KEEPING & ACCOUNTANCY

1. Drawer Drawee Payee Period Amount Date of bill Accepted on

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BOOK KEEPING & ACCOUNTANCY

TRADE BILLS {IN THE BOOKS OF DRAWER & DRAWEE

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BOOK KEEPING & ACCOUNTANCY

9th year of success

BOOK KEEPING & ACCOUNTANCY

9th year of success

BOOK KEEPING & ACCOUNTANCY

9th year of success

College Name: - Roll No. : -_______

To _________ (Drawees Name) _ ___________ (Drawees Address)