Professional Documents
Culture Documents
ANSWERSKEY
Answer 1
(i) True: Legal fee paid to acquire any property is part of the cost of that property. It is incurred to possess
the ownership right of the property and hence a capital expenditure.
(ii) False - The Sales book is a register specially kept to record credit sales of goods dealt in by the
firm, cash sales are entered in the cash book and not in the sales book.
(iii) True - In the early periods of useful life of a fixed assets, repairs and maintenance expenses are
relatively low because the asset is new. Whereas in later periods, as the asset become old, repairs
and maintenance expenses increase continuously. Under written down value method, depreciation
charged is high in the initial period and reduces continuously in the later periods. Thus,
depreciation and repair and maintenance expenses become more or less uniform throughout the
useful life of the asset.
Answer 1(b)
Answer 1 (C)
Purchase Returns Book
Date Debit Note No. Name of supplier L.F. Amount
2016
Jan. 4 101 Goyal Mills, Surat 5,000
Jan. 16 102 Mittal Mills, Bangalore 13,000
Jan. 31 Purchases Returns Account (Cr.) 18,000
1
Answer 2
Bank Reconciliation Statement on 31st March, 2017
Bank Balance as per Cash Book 27,570
Add: (i) Subsidy from government received directly by the bank 10,250
not recorded in the Cash Book
(iii) Debit balance of `2,156 brought forward as credit
balance on 20th March, 2017 in the Cash Book 4,312
(vi) Cheque issued returned marked ‘out of date’ 1,725 16,287
43,857
Less: (ii) Cash Book under cast on 15th March, 2017 350
(iv) Discount allowed to a customer, however entry made at
gross amount in the Cash Book 100
(v) Commission charged by bank on discounting of bill, not
considered in Cash Book 200
(vii) Insurance Premium paid directly by bank under
standing instructions 756
(viii) Discounted B/R dishonoured; not entered in Cash Book 1,530
(ix) Bank recorded short cash deposit 45 2,981
Balance as per Bank Statement 40,876
Alternative
Note : If we assume that year ended will be on 31 march 2017, Then before making BRS we
have to prepare adjusted cash book
By Bills is 1530
discounted dis.
43,857 43,857
2
Bank Reconciliation Statement as on 31st March 2017
Particulars Amount
40,876
Answer 3 (a)
3
Answer 3 (b)
` `
(i) Cash A/c Dr 2,000
Land A/c Dr 4,000
Furniture Ac Dr 1,000
Stock Dr 2,000
To Creditors 1,000
To Bank overdraft 2,000
To Capital A/c 4,000
Answer 4 (a)
(a) Triple Column Cash Book
Dr. Cr.
Date Particulars Discount Cash Bank Date Particulars Discount Cash Bank
2017 ` ` ` 2017 ` ` `
April 1 To Balance b/d 4,500 18,000 April 2 By Bank (C) 1,500
April 2 To Cash (C) 1,500 April 5 By Furniture A/c 2,250
April 12 To Mr. K 30 1,470 April 8 By Purchase A/c 750
April 14 To Sales A/c 7,500 April 16 By Mr. P 75 2,175
April 19 To Cash (C) 750 April 19 By Bank (C) 750
April 24 To Mr.B April 23 By Drawings A/c 900
30 2,145
(Note 2)
April 26 To Cash (C) 2,145 April 26 By Bank (C) 2,145
April 28 To Bank (C) 3,000 April 28 By Cash (C) 3,000
April 30 By Rent A/c 1,200
___ ___ April 30 By Balance c/d ___ 13,470 12,870
60 18,615 22,395 75 18,615 22,395
May 1 To Balance b/d 13,470 12,870
Note:
(1) Discount allowed and discount received ` 60 and ` 75 respectively should be posted
in respective Accounts in the ledger.
(2) When cheque is not promptly deposited into Bank, first it is entered in the Cash
Column and subsequently at the time of deposit, Bank Account is debited and Cash
Account is credited.
4
Answer 5 (a)
Bank Reconciliation Statement as at 31.03.2018
`
Balance as per Pass Book 10,000
Add: Cheque wrongly credited to another customer’s A/c 500
Error in carrying forward 3,000
Cheque recorded twice 350 3,850
13,850
Less: Excess credit for cash deposit 9
Undercasting of withdrawal column 100
Wrong credit 1,000 1,109
Balance as per Cash Book 12,741
Answer 5 (b)
(i) Capital expenditure.
(ii) Revenue receipt.
(iii) Capital expenditure.
(iv) Capital receipt.
Answer 6
Journal Entries in the books of Mr. Roy
Date Particulars Dr. Cr.
` `
(1) Motor Vehicles Account Dr. 2,700
ToProfit and Loss Adjustment A/c 2,700
(Purchase of scooter wrongly debited to conveyance
account now rectified-capitalisation of ` 2,700, i.e.,
` 3,000 less 10% depreciation)
(2) Suspense Account Dr. 10,000
To Profit & Loss Adjustment A/c 10,000
(Purchase Account overcast in the previous year; error
now rectified).
(3) Profit & Loss Adjustment A/c Dr. 4,000
To P’s Account 4,000
(Credit purchase from P ` 2,000, enteredas sales last
year; now rectified)
(4) B’s Account Dr. 1,000
To A’s Account 1,000
(Amount received from A wrongly posted to the
account of B; now rectified)
(5) Suspense Account Dr. 1,000
To C’s Account 1,000
(` 500 received from C wrongly debited to his account;
now rectified)
5
(6) Trade receivables Dr. 500
To Suspense Account 500
(` 500 due by Q not taken into trialbalance; now
rectified)
(7) R’s Account Dr. 2,000
To Profit & Loss Adjustment A/c 2,000
(Sales to R omitted last year; now adjusted)
(8) Suspense Account Dr. 198
To Profit & Loss Adjustment A/c 198
(Excess posting to purchase account last year, ` 2,593,
instead of ` 2,395, now adjusted)
(9) Profit & Loss Adjustment A/c Dr. 10,898
To Roy’s Capital Account 10,898
(Balance of Profit & Loss Adjustment A/c transferred to
Capital Account)
(10) Roy’s Capital Account Dr. 10,698
To Suspense Account 10,698
(Balance of Suspense Account transferred to the
Capital Account)
Note : Entries No. (2) and (8) may even be omitted; but this is not advocated.
Profit and Loss Adjustment Account
(Prior Period Items)
` `
To P 4,000 By Motor Vehicles A/c 2,700
To Roy’s Capital (transfer) 10,898 By Suspense A/c 10,000
By R 2,000
By Suspense Account 198
14,898 14,898
Suspense Account
` `
To Profit & Loss Adjustment Account 10,000 By Trade Receivables (Q) 500
To C 1,000 By Roy’s Capital Account (Transfer) 10,698
To Profit & Loss Adjustment Account 198
11,198 11,198