Required: Prepare Sinking Fund and Sinking Fund Investment Account for the years 2013-14, 2014-15,

2015-16. (10 Marks)

Question 3:

a) Prepare a bank reconciliation statement from the following particulars on 31st March, 2019: (7
Marks) Particulars Amount

Debit balance as per bank column of the cash book 37,20,000 Cheque issued to creditors but not yet
presented to the bank for payment 7,20,000 Dividend received by the bank but not yet entered in the
cash book 5,00,000 Interest allowed by the bank 12,500 Cheques deposited into bank for collection but
not collected by bank up to this date. 15,40,000 Bank charges 2,000 A cheque deposited into bank was
dishonoured, but no intimation received 3,20,000 Bank paid house tax on our behalf, but no
information received from bank in this 3,50,000 Connection.

b) Mr. David draws two bills of exchange on 1.1.2016 for Rs.6,000 and Rs.10,000. The bills of exchange
for Rs.6,000 is for two months while the bill of exchange for Rs.10,000 is for three months. These bills
are accepted by Mr. Thomas. On 4.3.2016, Mr. Thomas requests Mr. David to renew the first bill with
interest at 18% p.a. for a period of two months. Mr. David agrees to this proposal. On 20.3.2016, Mr.
Thomas retires the acceptance for Rs.10,000, the interest rebate i.e. discount being Rs.100. Before the
due date of the renewed bill, Mr. Thomas becomes insolvent and only 50 paisa in a rupee could be
recovered from his estate. You are to give the journal entries in the books of Mr. David. (7
Marks)

c) Attempt any one of the following two sub-parts i.e. either (i) or (ii). i. Calculate Average Due date from
the following information:

Date of the bill Term Amount

August 10, 2015 3 months 6,000 October 23, 2015 60 days 5,000 December 4, 2015 2 months 4,000
January 14, 2016 March 08, 2016 60 days 2 months 2,000 3,000 (Assume February of 28 days)
(6 Marks) OR
(ii) On 2nd January, 2016 Vinod opened a current account with the Allahabad Bank Limited and
deposited a sum of Rs.30,000.

He further deposited the following amounts: 15th January 12th March

10th May

12000 8000 16000

His withdrawals were as follows : 15th February 26000 10th April 30000
15th June 14000 Show Vinod’s a/c in the ledger of the Allahabad Bank. Interest is to be
calculated at 5% on the debit balance and 2% on credit balance. The account to be prepared as on 30th
June, 2016. Calculation may be made correct to the nearest rupee.

Question 4.

a) The following is the schedule of balances as on 31.3.19 extracted from the books of Shri Vengopal,
who carries on business under the same name and style of M/s Venugopal Vishwanath & Co., at Delhi:

Particulars Dr. Cr. Cash in hand 14,000

Cash at bank 26,000 Sundry Debtors 8,60,000 Stock on 1.4.2018 6,20,000 Furniture & fixtures 2,14,000
Office equipment 1,60,000 Buildings 6,00,000 Motor Car 2,00,000

Sundry Creditors 4,30,000 Loan from Vishwanath 3,00,000 Provision for bad debts 30,000 Purchases
14,00,000 Purchase Returns 26,000 Sales 23,00,000 Sales Returns 42,000 Salaries 1,10,000 Rent for
Godown 55,000 Interest on loan from Vishwanath 27,000 Rates & Taxes 21,000 Discount allowed to
Debtors 24,000 Discount received from Creditors 16,000 Freight on purchases 12,000 Carriage
Outwards 20,000

Drawings 1,20,000 Printing and Stationery 18,000 Electricity Charges 22,000 Insurance Premium 55,000
General office expenses 30,000 Bad Debts 20,000 Bank charges 16,000 Motor car expenses 36,000
Capital A/c 16,20,000 TOTAL 47,22,000 47,22,000

Prepare Trading and Profit and Loss Account for the year ended 31st March 2019 and the Balance Sheet
as at that date after making provision for the following:

Depreciate: (a) Building used for business by 5 percent; (b) Furniture and fixtures by 10 percent; One
steel table purchased during the year for Rs.14,000 was sold for same price but the sale proceeds were
wrongly credited to Sales Account; (c) Office equipment by 15 percent; Purchase of a typewriter during
the year for Rs.40,000 has been wrongly debited to purchase; and (d) Motor car by 20%. Value of stock
at the close of the year was Rs.4,40,000. Two month’s rent for godown is outstanding. Interest on
loan from Vishwanath is payable at 12 percent per annum, this loan was taken on 1.5.2018. Reserve
for bad debts is to be maintained at 5 percent of Sundry Debtors Insurance premium includes
Rs.40,000 paid towards proprietor’s life insurance policy and the balance of the insurance charges cover
the period from 1.4.2018 to 30.6.19. (10 Marks)

b) Peter, Paul and Prince were partners sharing profits and losses in the ratio 2:1:1. It was provided in
the partnership deed that in the event of retirement /death of a partner he/his legal representatives
would be paid:- The balance in the capital Account. His share of goodwill of the firm valued at two
years purchase of normal average profits (after charging interest on fixed capital) for the last three years
to 31st December preceding the retirement or death. His share of profits from the beginning of the
accounting year of to the date of retirement or death, which shall be taken on proportionate basis of
profits of the previous year as increased by 25%. Interest on fixed capital at 10% p.a. though payable
to the partners will not be payable in the year of death or retirement.

All the asset are to be revalued on the date of retirement or death and the profit and loss be debited/
credited to the Capital Accounts in the profit sharing ratio.

Peter died on 30th September, 2016. The books of Account are closed on calendar year basis from 1st
January to 31st December.
The balance in the Fixed Capital Accounts as on 1st January, 2016 were Peter Rs.10,000, Paul Rs.5,000
and Prince Rs.5,000. The balance in the Current Account as on 1st January, 2016 were Peter Rs.20,000,
Paul Rs.10,000 and Prince Rs.7,000. Drawings of Peter till 30th September, 2016 were Rs.10,000. The
profits of the firm before charging interest on capital for the calendar years 2013, 2014 and 2015 were
Rs.1,00,000, Rs.1,20,000 and Rs.1,50,000 respectively. The profits include the following abnormal items
of credit:-

2013 2014 2015

Profit on sale of assets 5,000 7,000 10,000 Insurance claim received 3,000 - 12,000

The firm has taken out a Joint Life Policy for Rs.1,00,000. Besides the partners had severally insured their
lives for Rs.50,000 each, the premium in respect thereof being charged to the Profit and Loss account.
The surrender value of the Policies were 30% of the face value. On 30th June, 2016 the firm received
notice from the insurance company that the insurance premium in respect of fire policy had been
undercharged to the extent of Rs.6,000 in the year 2015 and the firm has to pay immediately. The
revaluation of the assets indicates an upward revision in value of assets to the extent of Rs.20,000.
Prepare an account showing the amount due to Peter’s Legal representatives as on 30th
September,2016 along with necessary workings. (10 Marks)

Question 5.

The following is the Receipts

and

Payments

Account

of Lion Club for the year ended 31st March, 2019. Receipts Amount Payments Amount Opening
Balance: Cash Bank Subscription Received Entrance Donation Interest Received Sale of Assets
Miscellaneous Income Receipts at: Coffee Room Soft Drinks

10000 3850 202750 100000 58000 8000 9000

1070000 510000 Salaries Creditors Printing and Stationary Postage Telephone and Telex Repairs and
Maintenance Glass and Table Linen Crockery and Cutlery Garden Upkeep Membership Fees Insurance
120000 1520000 70000 40000 52000 48000 12000 14000 8000 400