OMTEX CLASSES: Accounts Board Question Paper October 2011 with answer

Q. 1 Attempt any FOUR sub-questions of the following: (20)

A] Answer in ‘One’ sentence each: (5)

(1) What is Partnership Deed?

Ans: A partnership deed is a written agreement duly stamped, signed and registered document containing the terms and conditions of the partnership.

(2) What is CPU?

Ans: The central processing unit is that hardware part of a computer that controls the entire working of the computer, processes the commands and data, and outputs the result.

(3) What do you mean by Scrap Value of an asset?

Ans: The net amount which is expected to be realised on the final disposal of a fixed asset is called ‘scrap value’.

(4) What are Noting Charges?

Ans: Noting charges are the fees charged by the Notary Public for noting the dishonour on the face of the bill and in his official register.

[5] What is the relationship between the Co-ventures?

Ans: The relationship between the co-ventures is similar to that of temporary partners i.e., principal and agent.

B] Write a word / term / phrase which can substitute each of the following statements: (5)

(1) An intangible asset which has realisable value:- Goodwill.

(2) An organisation not having object of earning profit:- Not for Profit Concern / Non-trading organisation.

(3) Credit balance on Joint Venture Account:- Profit on Joint Venture.

(4) A system which have no hard and fast rules for accounting:- Single Entry System.

(5) A movable mark on the display screen of computer:- Cursor.

C] Match the following pairs:

(5)

Group ‘A’	Answers
(1) Fixed Asset (2) Statement of Affairs (3) Co-venturers’ Liabilities (4) Dishonour of Bill (5) Active Partner	- Plant & Machinery - Single Entry System - Unlimited - Noting Charges - Takes Active Part in the Partnership

D] Select the most appropriate alternative from those given below and rewrite the sentences: (5)

(1) Single entry system is Incomplete.

(a) Complete (b) Scientific (c) Incomplete (d) Accurate

(2) Credit balance of Trading account shows Gross Profit.

(a) Net Profit (b) Net loss (c) Gross Profit (d) Gross loss

(3) A person to whom a bill is endorsed is the Endorsee

(a) Endorser (b) Endorsee (c) Drawer (d) Drawee

(4) Income and expenditure account is Nominal Account.

(a) Real A/c (b) Nominal A/c (c) Personal A/c (d) Capital A/c

(5) Amount contributed by co-venturer’s is debited to Joint Bank Account.

(a) Joint venture account (b) Joint Bank account (c) Co-venturer’s account (d) Shares’ account

E] State with reasons whether the following statements are True / False: (5)

(1) Public Library is a “Not for Profit” concern.

Ans: This statement is TRUE.

Public Library is setup not to earn profit but to serve the society. Hence, it is a not for profit concern.

(2) Payment of bill after due date is called “Retirement of Bill”.

Ans: This statement is FALSE.

Payment of the bill before the due date is called Retirement of Bill.

F] Preparation a Formate of Bill of Exchange from the following information: (5)

(1) Drawer:- Ankur Shah, Anand Park, Borivali (W), Mumbai: 90.

(2) Drawee:- Sharad Shah, Anand Sadan, Bandra (W), Mumbai: 50.

(3) Payee:- Anish Shah, Anand Mahal, Kandiwali (W), Mumbai: 57.

(4) Amount:- Rs. 15,555.

(5) Period : 3 months.

(6) Date of Bill:- 1^st January, 2008.

(7) Date of Acceptance:- 3^rd January, 2008

(8) Accepted for :- Rs. 12,000.

Q. 2 Shantikunj Company, Rajoli purchased furniture worth Rs. 38,400 and paid Rs.1,600 for installation charges on 1^st January, 2004. (10)

On 31^stMarch every year, the company charged depreciation @ 10% p.a. on original cost.

On 1^stOct.2004 the company purchased an additional furniture costing Rs.24,000.

The company sold furniture for Rs. 31,500 on 31^stDecember 2005, which was purchased on 1^st January 2004.

Company purchased a new furniture worth Rs. 20,000 on 31^stMarch, 2006.

You are required to prepare Furniture account and depreciation account for the years 2003-2004, 2004-2005 and 2005-2006.

In the books of Shantikunj Company

Date	Particulars	JF	Amt Rs.	Date	Particulars	JF	Amt Rs.
1-1-04	To Cash / Bank A/c				By Depreciation A/c By Balance c/d		1,000 39,000
			40,000	31-3-04 31-3-04			1,000 39,000
			40,000	31-3-04 31-3-04			40,000

1-4-04 1-10-04	To balance b/d To Cash / Bank A/c		39,000 24,000	31-3-05 31-3-05	By Depreciation A/c (4000 + 1200) By Balance c/d		5,200 57,800
1-4-04 1-10-04	To balance b/d To Cash / Bank A/c		63,000	31-3-05 31-3-05	By Depreciation A/c (4000 + 1200) By Balance c/d		63,000

1-4-05 31-3-06	To balance b/d To Cash / Bank		57,800 20,000	31-12-05 31-12-05 31-12-05 31-3-06 31-3-06	By Cash / Bank A/c By Profit & Loss A/c By Depreciation A/c By Depreciation A/c By Balance c/d		31,500 500 3,000 2,400 40,400
1-4-05 31-3-06	To balance b/d To Cash / Bank		77,800	31-12-05 31-12-05 31-12-05 31-3-06 31-3-06			77,800

1-4-06	To balance b/d		40,400
			40,400				40,400

Depreciation A/c.

Date	Particulars	JF	Amt Rs.	Date	Particulars	JF	Amt Rs.
31-3-04	To Furniture A/c		1,000	31-3-04	By Profit & Loss A/c		1,000
			1,000				1,000
31-3-05	To Furniture A/c		5,200	31-3-05	By Profit & Loss A/c		5,200
			5,200				5,200
31-12-05	To Furniture A/c To Furniture A/c		3,000 2,400	31-3-06	By Profit & Loss A/c		5,400
			5,400				5,400

Q. 2 A] Calculate the value of goodwill at 3 times the average profit of last 5 years. The profits were:

Year	Profit / Loss Amount
2001 – 2002 2002 – 2003 2003 – 2004 2004 – 2005 2005 – 2006	Rs. 14,500 Profit Rs. 9,000 Loss Rs. 16,700 Profit Rs. 9,500 Profit Rs. 13,300 Profit

Solution:

M/s _______________________

VALUATION OF GOODWILL

AVERAGE PROFIT METHOD

Average Profit = Total Profit – Total Losses

No. of years

= 54,000 – 9,000

= 45000 = Rs. 9000

Goodwill = Average Profit ´ No. of years Purchase

= 9,000 ´ 3

= Rs. 27,000

B] What are the features of Accounting Software Tally? (5)

Ans: Tally is very popular software package for Financial Accounting and Inventory Management. The salient features of Tally are:

(1) It is simple and at the same time can be customized according to the individual needs of the user. It can prepare, compare and consolidate the accounts of different branches of the same company as well as those of different companies under the same management simultaneously.

(2) As the accounting information is keyed in, Tally posts them to the respective ledger accounts.

(3) In Tally, it is possible to manifest one single transaction in multiple currencies and to view all reports in terms of one or more currency.

(4) Tally can record and maintain various ledgers. It can prepare Trial Balance. It can also prepare income statements, i.e. Trading Account and Profit and Loss Account as well as financial statements including Balance Sheet. Cash flow and Fund flow statements can also be generated as and when required.

(5) Tally can also prepare Bank Reconciliation Statement.

Q. 3 Bhagyashri sold goods worth Rs. 24,000 to Rupa. (12)

On the next day Rupa paid Rs. 10,000 in cash and accepted 4 months bill for the balance amount drawn by Bhagyashri.

Bhagyashri discounted the bill at 10% p.a. after one month with her bank.

On due date Rupa dishonoured her acceptance and noting charges amounted to Rs. 200.

Rupa paid half the amount of the bill and full amount of noting charges.

Rupa accepted a new bill at 2 months for the balance amount plus interest Rs. 100.

Pass necessary journal entries in the books of Bhagryashri.

In the books of Bhagyashri

Journal Entries

Date	Particulars	LF	Debit (Rs.)	Credit (Rs.)
? 1	Rupa A/c………………………………Dr. To Sales A/c (Being goods sold)		24,000	24,000
2	Cash A/c………………………………Dr. To Rupa A/c (Being cash received from Rupa)		10,000	10,000
3	Bills Receivable A/c…………………Dr. To Rupa A/c (Being bill drawn and accepted due after 4 months)		14,000	14,000
4	Bank A/c………………………………Dr. Discount A/c…………………………Dr. To Bills Receivable A/c (Being bill discounted with bank @ 10% after one month)		13650 350	14,000
5	Rupa A/c……………………………….Dr. To Bank A/c (Being bill dishonoured and incurred noting charges)		14,200	14,200
6	Cash / Bank A/c……………………..Dr. To Rupa A/c (Being part payment received along with noting charges)		7,200	7,200
7	Rupa A/c………………………………..Dr. To Interest A/c (Being interest received)		100	100
8	Bills Receivable A/c…………………..Dr. To Rupa A/c (Being new bill drawn and accepted due after 2 months along with interest)		7,100	7,100
			90,600	90,600

Q. 3 Journalise the following transactions in the books of Kantilal. (12)

(a) Sandhya informed Kantilal that Sawan’s acceptance for Rs. 16,000 endorsed to Sandhya has been dishonoured. Noting charges amounted to Rs. 300.

(b) Nalini renews her acceptance to Kantilal for Rs. 6,000 by paying Rs. 2,000 in cash and accepting a fresh bill for the balance plus interest at 12% p.a. for 3 months.

(d) Bank informed Kantilal that the bill of Rs. 8,000 has been dishonoured by Meenakshi which was sent to bank for collection.

In the books of Kantilal

Date	Particulars	LF	Debit (Rs.)	Credit (Rs.)
a	Sawan A/c……………………………..Dr. To Sandhya A/c (Being endorsed bill dishonoured and incurred noting charges)		16,300	16,300
b (i)	Nalini A/c……………………………….Dr. To Bills Receivable A/c (Being bill dishonoured)		6,000	6,000
(ii)	Nalini A/c……………………………….Dr. To Interest A/c (Being interest due)		120	120
(iii)	Cash A/c………………………………..Dr. To Nalini A/c (Being part payment received)		2,000	2,000
(iv)	Bills Receivable A/c…………………..Dr. To Nalini A/c (Being new bill drawn and accepted along with interest due after 3 months)		4,120	4,120
c	Cash / Bank A/c……………………..Dr. Discount A/c…………………………..Dr. To Bills Receivable A/c (Being bill retired)		9,950 50	10,000
d	Meenakshi A/c…………………………Dr. To Bank for collection A/c (Being bill sent to bank for collection dishonoured)		8,000	8,000
			46540	46540

Q. 4 Shrimant and Ramakant of Aurangabad entered into a Joint Venture to sell computers and share the profit or loss in the proportion of 1 : 2. (12)

Shrimant contributed Rs. 7,50,000 and Ramakant contributed Rs. 15,00,000 and the amount was deposited into Joint Bank Account.

Shrimant bought 60 computers at Rs. 35,000 each and paid for them from Joint Bank Account.

Ramakant bought 15 computers at Rs. 30,000 each and paid Rs. 15,000 for insurance and Rs. 6,000 for freight from his private cash.

60 computers were sold for Rs. 38,500 each 15 computer damaged in transit were repaired by Shrimant at a total cost of Rs. 15,000 from his private cash.

They were finally sold by Shrimant at Rs. 40,000 each.

The accounts between parties were duly settled.

Prepare:

(1) Joint Venture A/c (2) Co-venturer’s A/c (3) Joint Bank A/c

Joint Venture Account

Particulars		Rs.	Particulars	Rs.
To Joint Bank A/c (Purchase) To Ramakant A/c Purchase Insurance Freight To Shrimant A/c (Repairs) To Profit A/c Shrimant Ramakant	450000 15000 6000 108000 216000	21,00,000 471000 15000 324000	By Joint Bank A/c By Joint Bank A/c	23,10,000 600000
		2910000		2910000

Co-ventures A/c

Particulars	Shrimant	Ramakant	Particulars	Shrimant	Ramakant
To Joint Bank A/c	873000	2187000	By Joint Bank A/c By Joint Venture A/c By Joint Venture A/c By Joint Venture A/c	750000 15000 108000	1500000 471000 216000
	873000	2187000		873000	2187000

Joint Bank A/c

Particulars	Rs.	Particulars	Rs.
To Shrimant A/c To Ramakant A/c To Joint Venture A/c To Joint Venture A/c	750000 1500000 2310000 600000	By Joint Venture A/c By Shrimant A/c By Ramakant A/c	2100000 873000 2187000
	5160000		5160000

Q. 5 Mr. Anand gives you the following information: (10)

Particulars	31-03-2003 (Rs.)	31-03-2004 (Rs.)
Cash	5,000	6,000
Bank	15,000	18,000
Debtors	10,000	8,000
Stock	8,000	12,000
Furniture	12,000	12,000
Creditors	2,000	6,000
Bills Payable	2,000	-

During the year Mr. Anand introduced Rs. 4,000 as further capital in the business. He has withdrawn cash Rs. 20,000 out of which he spent Rs. 15,000 on 1-10-2003 for purchase of scooter for business use.

Adjustments:

(1) Depreciate furniture @ 10% p.a.

(2) Depreciate scooter @ 20% p.a.

(3) Create provision for doubtful debts @ 5% of the debtors as on 31-03-2004.

(4) Provide interest on capital at 10% p.a.

Prepare:

(1) Statement of Affairs as on 31-03-2003.

(2) Statement of Affairs as on 31-03-2004.

(3) Statement of Profit or loss for the year ended 31-03-2004.

Opening Statement of Affairs as on 31-3-2003

Opening Statement of Affairs as on 31-3-2003

Liabilities	Rs.	Rs.	Assets	Rs.	Rs.
Capital Creditors Bills Payable		46,000 2,000 2,000	Cash Bank Debtors Stock Furniture		5,000 15,000 10,000 8,000 12,000
		50,000			50,000

Closing Statement of Affairs as on 31-3-2003

Liabilities	Rs.	Rs.	Assets	Rs.	Rs.
Capital Creditors		61,900 6,000	Cash Bank Debtors Less: New R.D.D. Stock Scooters (1-10-03) Less: Depreciation Furniture Less: Depreciation	8,000 400 15,000 1,500 12,000 1,200	6,000 18,000 7,600 12,000 13,500 10,800
		67,900			67,900

Statement of Profit or Loss for the year ended 31-3-2004

Particulars	Rs.	Rs.
Closing capital balance as on 31-3-04 Add: Drawings Less: (1) Further capital introduced (2) Interest on capital Less: Opening capital balance as on 31-3-2003	4,000 4,600	61900 20000 81900 8600 73300 46000
Profit		27300

Q. 6 From the following Receipt and Payment account of Patan Sports Association, Patan and the adjustments. You are required to prepare Income and Expenditure Account for the year ended 31^st March, 2004 and a Balance sheet as on that date. (16)

Receipts and Payments Account for the year ended 31^st March 2004.

Receipts	Amt. (Rs.)	Payments	Amt. (Rs.)
To Balance b/d	4,160	By Salaries	5,500
To Subscription:		By Entertainment Exp.	2,580
2003-04 16,000		By Lighting	1,000
2004-05 412	16,412	By General Expenses	1,536
To Donation	2,000	By Taxes	500
To Receipt from Entertainment	3,644	By Investments	12,000
To Interest on Investment	324	By Printing & Stationery	944
To Entrance Fees	4,500	By Expenses of 2002-03	2,400
To Price Fund	3,000	By Fixed Deposit	4,000
		By Bank Balance	3,000
		By Balance c/d	580
	34,040		34,040

Adjustments:

(1) There are 450 members paying an annual subscription of Rs. 40 each.

(2) Salary outstanding on 31^st March, 2004 was Rs. 1,000.

(3) Building stood in books Rs. 60,000 and furniture at Rs. 4,600 on 1^st April, 2003. Write off depreciation on these assets @ 2% and 10% respectively.

(4) Interest on investment @ 5% has accrued for 3 months.

(5) The capital fund was Rs. 66,360 on 1^st April, 2003.

(6) 60% of the entrance fee is to be capitalised.

Income & Expenditure A/c for the years ended 31-3-2004

Expenditure	Rs.	Rs.	Income	Rs.	Rs.
To Entertainment Exp. To Salaries Add: Outstanding To Lighting To General Expenses To Taxes To Printing & Stationery To Depreciation Building Furniture To Surplus	5,500 1,000 1,200 460	2,580 6,500 1,000 1,536 500 944 1,660 11198	By Donation By Receipt from Entertainment By Interest on Investment Add: Interest By Entrance Fees Less: Capitalised By Surplus	324 150 4,500 2,700	2,000 3,644 474 1,800 18,000
		25,918			25,918

Balance Sheet as on 31-3-2004

Liabilities	Rs.	Rs.	Assets	Rs.	Rs.
Capital Fund Add: Entrance Fees Add: Surplus Price Fund Outstanding Salary Subscription paid in advance	66,360 2,700 69,060 11198	80258 3000 1000 412	Building Less: Depreciation Furniture Less: Depreciation Investments Add: Interest Fixed Deposit Bank Balance Cash Subscription receivable	60,000 1,200 4,600 460 12,000 150	58,800 4,140 12,150 4,000 3,000 580 2,000
		84670			84670

Q. 7 From the following Trial Balance of Kamlesh and Maharajan and given adjustments, prepare a Trading Account, Profit and Loss account for the year ended 31^stMarch, 2007 and a Balance Sheet as on that date. (20)

Dr. Trial Balance as on 31^st March 2007 Cr.

Particulars	Amt. (Rs.)	Particulars	Amt. (Rs.)
Opening Stock	45,000	Capital A/c
Purchases	2,25,000	Kamlesh	25,000
Plant and Machinery	75,000	Mahajan	20,000
Carriage	16,800	Sales	4,50,000
Factory Rent	1,500	Discount Received	750
Insurance	1,050	Sundry Creditors	15,000
Sundry Debtors	60,000	Bad debts Reserve	200
Office Rent	3,000	Bills Payable	2,000
Printing & Stationery	600
Advertisement	15,000
Bills Receivable	3,000
Drawings: Kamlesh	3,500
Mahajan	2,500
Salaries	18,000
Wages	20,000
Furniture	7,500
Royalty	1,000
Cash at Bank	14,500
	5,12,950		5,12,950

The following adjustment are required:

(1) Closing stock was valued at Cost price Rs. 35,000 and Market Price 40,000.

(2) Plant– Machinery & Furniture are to be depreciated at 6% & 10% p.a respectively.

(3) Maintain Reserve for Doubtful Debts @ 2 ½ % on Sundry Debtors.

(4) Outstanding Expenses: Factory Rent Rs. 300; Office Rent Rs. 600.

(5) Interest on capital to be allowed at 6% p.a.

(6) Prepaid insurance was Rs. 100.

Trading Account for the year ended 31-3-2007

Particulars	Rs.	Rs.	Particulars	Rs.	Rs.
To Opening Stock To Purchases To Carriage To Factory Rent Add: Outstanding To Wages To Royalty To Gross Profit c/d	1,500 300	45,000 2,25,000 16,800 1,800 20,000 1,000 1,75,400	By Sales By Closing Stock		4,50,000 35,000
		4,85,000			4,85,000

Profit and Loss A/c for the year ended 31-3-2007

Particulars	Rs.	Rs.	Particulars	Rs.	Rs.
To Insurance Less: Prepaid To Office Rent Add: Outstanding To Printing & Stationery To Advertisement To Salaries To Bad Debts Add: New Bad Debts Add: New R.D.D. Less: Old R.D.D. To Depreciation Plant & Machinery Furniture To Interest on Capital Kamlesh Mahajan To Net Profit Kamlesh Mahajan	1,050 100 3,000 600 - - - 1,500 1,500 200 4,500 750 1,500 1,200 64,375 64,375	950 3,600 600 15,000 18,000 1,300 5,250 2,700 1,28,750	By Gross Profit b/d By Discount Received		1,75,400 750
		1,76,150			1,76,150

Balance Sheet as on 31-3-2007

Liabilities	Rs.	Rs.	Assets	Rs.	Rs.
Capital Kamlesh Mahajan Sundry Creditors Bills Payable Outstanding Expenses Factory Rent Office Rent	87,375 83,075 300 600	1,70,450 15,000 2,000 900	Plant & Machinery Less: Depreciation Sundry Debtors Less: New R.D.D. Bills Receivable Furniture Less: Depreciation Cash at Bank Closing Stock Prepaid Insurance	75,000 4,500 60,000 1,500 7,500 750	70,500 58,500 3,000 6,750 14,500 35,000 100
		1,88,350			1,88,350

Partner’s Capital A/c

Particulars	Kamlesh	Mahajan	Particulars	Kamlesh	Mahajan
To Drawings To Balance c/d	3,500 87,375	2,500 83,075	By Balance b/d By Interest on Capital By Net Profit b/d	25,000 1,500 64,375	20,000 1,200 64,375
	90,875	85,575		90,875	85,575

OMTEX CLASSES	I ST PRELIMINARY EXAMINATION	BOOK KEEPING & ACCOUNTANCY	GROUP: A
TIME: - 3 HRS	DATE: - 16.11.2010	DAY - TUESDAY	MARKS: -100

Q1. Answer Any four of the following. (20 marks)

A. Answer the following. (5)

What is Balance Sheet?

Ans. A balance sheet is a statement showing the financial position of the business in the form of its assets and liabilities on a particular date.

Who is co – venture?

Ans. A co – venture is a temporary partner of joint – venture business only.

What is Super Profit?

Ans. Super profit is the profit earned over and above the normal return on the capital employed by the business firm.

What is Endorsement of Bill?

Ans. Endorsement of a bill is the holder’s signing on its back with the intention of transferring its title or ownership to another.

What is Good will of the firm?

Ans. Goodwill is the monetary value of the reputation of a firm as measured in terms of its expected future profits.

B. Write word/term/phrase which can substitute each of the followings: (5)

Reputation of a firm expressed in terms of money.

Ans. Goodwill.

Payment of expenses before they have become due.

Ans. Prepaid Expenses.

Payment of bill of exchange before its due date at rebate.

Ans. Retirement of Bill of Exchange.

The person on whom the bill of exchange is drawn.

Ans. Drawee.

The account that is credited when depreciation is charged.

Ans. Respective Assets Account.

C. Match the pairs. (5)

	A		B (Answers)
1. 2. 3. 4. 5.	Depreciation Dishonour of bill Joint Venture Goodwill Co – Ventures	1. 2. 3. 4. 5.	Wear and tear Notary Public Temporary partnership Intangible Asset Temporary Partners

D. Select the most appropriate alternative from those given below: (5)

Debit Balance in Profit and Loss Account shows _______________

Net profit
Gross profit
Net loss
Gross loss

A bill of exchange must be accepted by ___________________

A drawer
A payee
An endorsee
A drawee

At the end of the financial year balance of Depreciation account is transferred to _______________

Depreciation account
Asset account
Trading account
Profit and loss account.

In the absence of partnership deed the partners share the profit and loss of the firm _____________

In the ratio of capital
Equally
As per rights in management
On the basis of experience.

____________ has to ultimately bear the noting charges.

Drawer
Drawee
Endorser
Bank

E. State True / False with reasons. (Any Two) (5)

Under fixed capital method for each partner two accounts are maintained.

Ans. The given statement is true because of the following reasons.

i. Under fixed capital method each and every transactions of partners are transferred to their current account and not in their capital account.

ii. It becomes compulsory for the partners to maintain two accounts for their transactions. Once is capital account to record additional capital introduced and current account as well.

Under fixed instalment method depreciation is charged on the diminishing value of the asset.

Ans. The above statement is false because of the following reasons.

i. Under fixed instalment method depreciation is charged on the original value of the assets and the amount of depreciation will remain constant for each year.

ii. Under Diminishing balance method only the depreciation on fixed asset is charged on the written down value of fixed asset every year.

Interest on partner’s drawings is debited to Profit and loss appropriation account.

Ans. The above statement is false because of the following reasons.

i. Profit and loss appropriation account is another profit and loss account prepared especially to record the transactions pertaining to the partners.

ii. Thus Interest on Partner’s drawings is credited to the profit and loss account (or) profit and loss appropriation account and it will be debited to Partners capital account in the case of fluctuating capital method and to Partners current account in the case of fixed capital method.

F. Prepare a bill of exchange from the following information:

Drawer: Vilas Patil, 21. M.G. Road, Pune

Drawee: Vikas Pawar, 31. S.V. Road, Nasik.

Payee: Viraj Potade, 41, A.B. Road, Sholapur,

Period: 2 months

Amount: Rs. 7,500/-

Date of Bill: 1^st January, 2007.

Date of acceptance: 3^rd January, 2007.

ANS.

Q2. Ravindra Trading company. Ambajogai Purchased machinery for Rs. 55,000/- on 1^st April, 1996 and spent Rs. 5,000/- on its fixation and erection. In the same year on 1^st October, additional machinery costing Rs. 40,000/- was purchased. On 1^st October, 1998 the machinery purchased on 1^st April, 1996 became obsolete and was sold for Rs. 43,000/- On 1^st January, 1999, a new machinery was also purchased for Rs. 20,000.

Depreciation was provided annually on 31^st March at the rate of 10% per annum on Fixed Instalment Method. Prepare Machinery A/c and Depreciation A/c for the years 1996 – 97, 1997-98, 1998-99. (March 2005 Board exam Question).

Ans.

M/s Ravindra Trading Co.

Machinery Account.

Date	Particulars	J F	Amount	Date	Particulars	J F	Amount
1.4.1996	To cash / bank a/c [machinery purchased]		55000	31.3.1997	By Depreciation a/c		8000
1.4.1996	To cash / bank a/c [fixation and erection]		5000
1.10.1996	To cash / bank a/c [marhinery purchased]		40000	31.3.1997	By Balance c/d		92000
			100000				100000
1.4.1997	To balance b/d		92000	31.3.1998	By depreciation a/c		10000
				31.3.1998	By balance c/d		82000
			92000				92000
1.4.1998	To balance b/d		82000	1.10.1998	By depreciation a/c		3000
				1.10.1998	By cash/ bank a/c [Machinery sold]		43000
				1.10.1998	By profit / loss a/c [ loss on machinery sold]		2000
				31.3.1999	By depreciation a/c		4500
				31.3.1999	By balance c/d		49500
			102000				102000
1.4.1999	To balance b/d		49500

Depreciation account

Date	Particulars	J F	Amount	Date	Particulars	J F	Amount
31.3.1997	To machinery a/c		8000	31.3.1997	By profit & loss a/c		8000
			8000				8000

31.3.1998	To Machinery a/c		10000	31.3.1998	By profit & loss a/c		10000
			10000				10000
1.10.1998	To Machinery a/c		3000
31.3.1999	To Machinery a/c		4500	31.3.1999	By profit & loss a/c (balancing figure)		7500
			7500				7500

Q2. (A) The books of a business showed that the capital employed on 31^st December, 1992 was Rs.1, 00,000/-. Profits for the last five years are_1988, 1989, 1990, 1991 & 1992 were Rs, 60,000, Rs, 55,000, Rs, 75,000, Rs, 85,000 & Rs, 65,000 respectively. Goodwill is valued at 2 years purchase of the Super profit of the business. NRR is 10%.

Q2. (B) Importance of computer in accounting.

Ans.

The role of computer in accounting is explained as follows.

1. For various reasons, every business organization is required to prepare and maintain various books of account. The computer is used by many business organizations to carry out accounting operations at a greater speed and accuracy.

2. The computer is useful for classifying, processing, analyzing, tabulating, recording and interpreting the accounting data for various purposes.

3. It is useful for improving the financial system of the organization.

4. With the help of the computer, accountants can easily, accurately and speedily prepare the different source documents like voucher, invoice, quotation, receipt, etc.

5. The computer is useful for recording accounting entries in the journal and posting such entries in the ledger. It is also used to prepare trial balance, final account, accounting statements like Balance sheet, etc.

Q3. Anil sold goods to Ravindra for Rs. 6000. Ravindra accepted Anil’s bill for Rs. 6000 payable after 3 months. After a month, Anil discounted the bill with his bank at 10% p.a. On the due date, Ravindra dishonoured his acceptance. Ravindra paid Rs. 3000 to Anil and accepted a fresh bill for 3 months for the balance including interest @ 8% p.a. Anil sent the bill to bank for collection. On due date, Ravindra honoured the bill. Pass the journal entries in the books of Anil. (October 2002 board exam questions).

Ans.

Journal of Anil

Date	Particulars	L F	Debit	Credit
? 1	Ravindra’s A/c………Dr. To Sales A/c (Being the goods are sold)		6000	6000
2	Bills Receivable A/c ……… Dr. To Ravindra’s A/c (Being the bill is drawn)		6000	6000
3	Cash/ Bank A/c ……… Dr. Discount A/c ………… Dr. To Bills Receivable A/c (being the bill is discounted)		5900 100	6000
4	Ravindra’s A/c ……… Dr To Cash/Bank A/c (being the bill is dishonored)		6000	6000
5	Cash/ bank a/c………… Dr To Ravindra’s A/c (being the part payment is made)		3000	3000
6	Ravindra’s A/c ……… Dr. To Interest a/c (being the interest is charged on balance amount)		60	60
7	Bills Receivable A/c ………… Dr. To Ravindra’s A/c (being the new bill is drawn along with interest)		3060	3060
8	Bank for collection A/c ……… Dr. To Bills Receivable a/c (being the bill is send to bank for collection)		3060	3060
9	Cash/ bank a/c ……… Dr. To Bank for collection a/c (being the sent to bank for collection bill is honored)		3060	3060

Q3. Journalize the following transactions in the books of Motilal:

a. Bhavna informed Motila that Jyoti’s acceptance for Rs. 3600 endorsed to Bhavna has been dishonoured and noting charges have been Rs. 150.

b. Anil renews his acceptance to Motilal for Rs. 3400 by paying Rs. 900 in cash and accepting a new bill for the balance plus interest at 8% p.a. for 3 months.

c. Prabhakar retired his acceptance to Motilal for Rs. 4000 by paying Rs. 3850 in cash.

d. Bank informed Motilal that Arun’s acceptance of Rs. 7000 which was discounted with bank has been dishonoured with noting charges Rs. 100. (March 2008 board exam questions)

Ans.

Date	Particulars	L F	Debit	Credit
a	Jyoti’s A/c ……… Dr. To Bhavna’s (being the endorsed bill is dishonored along with noting charges)		3750	3750
b i.	Anil’s A/c ……… Dr. To Bills Receivable a/c (being the bill is dishonored)		3400	3400
ii.	Cash / bank a/c ……… Dr. To Anil’s a/c (being the part payment is made)		900	900
iii.	Anil’s A/c ……… Dr. To Interest A/c (being the interest is charged on balance amount)		50	50
iv.	Bills receivable a/c ……… Dr. To Anil’s A/c (being the new bill is drawn along with interest)		2550	2550
c	Cash/ bank a/c ……… Dr. Rebate’s A/c ……… Dr. To Bill’s Receivable A/c (being the bill is retired)		3850 150	4000
d	Arun’s A/c ………… Dr. To Cash/ bank A/c (bein the discounted bill is dishonored along with noting charges)		7100	7100

Q4. Ajay and Abhijeet were partners in a Joint Venture sharing profits and losses in the proportion of 4/5 and 1/5 respectively. Ajay supplied goods to the value of Rs. 25000 and incurred expenses amounting to Rs. 2700. Abhijeet also supplied goods to the value of Rs. 7000 and his expenses amounted to Rs. 400. Abhijeet sold all the goods for Rs. 46000. Abhijeet is entitled to a commission at 5% on sales. Abhijeet settled Ajay’s account by bank draft. Prepare Joint venture account and Abhijeet account in the books of Ajay. (March 2006 board exam questions.)

In the books of Ajay

Joint venture account

Particulars	Amount	Amount	Particulars	Amount	Amount
To Goods a/c To cash/bank a/c To Abhijeet’s a/c To Abhijeet’s a/c To Abhijeet’s a/c To profit on joint venture transferred to Profit / loss A/c Abhijeet’s A/c	6880 1720	25000 2700 7000 400 2300 8600	By Abhijeet’s A/c		46000
		46000			46000

Abhijeet’s Account

Particulars	Amount	Amount	Particulars	Amount	Amount
To Joint venture a/c		46000	By Joint venture a/c By Joint venture a/c By Joint venture a/c By Joint venture a/c (profit) By cash/ bank a/c (balancing figure)		7000 400 2300 1720 34580
		46000			46000

Q5. Mrs. Archana keeps her books on single entry system and gives the following information: (March 2008 board exam question)

Particulars	31.3.2006	31.3.2007
Cash at bank Sundry debtors Stock in trade Furniture Machinery Bills payable Sundry creditors	5000 25000 30000 20000 50000 5000 15000	32000 40000 50000 20000 50000 5000 20000

Further information:

1. Mrs. Archana withdrew from business Rs. 15000 for personal use.

2. She further introduced fresh capital of Rs. 25000.

3. Depreciation is to be charged @ 10% p.a. on Furniture and Machinery.

Prepare : (1) statement of affairs as on 31.3.2006. (2) statement of affairs as on 31.3.2007. (3) statement of profit and loss for the year ended on 31.3.2007.

ANS.

In the books of Mrs. Archana

Statement of affairs as on 31^st March, 2006

Liabilities	Amount	Assets	Amount
Bills payable Sundry creditors Capital at the beginning of the year	5000 15000 110000	Machinery Furniture Stock in trade Sundry debtors Cash at bank	50000 20000 30000 25000 5000
	130000		130000

Statement of affairs as on 31^st March, 2007

Liabilities	Amount	Assets	Amount
Bills payable Sundry creditors Capital at the end of the year	5000 20000 167000	Machinery Furniture Stock in trade Sundry debtors Cash at bank	50000 20000 50000 40000 32000
	192000		192000

Statement of profit or loss for the year ended 31^st March, 2007

Particulars	Amount
Capital at the end of the year	167000
Add: Drawings	15000
Less: Additional capital introduced	182000 25000
Less: Capital at the beginning of the year	157000 110000
GROSS PROFIT Less: Depreciation On Machinery = (50000)(10/100)(12/12) = 5000 On Furniture = (20000)(10/100)(12/12)=2000	47000 7000
NET PROFIT	40000

Q6. Sanjay, Ajay and Vijay undertook the construction of building at a contract price of Rs. 6,00,000 payable in cash Rs. 4,00,000 and in the form of debentures of company Rs. 2,00,000. They shared profits and losses in the ration of 3:2:1 respectively. They opened a Joint Bank account wherein they deposited the following amounts. Sanjay Rs. 3,00,000, Ajay Rs. 2,00,000 and Vijay Rs. 1,00,000.

The following payments are made out through Joint bank account.

1. Purchase of materials Rs. 2,50,000.

2. Payment of wages Rs. 77,000.

3. Purchase of plant Rs. 45,000 and

4. Other charges Rs. 11,000.

Sanjay bring the truck of Rs. 40,000. Ajay brings in the material of Rs. 55,000. Vijay brings mixer worth Rs. 10,000. At the close of venture the unused materials were taken by Sanjay for Rs. 5,000. Ajay took over the mixer and plant for Rs. 27,000. The truck was sold in the market for Rs. 22,000. The contract price was received as per ther agreement and Vijay agreed to take over the debentures at Rs. 1,90,000.

Prepare : Joint venture account, Joint Bank account and Co – ventureres account. (March 2008 board exam questions)

In the books of Joint venture

Joint venture account

Particulars	Amount	Amount	Particulars	Amount	Amount
To Join bank a/c Materials Wages Plant Other charges To Sanjay’s A/c (Truck) To Ajay’s A/c (materials) To Vijay’s A/c (mixture) To Debentures A/c (discount on debenture) To profit on joint venture transferred to Sanjay Ajay Vijay	250000 77000 45000 11000 78000 52000 26000	383000 40000 55000 10000 10000 156000	By Joint Bank a/c (contract price) By Debentures a/c (contract price) By joint bank a/c (truck sold) By Sanjay’s A/c (Materials taken over) By Ajay’s A/c (Mixer and plant)		400000 200000 22000 5000 27000
		654000			654000

CO – VENTURERS’ ACCOUNT

Particulars	Sanjay	Ajay	Vijay	Particulars	Sanjay	Ajay	Vijay
To Joint venture a/c To debenture a/c To joint bank a/c	5000 413000	27000 280000	190000	By joint bank a/c By joint venture A/c By joint venture A/c By joint Bank A/c	300000 40000 78000	200000 55000 52000	100000 10000 26000 54000
To Joint venture a/c To debenture a/c To joint bank a/c	418000	307000	190000		418000	307000	190000

Joint Bank A/c

Particulars	Amount	Particulars	Amount
To Sanjay’s A/c To Ajay’s A/c To Vijay’s A/c To joint venture A/c To Joint Venture A/c To Vijay’s A/c	300000 200000 100000 400000 22000 54000	By joint venture a/c By Sanjay’s A/c By Ajay’s A/c	383000 413000 280000
	1076000	By joint venture a/c By Sanjay’s A/c By Ajay’s A/c	1076000

Debentures A/c

Particulars	Amount	Particulars	Amount
To Joint venture A/c	200000	By Vijay’s A/c By Joint Venture A/c (balancing figure)	190000 10000
To Joint venture A/c	200000	By Vijay’s A/c By Joint Venture A/c (balancing figure)	200000

Q7. Following is the Trial Balance of Premlal and Sundarlal as on 31^st March 2006.

Trial balance as on 31^st March, 2006.

Particulars	Amount	Particulars	Amount
Stock on 1-4-2005 Purchases Drawings: Premlal Sundarlal Sales return Wages : productive Unproductive Salaries Rent, rates and insurance Bad debts Discount allowed Machinery Building Sundry debtors Cash Government bonds	90000 225000 33000 30000 7200 10500 1800 18600 10200 1200 3900 45000 108600 153000 1000 2000	Sales Purchase returns Discount received Sundry creditors Capital : Premlal Sundarlal Bank overdraft	375000 3000 3000 90000 105000 135000 30000
	741000		741000

1. Closing stock was valued on 31.3.2006 at market price Rs. 60,000 which was 20% above its cost price.

2. Outstanding productive wages Rs. 600

3. Rent, Rates and insurance include insurance Rs. 1600 paid for one year ending on 30^th June 2006.

4. Maintain Reserve for doubtful debts at 5% on debtors.

5. Depreciate buildings by 5% and machinery at 10% p.a.

6. Goods costing Rs. 2500 were distributed as free samples for which no record has been made in the books.

7. Six months interest is due on Bank Overdraft at 10% p.a.

Prepare trading and profit and loss account for the year ended 31^st March 2006 and Balance Sheet as on that date. (September 2008 board exam questions)

In the books of Premlal and Sunderlal

Trading account for the year ended 31^st March, 2006.

Particulars	Amount	Amount	Particulars	Amount	Amount
To opening stock To purchases (-)return To productive wages (+) outstanding To Gross profit c/d	225000 (3000) 10500 600	90000 222000 11100 97200	By sales (-) return By goods distributed as free samples By closing stock	375000 (7200)	367800 2500 50000
		420300			420300

Profit and loss account for the year ended 31^st March, 2006

Particulars	Amount	Amount	Particulars	Amount	Amount
To Salaries To unproductive wages To rent, rates and insurance (-) prepaid insurance To bad debts (+) FBD (+)NRDD (-) ORDD To discount allowed To advertisement To depreciation: Buildings Machinery To interest on bank over draft To net profit c/d Premlal Sundarlal	10200 (400) 1200 NIL 7650 NIL 5430 4500 21660 21660	18600 1800 9800 8850 3900 2500 9930 1500 43320	By gross profit b/d By discount received		97200 3000
		100200			100200

Partners’ capital accounts

Particulars	Premlal	Sunderlal	Particulars	Premlal	Sunderlal
To drawings To balance c/d	33000 93660	30000 126660	By balance b/d By Net profit b/d	105000 21660	135000 21660
To drawings To balance c/d	126660	156660	By balance b/d By Net profit b/d	126660	156660

Balance sheet as on 31^st March, 2006

Liabilities	Rs.	Rs.	Assets	Rs.	Rs.
Capital account Premlal Sunderlal Sundry creditors Bank overdraft Add: interest Outstanding productive wages	93660 126660 30000 1500	220320 90000 31500 600	Buildings (-) Deprn@5% Machinery (-) Deprn@10% Sundry Debtors (-) N.R.D.D. @5% Closing stock Cash Prepaid insurance Government Bonds	108600 5430 45000 4500 153000 7650	103170 40500 145350 50000 1000 400 2000
		342420			342420

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