Bcom Notes

B.
COM – FINANCIAL ACCOUNTING 1

ROHIT SARAWAGI- 9899669913
1. SINGLE ENTRY SYSTEM

Q. 1
Mr. X , a trader, does not keep proper books of account. However he provides the
following particulars.
31.12.2001 31.12.2002
Cash at Bank 4500 3000
Cash in Hand 300 4000
Stock 40000 45000
Debtors 12000 20000
Equipments 5000 5000
Creditors 30000 20000
Furniture 4000 4000
During the year 2002, Mr. X introduced Rs. 6000 as additional capital and
withdrew Rs. 4000 as drawing. He write off 10% on furniture and 5% on equipment
as depreciation.
Prepare a statement showing the profit or Loss made by him for the year ended 31 st
December , 2002. (B.COM: 2004) Ans. (PROFIT MADE DURING 2002 Rs. 22550)
Q. 2
Ghanshyam keeps his books by single entry. On 1 st April, 2002, his position was as
follows:
Rs.
Sundry Creditors 20,000
Cash and Bank 10,800
Sundry Debtors 40,000
Stock 10,000
Plant 20,000
On 31st March, 2003 the position was as indicated below.
Rs.
Cash and Bank 22,500
Sundry Debtors 49,000
Stock 12,000
Plant 45,000
He drew Rs. 500 at the end of every month. He introduced Rs. 25,000 as additional
capital. Depreciation plant at 10% per annum.
Prepare a Statement of profit and loss for the year 2002-2003 on the assumption
that additional plant was purchased on 1-10-2002. (B.COM : 2003)
Ans. (PROFIT Rs. 10450)
B.COM – FINANCIAL ACCOUNTING 2
Q. 3
A commenced business on January 1, 2002 with a capital of Rs. 100000. He
immediately bought furniture and fixtures for Rs. 20,000. On 30 th June, he
borrowed Rs. 50,000 form his wife @ 9% p.a. (interest not yet paid) and introduced
a further capital of his own amounting to Rs. 11,500. A drew at the rate of Rs.
3,000 per month at the end of each month for his household expenses. On 31 st Dec.
2002 his position was as follows.
Cash in hand Rs. 28,000 Sundry Debtors Rs. 48,000
Stock 68,000 Bills Receivable 16,000
Creditors 5,000 Owing for Rent 1,500
Furniture and Fixtures to be depreciated by 10%
Ascertain the profit or loss made by A during 2002.
Ans. (profit Rs. 43750)
Q.4
The following is the statement of affairs of X as at 31st March, 2002:
Liabilities Rs. Assets Rs.
Creditors 53,200 Cash 10,820
Capital 2,80,000 Debtors 96,730
Stock 1,55,500
Furniture 20,750
Machinery 49,400
3,33,200 3,33,200
In July 2002, the proprietor introduced fresh capital of Rs.20, 000. Every month, he
withdrew Rs. 3,000 for his private expenses.
On 31st March, 2003, his assets and liabilities were as follows:
Debtors Rs. 1,14,170; Stock: Rs. 1,56,400; Cash: Rs. 11,170; and Creditors Rs.
38,140.
Prepare a statement showing profit earned during the year ended 31 st March,
2003. Depreciation fixed assets @ 10% per annum on diminishing balance method
and create a provision of doubtful debts amounting to Rs. 1,935.
Ans. (Profit Rs. 40,800)
Q. 5
X and Y started business on 1 st January with capitals in the ratio of 3:2. Their assets
and liabilities on 1st January, 2002 and on 31st Dec. 2002, were as follows.
Jan. 1. 2002 Dec. 31, 2002
Cash in hand and at bank Rs. 4,005 Rs. 3,000
Bills receivable 2,000 3,500
Sundry debtors 15,000 25,000
Stock-in-trade 3,700 3,800
Fixed assets 60,000 65,400
Creditors 5,705 6,700
The partners share profits in the ratio 3:2 after charging interest on capital in the
beginning at 5% p.a. and after providing for interest on drawings @ 6%p.a.
Drawings on an average of 6 months are Rs. 8,000 for X and Rs. 6,000 for Y.
Calculate profits and prepare statement of affairs at the end.
Ans. (profit Rs. 29000, total of statement of affair is Rs. 100700)
ALTERNATIVE METHOD: CONVERSION OF SINGLE ENTRY TO DOUBLE

ENTRY:
It may be possible to prepare the P & L a/c and balance sheet for such
organizations by converting the records into double entry method. In this method,
various ledger accounts are prepared e.g. sales, purchases, debtors, creditors,
trading a/c, cash book. As full information is not available the balancing figure in
each of these accounts needs to be correctly interpreted. For example, if we know
opening & closing balances in debtors’ a/c and the cash received from debtors; then
the balancing figure will obviously indicate sales figures. Also, if we know opening
and closing balances of creditors & credit purchases figures; then the balancing
figure will certainly mean cash paid to creditors. Once these figures are calculated,
it’s easy to prepare the financial statements in regular formats.
CALCULATION OF MISSING FIGURE:

1. Credit sales or opening debtors or closing debtors:
Proforma Total Debtors Account
Rs. Rs.
Balance b/d (opening balance) Cash/ Bank
Bills Receivable (dishonored) Bills Receivable
Cash (paid for sales return etc.) Return Inwards
Sales (credit) Allowances and Discounts
Interest (charged from customers) Bad Debts
Transfer to Creditors
Balance C/d (Closing Balance)
2. Credit purchase or closing creditors or opening creditors:
Proforma Total Creditors Account
Rs. Rs.
Cash/ Bank Balance b/d (opening balance)
Bills Payable Bills Payable (dishonored)
Return Outwards Cash (paid for purchases return
Allowances and Discounts etc.)
Transfer from Debtors Purchases (credit)
Balance C/d (Closing Balance) Interest charged
3. Bills receivable and Bills payable Balance

Proforma Bills Receivable Account
Rs. Rs.
Balance b/d Cash / Bank
Sundry Debtors (Bills Receivable Interest (on Retirement)
accepted by customers) Sundry Debtors (on dishonored of
Bills)
Sundry creditors (on endorsement
of B/R from a customer to
supplier)
Balance C/d
Proforma Bills Payable Account

Rs. Balance B/D Rs.
Cash / Bank Sundry Creditors (Acceptances)
Interest (on Retirement)
Sundry Creditors (dishonor of Bills
Payable)
Balance C/d
4. Opening stock: It can be calculated by applying gross profit percentage to
sales. A memorandum trading account has to be prepared by writing the
information given in the examination.
5. Missing cash and bank Balance: A Receipts and Payments account is
prepared preferably in a columnar form from the bank pass book. The
purpose is to ascertain either opening or closing balance of cash in hand or/
and with bank. Where cash in hand not stated expressly , it may be
extracted from the opening statement of affairs.
Q. 6
Purchases made during the year Rs. 2,000; Sales made during the year Rs.
3,00,000; Closing stock Rs. 20,000; Wages, Freight Rs. 5,000. Indirect expenses
Rs. 7,000; Rate of gross profit on cost 1/2. Calculate opening Stock.
Ans. (Rs. 15000)
Q. 7
From the following information you are required to calculate total purchases:
Cash purchases Rs.85, 000
Creditors as April 1, 2002 40,000
Cash paid to creditors 1, 55,000
Purchases returns 5,000
Creditors as on March 31, 2003 67,000
Ans. (Rs. 2,72,000)
Q. 8
From the following facts your are required to calculate total purchase:
Opening balance of bills payable Rs. 50,000
Opening balance of creditors 60,000
Closing balance of bills payable 70,000
Closing balance of creditors 40,000
Cash paid to creditor during the year 3, 02,000
Bills payable discharged during the year 89,000
Returns outward 12,000
Cash purchases 2, 58,000
Ans. (Rs. 6,61,000)
Q. 9
From the following details, calculate the value of Opening Stock:
Closing stock Rs. 68,000
Totals sales Rs. 4, 80,000
(Including cash sales Rs. 1, 20,000)
Total purchases Rs. 3, 60,000

(Including credit purchases Rs. 2, 93,200)
Goods are sold at profit of 25% on cost.
Ans. (Rs. 92,000)
Q. 10
From the following facts you are required to calculate total sales:
Bills receivable in the beginning Rs. 78,000 Returns inward Rs. 87,000
Debtors in the beginning 3, 08,000 Bills receivable dishonored 18,000
Bills receivable encashed during Bills receivable at the end 60,000
The year 2, 09,000 Debtors and the end 2, 55,000
Cash received from debtors 7, 00,000 Cash sales (as per cashbook)4,09,000
Bad debts written off 28,000
Ans. (Rs. 13,62,000)
Q. 11
From the following facts you are required to determine the amount of total sales.
Stock in the beginning Rs. 8,000; Stock at the end Rs. 7,000; Purchases Rs.
40,000: Rate of gross profit on sale 1/6.
Ans. (Rs. 49,200)
Q. 12
Find out the missing figure:
Opening stock Rs. 50,000
Closing stock Rs. 70,000
Sales Rs. 5, 60,000
Carriage inward Rs. 10,000
Purchases ?
Gross profit 25% on sales
Ans. (Rs. 4,30,000)
Q. 13
From the following particulars, ascertain the amount of credit sales and credit
purchases for the year ended 31st March 2006:
Rs.
Total Creditors: 1.4.2005 4,00,000
Total debtors: 1.4.2005 7,00,000
Cash received from customers 14,50,000
Received for bills receivable 80,000
Paid to sundry creditors 5,60,000
Bills payable met 1,20,000
Discount allowed to customers 20,000
Discount earned 10,000
Sales returns 60,000
Purchase returns 80,000
Bad debts 30,000
Total creditors: 31.3.2006 9,20,000
Total debtors: 31.3.2006 8,80,000
Bills receivable: 1.4.2005 60,000
Bills payable: 1.4.2005 1,40,000

Bills receivable: 31. 3.2006 1,80,000
Bills payable: 31.3.2006 1,00,000
Ans. (Credit Sale Rs. 19,40,000 & Credit Purchase Rs. 12,50,000)
Q. 14
From the following prepare total debtors account and total creditors account and
find out credit sales and credit purchase:
Debtors as on 1-4-2003 5000

Creditors as on 1-4-2003 4000
Debtors as on 31-3-2004 4000
Creditors as on 31-3-2004 6000
Bills receivable received during the year 10000
Bills Payable issued during the year 8000
Cash received from customer 30000
Cash paid to supplier 20700
Discount allowed by supplier 270
Discount allowed to customer 150
Bad debts written off 1200
Bad debts recovered 300
Bills received endorsed to creditors 4000
Bills receivable dishonored by customer 1000
Endorsed bills receivable dishonored 500
Bills receivable dishonored 2000
Discounted bills receivable dishonored 700
Sales returns 600
Purchase returns 200
Ans. (Credit Sales Rs. 36750 and Credit Purchase Rs. 34670) (B.com 2006)
Q. 15
From the following particulars, Calculate:
(i) Cash paid to sundry creditors during the year
(ii) Cash received from sundry debtors during the year
Opening creditors 20600
Closing creditors 34800
Opening debtors 66400
Closing debtors 37400
Opening stock 50000
Closing stock 40000
Purchases during the year 140000
Discount allowed by creditors 800
Discount allowed to customer 1000
Bills payable issued to creditors 20000
Bills receivable received from customer 35000
Bills receivable dishonored 2000
The rate of gross profit is 25% on selling price.

Of the total sale Rs. 35000 were for cash.
Ans. ((i) Rs. 10,500) , (ii) Rs. 1,60,000) (B.com 2003)
Q. 16
From the following information supplied by Mr. X, Calculate total Sales:
Capital in the beginning 120000
Cash in hand in the beginning 40000
B/R in the beginning 7800
Debtors (Opening) 30800
Cash received from Y as Loan 10000
Cash received from Debtors 70000
B/R encashed during the year 20900
Return outward 10000
Credit purchases 150000
Cash paid to suppliers 30000
Return inwards 8700
B/R dishonored 1800
B/R at the end of the year 6000
Debtors at the end of the year 25500
Cash sales 40900
Cash received from a Customer whose account was closed last
year because of his insolvency 500
Ans. (Total Sales Rs. 136200) (III)
Q. 17
The Books of Mr. Rachit on 1st Jan. 2003, disclosed the following position:
Particulars Amount Particulars Amount
Capital 80,000 Furniture 20,000
Sundry Creditors 75,000 Sundry creditors 90,000
Stock 40,000
Cash at bank 5000
1,55,000 1,55,000
During the year 2003, the books were imperfectly kept, but the analysis of the bank
transaction reveled the following:
Rs.
Receipts from customers 350000
Drawings for personal expenses 60000
Payments of salaries 30000
Payments to creditors 220000

Payments of rent 15000
Miscellaneous expenses 4000
The schedules on 31-12-2003 of the debtors totaled Rs. 95,000 and of the creditors
Rs. 64,000. No inventory of the stock was taken on 31-12-2003, but it was stated
that a gross profit of 40 percent on turnover was made during the year.
Prepare trading and profit and loss account for the year and a balance sheet as on
31-12-2003.
Ans. (G.P. Rs. 142000, N.P. Rs. 93000, B/S Total Rs. 177000) (2010)
Q. 18
Sonam Keeps his books on single entry and provides you the following information:
Particulars 31-12-2006 31-12-2007
Furniture and fittings 50,000 60,000
Stock 30,000 10,000
Sundry debtors 60,000 70,000
Sundry creditors 20,000 Nil
Prepaid expenses Nil 2,000
Outstanding expenses 6,000 10,000
Cash in hand 11,000 3,000
Receipts and payments in 2007;
Receipts from debtors 2,10,000
Paid to creditors 1,00,000
Cartage 20,000
Drawing 1,20,000
Sundry expenses 1,60,000
Furniture purchased for cash 10,000
Prepare trading and profit and loss account for the year ended 31 December, 2007
after providing for bad debts at 10 percent.
There was a considerable amount of cash sales.

Q. 19
Mr. X keeps his books on single entry. From the following information, prepare
trading and profit and loss account for the year ended 31.3.2008, together with
balance sheet as on that date:
Cash book analysis shows the following:
Interest charges 100 Balance at the bank as on

Personal withdrawals 2000 31.3.2008 2425
Staff salaries 8500 Cash in hand as on 31.3.2008 75
Other business expenses 7900 Received from debtors 25000
Payment to creditors 15000 Cash sales 15000
Further details available are:
As on 1.4.2007 As on 31.3.2008
Stock on hand Rs. 9,000 Rs. 10,220
Creditors 8,000 5,500
Debtors 22,000 30,000
Furniture Rs.1,000 Rs. 1,000
Office premises 15,000 15,000
Provide 5 per cent interest on X’s capital balance as on 1.4.2007. Provide Rs. 1,500
for doubtful debts, 5 per cent depreciation on all fixed assets, 5 per cent group
incentive commission to staff has to be provided for on net profit after meeting all
expenses and the commission.
Q. 20
On 1st April, 2005, B commenced his business as a cloth merchant with a capital of
Rs. 10,00,000. On the same day, he purchased furniture for Rs. 3,00,000. He kept
his books of account according to the single entry system. Following are the
particulars of transactions during the year ended 31 st March 2006:
Rs.
Sale (including cash sales, Rs. 7,00,000) 17, 00,000
Purchases (including cash purchases, Rs. 4, 00,000 15, 00,000
Sundry expenses paid in cash 70,000
Bad debts 5,000
Drawings by B in cash 1, 20,000
Salaries paid in cash 2, 45,000
B took cloth worth Rs. 5,000 from his stop for his personal use and gave Rs.
20,000 to his son out of firm’s cash but these transactions were not recorded in the
books of account.
On 31st March, 2006, his sundry debtors were Rs. 5,65,000 and his sundry
creditors were Rs. 3,60,000. Stock in hand on 31 st March, 2006 was Rs. 6,50,000.
Show rectified cash book, sundry debtors accounts, sundry creditors account and
prepare Trading and Profit and Loss account for the year ended 31 st March, 2006
with balance sheet as on 31st March, 2006.
Q. 21
The following is the position of assets and liabilities of Milan who keeps his books on
single entry system:
1-1-2006 31-12-2006
Stock 50000 45000
Debtors 60000 76000
Machinery 60000 60000
Furniture 5000 5000
Creditors 30000 29000

Bank Overdraft 10000 --
Salary Outstanding -- 500
The cash book gives the following information:

Receipts from debtors 80000 Salaries 5000
Cash sales 30000 Drawings 4000
Payments to creditors 40000 General expenses 8000
Cash purchases 25000 Rent 2200
Interest on bank overdraft 1500
Other Informations:
Discount allowed to debtors was Rs. 4000 and discount earned from creditors Rs.
2500. Goods worth Rs. 3000 were returned by the customer and goods worth Rs.
1500 were returned to supplier. Also depreciate machinery at 10% and furniture at
6%.
Prepare Trading and Profit and Loss account for the year ending on 31-12-2006 and
a Balance Sheet as on that.
Q. 22
Ram Prakash keeps his books on Single Entry System. From the following
information provided by him, prepare a Trading and Profit & Loss Account for the
year ended 31st Dec. 2002 and Balance Sheet as on that date:
31-12-2001 31-12-2002
Rs. Rs.
Furniture 10,000 12,000
Stock 6,000 2,000
Debtors 12,000 14,000
Prepaid Expenses __ 4,000
Creditors 4,000 ?
Outstanding Expenses 1,200 2,000
Cash 2,200 6,00
Receipts and payments during the year were follows:
Rs.
Receipts from Debtors 42,000
Paid to Creditors 20,000
Carriage Inwards 4,000
Drawings 12,000
Sundry Expenses 14,000
Furniture purchased 2,000
Other information:
There were considerable amount of cash sales. Credit purchases during the year
amounted to Rs. 23,000. Provide as provision for doubtful debts to the extent of
10% on debt Rs.
Q. 23
The following information is supplied from which you are required to prepare the
profit and Loss Account for the year ended 31 st March, 2003 and Balance Sheet as
on that date:
Assets and Liabilities 31.3.2002 31.3.2003
Sundry assets Rs.18,000 Rs.20,000
Stock 14,000 19,000
Cash in hand 8,200 4,800
Cash in bank 2,200 8,000
Debtors ? 26,000
Creditors 22,000 19,800
Miscellaneous expenses outstanding 1,000 600
Details relating to year’s transactions are:

Receipts in the year and discount credited
to debtors accounts 2,45,000
Returns from debtors 6,000
Bad debts 2,000
Sales—Cash and credit 3, 00,000
Returns to creditors 3,000
Payments to creditors by cheque 2, 36,200
Receipts from debtors deposited into bank 2, 43,000
Cash purchases 10,000
Salary and wages paid out of Bank 18,000
Miscellaneous expenses paid cash 5,000
Drawing by cash 9,400
Purchase of sundry assets by cheque 2,000
Cash withdrawals from bank 21,000
Cash sales deposited in bank ?
Discount allowed by creditors 4,000
2. FINAL ACCOUNT OF NOT FOR PROFIT

ORGANISATION
EXAMINATION PROBLEM
1. Preparation of income and expenditure account and a balance sheet from a

given receipts and payment account and additional information or and
opening balance sheet.
2. Preparation of receipts and payments account from a given income and
expenditure account and additional information or / and opening balance
sheet.
3. Preparation of opening and closing balance sheet from a given receipts &
payments account and income and expenditure account alongwith additional
information if any.
Q. 1
On 31st December 2005, a club had subscription in arrears of Rs 16000 and in
advance Rs 4000. During the year ended 31-03-2006, the club received
subscription of Rs 208000 of which Rs 10400 was related to 2007. On 31 st
December 2006, there were 4 members who had not paid subscription for 2006 @
Rs 1600 per person.
Write up subscription a/c for the year 2006.
Q. 2
Subscription income for 1996-97 as per Income & Expenditure Account 82,000
Advance subscription received in 1995-96 4,000
Subscription outstanding at the end of 1996-97 (Including 1,000 for
95-96) 9,500
Advance subscriptions received for 1997-98 2,000
Subscription receivable on 1.4.96 5,000
Prepare a statement showing subscription received in 1996-97 as per Receipts &

payments Account.
Q. 3
There were 450 members in a club each paying an annual subscription of Rs. 50.
Rs. 500 were in arrears as on 31 st Dec. 1998. Subscriptions received during 1999
were Rs. 22,330 Including Rs. 450 for 1998 and Rs. 750 for the year 2000.
Calculate the amount of subscription in arrears as on 31 st Dec. 1999 by preparing

Subscription Account.
Q. 4
In 2006, the subscription received by Due club of Delhi were Rs. 20450including Rs.
250for 2005 and Rs. 500 for 2007. At the and of 2006, subscription outstanding for
2006 were Rs. 750. The subscription due but not received at the end of the
previous year i.e. 31-12-2005were Rs. 400 while subscription received in advance
on the same date were Rs. 900. Calculate the amount of subscription to be credited
to income and expenditure account for the year ending 31.12.2006.also state how
disclosure is to be made in the balance sheet at the end.
Q. 5
From the following , find out the amount of subscription to be included in the
income & expenditure account for the year ended 31 st march 2006:
Subscription were received during the year 2005-2006 as follows:
For the year ending 2004-2005 20000
Subscription outstanding as on 31st march 2005 were Rs. 35000 out of which Rs.
5000 were considered irrecoverable. On the same date , subscription received in
advance for 2005-2006 were Rs. 20000. Subscription still outstanding as on 31 st
march 2006 amounted to Rs. 60000.
Q. 6
Calculate what amount will be posted to income and expenditure account for the
year ending 31st December, 1996.
(a)
Amount paid for stationery during the year 1996 Rs. 1,080; Stock of stationery in
hand on 31st Dec. 1996 Rs. 50.
(b)
Stock of Stationery during the year 1996 Rs. 300; Payment made for stationery
during the year 1996, Rs. 1,080; stock of stationery in hand on 31 st Dec. 1996 Rs.
50.
(c)
Stock of stationery on 1st Jan., 1996 Rs. 300.
Creditors for stationery on 1st Jan., 1996 Rs. 200.
Amount paid for stationery during the year 1996 Rs. 1,080.
Stock of stationery on 31st Dec., 1996 Rs. 50.
Q.7
How will you deal with the following case while preparing final accounts of a non-
profit organization?
1-1-1998 31-12-1998
Rs. Rs.
Stock of Stationery 600 100
Creditors for stationery 400 260
Amount paid for stationery during 1998 was Rs. 2,160.
Q. 8
From the following information calculate the amount of stationery to be debited to
income & expenditure account for 2006:
Stock of stationery on January 1, 2006 3000
Creditors for stationery on January 1, 2006 2000
Advance paid for stationery carried forward from 2005 200
Amount paid for stationery during the year 2006 10800
st
Stock of stationery on 31 December 2006 500
Creditors for stationery for 2006 1300
st
Advance paid for stationery on 31 December 2006 300
Q. 9
The following is the summary of cash transactions for the year 2002.
Dr. Cr.
Receipts Rs. Payments Rs.
To Balance b/d 6,000 By Salaries 6,200
To Entrance fees 5,200 By Additions to Library 13,500
To Subscriptions: By Payments to
2001 3,000 Creditors 1,300
2002 13,000 By repair 500
2003 1,000 By Electric fittings 9,000
17,000 By Printing & Stationery 1,900
To sale of furniture 1,200 By Misc. expenses 300
To Sale of old furniture 120 By Balance c/d 6,900
To Rent of library hall 2,080
To Proceeds from
Entertainment (net) 6,000
To Special Subscription
For Governor’s party 2,000
39,600 39,600
From the above Receipts and Payments Account prepare Income and Expenditure
account.
Q. 10
The following is the receipts and payments account of a charitable hospital for the
year ended 31st March 2002:
Receipts Rs. 000 Payments Rs. 000
To Balance b/f: By Medicines 1,500
Cash in hand 50 By Honorarium to doctors 500
Cash at bank 300 By Salaries 1,375
To subscriptions 2,500 By Sundry expenses 25
To Donations 725 By Equipments purchased 750
To Interest for full year on By Charity show expenses 50
investments @ 7% per By balances e/f:
annum 350 Cash in hand 25
To charity show receipts 500 Cash at bank 200
4,425 4,425
Additional information
On 31.3.2001 On 31.3.2002
[Rs. ‘000] [Rs. ‘000]
Subscription outstanding 25 50
Subscription received in 50 25
Stock of medicines 500 750
Amounts due to suppliers of medicines 400 600
Value of equipments 1,050 1,500
Value of buildings 2,000 1,900
You are required to prepare income and expenditure account for the year ended
31st March, 2002 and the balance sheet as on that date.
Q.11 A summary of Receipts and Payments of Bakers Club for the year ended 31st March,
2008
To Opening Balance 3,000 By Salaries & Rent 1,500
“ Subscription 20,000 “ Electric Charges 30

0
“ Donations 5,000 ‘’ Sports Expenses
1,000
“ Entrance Fees 1,000 “ Sports goods purchase
9,000
“ Interest 10 ‘‘ Books purchase
0 5,000
“ Charity show Receipts “ Miscellaneous Expenses
2,400 70
“ Charity show Expenses
0
“ Investment
2,000
“ Closing balance
8,000
31,500 31,500
Following information are available at the end of the year :

(i) Of the total subscriptions received Rs. 500 for 2006-07 and Rs. 600 for
2008-09 but Rs. 100 is due for 2007-08.
(ii) The total sum received on Entrance fees is to be transferred to
Capital Fund.
(iii) Salary is remaining due to be paid Rs. 300.
(iv) Interest is receivable Rs. 500.
The club had the following assets on the opening day of the year Sports goods
Rs. 3,000; Books Rs. 2,000; Investment Rs. 6,000.
As on 31.3.08 : spors goods valued at Rs. 10,000.
From the above information prepare an Income and Expenditure Account for the
year ended 31.3.08 and Balance sheet as on that date.
Q. 12 Receipts and Payments Account Monster Club for the year ended 31st March, 2008.
Dr. Cr.
To Cash in hand 50 By Salaries 2,400
“ Cash at Bank 56 “ Rent 720
“ Subscription 5 “ Postage 30
“ (including Rs. 150 for 06-07 “ Printing & Stationery 25
“ and Rs. 100 for 08-09) “ Electricity charges 5
“ Interest on Investments 4,550 “ Meeting Expenses 300
“ Bank Interest 2,000 “ Purchase of library books 150
“ Sale of Furniture 25 “ Investment in bonds 1,000

200 “ Cash in hand 1,000
“ Cash at Bank 15
5
7,390 7,390
The following additional information is supplied to you—
1 . On 1st April. 2007 the club had the following assets and liabilities : (a)
Investments Rs.40,000; (b) Furniture Rs. 3,000; (c)Library Books Rs. 5,000;
(d) Liability for Rent Rs.60 and Salary Rs. 200.
2 . On 31st March, 2008 Rent Rs. 80 and Salary Rs. 300 were in arrear.
3 . The book value of furniture sold was Rs. 250.
4 . The club has has 45 members with an annual subscription of Rs.
100 each.
Prepare the Income & Expenditure Account of the Club for the year ended 31st
March, 2008 and the Balance Sheet as on that date.
Q.13
From the following particulars related to Anand Charitable Hospital, prepare an
Income and Expenditure Account for the year ended 30th June, 08 and a
Balance Sheet on that date.
Receipts & Payments Account for the year ended 30.6.08
Dr. Cr.

Balance in hand on 1.7.07 7,130 Payments for Medicines 30,590
Subscriptions 48,000 Honorarium to Medical staff 9,000
Donations 14,500 Salaries to House Staff 27,500
Interest on Investment @ 7% 7,000 Petty Expenses 46
0
Proceeds from Annual Day 10,450 Equipment Purchase
15,000
Expenses for Annual Day
75
Closing Balance (30.6.08)
1
87,080 87,080
Additional information :
On 30.6.07(Rs.) On 30.6.08 (Rs.)
Subscription Receivable 24 28
0 0
Subscription Received in Advance
64 10
Stock of Medicines
0
8,810
Value of equipment
9,740
21,200
Buildings
31,600
40,000
Outstanding liability to Medicine suppliers
38,000
10,000
Q. 14 How will you deal with the following cases while preparing final accounts of a
sports club as on 31st December 2007.
(i) Extract of trial balance as on 31st December 2007

Particulars Debit (Rs.) Credit (Rs.)
Match Fund 20000
Match Fund Investment 18000
Match Fund Bank balance 875
Match Fund Investment Interest 720
Match Expenses 1250
(ii) Balance Sheet as on 1st January 2007

Creditors for sports 15000 Sports material 20000
material
Receipts & Payment account for the year ended 31st December 2007
Sports Material 9000 Sports material 350000
(sale of old material)
(iii)
Subscription received during 2007 250000

Subscription outstanding on 31-12-2006 50000
Subscription outstanding on 31-12-2007 100000
Subscription received in advance on 31-12-2006 75000
Subscription received in advance on 31-12-2007 50000
Q. 15. The following is the receipts and payments account of a charitable hospital
for the year ended 31st March 2002:
To Balance b/f: 70000 By Medicines 300000
To subscriptions 500000 By Honorarium to doctors 100000
To Donations 145000 By Salaries 275000
To Interest for full year on By Sundry expenses 5000
investments @ 7% per 70000 By Equipments purchased 150000
annum By Charity show expenses 10000
To charity show receipts 100000 By balances c/f: 45000
885000 885000
Additional information
On 31.3.2001 On 31.3.2002

Subscription received in 10000 5000
Stock of medicines 100000 150000
Amounts due to suppliers of medicines 80000 120000
Value of equipments 210000 300000
Value of buildings 400000 380000
You are required to prepare income and expenditure account for the year ended
31st March, 2002 and the balance sheet as on that date.
Q. 16 Given below is the receipts and payments account of ABC Club:

Receipts & Payments Account
for the year ended 31st December, 2008.
Balance Salary of Secretary 3600
Cash 60 Honorarium 450
Bank 3000 3060 Wages 2400
Subscription (including Charities 2000
Subscription for 07 Rs. 1050) 9000 Printing & stationery 300
Sale of old furniture on 750 Postage 100
(1-1-2008) Rent & Taxes 1200
Sale of old newspaper 50 Upkeep of land 500
Legacies 3000 Sports material 2500
Interest on investment 1200 Balance c/d 14850
(Cost Rs. 20000)
Endowment fund 10000
Proceeds of concerts 800
advertisement 40
27900 27900
Assets and Liabilities as on 31-12-2007 and 31-12-2008 are as under:

31-12-2007 31-12-2008
Subscription in arrear 1250 450
Subscription in advances 300 600
Furniture 2000 1080
depreciation was 10% p.a. on the furniture left after selling a part of it. it was
decided that half of the legacies may be capitalized.
prepare income & expenditure account for the year ending 31 st December 2008 and
balance sheet as on that date.
Q. 17 From the following particulars, prepare Income and Expenditure Account.

Rs.
(i) Fee collected, including Rs. 80,000
on account of the previous year 3,80,000
(ii) Fees for the year outstanding 10,000
(iii) Salary paid, including Rs. 8,000 on account of the
previous year. 98,000
(iv) Salary outstanding at the end of the year. 9,000
(v) Entertainment expenses 3,000
(vi) Tournament expenses 42,000
(vii) Meeting expenses 18,000
(viii) Travelling expenses 6,000
(ix) Purchase of books and periodicals, including
Rs. 18,000 for purchase of books 28,000
(x) Rent paid 17,000
(xi) Postage, telegrams and telephones 15,500
(xii) Printing and stationery 4,500
(xiii)Donations received 25,000
Q. 18
From the following information relating to Dwarka Club , prepare the Balance Sheet
as on 1-1-2007 and on 31-12-2007:
(i) Assets on 1-1-2007 are – Club Ground and Building Rs. 500000, Sports
Equipment Rs. 300000, Furniture Rs. 70000, Subscription in arrears on that date
Rs. 10000.
Creditors for stationery Rs. 5000.
(ii) Receipts and Payments Account for the year ending 31 st December, 2007
Rs. Rs.
Balance b/d 50000 Printing & stationery 30000
Subscriptions: Salaries 110000
2006 9000 Advertisement 20000
2007 180000 Fire insurance 15000
2008 5000 Furniture 20000
Sale of old newspaper 3000 Investment 180000
Rent received 22000 Balance c/d 14000
Entrance fees 120000
389000 389000
(iii) Income & Expenditure account for the year ending 31 st December, 2007.
Rs. Rs.
Salaries 120000 Subscription 190000
Printing & Stationery 28000 Entrance fees 120000
Audit fees 5000 Rent received 24000
Advertising 20000 Sale of old newspapers 3000
Fire Insurance 12000
Depreciation:
On sports equipment 60000
On furniture 8000
Excess of income over 84000
expenditure
337000 337000
Q. 19
Summary of Receipts and payments of Bombay medical aid society for the year
ended 31.12.2000 are as follows:
Opening cash balance in hand Rs. 8,000, Subscription Rs. 50,000, Donation Rs.
15,000. Interest on Investments @ 9% p.a. Rs. 9,000. Payments for medicine
supply Rs. 30,000, Honorarium to Doctors Rs. 10,000, Salaries Rs.28,000, Sundry
expenses Rs. 1,000. Equipment purchase Rs. 15,000, Charity show expenses Rs.
1,500, Charity show collections Rs. 12,500.
Additional information:
1.1.2000 31.12.2000
Rs. Rs.
Subscription due 1,500 2,200
Subscription received in advance 1,200 700
Stock of medicine 10,000 15,000
Amount due for the medicine supply 9,000 13,000
Value of Equipment 21,000 30,000
Value of building 50,000 48,000
You are required to prepare Receipts and Payments Account and Income and
Expenditure Account for the year ended 31.12.2000. Also prepare balance sheet as
on 31-12-1999 and 31-12-2000.
Q. 20
Given below is the Receipts & payments Account of a “Resident welfare Association”
– sports club for the year ending 31-12-2006:
Balance b/d 2100 Purchase of sports material 7000
Subscription (Including Rs. Stationery 5700
1000 for 2005 and Rs. 1500 18000 Salaries 7000
for 2007) Honorarium 3000
Life membership fees 9000 Upkeep of ground 2600
Legacies 2000 Application fees 2000
Entrance fees 4000 Refreshment 1400
Donation for building fund 10000 Tournament expenses 6000
Tournament fund 8000 Match expenses 1000
Hire of club hall 5000 10% investment on 1-7-06 12000
Sale of old bats & balls etc. 500 Furniture (part payment) 5000
Sale of old furniture 700 Balance c/d 3600
59300 59300
Additional Information:
1-1-2006 31-12-2006
subscription due 1400 2400
Subscription received in advances -- 1500
Audit fees outstanding -- 1000
Creditors for stationery 600 500
stock of stationery -- 800
Stock of sports material 1100 1500
Building 40000 40000
Furniture was sold on 1-1-2006 at its book value. on the same date furniture Rs.
8000 was purchased. Depreciation is to be charged at 10% p.a.
Prepare Income & Expenditure Account for the year ended 31-12-2006 and balance
sheet as on that date.
Q. 21
The following is the income & expenditure Account of a charitable hospital for the
year ending 31-12-2006
Expenditure Rs. Income Rs.
Diet expenses 20000 Donations 40000
Rent & rates 5000 Interest on investments for
Insurance 2000 full year @ 5% 90000
Office expenses 80000 Miscellaneous Receipts 6000
Surgery & dispensary exp. 10000
Depreciation on:
Building 37500
Furniture 1200
Instruments 8000
Surplus of income over
expenditure 29300
356000 356000
Other information supplied to you are as under:

31-12-2005 31-12-2006
cash in hand 2000 1500
cash at bank 54000 ---
Building 750000 ---
Furniture 20000 ---
Instruments 35000 ---
subscription advance 6000 8000
Salaries Outstanding 18000 20000
Instruments purchased during the year 2006 were Rs. 5000.

You are required to prepare the Receipts & Payments Account of the hospital for
the year ended 31st December , 2006 and the balance sheet as on that date.
Q. 22
The following is the income & Expenditure Account of a club for the year ended 31 st
March 2004:
Expenditure Rs. Income Rs.
Stationery 1600 Donation 8000
Postage & telephone 3200 Billiard Table collection 7000
rates & taxes 6000 Profit on sports meet 12000
Repairs 8000 Income from investment 2700
Table tennis balls 1200
Printing of souvenir 2000
Electric charges 6000
Billiard room expenses 3000
Miscellaneous expenses 9400
Depreciation on club assets 2000
Surplus 41300
107700 107700
The following information are available:

1-4-2003 31-3-2004
club Assets 48000 52000
Outstanding Subscription 3000 5000
Advances Subscription 6000 10000
Stationery 600 400
Telephone 300 200
Electricity 700 300
Cash at Bank 1800 --
Investment 27000 47000
Prepare Receipts & Payments Account for the year ended 31 st march 2004 and a
balance sheet as at 31st march 2004.
Q. 23
From the following information relating to Dwarka Club , prepare the Balance Sheet
as on 1-1-2007 and on 31-12-2007:
(i) Assets on 1-1-2007 are – Club Ground and Building Rs. 44000, Sports
Equipment Rs. 25000, Furniture Rs. 4000, Subscription in arrears on that date Rs.
800.
(ii) Receipts and Payments Account for the year ending 31 st December, 2007
Rs. Rs.
Balance b/d 4200 Printing & stationery 2600
Subscriptions: Salaries 11000
2006 600 Advertisement 1600
2007 25000 Fire insurance 1200
2008 400 Investment 20000
Rent received 3500 Balance c/d 7800
Entrance fees 10500
44200 44200
(iii) Income & Expenditure account for the year ending 31 st December, 2007.
Rs. Rs.
Printing & Stationery 2200 Entrance fees 10500
Audit fees 500 Rent received 4000
Advertising 1600
Fire Insurance 1000
Depreciation:
On sports equipment 9000
Excess of income over 14300
expenditure
40100 40100
Q. 24
From the following Receipts and payments Account of Cricket Club and the
additional information given, prepare the Income and Expenditure account for the
year ending 31-12-99 and the Balance Sheet on that date:
RECEIPTS AND PAYMENTS A/C
for the year ending 31-12-1999
To Bal. b/d Rs. Rs.
By Maintenance 6,820
Cash 3,520 By Crockery
Bank 27,380 Purchased 2,650
Fixed Deposit By Match Expenses 13,240
@ 6% 30,000 By salaries 11,000
To Subscription By Conveyance 820
(including Rs. By Upkeep of Lawns 4,240
6,000 for 1998) 40,000 By Postage Stamps 1,050
To Entrance Fees 2,750 By Purchase of
To Donation 5,010 Cricket goods 9,720
To Interest on Fixed By Sundry Expenses 2,000
Deposits 900 By Investments 5,700
To Tournament By Tournament Expenses 18,800
Fund 20,000 By Bal. c/d:
To Sale of Crockery Cash 2,200
(Book Value Bank 23,320
Rs. 1,200) 2,000 Fixed Deposits 30,000
1,31,560 1,31,560
Additional Information:
(i) Salary outstanding is Rs. 1,000.
(ii) Opening balance of stock of Postage and stationery and Cricket goods is
Rs. 750 and Rs. 3,210 respectively. Closing sock of the same is Rs. 900
and Rs. 2,800 respectively.
(iii) Outstanding subscription for 1998 and 1999 is Rs. 6,600 and Rs.
8,000 respectively.
Q. 25
From the following particulars relating to Mother Teresa Charitable Trust Hospital
prepare Receipts and payments Account for the year ended 31 st March, 2003 and a
Balance Sheet as on the date:
INCOME AND EXPENDITURE
for the year ended 31 st March, 2003
Rs. Rs.
To Medicines used 1,49,900 By Subscription 2,80,000
To Honorarium to doctors 60,000 By Donations 47,500
To Salaries 1,37,500 By Interest on investments
To Printing and Stationery 5,500 At 11% p.a. 55,000
To Electricity and water 2,375 By Proceeds from
To Rent 30,000 Charity show 57,250
To Depreciation on furniture 10,500 Less: Exp. 3,900 53,350
To Deprecation on equipment 16,250
To Surplus 23,825
4,35,850 4,35,850
Additional Information
31-3-2002 31-3-2003
Rs. Rs.
(i) Subscription due 600 800
(ii)Subscription received in advance 320 500
(iii)Electricity and water outstanding 460 575
(iv)Stock of medicines 39,100 48,750
(v)Estimated value of equipments 58,000 69,500
(vi)Furniture cost less depreciation 1, 05,000 94,500
(vii)Land -- 50,000
(viii)Interest accrued on investments
in 11% Bonds costing Rs. 5, 12,500
(face value Rs. 5, 00,000) 13,750 13,750
(ix)Cash in hand 1,700 800
(x)Cash at bank 45,000 ?
3. FINAL ACCOUNT
Q. 1
From the following Trial Balance of Mr. Gupta , Prepare Trading, Profit & Loss
Account for the year ending on 31st March 2008 and Balance sheet as on that date:
Particulars Debit Credit
Capital and Drawing 100000 800000
Opening stock 150000
Purchase and sales 840000 1620000
Debtors and Creditors 240000 150000
Discounts 32000 56000
Commission 24000 28000
Returns 32000 40000
Salaries 240000
Rent, Rates and taxes 80000
Postage, Telegram and Telephone 50000
Loan 600000
Duty Drawbacks 20000
Interest on loan 40000
Furniture 700000
Brand names and design 120000
Advertisement 200000
Cash at bank 300000
Cash in hand 126000
Freight inward 40000
3314000 3314000
Other Informations:
(i) Closing stock Rs. 340000.
(ii) Sales include sales tax Rs. 100000.
(iii) Depreciate furniture @ 10% and amortize brand names and design @
20%.
(iv) Write off advertisement over 5 years.
(v) Salaries outstanding Rs. 24000.
(vi) Salaries paid in advance Rs. 20000.
Q. 2
On 31st March , 2008 the following trial balance was prepared from the books of Mr.
M:
Debit Credit
Bills Receivable 5000
Plant and machinery 75000
Purchase (adjusted) 190000
Capital account 70000
Freehold premises 50000
Salaries 21000
Wages 24400
Postage and stationery 1750
Carriage in 1750
Carriage out 1000
Bad debts 950
Bad debts provision 350
Office charges 1500
Cash at bank 5300
Cash in hand 800
Bills Payable 7000
General Reserve 20000
Sales 331700
Closing Stock 30000
439050 439050
The following adjustments are require :
(a) M gets a salary of Rs. 12000 p.a.
(b) Allows interest on capital @ 10% p.a.
(c) Bad debts provision is 2.5 % on debtors.
(d) 10% of net profit to be carried to General Reserve.
(e) It was discovered in april 2007 that the stock as on 31 st March , 2007
were overcast by Rs. 1000. However no entry was passed in april 2007.
(f) Depreciate plant and machinery @ 10% and freehold premises @ 2% p.a.
Prepare the Trading and Profit and Loss account of the firm for the year ended
31st March, 2008 and a balance sheet as at that date.
Q. 3
The following is the Trial Balance of Ashok on 31st December , 2006-
Trial Balance as on 31st December , 2006
Particulars Debit Particulars Credit
Building (at cost) 150000 Capital 30000
Purchases (adjusted) 290000 Sales 529500
Salaries 5000 Wages outstanding(end) 8000
Bad debts 2000 Pro. For Dep. On Furniture 12000
Wages 10000 Apprentice Premium 500
Rent 5000 Sundry Creditors 20000
Prepaid rent (at the end) 3000
Insurance 5000
Furniture & Fitting (at cost) 60000
Drawings 5000
Sundry debtors 25000
Closing stock 40000
600000 600000
Prepare a Trading and Profit and Loss Account for the year ended 31 st December,
2006 and also the Balance Sheet as on that date after making the following
adjustments:
(1) Salaries for the month of December 2006 amounting to Rs. 1000 were
unpaid which must be provided for. The balance in the account included
Rs. 800 paid in advance.
(2) Insurance is prepaid to the extent of Rs. 2000.
(3) Depreciate furniture and fittings by 10% on original cost and building by
5%.
(4) Stock worth Rs. 1500 was put by Ashok to his personal use.
(5) Make a provision for doubtful debts equal to 10% of Debtors.
Q. 4 From the following Trial Balance and information, Prepare Trading and Profit
and Loss account of Mr. Rishabh for the year ended 31 st March, 2007 and a balance
sheet as on that date.
Capital 100000
Drawing 12000
Land and Building 90000
Plant and Machinery 20000
Furniture 5000
Sales 140000
Return outward 6000
Debtors 18400
Loan From Gajanand on 1-7-2006 @ 6% p.a. 30000
Purchases 80000
Return Inward 5000
Carriage 10000
Sundry expenses 600
Printing and Stationery 500
Insurance expenses 1000
Prov. For bad and doubtful debts 1000
Provision for discount on debtors 380
Bad debts 400
Opening stock on 01.04.2006 21300
Salaries and wages 18500
Creditors 12000
Trade expenses 800
Cash at bank 4600
Cash in hand 1280
289380 289380
(i) Value of closing stock on 31.03.2007 was Rs. 27300.
(ii) Fire occurred on 23rd March, 2007 and Rs. 10000 worth of general
goods were destroyed. The insurance company accepted claim for Rs.
6000 only and paid the claim money on 10th April, 2007.
(iii) Bad debts amounting to Rs. 400 are to be written off. Provision for bad
and doubtful debts is to be made at 5% and for discount at 2% on
debtors. Make a provision of 2% on creditors for discount.
(iv) Received Rs. 6000 worth of goods on 27th March, 2007 but the invoice
of purchase was not recorded in purchase book.
(v) Rishabh took away goods worth Rs. 2000 for personal use but no
record was made thereof.
(vi) Charge depreciation at 2% on Land and Building, 20% on Plant and
Machinery and 5 % on furniture.
(vii) Insurance prepaid amounts to Rs. 200.
Q. 5
The following is the trial balance of Mr. Ram Lal as at 31st December, 2006:
Ram Lal Capital 86690
Stock on 01.01.2006 46800
Returns 8600 5800
Freight and carriage 18600
Rent and taxes 5700
Salaries and wages 9300
Sundry debtors and creditors 24000 14800
Bank loan @ 6% p.a. 20000
Bank interest on loan 900
Printing and advertising 14600
Miscellaneous Income 250
Cash at bank 8000
Discount 1800 4190
Furniture and fittings 5000
General expenses 11540
Insurance 1300
Postage and telegram 2330
Cash in hand 380
Travelling expenses 870
drawings 40000
521330 521330
The following adjustment should be made:
(i) Included amongst the debtors is Rs. 3000 due from Suresh Kumar and
included among the creditors Rs. 1000 due to him.
(ii) Provision for bad and doubtful debts be created at 5% and reserve for
discount @ 2% on sundry debtors.
(iii) Depreciate furniture and fittings by 10%.
(iv) Personal purchase amounting to Rs. 600 had been included in the
purchase day book.
(v) Interest on bank loan shall be provided for the whole year.
(vi) One quarter of the amount of printing and advertising is to be carried
forward to next year.
(vii) Credit purchase invoice amounting to Rs. 400 had been omitted from
the books.
(viii) Stock on 31st December, 2006 was Rs. 78600.
Prepare Trading and Profit and Loss account for the year ended 31 st December,
2006 and Balance Sheet as on that date.
Q. 6
The following Trial balance was extracted from the books of Mr. Shyam Lal as on
31st December, 2006:
Capital account - 100000
Plant and machinery account 78000 -
Furniture 2000 -
Sales - 127000
Purchase 60000 -
Returns 1000 750
Opening stock 30000 -
Discount 425 800
Sundry debtors and creditors 45000 25000
Salaries 7550 -
Manufacturing wages 10000 -
Carriage outwards 1200 -
Provision for bad debts - 525
Rent, rates and taxes 10000 -
Advertisement 2000 -
Cash 6900 -
254075 254075
st
Prepare Trading and Profit and Loss Account for the year ended 31 December,
2006 and Balance sheet as on that date after taking into account the following
adjustments:
1. Closing stock was valued at Rs. 34,220.
2. Provision for bad debts is to be kept at Rs. 500.
3. Allow interest on capital at 10% p.a.
4. Furniture was old and the same was disposed off for Rs. 760 in exchange of
new furniture costing Rs. 1680. The net invoice of Rs. 920 was passed
through purchase register (No depreciation need be charged on old and new
furniture.)
5. Depreciate Plant and machinery by 10% p.a.
6. The Proprietor Mr. Shyam Lal has taken goods worth Rs. 5000 for personal
use and distributed goods worth Rs. 1000 as samples.
Q. 7 Mr. A, a shopkeeper had prepared the following trial balance from his ledger as
on 31st March, 1989.
Dr. (Rs.)Cr. (Rs.)
Purchases 6,20,000
Sales 8,30,000
Cash in hand 4,200
Cash in Bank 24,000
Stock of Goods on 1.4.88 1,00,000
Mr. A’s Capital 5,77,200
Drawings 8,000
Salaries 64,000
Postage and Telephones 23,000
Salesmen Commission 70,000
Insurance 18,000
Advertising 34,000
Furniture 44,000
Printing & Stationery 6,000
Motor Car 96,000
Bad debts 4,000
Cash Discount 8,000
General Expenses 60,000
Carriage Inward 20,000
Carriage Outward 44,000
Wages 40,000
Creditors 80,000
Debtors 2,00,000
Total Rs. 14,87,20014,87,200
You are requested to prepare Trading and Profit and loss Account for the year
ended 31st March, 1989 and Balance Sheet as on that date.
(1)Cost of goods is stock as on 31st March 1989 Rs. 1,45,000
(2)Mr. A had withdrawn goods worth Rs. 5,000 during the year.
(3)Purchases included purchases of furniture worth Rs. 10,000.
(4)Debtors include Rs. 5,000 as bad debts.
(5)Creditors include a balance of Rs. 4,000 to the credit of Mr. B in respect of which
it has been decided and settled with the party to pay only Rs. 1,000.
(6)Sales include goods worth Rs. 15,000 sent to Ram and Co. on approval and
remaining unsold as on 31st March 1989 the cost of goods was Rs. 10,000
(7)Provision for bad debts is to be created at 5% on Sundry Debtors.
(8) Depreciate Furniture by 15% and Motor Car by 20%.
(9)The Salesmen are entitled to a commission of 10% on total sales.
Q. 8
Given below is the trial balance of Mr. Alok, a trader, as on 31 st March, 2006:
Cash in hand 5000
Land and building 80000
Plant and Machinery 50000
Stock on 1.4.2005 10000
15% investment on 1.4.2005 20000
Purchase and Sales 95000 190000
Bank Overdraft 20000
Wages 28000
Salaries 16000
Rent, Rates and Taxes 15000
Bad Debts 6000
Drawings 5000
Bills receivable and bills payable 15000 21000
Carriage inwards 6000
Custom duty on purchases 16000
Life insurance premium 4000
Advertisement 30000
Provision for doubtful debts 2000
Interest on investment 2000
Trade expenses 11000
Furniture 20000
Sales tax payable 25000
Capital 157000
457000 457000
Additional informations:
(i) Stock on 31.3.2006 was valued at Rs. 40000.
(ii) Included in debtors are Rs. 8000 due from Ram and included in
creditors are Rs. 6000 due to Ram.
(iii) Bills receivable include a bill of Rs. 5000 received from Varun, which
has been dishonored.
(iv) Sales include Rs. 5000 for the goods sold on approval basis. Goods are
sold at a profit of 25% on cost. Approval was not received upto
31.3.2006.
(v) Wages include Rs. 5000 spent on the erection of the machinery.
(vi) Advertisement include Rs. 20000 spent at the time of launching a new
product. It is the policy of the business to write off such expenses in 5
years.
(vii) Create a provision for doubtful debts at 5% on debtors.
(viii) Prepaid taxes amounted to Rs. 2000.
(ix) Depreciate machinery by 10%.
Prepare Trading and Profit and Loss Account for the year ended 31 st March 2006
and a Balance Sheet on that date.
Q. 9
From the following balances taken from the ledgers of Krishna on 31 st March, 2005,
prepare the Trading and Profit and Loss account for the year ending 31 st March,
2005 and balance sheet on that date:
Sundry Creditors 19000 Bad Debts 100
Building 15000 Loam from Ram 2500
Income tax 1025 Sundry Debtors 9500
Loose tools 1000 Investments 6500
Cash at bank 16200 Bad Debts reserve 1600
Sundry expenses 1990 Rent and rates 850
Bank interest (credit) 75 Furniture 3000
Purchases 157000 Stock (1.4.2004) 27350
Wages 10000 Capital 47390
Carriage inwards 1120 Discount allowed 630
Sales 185000 Discount received 535
Motor Van 12500 Drawings 2000
Cash in hand 335 Bills payable 10000
Adjustments:
(i) Write off further Rs. 300 as bad debts and create a provision for bad
debts at 20% on debtors.
(ii) Dividend accrued and due on investment is Rs. 135. Rates paid in
advance Rs. 100 and wages owing Rs. 450.
(iii) On 31.03.2005 stock was valued at Rs. 15000 and loose tools were
valued at Rs. 800.
(iv) Write off 5% for depreciation on building and 40% on motor van.
(v) Provide for interest at 12% p.a. due on loan taken on 1.6.2004.
(vi) Manager is entitled to a commission of 5% on net profits after
charging his commission.
Q. 10
From the following Trial balance of a trader on 31 st March, 2005, prepare Trading
and Profit and Loss account for the year ending 31 st March, 2005 and Balance Sheet
as at that date after giving effect to the under mentioned adjustments:
Debit Balances Rs. Credit Balance Rs.
Drawings 6000 Bank Overdraft 25000
Wages 15500 Interest on investment 5800
Stock 12800 Bills Payable 4600
Loan to X 4000 Interest on loan to X 320
Rent 5000 Capital 100000
General Expenses 1480 Reserve for Bad Debts 250
Investments 60000 Sales 230000
Purchases 160000 Sundry Creditors 12590
Freight and cartage 2100
Goodwill 40000
Bills Receivable 6200
Rates and Taxes 1800
Sales Returns 2100
Insurance 900
Cash and Bank Balance 3700
Postage and Telegram 3800
Land and Building 25000
Plant and machinery 10000
Sundry Debtors 16500
Packing charges 400
Bad Debts 1280
378560 378560
Adjustments:
(i) Closing stock as on 31.3.2005 Rs. 16000.
(ii) Goods worth Rs. 700 were sent on 25.3.2005 as sale on approval basis
for Rs. 800 and the approval was not received before the end of the
month.
(iii) 20% of the goodwill is to be written off.
(iv) Further bad debts were estimated at Rs. 350. Increase reserve for bad
debts to the extent of Rs. 1500.
(v) Depreciate land and building by 3% and plant and machinery by 10%.
(vi) Goods worth Rs. 800 were distributed as free samples.
Q. 11
The following balance were taken from the books of Shri Ram Prasad on 31 st March,
2003:
Rs. Rs.
Capital Account 100000 Rent 2100
Drawings 17600 Railway freight on sales 16940
Purchases 80000 Carriage inwards 2310
Sales 140370 Office expenses 1340
Purchase Return 2820 Printing and stationery 660
Opening Stock 11460 Postage and telegrams 820
Bad Debts 1400 Sundry Debtors 62070
Bad Debts Provision Sundry Creditors 18920
(1.4.2002) 3240 Cash at Bank 12400
Rates and Insurance 1300 Cash in Hand 2210
Discount (Cr.) 190 Office furniture 3500
Bills Receivable 1240 Salary and Commission 9870
Sales Returns 4240 Addition to Building 7000
Wages 6280
Building 25000
Prepare Trading , Profit and Loss Account for the year ending 31 st March, 2003 and
Balance Sheet as on 31st March, 2003, after keeping in view these adjustments:
(1) Depreciate old Building 2.5% and New Addition to Building @ 2% and
office furniture @ 5%.
(2) Write off further Bad Debts Rs. 570.
(3) Increase the bad debts provision to 6% of Debtors.
(4) On 31st March, 2003 Rs. 570 was outstanding for Salaries.
(5) Rent Receivable Rs. 200.
(6) Interest on Capital at 5%.
(7) On 31st March, 2003 stock is valued at Rs. 14290.
(8) Unexpired insurance Rs. 240.
Q. 12
From the following Trial Balance of Mr. S, You are required to prepare Final Account
for the year ended 31st March, 2003 after making the necessary adjustments:
Capital and Drawings Account 10000 200000
Freehold Property 60000 -
Plant and Machinery 100000 -
Salaries 14000 -
Printing and stationery 2000 -
Furniture and Fixtures 4000 -
Discount 1500 -
Bills payable - 5700
Insurance 3000 -
Bad Debts 600 -
Office Rent 2600 -
Loose Tools 2000 -
Provision for doubtful debts - 4800
Loan to Sudhir @ 10% on 1.10.2002 40000 -
Interest on loan to Sudhir - 1000
Cash at Bank 25000 -
Cash In hand 10500 -
Stock 31.3.2003 74000 -
Trading profits - 117200
Outstanding wages on 31.3.2003 - 500
Insurance claim received for lose of goods - 5000
374200 374200
Adjustments:
(i) Outstanding Salaries Rs. 700.
(ii) Prepaid Insurance Rs. 400.
(iii) Value of Loose Tools on 31st March, 2003 Rs. 1500.
(iv) A new machinery was purchased on credit and installed on 31 st
December 2002 costing Rs. 15000. No entry for the same has yet
been made in the books.
(v) Depreciate (on closing Balance) – Plant and Machinery at 10%,
furniture and fixtures at 5%.
(vi) The provision for doubtful debts is to be maintained at 5% on debtors.
Q. 13
You are required to prepare Trading and Profit and Loss Account and Balance sheet
from the following balances and adjustments for the year ending on 31 st December,
2001:
Debit Credit
Purchases/ Sales 130295 180500
Cash in hand 500
Cash at bank 9500
Stock on 1.1.2001 40000
Wages 22525
Returns 2400 195
Repairs 1675
Debtors/ Creditors 30000 30305
Bad Debts 2310
Loan (12% p.a.) 20000
Discounts 800 530
Capital 37500
Salaries 8000
Sales Tax 800
Octroi 500
Insurance 1000
Charity 125
Rent 2000
Machinery 16000
Total 269030 269030

Adjustments:
(i) Wages include Rs. 2000 for erection of new machinery installed on
1.1.2001.
(ii) Provide for depreciation on machinery @ 5% p.a.
(iii) Stock on 31.12.2001 is Rs. 40925.
(iv) Salaries unpaid Rs. 800.
(v) Further bad debts Rs. 400.
(vi) Make a provision of 5% on debtors for doubtful debts.
(vii) Rent is paid upto 31st March, 2002.
(viii) Unexpired insurance Rs. 300.
14.
From the under mentioned trial balance of Mr. B, prepare the final account for the
year ended 31st March, 2003 and the balance sheet as at that date:
Debit Credit
Land and Building 50000 -
Purchases (adjusted) 210000 -
Stock 31.3.2003 45000 -
Returns 1500 2500
Wages 45300 -
Salaries 39000 -
Office expenses 15400 -
Carriage inwards 1200 -
Discounts 750 1200
Bad debts 1200 -
Sales - 385000
Capital - 115000
C’s Loan A/c (taken on 1.10.2002@ 18%p.a.) - 25000
Insurance 1500 -
Commission - 1500
Plant and Machinery 50000 -
Bills Receivable 20000 -
Sundry Debtors 40000 -
Sundry Creditors - 25000
Cash at Bank 16000 -
Office equipment 12000 -
Bills Payable - 12350
Expenses Payable - 3300
570850 570850
The following adjustments be taken care of:
(i) Depreciate Land and Building @ 6%, Plant and Machinery @ 10% ,
office Equipment @ 20% and furniture and fixtures @ 15%.
(ii) Create a provision for bad and doubtful debts at 2% on debtors.
(iii) Insurance premium includes Rs. 250 paid in advance.
(iv) Provide interest on capital @ 10% p.a. and salary to Mr. B Rs. 15000
p.a.
(v) 10% of final profit is to be kept in general reserve.
Q. 15
From the following Trial Balance of Mr. Bharat , Prepare Trading, Profit & Loss
Account for the year ending on 31st March 2001 and Balance sheet as on that date:
Capital and Drawing 50000 400000
Opening stock 75000
Discounts 16000 18000
Commission 12000 14000
Returns 16000 20000
Salaries 120000
Rent, Rates and taxes 40000
Postage, Telegram and Telephone 25000
Loan 310000
Duty Drawbacks 10000
Furniture 350000
Brand names and design 60000
Advertisement 100000
Cash at bank 150000
Cash in hand 63000
Freight inward 20000
1657000 1657000
Other Informations:
(i) Closing stock Rs. 170000.
(ii) Sales include sales tax Rs. 50000.
(iii) Depreciate furniture @ 10% and amortize brand names and design @
20%.
(iv) Write off advertisement over 5 years.
(v) Salaries outstanding Rs. 12000.
(vi) Salaries paid in advance Rs. 10000.
Q. 16
The following is the schedule of balances on 31.3.2001 extracted from the books of
Shri Gavaskar:
Debit Credit
Cash in Hand 1400 -
Cash at Bank 2600 -
Sundry Debtors 86000 -
Stock on 1.4.2000 62000 -
Office Equipment 16000 -
Buildings 60000 -
Motor Car 20000 -
Sundry Creditors - 43000
Loan - 30000
Reserve for bad debts - 3000
Purchases 140000 -
Purchase returns - 2600
Sales - 230000
Sales returns 4200 -
Salaries 11000 -
Rent for godown 5500 -
Interest on loan 2700 -
Rates and taxes 2100 -
Discount allowed to debtors 2400 -
Discount received from creditors - 1600
Freight on purchases 1200 -
Drawings 12000 -
Printing and stationery 1800 -
Electric charges 2200 -
Insurance premium 5500 -
General office expenses 3000 -
Bad debts 2000 -
Bank charges 1600 -
Motor car expenses 3600 -
Capital account - 162000
472200 472200
Prepare Trading and Profit and Loss account for the year ended 31.3.2001 and the
Balance sheet as on that date after making provision for the following:
(1) Depreciate Building by 5%, Furniture and Fixture by 10%, Office
Equipment by 15% and Motor car by 20%.
(2) Value of stock at the close of the years was Rs. 44000.
(3) Reserve for bad debts is to be maintained at 5% of sundry debtors.
(4) Insurance premium includes Rs. 4000 paid towards proprietor’s life
insurance policy and the balance of the insurance charges cover the
period from 1.4.2000 to 30.6.2001.
17.
From the following Trial Balance of Mr. Gaurav Singh for the year ending 31.3.2000
and additional information given, prepare Trading and Profit and Loss account and
Balance Sheet as on 31.3.2000:
Capital - 464000
Purchases and Sales 500000 875000
Carriage 10000 -
Wages and Salaries 31250 -
Commission - 16750
Machinery 138750 -
Furniture 25000 -
Bad debts recovered - 8000
B/R and B/P 37500 33750
Taxes and Insurance 21250 -
10% Bank Loan - 50000
Interest on Bank Loan 3000
Bank 24500
Drawings 62500
1491250 1491250
(i) Value of closing stock as on 31st March, 2000 is Rs. 50000.
(ii) Wages and Salaries outstanding is Rs. 12500 and insurance prepaid is
Rs. 5000.
(iii) Depreciate machinery and furniture @ 10% and 15% p.a. respectively.
Machinery included a machine which was purchased for Rs. 38500 on
30th September , 1999.
(iv) Goods costing Rs. 10000 were taken by the proprietor for his personal
use , but no entry has been made in the books of accounts.
18.
The trial balance of X for the year ended 31 st December , 2001 is given ahead,
prepare his trading and profit and loss account for the year ended 31 st December ,
2001 and his balance sheet on that date:
Furniture 640 -
Building 7500 -
Machinery 6250 -
Capital - 12500
Bad debts 125 -
Bad debts reserve - 200
Stock (1.1.2001) 3460 -
Bank overdraft - 2850
Returns 200 125
Advertisement 450 -
Interest 118 -
Cash 650 -
Commission - 375
Tax and Insurance 1250 -
General expenses 782 -
Salary 3300 -
34000 34000
Stock on 31st December , 2001 was valued at Rs. 3250. Depreciate building at 5%,
furniture at 10% and machinery at 20%. Interest Rs. 85 is payable on bank
overdraft. Salary Rs. 300 and tax Rs. 120 are outstanding. Insurance prepaid is Rs.
100 and one third of the commission is received in advance. Furniture purchased in
January 2001 worth Rs. 100 is included in purchases. Write off Rs. 100 as further
bad debts and reserve for doubtful debts is to be made equal to 5% on debtors.
19.
From the following Trial Balance of Mr. Gaurav Singh for the year ending 31.3.2000
Capital - 900000
Returns 30000 20000
Carriage 16000 -
Commission - 26000
Machinery 160000 -
Furniture 40000 -
Bad debts 16000 -
B/R and B/P 60000 14000
Discount allowed 24000 -
Bank 100000 -
Drawings 100000 -
2450000 2450000
Rs. 4000.
(iv) Goods costing Rs. 10000 were taken by the proprietor for his personal
use , but no entry has been made in the books of accounts.
(v) Provide for doubtful debts on the debtors @ 10%.
20.
From the following Trial Balance of Mr. Gopal Singh for the year ending 31.3.2000
Capital - 225000
Returns 7500 5000
Carriage 40000 -
Commission - 6500
Machinery 40000 -
Furniture 10000 -
Bad debts 4000 -
B/R and B/P 15000 3500
Discount allowed 6000 -
Bank 25000 -
Drawings 25000 -
612500 612500
Rs. 2000.
(iv) Goods costing Rs. 12000 were sold on approval basis for Rs. 15000 ,
but these were not approved by the customer as yet.
(v) Provide for doubtful debts on the debtors @ 10%.
4. DEPRECIATION
Q. 1
An asset is purchased for Rs. 25,000. Depreciation is to be provided annually
according to the straight-line method. The useful life of the asset is 10 years and
the residual value is Rs. 500.
You are required to find out the rate of depreciation and prepare asset account for
the first three years.
Q. 2
X Ltd. purchased on January I, 20XI a second hand plant for Rs 60,000 and
immediately spent Rs 40,000 in putting the same in working condition. On July I,
20X1 additional machinery costing Rs 40,000 was purchased. On January I, 20X3
the plant purchased on January I, 20XI became obsolete and was sold for Rs
50,000. On July I, 20X3 new machinery was purchased at a cost of Rs 1,20,000.
The firm provided depreciation on straight line method at 10% per annum on the
original cost of the asset.
Show Machinery Account for the calender years 20XI to 20X4.
Q. 3
X Ltd. purchased a second-hand machinery on January 1, 20X1 for Rs 37,000 and
immediately spent Rs 2,000 on its repairs and Rs 1,000 on its erection. On July 1,
20X2, it purchased another machine for Rs 10,000 and on July 1, 20X3 sold off the
first machine purchased in 20X1 for Rs 28,000; on the same date it purchased a
machinery for Rs 25,000. On 1st July, 20X4 the second machinery purchased for Rs
10,000 was also sold off for Rs 2,000. Depreciation was provided on the Machinery
at a rate of 10% p.a. on the original cost annually on 31st December.
Given the Machinery Account for four calender years commencing from January1,
20Xl. Calculations are to be made to the nearest rupee.
Q. 4
M/s Suba Pharmaceuticals has imported a machine on 1 st July, 2001 for Rs.
1,60,000. They also paid customs duty and freight Rs. 80,000 and incurred
erection charges Rs. 60,000. Another local machinery costing Rs. 1,00,000 was
purchased on January 1, 2002. On 1st July, 2003 a portion of the imported
machinery (value one third) got out of order and was sold for Rs. 34,800. Another
machinery was purchased to replace the same for Rs. 50,000. Depreciation is to be
calculated at 20% p.a.
Show the Machinery account for 2001, 2002 & 2003, using the fixed installment
method.
Q. 5
On 1st April 1995 a firm purchased a machinery for Rs. 2,00,000. On 1 st October in
the same accounting year additional machinery costing Rs. 1,00,000 was
purchased. On 1st October, 1996 the machinery purchased on 1 st April 1995 having
become obsolete, was sold off for Rs. 90,000. On 1 st October, 1997 new machinery
was purchased for Rs. 2,50,000 while the machinery purchased on 1 st October,
1995 was sold for Rs. 85,000 on the same day.
The firm provides depreciation on its machinery @ 10% per annum on original cost
on 31st March every year.
Show Machinery account, provision for depreciation account and depreciation
account for the period of three accounting year ending 31 st March, 1998.
Q. 6
In a business there was a machine of Rs. 90000 on 1 st January , 1996. On 30 June
1996 an additional machine was purchased for Rs. 10000. On 31 st December 1996
part of the machine was sold for RS. 2100which had a cost of Rs. 2000 on 1 st
January 1996. Prepare machine account after providing at 10% on fixed installment
method.
Q. 7
A firm purchased on 1st January , 1996 a small plant for Rs. 100000. On 1 st July in
the same year an additional plant was purchased costing Rs. 50000. On 1 st July
1997, the plant purchased on 1st January 1996 having become obsolete , is sold off
for Rs. 40000.
Depreciation is provided at 10% p.a. on original cost on 31 st December every year.
Show plant account and Provision for Depreciation account.
Q. 8
On 1st April 1995 M/s Rishab & Co. purchased four machines for Rs. 50,000 each.
His accounting year ends on 31st March, Depreciation @ 20% on original cost has
been charged to profit and loss account and credited to a separate provision for
depreciation account.
On 1st April 1996 one machine was sold for Rs. 35,000 and on 1 st April 1997, a
second machine was sold for Rs. 33,000 A new machine which cost Rs. 80,000 was
purchased on 1st October 1996. The same rate of depreciation was decided for the
new machine as well.
Prepare :
(i) Machinery A/c.
(ii) Machinery Disposal A/c.
(iii) Provision for Depreciation A/c.
Q. 9
On 1st January 1992 X Ltd. purchased a machinery for Rs. 58,000 and spent Rs.
2,000 on erection. On 1st July, 1992 an additional machinery costing Rs. 20,000
was purchased. On 1st July 1994 the machine purchased on 1.1.92 was wold for Rs.
28,600 and on the same date, a new machine was purchased at a cost of Rs.
40,000. So the machinery A/c for the first for calendar years according W.D.V.
method taking the rate of depreciation at 10% per annum.
Q. 10
X bought a machine for Rs. 25,000 on which he spent Rs. 5,000 for carriage and
freight, Rs. 1,000 for brokerage of a middleman Rs. 3,500 for installation and Rs.
500 for an iron pad. The machine depreciated @ 10% every year on written down
value basis. After three years the machine was sold to Y for Rs. 30,500 and Rs. 500
was paid as commission to the broker through whom the sale was effected. Prepare
Machine Account for three years.
Q. 11
Ram Ltd. which depreciates its machinery at 10% p.a. on Diminishing Balance
Method, had on 1st January, 1994 Rs. 9,72,000 on the debit side of Machinery
Account.
During the year 1994 machinery purchased on 1 st January, 1992 for Rs. 80,000 was
sold for Rs. 45,000 on 1st July, 1994 and a new machinery at a cost of Rs.
1,50,000 was purchased and, installed on the same date, installation charges being
Rs. 8,000.
The company wanted to change the method of depreciation from Diminishing
Balance Method to Straight Line Method with effect from 1st January, 1992.
Difference of depreciation upto 31st December, 1994 to be adjusted. The rate of
depreciation remains the same as before. Show Machinery Account.
Q. 12
A purchased on 1st January , 1993 certain machinery for Rs. 1,94,000 and spent
Rs. 6,000 on its erection. On 1st July, 1993 additional machinery costing Rs.
1,00,000 was purchased.
On 1st July, 1995 the machinery purchased on 1st January, 1993 having
become obsolete was auctioned for Rs. 1,00,000 and on the same date new
machinery was purchased at a cost of Rs. 1,50,000. Depreciation was provided for
annually on 31st December at the rate of 10% per annum on the original cost of
the machinery.
No depreciation need be provided when a machinery is sold or auctioned, for
that part of the year in which sale or auction took place. But for the above,
depreciation shall be provided on time basis. In 1996 however, A changed this
method of providing depreciation and adopted the method of writing off 15% p.a.
on the written down value on the balance as appeared in machinery account on 1-

1-1996.(retrospective effect)
Show the machinery account for the calendar years 1993 to 1996.
Q. 13
A firm purchased on 1st January, 1998 certain machinery for Rs. 58,200 and spent
Rs. 1,800 on its erection. On July 1, 1998 another machinery for Rs. 20,000 was
acquired. On 1st July, 2000 the machinery purchased on 1 st January, 1998 having
become obsolete was auctioned for Rs. 28,600 and on the same date fresh
machinery was purchased at a cost of Rs.40,000.
Depreciation was provided for annually on 31 st December at the rate of 10 per cent
on written down value. In 200 I, however, the firm changed this method of
providing depreciation and adopted the method of providing 5 per cent annum
depreciation on the original cost of the machinery with retrospective effect.
Q. 14
A company purchased second hand machinery on 1 st January, 2000 for Rs.

3,00,000, subsequent to which Rs. 60,000 and Rs. 40,000 were spent on its repairs
and installation, respectively. On 1st July, 2001 another machinery was purchased
for Rs. 2,60,000. On 1st July, 2002, the first machinery having become outdated
was auctioned for Rs. 3,00,000 and on the same date, another machinery was
purchased for Rs. 2,50,000.
On 1st July, 2003, the second machinery was also sold off and it fetched Rs.
2,30,000.
Depreciation was provided on machinery @ 10% on the original cost annually on

31st December, under the Fixed Installment, method. From 1 st January, 2002, the
method of providing depreciation was changed to Reducing Balance method, the
rate being 15% p.a.
You are required to prepare the following accounts in the books of the company:
(i) Machinery Account for the years ending 2000 to 2003.
(ii) Machinery Disposal Account.
Note: The figures may be rounded off to the nearest multiple of Rupees ten.
Q. 15
On 1-1-2001, Arya Let. Purchased a machinery for Rs. 12,00,000. On 1-4-2003 a
part of machinery purchased on 1-1-2001 for Rs. 80,000 was sold for Rs. 45,000
and a new machinery at a cost of Rs. 1,50,000 was purchased on the same date.
The company has adopted the method providing 10% p.a. depreciation on the
original cost of the machinery.
Show the necessary ledger accounts assuming that:-
a. Provision for Depreciation A/c is not maintained.

b. Provision for Depreciation A/c is maintained.
Q. 16
A company had a balance of Rs. 4,05,000 on 1 st January, 2003 in its Machinery
account. 10% per annum depreciation was charged by diminishing balance
method. On 1st July, wood, the company sold a part of machinery for Rs. 87,500,
which was purchased on 1st January, 2001 for Rs. 1,20,000 as a part of it became
useless, and on the same date i.e. on 1st July , 2003, the company purchased a
new machine for Rs. 2,50,000. On 31 st December 2003, the Directors of the
company decide to adopt the fixed installment method of depreciation from 1 st
January, 2001 instead of diminishing balance method. The rate of depreciation will
remain the same. Prepare machinery account in the books of Company for the year
ending 2003
Q. 17
0n 1-12-2006 Mr. X purchased a second hand machinery for Rs. 50000, paid Rs.
11000 for its overhauling and Rs. 5000 for its installation which was completed on
31-03-2006. On 1-10-2007 a repair work was carried out on the machine and Rs.
5000 was spent for the same. The machine was sold on 31-10-2008 for a sum of
Rs. 21000 and an amount of Rs. 1000 was paid as dismantling charges. The
company provide depreciation on its machinery at 20 % p.a. on diminishing balance
method and closes its books on 31st December every year.
Prepare machinery account from 2006 to 2008.
Q. 18
A machine is purchased for Rs. 160000 on 16-6-2003. The company took delivery
on 27-06-2003 incurring Rs. 2500 for transportation. The machine was installed on
15-07-2003 spending Rs. 2000 for wages and Rs. 1000 for consultancy fees. Trial
run was constructed on 15-11-2003 spending Rs. 2500. The machine was put to
use on 1-1-2004. Useful life of the machine was expected to be 5 years and scrap
value at the end was expected to be Rs. 12000. The firm follow straight line method
of depreciation.
Show machinery account and provision for depreciation account assuming that
machine realized Rs. 13000 at the end of 5 years. The account being closed on 31 st
December each year.
Q. 19
On 1st January , 2004 R & Co. purchased machinery for Rs. 74000 and spent Rs.
4000 on its repair and Rs. 2000 on its installation. On 1 st January , 2005 the firm
purchased another machinery for Rs. 20000. On 1 st July 2006 the machinery
purchased on 1st January 2004 was sold for Rs. 56000 and on the same date a new
machinery was purchased for Rs. 50000. On 1 st July 2007 the machinery purchased
on 1st January 2005 was sold for Rs. 4000. In 2004 depreciation was charged at the
rate of 10% p.a. on original cost of assets. From 2005 , it decide to write off
depreciation at the rate of 15% p.a. on written down value method with
retrospective effect.
Show the machinery account for 4 years starting 2004.
Q. 20
The book value of machinery on 1-1-2004 was Rs. 200000. New machinery for Rs.
10000 was purchased on 1-10-2004 and for Rs. 20000 on 1-7-2005. On 1-4-2006,
a machine whose book value had been Rs.
on 1-1-2004 was sold for Rs. 16000. Depreciation has been charged at 10% p.a.
since 2004 on straight line method. It was decided in 2006 that depreciation @20%
p.a. on diminishing balance method should be charged with retrospective effect
since 1-1-2004.
Show the Machinery account upto 31-12-2006. Give working.
Q. 21
M/s Hot & Cold commence business on 1 st april, 2002 when they purchased a new
machinery costing Rs. 800000. On 1 st October 2003, they purchased another
machinery for Rs. 600000 and again on 1 st July 2006, machinery costing Rs.
1500000 was purchased. They adopted a policy of charging @20% p.a. on
diminishing balance basis.
On April 2006 , they however changed the method of providing depreciation and
adopted the method of writing off the machinery account at 15% p.a. under
straight line method with retrospective effect from 1-4-2002, the adjustment being
made in the accounts for the year ended 31st March, 2007.
Show the machinery Account for the year ending 31 st march 2007.
Q. 22
A company provide depreciation on plant and machinery at 20% p.a. on reducing
balance method. On April 1, 2006 the balance of plant and machinery account was
Rs. 500000. It was discovered in 2006-2007 that:
(i) Rs. 25000 being repairs to machinery incurred on June 30, 2004 had been
capitalized.
(ii) Rs. 50000 being cost of machine purchased on October 1 , 2003 had been
treated as ordinary goods.
Management wants to correct the mistake while preparing the accounts for the
year ending March 31, 2007. A plant that cost Rs. 40000 on September 30, 2005
was scrapped and replaced with a modern plant on 31 st December, 2006 by
spending Rs. 60000.
Calculate the amount of depreciation for the year ended March 31, 2007. Also
prepare machinery account upto March 31, 2007.
Q. 23
Rama motor Limited purchased a machinery for Rs. 1500000 on april 1, 2002. On
October 1, 2003, another machinery was purchased for Rs. 600000. On October 1,
2004 a new machinery was purchased for Rs. 450000.
Depreciation at 20% per annum on the diminishing value basis was accumulated in
provision for depreciation account.
On January 1, 2006 machine no. 2(purchased on October 1 , 2003) was damaged
and had to be replaced by a new machine costing Rs. 750000. It was expected that
damaged machine will fetch Rs. 33000, but it was insured and an insurance claim
for Rs. 372000 was admitted by the insurer.
Show for the year ending 31st March, 2006 the Machinery Account, Provision for
Depreciation Account and Machinery Disposal account.
Q. 24
The plant and machinery account of a company had a debit balance of Rs. 147390
on April 1 , 2006. The company was incorporated in april , 2003 and has been
following the practice of charging full years depreciation every year on diminishing
balance system @ 15%. In 2006 it was, however, decided to change the method
from diminishing balance to straight line with retrospective effect from april 2003
and to give effect the change while preparing the final accounts for the year ending
31st march, 2007, the rate of depreciation remaining same as before.
In 2006-2007 new machinery was purchased at a cost of Rs. 50000. All the other
machines were acquired in 2003-2004.
Q. 25
On 1st April, 2000 a firm purchased a machinery for Rs. 200000. On 1 st October
2000 additional machinery was purchased for Rs. 100000.
On 1st October, 2002, new machinery was purchased for Rs. 250000 while the
machinery purchased on 1st October, 2000 was sold for Rs. 85000 on the same day.
The firm provide depreciation on its machinery @10% p.a. on original cost. It close
its books of accounts on 31st march every year.
Show the machinery account for three accounting years ending 31 st March, 2003.
Q. 26
A limited company purchased on 1st January 1998 second hand plant for Rs. 12000
and immediately spent Rs. 8000 on its overhauling. On 1 st July in the same year
additional plant costing Rs. 10000 is purchased. On 1 st July , 2000 the plant
purchased on 1st January, 1998 having become obsolete is sold for Rs. 4000and on
the same date fresh plant is purchased at a cost of Rs. 24000.
Depreciation is provided @10% p.a. on original cost on 31 st December every year.
In 2001, however, the company changes the method of providing depreciation and
adopts the method of writing off 15% p.a. on the diminishing balance method with
retrospective .
Show the Plant Account from 1998 to 2001.
Q. 27
A company had bought machinery for Rs. 200000 including a boiler worth Rs.
20000. The machinery account had been credited for depreciation on the reducing
balance method for the past four years at the rate 10%. During the fifth year , the
boiler became useless on account of damage to some of its vital parts. The
damaged boiler is sold in the very beginning of the fifth year for Rs. 4000. Write up
the machinery account for all these five years.
Q. 28
A firm purchased on 1st January 1996 a small plant for Rs. 10000. On 1 st July in the
same year an additional plant was purchased costing Rs. 5000. On 1 st July 1997 the
plant purchased on 1st January 1996 having become obsolete , is sold off for Rs.
4000. Depreciation is to be provided at 10% p.a. on diminishing balance basis.
Show Plant and Machinery Account.
Q. 29
Mr. N commenced business in March 2000. He acquired some machines for Rs.
200000 on 1st April, 2000. He acquired another machine for Rs. 50000 on march 1,
2002. He sold machines original cost of which was Rs. 60000 for Rs. 35000 on
October 31, 2001. Assuming depreciation @15% under WDV basis, compute the
depreciation for the year ended march 31, 2001 and march 31, 2002.
Depreciation to be calculated to the nearest rupee.
Q. 30
Giri enterprises purchased some second hand machinery on 1 st april 1993 for Rs.
370000 and installed it at a cost of Rs. 30000. On 1 st October 1994 it purchased
another machine for Rs. 100000 and on 1 st October 1995 , it sold off the first
machine purchased in 1993, for Rs. 280000.
On the same date it purchased a machinery for Rs. 250000. On 1 st October 1996,
the second machinery purchased for Rs. 100000 was also sold off for Rs. 20000.
In the beginning depreciation was provided on machinery at the rate of 10% p.a.
on the original cost each year on 31 st march. From the year 1994-95 , however the
trader changed the method of providing depreciation and adopted the written down
value method, the rate of depreciation being 15% p.a.
Q.31
Rohan Sons purchased a machine for Rs. 200000 on January 1, 1993. The machine
was depreciated at the rate 10% p.a. under WDV method. On January 1, 1996 the
firm decided to change the method of depreciation from WDV to SLM without
changing the rate with retrospective effect from January 1, 1993.
Prepare Machine Account from 1993 to 1996.
Q. 32
Machine account of Karuna enterprises showed a debit balance of Rs. 280000 as
on January 1 , 1991. They have been charging depreciation at 10% on SLM. They
have now decided to change the method of depreciation from SLM to WDV method
with effect from January 1, 1988, on which date they purchased the machine .
You are required to prepare machine account upto December 31, 1991.
Q. 33
Arvind enterprises purchased on April1, 1999 certain machinery for Rs. 72800 and
paid Rs. 2200 on its installation. On October 1 ,1999 another machinery for Rs.
25000 was acquired. On April 1, 2000 the first machinery was sold for RS. 50000
and on the same date a fresh machinery was purchased at a cost of RS. 45000.
Depreciation was annually provided on 31st march at 10% p.a. on WDV method.
On april 1, 2001, however , the firm decided to change the method of providing
depreciation and adopted the method of providing depreciation @ 10% p.a. on the
original cost, with retrospective effect.
Ascertain the value of Machinery on 31st March , 2002.
Q. 34
Deva ltd. Charged depreciation on its plant and machinery @ 10% p.a. on WDV
method. On 31st March 2000, the company decides to adopt SLM of charging
depreciation with retrospective effect from 1st April , 1996, the rate of depreciation
being 15%. On 1st april 1999, the plant and machinery account stood in the books
at Rs. 291600. On 1st July , 1999 a sum of Rs. 65000 was realized by selling a
machine cost of which on 1st April, 1996 was Rs. 90000. On 1st January , 2000, a
new machinery was purchased at a cost of Rs. 150000.
Show the plant and machinery account in the books of the company for the year
ended 31st march, 2000.
Q.35
The machinery Account of a Factory showed a balance of Rs. 1,90,000 on 1 st Janu-
ary, 200 I. Its accounts were made up on 31 st December each year and
depreciation is Written off at 10% p.a. under the Diminishing Balance Method.
On 1st June 200 I, a new machinery was acquired at a cost of Rs. 28,000 and
installation charges incurred in erecting the machine works out to Rs. 892 on the
same date. On 1st June, 2001 a machine which had cost Rs. 6,000, on 1 st January
1996 was sold for Rs. 750. Another machine which had cost Rs. 600 on 1st
January, 1997 was scrapped on the same date and it realised nothing.
Write a plant a machinery account for the year 2001, allowing the same rate of
depreciation as in the past calculating depreciation to the nearest multiple of a
Rupee.
Q. 36
A company purchased furniture of Rs 40000 on 1st April 2003. It charges
depreciation @ 10% on reducing balance method every year. On 1st July 2005, a
part of furniture was sold for Rs 4000, the original cost of which was Rs 8000
purchased on 1st April ‘03. The accounting years of the company ends on 31st
march every year.
Show Furniture a/c from 1st April 2003 to 31st March 2006. Also, calculate profit or
loss on sale of furniture.
Q. 37
B. Co. Purchased machinery as follows :
Date of Purchase Cost of Machine (Rs.)
1.4.86 60,000
1.10.86 40,000
1.7.87 20,000
On 1.1.88 one-third of the machinery which was purchased on 1.4.86 became
obsolete and was sold for Rs. 6,000. The machinery was to be depreciated by Fixed
Installment Method at 10% p a. Show how the Machinery Account would appear in
the ledger of the Company for the years 1986. 1987 and 1988. Assume that the
accounting year of the Company ends on 31st December every year.
Q. 38
Q Ltd, purchased on 1st January, 1988 a machine for Rs. 10,000. On 1.7.88 it
again purchased another machine for Rs. 5,000. On 1.7.89 the machine purchased
on 1.1.1988 was sold for Rs. 4,000. On 1.7.1990 a new machine was purchased for
Rs. 12,000. On the same date the machine purchased on 1.7.88 was sold for Rs.
4,200.
Depreciation was provided at 10% p.a. on the written down value every year. Show
the Machinery Account .
Q. 39
A firm purchased on 1st January. 1996. certain machinery for Rs. 19,40,000 and
spent Rs. 60,000 on its erection. On 1st July in the same year additional machinery
costing Rs. 10,00,000 was acquired. On 1st July. 1998. the machinery purchased
on 1st January 1996 having become obsolete was auctioned for Rs. 8,00,000 and
on the same date fresh machine was purchased at a cost of Rs. 15,00,000.
Depreciation was provided for annually on 31st December at the rate of 10% per
annum on the original cost of the asset. In 1999, however, the firm changed this
method of providing depreciation and adopted the method of writing off 20% on the
written down value.
Give the Machinery Account as it would stand at the end of each year from 1996 to
2000.
5. ACCOUNTING FOR SPECIAL

TRANSACTIONS- CONSIGNMENT
Q. 1
100 cycles, costing Rs. 150 each, were consigned to the agent at Jaipur. Expenses
incurred on sending them were Rs. 1000. On the way 5 cycles were damaged dofue
to bad handling and insurance claim of Rs. 700 was accepted. Consignee took
delivery of the rest and incurred direct expenses of Rs. 285 and indirect expenses
of Rs. 150. He sold 80 cycles at Rs.200 per cycle. Prepare consignment account
when consignee gets 5% commission on gross sales. Also show how abnormal loss
and stock at the end is to be calculated prepare abnormal loss account.
Q. 2
1000 bicycle were consigned by Roy & Co. of Kolkata to T.Nu of Rangoon at an
invoice cost of Rs. 950 each. Roy & Co. paid freight Rs. 65000 and insurance Rs.
11500. During the transit 100 bicycle were totally damaged by fire and had to be
thrown overboard. T.Nu took delivery of the remaining bicycles and paid Rs. 86400
for custom Duty.
T.Nu sent a bank draft to Roy & Co. for Rs. 320000 as advance payment and later
sent an account sales showing that 800 bicycles were sold at Rs. 1400 each.
Expenses incurred by T.Nu on godown rent and advertisement etc. amounts to Rs.
12500. He is entitled to a commission of 5%.
Prepare the consignment account. T.Nu account and abnormal Loss account in the
books of Roy & co. assuming that nothing has been recovered from the insurer due
to a defect in the policy.
Q. 3
Oil Mills . Mumbai , consigned 10000 kg. of castor oil to D of Kolkata on 1 st January,
2003. The cost of the oil was Rs. 23 per kg. S oil mills paid Rs. 20000 for packing,
freight and insurance.
During transit 250 kg. were accidently destroyed for which the insurer paid ,
directly to the consignor, Rs. 4500 in full settlement of the claim.
D took delivery of the consignment on the 10 th January. On 31st March, 2003, D
reported that 7500 kg. were sold @ Rs. 30, the expenses being on godown rent Rs.
3000, on advertisement Rs. 4000 and on salesmen salaries Rs. 6400. D is entitled
to a commission of 3% plus 1.5% del-credere. A party which had bought 1000 kg.
was able to pay only 80% of the amount due from it.
D reported a loss of 100 kg. due to leakage. Assuming that D paid the amount due
by Bank draft. Show the account in the books of the consignor. S Oil Mills closes its
books on 31st March.
Q. 4
On 1st January , 2003, Badri of Mumbai consigned 100 cases ( cost price Rs. 7500)
at a proforma invoice price of 25% profit on sale to his agent. Anil of Allahabad , on
the same date , Badri paid non- recurring expenses of Rs. 600. On 10 th January,
Anil, took delivery and paid Rs. 1200 for Octroi and other duties and remitted Rs.
4000 as an advance against the consignment. On 31 st January he sold 80 cases for
Rs. 10500. Anil is entitled to 5% commission on gross sale and 10% on the sale
price in excess of invoice price . show the ledger accounts in the books of both
parties. Anil is required to maintain proportionate security with the consignor for
the unsold stock.
Q. 5
Ravi consigned goods to Suraj costing Rs. 100000. The Proforma invoice was made
to show a profit of 25% on cost. Ravi paid freight, insurance Rs. 2000. Suraj sold
part of consignment for Rs. 88000 at a uniform price of 10% over invoice price and
spent Rs. 3000 as warehousing charges, Rs. 1000 as selling expenses. Suraj is
entitled to a commission of 5% on sales and 20% of the net profit after charging
such commission on sales. Suraj paid the amount due by bank draft. Draw up the
consignment account in the books of Ravi with appropriate working notes.
Q. 6
Rahim of Mumbai consigned to Raju of Chennai goods to be sold at invoice price
which represents 125% of cost. Raju is entitled to a commission of 10% on sales at
invoice price and 25% of any excess realized over invoice price. The expenses on
freight and insurance incurred by Rahim were Rs. 10000. The account sales
received by Mr.Rahim shows that Raju effected sales aggregating to Rs 1,00,000in
respect of 75% of the consignment. His selling expenses to be reimbursed were Rs,
8,000. 10% of the consignment goods of the value of Rs. 12,500 were destroyed in
fire at the Chennai godown and the Insurance Company paid Rs.12,000 net of
salvage. Raju remitted the balance in favour of Rahim.
Prepare Consignment Account and the Account of Mr. Raju in the books of
Mr.Rahim along with necessary workings.
Q. 7
Mr. Laxman of Delhi purchased 10000 pieces of sarees at Rs. 100 per saree. Out of
this, 6000 sarees were sent on consignment to Mr. T of Chennai at the selling price
of Rs. 120 per saree. The consignor paid Rs. 3000 for packing and freight. Mr. T
sold 5000 sarees at Rs. 125 per saree and incurred Rs. 1000 for selling expenses
and remitted Rs. 500000 to delhi on account. Mr. T is entitled to a commission of
5% on total sales plus a further commission at 20% of surplus price realized over
invoice price. At the end of the year, owing to recession in the market, selling price
of a saree has come down by 10% of Rs. 120.
You are required to prepare the consignment account in the books of Mr. Laxman
and Mr. Laxman account in the books of Mr. T.
Q. 8
Peter sent to Qureshi 1,000 pieces of goods on consignment basis ; one piece
costing Rs.230. Peter sent Rs.2,200 on packing , Rs.450 on freight and rs.1400 on
insurance in transit. Qureshi paid Octroi duty amounting to Rs.1,200 and cartage
Rs. 1,100 to bring goods to his godown. In course of time Qureshi also spent
Rs.1,600 on insurance and rent of godown and paid Rs.4,000 as salaries to
salesman. Just before close of accounting period, Qureshi reporte that he had sold
800 pieces at Rs.305 per piece. Qureshi is entitled to a commission @ 5% of gross
sales.
Show how the unsold stock will be value and prepare Consignment Account in
Peter’s Ledger .
Q. 9
On 1st September ,2007 Atul of Assam sent on consignment to Daulat of Delhi 100
cases of tea costing Rs. 500 each invoiced ‘pro-forma’ at Rs.600 each. Freight and
other charges on the consignment amount to Rs.3,100.
On 1st December ,2007 Daulat sent Account Sales Ledger with the necessary
remittance showing that 40 cases had realized Rs.600 each and 30 cases Rs.700
each and 30 cases remained in stock unsold. Rs.2,500 was spent by Daulat for the
consignment. Daulat was given a commission of 5% on sales. On 27 th December
Daulat informed Atul that 20 Cases were damaged due to bad packing that they
would be sold at Rs.200 per case.
Both the firms close their books of account on 31 st December. Prepare Ledger
Account in the books on both the parties.
Q. 10
On 4th September,2007 Dilip sent to Kuldeep on consignment basis goods costing
Rs.80,000 invoiced Proforma at Rs.1,00,000 and drew upon the later a bill at 3
months for Rs.50,000 which was immediately accepted by the latter . Freight and
other expenses incurred by Dilip on the goods consigned amounted to Rs.6,400.
On 21st December,2007, Dilip received an Account Sales from Kuldeep along with a
bank draft for the amount to settle the up –to-date. According to Account Sales
received, Kuldeep had sold three-fourths of the goods for Rs.87,000 and had
incurred selling expenses amounting to Rs.3,270. Kuldeep charge commission
@5%.
Both the entries parties closed their account on 31st December,2007.
Show journal entries to record the above mentioned transactions in the books of
both the parties. Also show important Ledger Accounts in Dillip’s passed entries on
the basis of invoice price of the goods consigned. The advance money received may
be treated by way of security.
Q. 11
On 1st October ,2007, B of Bombay consigned to A of Ahemdabad 100 Mobile sets.
Cost of each set was Rs. 1,900 but B prepared pro-forma invoice at Rs.2,200per
set. B incurred expenses amounting to Rs.5,000 on goods consigned. On 31 st
December,2007 , A informed B that he had sold 68 sets @ 2,800 per set and 11
sets @ Rs.2,700 per set and had spent Rs. 15,200 on behalf of the consignor. One
set has been accidentally damaged and sold for Rs.500 according to instructions of
the consignor. A was entitled to a commission 6% on gross sales including del
credere commission . A could recover only Rs.2,500 from a customer to whom on
set has been sold on credit for Rs.2,800. All other sales were made on cash basis.
Show ledger accounts in the books of both the parties.
Q. 12
R of Ranchi consigned goods of the invoice price of Rs. 2,00,000 which is 25%
above cost, to D of Delhi on the following conditions:
(i) Consignee to get a commission of 5% on all sales.
(ii) Any goods taken by the consignee himself or lost through consinee’s
negligence shall he valued at cost plus 12-1\2% and no commission
would be allowed on them.
The expenses incurred by the consignor were carriage and freight Rs.6,720 and
insurance Rs.3440.
The consignor received Rs.50,000 as advance against the consignment. Account
sales together with a draft for the balance due was received by the consignor
showing the following position: Goods of the invoice price of Rs.1,60,000 were
sold for Rs.2,48,000. Goods of the invoice price of Rs.10,000 and Rs.5,000 were
taken by D and lost through his negligence ,respectively. Amount of Rs.1,720 on
advertisement and Rs.1,080 on selling expenses were incurred by D.
Prepare consignment account and consignee’s account in the books of the
consignor.
Q . 13
Punjab Cycle Co. of Ludhiana consigned 100 bicycles to Kanpur Cycle Co. of
Kanpur costing Rs.1,500 each, invoiced at Rs.2,000 each . The consignor paid
freight Rs.10,000 and insurance in transit Rs.1,500. During transit ,10 bicycles
were totally damaged.
Kanpur Cycle Co. took delivery of the remaining bicycles and paid Rs.1,530 for
Octroi duty. Kanpur Cycle Co. sent a bank draft to Punjab cycle Co. for
Rs.50,000 as advance and later on sent an account sales showing that 80
bicycles had been sold @ Rs.2,200 each. Expenses incurred by Kanpur Cycle
Co. on godown rent were Rs.2,000. Kanpur Cycle Co. is entitled to a commission
of 5% on invoice price. Insurance claim was settled at Rs.14,000.
Prepare consignment account consignee’s account and abnormal loss account in
the books of the consignor.
6. JOINT VENTURE
Q. 1
A, B and C jointly undertake to construct a building for a company at a contract
price of Rs 15,00,000 to be paid as to Rs 12,00,000 in cash by installments and Rs
3,00,000 in fully paid shares of the company. They agreed to share profit or loss
equally. They open a joint bank account and contribute:
A Rs. 1,80,000 B Rs. 2,00,000 C Rs. 1,30,000
A gets the plan prepared and pays Rs.20,000 for it. B brings into the joint venture
machinery of Rs.60,000 and C brings into the venture a truck of the value of Rs.
1,50,000. They also purchased materials worth Rs.7,50,000 and wages paid were
Rs. 4,95,000.
On completion of the venture, A takes over unused materials, of the value of Rs.
35,000,B takes back machinery at Rs.70,000 and C agrees to take back truck at a
valuation of Rs. 2,60,000.
Prepare necessary ledger accounts assuming that a separate set of account
books is maintained.
Q. 2
Mr. Gulab of Delhi and Mr.Vikas of Bombay entered into joint venture for sale of
100 machines out of his stock.
Mr.Gulab paid Rs.12,000 for transit insurance. Mr. Vikas paid Rs. 25,000 for
freight while talking delivery on 5 th April 2006. On the same day he sent a draft of
Rs.5,50,000 to Mr.Gulab Mr.Vikas spent Rs 28,000 for advertisement and Rs.7,500
for godown rent.
Mr.Vikas is entiled to commission at the rate of 4% on sales and share of 2/5 th
Profit. By 30th April,2006 all the machines were sold at the list price of Rs.15,200
each less 5% discount. Mr. Vikas could not collect Rs. 2,500 from customers. He
settled the amount due to Mr. Gulab on 30th ,April,2006.
Prepare the joint Venture Account and Vikas’ Account in the books of Gulab and
the Joint Venture Account and Gulab’s Account in the books of Vikas..
Q. 3
12 M of Mangalore and B of Bangalore entered into a joint venture for the purpose
of Buying and selling second-hand cars. M was to purchase them while B was to sell
them. The profit or loss was to be shared equally. B remitted a sum of Rs. 3,00,000
to M towards the venture.
M Purchased 5 cars for Rs.2,40,000 and paid Rs.90,000 for their reconditioning
and sent them to Bangalore.
B sold 4 cars for Rs.3,60,000 and retained the fifth car himself at an agreed
value of Rs. 75,000. His expenses were:
Brokerage Rs.3,000; Garage rent Rs. 3,000; Insurance Rs.1,500 and Sundry
expenses Rs.600.
Each party’s ledger contains a record of his own transaction on joint account.
Prepare the Memorandum Joint Venture Account, Joint Venture with M Account and
Joint Venture with B Account.
Q. 4
Mr. M and Mr. N jointly agreed to underwrite the subscription at par of 100000
shares of Rs. 10 each in X Ltd. And to pay all expenses upto allotment. The
consideration in return for the guarantee was 5000 other shares of Rs. 10 each fully
paid to be issued to them. They were to share the profit in the ratio of 3:1.
Mr. M provided the funds to meet the following expenses:
Registration Fees Rs. 4850
Advertising Charges Rs. 2850
Printing Charges Rs. 2300
Mr. N contributed towards the payment of the following expenses:
Rent Rs. 5000
Solicitor’s Charges Rs. 3000
Application fell short of the full issue by 10000 shares. Mr. N took over on joint
account and paid for the same in full.
The guarantee having been fulfilled, X Ltd. Handed over to M and N 5000 shares.
They sold their all shares at Rs. 15 per shares. The proceeds were shared by M for
4000 shares and by N for the Balance.
Prepare Joint Venture A/C and Co-venture’s A/C in the books of both the parties.
Q. 5
Mr. X and Mr. Y carrying on a business separately as contractors, jointly take up the
work of constructing a building at an agreed price of Rs. 3,50,000, payable in cash
Rs.2,40,000 and in fully paid shares of a company for the balance of Rs.1,10,000. A
bank account is opened in which X and Y paid Rs.75,000 and Rs.50,000
respectively. The following costs were incurred in completing the construction and
the contract price was duly realized:
Wages paid Rs.90,000
Materials purchased for cash Rs.2,10,000
Materials supplied by Mr.Y from his stock Rs.27,000
Consulting Engineer’s fees paid by Mr.X Rs.6,000
X agreed to take over the shares at an agreed valuation of Rs.48,000 while Y
agreed to take the remaining stock At Rs.9,000.
Prepare necessary ledger accounts for the Joint Venture (Profit sharing ratio 2:1).
6. Aditya and Amit entered into a joint venture to buy and sale Ganesh idols for
the Ganesh festival. They opened a joint bank a/c. Aditya deposited Rs
200000 and Amit Rs 150000. Aditya supplied Ganesh idols worth Rs 25000
and Amit supplied decoration material worth Rs 15000.
The following payments were made by the venture:
a) Cost of Ganesh idols purchased Rs 250000
b) Transportation charges Rs 12000
c) Advertising Rs 7500 and sundry expenses Rs 2500
They sold idols for Rs 400000 for cash. Aditya took over some idols for Rs
30000 and Amit took over remaining for Rs 10000. The profit or losses were
to be shared equally between co-venturers.
Prepare Joint Venture a/c, Joint Bank a/c and each co-venturer’s a/c.
7. Prabir and Mihir doing business separately as building contractors undertake

jointly to build a skyscraper for a newly started public limited company for a
contract price of Rs 10000000 payable as Rs 8000000 in cash and the
balance by way of fully paid equity shares of the new company. A bank a/c
was opened for this purpose in which Prabir paid Rs 2500000 and Mihir Rs
1500000. The profit sharing ratio was agreed as 2:1 between Prabir and
Mihir. The transactions were:
a) Advance received from the company Rs 5000000
b) Wages to contractors Rs 1000000
c) Bought materials Rs 6000000
d) Material supplied by Prabir Rs 1000000
e) Material supplied by Mihir Rs 1500000
f) Architect’s fees paid from Joint bank account Rs 2100000
The contract was completed and the price was duly paid. The joint venture
was duly closed by Prabir taking all the shares at Rs 1800000 and Mihir
taking over the balance material for Rs 300000.
Prepare the Joint Venture a/c, Joint Bank a/c Co-venturer’s a/cs and Shares
a/c.
8. John and Smith entered into a joint venture business to buy and sale
garments to share profits or losses in the ratio of 5:3. John supplied 400
bales of shirting at Rs 500 each and also paid Rs 18000 as carriage &
insurance. Smith supplied 500 bales of suiting at Rs 480 each and paid Rs
22000 as advertisement & carriage. John paid Rs 50000 as advance to
Smith. John sold 500 bales of suiting at Rs 600 each for cash and also all 400
bales of shirting at Rs 650 each for cash. John is entitles for commission of
2.5% on total sales plus an allowance of Rs 2000 for looking after business.
The joint venture was closed and the claims were settled.
Prepare Joint Venture a/c and Smith’s a/c in the books of John and John’s a/c
in the books of Smith.
9. A and B decided to work on a joint venture to sale electric motors. On 21st

May 2005, A purchased 200 electric motors at Rs 175 each and dispatched
150 motors to B incurring Rs 1000 as freight and Insurance. 10 motors got
damaged in transit. On 1st Feb 2006, insurance company paid Rs 500 to A in
full settlement of the claim. On 15th March 2006, A sold 50 motors at Rs 225
each. He received Rs 15000 from B on 1st April 2006. On 25th May 2005, B
took delivery of motors and paid Rs 125 for clearing, repairs Rs 300 and rent
of Rs 600. B sold motors as on 1st Feb 2006 – 10damaged motors at Rs 170
each, on
15th March 2006 – 40 motors at Rs 200 each, on 1st April 2006 – 20 motors
at Rs 315 each and on 1st April 2006 80 motors at Rs 250 each. It was
agreed that they would be entitled for a commission of 10% on the
respective sales made by them and that the profit or losses will be shared by
A & B in the ratio of 2:1. On 30th April 2006, B remits the cash to A to close
the venture.
Prepare “joint venture with B a/c” in the books of A and the Memorandum
joint venture a/c.
Q .10
On 1st January 2007 B and C entered into a joint venture sharing the profits in
the ratio of 3:2 after allowing a salary of Rs.2,000 p.m. to C. B sent out of his
stock of goods costing Rs.5,00,000 to be sold by the latter and incurred
expenses amount t Rs.10,700. On 3 rd January ,2007 C accepted a bill of
exchange at 2 months for Rs.3,00,000 drawn by B. On 6 th January, 2007, B
discounted the bill @9% p.a. By 31st march,2007 C had sold goods for
Rs.6,00,500 after incurring expenses amounting to Rs.11,450. C agreed to take
over the remaining goods for Rs.20,000. C forwarded a cheque immediately to
settle the account. Show the journal and ledger account in the books of B and C.
Q .11
X and Y entered into a joint venture involving the buying and selling of old
railway material. The profit and loss was to be shared equally. The cost of the
material purchased was Rs.85000 which was paid by X who drew a bill on Y at
two months demand for 60,000. The bill was discounted by X at a cost of
Rs.480. The transaction relating to the venture was (a) X paid Rs.600 for
carriage, Rs.1,000 for commission on sales and Rs. 400 travelling expenses, (b)
Y paid Rs.200 travelling expenses and Rs.300 sundry expenses;(c) sales made
by X amounted to Rs.40,000 and sales made by y were Rs.60,000. Goods

costing Rs. 2,000 and Rs.3000 (being unsold stock) were retained by X and y
respectively and these were charged to them at prices to show the same rate of
gross profit that made on total sales (excluding these sales). X was credited with
a sum of Rs. 800 to cover the cost of ware housing and insurance. The expense
in connection with the bill were to be treated as a charge against the venture.
You are required to:
(a) Show the account in the books of each party to record his own transaction
and
(b) Prepare a memorandum joint venture account.
Q .12
Verma and Manik both Building Contractors, undertook a joint venture involving
the construction of a house building. The joint Bank Account was opened in
which Verma deposited Rs.1,00,000 and Manik deposited Rs.50,000. The
contract amount was Rs.5,00,000. The result of joint venture was to be shared
by verma 2/3rd and Manik 1/3rd. The details of the transaction were as under:
Salaries 16,000
Wages Paid 92,000
Building materials purchased 2,20,000
Material supplied by verma 18,000
Material supplied by Manik 16,000
Architect’s fees 14,000
Cartage 24,000
Concrete mixer plant purchased 50,000
The stock of the building materials on the completion of the contract, valued at
Rs. 22,000 was taken over by verma. Concrete mixer plant was sold out for
Rs.40,000. Mr.Verma was to pay Rs.24,000 per annum against established
expenses, to be charged to the joint venture account . The contract lasted for 8
months.
Prepare a joint venture account, joint bank account account of verma and Manik.
7. HIRE PURCHASE ACCOUNTS

Q.1. A Ltd. purchased a machine on hire purchase system from B. Ltd., on 1
January, 1998, paying immediately Rs.20,000 and agreeing to pay three
installments of Rs.20,000 each on 31 December every year. The cash price of
the machine is Rs.74,500 and vendors charge interest at 5% p.a. Calculate the
amount of interest paid by buyer to seller every year.
Q.2. Aprna purchased a Radio-Recorder on January 1, 19 x 1 on hire purchase

system for Rs.2,500 payable as under :
Rs.
Down payment 465
At the end of first year 713
At the end of second year 902
At the end of third year 420
Interest is charged at 5% p.a.
Calculate total cash price of Radio-Recorder and interest paid with each
installment.
Q.3. (i) The cash price of the machine is Rs.50,000.

(ii) Rs.20,000 is to be paid on signing the agreement.
(iii) The balance is to be paid in annual installments of Rs.10,000 plus
interest (or together with interest).
(iv) Interest chargeable on outstanding balance is 6% p.a.
Q.4. On 1 January 19... Sunita purchases a refrigerator on hire purchase system.

She paid Rs.1,000 on delivery and the balance in four installments of Rs.750,
each payable annually on 31 December. The cash price of the refrigerator was
Rs.3,700. Calculate the amount of interest included in each of the annual
installments.
Q. 5
On April 1st 1988, Shyam Lal purchased a plant on hire purchase system. According
to the terms of the agreement of Rs. 80000 was to be paid on the signing of the
contract. The balance was to be paid in four annual installments of Rs.50,000 each
plus interest. The cash price of the plant was Rs.2,80,000. Interest chargeable on
outstanding balance was 20 percent per annum. You are required to calculate
interest.
Q.6
Maheer purchase a car on hire purchase system on April 1,1995, the total cash
price of the car is Rs.3,30,000, payable Rs.1,00,000 on signing of the agreement
and three equal annual installments of Rs.1,00,000 payable on 31 st March for 3
years. Interest is charged at 15% per annum. You are required to calculate interest
paid by the buyer to seller each year.
Q.7
Mr. Nair purchased a VCR on hire purchase system on April 1,1999. As per terms,
he is required to pay Rs. 8,000 down, i.e., on April1 1999, Rs.7,000 on March
31,2001 Rs. 6000,on March 31,2002 .Interest is Charged 20% per annum. You
are required to calculate total cash price of the VCR
and interest paid with each installment.
Q.8
M/s Hitendar Shah & Co. purchased matadors from Saini Bros,. on hire-purchase
system on April 1,1999, payment being made Rs.2,98,500 down and
Rs.3,00,000annually for three years. The installment were required to be paid on
March 31,each year . The cash price of the matadors purchased was Rs. 9,30,000.
Saini Bros. charged interest @20% per annum. M/s Hitendar Shah &Co. provided
depreciation on matadors@20%p.a. on the diminishing balance method. The books
of account are closed on March 31, every year.
Pass journal entries and show ledge accounts in the book of M/s Hitendra Shah
& Co. Also show how various items will be shown in the balance sheet of the
purchaser.
Q.9
Biswas Ltd. Purchased a machine on hire purchase system from Madras Machinery
Ltd. The terms are that they would pay Rs.25,000 down on April 1,1998. They
charged depreciation on the machine at the rate of 15 per cent annum under
straight line method.
Madras Machinery Ltd. Had charged interest at the rate of 20 per cent annum.
Prepare the Machinery Account and Madras Machinery Ltd. Account to record per
above transactions in the books of Biswas Ltd. till the installment s are paid off.
The accounting year of Biswas Ltd. ended on 31st March in each year.
Q. 10
M/s Raghavan Transport Co. purchased a truck on hire purchase system for
Rs.5,00,000 on April 1, 1989 payment to be made Rs. 2,00,000 down and three
annual installments of Rs. 1,50,000 each payable on March 31, 1990, #1,1991 and
March #1,1992. Rate of interest is charged @ 25% per annum by the vendor, M/s.
Deepa Motors. The buyer depreciates the truck at 20 per cent per annum on written
down value method.
Because of financial difficulties, M/s Raghavan Transport Co. after having paid
down payment and first installment at the end of 1 st year (i.e. on March 31, 1990),
could not pay second installment and the vendor took possession of the truck
,Vendor , after spending Rs. 15,000 on repairs of the asset sold it away for Rs.
3,25,000 on April 10,1991.
Q.11
Rapid Engineering Works sold to Pratap Industries a machine of the cash value of
Rs. 31,360 on hire purchase basis on 1t April, 1995. A sum of Rs.9,000 was paid at
the time of delivery . The balance was payable in three equal annual installments of
Rs.9,000 each payable on 31 st March of every year. Interest was charged @10%
per annum. The purchaser charged 10% depreciation per annum on the diminishing
balances of the machine.
Pratap Industries failed to pay the installment due on March 31, 1997. Rapid
Engineering Works obtained the permission of the court to repossess the machine
as a result of default by the purchaser and having completed all the statutory
requirements took possession of the machine on May 31,1997.
Q. 12
Ramu purchased four machines of Rs.14,000 each by the Hire Purchase system .
The hire purchase price for all the four machines was Rs.60,000 to be paid as
Rs.15,000 down and three installments of Rs.15,000 each at the end of each year.
Depreciation is written off at 10% per annum on the straight line method. Interest
is charged at 5% p.a.
Down payment and first installment were paid. On the default, vendor took
possession of three machines leaving one machine with buyer. The machines were
taken by the vendor at a depreciated value 20% per annum under written down
method. Vendor spent Rs.1,200 on repairs and sold the three machines for
Rs.35,000.
Q. 13
X Transport Ltd. Purchased from manish Motors 3 Tempos costing Rs. 1,00,000
each on hire purchase basis on 1-1-1995. 20% of the cost was to be paid down and
the balance in 3 equal annual installments together with interest @ 9% at the end
of each year. X Transport Ltd. Paid the installments due on31st December ,
1995,but could not pay there after. Manish Motors agreed to leave \one tempo with
the purchaser on 1-1-1996 adjusting the value of the other two tempos against the
amount due that date. The tempos recovred were valued on the basis of 30%
depreciation annually. X Transport Ltd. Charges
Depreciation on tempos @20% on diminishing balance method.
M/s Manish Motors incurred Rs.10,000 on repairs of tempos repossessed and

resold them at a profit of 5% on total cost.
Write up necessary ledger Accounts in the books of both parties giving effect to
the above transactions.
Q. 14
On 1-1-1999 X, a television dealer, bought 5 television sets from olphia Television
Co. on hire purchase. The cash price of each set was Rs.20,000. It was agreed that
Rs. 25,000 should be paid immediately and the balance in three installments Rs.
30,000 each at the end of each year. The Television co. charges interest @10%
p.a. The buyer depreciates television sets at 20% P.a. on the diminishing balance
method.
X paid cash down and two installments but failed to py the last installments
consequently, the Television Co. repossessed three sets , leaving two sets with the
buyer and adjusting the value of 3 sets against the amount due. The sets
repossessed were valued and adjusting the basis of 30% depreciation P.a. on the
written down value. The sets repossessed were sold by the Television Co. for
Rs.30,000 after necessary repairs amounting to Rs.5,000.
Open the necessary ledger accounts in the books of both the parties.
Q. 15
On 1st October, 1999 five trucks were purchased by A on the hire purchase system.
The cash price of each truck is Rs.5,50,000. The Payment was to be made as
follows;
20% of cash price down:
25% of cash price at the end of each of the 4 subsequent half years.
The Payment due on 30th September,2000, could not be made and hence trucks
were seized by the vendor but, after negotiations, A was allowed to keep three
trucks on the condition that the value of the other trucks would be adjusted against
the amount due, the trucks being valued at cost less 25% depreciation. A;s books
are closed on 31st March every year and he charges 15% depreciation on trucks on
the original cost.
Show the necessary accounts in the books of A.
Hire Purchase Trading Account

(at Cost)
Q. 16
The following details relate to a dealer in certain domestic appliances who disposes
of them on hire purchase system. Assuming his gross profit on sales to be 25% and
there were no opening and closing creditors for goods or expenses, prepare hire
purchase trading account for the year ended 31 st December, 2008
2008 Rs.
Jan. 1 Stock out on hire at H.P. Price 4000
Stock on hand at shop at cost 500
Installments overdue, customer still paying 300
Dec. 31
Stock out on hire at H.P. Price 4600
Stock on hand at shop at cost 700
Installments overdue, customer still paying 500
Cash purchase during the year 6000
Credit purchase during the year 800
Cash received (Installments) during the year 8000
Hire purchase expenses paid during the year 740
Q. 17
(at invoice price)
Ram sells goods on hire purchase basis at a profit of 50% on cost. Following
particulars are given to you relating to the business during 2006:
Hire purchase stock (at selling price) as on 1st January, 2006 9000
st
Installment due on 1 January , 2006 5000
Goods sold on hire purchase during the year ( At selling price) 87000
Cash received from hire purchase customer during the year 60000
Goods repossessed (installment due Rs. 2000) as valued 500
st
Hire purchase stock (at selling price) as on 31 December, 2006 30000
st
Installment due on 31 December, 2006 9000
Prepare Hire Purchase Trading Account showing the profit earned .
Q. 19
P sells goods at hire-purchase basis, the price being cost plus 50%. From the
following calculate profit by preparing ledger accounts on stock and debtors system
for the year ended 31 March, 2004:
April 1,2003 Stock at the shop at cost 36,000
April 1,2003 Stock out with H.P. customers 18,000
At selling price
April 1,2003 H.P. Debtors 10,000
31 March, 2004 Cash received from customers 1,20,000
Goods repossessed (Installments Due Rs.
4,000) valued at 1,200
H.P. Debtors at the end of the year 18,000
Stock at the shop at the end of the year, at cost 40,000
Stock out with H.P. Customers at selling Price 60,000
Purchase made during the year 1,20000
Q. 20
Anuj Traders sells various items on hire purchase at cost plus 50%; from the
following particulars find out the profit for the year ending march 31, 2009:
2008 Rs.
April 1 Stock with hire purchase customers at selling price 4,500
Stock at shop at cost 9,000
Installments due 2,500
2009
March 31 Cash received from customers 30,000
Goods repossessed (installments due Rs.1,000) valued at 250
Installments due, customers paying 4,500
Stock at shop at cost (excluding repossessed goods) 10,000
Goods purchased during the year 30,000
Q. 21
Tulika sells goods at hire purchase price. Hire purchase is made of profit at 50% on
hire purchase (cost). Calculate profit from the information given below by preparing
hire purchase trading account:
20…….
January 1 Installments due in the beginning 8,000
December 31 Installments due during the year 25,000
Cash received during the year 30,000
Goods sold during the year 24,000
Installments unpaid (not due) on 31 December 6,000
Goods repossessed during the year (Amount due
Rs.500) 50
Q. 22
From the following prepare hire purchase trading account Lakshmi Devi who sells
goods on hire purchase basis at cost plus 25%:
Rs.
Installment not due on 31.12.2005 300000
Installment due and collected during 2006 800000
Installment due but not collected during 2006 including
Rs. 10000 for which goods were repossessed 50000
st
Installment not due on 31 December 2006 including Rs. 20000
For which goods were repossessed 370000
Installment collected on repossessed stock 15000
Goods repossessed were valued at 60% of original cost.
Q. 23
Geeta products sells goods on hire purchase system at cost plus 50% . from the
following particulars for the year ending December 2007, prepare H.P. Debtors
account, Shop stock account, H.P. Stock account and H.P. adjustment account to
reveal the profit earned:
January 1 stock with H.P. customers at selling price 27000
Stock at shop at cost 54000
Installments overdue 15000
December 31
Cash received from customers 180000
Goods repossessed ( installment due Rs. 8000)
Valued at Rs. 1500 which has been included in the stock
At the end at Rs. 1500
Goods purchased during the year 180000
Stock at shop at cost 61500
Installment due 27000
8. BRANCH ACCOUNTING
Q. 1
M/s R Brothers are having their head office at Delhi and Branch at Meerut. The
following are the transaction of the Head Office with the branch for the year ended
31st August, 2002:
Rs.
Stock at branch as on 1.09.2001 30800
Debtors at the branch as on 1.09.2001 16500
Petty cash as on 1.09.2001 500
Goods supplied to the branch 151200
Remittances from branch:
Cash sales 10500
Realization of debts 167740
Amount sent to branch:
Salary 7400
Rent 2400
Petty cash 3000
Sundry debtors at the branch as on 31.08.2002 50460
Petty cash as on 31.08.2002 750
Show the Meerut Branch account in the books of Head Office.

(ANS: PROFIT RS. 40,800)
Q. 2
S Co., Bangalore , opened a branch at Hyderabad on 1.4.2001. the following
information is available in respect of the branch for the year 2001-2002.
Rs.
Goods sent to branch 75000
Cash sales at the branch 50000
Credit sales at the branch 60000
Salaries of the branch staff paid by the head office 15000
Office expenses of the branch paid by the head office 12000
Cash remittances to branch towards petty cash 6000
Petty cash at branch on 31.03.2002 500
Debtors of branch as on 31.3.2002 5000
Prepare Branch Account to show the profit and loss from the branch for the year.
(ANS. PROFIT 29,500. COLLECTION FRONM DEBTOR 55,000)
Q. 3
From the following particulars, prepare Branch Account showing the profit or loss of
the Branch.
Rs.
Opening stock at the branch 30000
Goods sent to branch 90000
Sales (cash) 120000
Expenses :
Salaries 10000
Other expenses 4000
Closing stock could not be ascertained , but it is known that the branch usually sells
at cost plus 20 percent. The Branch Manager is entitled to a commission of 5% on
the profit of the Branch before charging such commission.
Q. 4 T Co. , Delhi has a branch in Kolkata. It invoice goods to the branch at selling
price which is cost plus 33-1/3%. From the following particulars prepare Branch
Account, Branch Debtors Account, and Goods Sent to Branch Account in the Books
of T Co., Delhi:
Rs.
Stock on 1st January 2002 (invoice price) 15000
Debtors on 1st January 2002 11400
Goods invoiced to branch during the year at invoice price 67000
Sales at the branch:
Cash 31000
Credit 37400 68400
Cash received from debtors 40000
Discount allowed to customers 300
Cheque sent to branch:
Salaries 5000
Sundry expenses 1700 6700
Stock on 31st December 2002 (invoice price) 13400
Q. 5 G Ltd. Invoices goods to its branch at selling price which is cost plus 60% .
from the following particulars, prepare branch account for the year ended 31 st
March, 2002:
Rs.
Stock at branch on 1st April, 2001 at invoice price 240000
st
Branch debtors on 1 April, 2001 213750
Branch Furniture on 1st April, 2001 200000

Transaction during the year 2001-2002: 3120000
Invoice price of goods sent to branch 2160000
Cash sales at branch 624000
Credit sales at branch 162000
Cash expenses of branch directly met by head office 6000
Discount allowed to branch debtors 3760
Stock at branch on 31st March, 2002 at invoice price 108000
Branch debtors on 31.03.2002
Depreciate furniture @ 15% per annum.
Q. 6
A company with its head office at Mumbai has a branch at Kolkata. The branch
receives all goods from head office who also remits cash for all expenses. Sales are
made by the branch on credit as well as for cash. Total sales by the branch for the
year ended 31st March, 2006 amounted to Rs. 560000 out of which 20% is cash
sales. The following further information is also relevant:
01.04.2005 31.03.2006
Stock in trade 25000 36000
Debtors 60000 48000
Furniture 8000 ?
Petty Cash 120 180
Expenses actually incurred by the branch during the year were:
Salaries Rs. 36000
Rent Rs. 9000 (upto 31st December, 2005)
Petty Expenses Rs. 5660
st
Sale of furniture on 1 October, 2005 (book value of furniture on the date of sale
Rs. 950) amounted to Rs. 900.
All sales are made by the branch at cost plus 25%. Depreciation on furniture is
10% p.a.
Prepare Kolkata Branch account in the books of Head Office for the year ending on
31st March, 2006.
(PROFIT Rs. 57,600)
Q. 7
From the following transaction relating to Rajasthan Branch , prepare a branch
account in the Delhi head office. All expenses are paid by the branch as per
arrangement with the head office:
Rs.
st
Balances (1 April, 2005) :
Branch Stock (at cost to H.O.) 378000
Branch Debtors 135500
Personal computer 45000
Branch Bank 9650

Balances ( 31st March 2006)
Branch Debtors
Branch Bank
Personal Computer
Branch Stock (at cost to H.O.) 270000
Transaction at branch during the year:
Goods transferred to Branch (at cost to H.O.) 762000
Goods returned to H.O. by branch (at cost to H.O.) 15000
Cash sales paid into Bank 156000
Credit sales 825000
Sales return at selling price 3750
Cheque received from customer for credit sale 845000
Discount allowed 7800
Aggregate amount of cash transferred from the branch bank to H.O.
bank account during the year on month wise basis 895000
Rent and rates 56000
Wages 45000
General Expenses 7630
Transaction at H.O. on behalf of branch during the year:
Goods transferred to branch (at cost to H.O.) As above
Goods returned from branch (at cost to H.O.) As above
Cash Received from branch As above
Salaries of branch staff 152500
Provide depreciation at 20% p.a. on personal computer.
Q. 8
Modern Shoe Store has an old established branch at Delhi. Goods are invoiced to
the branch at 20% profit on sale, the branch having been instructed to send all
cash daily to the head office. All expenses are paid by the head office except petty
expenses which are met by the branch Manager. From the following particulars ,
you are required to draw up branch account as it would appear in the books of the
head office, i.e. Modern shoe store:
Rs. Rs.
Stock on January 1, 2006 (invoice price) 15000
Sundry debtors on January 1, 2006 9000
Cash in hand on January 1, 2006 400
Office furniture on January 1, 2006 1200
Goods supplied by the head office (invoice price) 80000
Goods returned to head office 1000
Goods returned by debtors 480
Cash received from debtors 30000
Cash sales 50000
Credit sales 30000
Discount allowed 300

Expenses paid by the head office:
Rent 1200
Salary 2400
Stationery and printing 300 3900
Petty expenses paid by the branch Manager 280
Provide depreciation on furniture @ 10% p.a.
Stock on 31.12.2006 (invoice price) 14000
Q. 9
From the following particulars , prepare Delhi Branch Account showing profit or Loss
from the branch in the books of Kolkata head office:
Opening stock at the branch 7,500
Goods sent to branch 22,500
Expenses:
Salaries 2,500
Rent 800
Other expenses 188
Sales (cash) 30,000
Closing stock could not be ascertained , but it is known that the branch usually sells
at cost plus 20 percent. The Branch Manager is entitled to a commission of 5% on
the profit of the Branch before charging such commission.
Q. 10
A trader has its branch at Kolkata to which the goods are invoiced at cost plus 20%.
Prepare Branch account in the books of head office from the following :
Opening stock at branch 24,000
Cash sales at branch 17,500
Credit sales 41,000
Collection from debtors 37,900
Goods received from head office 30,000
Branch Expenses:
Paid by H.O. 3,000
Paid by branch 6,000
Expenses unpaid 1,400
Closing stock at branch 18,000
Closing balance of debtors 9,160
Goods in transit from H.O. 3,600
Q .11
From the details given below relating to Patna branch for the year ending March 31,
2002 prepare Patna Branch Debtors account in the books of Head Office. Show your
working clearly . Goods are invoiced to give a profit of 20% of selling price.
Stock on 1.4.01 5,000
Debtors on 1.4.01 2,000
Furniture on 1.4,01 1,000
Petty Cash on 1.4.01 200
Insurance prepaid on 1.4.01 50
Salaries due on 1.4.01 1,000
Goods sent to branch 40,000
Cash Sales 55,000
Total Sales 70,000
Cash received from debtors 16,000
Goods returned by the branch 500
Goods returned by the debtors 200
Cash sent to the branch for:
Rent 3,600
Salaries 10,200
Petty Cash 600
Insurance (upto june 02) 400
Stock on 30.3.02 500
Depreciate furniture by 20 % 3,000
Q. 12
(when balance of assets at the end are missing). The Bundi shoes Ltd. Bundi, is
having its branch at Ajmer. Goods are invoiced to the branch at 20% profit on
sales. Branch has been instructed to send all cash daily to the head office. All
expenses are paid by the head office except petty expenses which are met by the
branch manager. From the following particulars prepare Branch account in the
books of Bundi shoes Ltd.
Stock on 1st January,02 15,000
(invoice price )
Sundry debtors on 1st January 9,000
st
Cash in hand on 1 January 400
st
Office furniture on 1 January 1,200
Goods invoiced from the head office 80,000
(invoice price)
Discount allowed to debtors 30
Expenses paid by the head office:
Rent 1,200
Salary 2,400
Stationary 300
Petty expenses paid by the branch manager 280
Goods returned to head office 1,000
Goods returned by debtors 480
Depreciation in to be provided on branch furniture at 10% p.a.
stock on 31st December ,2002 at invoice price 14,000
Cash sales 50,000
Credit sales 30,000
Q. 13
A ltd had its Head Office at Mumbai and a Branch at Pune. The Head Office invoice the goods to the
Branch including a profit of 25% above cost.
The following are the transactions of the Head Office with Branch for the Year ended 31-12-2002:
Stock at Branch as on 1-1-2002 (at invoice price) 15,400
Debtors at Branch as on 1-1-2002 8,250
Petty cash as on 1-1-2002 250
Goods supplied to the Branch (at invoice price) 75,600
Remittance from the Branch:
Cash Sales 5,250
Realisation of debts 78,870 84,120
Amount sent to Branch;
Salary 3,720
Rent etc. 1,200
Petty Cash 1,500 6,420
Stock at Branch as on 31-12-2002 (at Invoice Price) 11,575
Sundry Debtors at the Branch as on 31-12-2002 25,230
Petty cash as on 31-12-2002 375
From the above show the Branch Account in the Head Office books.
Q. 14
A trader has its branch at Kolkata to which the goods are invoiced at cost plus 20%. Prepare “Branch a\c
in H.O. books from the following:
Opening stocks at branch 24,000
Cash sales at branch 17,500
Credit Sales 41,000
Collection from Debtors 37,900
Goods received from H.O. 30,000
Branch Expenses:
Paid by H.O. 3,000
Paid by branch 6000
Expenses unpaid 1400
Closing stocks at branch 18000

Closing balance of debtors 9,160
Goods in transit from H.O. 3,600
Q. 15
Mahajan Bros. of Kollhapur have a branch at Jaipur. Goods are sent at cost plus 50%. From the following
particulars you are required to prepare: (a) Branch expenses account; (b) Branch stock account; and (c)
Branch adjustment account for calculating net profit.
Stock in the beginning at Cash sales 25,000
Invoice price 30,000 Credit sales 80,000
Goods sent to the branch Stock at the end invoice price 15,000
At invoice price 90,000
Branch expenses;
Salary 1,000
Depreciation 600
Rent 600
Other expenses 2,000
Q. 16
Hari Haran of Chennai opened a branch at Calcutta goods are invoiced from the head office at cost plus
331\3%. Branch is allowed to make sales at invoiced price only. Expenses of the branch are paid by the
head office. Calculate net profit made by the branch on ‘Stock and debtors’ system. Transaction during
the year were as follows:
Stock in the beginning at invoice
price 8,000 Goods returned by the branch to
Goods invoiced by the head office 88,000 head office 2,000
Sales; Cash 50,000 Stock at the end at invoice price 7,000
Credit 36,000 86,000 Branch expenses;
Sales returns by branch Freight and cartage 500
debtors 800 Rent 1,000
Salary 3,900
Bad debts 50
Depreciation on furniture 80
Advertisement for the branch 200
Q. 17
Onkar Corporation Ltd. Has two branches one at Jaipur and another at Lucknow. Goods are Invoiced to
branches at cost plus 50%. Branches remit all cash received to head office and all expenses are met by
the H.O. From the following particulars prepare the necessary Account on the “Stock and debtors
System” to show the profit earned at the Jaipur branch:
Stock on 1 january 2000 9,300
Debtors on January 1,2000 6,800
Goods sent to Branch ( at cost) 34,000

Sales at Branch
Cash 25,010
Credit 31,000
Cash collected from Debtors 30,400
Goods returned by branch to H.O. 1,200
Goods transferred from Lucknow Branch to Jaipur Branch 15,00
Shortage of Stock 2100
Shortage of Stock at branch 450
Discount allowed to customers 200
Expenses at Branch 5,400
Q . 18
Agra head office supplies goods to its branch at Alwar at invoice price which is cost plus 50%. All cash
received by the branch is remitted to Agra and all branch expenses are paid by the head office. From the
following particulars related to Alwar branch for the year 2002 prepare Branch debtors account. Branch
stock amount and Branch Adjustment Account in the books of the head office so as to find out the gross
profit and net profit made by the branch:
Stock with Branch on 1.1.2002 (at invoice price) 66,000
Branch Debtors on 1.1.2002 22,000
Petty cash balance on 1.1.2002 500
Goods received from head office (at invoice price) 2,04,000
Goods returned to Head Office 6,000
Credit Sales 87,000
Sales Return 3,000
Allowance to customer on selling price (already adjustment while invoicing) 2,000
Discount allowed to debtors 2,400
Expenses (cash paid by Head Office)
Rent 2,400
Salaries 24,000
Petty Cash 2,000 28,400
Cash Sales 1,06,000
Stock with Branch on 31.12.2002(at invoice price) 69,000
Petty Cash Balance on 31.12.2002 100
Q. 19
Crown industries Mumbai has a branch at Madurai to which goods are invoiced at cost plus 25%. The
branch makes sales both for cash and on credit branch expenses are paid direct from head office and the
branch remits all cash to head office.
From the following details, prepare the necessary ledger accounts in Head Office books to calculate
branch profits as per the Stock and Debtors System.
Goods received from H.O. at invoice price 60,000
Returns to H.O.at invoice price 1,200
Branch stock on April1,2001 at invoice price 6,000
Cash sales 20,000
Credit sales 36,000
Branch debtors on April1,2001 7,200
Cash collected from debtors 32,000
Discount allowed to debtors 600
Bad debts in the year 400
Goods returned by debtors to branch 800
Rent, rates and taxes at branch 1,800
Branch office expenses 600
Branch stock at invoice price on March 31,2002 12,000
9. PARTNERSHIP ACCOUNTS -
DISSOLUTION
Q. 1 P, Q and R share profit in ratio of 2:1:1. On the date of dissolution , their
balance sheet showed as follow:
Creditors 14,000 Sundry assets 40,000
P’s capital 10,000
Q’s capital 10,000
R’s capital 6,000
40,000 40,000
The assets realized Rs.35,500. Creditors were paid in full. Realisation expenses
amounted to Rs. 1,500. Close the books of the firm.
Q .2 Mala, Neela and Kala were the partners sharing the profit in the ratio of 3:2:1.
Their Balance sheet as on 31st December, 1998 was as under:
Liabilities Amount Assets Amount
Sundry creditors 15,000 Plant and machinery 16,000
Sheela’s loan 13,000 Stock 15,000
Repairs and renewals 1,200 Sundry debtors 20,000
Reserve Less; Provision 1,000 19,000
Capitals: Prepaid Insurance 400
Mala 10,000 Investments 3,000
Neela 15,000 Cash 2800
Kala 2,000 27,000
56,000 56,200
On this date the firm was dissolved. The assets realized as under:
Plant and Machinery Rs.10,000; Stock Rs.12,000: Sundry debtors Rs.16,000. The
investment were taken over by mala at a value of Rs. 2000. She also agreed to pay
Sheela’s Loan . During the course of realization it was found that a bill for Rs.5,000
previously discounted by the firm was dishonoured and had to be paid. Expenses
came to Rs.800.
Q .3 A, B and C sharing Profits in the ratio of 3:1:1 decided to dissolve their firm.
On 31st March ,2002. Their position was as follows:
Creditors 6,000 Cash at bank 3,500
Loan 1,500 Debtors 24,200
Capital Less: Reserve for doubt
A 27,000 ful debts 1,200 23,000
B 11,000 Stock 8,300
C 10,000 48,500 Furniture 1,200
Sundry assets 20,000
56,000 56,000
It is agreed that:
A is to take over all the furniture at Rs. 1,000 and Debtors amounting to Rs.20,200
at Rs.18,000. A also agrees to pay the creditors.
B is to take over all the stock at book value and some of the Sundry Assets at Rs.
7,200 (being book value less 10%).
C is to take over the remaining Sundry Assets at 90% of the book value and
assume responsibility for the discharge of the loan.
The remaining debtors were taken over by a Debt collecting agency at 80% of book
value .
The expenses of dissolution amounted to rs.200.
Prepare Realization Account , Bank Account and Capital Accounts of the partners.
Q .4
P,Q and R are partners sharing profits and losses equally. On 31 st March, 2002.
Their balance sheet stood as follows:
Bills Payable 16,000 Cash at Bank 15,000
Creditors 1,19,000 Debtors 1,25,000
Loan from Q 25,000 Stock 2,90,000
General Reserve 30,000 Furniture 40,000
P’s current Account 15,000 Machinery 1,20,000
Q’s current Account 15,000 R’s current Account 30,000
P’s capital Account 2,00,000
Q’s Capital Account 1,00,000
R’s capital Account 1,00,000
6,20,000 6,20,000
The firm was dissolved on the above mentioned date. P agreed to pay creditors at
par. Q took over the entire furniture for Rs.36,000. The remaining assets were sold
for Rs. 5,53,000. Bills payable were retired for a discount Rs. 100 received for
payment before the due dates of maturity expenses of dissolution amounted to Rs.
1,200.
Prepare important ledger accounts and cash book. The current accounts and the
capital accounts may be prepared in columnar form.
Q .5
A,B and C are partners sharing profits and losses as to 2:2:1. their Balance sheet
as at 30th September 2002 is as follows:
Sundry creditors 4,000 Bank 5,000
Capital A/cs: Debtors 4,000
A 20,000 Stock 15,000
B 10,000 Furniture 2,000
C 7,000 37,000 Machinery 15,000
41,000 41000
They decided to dissolved the firm. The assets realized were as follows:
Machinery 16,100, Furniture 1,000, Stock 14,000, Debtors Rs.3,500. Creditors were
Paid after obtaining a discount of 5% . A agreed to bear all the realization
expenses for which he was remunerated Rs.1,200. Actual expenses amounted to
Rs. 2,000 which was withdrawn by him from the firm. There was an unrecorded
assets of Rs. 500 which was taken over by B for Rs.400 Prepare: (1) Realization
A/c (2) Partners Capital A/c and (3) Bank A/c.
Q.6
A, B, C and D were partners sharing profits to the ratio 3:2:3:2. Their balance
sheet on the date on the date of dissolution was as follows:
A’s Capital 10,000 Assets 17,000
B’s Capital 5,000 C’s capital 6,360
Reserve 4,000 D’s Capital 1,640
Creditors 6,000
25,000 25,000
On the above date C becomes insolvent and was able to contribute only 50 paise in
the rupee. Assets realized Rs.12,500. Realisation expenses amounted to Rs.400.
Prepare ledger accounts.
Q .7 B, C and D are equal partners. Their balance sheet as on 31 st March ,2003

stood as follows:
Creditors 55,000 Cash at bank 6,250

Capital Account : Debtors 62,500
B 82,500 Stock 87,500
D 55,000 Investments 25,000
Furniture 1,250
C’s Capital A/c 10,000
1,92,500 1,92,500
The firm was dissolved as on that date for the purpose of dissolution. The
investments were valued at Rs. 57,500 and stock at Rs. 70,000.
D agreed to take over the investments and B took over the furniture at book value
and also the stock. The debtors realized Rs.58,000 and creditors were paid off at
Rs.53,500 in full satisfaction of their claims.
 Assuming that C is insolvent and is unable to bring in anything in respect of
his debts to the firm. Prepare necessary ledger accounts to close the books
of the firm in according with the decision in Garner Vs. Murray case.
Q.8
(a) A, B and C are partners sharing profits in the ratio of 2:2:1. Their
balance sheet on 31st December 1998, the date of dissolution, was as
follows:
Capital: A 7,000 Assets:-Fixed 21,000
B 3,000 :-current 2,000
C 1,000 Current account:-C 3,000
Current account: A 2,000
B 1,000
Reserve 2,000
Creditors 10,000
26,000 26,000
All assets, leaving Rs.500 out of current assets which consulted bank balance.
Realized Rs.8,000. C is unable to bring his share of loss and is declared insolvent.
On the date of dissolution it was found that a contingent liability in respect of a bill
discounted Rs. 800 had matured and firm recovered only rs.200 from the acceptor
of the bill. This amount is not included in Rs. 8,000 above. Realization expenses
amounted to Rs. 100. Prepare ledger accounts.
Q .9
The following is the balance sheet of a firm as on 31st March, 1999:
Creditors 2,04,800 Bank 11,000
P’s loan account 60,000 Debtors 1,92,000
Q’s loan account 24,000 Stock 1,28,000
P’s current account 42,000 Plant and machinery 57,200
Q ‘s current account 5,000 Land and Buildings 1,68,000
Capital accounts:
P: 1,20,000 R’s current account 19,880
Q: 80,000
R; 40,000 2,40,000 2,40,000
5,76,200 5,76,200
It was decided to dissolve the firm on that date. The assets excepting bank
balance realized Rs. 4,53,520. The firm had to pay Rs. 3,000 for an out standing bill
not recorded earlier in the books. R became insolvent and a sum of Rs. 2,000 was
realized from his estate. Prepare necessary ledger accounts to close the books of
the firm as per Garner vs. Murray rule.
Q .10
As partners A,B and c shared profits and losses in the ratio of 4:3:2 respectively.
On 31st March, 2002, their balance sheet was shown as under:
Creditors 3,50,000 Cash at bank 1,00,000
A’s capital 4,00,000 Debtors 2,00,000
B,s capital 2,00,000 Stock 5,50,000
C’s capital 50,000 Furniture 1,50,000
10,00,000 10,00,000
On this date, the partners decided to dissolve the firm. A took over part of the
furniture for Rs.40,000 and the remaining furniture was sold in auction for Rs.
10,000. Debtors realized Rs.1,50,000. Stock was sold for Rs. 2,70,000. Expenses
totaled Rs.20,000.
Prepare important ledger accounts and cash book closing the books of account.
C was insolvent and cash book closing the books of accounts. C was insolvent and
his estate was not in a position to contribute anything towards his deficiency. Apply
Garner vs. Murray rule. Calculations may be made to the nearest rupee.
Q .11
A,B and C are partners in ratio 2:2:1. Below is the balance sheet as on 30 th
September, 2002:

X,s Loan on security 10,000 Current Assets
Depreciation provision- 2,000 (including Cash Rs. 8,000
furniture 1,000)
Contingency reserve 1,000
Capital Accounts: Furniture 5,000
A 5,000
B 4,000 Other fixed assets 45,500
C’s capital overdrawn 3,500
62000 62000
Assets of the firm proved bogus and due to its inability to pay creditors. It was
dissolved 31s December 2002. During these three months from the above date of
balance sheet there was no change excepting current assets of the firm decreased
to Rs. 5,000 and a contingent liability in respect of a case against the firm of Rs.
2,000 became a real liability. The contribution from the estate of A Was Rs. 2,000
.C Had a private liability of Rs. 6,500 and private assets (including his life policy )
Rs. 7,000. Assets of the firm realized_ current (other than cash) Rs. 4,000;
Furniture Rs. 1,500; and fixed assets Rs. 20,000. Prepare ledger accounts. All
partners were insolvent.

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B.

COM – FINANCIAL ACCOUNTING 1

1. SINGLE ENTRY SYSTEM

ALTERNATIVE METHOD: CONVERSION OF SINGLE ENTRY TO DOUBLE

CALCULATION OF MISSING FIGURE:

3. Bills receivable and Bills payable Balance

Proforma Bills Payable Account

Total purchases Rs. 3, 60,000

Bills payable: 1.4.2005 1,40,000

Debtors as on 1-4-2003 5000

Bills receivable dishonored 2000

The rate of gross profit is 25% on selling price.

Payments to creditors 220000

There was a considerable amount of cash sales.

Interest charges 100 Balance at the bank as on

Further details available are:

Creditors 30000 29000

The cash book gives the following information:

Details relating to year’s transactions are:

2. FINAL ACCOUNT OF NOT FOR PROFIT

1. Preparation of income and expenditure account and a balance sheet from a

Prepare a statement showing subscription received in 1996-97 as per Receipts &

Calculate the amount of subscription in arrears as on 31 st Dec. 1999 by preparing

Amount paid for stationery during 1998 was Rs. 2,160.

Receipts Rs. Payments Rs.

To Opening Balance 3,000 By Salaries & Rent 1,500

“ Subscription 20,000 “ Electric Charges 30

Following information are available at the end of the year :

“ Interest on Investments 4,550 “ Meeting Expenses 300

“ Bank Interest 2,000 “ Purchase of library books 150

“ Sale of Furniture 25 “ Investment in bonds 1,000

Receipts Rs. Payments Rs.

(i) Extract of trial balance as on 31st December 2007

(ii) Balance Sheet as on 1st January 2007

Subscription received during 2007 250000

Subscription outstanding 5000 10000

Q. 16 Given below is the receipts and payments account of ABC Club:

Assets and Liabilities as on 31-12-2007 and 31-12-2008 are as under:

Q. 17 From the following particulars, prepare Income and Expenditure Account.

Other information supplied to you are as under:

Instruments purchased during the year 2006 were Rs. 5000.

The following information are available:

Total 269030 269030

on the written down value on the balance as appeared in machinery account on 1-

A company purchased second hand machinery on 1 st January, 2000 for Rs.

Depreciation was provided on machinery @ 10% on the original cost annually on

(i) Machinery Account for the years ending 2000 to 2003.

(ii) Machinery Disposal Account.

Show the necessary ledger accounts assuming that:-

a. Provision for Depreciation A/c is not maintained.

5. ACCOUNTING FOR SPECIAL

7. Prabir and Mihir doing business separately as building contractors undertake

9. A and B decided to work on a joint venture to sale electric motors. On 21st

by X amounted to Rs.40,000 and sales made by y were Rs.60,000. Goods

7. HIRE PURCHASE ACCOUNTS

Q.2. Aprna purchased a Radio-Recorder on January 1, 19 x 1 on hire purchase

Q.3. (i) The cash price of the machine is Rs.50,000.

Q.4. On 1 January 19... Sunita purchases a refrigerator on hire purchase system.

M/s Manish Motors incurred Rs.10,000 on repairs of tempos repossessed and

Hire Purchase Trading Account