Question 1

(a) State with Reasons, Whether the Following Statements are

True or False
(6*2) = (12 Marks)

1. In case of bill of exchange, the drawer and the payee may not be the
same person but in case of a promissory note, the maker and the
payee may be the same person.
Answer – False
The drawer and payee may be same person in case of bill of exchange
whereas in promissory note maker and payee can’t be same person.

2. A concern proposes to discontinue its business from December 2020

and decided to dispose off all its plants within a period of 3 months.
The Balance Sheet as on 31ST December, 2020 should continue to
indicate the plants at its historical costs as the assets will be disposed
off after the Balance Sheet date.
Answer - False
Reason - If the fundamental accounting assumption of going concern is not
followed, then the assets and liabilities should be stated at realizable value not
historical cost.

3. Gauri purchased goods worth Rs. 75,800 at 5% trade discount and

she paid half of the amount in cash. The amount appearing in the
purchase book is Rs. 36,005.
Answer – True

Reason - The trade discount is to be deducted from the total value of Rs.
75,800. The amount paid in cash includes cash purchases and only the credit
purchase will be shown in the purchase book = 36,005 (72,010 X 50%).

4. If individual life policies are taken in the name of the partners and
premium is paid from the firm, then retiring partner is entitled to
surrender value of his policy only.
Answer – False

Reason - If individual life policies are taken in the name of the partners and
premium is paid from the firm, then retiring partner is entitled to surrender
value of all partners’ policies.

5. When shares are forfeited, the share capital account is debited with
called up capital of shares forfeited and the share forfeiture account is
credited with calls in arrear of shares forfeited.
Answer – False
When shares are forfeited, the share capital account is debited with called
up capital of shares forfeited and the share forfeiture account is credited
with amount received on shares forfeited.
6. In the balance sheet of X Limited, Preliminary expenses amounting to
Rs. 5 lakhs and securities premium account of Rs. 35 lakhs are
appearing. The accountant can use the balance in securities premium
account to write off Preliminary expenses.

Answer - True

Reason - According to Section 52 of The Companies Act, 2013, securities

premium account may be used by the company to write off Preliminary expenses
of The Company. Thus the accountant can use the balance in securities premium
account to write off Preliminary expenses amounting to Rs. 5 lakhs.

b) A trader prepared his accounts on 31st March, each year. Due to some
unavoidable reasons, no stock taking could to be possible till 15 th April,
2022 on which date the total cost of goods in his go down came to Rs.
50,000. The following facts were established between 31 st March and
15th April 2022.
a. Sales Rs. 41,000 ( including cash Sales Rs. 10,000)
b. Purchases Rs. 5,034 (including cash purchase Rs. 1,990)
c. Sales Return Rs. 2,000
d. The Trader Had Also Received Goods Costing Rs. 8000 in march, For
Sale on Consignment Basis, 20% of Goods had Been Sold by 31st
March and Another 80% Before 15th April. These Sales are not
included in Sales Above.

Goods are sold by the trader at a profit of 20% on sales.

You are required to ascertain the value of inventory as on 31 st

March, 2022. (4 Marks)

(b)

STATEMENT SHOWING COMPUTATION OF VALUE OF STOCK AS ON

31-3-2022
SR.NO PARTICULARS AMOUNT AMOUNT
A Value of Stock as on 15-4-2022 50000
B Add -
Cost of Sales (41000-20%) 32800

C Less -
Cost of Goods Purchased 5034
Cost of Goods Returned By Customer
(2000-20%) 1600 6634

D Value of Stock as on 31-03-2022 76166

Note – Goods Received on Consignment basis and Sold on behalf of Consignor

Will have No Effect
 C) Differentiate Between Normal Loss & Abnormal Loss
(4 Marks)
(c)

Question 2
The Cash-book of M/s ABC shows 27,570 as the balance at Bank
as on 31st March, 2021. But this does not agree with balance as
per the Bank Statement. On scrutiny following discrepancies were
found:
a) Subsidy 10,250 received from the government directly by the bank, but
not advised to the company
b) On 15th March, 2021 the payments side of the Cash-book was under
cast by 350.
c) On 20th March, 2021 the debit balance of 2,156 as on the previous day,
was brought forward as credit balance in Cash-book.
d) A customer of the M/s ABC, who received a cash discount of 5% on his
account of 2,000, paid to M/s ABC a cheque on 24 th March, 2021. The
cashier erroneously entered the gross amount in the Cash-Book.
e) On 10 th March, 2021 a bill for 5,700 was discounted from the bank,
entered in Cash-book, but proceeds credited in Bank Statement
amounted to 5,500 only.
f) A cheque issued amounting to 1,725 returned marked ‘out of date’. No entry
made in Cash-book.
g) Insurance premium 756 paid directly by bank under a standing order. No
entry made in cash-book.
h) A bill receivable for 1,530 discounted for 1,500 with the bank had been
dishonoured on 30th March, 2021, but advice was received on 1st April,
2021.
i) Bank recorded a Cash deposit of 1,550 as 1,505.
Prepare Bank Reconciliation Statement on 31st March, 2021.
(10 Marks)
 2 (a)

Cash Book (Amended Bank Column)

Particulars Amount Particulars Amount
To Bal B/d 27570 By Under Casting of Cash Book 350
To Subsidy A/c 10250 By party A/c 100
To Error of carrying Forward 4312 By Discounting Charges 200
To Party A/c (Cheque Issued
Returned) 1725 By Insurance Premium A/c 756
By Discounted Bill Dishonoured 1530
By Bal C/d (Bal Fig) 40921
43857 43857

M/s. ABC
Bank Reconciliation Statement as at 31-03-2021
S.No Particulars Amount Amount
A Balance as Per Adjusted Cash Book 40921

B Less-
Bank Recorded Short Cash Deposit 45

C Balance as Per Pass Book (A-B) 40876

Note - In The Absence of Information It is Assumed that Books of

Accounts are Being Closed on 31 st March 2021 & Accordingly BRS is
Being Prepared With Adjusted Cash Book.

2 (b)
X and Y were friends and in need of funds. On 1 st Jan. X drew a bill for Rs
200000 for 3 months on Y. On 4 th Jan. X got the bill discounted at 10%
p.a. and remitted half of the proceeds to Y. On 1 st April, X could not send
the required sum, instead, he accepted Y’s bill for Rs 120000 for two
months. On 4th April, the bill was discounted by Y at 12% p.a. Out of this
Rs 7800 were remitted to X. At maturity of second bill, due to financial
crisis, X became insolvent and only 50 Paise in a rupee could be
recovered from his estate.

Give journal Entries in the Books of Y & Y’s ledger in the Books of X
(10 Marks)
2 (b)
Y's Journal

Date Particulars Dr. (Rs.) Cr. (Rs.)

Jan.1 X Dr. 2,00,000
 To Bills Payable A/c 2,00,000
(Being acceptance of the bill given
to X)

Jan.4 Bank A/c Dr. 97,500

Discount A/c Dr. 2,500
To X 1,00,000
(Being the half the proceeds
received from X)

April.1 Bills Receivable A/c Dr. 1,20,000

To X 1,20,000
(Being the acceptance of a bill
received from X)

April.4 Bank A/c Dr. 1,17,600

Discount A/c Dr. 2,400
To Bill Receivable A/c 1,20,000
(Being the bill discounted @ 12
p.a.)

April.4 Bills Payable A/c Dr. 2,00,000

To Bank A/c 2,00,000
(Being the first bill discharged)

April.4 X Dr. 10,000

To Bank A/c 7,800
To Discount A/c 2,200
 [Being Rs.7,800 remitted to X and
proportionate discount Rs.2,200
(i.e. Rs.2,400x Rs.1,07,800/ Rs.
1,17,600 charged)]

4th
June X Dr. 1,20,000
To Bank A/c 1,20,000
(Being the bill of X dishonoured on
X's bankruptcy)

4th
June Bank A/c Dr. 55,000
Bad Debts A/c Dr. 55,000
To X 1,10,000
(Being a dividend of 50 paisa in a
rupee received on X's bankruptcy
and the balance written off as bad
debts)

In The Books of X
Y’s A/c
Particulars Amount Particulars Amount

To Bank A/c 97500 By B/R A/c 200000

To Discount A/c 2500 By Bank A/c 7800

To B/P A/c 120000 By Discount A/c 2200

To Bank A/c 55000 By B/P A/c 120000

To Deficit A/c 55000

330000 330000

Question 3 (a)

Mr X provides you the following information:

1. Good sent by Mr X to his agent Mr Y – 10000 Units @ Rs 20 per unit
2. Mr X’s Forwarding and Insurance Expenses Rs 50000
3. Goods still-in-transit-200 units
4. Agent took delivery and brought the goods to his go down after
incurring expenses @ Rs 1 per unit
5. Goods sold by Agent – 7300 units @ Rs 30
6. Agent’s Commission --- 5%
Required - Calculate the amount of Closing Stock To be Shown in the
Books of Consignor (5 Marks)
3 (a)

Calculation of Value of Goods Still in Transit

S.No Particulars Amount
A Cost of Goods Still in transit (200 Units * 20) 4000
B Add - Proportionate Expenses of Consignor (50000/10000*200) 1000
C Total Cost of Goods Still in Transit (A+B) 5000

Calculation of Cost of Closing Stock Lying With Consignee

S.No Particulars Amount
A Cost of Goods lying with Consignee (2500 units *20) 50000
B Add - Proportionate Expenses of Consignor (50000/10000*2500) 12500
Add - Proportionate Non Recurring Expenses of Consignee
C (9800/9800*2500) 2500
D Total Cost of Goods Lying with Consignee (A+B+C) 65000
Total Cost of Goods to Be Shown in Books of Consignor = 5000+65000 = 70000

Question 3 (b)
While closing his books of account OM Pandey finds that the Trial Balance
on that date, i.e, 31st March, 2022 is out by Rs.907 excess debit. He
places the difference in a newly opened Suspense Account and prepares his
final accounts which reveals a profit of Rs.14,780 for the year ended 31st
March, 2022.

In April, 2022, the following errors were detected in the accounts for 2021-
22
A. Purchases Book was undercast by Rs.1,000.
B. Cash received from Mohan das Rs.687 was posted to the debit of Rohan
das as Rs.678.
C. Discount received Rs.7,630 and discount allowed Rs.6,873 were not
posted to the ledger.
D. Schedule of debtors was totalled Rs.16,280 instead of Rs.16,380. Om
Pandey maintains a provision for doubtful debts @5%.
E. Bank Charges and interest Rs.115 remained unposted to the debit side
of the Nominal Account.
F. Depreciation on furniture Rs.970 was wrongly recorded as Rs.790.

Pass the Journal entries to rectify the above mentioned errors, prepare
the Suspense Account and profit and loss Adjustment Account and
ascertain the correct amount of profit for the year ending 31st March,
2022. (15 Marks)

3 (b)
JOURNAL
DATE PARTICULARS L.F. Dr. Cr.
 Amount Amount
1 Profit and Loss Adjustment A/C Dr. 1,000
To Suspense A/C 1,000

(Being the rectification of error caused

by under casting of purchase book for
21-22 by Rs. 1000)
2 Suspense A/C Dr. 1,365
To Mohan Das A/C 687
To Rohan Das A/C 678

(Being the rectification of wrong debit

of Rs. 678 to Rohan Das and Omission
to credit of Rs. 687 to Mohan Das,in
21-22 books )
3
(a) Suspense A/C Dr. 7,630
To Profit And Loss Adjustment A/C 7,630

(Being the rectification of Omission of

posting of discount received in 21-22)

(b) Profit And Loss Adjustment A/C Dr. 6,873

To Suspense A/c 6,873

(Being the rectification of Omission of

posting of discount Allowed in 20-21
4 Sundry Debtor A/C Dr. 100
Profit And Loss Adjustment A/C Dr. 5
To Suspense A/C 100
To Provision for doubtful debts A/C
5

(Being the rectification of schedule of

debtors and also rectification of
provision for bad debts account due
to wrong basis on which the amount
of provision was calculated in 21-22)
5 Profit And Loss Adjustment A/C Dr. 115
To Suspense A/C 115
 (Being the rectification of omission of
posting of bank charges and interest)
6 Profit And Loss Adjustment A/C Dr. 180
To Furniture A/C 180

(Being the rectification of wrong entry

for depreciation of furniture)
7 Capital A/C Dr. 543
To Profit And Loss Adjustment A/C 543

(Being the balance of profit and loss

Adjustment A/C Transferred to Capital
A/C)
SUSPENSE A/C
Dr. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
By Difference
To Mohan Das in Trial
Apr-22 A/C 687 Mar-22 Balance b/d 907
By Profit And
Loss
To Rohan Das Adjustment
Apr-22 A/C 678 Apr-22 A/C 1,000
By Profit And
To Profit And Loss
Loss Adjustment Adjustment
Apr-22 A/C 7,630 Apr-22 A/C 6,873
By Sundry
Apr-22 Debtors A/C 100
By Profit And
Loss
Adjustment
Apr-22 A/C 115
8,995 8,995

Profit And Loss Adjustment A/C

Dr. Cr.
Date Particulars J.F. Amount Date Particulars J.F. Amount
To Suspense By Suspense
Apr-22 A/C 1,000 Apr-22 A/C 7,630
To Suspense By Capital
Apr-22 A/C 6,873 Apr-22 A/C(Loss) (b/f) 543
To Provision for
Apr-22 Doubtful Debts 5
 A/C
To Suspense
Apr-22 A/C 115
Apr-22 To Furniture A/c 180
8,173 8,173
The Correct profit for 21-22 Shall Be 14780 – 543 = 14237

Question 4 (a)
Following is the Receipts and Payments Account of Mayur Club for the
year ended 31st March, 2023:
Receipts Rs. Payments Rs.
Opening Balance
Sports Materials 3,04,500
(1.4.2022)
Cash on hand 39,100 Salaries 3,15,000
Equipment purchased on
Cash at Bank 50,000 60,000
01.10.2022
Bank Fixed deposits on
Subscriptions Received 1,50,000
31.3.2023
For the year 2021-22 18,000 Rent 1,48,500
For the year 2022-23 9,63,000 Ground maintenance 22,120
For the year 2023-24 4,500 Insurance 38,400
Interest on bank Fixed
45,000 Stationery 3,450
Deposits @10%
Sundry Expenses 5,880
Closing balances as on
31.3.2023
Cash in hand 31,750
Cash at Bank 40,000

11,19,600 11,19,600
Following additional information is provided to you:
1. The club has 220 members. The annual subscription is Rs.4,500 per
member.
2. Depreciation to be provided on furniture at 10% p.a. and on sports
equipment at 15%p.a.
3. On 31st March, 2023, stock of sports material in hand (after members
use during the year) is valued at Rs.78,000 and stock of stationery at
Rs.3,150. Rent for 1 month is outstanding. Unexpired insurance
amounts to Rs.9,600.
4. On 31st March, 2022 the club had the following assets:
Furniture Rs.2,70,000
Sports Equipment Rs.1,80,000
Bank Fixed Deposit Rs.4,50,000
Stock of Stationery Rs.1,500
Stock of Sports Material Rs.73,500
Unexpired Insurance Rs.8,400
Subscription in arrear Rs.22,500

Note: There was no Liability on 31.3.2022.

 You are required to prepare:
1. Income and Expenditure Account; and
2. Balance sheet as at 31st March, 2023.
(10 Marks)

4 (a)
In The Books of Mayur Club
Income & Expenditure A/c
for the year ended 31st march 2023
Expenditure Amount Income Amount
To Salaries 3,15,000 By Subscription 9,90,000
To Ground By Interest on Bank
Maintenance 22,120 Fixed Deposit 45,000
To Sundry Expenses 5,880
To Depreciation
Sports Equipment 31,500
Furniture 27,000
To Sports Material 3,00,000
To Stationery 1,800
To Insurance 37,200
To Rent 1,62,000
To Surplus for the
year* 1,32,500
10,35,000 10,35,000

Balance Sheet (Closing)

As on 31st March 2023
Liabilities Amount Assets Amount
Capital Fund 1095000 Bank Fixed Deposit 6,00,000
Add - Surplus 132500 12,27,500 Cash in Hand 31,750
Subscription received
in advance 4,500 Cash at Bank 40,000
Outstanding Rent 13,500 Furniture 2,70,000
Less: Dep 27,000 2,43,000
Stock of Sports
material 78,000
Stock of Stationery 3,150
unexpired insurance 9,600
outstanding
Subscription 31,500
sports Equipment 2,08,500

12,45,500 12,45,500

Balance Sheet (Opening)

As on 31st March 2022
Liabilities Amount Assets Amount
Capital Fund (Bal Fig) 10,95,000 Cash in Hand 39,100
Cash at Bank 50,000
Furniture 2,70,000
Sports Equipment 1,80,000
Bank Fixed Deposits 4,50,000
Stock of Stationery 1,500
Stock of Sports
Material 73,500
Unexpired Insurance 8,400
Outstanding
Subscription 22,500
10,95,000 10,95,000

WORKING NOTES
Subscription A/c
Particulars Amount Particulars Amount
To Bal B/d 22500 By Cash/Bank A/c 9,63,000
To Income &
Expenditure A/c 9,90,000
(220 members X
Rs.4,500)
To Bal C/d 4500 By Bal C/d (Bal Fig) 31500
9,90,000 9,90,000

Sports Material A/c

Particulars Amount Particulars Amount
By Income &
Expenditure A/c
To Balance B/d 73,500 (Bal Fig) 3,00,000
To Cash/Bank A/c 3,04,500 By Balance c/d 78,000

3,78,000 3,78,000

Stationary A/c
Particulars Amount Particulars Amount
By Income &
Expenditure A/c
To Balance b/d 1,500 (Bal Fig) 1,800
To Cash/Bank A/c 3,450 By Balance c/d 3,150

4,950 4,950

Insurance A/c
Particulars Amount Particulars Amount
By Income &
Expenditure A/c
To Bal B/d 8,400 (Bal Fig) 37,200
 To Cash/Bank A/c 38,400 By Bal C/d 9,600

46,800 46,800

Rent A/c
Amount Particulars Amount
By Income &
expenditure A/c
To Cash/Bank A/c 1,48,500 (Bal Fig) 1,62,000
To Bal C/d 13,500

1,62,000 1,62,000

Sports Equipment A/c

Particulars Amount Particulars Amount
To Balance B/d 1,80,000 By Depreciation A/c 31,500
By Balance C/d
To Cash/bank A/c 60,000 (Bal Fig) 2,08,500

2,40,000 2,40,000

Question 4 (b)
The following amounts are due to X by Y. Y wants to pay off (a) on 18 th
March or (b) on 14th July. Interest rate of 8% p.a. is taken into
consideration.

Due Dates Rs.

10th January 500
26th January (Republic day) 1,000
23rd March 3,000
18th August (Sunday) 4,000

Determine the amount to be paid in (a) and (b). (5 Marks)

4 (b)
Statement Showing Computation of ADD

Due Date Amount No. of Days Products

from Base
Date

10th January 500 0 0

25th January 1000 15 15000

23rd March 3000 72 216000

 17th August 4000 219 876000

8500 1107000

Let the Base Date Be 10th January

Average Due Date = Base Date + (Total of Products/Total of Amount)
Days
= 10th January + (1107000/8500) Days
= 10th January + 130.23 Days Say 131 Days
= 21st May

Note - As The No of Days to Be added to base Date to Arrive At Average

Due Date are in Decimal , The No of Days are Rounded up to Next Day
Hence taken 131 Days

Amount Payable If Entire Amount Paid on 18th March

ADD = 21st May
Date of payment = 18th March
No. Of Days Early Payment = 64 Days
Saving In Interest = 8500*8%/365*64 = 119.23 Say 119
Total Amount Payable =8500-119 = 8381

Amount Payable If Entire Amount Paid on 14th July

ADD = 21st May
Date of payment = 14th July
No. Of Days Delayed Payment = 54 Days
Interest payable = 8500*8%/365*54 = 100.60 Say 101
Total Amount Payable =8500+101 = 8601

Question 4 (c) (i)

Caly Company sends out its gas containers to dealers on Sale or Return
basis. All such transactions are, however, treated as actual sales and are
passed through the Day book. Just before the end of the financial year,
100 gas containers, which cost them Rs.900 each have been sent to the
dealer on ‘ Sale or return basis’ and have been debited to his account at
Rs.1,200 each. Out of this only 20 gas containers are sold at Rs.1,500
each.
You are required to pass necessary adjustment entries for the purpose of
Profit and Loss Account Balance sheet.

4 (C) (i)
 JOURNAL BOOK

DATE PARTICULARS L.F DEBIT CREDIT

Customer's A/c….Dr (20 Containers * Rs.300) 6000

To Sales A/c 6000

(Being Goods sent on Sale or return Basis accounted as sale for

increase in price)

Sales A/c….Dr (80 Containers* Rs. 1200) 96000

To Customer's A/c 96000

(Being reversal of Sales on Balance Sheet date for goods unsold)

Stock With Customer on Approval Basis A/c….Dr (80 Conatiners*

Rs. 900) 72000

To Trading A/c 72000

(Being Stock Lying with Customer Sent on Approval Basis)

OR
Question 4 (c) (ii)
Roshan has a current account with partnership firm. It has debit Balance of
Rs.75,000 as on 01.07.2016.
He has further deposited the following amounts:

Date Amount (Rs.)

14.07.2016 1,38,000

18.08.2016 22,000

He withdrew the following amounts:

Date Amount (Rs.)

29.07.2016 97,000

09.09.2016 11,000

Show Roshan’s A/c in the ledger of the firm. Interest is to be calculated at

10% on debit balance and 8% on credit balance. You are required to
prepare current account as on 30th September, 2016 by means of product
of balances method.
4 (C) (ii)

In The Books of Partnership Firm

Ramesh in Account Current with Partnership Firm
For The Period 1-7-2016 to 30-09-2016
 Date Particulars Debit Credit Balance Dr/Cr No. Of Debit Credit
Days Products Products

01/07/2016 To Bal B/d 85000 85000 Dr 13 1105000

14/07/2016 By Cash A/c 123000 38000 Cr 15 570000

29/07/2016 To Self 92000 54000 Dr 20 1080000

18/08/2016 By Cash A/c 21000 33000 Dr 22 726000

09/09/2016 To Self 11500 44500 Dr 22 979000

3890000 570000

To Interest
30/09/2016 A/c 938 45438 Dr

Interest Payable on Credit Products = 3890000*10%/366 Days * 1 Day = 1062.84 Say 1063

Interest Receivable on Debit Products = 570000*8%/366 Days * 1 Day = 124.59 Say 125

Net Interest Receivable = 1066-125 = 938

Question 5 (a)
A, B and C are partners in a firm sharing profits and losses as 8:5:3. Their
Balance Sheet as at 31st December, 2021 was as follows:

Rs. Rs.
Sundry Creditors 1,50,000 Cash 40,000
General Reserve 80,000 Bills Receivable 50,000
Partner’s Loan Accounts: Sundry Debtors 60,000
A 40,000 Stock 1,20,000
B 30,000 Fixed Assets 2,80,000
Partner’s Capital Accounts:
A 1,00,000
B 80,000
C 70,000
5,50,000 5,50,000
From 1st January, 2022 they agreed to alter their profit-sharing ratio as
5:6:5.
It is also decided that:
a) The fixed assets should be valued at Rs.3,31,000;
b) A provision of 5% on sundry debtors be made for doubtful debts;
 c) The goodwill of the firm at this date be valued at three year’s purchase
of the average net profits of the last five years before charging insurance
premium; and
d) The Stock be reduced to Rs.1,12,000.
There is a joint life insurance policy for Rs.2,00,000 for which an annual
premium of Rs.10,000 is paid, the premium being charged to Profit and
Loss Account. The surrender value of the policy on 31 st December, 2021
was Rs.78,000.
The net profits of the firm for the last five years were Rs.14,000,
Rs.17,000, Rs.20,000, Rs.22,000 and Rs.27,000.

Goodwill and the surrender value of the joint life policy was not to appear
in the books.

Prepare Revaluation Account, partner’s Capital Account & Revised balance

Sheet. (10 Marks)

5 (a)

Revaluation A/c
Particulars Rs. Particulars Rs.
To RDD 3,000 By Fixed Assets 51,000
To Stock 8,000
To Revaluation profit
A 20000
B 12500
C 7500 40000

51,000 51,000

Partners Capital Accounts

A B C A B C
To A's Capital A/c - 5625 11,250 By Bal B/d 1,00,000 80,000 70,000
To A's Capital A/c - 4,875 9,750 By General Reserve 40,000 25,000 15,000
- By B & C's Capital (G/W) 16,875
By B & C's Capital (JLP) 14,625
To bal C/d (Bal Fig) 1,91,500 1,07,000 71,500 By Revaluation A/c 20000 12,500 7,500

1,91,500 1,17,500 92,500 1,91,500 1,17,500 92,500

Balance sheet as on 1st Jan 2022
Liabilities Rs. Assets Rs.
Partners Capital A/c Cash 40,000
A 191500 Bills Receivable 50,000
B 107000 Debtors 60000
C 71500 3,70,000 Less - RDD 3000 57000
Partners Loan A/c Stock 112000
A 40000 Fixed Assets 3,31,000
B 30000 70,000
Sundry Creditors 1,50,000

5,90,000 5,90,000

Working Notes
1. Computation of Gaining & Sacrifing Ratio
A = 8/16 - 5/16 = 3/16 (Sacrifice)
 B = 5/16 - 6/16 = (1/16) (Gain)
C = 3/16 - 5/16 = (2/16) (Gain)

2. Calculation of Value of Goodwill & Its Treatment

Average profit of Last 5 Years after Charging Insurance Premium
i.e 14000+17000+20000+22000+27000/ 5 Years = 20000
Average profit of last 5 Years Before Charging Insurance Premium = 20000+Insurance Premium per Year
= 20000+10000
= 30000

Value of Goodwill = 3Yrs Purchase * Average profit Before Charging Insurance Premium
= 3 * 30000
= 90000

Accounting Entry For Goodwill Adjustment

B's Capital A/c…...Dr (1/16*90000) 5625
C's Capital A/c…...Dr (2/16*90000) 11250
To A's Capital A/c (3/16*90000) 16875

3. Treatment of Surrender Value Rs. 78000 of JLP

Accounting Entry
B's Capital A/c…...Dr (1/16*78000) 4875
C's Capital A/c…...Dr (2/16*78000) 9750
To A's Capital A/c (3/16*78000) 14625

Question 5 (b)
From following trial balance of Mr. Sundar Lal, prepare Manufacturing,
Trading and Profit & Loss Account for the year ended 31 st March, 2023 &
Balance Sheet as on that date:
Dr. Trial Balance as on March 31, 2023
Cr.
Debit Balances Amount Credit Balances Amount
Drawings 12,000 Capital 82,000
Cash in hand 1,000 Mr. Sundar Lal’s Loan 8,000
Cash at Bank 8,000 Sundry Creditors 90,000
Sundry Debtors 80,000 Sales less returns 2,46,000
Patents 4,000 Discount Received 4,000
Plant & Machinery 45,000 Sale of Scrap 2,000
Land & Buildings 52,000 Bad Debts Recovered 5,000
Purchase of Raw Materials 70,000
Stock of Raw Materials 7,000
(1.4.2022)
Stock of Work-in- 4,000
progress(1.4.2022)
Stock of Finished goods 36,000
(1.4.2022)
Carriage Inwards 2,000
Wages 54,000
Salary to Factory Manager 11,000
Factory Expenses 6,000
Factory Rent and Insurance 5,000
 Royalty (paid on sales basis) 2,000
Advertisement 6,000
Office Rent and Insurance 10,000
Office Expenses 12,000
Carriage Outwards 1,000
Bad Debts 2,000
Discount Allowed 3,000
Printing and Stationery 4,000
4,37,000 4,37,000
The Stock as on 31 March, 2023 was as follows: Raw Materials Rs.8,000;
st

Work-in-progress Rs.10,000; finished Goods Rs.30,000. (10 Marks)

5 (b)

In The Books of Mr. Sundarlal

Manfacturing A/c
For the year Ended 31-03-2023
Particulars Particulars Amount
To Opening Work in Progress 4000 By Sale of Scrap 2000
To Raw Material Consumed By Closing Work in Progress 10000
Opening stock By Cost of Production trf to Trading
7000 Account 139000
Add - Purchases
70000
Less - Closing Stock
8000 69000
To Carriage Inwards 2000
To Wages 54000
To Salary to Factory Manager 11000
To Factory Expenses 6000
To Factory Rent & Insurance 5000

151000 151000

Trading & P/L A/c

For the year Ended 31-03-2023
Particulars Amount Particulars Amount
To Opening Stock of Finished Goods 36000 By Sales 246000
To Cost of Production 139000 By Closing Stock 30000
To Gross profit 101000

276000 276000

By Gross Profit B/d 101000

To Royalty 2000 By Discount Received 4000
To Advertisment 6000 By Bad Debts Recovered 5000
To office Rent & Insurance 10000
To Office Expenses 12000
To Carriage outward 1000
To Bad Debts 2000
To Discount Allowed 3000
To Printing & Stationary 4000
To Net Profit Trf to Capital A/c 70000
110000 110000

BALANCE SHEET
AS ON 31-03-2023
Particulars Amount Particulars Amount
Capital
82000 Patents 4000
Less - Drawings Plant & Machinery 45000
 12000
Add - Net Profit
70000 140000 Land & Building 52000
Sundry Debtors 80000
Sundarlal's Loan 8000 Cash in hand 1000
Sundry Creditors 90000 Cash at Bank 8000
Closing Stock
Raw Material
8000
Work in Progress
10000
Finished Goods
30000 48000

238000 238000

Question 6 (a)
B Ltd. issued 20,000 equity shares of Rs 100 each at Rs 20 per share
payable as follows: on application Rs 50; on allotment Rs 50 (including
premium); on final call Rs 20. Applications were received for 24,000
shares. Letters of regret were issued to applicants for 4,000 shares and
shares were allotted to all the other applicants. Mr. A, the holder of 150
shares, failed to pay the allotment and call money, the shares were
forfeited. Show the Journal Entries and Cash Book in the books of B Ltd.

6 (a)

In The Books of B Ltd

Journal Entries

S.No PARTICULARS L.F DEBIT CREDIT

1 Equity Share Application A/c 1000000

Equity Share Allotment A/c 1000000
To Equity Share Capital A/c 1600000
To Securities Premium Reserve A/c 400000
(Being Shares allotted & Allotment Money Due)

2 Calls In Arrears A/c…..Dr 7500

To Equity Share Allotment A/c 7500
(Being Allotment Money Not Received on 150 Shares at Rs. 50 Each
Transferred to Calls in Arrears

3 Equity Share First & Final call A/c…..Dr 400000

To Equity Share Capital A/c 400000
(Being Share First & Final call Due)

4 Calls In Arrears A/c…..Dr 3000

To Equity Share First & Final call A/c 3000
(Being First & Final call Not Received on 150 Shares at Rs. 20 Each
Transferred to Calls in Arrears

5 Equity Share Capital A/c…....Dr (150*100) 15000

Securities Premium A/c….Dr (150*20) 3000
To Forfeited Shares A/c (150*50) 7500
To Call in Arrears A/c 10500
(Being 150 Shares Forfeited for non payment of allotment & Final call
Money)

In The Books of B Ltd

 Cash Book

Particulars Amount Particulars Amount

To Equity Share Application A/c 1200000 By Equity Share Application A/c 200000
(Being Application money Received on 24000 (Being Excess Application money on
Shares at Rs. 50 Each 4000 Shares at 50 each Refunded)

To Equity Share Allotment A/c 992500

(Being Allotment money Received on 19850
Shares at Rs. 50 Each By Balance C/d (Bal Fig) 2389500

To Equity Share First & Final call A/c 397000

(Being First & Final Call Received on 19850
Shares at Rs. 20 Each

2589500 2589500
(10 Marks)

Question 6 (b)
X Ltd. Obtains a Loan from IDBI of Rs.1,00,00,000, giving as collateral
security of Rs.1,50,00,000 (of Rs.10 each), 14%, First Mortgage
Debentures. Give Journal Entries and extract of balance sheet. (5 Marks)

6 (b)

In the Books of X Ltd.

Journal
Date Particulars Rs. Rs.
Bank A/c……Dr 1,00,00,000
To IDBI Loan A/c 1,00,00,000
(Being Bank Loan taken)

Debentures Suspense A/c Dr 1,50,00,000

To 14% First Mortgage Debentures A/c 1,50,00,000
(Being the Issue of Rs.15,00,000
debentures @ Rs.10 collaterally as per
Board's Resolution No… Dated…)

Balance Sheet of X Limited as at…. (Extracts)

Notes
Particulars No. Rs.
EQUITY AND
LIABILITIES
Non-Current
(i) Liabilities
Long Term
Borrowings 1 2,50,00,000
Total 2,50,00,000
ASSETS
(ii) Non-current Assets
Other Non-current
Assets 2 1,50,00,000
 (iii) Current Assets
Cash and Cash
Equivalent 1,00,00,000
Total 2,50,00,000
Notes to accounts
Rs. Rs.
Long Term
(i) Borrowings
Secured Loan
IDBI Loan 1,00,00,000
14% First Mortgage
Debentures 1,50,00,000 2,50,00,000

Other Non-current
(ii) Assets
Debenture Suspense
Account
(Issue of
Rs.15,00,000 14%
first debentures as
collateral security as
per contract) 1,50,00,000

Question 6 (c)
Explain Imprest & Non Imprest System of Petty Cash Book. (5 Marks)

6 (C)
a) “Imprest’ or ‘Float’ is the amount which the main cashier hands
over to the petty cashier in order to meet the petty cash expenses
of a given period.

b) Petty cash book may be maintained on Imprest system or no

Imprest system.

Imprest System of petty cash – under Imprest system. The chief

cashier makes the reimbursement of the amount spent by the
petty cashier and the petty cashier again has the same amount of
petty cash at the end as in the beginning.

Non Imprest system of Petty Cash - Under the non Imprest

system the Chief Cashier may hand over the cash to the Petty
Cashier equal to/ more than / less than the amount spent by the
petty cashier. The petty cashier may or may not have the same
closing balance of petty cash as opening balance.