Answers

Question 1

(i) (d)

(ii) (c)

(iii) (a)

(iv) (a)

(v) (d)

(vi) (c)

(vii) Valuation Account is an account that is used in combination with other account of a
Balance Sheet to show the amount of an asset at its net value. For example, Provision
for Doubtful Debts is Valuation Account since it is used with Sundry Debtors Account.

(viii) Depreciation is charged on fixed tangible assets whereas amortisation is writing off
intangible assets. Hence, depreciation differs from amortisation.

(ix) True: When the acceptor of a bill of exchange fails to make the payment on the due
date, a new bill of exchange may be drawn on him after cancellation of the old bill of
exchange. This is known as renewal of a bill of exchange.

(x) Error which affects the matching of Trial Balance is called one-sided error. One-sided
error affects one side of an account only. Every one-sided error is rectified by passing a
Journal entry through the Suspense Account, e.g., Sales Book was undercast by ` 2,000.
Suspense A/c ...Dr. ` 2,000
To Sales A/c ` 2,000
(Being the error in Sales Book totalling, now rectified)

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(xi) (a) Manager’s Commission = ` 10,500 × = ` 500
105
(b) Manager’s Commission A/c ...Dr. ` 500
To Manager’s Commission Payable A/c ` 500
(Being the Manager’s Commission provided)
(xii) Provision is an expense or loss accounted by estimating the amounts.
(xiii) Credit Notes issued to the customers or Debit Notes issued by the customers.
(xiv) Readymade Software is a software that is developed not for any specific user but for the
users in general.
(xv) Cash Account.

Reason: Cash Book with Discount column serves the purpose of Cash Account.
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Question 2
JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
(i) Charity A/c ...Dr. 1,000
To Purchases A/c 1,000
(Being the goods given as charity)
(ii) Cash A/c ...Dr. 1,950
Discount Allowed A/c ...Dr. 50
To Rattan 2,000
(Being the cash received from Rattan and discount allowed)
(iii) Cash A/c ...Dr. 1,200
Bad Debts A/c ...Dr. 800
To Mahesh’s A/c 2,000
(Being 60% of the amount due from Mahesh received and 40% written-
off as being irrecoverable)

Or

JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
(i) Cash A/c ...Dr. 500
To Bad Debts Recovered A/c 500
(Being a bad debt written-off last year, now recovered)
(ii) Rent A/c ...Dr. 3,500
To Outstanding Rent A/c 3,500
(Being the rent due to landlord)
(iii) Depreciation A/c ...Dr. 2,000
To Furniture A/c 2,000
(Being the depreciation provided on furniture)

Question 3
Dr. AN EXTRACT OF THREE COLUMN CASH BOOK Cr.
Date Particulars L.F. Discount Cash Bank Date Particulars L.F. Discount Cash Bank
Allowed Received
` ` ` ` ` `
2023 2023
April 1 To Cash A/c C ... 6,000 April 1 By Bank A/c C 6,000 ...
April 5 To Bank A/c C 3,000 ... April 2 By Drawings A/c 2,000 ...
April 5 By Cash A/c C 3,000

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 Or
Dr. AN EXTRACT OF THREE COLUMN CASH BOOK Cr.
Date Particulars L.F. Discount Cash Bank Date Particulars L.F. Discount Cash Bank
Allowed Received
` ` ` ` ` `
2023 2023
April 2 To Bill Receivable A/c ... ... 4,950 April 1 By Machinery A/c ... 10,000
April 1 By Draft Commission A/c ... 100
April 5 By Bills Payable A/c 8,000
Note: Discounting charges of ` 50 will be recorded through entry in the Journal.
Discounting Charges A/c ...Dr. ` 50
To Bill Receivable A/c ` 50
Question 4
SALES BOOK OF GARIMA TRADERS
Date Particulars Invoice L.F. Detail Sale Output Output Output Total
No. Value CGST SGST IGST
` ` ` ` ` `
2023
April 1 M/s Vishal Furniture House, Delhi
100 chairs @ ` 1,500 per chair 1,50,000
40 tables @ ` 2,000 per table 80,000
2,30,000
Less: Trade Discount @ 5% 11,500
2,18,500
Add: IGST @ 12% 26,220
2,44,720 2,18,500 ... ... 26,220 2,44,720
April 10 M/s Mayank & Sons, Kolkata
150 desks @ ` 1,000 per desk 1,50,000
160 chairs @ ` 1,500 per chair 2,40,000
3,90,000
Less: Trade Discount @ 5% 19,500
3,70,500
Add: CGST @ 6% 22,230
SGST @ 6% 22,230
4,14,960 3,70,500 22,230 22,230 ... 4,14,960
April 30 Total 5,89,000 22,230 22,230 26,220 6,59,680

JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
M/s. Vishal Furniture House, Delhi ...Dr. 2,44,720
M/s. Mayank & Sons, Kolkata ...Dr. 4,14,960
To Sales A/c 5,89,000
To Output CGST A/c 22,230
To Output SGST A/c 22,230
To Output IGST A/c 26,220
(Being the sales for the month of April recorded)

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Question 5
SALES RETURN BOOK OF VIJAY & CO.
Date Particulars Credit Note No. L.F. Details (`) Amount (`)
2023
April 5 Shiv & Co. Rohtak:
2 Polyester Sarees @ ` 1,250 each 2,500
Less: Trade Discount @ 10% 250 2,250
April 21 Dhanpat & Co. Hissar:
2 Silk Sarees @ ` 3,250 each 6,500
Less: Trade Discount @ 20% 1,300 5,200
April 30 Total 7,450

Note: Return of Kota Sarees will be recorded in the Cash Book since in the Sales Return Book only the return
of goods sold on credit are recorded.

Ledger of Vijay & Co.

Dr. SHIV & CO., ROHTAK Cr.
Date Particulars J.F. ` Date Particulars J.F. `
2023
April 5 By Sales Return A/c 2,250

Dr. DHANPAT & CO., HISSAR Cr.

Date Particulars J.F. ` Date Particulars J.F. `
2023
April 21 By Sales Return A/c 5,200

Dr. SALES RETURN ACCOUNT Cr.

Date Particulars J.F. ` Date Particulars J.F. `
2023
April 17 To Cash A/c 10,000
April 30 To Sundries as per Sales
Return Book 7,450

Question 6
AMOUNT TO BE SHOWN AGAINST STATIONERY IN INCOME AND EXPENDITURE ACCOUNT
Particulars `
Amount paid for stationery during 2022–23 20,000
Add: Stock of Stationery on 1st April, 2022 4,000
Creditors for stationery on 31st March, 2023 5,000 9,000
29,000
Less: Stock of Stationery on 31st March, 2023 3,000
Creditors for stationery on 1st April, 2022 4,500 7,500
Amount to be shown against stationery in Income and Expenditure A/c 21,500

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Question 7
BANK RECONCILIATION STATEMENT as on 31st March, 2023
Particulars Amount Amount
Details (`) `
Overdraft Balance as per Pass Book (Dr.) 40,000
Add: Cheques issued but not yet presented for payment 14,000
54,000
Less: Interest on overdraft charged by the bank but not recorded in the Cash Book 1,000
Cheque sent for collection but not yet collected by bank 15,000
Insurance premium paid by bank, not recorded 5,000
Fee of Chamber of Commerce paid by the bank but not recorded in Cash Book 1,500
Bank charges charged by bank but not recorded in Cash Book 500
Discounted bill dishonoured but not recorded in the Cash Book 2,500 25,500
Overdraft Balance as per Cash Book (Cr.) 28,500

Or
BANK RECONCILIATION STATEMENT as on 31st March, 2023
Particulars Amount Amount
Details (`) `
Balance as per Cash Book (Dr.) 9,030
Add: Cheques issued but not yet presented for payment 8,750
Direct payment by customers into Bank 3,500 12,250
21,280
Less: Cheques deposited with bank but not collected 30,500
Cheques recorded in the Cash Book but not sent to the bank for collection 2,000
Bank Charges 200
Premium paid by the bank 1,980
Dishonour of bill including noting charges (Note) 3,100 37,780
Overdraft Balance as per Bank Pass Book (Dr.) 16,500

Note: Though the bill was discounted for ` 2,850, at the time of dishonour, the bank will debit Customer’s
Account for the full value of bill (including Noting Charges), i.e., ` 3,100.
Question 8
JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
(i) Sales A/c ...Dr. 3,000
To Suspense A/c 3,000
(Being the Sales Book was overcasted by ` 3,000 now rectified)
(ii) Furniture A/c ...Dr. 6,150
To Purchases A/c 6,150
(Being the purchase of furniture passed through Purchase Book,
now rectified)
(iii) Yograj ...Dr. 4,950
To Suspense A/c 4,950
(Being an amount of ` 550 received from Yograj was wrongly posted to
his account ` 5,500, now rectified)

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 (iv) Purchases Return A/c ...Dr. 1,090
To Suspense A/c 1,090
(Being the total of purchase return book was carried forward as ` 2,210
in place of ` 1,120, now rectified)
(v) Suspense A/c ...Dr. 10,000
To Sales A/c 10,000
(Being the Cash Book of ` 12,350 wrongly posted in the Sales Account
as ` 2,350, now rectified)

Dr. SUSPENSE ACCOUNT Cr.

Particulars ` Particulars `
To Sales A/c 10,000 By Balance b/d 960
By Sales A/c 3,000
By Yograj Singh 4,950
By Purchase Return A/c 1,090
10,000 10,000

Question 9
In the Books of Gautam & Co.
Dr. MACHINERY ACCOUNT Cr.
Date Particulars J.F. ` Date Particulars J.F. `
2020 2021
April 1 To Bank A/c 1,50,000 March 31 By Balance c/d 2,00,000
Oct. 1 To Bank A/c 50,000
2,00,000 2,00,000
2021 2022
April 1 To Balance b/d 2,00,000 March 31 By Balance c/d 2,00,000
2022 2022
April 1 To Balance b/d 2,00,000 Sept. 30 By Machinery Disposal A/c 50,000
(Original Cost)
2023
March 31 By Balance c/d 1,50,000
2,00,000 2,00,000

Dr. ACCUMULATED DEPRECIATION ACCOUNT Cr.

Date Particulars J.F. ` Date Particulars J.F. `
2021 2021
March 31 To Balance c/d 17,500 March 31 By Depreciation A/c 17,500
2022 2021
March 31 To Balance c/d 37,500 April 1 By Balance b/d 17,500
2022
March 31 By Depreciation A/c 20,000
37,500 37,500

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 2022 2022
Sept. 30 To Machinery Disposal A/c 10,000 April 1 By Balance b/d 37,500
2023 Sept. 30 By Depreciation A/c (WN 1) 2,500
March 31 To Balance c/d 45,000 2023
March 31 By Depreciation A/c (WN 2) 15,000
55,000 55,000

Dr. MACHINERY DISPOSAL ACCOUNT Cr.

Date Particulars J.F. ` Date Particulars J.F. `
2022 2022
Sept. 30 To Machinery A/c 50,000 Sept. 30 By Accumulated
(Original Cost) Depreciation A/c 10,000
By Bank A/c (Sale) 30,000
By Loss on Sale of Machinery
(Profit & Loss A/c) 10,000
50,000 50,000

Working Note:
` ` Total (`)
Purchase Cost 1,50,000 50,000 2,00,000
Date of Purchase 1.4.2020 1.9.2020
Depreciation for 2020–21 @ 10% p.a. 15,000 2,500* 17,500
Depreciation for 2021–22 @ 10% p.a. 15,000 5,000 20,000
Accumulated Depreciation upto 31st March, 2022 30,000 7,500 37,500
Depreciation for 2022–23 15,000 2,500 17,500

*For six months.

Question 10

Charitable Trust
AN EXTRACT OF INCOME & EXPENDITURE ACCOUNT
Dr. for the year ended 31st March, 2023 Cr.

Expenditure ` Income `
To Medicines Consumed (Note) 11,500

AN EXTRACT OF BALANCE SHEET

as at 31st March, 2023
Liabilities ` Assets `
Creditors for Medicines 1,300 Advance for Medicines 1,300
Stock of Medicines 500

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Note:
STATEMENT SHOWING MEDICINES CONSUMED DURING THE YEAR
ended 31st March, 2023
Particulars `
Amount paid for Medicines during the year ended 31st March, 2023 10,800
Add: Stock of Medicines on 1st April, 2022 3,000
Advance paid for Medicines carried from previous year 200
Creditors for Medicines on 31st March, 2023 1,300 4,500
15,300
Less: Stock of Medicines on 31st March, 2023 500
Advance paid for Medicines on 31st March, 2023 1,300
Creditors for Medicines on 1st April, 2022 2,000 3,800
Medicines consumed during the year ended 31st March, 2023 11,500

Or
Dr. CASH BOOK Cr.
Date Particulars J.F. ` Date Particulars J.F. `
2023 2023
April 1 To Balance b/d 70,000 April 4 By Bank A/c C 30,000
April 3 To Tiger 60,000 April 6 By Wages A/c 15,000
April 5 To Commission Received A/c 6,000 April 11 By Drawings A/c 10,000
April 7 To Bank A/c C 7,000 April 12 By Furniture A/c 4,000
April 8 To Sales A/c 20,000 April 13 By Anurag 8,000
April 15 By Drawings A/c 2,000
April 30 By Balance c/d 94,000
1,63,000 1,63,000
2023
May 1 To Balance b/d 94,000

Dr. TIGER’S ACCOUNT Cr.

Date Particulars J.F. ` Date Particulars J.F. `
2023
April 3 By Cash A/c 60,000

Dr. BANK ACCOUNT Cr.

Date Particulars J.F. ` Date Particulars J.F. `
2023 2023
April 4 To Cash A/c 30,000 April 7 By Cash A/c 7,000

Dr. COMMISSION RECEIVED ACCOUNT Cr.

Date Particulars J.F. ` Date Particulars J.F. `
2023
April 5 By Cash A/c 6,000

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Dr. SALES ACCOUNT Cr.

Date Particulars J.F. ` Date Particulars J.F. `

2023
April 8 By Cash A/c 20,000

Dr. WAGES ACCOUNT Cr.

Date Particulars J.F. ` Date Particulars J.F. `

2023
April 6 To Cash A/c 15,000

Dr. DRAWINGS ACCOUNT Cr.

Date Particulars J.F. ` Date Particulars J.F. `

2023
April 11 To Cash A/c 10,000
April 15 To Cash A/c 2,000

Dr. FURNITURE ACCOUNT Cr.

Date Particulars J.F. ` Date Particulars J.F. `

2023
April 12 To Cash A/c 4,000

Dr. ANURAG’S ACCOUNT Cr.

Date Particulars J.F. ` Date Particulars J.F. `

2023
April 13 To Cash A/c 8,000

Question 11

(i) Profit on Sale of truck ` 10,000 is a Capital Profit.

(ii) ` 5,50,000 received from the proprietor as capital is Capital Receipt.

(iii) Cost of Land ` 2,50,000 (` 2,00,000 + ` 50,000) is Capital Expenditure.

(iv) It is a Revenue Expenditure since it does not bring benefit of enduring nature.

(v) Repairs to building of ` 60,000 is a Revenue Expenditure.

(vi) It is a Capital Expenditure since it is incurred to make the machine ready for use.

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Question 12
Dr. TRADING AND PROFIT & LOSS ACCOUNT for the year ended 31st March, 2023 Cr.

Particulars ` Particulars `
To Opening Stock 2,67,250 By Sales 25,24,000
To Purchases 16,25,050 By Closing Stock (Note) 1,25,500
To Wages 2,31,370
To Power and Fuel 13,500
To Gross Profit c/d 5,12,330
26,49,500 26,49,500

To Salaries 55,750 By Gross Profit b/d 5,12,330

To Courier Charges 42,260 By Provision for Doubtful Debts:
To General Expenses 58,310 Existing 52,000
To Depreciation on Furniture 7,250 Less: Bad Debts (` 5,250 + ` 5,000) 10,250
To Net Profit transferred to Capital Account 3,66,660 41,750
Less: Provision for Doubtful Debts 24,850 16,900
By Interest on Loan 1,000
(` 30,000 × 10/100 × 4/12)
5,30,230 5,30,230

BALANCE SHEET as at 31st March, 2023

Liabilities ` Assets `
Capital Fixed Assets
Opening Balance 1,00,000 Furniture 72,500
Less: Drawings 44,520 Less: Depreciation 7,250 65,250
55,480 Current Assets
Add: Net Profit 3,66,660 4,22,140 Cash at Bank 1,00,000
Current Liabilities Closing Stock 1,25,500
Outstanding Wages 40,000 Sundry Debtors 5,02,000
Outstanding General Expenses 7,000 Less: Bad Debts 5,000
Sundry Creditors 3,05,260 4,97,000
Bills Payable 39,500 Less: Provision for Doubtful Debts 24,850 4,72,150
Loan to Suraj 30,000
Add: Interest on Loan (Outstanding) 1,000 31,000
Input CGST (` 30,000 – ` 20,000) 10,000
Input SGST (` 30,000 – ` 20,000) 10,000
8,13,900 8,13,900

Note: As per prudence concept, closing stock is valued at cost or net realisable value (market value), whichever
is less. Therefore, closing stock is taken as ` 1,25,500.

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 Or
A. In the Books of Shivam
JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
2023 Entries in all cases:
April 1 Rahul ...Dr. 45,000
To Sales A/c 45,000
(Being the goods sold on credit)
Bills Receivable A/c ...Dr. 45,000
To Rahul 45,000
(Being the bill drawn and accepted by Rahul)
Additional entry in case (i):
Cash or Bank A/c ...Dr. 45,000
To Bills Receivable A/c 45,000
(Being the bill realised on due date)
Additional entry in case (ii):
Bank A/c ...Dr. 43,800
Discounting Charges A/c ...Dr. 1,200
To Bills Receivable A/c 45,000
(Being the bill discounted with Bank for ` 43,800)
Additional entry in case (iii):
Mehtab & Co. ...Dr. 45,200
To Bills Receivable A/c 45,000
To Discount Received A/c 200
(Being the bill endorsed in favour of creditor Mehtab & Co. in
settlement of their debt)
Additional entries in case (iv):
(a) When the bill is sent for collection:
Bills Sent for Collection A/c ...Dr. 45,000
To Bills Receivable A/c 45,000
(Being the bill sent for collection)
(b) When bill is Collected:
Bank A/c ...Dr. 45,000
To Bills Sent for Collection A/c 45,000
(Being the bill collected at maturity)

B. STATEMENT OF AFFAIRS
as at 31st March, 2022
Liabilities ` Assets `
Sundry Creditors 15,000 Cash 1,000
Capital (Balancing Figure) 1,19,000 Sundry Debtors 39,000
Stock 34,000
Plant and Machinery 60,000
1,34,000 1,34,000

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 STATEMENT OF AFFAIRS as at 31st March, 2023
Liabilities ` Assets `
Sundry Creditors 14,900 Cash 900
Bills Payable 5,000 Sundry Debtors 45,000
Capital (Balancing Figure) 1,38,000 Stock 32,000
Plant and Machinery 80,000
1,57,900 1,57,900

STATEMENT OF PROFIT & LOSS for the year ended 31st March, 2023
Particulars `
Capital as on 31st March, 2023 1,38,000
Add: Drawings during 2022–23 (` 3,000 × 12) 36,000
1,74,000
Less: Additional Capital introduced during the year 10,000
Adjusted capital as on 31st March, 2023 1,64,000
Less: Capital as on 31st March, 2022 1,19,000
Net Profit earned during 2022-23 45,000

Question 13
Dr. INCOME & EXPENDITURE ACCOUNT for the year ended 31st March, 2023 Cr.
Expenditure ` Income `
To Catering Charges (` 1,27,000 – ` 35,000) 92,000 By Subscriptions (60 × ` 2,000) 1,20,000
To Band Fees 16,000 By Locker Rent 25,000
To Repairs to Nets 6,000 By Dance Receipts 1,45,000
To Purchase of New Balls: By Sale of Old Balls 12,000
Payment 50,000 By Donations 10,000
Add: Owing for Tennis Balls 5,000 55000
To Match Expenses 8,000
To Taxes on Club House 24,000
Less: Prepaid Taxes 6,000 18,000
To Depreciation on Equipment 14,400
To Surplus (i.e., Excess of Income over 1,02,600
Expenditure)
3,12,000 3,12,000

BALANCE SHEET as at 31st March, 2023

Liabilities ` Assets `
Capital Fund: Freehold Club House 2,50,000
As on 1st April, 2022 (WN 1) 4,49,600 Equipment 1,35,000
Add: Surplus for the year 1,02,600 5,52,200 Add: Purchases 9,000
Creditors for Tennis Balls 5,000 1,44,000
Less: Depreciation 14,400 1,29,600
Cash in Hand 1,00,000
Cash at Bank 61,600
Subscriptions in Arrears (WN 2) 10,000
Prepaid Taxes 6,000
5,57,200 5,57,200

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Working Notes:
1. Calculation of Opening Capital Fund:

BALANCE SHEET as at 1st April, 2022

Liabilities ` Assets `
Amount due to Caterers 35,000 Cash in Hand 2,600
Capital Fund (Balancing Figure) 4,49,600 Cash at Bank 90,000
Outstanding Subscription 7,000
Freehold Club House 2,50,000
Equipment 1,35,000
4,84,600 4,84,600

2. Outstanding Subscription as on 31st March, 2023: `

Subscription receivable (60 × ` 2,000) = 1,20,000
Less: Received during the year for the year ended 31st March, 2023 = 1,10,000
Outstanding Subscription = 10,000

Or
Dr. INCOME & EXPENDITURE ACCOUNT for the year ended 31st March, 2023 Cr.
Expenditure ` Income `
To Expenses 20,000 By Subscriptions (60 × ` 2,000) 21,000
To Interest 4,000 Add: Subscription Received
To Miscellaneous Expenses 4,700 in Advance (Last Years) 6,000 27,000
To Surplus (i.e., Excess of Income By Locker Rent 7,000
over Expenditure) 12,900 Less: Outstanding Rent
(Last Years) 2,400 4,600
By Sale of Old Newspapers 1,000
By Miscellaneous Income 9,000
41,600 41,600

BALANCE SHEET as at 31st March, 2023

Liabilities ` Assets `
Capital Fund: Land & Building (` 1,50,000 + ` 40,000) 1,90,000
Opening Balance 1,06,200 Outstanding Subscription 1,800
Add: Entrance Fee 38,000 (2021–22): (` 3,800 – ` 2,000)
Surplus 12,900 1,57,100 Cash in Hand 18,300
Loan 40,000
Creditors 10,000
Outstanding Expenses (` 14,000 – ` 12,000) 2,000
Subscription Received in Advance 1,000
2,10,100 2,10,100

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