Accounts Notes For 2010 - 11

H.S.
C OMTEX CLASSES 8TH YEAR
OMTEX CLASSES
8th years of success
BOOK KEEPING
AND
ACCOUNTANCY
NAME :- ______________________________
STANDARD: -S.Y.J.C (Second year junior college)
CLASSES :- OMTEX CLASSES

FOR PRIVATE CIRCULATION ONLY
“You don’t know what you can do until you try”
“IF YOU ARE SATISFIED WITH OUR TEACHING TELL TO OTHERS IF NOT TELL TO US”
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BOOK KEEPING & ACCOUNTANCY
H.S.C OMTEX CLASSES 8TH YEAR
Preface
It gives us great pleasure to present this thoroughly revised edition

of Omtex Book – Keeping and Accountancy for Standard XII,
prepared according to the pattern prescribed by the board.
A thorough study and practice of this edition with the help of Omtex
guidance (teaching + coaching) will enable the students to pass the HSC
Examination with good marks.
Meticulous care has been taken to make this edition of Omtex

Book – Keeping and Accountancy perfect and useful in every
respect. However, suggestions, if any, for its improvement are most

welcome.
- Omtex
Note: - No part of this book may be copied, adapted, abridged or translated, stored in any retrieval
system, computer system, photographic or other system or transmitted in any form or by any
means without a prior written permission of the Omtex classes.
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CH. 1. VALUATION OF GOODWILL [Q. 2 (A): 5 MARKS]
Note: - One practical problem on Valuation of Goodwill carrying 5 marks and one theory
question on Computer Awareness carrying 5 marks will be asked in Q. 2 of the Board Paper
in option to one practical problem on Depreciation carrying 10 marks. The students may
either attempt problem on Depreciation or Goodwill and theory question on Computer
Awareness.
Valuation of Goodwill: - As prescribed in the syllabus, the value of goodwill as on a

particular date is ascertained by using any one of the following methods:
i. The Average Profit Method and
ii. The Super Profit Method.
INTRODUCTION
Definition: Goodwill is an intangible (non – visible) fixed asset having a realizable
(economic) value. It is the reputation of business. Valuation of goodwill is very
important in the case of admission, retirement and death of partners.
PROBLEMS
1. The profits of the firm for the last five years are 2002 Rs. 20,000; 2003 Rs. 16,000; 2004
Rs. 24,000; 2005 Rs. 8000; 2006 Rs. 12,000. Calculate the goodwill of the firm. [Ans.
Rs. 16,000]
2. Mona, Reena and Sona have been carrying on a partnership business and good will of their
firm is to be valued at three years purchase of the average profit for the last five years. The
profit and losses for the last five years have been. 1st Year Rs. 16,000, 2nd Year, 15,000, 3rd
Year, 8,000(Loss), 4th Year, 7,000, 5th Year, 10,000. [Ans. Rs. 24,000]
3. Calculate the good will from the following information goodwill is valued at three years
purchase of average profit of the last six years. Profit and losses of the business in the last
six years are as follows, [Ans. Rs. 95,000]
1st year, Rs, 40,000(Profit)
2nd Year, Rs, 60,000(Profit)
3rd Year, Rs, 10,000(Loss)
4th Year, Rs, 50,000(Profit)
5th Year, Rs, 30,000 (Loss)
6th Year, Rs, 80,000(Profit)
4. Calculate the value of goodwill according to average profit method. Goodwill is valued at
three years purchase of last four year average profit. The profits and losses for the last four
years are. [Ans. Rs. 27,000]
1st Year Rs, 10,000(Profit)
2nd Year Rs, 12,000(Profit)
3rd Year Rs, 4,000(Loss)
4th Year Rs, 18,000(Profit)
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5. The profit of a firm for the four years from 1991 to 1994 where_ [Ans. Rs. 1, 02,000]
1991 Rs, 40,000
1992 Rs, 45,000
1993 Rs, 55,000
1994 Rs, 53,000
Calculate the goodwill of the firm at 2yrs. Purchase of the average profit for the last three
years.
6. Mr. X a businessperson has earned the following profits in the last five years.
1995 1, 05,800
1994 1, 02,600
1993 98,400
1992 96,800
1991 95,500
Value goodwill of Mr. X on the basis of three years purchase of average of the past five
years. [Ans. Rs. 2,99,460]
7. Good will is valued at three years purchase of last five years average profit. The profits for
the last five years are. [Ans. 0]
1st Year 4,800(p)
2nd Year 7,200(L)
3rd Year 10,000(L)
4th Year 3,000(P)
5th Year 5,000(L)
Note: - Since the company‟s average profit is negative. Therefore the firm‟s goodwill is zero.
8. Compute the goodwill the following case good will is valued at three years purchase of
average profit of five years. The Profit of the five years were_ [Ans. Rs. 26,400]
1st Year 5,800
2nd Year 7,400
3rd Year 20,000
4th Year 3,500
5th Year 7,300
9. Sales of trader for 3years ended 30th June 1995 are as follows [Ans. Rs. 1, 22,680]
1995 Rs, 5, 50,000
1994 Rs, 5, 46,000
1993 Rs, 5, 25,000
The profit margin for the 3 years ended 30th June 1995 was 10%, 12%, 12% respectively. For
the purpose of selling the business of the trader, goodwill is to be valued at 2years purchase
of the average profit of the last 3years. Find the value of good will.
10. From the following particulars, value good will of 2yrs. Purchase of last 5 years. [Ans.
Rs. 70,326]
Year ended Turn over Net profit
31-12-1990 5,15,000 5%
31-12-1991 5,45,600 6%
31-12-1992 5,35,800 7%
31-12-1993 5,40,900 7.5%
31-12-1994 5,60,800 7%
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11. A firm with an average capital employed of Rs. 1, 60,000 is expected to earn Rs, 40,000
per annum in future. Calculate goodwill at three times the super profit taking the normal
rate of return as 15%. [Ans. Rs. 48,000]
12. Capital employed on 31st December, 1990 was Rs, 1, 00,000/-. The Profits earned by the
business for the last 5 years where. [Ans. Rs. 87,000]
1986 30,000
1987 40,000
1988 50,000
1989 40,000
1990 60,000
Normal rate of return is 15%. Good will is valued at 3 years purchase of the super profits of
the business. Find out the value of goodwill.
13. 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%. [Ans. Rs. 1, 16,000]
14. M/s XYZ partnership firm earned net profit during the last four years were Rs, 7,000. Rs,
13,000. Rs, 12,000 and Rs, 8,000. The capital investment made in the firm was Rs,
50,000. N.R.R on capital is 15%. The remuneration of the partners during the period is Rs,
500 p.a. Good will is valued at 2 Yrs purchase of Average super profit of the above
mentioned years. [Ans. Rs. 4,000]
15. M/s Vijay trading company earned net profit during the last four years was follows.
1st Year Rs, 57,000
2nd Year Rs, 44,000
3rd Year Rs, 61,000
4th Year Rs, 58,000
The capital investment made by the company is Rs, 1, 50,000. Normal Rate of return on
capital is 20%. The remuneration of the partners during this period is Rs, 500 p.m. Good
will is valued at 2years purchase of Average Super profit of above mentioned period.
[Ans. Rs. 38,000]
16. The average net profit expected in the business by ABC firm is Rs, 36,000 per year. The
average capital employed in the business by the firm is Rs, 2, 00,000. The Rate of interest
expected from capital invested in the business is 10%. The remuneration of the partners is
estimated to Rs, 6,000 P.a. Calculate the value of goodwill based on 2years purchase of
super profit. [Ans. Rs. 20,000]
17. M/s Rajesh Trading company earned net profit during the last four years were Rs, 15,000,
Rs, 28,000, Rs, 30,000 & Rs, 40,000. The capital investment made by the company is 1,
00,000. Normal rate of return on capital is 15 %. The remuneration of the partners during
this period is Rs, 1,000p.a. Good will is valued at 2 years purchase of average super profit
of the above mentioned period. [Ans. Rs. 24,500]
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18.The present average net profit of Braful, Shobha partnership firm before detecting
partner‟s remuneration is Rs, 27,000 p.a. The capital employed in the business by the
partner Braful Rs, 1, 00,000 & Shobha Rs, 50,000. The profit expected from the total
capital invested is 10% p.a. The total remuneration is estimated to be Rs, 6,000 per
annum. Find out the value of goodwill on the basis of 2 years purchase of super profit.
[Ans. Rs. 12,000]
19. The following balance sheet of Kantilal, Chandrakant.

Balance sheet as on 31st March, 1995
Liabilities Amount Assets Amount
Capital Machinery 50,000
Kantilal 90,000 Building 41,000
Chandrakant 70,000 Investments 30,000
Reserve Fund 44,000 Stock 20,000
Creditors 38,000 Debtor 66,000
Bank 30,000
Profit/loss A/c 5,000
2,42,000 2,42,000
The net profits of the firm for the year ended 31st March, 1995 were Rs, 15,000 Rs, 25,000
Rs, 26,000. Ascertain the value of good will at 2 years purchase of the super profit of the
3years taking the normal rate of return on capital employed is 10%. [Ans. Rs. 4,200]
20. The following is the balance sheet of M/s Anna and Chunna as on 31st March 1995.
Balance sheet as on 31st march, 1995.
Capital Machinery 10,000
Anna 1,64,000 Building 26,000
Chunna 40,000 Plant 56,000
Creditors 35,000 Stock 56,000
Profit/ Loss A/c 3,040 Debtor 19,040
Bank 75,000
2, 42, 040 2, 42, 040
Net profits for the past 3years are 1st year Rs, 43,350, 2nd year Rs, 36870, 3rd year Rs,
32,280. Normal rate of return on capital employed is 10%. Calculate the value of goodwill
at 2years purchase of the average super profit. [Ans. Rs. 33,592]
21. Priti and Pritam are partners sharing profits and losses in the ratio of 3:2. They admit
Prasad for 1/6th share. For the purpose of admission of Prasad, goodwill of the firm should
be valued on the basis of 3 years purchase of the last 5 years average profit. The profits
were. [Ans. Rs. 1,20,000]
Year 1990 – 91 1991 – 92 1992 – 93 1993 – 94 1994 – 95
Profits Rs. 60,000 62,500 45,000(L) 42,500 80,000
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HOME WORK SECTION
1. Mahipati and Ganpati are partners sharing profits and losses in the ratio of 4:3. They
admitted in partnership Shripati for 1/8 share. For the purpose of admission of Shripati,
goodwill of the firm should be valued on the basis of 2 years purchase of the last 5 years
average profit. Calculate the goodwill of the firm. [Ans. Rs. 2,00,000]
1991 – 92 Rs. 75,000
1992 – 93 Rs. 1,00,000
1993 – 94 Rs. 1,25,000
1994 – 95 Rs. 85,000
1995 – 96 Rs. 1,15,000
2. Jaya and Maya are carrying on a business in partnership for last 12 years. Goodwill of the
firm is to be valued at 3 ½ years purchase of the average profit of last 6 years.
2000-01 Rs. 2,20,000(Profit)
2001-02 Rs. 1,20,000(Loss)
2002-03 Rs. 2,60,000(Profit)
2003-04 Rs. 1,80,000(Loss)
2004-05 Rs. 2,90,000(Profit)
2005-06 Rs. 3,20,000(Profit)
2006-07 Rs. 2,10,000(Profit)
You are required to calculate the value of Goodwill of the firm. [Ans. Rs. 4,55,000]
[Note: - Last 6 years are to be counted in reverse order of years given. Therefore, profit given
for the year (2000 – 01) is to be ignored].
3. Vijay and Azim carrying on a business in partnership for last 5 years. Goodwill of the firm
is to be valued at 3 years purchases of the average profits of last 5 years. The profits and
losses for the last 5 years were:
1996-97 (Profit) Rs. 32,000
1997-98 (Profit) Rs. 30,000
1998-99 (Loss) Rs. 16,000
1999-2000 (Profit) Rs. 14,000
2000-01 (Profit) Rs. 20,000
You are required to calculate the value of goodwill of the firm. [Ans. Rs. 48,000]
4. The following is the Balance Sheet of Ashok and Nayan:

Balance Sheet as on 31st March 2007.
Capital Plant and Machinery 1,78,000
Ashok 1,00,000 Furniture 62,000
Nayan 1,20,000 Stock 48,000
General Reserve 78,000 Debtors 40,000
Profit & Loss A/c 56,000 Bank 35,000
Sundry Creditors 36,000 Prepaid Expenses 27,000
3,90,000 3,90,000
The trading result for the last four years was 2003 – 04: Rs. 65,000 (Profit), 2004 – 05: Rs.
5,000(loss), 2005 – 06: Rs. 78,000 (Profit) and 2006 – 07: Rs. 92,000 (Profit).
Calculate the value of goodwill of the firm at 2 ½ years‟ purchases of the super profit
considering the Normal rate of return on the capital employed is 13%. [Ans. Rs. 37,475]
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5. Calculate the value of goodwill of the firm from the following information:
i. Total capital employed in the business Rs. 4,00,000.
ii. Net profits of the firm or the past three years were Rs. 53,800, Rs. 45,350, Rs. 56,250.
iii. Normal rate of return at 10%.
iv. Goodwill is to be valued at three years purchase of super profit. [Ans. Rs. 35,400]
6. Following is the Balance Sheet of Mr. Atul as on 31st March, 1993:

Capital 77,500 Fixed Assets 85,000
General Reserve 22,500 Current Assets 50,000
Creditors 40,000 Prepaid Advertisement 10,000
Bills Payable 5,000
1,45,000 1,45,000
The net profits for the last three years were Rs. 19,500; Rs. 22,500; Rs. 30,000.
Calculate the value of goodwill at two times of super profit, taking into consideration the
standard rate of return on the capital employed is 15%. [Ans. Rs. 21,000]
Note: Capital Employed = Partners‟ Capital + General Reserve + Accumulated Profit –

Unadjusted losses – Expenses yet to be written off.
IMPORTANT POINTS TO REMEMBER
 Any Number which is followed by the word Years Purchase / Times / Thrice /
Twice are considered as number of years purchase.
 If Number of Years of purchase is not given then assume it as 1 years
purchase.
 If there is a continuous loss in the Firm then the Good will of the Firm would
be Zero (0).
 If the total Profits/ Loss are negative then also the goodwill will be Zero.
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CH. 2. COMPUTER AWARENESS [Q. 2 (B): 5 MARKS]
Answer the following questions
1. What is the computer hardware?

Ans. Computer hardware refers to physical components like input devices, central processing
unit and output devices of a computer system.
2. Explain about the components of computer hardware?

Ans. The computer hardware comprises of the following components.
i. Input devices: - The data is required to be transmitted to computer for processing. It
is done with the help of input devices like punch card reader, paper tape reader, mark
and character reader, keyboard, speech recognizer etc.
ii. Central processing Unit: - This unit processes raw data according to the
instructions given to the computer. It has mainly three parts. Control unit, Arithmetic /
Logic unit and memory unit.
iii. Output devices: - The processed data is to be made available to the user in the form
required by him. For this purpose the following devices are used. Printers, visual display unit
etc. This is necessary to provide back up storage. It may be in the form magnetic tapes,
magnetic dises, floppies, C.D.s etc.
3. Write a short note on – second generation computers.

Ans. The computers of the second generation: - We are initially characterized by either
magnetic drum or magnetic core storage later on they used transistors in place of vacuum
tubes the transistors being small in size occupied lesser space and power. They were less
expensive and generated less heat as compared to the vacuum tubes. The computer became
compact. These computers were also applied in other field such as scientific and mathematical
application in addition to application in the fields of business and industry. The United states
of America had more than 5000 computers. Some of the important second generation
computers are IBM – 1620, IBM – 1401, IBM – 7094, CDC – 1604, CDC – 3600, RCA – 501 and
UNIVAC – 1108 of these the most popular model of the second generation was IBM – 1401.
4. Write short notes on „Third Generation Computers‟ (1965 – 71)

Ans. In the early sixties integrated circuits were developed which were later on used in
computers. Integrated circuits (I.C.) improved secondary stage devices, new input – output
devices such as Visual Display Unit (V.D.U) and high speed printers. These computers came to
be known as Mini computers. I.C.‟s were more efficient and they were having much higher
speed than transistors. Because of the I.C.‟s it became possible to have lot of functions from
computers. They had a very large memory. Also many computer languages were introduced.
5. Write short note on “Fourth Generation of Computers” (1971 – 85)

Ans. In 1971, Intel corporation developed and I.C. which was a revolutionary in a computer
world. Later in 1974, another breed of computer known as Micro computers came into
existence and which became popular during the fourth phase. The computer which used large
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scale integrated circuits used micro – processor chips like 8080, 8085, 8086, 6800, 68000 of
this 8086 and 68000 are 16 Bit chips and rest are 8 Bit chips. It reduced the size and
increased the number of functions. Secondary devices are further developed. These computers
left no field in human life uncovered. Some of the important models of fourth generation are
Intel 4004, Apple I & II, DCM Spectrum, 2X – Spectrum, BBC‟s ACCOM, IBM Compatibles
etc. and sinclairs ZX – 81.
6. Write short notes on – First generation Computers.

Ans. The first generation computers were voluminous computers in which electronic valves
were used. They were built by using vacuum tube. As the vacuum tubes were used as an
electronic component, the computers were very large in size. ENIAC was the first computer of
this category. Thus, the computer from ANIAC to IBM – 650 belongs to this generation. The
data manipulation capacity of ENIAC was thirty times more than the previous computers
vacuum tubes were replaced by the transistors. Transistors were very small in size and weighs
as compared to vacuum tubes and consumed very low power.
7. Write short notes on Central Procession Unit.

Ans. It is popularly known as the heart, Brain and Nervous system of the computer. It provides
central control of the operation of the whole computing machine. The CPU is known as a part
of the computer system. The CPU consists of a memory unit, control unit and An Arithmetic
and logic unit.
i. Memory unit: - A memory unit of the central processing unit is a place where the
computer program and data are stored during processing. A memory unit is a random
access storage device comprising number of storage locations. The data which is to be
stored in the memory unit for processing are fixed by the computer program. The main
or internal memory is called as primary storage. It normally consists of the program to
be executed and the data required by the program.
ii. The Control Unit: - All the operations carried out by the computer are directed by
the control unit. A control unit is called as the nerve centre of the computer since it
controls and co – ordinates all hardware operations. The program and data are
transferred from the input device into the memory as directed by the control unit
during the execution of the program each instruction is retrieved in turn from the
memory and interpreted. A control unit informs the Arithmetic logic unit as to how
precisely the operation to be preformed. It directs the transfer to the Arithmetic logic
unit of any item of data that is required for operation.
iii. The Arithmetic Logic Unit (ALU): - The arithmetic logic unit comprises a number
of accumulators and registers. Accumulator means a register and associated
equipment in the arithmetic unit of the computer where arithmetic and logical
operations are performed. A register is a hardware device for holding data to be
operated upon. The ALU obtains the data from the main memory as per the direction
given by the controlling unit based on the program given to it. This data is loaded into
accumulators in the ALU. The ALU operates on the data which is available in the main
memory. The ALU after processing the data sent to output device.
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8. EXPLAIN THE IMPORTANCE OF COMPUTER IN MODERN AGE.
Today computers are put to a variety of uses. They have been designed with highly improved
performances. Computers can be used to process voluminous data at a high speed. As regards
its application in the field of accounting, a computer should be able to deal with routine
accounting. It means all normal accounting processes such as financial transactions should be
dealt with the use of a computer. All cash and bank transactions, handling of accounts of
debtors and creditors and calculation of wages and salaries etc should be handled with the use
of computer. In addition, computers can be put to other popular uses such as production,
programming and control, flexible budgetary control, variance analysis, sales and forward
trends etc.
Following points explain the importance of computer in modern age.
Speed: - In the modern world, the desire of a man to complete tasks within the stipulated time
limits has been, to a large extent, fulfilled by using a computer. Computers enable us to do
arithmetical computations with a high degree of speed and ease. It has enables us to do things,
which would have been almost impossible earlier. The speed which computers functions are
measured in Pico seconds (1/1000 of Nano – second). Thus, computers are capable of
making millions of computations per second. Hence, a powerful computer is capable of
completing the tasks in less than an hour, which could have taken a year for a group of people
to compute.
Accuracy: - Computers are not only fast in completing a job at a great speed, but it is also
performed with a high degree of accuracy. Sometimes, it is common to say that there is a
“Computer error”. As a matter of fact, it is “Human error” and not a “Computer error” since a
computer carries out the instructions efficiently given by the programmer. As such, if the
instructions are faulty, the errors creep in the computer‟s output. Therefore, if the computer is
provided with accurate data and instructions, there will be no error in the output given by a
computer. Thus, a computer offers the greatest advantage of achieving high degree of accuracy
in accounting processes.
Diligence: - By doing similar job continuously, human beings get tired which results into some
mistakes. As against this, a computer is capable of doing the same job continuously error free.
A computer takes the same time to complete the first calculation as well as the 10000th
calculation. Thus, the degree of diligence possessed by a computer is impossible in case the
same job is done by human beings.
Storage: - Another advantage offered by a computer is that of its enormous capability to store
data. A computer is capable of storing data along with the instructions given by the
programmer in the primary (main) memory. In case, the primary memory is not sufficient it
can be stored in its secondary (auxiliary) memory. There are various devices used for storing
the secondary memory. Some of the common devices used in secondary memory are Compact
Disks, Tapes, Drums, pen Drives etc. Having large capacity to store data.
Versatility: - A computer possesses great versatility, which is capable of performing arithmetic
calculations, logic operation of comparison and moving data within different sections of the
computer and in input and output operations. Although, a computer lacks a brain of its own, it
can be put to a varied uses such as preparation of mark – lists, financial accounting, share
analysis etc. Further, a computer can produce results almost in whatever form it is most
suitable.
Miscellaneous: - In addition to the above – mentioned advantages, a computer can offer
economies in the form of effective managerial control, saving in labour cost because it is fully
automatic.
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9. EXPLAIN THE ROLE 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.
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CH. 3. BILLS OF EXCHANGE [Q.3: 17 MARKS]
Note: - In Q.3 of the Board paper, one problem on Renewal of bills of exchange and another
problem on dealing of multiple bills by a drawer (one drawer and multiple drawees) will be asked.
Students are required to attempt any one out of these two.
DEFINITION:-
BILLS OF EXCHANGE: - “A Bills of Exchange is a Negotiable (exchangeable) Instrument,

containing an unconditional order signed by the maker (drawer) directing a certain person
(drawee) to pay a certain sum of money only to the bearer of the Instrument.”
THERE ARE THREE PARTIES IN THE BILL OF EXCHANGE.

DRAWER: - The drawer is the person or the party who draws the bill. He is the creditor and he
has to receive the money from other person.
DRAWEE: - The drawee is the person or the party on whom the bill is drawn. He is a debtor
and he has to pay the amount to the drawer. Once he accepts the bill he becomes an „Acceptor‟.
PAYEE: - The payee is the person or the party to whom the bill is made payable. If the bill is
made payable to the drawer himself, the drawer and the payee are the same person.
TERM OF THE BILL: -A bill of exchange is subject to certain terms and conditions. Such terms
and conditions include period of the bill, place of payment, amount of the bill, etc.
GRACE DAYS/ DAYS OF GRACE: - While calculating the due date of any time bill, three extra
days knows as days of grace should be added to the specified period mentioned in the bill. For
example, a bill drawn on 15th January, 2007 for two month will become due on 18th March,
2007.
DUE DATES / MATURITY DATES: - The date on which the Bill is ready for the payment is
known as due date or maturity date of that Bill.
If the due date falls on Sunday or any other public holiday the payment of the bill should be
made on the immediately preceding working day. If a bill falls due for payment on 15 th August,
it must be paid on 14th August. If a bill falls due on 26th January, it must be paid on 25th
January. In case 25th January is Sunday the payment must be made on 24th January.
HONOUR OF THE BILL: - When the bill is paid on the due date is known as honour of the Bill.
DISHONOUR OF THE BILL: - When the Bill is not paid on the due date then it is known as dishonour
of the bill.
RETIREMENT OF THE BILL: - When the Bill is paid before the due date then it is known as
retirement of the Bill.
HUN DIES: - When the subject matter of the Bill is in Indian language say Tamil, Telungu,
Guajarati, Hindi etc. then it is known as hundies.
ACCEPTANCE OF THE BILL: - When the drawee puts the signature on the bill then it is known
as acceptance of the bill.
THERE ARE TWO TYPES OF ACCEPTANCE

GENERAL ACCEPTANCE: - When the bill is accepted without any terms and conditions then it
is known as general acceptance.
13
QUALIFIED ACCEPTANCE: - When the bill is accepted with certain terms and conditions then
it is known as qualified acceptance.
DRAFT: - Before the acceptance of the bill, it is known as draft.
ENDORSEMENT OF BILL: - When the ownership of the bill is transferred then it is known as
endorsement of Bill. There are two parties in the endorsement of Bill.
ENDORSER: - A person who transfers the ownership of the bill is known as endorser.
ENDORSEE: - A person on whom the bill has been transferred is known as endorsee.
TYPES OF BILL: - There are two types of Bill

INLAND BILL: - A bill which is drawn & made payable in the same country, it is known as
Inland bill.
FOREIGN BILL: - A bill which is drawn in one country & made payable in another country
then it is known as foreign bill.
NOTING CHARGES: - It is a fee charged by the Notary Public, In case of dishonour of Inland
bill. Notary Public is a government officer who is appointed to register the dishonour bill.
PROTESTING: - It is also a fee charged by the government in case of foreign bill.
14
Pro Forma of a bill of exchange
BILL OF EXCHANGE
STAMP ________________
________________
(Drawer’s Name &
Address)
_______________
(Date of Bill drawn)
______________ after date, pay __________________________________________________
_________________________ or his / her order, the sum of Rupees _____________________
_______________________________________________ only for value received.
Rs. ______________/-
Sd /-
_______________
(Drawer’s Name)
To
___________________ Accepted
(Drawee’s Name) Sd/-
___________________ _______________
___________________ (Drawee’s name)
(Drawee’s Address) _______________
(Date of acceptance)
Notes: -
1. If the question includes “Prepare a demand bill” or if the term is “On demand”,
or if the period is not given at all, the wording will be: “On demand, pay ………”
2. If the term given in “45 days after acceptance/sight”, the wording will be: “Forty
– five days after acceptance / sight, pay ………”
3. If instead of the term, the due date itself is given the wording will be: “On such
and such a date, pay ………”
15
PREPARE A BILL OF EXCHANGE FROM THE FOLLOWING
DETAILS. [Q. 1. (F) - 5 Marks]
1. Drawer : Soundariya, Neelam Bhawan, Kalyan

Drawee : Sugandi, Dastur Nagar, Amaravati
Payee : Umesh , Deogad
Period : 90 days
Amount : Rs. 7,555
Date of bill : 15th March 1995
Accepted on : 20th March 1995
2. On 10th March, 1995 Rajesh Bhoyar, Gandhinagar, Nagpur draws a 2 months bill for Rs. 3,000 on
Samir Choudhary, Main Road, and Belapur. Samir Choudhary accepted the bill on 15 th March 1995
3. Drawer : Vilas Patil, 20, M.G. Road, Pune.

Drawee: Vikas Pawar, 31, S.V. Road, Nashik
Payee: Viraj Potade, 41, A.B. Road, Sholapur,
Period, 3 months
Amount Rs. 7500
Date of Bill, 1st January, 2007
Date of Acceptance: - 3rd January, 2007
4. Drawer : Shri Narayandas Kela, Gandhi Chauk, Dhamangaon

Drawee : Shri Atul Khatke, Mandrup Road, Solapur
Payee : Shri Ranjeet Chavan, Ambajogi
Amount : Rs. 5,000
Period : 90 days.
Date of Bill : 15th March, 1995
Accepted on : 20th March, 1995
5. Drawee : K . Prabhakar, Nehur Road, Solapur.

Drawer : M. Sudhakaran, Shivaji Nagar, Nanded.
Period : 3 Months.
Date of Bill : 5th February,1996
Amount of the Bill : Rs. 4000/-
Accepted On : 9th February,1996
6. Drawer : Vilas Ptil, 44, M.G. Road, Nanded.

Drawee : Pankaj Pawar, 70, Bhavani Galli, Solapur.
Payee : Ramchandra Rampure, Rampur.
Period : 60 days.
Date of Bill : 28th January, 1995
Date of Acceptance : 29th January, 1995
Amount of the Bill : Rs. 2,800/-
16
7. Drawer : Rekha, Main Road, Jalgaon.
Drawee : Basant, Sandesh, Nandura.
Payee : Uma Chandak, Khamgaon.
Amount : Rs. 2500/-
Period : 2 months.
Date of Bill : 21st January, 1995
Date of Acceptance: 25th January, 1995
8. Drawer : Shekhar Desai, Shastri Road, Mahad.

Drawee : Sharad Verma, Narayanpeth, Pune
Payee : Mukund Pande, Panel.
Amount : Rs. 3,500/-
Period : 3months.
Date of Bill : 21st June, 1995
Bill accepted : for 3,000 on 25th June, 1995.
9. Drawer : Vijay Bhat, Main Road, Nagpur.

Drawee : Ashok Kulkarni, M.G. Road, Nagpur.
Payee : Anil Jadhav, Pune.
Amount : Rs. 6,950.
Period : 80 days.
Date of Bill : 7th March, 1996.
Accepted on : 10th March, 1996. For 90 days.
10. Drawer : Namdev Tukaram, Paithan.

Drawee : Nivruti Sopan, Dehu.
Payee : Vitthal Pandurang, Pandharpur.
Amount : Rs. 5,111
Period : 3 months
Date of Bill : 17th August, 1995
Date of Acceptance : 20th August, 1995
11. Drawer : Priti Chavan, Chandika Road, Malvan.

Drawee : Snehlata Patil, Prashant Nagar, Ambajogai
Payee : Archana Ghime, Amaravati
Amount of Bill : Rs, 10,000/-
Period : 2 months.
12. Drawer : Shri Ravindra Patil, Housing Society, Ambajogai

Drawee : Shri Bhaurao Deshmukh, Bazar Chauk, Dhamangaon
Payee : Shri Prasad Shendage, Malvan
Amount : Rs. 7,500/-
Period : 3 months
17
13. Drawer : Abhijit Patil, Vikram nagar, Patna.
Drawee : Tejas Kapare, Kothrud, Pune.
Payee : Amey Patki, Nagpur.
Amount : Rs. 7500
Period : 60 days
Term : After sight
Date of Bill Drawn : 1st June 2006
Date of Acceptance : 11th June 2006
Accepted bill for Rs. : 7000 only.
14. Drawer: Yamini Gupta, Sarvapriya Vihar, Delhi

Drawee – Kamini Sharma, Raj baug, Agra.
Period – 100 days.
Term – After acceptance
Date of Bill – 1st January, 2007
Amount – Rs. 10,500/-
Date of Acceptance – 3rd January, 2007
18
TRADE BILLS {IN THE BOOKS OF DRAWER & DRAWEE}
1. Anand brought goods worth Rs. 4,500 from Samant on August 1, 2006. On the same day, Anand
accepted the bill for Rs. 4,500 at 3 months drawn by Samant. Samant got the bill discounted with
his bank at 4%. Before the due date, Anand informed Samant about his inability to pay the amount
of bill. He further requested him to accept Rs. 2,500 in cash and immediately draw upon him a new
bill for the remaining amount at 2 months together with interest at 8% p.a. Samant agreed. The
second bill was duly paid on maturity. Give journal entries in the books of Samant and Anand.
Note: - Here 1st part payment is made and then the interest is charged.
2. On 1st March, Ramchandra sold goods to Raman worth Rs. 8,000/- and Raman accepted the Bill for
Rs. 8,000/- at 3 months drawn by Ramchandra. Ramchandra discounted the bill with his bank @
6% p.a. On due date the bill was dishonoured and Raman requested Ramchandra to accept Rs.
4,000/- immediately and draw upon him a new bill for the remaining amount at 3 months together
with an interest at 10% p.a. Ramchandra agreed. The second Bill was duly honoured. Give Journal
entries in the books of Ramchandra.
Note: - Here 1st part payment is made and then the interest is charged.
3. Premlal sold goods to Sunderlal worth Rs. 10,000/- and Sunderlal accepted the bill for Rs. 10,000/-
at 3 months drawn by Premlal. Premlal Discounted the bill with his bank @ 6 % p.a. on due date the
bill was dishonoured and Sunderlal requested Premlal to accept Rs. 4,000 immediately and draw
upon him a new bill for the remaining amount at 3months together with an interest at 10% p.a.
Premlal agreed and the second bill was duly honoured. Give the Journal entries in the books of
Premlal. Note: - Here 1st part payment is made and then the interest is charged.
4. Archana purchased goods from Babita on Credit for Rs. 20,000. On next day Archana paid Rs.
10,000 to Babita and accepted a bill drawn by Babita for the balance amount for four months.
Babita discounted the bill with her bank for Rs. 9600/- Before the due date Archana approached
Babita with a request to renew the Bill Babita agreed with the condition that Archana should pay
Rs. 6000 with interest of Rs. 120 and accept a new bill for the balance. The arrangement was duly
carried out. New bill is met on the due date. Pass journal entries in the books of Babita.
Note: - Here 1st interest is charged and then the part payment is made.
5. Baloo owes Kaloo Rs.8000. Kaloo then draws a bill for Rs. 8000 on Baloo for a period of three
months. Baloo accepts and return it to Kaloo. Kaloo discounted the bill with his bank at 12 % p.a.
On due date, the bill was dishonoured noting charges amount to Rs. 30. Kaloo then draws a bill for
the balance plus interest of Rs. 170. Before the due date of this bill Baloo pays the amount at a
discount of Rs. 40 to retire the bill. Pass Journal Entries in the books of Kaloo.
Note: - Here only the interest is charged and there is no part payment occurs.
6. Minal draws a bill on Usha for Rs. 5,000 at 3 months. Usha accepts the bill and return to Minal.
Minal discounted the bill @ 12 % p.a. with the bank. On Maturity Usha finds herself unable to make
payment of the bill and requested Minal to renew the bill. Minal accepts the proposal on the
condition that Usha should Pay Rs. 2,000 in cash and accept a new bill at one month along with
interest at 10% p.a. These arrangements were carried through. Usha retires the bill by paying Rs.
3015/- Pass Journal Entries in the books of Minal. Note: - Here 1st part payment is made and
then the interest is charged.
MISCELLANEOUS PROBLEM
7. Rupali accepted a bill for Rs. 2,000/- drawn by Deepali at three months. Deepali got the bill
discounted with her bank for Rs. 1,900. Before the due date Rupali approached Deepali for renewal
of the bill. Deepali agreed on the condition that Rs. 1,000/- be paid immediately together with
interest on the remaining amount at 6% p.a. For balance Rupali should accept a new bill for three
months. These arrangements were carried through but afterwards, Rupali become Insolvent and
only 40 % of the amount could be recovered from her estate. Give journal entries in the books of
Deepali.
8. Chanda accepted a bill for Rs. 6,000 drawn by Nanda at three months. Nanda got the bill
discounted with his bank for Rs. 5,700. Before the due date, Chanda approached Nanda for renewal
of the Bill. Nanda agreed on the condition that Rs. 3,000 is paid immediately together with an
interest on remaining amount at 18% p.a. for four months and for the balance Chanda should
19
accept a new bill. But afterwards Chanda become insolvent and only 25% of the amount could be
recovered from her estate. Pass journal entries in the books of Nanda.
9. Pankaj draws a bill on Anil worth Rs. 8,000 for three months which was accepted by Anil. On the
same date Pankaj discounted the bill with his bank @ 10 % p.a. On the due date Anil dishonoured
his acceptance. Anil paid Rs. 4,000/- to Pankaj and accepted a fresh bill for two months for the
balance including interest of Rs. 40. Anil became insolvent before the maturity of the bill and 50
paise in a rupee was received at first and final dividend from his estate. Give Journal entries in the
books of Pankaj.
10. Bhagwan sold goods to Deo for Rs. 3,000. On the same date Deo accepted a bill for 2 months.
Bhagwan endorsed the bill to Ishwar. On the due date of the bill, Ishwar informed that the bill is
dishonoured and the noting Charges were Rs. 20. Bhagwan drew a new bill on Deo for the amount
due including noting charges and an interest of Rs. 130. Before the due date of the second bill Deo
become bankrupt and 20 paise in a rupee was received from his estate as first and final dividend.
Pass the necessary journal entries in the books of Bhagwan.
11. Mahendra sold goods to Ravindra worth Rs. 6000 and for that Ravindra accepted a bill drawn by
Mahendra for 3 months. After a month Mahendra discounted the bill with his bank at 10 % p.a. On
the due date Ravindra dishonoured his acceptance. Ravindra paid Rs.3, 000 to Mahendra and
accepted a fresh bill for 3 months for the balance including interest @ 8% p.a. Before Maturity of
the Bill Ravindra become insolvent and 50 paise in a rupee was discovered from his estate as first
and final dividend. Give Journal entries in the books of Mahendra and Ravindra.
12. Prakash drew a bill for Rs. 4,000 on Anand on 1st May, 1976 for three months. This was for the
amount which Anand owed to Prakash. Anand accepts the same and return it to Prakash who
discounted at his bank for Rs. 3,900. On 1st Aug, 1976 Anand requested Prakash to renew the bill
and Prakash agreed on the condition that Rs. 1,000 is paid immediately and Anand should accept
the new bill for 3 months for the balance payable plus interest of Rs. 45. These arrangements were
carried through. However, on 1st October, 1976, Anand retired his acceptance for Rs. 3, 035. Pass
journal entries in the books of Prakash and Anand.
13. On 1st January, 1988 Vandana drew a bill for Rs. 6,000 for 2 months periods on Lata. Lata duly
accepted the bill. On 4th January 1988 Vandana discounted the bill with her bank for Rs. 5850.
However, on the due date the bill was dishonoured. Lata agreed to accept a new bill with an interest
of Rs. 100 for a period of one month. The bill was duly met on the due date. Give the journal entries
in the books of Vandana and show Vandana‟s account in the books of Lata.
14. Mukund owes (be obligated) Prakash Rs. 4000 for which Prakash draws a bill for 2 months on 1 st
February, 1989. Mukund accepts it and returns it to Prakash. On 4 th March, 1989, Mukund
approaches Prakash and request him to accept Rs. 1000 in cash and draw a fresh bill for 3 months
for the balance plus interest @ 10% p.a. Prakash accepts the request and draw a bill accordingly
which is accepted by Mukund. On 1st June 1989 Mukund retired his acceptance under discount of
Rs. 30/-. Pass journal entries in the books of Prakash and prepare Prakash account in the ledger of
Mukund.
15. Abhay draws a bill on Ajay for Rs. 1,400 at 3 months. Ajay accepts the bill and returns it to Abhay.
The bill is sent to the bank for collection. On maturity – Ajay finds he unable to make payment of
the bill and request Abhay to renew it. Abhay accepts the Proposal on the condition that Abhay
should pay Rs. 700 in cash along with noting charges of Rs. 10 and draw a renew bill for one
months for the balance. These arrangements were carried through. Afterwards Ajay retired the bill
by paying Rs. 695. Give journal entries in the books of Abhay and Ajay.
16. Krishna accepted a bill for three months drawn by Rama for Rs. 4000. Rama discounted the bill
with the bank at Rs. 3900. On the date of maturity, the bill was dishonoured. Rama paid noting
charges for Rs. 20 Krishna paid half the mount for the bill and full amount of the noting charges
and accepted a bill for the balance including interest of Rs. 50. The second bill was duly honoured.
Pass necessary journal entries in the books of Rama and show Krishna‟s account.
20
17. Jain purchased goods worth Rs. 3,000 from Sharma on 1st June 1977 and gave him acceptance on
3rd June for a period of three months. On 15th June Sharma discounted the bill for Rs. 2980. On 6th
September, when the bill was presented for payment. Jain dishonoured the same. Rs. 20 was paid
as noting charges. Pass journal entries in the books of Sharma and Sharma‟s account in the books of
Jain.
18. Sagar owes Sindhu Rs. 8000 Sagar accepted a bill for 3 months by Sindhu for Rs. 8000. Sindhu
discounted the bill with bank at Rs. 7800. On the due date, the bill was dishonoured. Noting
charges amounted to Rs. 20. Sagar Paid half the amount of the bill and full amount of the noting
charges including interest of Rs. 100. Pass journal entries in the books of Sindhu and show the
account of Sagar.
19. On 1st January, 1982 Shri Jameersheth of Jalgaon sold goods to Shri Nanchand of Nanded for Rs.
80,000. On the same date Shri Jameersheth drew a bill on Shri Nanchand for the same amount for
three months. Shri Nanchand accepted the bill and returned the same to Shri Jameersheth on 4th
January, 1982. Shri Jameersheth discounted the bill with the banker at 10 % p.a. On the due date
bank informed that the bill was dishonoured and Shri Nanchand requested Shri Jameersheth to
accept Rs. 40000 immediately and draw upon him the new bill for the remaining amount for two
months together and interest at 12% p.a. Shri Jameersheth agreed and the second bill was duly
honoured. Pass the necessary Journal entries in the books of Shri Jameersheth of Jalgaon and show
Shri Jameersheth‟s account in the books of Shri Nanchand of Nagpur.
20. Ameet draws a bill for Rs. 7500 on Tushar for four months. Ameet discounts the bill with the
bank at 8%p.a. On the due date Tushar requested Ameet to accept Rs. 4,700 (including Rs. 200
for interest) and to draw a bill for the balance of three months. Ameet agrees this proposal. Before
the due date of the new bill Tushar retires the bill for Rs. 2960. Pass the journal entries in the books
of Tushar and open Tushar‟s account in the books of Ameet.
21. Akbar owed to Barbar Rs. 6,000. Akbar accepted the bill drawn by Barbar for the amount at four
months. Barbar discounted the bill with his bank for Rs. 5850. Before the Due date, Akbar
approaches Barbar with the request for renewal of the bill. Barbar agreed on the condition that Rs.
4,000 is paid immediately in cash together with an interest on the remaining amount at 12%p.a. for
three months and for the balance Akbar should accept a new bill at three months. These
arrangements were carried through. Barbar endorsed the new bill to Kadar. Akbar met the bill on
due date. Give the transaction in the books of Akbar and prepare Akbar‟s account in the books of
Barbar.
22. Sonia draws a bill on Moni for Rs. 6,000 at 4 months. Moni accepts the bill and returns it to Sonia
who discounts the bill with the bank at a discount of 8%p.a. Before the due date of Bill Moni
requested Sonia to accept Rs. 4000 in cash and draw a bill for the balance plus interest at 12%p.a.
for two months. Sonia draws a bill as the request is agreed. The bill is sent to bank for collection. On
the due date the bill was honoured. Pass the necessary journal entries in the books of Sonia and
Moni.
23. Journalize the following transactions in the books of Kamesh:

a. Nanda informs Kamesh that Shanti‟s acceptance for Rs. 4,000 endorsed to Nanda has been
dishonoured and noting charges have been Rs. 100
b. Ashok renews his acceptance to Kamesh for Rs. 2400 by paying Rs. 800 in cash and accepting a
new bill for the balance plus interest @ 12 p.a. for 3 months.
c. Deva‟s acceptance to Kamesh Rs. 12,000 is retired one month before its due date at a discount of
12% p.a.
d. The bank informs Kamesh that Sudhakar‟s acceptance for Rs. 4,000 has been dishonoured and it
has paid noting charges Rs. 80.
24.Journalise the following transactions in the books of Kailash.

a. Sandeep informs Kailash that Vila‟s acceptance for Rs. 8,000 endorsed to Sandeep has been
dishonoured. Noting Charges amounted to Rs. 200.
b. Kalpana renews her acceptance to Kailash for Rs. 7,500 by paying Rs. 3,500 in cash and accepting a
fresh bill for the balance plus interest at 10% p.a. for 3 months.
c. Uma retired her acceptance to Kailash for Rs. 3,000 by paying Rs. 2,900 in cash.
21
d. Kailash sent a bill of Anita for Rs. 6,000 to bank for collection. But Bank informed that the bill has
been dishonoured by Anita.
25. Journalise the following transactions in the books of Rahul.

a. Pradeep informed Rahul that, Vijay‟s acceptance for Rs. 1,000 endorsed to Pradeep has been
dishonoured. Noting charges amounted to Rs. 50.
b. Nilesh renews his acceptance to Rahul for Rs. 600 by paying Rs. 200 in cash and accepting a fresh
bill for balance plus interest at 12% p.a. for 3 months.
c. Prashant‟s acceptance to Rahul for Rs. 3,000 retired one month before due date at a discount of
12% p.a.
d. Bank informs Rahul as to the dishonour of Aviraj‟s acceptance for Rs. 1,000 to Rahul, discounted
with the bank. Noting charges are Rs. 20.
26.Journalize the following transactions in the books of Maharaja.

a. Ayub informs Maharaja that Sadashiv‟s acceptance for Rs. 2,000 endorsed to Ayub has been
dishonoured, noting charges amounted to Rs. 150
b. Pankaj renews his acceptance to Maharaja for Rs. 1200 by paying Rs. 400 in cash and accepting
a fresh bill for the balance plus interest at 12% p.a. for 3 months.
c. Vaibhav‟s acceptance to Maharaja for Rs. 6000 retired one month before the due date at a
discount of 12%p.a.
d. Bank informs Maharaja as to the dishonour of Kasam‟s acceptance for Rs. 2000 to Maharaja
discounted with Bank noting charges Rs. 200.
27. Journalise the following transactions in the books of Mr. Ashok Agrawal.
 The bank informed Mr. Ashok Agrawal that Kamlesh‟s acceptance for Rs. 12,000 sent to bank
for collection had been honoured and bank charges debited were Rs. 60.
 Discharged Dr. Ashok Agrawal‟s acceptance to Mahesh for Rs. 15,250 by endorsing Prakash‟s
acceptance to Mr. Ashok Agrawal for Rs. 15,100.
 Vishal renewed his acceptance to Mr. Ashok AGrawal for Rs. 11,200 by paying Rs. 6000 in cash
and accepting a fresh bill for the balance plus interest @ 12% p.a. for three months.
 Dinesh who had accepted Mr. Ashok Agrawal‟s bill of Rs. 14,000 was declared bankrupt and
only 45% of the amount due could be recovered from his estate.
28.Journalise the following transactions in the books of Ashwin.

 Bank informed that Sachin‟s acceptance for Rs. 5,750 sent to bank for collection had been
honoured and bank charges debited were Rs. 50.
 Nitin renewed his acceptance for Rs. 7,200 by paying Rs. 2,200 in cash and accepting a new bill
for the balance plus interest @8% p.a. for 3 months.
 Discharged our acceptance to Pravin for Rs. 4,250 by endorsing Bhavin‟s acceptance to us for
Rs. 4,000.
 Jatin who had accepted Ashwin‟s bill of Rs. 8,500 was declared insolvent and only 40% of the
amount due could be recovered from his estate.
29.Journalise the following transactions in the books of Kamalakar.

 Nisha informs Kamalakar that Shanti‟s acceptance for Rs. 14,000 endorsed to Nisha has been
dishonoured and noting charges have been paid Rs. 200.
 Asha renews hare acceptance to Kamalakar for Rs. 12400 by paying Rs. 6000 in cash and
accepting a new bill for the balance plus interest @ 12% p.a. for 3 months.
 Devika‟s acceptance to Kamalakar for Rs. 42000 is retired one month before its due date at a
discount of 12% p.a.
 The bank informs Kamalakar that Sindhu‟s acceptance for Rs. 15000 has been dishonoured and
it has paid noting charges Rs. 100.
 Bank informs Kamalakar that Sangita‟s acceptance for Rs. 12000 which was sent to bank for
collection has been dishonoured.
22
30. Journalise the following transactions in the books of Ranbir.
 Sonam informs Ranbir that Salman‟s acceptance for Rs. 3200 endorsed to Sonam has been
dishonoured and the noting charges amounted to Rs. 80.
 Ravindra renews his acceptance to Ranbir for Rs. 4,800 by paying Rs. 1800 in cash and
accepted a fresh bill for the balance, plus interest @ 12% p.a for 2 months.
 Dilip‟s acceptance to Ranbir for Rs 8000 is retired one moth before the due date at a discount
of 12% p.a.
The bank inform Ranbir that Shirin‟s acceptance for Rs 5500 to Ranbir discounted with the bank earlier
has been dishounred and the noting charges Rs. 100.
23
CH. 4. DEPRECIATION [Q. 2 : 10 MARKS]
Note: - As per the syllabus a Standard XII (SYJC), the students are required to study the following
two methods of depreciation only, viz.
i. Fixed Installment Method / Original Cost Method / Straight Lime Method / Equal
Installment method.
ii. Reducing Balance Method / Written Down Value Method / Diminishing Balance
Method.
PROBLEMS
1. M/s Modern company purchased Machinery worth Rs. 2, 00,000 on 1st April, 2006.
Accounting year of the Company closes on 31st March every year. Company provides
depreciation at 10% p.a. on the original cost. On 31st March, 2008 the machinery was sold
for Rs. 1, 20,000. Give the machinery Account and depreciation account for three years.
[F.I.M]
2. M/s Classic company purchased Machinery worth Rs. 1, 00,000 on 1st April, 2006.
depreciation at 10% p.a. on the original cost. On 31st March, 2008 the machinery was sold
for Rs. 20,000. Give the machinery Account and Depreciation account for three years
3. Shri Yuvraj and company, Kolhapur, purchased furniture for Rs. 60,000 on 1.4.2007. On
1.10.2009 the company sold out a part of the furniture for Rs. 6000, the original cost of
which on 1.4.2007 was Rs. 12,000. The company charges depreciation at the rate of 10%
p.a. on Original Cost method. The financial year of the company ends on 31st March, every
year. Prepare: Furniture account and depreciation account for the years 2007 – 2008-,
2008 – 2009, 2009-2010. [F.I.M]
4. M/s. Deepali International bought furniture worth Rs. 24,000 on 1 – 4 – 1977 and
additional furniture on 1 – 10 – 1977 worth Rs. 16,000. They charged depreciation at 15%
p.a. on Fixed Instalment basis. On 1 – 10 – 1979 they sold out one cupboard for Rs. 2,200
original cost of which on 1-4-1977 was 4,000. On the same date a new cupboard was
purchased for Rs. 8,000. Show the furniture account and depreciation account for the year
1977-78, 1978-79 and 1979-80 assuming that the financial year closes on 31st March every
year. [F.I.M]
5. Janab Hasansab of Hyderabad made furniture for his own office on 1 st October 1975. For
this he had spent Rs. 36,000 on materials and Rs. 16,000 on wages. He estimated he life of
the furniture to be 10years. He also estimated that its expected scrap value at the end of its
life would be Rs. 12,000. He closed his books of accounts on 31st March every year. He sold
the entire furniture for Rs. 40,000 on 1st October 1978. Show the furniture account and
depreciation account for the year ended 31st March, 1976, 31st March 1977, 31st December
1978 and 31st December 1979. [F.I.M]
6. The company purchased machinery worth Rs. 36,000 on 1-4-1987 and spent Rs. 4,000
towards installation charges. The company depreciates the machinery at the rate of 10%
p.a. on original cost. On 1-10-1989 the company sold out a part machinery for Rs. 3,200.
The original cost of the sold machinery on 1-4-1987 was Rs. 6,000. On 1-10-89 the
company purchased machinery for Rs. 10,000. As the company closes the financial year
24
31st March every year. Prepare Machinery account and the deprecation account for the
years 1987-88, 1988-89 and 1989-90. [F.I.M]
7. Shirish Enterprises purchased a machinery costing Rs. 36,000 on 1-4-1989 and was
installed on the same date. The installation expenses amounted to Rs. 4,000. The firm
decided to charge depreciation at 10% p.a. on straight line method. On 1-10-91 a part of
machinery with an original price of Rs. 6,000/- (including the installation charges) was
sold for Rs. 3,200 and a new machinery costing Rs. 10,000 was purchased on the same
date. The firm closes its books of accounts on 31st March every year. Prepare Machinery
account and Depreciation account for the year 1989-90, 1990-91 and 1991-92 in the books
of the firm. [F.I.M]
8. S. Narayan from Bombay purchased Furniture for his office costing Rs. 1,04,000 on 1 st
July 1987. Estimated life of the Furniture is 10 years and scrap value Rs. 24,000. The
Furniture was sold on 31st December 1990 for Rs. 70,000. The accounts are closed on 31 st
December every year. From the above information prepare Furniture account and
Depreciation account for the years 1987, 1988, 1989 and 1990, by charging depreciation
under Fixed Instalment Method. [F.I.M]
9. M/s J.K. Company, Maroda, purchased machinery for Rs. 80,000 on 1 st April 2002.
Company purchased additional machinery for Rs. 36,000 on 1 st October, 2003. The
company charges depreciation @10% p.a. on the original cost. The financial year of the
Company ends on 31st March every year. On 30th September, 2004 a part of the machinery,
original cost of which was Rs. 30,000 on 1st April, 2002 was sold by the Company for Rs.
22,000. Prepare Machinery account for 3 years and give journal entries for the year 2002
– 2003. [F.I.M] [MARCH 2009].
10. M/s Dolphin, New delhi, showed a debit balance of Rs. 32,000 to the Machinery A/c
on 1st April, 2001(Original cost of the Machinery was Rs. 40,000). On 1st October, 2001 the
Mill bought additional Machinery for Rs. 15,000 and spent Rs. 1,000 for its installation.
One more machinery costing Rs. 20,000 was purchased on 31 st March, 2003. Depreciation
is charged on 31st March, every year at 10% p.a. under the straight line method. On 31 st
March, 2004, the machinery which was purchased on 1st October, 2001 was sold for Rs.
12000. Prepare Machinery A/c and Depreciation A/c for the years 2001 – 2001, 2002 –
2003 and 2003 – 2004. [F.I.M]
11. M/s Philips company purchased Machinery worth Rs. 2, 00,000 on 1st April, 2006.
depreciation at 10% p.a. on the written down value. On 31st March, 2008 the machinery
was sold for Rs. 1, 20,000. Give the machinery Account and depreciation Account for
three years. [F.I.M]
12. M/s View Sonic company purchased Machinery worth Rs. 1, 00,000 on 1st April, 2006.
depreciation at 10% p.a. on the Diminishing balance method. On 31st March, 2008 the
machinery was sold for Rs. 20,000. Give the machinery Account and Depreciation
account for three years.
13. Aurangabadkar purchased furniture worth Rs. 20,000 on 1-4-73. He charges depreciation
at the rate of 10% on the Reducing Balance method. On 1 – 7 – 75, he sold out a part of the
Furniture for Rs. 2,000, the original cost of which on 1 – 4 – 73 was Rs. 4,000. The
financial year of Aurangabadkar ends on 31st March every year. You are required to
prepare his furniture account for the first four years, and to pass journal entries for the
transactions of the third year. [W.D.V.]
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14. On 1st July, 1992, Ajanta Traders, Pune, acquired a building for Rs. 8,00,000. On 1st April,
1993, an extension was made to the above building by spending Rs. 4,00,000. On 1st
October 1994, half of the building was sold through a broker for Rs. 5,60,000 and
brokerage at 2% of the selling price was paid. Depreciation is charged on 31 st March every
year at 10% p.a. under the Diminishing Balance Method. Prepare the Building Account and
the Depreciation account for three years. [W.D.V.]
15. M/s Jalaram Mill, Mulund, showed a debit balance of Rs. 32,000 to the Machinery A/c on
1st April, 2001(Original cost of the Machinery was Rs. 40,000). On 1st October, 2001 the
Mill bought additional Machinery for Rs. 15,000 and spent Rs. 1,000 for its installation.
One more machinery costing Rs. 20,000 was purchased on 31 st March, 2003. Depreciation
is charged on 31st March, every year at 10% p.a. under the Diminishing Balanced Method.
On 31st March, 2004, the machinery which was purchased on 1st October, 2001 was sold for
Rs. 12000. Prepare Machinery A/c and Depreciation A/c for the years 2001 – 2001, 2002
– 2003 and 2003 – 2004. (February, 2008) [W.D.V.]
16. On 1st April, 2004 Saikripa enterprises purchased two computers of Rs. 40,000 each. On
1st October, 2004 they purchased one more computer for Rs. 40,000. On 1 st October, 2006
they sold one computer, which was purchased on 1 st April, 2004 for Rs. 18,780.
Depreciation on computers was provided @ 10% p.a. on diminishing balance method and
the financial year closes on 31st March every year. Prepare computer A/c depreciation A/c
for years 2004 – 05, 2005 – 06 and 2006 – 07. (September. 2008) [W.D.V.]
17. Shri Yashraj and company, Kolhapur, purchased furniture for Rs. 60,000 on 1.4.2007. On
1.10.2009 the company sold out a part of the furniture for Rs. 6000, the original cost of
which on 1.4.2007 was Rs. 12,000. The company charges depreciation at the rate of 10%
p.a. on Reducing balance method. The financial year of the company ends on 31st March,
every year. Prepare: Furniture account and depreciation account for the years 2007 –
2008-, 2008 – 2009, 2009-2010. [W.D.V] FEBRUARY 2011.
18.M/s J.K. Company, Maroda, purchased machinery for Rs. 80,000 on 1 st April 2002.
Company purchased additional machinery for Rs. 36,000 on 1 st October, 2003. The
company charges depreciation @10% p.a. on the diminishing balance. The financial year of
the Company ends on 31st March every year. On 30th September, 2004 a part of the
machinery, original cost of which was Rs. 30,000 on 1st April, 2002 was sold by the
Company for Rs. 22,000. Prepare Machinery account for 3 years and give journal entries
for the year 2002 – 2003.
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CH. 5. JOINT VENTURE ACCOUNTS [Q. 4: 12 MARKS]
Method I When Separate set of Books is maintained.
1. Dimple and Simple entered into a joint venture. They agreed to share profits and
losses in the proportion of their initial contributions to the joint venture. They opened a
joint Bank A/c. and deposited Rs. 60,000 and Rs. 40,000 respectively as initial
contributions. They made cash purchases of Rs. 70,000. They also paid Rs. 4,500 for
insurance and freight and Rs. 1,750 for sundry expenses. At the end of the venture, the
sales amounted to Rs. 1, 10,000/- There was unsold stock of goods worth Rs. 5000. Simple
took over the unsold stock. The Joint Venture was closed. You are asked to prepare Joint
Venture A/c. Joint Bank A/c and Co – ventures A/c. Also pass journal entries.
2. A and B entered in to Joint Venture to construct a building for X enterprises limited.

The contract price was Rs. 2, 50,000. They opened joint bank account and deposited Rs.
1,20,000 and Rs. 60,000 respectively and agreed to share profits and losses in the ratio 3 :
2. The following transactions were made from Joint Bank A/c: Wages – Rs. 70,000 and
Material purchases – Rs. 1,25,000. Apart from this A supplied material of Rs. 12,000 and
B paid the architect fees of Rs. 2,500 on completion of construction. X enterprises Ltd.
paid the full amount and unsold stock was taken over by B at an agreed value of Rs.
15,000. Prepare Joint venture A/c, Joint Bank A/c and Co – venturer‟s A/c. Also pass
journal entries.
3. Suresh and Ramesh entered into a joint venture to construct a building at a contract
price of Rs. 7,00,000. They agreed to share profits and losses in the ratio of 2:1. Suresh
deposited Rs. 5,00,000 and Ramesh Rs. 1,00,000 into joint bank. The transactions were
as follows.
 Purchase of materials Rs. 3,50,000

 Tools and equipment Rs. 1,00,000.
 Wages Rs. 1,20,000
 Architect fees Rs. 25,000
 Besides these, Suresh supplied material worth Rs. 15,000 and Ramesh supplied
material worth Rs. 13,500. Building was ready and contract price received. Prepare
Joint venture A/c, Joint Bank A/c & Co – Venturer‟s A/c. Also pass journal entries.
4. Ashok, Kishor & Anup undertook the construction of an office building at a contract
price of Rs. 10,00,000. Receivable in cash Rs. 6,00,000 and Rs, 4,00,000 in shares. They
agreed to share profits and losses equally. They opened the joint bank a/c and contributed
the following amount. Ashok – Rs. 3,00,000, Kishor - Rs. 3,00,000, and Anup –
Rs.2,00,000. Ashok paid Rs. 10,000 as architect fees, Kishor brought in the venture
mixture of Rs. 25,000 and Anup brought in motor truck of Rs. 55,000. The following
transactions were made from Joint bank A/c. Purchase of material Rs. 4, 50,000, Plant –
Rs. 30,000 and freight and wages – Rs. 1, 50,000. At the close of the venture, Ashok took
away the unused material worth Rs. 8,000. Kishor took away the mixture worth Rs.
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15,000 and Anup took away the truck worth Rs. 35,000. The scrap value realised of the
plant was Rs. 6,000. The Contract price was received in full and Kishor took over the
shares for Rs. 4,10,000. Prepare Joint Venture A/c, Joint Bank A/c & co – ventures A/c.
Pass journal entries.
5. Sanjay, Ajay and Vijay entered into a Joint venture for construction of a building for
contract price of Rs. 6, 00,000. Payable in cash Rs. 4,00,000 and Rs. 2,00,000 in
debentures. They decided to share profits and losses in the ratio of their initial
contributions. They opened Joint Bank A/c. where Sanjay deposited Rs. 3,00,000 Ajay
Deposited Rs. 2,00,000 and Vijay deposited Rs. 1,00,000. The following payments are
made out through Joint Bank A/c . Purchase of material Rs. 2,50,000, Plant Rs. 45,000,
Wages – Rs. 77,000 and other charges Rs. 11,000. Sanjay brings truck of Rs. 40,000. Ajay
brings materials of Rs. 55,000 and Vijay brings mixture of Rs. 10,000. At the end of the
venture unused material was taken over by Sanjay for Rs. 5,000. Ajay took over mixture
for Rs. 15,000 and Vijay took over Plant for Rs. 12,000. The truck was sold in the market
for Rs. 22,000. Contract price was received and debentures were taken over by Vijay for
Rs. 1,90,000. Prepare Joint Venture A/c., Joint Bank A/c., Co – ventures A/c and also
passes journal entries.
6. Harish, Iqbal and Joseph undertook to construct a building for Prabhu & Co. at a
contract price of Rs. 2, 50,000. The price was to be paid as follows: Rs. 2,00,000 in cash
and balance in preference shares of the company. Profit was agreed to be divided in the
ratio of 2:2:1. The participants contributed cash as follows. Harish Rs. 30,000 Iqbal Rs.
25,000 and Joseph Rs. 20,000. These amount were credited to a joint bank A/c. Iqbal was
to be paid a remuneration of Rs. 1,500 for managing the business. Harish prepared the
plats and paid Rs. 3,500 for them. Iqbal brought a concrete mixture for Rs. 12,000 and
Joseph brought a truck for Rs. 25,000. They brought Plant for Rs. 15,000 Material for Rs.
1,20,000 and paid wages Rs. 1,05,000. When the contract was completed Harish took over
unused material for Rs. 10,000. Iqbal took back the concrete mixture for Rs. 11,000 and
Joseph agreed to take back the truck for Rs. 18,000. The plant was sold as scrap for Rs.
6,000. When the contract price was received, Harish agreed to take over preference shares
at a discount of 20%. All the accounts were closed. Prepare Joint venture A/c, Joint Bank
Account and the Co – venturer‟s account also pass journal entries.
7. X, Y and Z entered into a joint venture to construct a premises and the contract price
was Rs. 4,00,000. Payable Rs. 2,00,000 in cash and Rs. 2,00,000 in shares. X,Y and Z
contributed Rs. 1,00,000 each. The following payments were made through bank: Raw
materials Rs. 75,000; Transportation charges Rs. 25,000; Machinery Rs. 50,000;
Insurance Rs. 25,000. Besides this X paid other expenses Rs. 20,000. Y paid for mixture
worth Rs. 20,000 and Z brought in materials of Rs. 20,000. After completion X and Z took
over unused materials of Rs. 5,000 each and Y took over the mixture for Rs. 10,000. The
scrap of plant was sold for Rs. 8,000. Due to a certain defect, contract price was reduced
by Rs. 10,000 and shares were taken over by X at a premium of 5%. Prepare Joint Venture
A/c. Joint Bank A/c and Co – venturer‟s.
8. X,Y and Z entered into a Joint Venture to sell a certain plot of land. They contributed
Rs. 25,000 each. They purchased land of 5,000 sq. m. at Rs. 10 per sq. m. 1/5 th of the land
28
was left over for public roads and the balance was divided into 8 plots of equal size. A plan
was got prepared for Rs. 2,000 and other expenses were Rs. 3,500. 5 plots were sold @ Rs,
15 per sq. m. and 3 plots were sold @ Rs. 14 per sq. m. Prepare joint venture A/c Joint
Bank A/c and Co – Venturer‟s A/c. Pass journal entries.
9. A, B & C entered into a joint venture sharing profits and losses in the ratio of their initial
contributions. They opened a Joint Bank A/c. wherein they deposited Rs. 1,00,000 Rs.
1,50,000 and Rs. 2,00,000 respectively. Expenses made through Joint Bank were as
follows. Purchase of Raw material Rs. 50,000. Paid architect fees Rs. 10,000, Plant Rs.
25,000 Besides this, A brought in mixture of Rs. 20,000, B paid insurance charges Rs.,
5,000 and C brought in machinery worth RS. 12,000. At the end of the venture, A took
back the mixture worth Rs. 5,000, B took back the unused materials for Rs. 4,000 and C
took back the machinery for Rs. 8,000. Scrap of plat realized Rs. 2,000. On completion
they received the contract price Rs. 1,00,000 in cash and Rs. 1,00,000 in debenture which
where taken over by A at a loss of Rs. 10,000. Prepare Joint Venture A/c Joint Bank A/c
and Co – venture A/c. Pass Journal entries.
10. Ram and Rajiv entered into a Joint venture to construct a conference hall at a contract
price of Rs. 3,00,000. Ram contributed Rs. 1,00,000 and Rajiv contributed Rs. 1,50,000.
Ram brought in material worth Rs. 2,000 and Rajiv Paid transportation charges worth Rs.
6,000 Plant was purchased for Rs. 50,000 and material worth Rs. 2,00,000 were also
purchased. On completion, plant was sold for Rs. 20,000. Due to certain defect, one bill of
Rs. 20,000 was not recovered and the balance was received in cash. Venturers share
profits in the ratio of their initial contributions. Prepare Joint Venture A/c, Joint Bank A/c
and Co – venturer‟s A/c and pass Journal entries.
11. A and B entered into a Joint venture. They contributed Rs. 75,000 each and
purchases a plot of 6,000 sq. m. @ Rs. 20 per sq. m. Besides this A got the plan prepared
for Rs. 2,000 and B paid the stamp duty of Rs. 3,000. Fencing expenses were Rs. 5,000
and other expenses amounting to Rs. 3,000 were paid from Joint Bank A/c. Later on, 1/6th
of the land was left over for roads and the balance was divided into 10 equal plots. 5 plots
were sold for Rs. 30 per sq. m. and 4 plots were sold for Rs. 40 per sq. m. Remaining one
plot was taken over by A for Rs. 10,000. Prepare Joint Venture A/c. Joint Bank A/c and Co
– Venturer‟s A/c. Also pass the necessary Journal Entries.
12. Pramod and Amit jointly undertook to construct a factory building for a limited
company. The contract price was Rs. 5, 00,000 and was received after work has been
completed. They contributed_ Pramod Rs. 80,000 & Amit Rs. 40,000 and deposited in
Joint Bank Account. They agreed to share profit or Loss in the capital ratio. Pramod got
plans ready and paid Rs. 5, 000 for that Amit brought into the venture Plant and
Machinery valued at Rs. 20, 000 and a motor truck at Rs. 16, 000. For the purpose of
erection of factory building, materials of the value of Rs. 3, 50, 000 were purchased and
wages paid Rs. 60, 000. They also paid other sundry expenses amounting to Rs. 25, 000.
The contract was completed and the company settled their account fully. Uninsured
Material valued at Rs. 4, 000 was taken over by Pramod. The plant and Machinery was
sold as scrap for Rs. 3, 000 and Amit took back the motor truck at an agreed value of RS.
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5000. You are required to show Joint venture A/c, Joint Bank A/c in the books of the Joint
venture.
13. Raghu and Ramesh entered into a joint venture to produce an advertisement film for
Bharati Traders, at a contract price of 40,000. Raghu contributed Rs. 10, 000 and Ramesh
Rs. 20,000 and opened a joint account in the bank with these contributions. Raghu
purchases from his own funds raw film for Rs. 8, 000 and a Camera for Rs. 7,000 for joint
venture. They Paid from the Joint Bank Account: Artist‟s fees Rs. 18, 000, Hire of sets Rs.
2,000 and technician Charges RS. 10,000. The firm was completed but due to certain
defects in the firm, the contract Price was reduced by 10% the amount being received by
cheque from Bharati Traders. At the end of venture, the camera was sold for Rs. 5,000 and
Ramesh took over the unused film for Rs. 400. Raghu and Ramesh shared profit and
losses in the proportion of 1:2 and settled account of the venture. Prepare the Joint venture
Account the Joint Bank account and the accounts of the Co – ventures.
14. Suratwala and Bodochwala entered into a joint venture to construct a bridge of Koyna
river at a contract price of Rs. 7, 00, 000. Suratwala and Bodochwala introduced Rs.
1,50,000 and Rs. 1, 00, 000 and opened a joint account in the bank. Suratwala supplied
material worth Rs. 60, 000 and Bodochwala brought a Motor Truck costing Rs. 50, 000.
Total Material used amounted to Rs. 2,50,000; payment for wages Rs. 3,00,000 and other
expenses amounted to Rs. 40,000. Suratwala took over unused material at Rs. 5, 000.
Motor truck was sold as a scrap of Rs. 4,000 contract prices was received in full on
completion of contract. Prepare Joint Venture A/c, Co- venture‟s accounts and Joint Bank
Account.
15. Shri Nandkarni of Nanded and Shri Kulkarni of Kolhapur undertook in January 1983
the construction of “Ajanta Market Hall” for Rs. 5, 00, 000 to be completed within one
year. On the same date Nandkarni brought in Rs. 5, 000 and Kulkarni brought Rs. 10,000.
These amounts were deposited in a Joint Bank account which was newly opened by them
for the purpose. Both agreed to share profits and losses equally. The work was completed
in time and the following expenses were incurred and paid from Bank accounts, Material
Rs. 2,30,000; Wages, Rs. 1,90,000 and Plant Rs. 40,000. The payments were
received in instalments but due to certain defects a bill of Rs. 15,000 was not paid. When
the work was over, as half of plant was taken over by Nandkarni @ 20% below while the
other half could be sold for Rs. 15,000.
Prepare: Joint venture A/c, Joint Bank A/c, Accounts of Co- ventures.
16. Manoj and Ambalal enter into a joint venture to prepare a building for the government,
who agrees to pay Rs. 2,00,000. A Bank Account is opened in their joint names; Manoj
contributing Rs. 25,000 and Ambalal Rs. 25,000 and it is agreed that they will share the
profit and losses in the proportion of 2/5th and 3/5th respectively.
Payment made out of the Joint Bank accounts were:
Purchases of Equipments : Rs. 14,000
Hire Purchases of Equipments : Rs. 13,000
Wages : Rs. 85,000
Purchases of Materials : Rs. 18,000
Office expenses : Rs. 8,000
Manoj and Ambalal then paid Rs. 5, 000 and Rs. 3,000 respectively for other expenses.
The building was completed the government paid the amount by cheque and the joint
venture was closed. Ambalal taking up the equipments at Rs. 4,000 and Manoj taking up
the unused material at Rs. 2, 000. Prepare Joint Venture A/c, Joint Bank A/c and Co-
Venture‟s A/c.
30
Method II: When no Separate set of Books is

maintained.
I.e. Individual Books of Accounts are maintained.
17. Abhay Kumar and Jaywant entered into a joint venture to share profits and losses in
equal proportion. The following transactions were made:
 Abhay Kumar brought goods for Rs. 60,000/-
 Abhay Kumar paid for expenses incurred on the above purchases Rs. 3,500/-
 Jaywant supplied goods of Rs. 24,000 from the stock.
 Jaywant had to pay Rs. 600/- and Rs. 700/- for loading and freight respectively
on supply of goods.
 Abhay Kumar paid Rs. 350/- and Rs. 250/- for warehousing charges and other
expenses respectively.
 Abhay Kumar sold goods for Rs. 1,20,000/-
 Jaywant sold goods for Rs. 10,000/-
 The unsold stock of goods was taken over by Jaywant for Rs. 5,000/-
You are asked to prepare Joint Venture account and Jaywant A/c in the books of
Abhay Kumar
18. A and B entered into a joint venture to sell carpets. A purchased 200 carpets at Rs. 20
each and B purchased 100 at Rs. 25 each. A paid transportation expenses Rs. 500 and also
paid freight Rs. 200. B Paid advertising expenses Rs. 100. Later on A sold 150 carpets for
Rs. 35 each and B sold 125 carpets for Rs. 30 each. Remaining 25 carpets were taken over
by B for Rs. 500. Venturer‟s settle their accounts. You are asked to prepare Joint Venture
account and B‟s Account in the books of A.
19. Humayun and Phiroz entered into a joint venture. They agreed to share the profits and
losses equally. Following transactions were made by them.
 Humayun bought goods Rs. 90,000
 Phiroz paid for freight Rs. 7000
 Phiroz sold goods Rs. 75,000
 Phiroz paid commission on sales Rs. 2500
 Humayun paid for warehousing charges Rs. 3500
 Humayun sold rest of the goods Rs. 45,000
 Humayun paid commission on sales Rs. 3500
You are asked to show as to how the above transactions will be entered in the books of Humayun.
20. Ramrao and Shamrao decided to undertake a business venture jointly. They agreed to
share the profits and losses in the proportion of 2/3 and 1/3 respectively. Ramrao supplied
goods for the joint venture worth Rs. 15,000 and paid Rs. 650 for carriage and freight.
Shamrao supplied goods worth Rs. 12,000 and spent Rs. 500 for sundry expenses. Shamrao
sold goods for Rs. 35,000. Shamrao is entitled to get a commission of 10% on sales as per
agreement. Shamrao settled the account of Ramrao by remitting the amount due by bank draft.
Open the necessary ledger account in the books of Ramrao.
21. East and West entered into a joint venture to share profits and losses in the ratio 2:1 to sell
rice. East purchased 100 bags of rice at Rs. 200 each. He also paid packing charges Rs. 2000
and freight Rs. 300. West paid warehousing charges Rs. 1000 and sold all the bags for Rs. 300
each. He was entitled to a commission of 5% on sales. They settled their account by a draft.
Prepare necessary ledger accounts in the books of west.
22. Kapil and Rohan entered into a joint venture to deal in computers. They agreed to share
profits and losses in the ratio 3:2. Kapil purchased 20 computers @ Rs. 25,000 each and
supplied 5 computers @ Rs. 20,000 each from his own shop while Rohan purchased 15
31
computers @ Rs. 24,000 each and got 5 computers from his godown @ Rs. 20,000 each. Kapil
paid for the transportation charges amounting to Rs. 30,000 while Rohan paid for insurance
and other charges totally amounting to Rs. 40,000. Finally all the computer were sold except 4
computers out of which both took back 2 computer each @ Rs. 17,000 each. Kapil sold 16
computers and Rohan sold the remaining computers. The selling price of each computer was
Rs. 32,000 each. Both the venturer‟s were to get 4% commission on the sales made by them.
The venturers settle their accounts by a draft. You are required to prepare Joint venture A/c
and Co Venturer‟s account in the books of Kapil.
23. Jaganlal of Mumbai purchases cotton goods and supplied them to Babanlal of Delhi for sale on
joint venture basis. They have agreed to share the profits and losses equal proportion. Jaganlal
bought goods worth Rs. 35,000/- and sent them to Babanlal in Delhi. Jaganlal paid Rs. 2500
towards the freight charges. Jaganlal‟s bill of exchange for Rs. 20000 payable after 3 months drawn
on Babanlal was accepted by Babanlal. Jaganlal discounted the same bill with bank for Rs. 18200.
Babanlal informed Jaganlal that he had incurred Rs. 4500 expenses and the entire goods were sold
for Rs. 50,000. Babanlal remitted the required amount to Jaganlal. You are required to prepare
Joint venture A/c and Coventurers‟ account in the books of Jaganlal of Mumbai.
24. Satish and Ramesh enter into a joint venture to deal in TV. Sets. Satish is to purchase TV sets in
Mumbai and sent it to Ramesh in Pune. They agreed to share profits and losses in the ratio of 3:1.
Satish purchased 50 TV sets in Mumbai costing Rs. 7000 each and paid Rs. 10,000 as
transportation cost. Ramesh received the consignment and sold all the TV sets at a lump sum price
of Rs. 4, 45,000. Ramesh sent a draft of Rs. 75,000 to Satish as an advance. The expenses incurred
by Ramesh were Rs. 6000 to sell the TC sets. Venturer‟s settle their accounts. You are requested to
open Joint Venture A/c and Ramesh A/c in the books of Satish.
25. Mahesh and Kalpesh enter into a joint venture to share profits and losses in the proportion of
3:2. Mahesh paid Rs. 25,000 for purchases of goods and supplied goods of Rs. 3500 from his stock.
Kalpesh made purchases of R. 78000 for the joint venture in addition to goods supplied from his
godown worth Rs. 14000. Mahesh accepted a bill drawn by Kalpesh of Rs. 25000 which was
discounted by Kalpesh for Rs. 24000 and the discount to be treated as an expense of the joint
venture. Kalpesh also received Rs. 5000 cash as an advance from Mahesh. The expenses of the joint
venture amounted to Rs. 10000 which were paid by Mahesh and Kalpesh equally. Mahesh sold
goods amounting to Rs. 3000 and Kalpesh could sell goods worth Rs. 70000. The unsold goods
were taken away by Mahesh for Rs. 4000. The Coventurers‟ are entitled for a commission of 10% of
sales made by them. Venturer‟s settled their accounts by cheque. Prepare Joint venture account and
coventurers‟ account in the books of Mahesh.
26. Usha and Sulbha decided to undertake a venture jointly. They agreed to share profits and losses
in the ratio of ¾ and ¼ respectively. Usha supplied from her own stock goods worth Rs. 90,000
and paid Rs. 3,600 for freight. Sulbha supplied goods worth Rs. 72,000 and spent Rs. 3,000 for
sundry expenses. Usha drew a 4 months bill on Sulbha for Rs. 12,000 as an advance. The same was
discounted by her at 15% p.a. and discount was charged to Joint Venture A/c. Sulbha sold all the
goods for Rs. 2,10,000. At the end of the venture, the accounts were settled. Give journal entries in
the books of Usha.
27. Narayani and Indrayani entered into a joint venture to buy and sell second – hand motor cars
and agreed to share profits & losses equally. Narayani purchased two cars for Rs. 75,000 and Rs.
78,000 respectively, paid Rs. 4,000 for repairing these cars and sold them for Rs. 1,30,000 and Rs.
1,40,000 respectively. Indrayani purchased three cars for RS. 2,70,000 in all, incurred an expense
of Rs. 4,000 for reconditioning these cars, sold two cars at a total price of Rs. 2,40,000 and took
over the third car at an agreed price of Rs. 90,000. Prepare the Joint Venture A/c and the Co –
Venture‟s A/c in the books of Narayani.
28. Pritam of Sindhudurg and Prasad of Ratnagiri entered into a joint venture to consign 100
computers to Priti of Mumbai to sell at their joint risk which is in proportion of 2/3 and 1/3
respectively. Pritam supplied 55 computers at Rs. 25,000 each paying freight of Rs. 7,500 and
other charges Rs. 1,500. Prasad suppled 45 computers at Rs. 24,000 each paying insurance Rs.
750, freight Rs. 350 and other charges Rs. 1,800. Pritam advanced to Prasad Rs. 25,000 on
account of venture. All the computers were sold by Priti for Rs. 28,00,000 out of which she
32
deducted 2% for her expenses and 2% for her commission on total sales. Priti remitted Rs.
13,00,000 to Pritam by bank draft and balance to Prasad by accepting a bil drawn by Prasad
for one month. Pass Journal Entries in the books of Pritam assuming that all accounts have
been finally settled.
29. Ramsingh of Rampur and Narsingh of Nagpur entered into Joint Venture. They decided to
send 500 TV sets to Harsingh of Hyderabad on their joint risk. They share profits and losses in
the ratio of 3/5 and 2/5 respectively. Ramsingh sent 300 sets at Rs. 2,500/- each and paid Rs.
17,000/- for the expenditure of sending the goods. Narsingh sent 200 TV sets at Rs, 2,000/-
each and paid Rs. 13,000 for the expenditure of sending the goods. Ramsingh advanced to
Narsingh Rs. 50,000/- on account of Joint Venture. All the TV sets were sold by Harsingh for
Rs. 14,00,000/- from which he deducted 3% for his expenses and 2% commission on total
sales and he remitted Rs. 10,00,000 to Ramsingh and the balance amount to Narsingh. The
co – venturers closed their venture and settled their accounts. Prepare: Joint Venture A/c,
Narsingh A/c, Harsingh A/c in the books of Ramsingh.
30. Anil and Sunil entered in to a joint venture to consign 500 bales of cotton to Mukesh to be
sold on their joint risk. Anil sends 150 bales at Rs. 300 each and pays Rs. 2000 for freight and
insurance. Sunil purchases 350 bales at Rs. 250 each paying for insurance and other charges
Rs. 4000. Anil advances a cheque of 12,000 to Sunil and also accepts a bill for the same
amount drawn by Sunil which was discounted by Sunil@ 90% of its value. Mukesh sold all the
bales @ Rs. 400 each. The expenses incurred by Mukesh are Rs. 5000 and his commission was
10% of the sales value. Mukesh remits Rs. 100000 to Sunil and the balance to Anil by a cheque.
Venturers settle their accounts by a draft. Prepare joint ventures account and coventurers‟
account in the books of both the parties and pass journal entries.
31. Nagpurkar of Warud and Warudkar of Akola entered into joint venture to sent oranges to
M/s Modern Fruit Co., Amrutsar on their Joint risks for sale. They decided to share profits and
losses equally. Nagpurkar purchased oranges of Rs. 2,40,000and paid for transportation,
packing and insurance Rs. 70,000. Warudkar purchased oranges of Rs. 3,70,000 and paid for
transportation, packing and insurance Rs. 1,00,000. All the oranges were sold by M/s Modern
Fruit Co. For Rs. 10,00,000 from which company deducted Rs. 25,000 for expenses and 5%
commission on sale proceeds and remitted Rs. 5,00,000 to Warudkar and remaining amount
to Nagpurkar. The co – ventures closed their venture and settled their accounts. Prepare Joint
venture account, Warudkar account, M/s Modern Fruit co. Account in the books of Nagpurkar.
32. Arun of Solapur and Dhanaji of Sangli entered into Joint venture to send 100 bales of cotton
to Shivaji of Mumbai to be sold at their equal joint risks. Arun sends 60 bales at Rs. 12,000
each and pays Rs. 18000 for freight and other charges. Dhanaji sends 40 bales at Rs. 11,000
each and pays Rs. 10,000 for freight and other charges. Shivaji sold all the bales of cotton at
Rs. 15,00,000. He charges Rs. 10,000 as his commission and other expenses and remits the
balance due fully to Dhanaji. Dhanaji settled account of Arun by remitting to him the balance
due. You are required to prepare Joint venture account, Dhanaji account, Shivaji account in the
books of Arun.
33. Methe and Mane decided to undertake the business jointly. They agreed to share the profits
and losses in the ratio of ¾ and ¼ respectively. Methe supplied goods from his own stock for
joint venture worth Rs. 4,50,000 and paid Rs. 15,000 for carriage and freight. Mane supplied
goods worth Rs. 3,60,000 and spent Rs. 15,000 for sundry expenses. Methe drew a bill on
Mane for Rs. 60,000 as an advance. Mane sold goods for Rs. 10,50,000. AT the end of venture
the accounts were settled. Give Journal entries in the books of Methe.
34. Vithal of Bombay and Kailash of assai entered into Joint Venture to purchase and sell cycles.
They decided to share profits and losses equally. Vitthal purchased 200 cycles at Rs. 500 each
and spent Rs. 2000 for carriage, Rs. 4000 for insurance and draws a bill for Rs. 20000 on
Kailash, which is duly accepted by Kailash. Kailash purchased 140 cycles at Rs. 600 each and
spent Rs. 10 per cycles for carriage and Rs. 2000 for selling expenses. Vitthal sold 180 cycles at
Rs. 750 each. All the remaining cycles of venture were sold by Kailash at Rs. 550 each. Joint
33
venture was completed and both the parties settled their accounts. You are required to pass
journal entries in the books of Vitthal.
35. Yashpal of Udgir and Balu of Latur entered into Joint Venture to consign 300 machines to
Amol of Amravati to be sold on their joint risk which is in the proportion of 2:3 respectively.
Yashpal sent 180 machines at Rs. 300 each and paid freight Rs. 700 and sundry expenses Rs.
300. Balu sent 120 machines at Rs. 250 each and paid for insurance Rs. 500 and carriage Rs.
500. Amold sold all the machines at Rs. 400 each. He spent Rs. 4,000 for advertisement and
Rs. 1,000 for godown charges. Amol deducted 5% commission on sales and sent Rs. 80,000 to
Yashpal and balance to Balu by bank draft. Prepare: Joint venture A/c, Balu‟s A/c, Amol‟s A/c
in the ledger of Yashpal.
34
CH. 6. SINGLE ENTRY SYSTEM [Q. 5: 10 MARKS]
Proprietary concerns
1. Rao commenced business on 1st April, 06 with cash of Rs. 20,000. On 1st Oct, 06,
he introduced a further capital of Rs.5,000. During the year he withdrew Rs.400
p.m. for personal use. On 31st march, 07 his asset and liabilities were:
Stock in trade 20,000
Debtor 15,000
Furniture 4,000
Cash at bank 3,000
Unpaid expense 1,000
Sundry creditors 8,000
Prepare closing statement of affairs and profit earned by Mr.Rao for the year ended
31/3/07.
2. The following information is available from Rajendra‟s records:

Particular 1.4.06 31.3.07
Creditor 5,000 8,000
Bank overdraft - 15,000
Bank balance 10,000 -
Plant and machinery 10,000 20,000
Furniture 4,000 4,000
Debtors 30,000 52,000
Stock 34,000 28,000
Ram had withdrawn Rs.5000 for personal expenses and Rs. 4000 for son‟s marriage.
Out of business funds, he had also purchased a residential building costing Rs.20000;
which is not shown in the above balance. Additions to Machinery were made on
1/04/06. Dep. at 10 %p.a. should be provided on plant and machinery. Find out
Ram‟s net profit for the year ended 31st march 07.
3. On 01/04/06, Mr. Bannerjee commenced business with a capital of Rs.25,000.

During the year 2006-07, he with drew for his personal use goods worth Rs.2, 000
and cash Rs.3,000. He also gave a donation of Rs. 500 to shri Ramakrishna mission.
He paid Life Insurance premium of Rs.1000.During the year, he received a gift of
Rs.5000 from his father by cheque which was deposited in the bank account of the
business. On 31/3/07; his position was as under:
Particulars RS
Machinery 20,000
Furniture 2,000
Stock 5,000
Debtors 8,000
Balance at bank 1,500
Prepaid insurance 200
Payable to creditors 3,000
Liabilities for expenses 700
35
Find out the profit earned by him after providing for depreciation at 10% on plant &
Machinery and furniture and Rs.400 as reserve for Doubtful Debt. Also prepare
statement of affair as on 31.03.07.
4. Ash keeps her books on single entry & following information is disclosed.
Particulars 31.3.06 31.3.07

Cash 18,000 27,000
Stock 15,000 18,750
Debtors 30,000 45,000
Sundry creditors 26,250 31,500
Bills payable - 9,000
Loan from „y‟ - 3,000
Investments - 15,000
Miss Ash transferred Rs150 each month during first half year and Rs.100 each month
for the remaining period from her business to her private banking account by way of
drawing, and took away Rs.350 worth of goods for private use. She sold her private car
for Rs.3, 500 and proceeds were utilised for business. Furniture to be depreciated by
10% and Reserve for Doubtful debts to be maintained at 5% on debtors. Prepare
opening and closing statement of affairs and also profit and loss statement for the year
ending 31/03/07.
5. Mr. Mukesh maintains single entry books of accounts. From the following details,
determine profit for the year and statement of affairs at the end of year:
Rs.1000 (cost) furniture was sold for Rs.5,000 on 1st April,06 ; 10% depreciation is to
be charged on furniture. Mr. Mukesh has drawn Rs.1000 per month and Rs.2,000 was
invested in 2006.
Stock 40,000 60,000
Debtors 30,000 40,000
Cash 2,000 1,000
Bank 10,000 5,000( O. D )
Creditors 15,000 25,000
Outstanding expenses 5,000 8,000
Furniture(cost) 3,000 2,000
Bank balance on 1 April 06 is as per cash book, but the bank overdraft on 31.03.07 is
st
as per bank statement. Rs2,000 cheques drawn in March 07 have not been en cashed
with in the year. Provide interest on Drawing @ 10%p.a.
6. Mr. Ganesh keeps his books by single entry method. His financial position on
1.01.04 and 31.12.04 was as under.
Cash 10,000 16,000
Bank 20,000 36,000
Stock 16,000 24,000
Debtors 24,000 30,000
36
Creditors 15,000 18,000
Furniture and fitting 18,000 18,000
During the year Mr. Ganesh withdrew Rs.8,000 for his private purpose and he had
used 2,000 worth of stock also for his private purpose. On 1.10.03 he sold some of his
house hold furniture for Rs.2,000 and paid this amount into his Bank A/c of business.
Prepare a statement of profit & loss for the year ended 31.12.04 and a statement of
affairs after taking into consideration the following:
1. Provide interest on capital @ 5% p.a on opening balance and Interest on drawing (
only on cash drawings) @10% p.a. (on an average of 6 months)
2. Depreciate plant and machinery @10 %( assuming addition were made on 1.10.04)
and furniture at 5%.
3. stock on 31.12.04 was overvalued by Rs.2,000
4. Write off bad debts Rs.2,000 and provide Reserve for Doubtful debts at 7.5% on
debtors.
7. Mohan keeps his books under single entry system. Prepare: Statement of affair as
on 31.12.00 &
31.12.01. Statement of profit/loss for the year ending 31.12.01. He gives the
following information:
Particulars 31.12.01 31.12.00
Bank balance 4,500 Cr. 1,000 Dr
Stock 12,000 15,000
Debtors 9,300 10,400
Creditors 10,900 14,300
Loose tool 2,700 2,700
Outstanding salary 1,000 1,500
Prepaid insurance 300 200
Add information: 1.He has withdrawn from business Rs 2,500 of which he spent
Rs2,000 For investing in securities in the name of the business. 2.
Provide depreciation at 20% on loose tools and 7% on furniture.
8. Premjeet a trader keeps his books by the single entry Method. His financial position
on 1st April 06 and on 31st March, 07 were as follows:
Particulars 1.04.06 31.03.07
Cash in hand 1,500 1,600
Bank balance 1,200(Dr.) 1,800(Cr.)
Stock in trade 4,000 4,650
Debtors 3,400 3,800
Creditors 2,400 3,600
During the year, Sri Premjeet had withdrawn Rs.75 per month for his household use.
From the above information ascertain his profit or loss for the year ended and also
give his statement of affairs as on 31.03.07 after taking into account the following
further information:
37
1. Depreciate plant and machinery by 15% and furniture by 121/2% p.a (assume the
addition on 30th September,2006)
2. Of the debtors Rs100 are bad and to be written off.
3. Create a reserve for Discount on Debtors at 2% and a reserve for Doubtful debts at
5%.
4. Allow interest on capital at 5% and charge interest on Drawing at 6%p.a
9. Mr. Gopal maintained his books on single entry. The following statement of affairs
had been Prepared as on 31.03.06
Liabilities Amt Asset Amt
Capital account 28,000 Leasehold land 2,075
Sundry creditors 3,170 Plant and Machinery 4,940
Bill payable 2,150 Stock in trade 9,673
Book debts 15,550
Cash in hand 1,082
33,320 33,320
On 31.03.07 it was learnt that he had introduced further capital of Rs1,000 on 1 st
july,06 and he drawn Rs1,580 on various dates during the year. It was also ascertained
that the proprietor had taken Rs.75 worth of goods for his own use. Statement
prepared on the same date disclosed that book debts were Rs.14,640,
Creditors were Rs.2,309 and Bills payable were Rs.1,775. The stock was valued at
Rs.11,417 and cash in hand amounted Rs.917 on the same date.
Prepare: 1. Statement of profit for the year 06-07
2. Statement of affairs as on 31.03.07 taking in to consideration the following:
 5% Reserve to be created on Book debts.
 5% Depreciation to be written off on plant and machinery.
 Rs.125 to be written off the lease.
 Interest at 5% p.a. to be provided on the capital.
10. Mr. Suryakant maintains books on single entry and who gives you the following
information.
Particulars 31-3-2006 31-3-2007

Cash in hand 500 2000
Cash at bank 2500 5000
Stock 20000 30000
Sundry debtors 25000 40000
Investments 20000 20000
Furniture 10000 25000
Machinery 25000 40000
Sundry creditors 10000 10000
Outstanding expenses 3000 2000
Additional information
1. Mr. Suryakant introduced further capital of Rs. 20000 on 1st July, 2006 and
had withdrawn Rs. 10,000 during the year.
38
2. Interest on capital is allowed at 10% p.a.
3. Additions to furniture and machinery were made on 1st October, 2006
4. Write of deprecation on furniture and machinery at 10% p.a.
5. Create reserve for doubtful debts at 5% on sundry debtors.
6. Prepare: a. Statement of affairs. B. Statement of profit and loss for the year
ended 31st March, 2007.
11. Mrs. Archana keeps her books on single entry system and gives the following
information.
Particulars 31-3-2006 31-3-2007

Stock in trade 30000 50000
Furniture 20000 20000
Machinery 50000 50000
Bills payable 5000 5000
Additional information
Mrs. Archana withdrew from business Rs. 15,000 for personal use.
She further introduced fresh capital of Rs. 25,000. Depreciation is to be charged

@10% p.a. on Furniture and Machinery.
Prepare: (i) Statement of Affairs as on 31-3-2006
(ii) Statement of Affairs as on 31-3-2007
(iii) Statement of profit or loss for the year ending 31-3-2007.
Partnership Firms
12. Sameer and Ashok are partners in a partnership form sharing profits and losses in
the ration of 2:1. They maintain their books of accounts under single entry system. The
following information is available form their records.
Liabilities Amt Asset Amt

Capital accounts Buildings 250000
Sameer 270000 Machinery 100000
Ashok 145000 Furniture 59000
12% Loan from Sameer 50000 Stock in Trade 16000
Bills Payable 18000 Sundry Debtors 22000
Sundry Creditors 24000 Cash in Hand 15800
Bank Overdraft 17000 Goodwill 46200
39
Profit and Loss A/c 15000
524000 524000
Further information
On 31st March, 2009 their assets and liabilities were: Buildings Rs. 300000,
Machinery Rs. 160000, Furniture Rs. 59,000, Stock in Trade Rs. 24,000, Sundry
Debtors Rs. 23,000, 12% Loan from Sameer Rs. 50,000, Bills Payable Rs. 19,000,
Sundry Creditors Rs. 21,500, Bank over draft Rs. 15000, Profit and Loss A/c (Dr.
Balance) Rs. 10,000, Cash in hand Rs. 20,000 and Prepaid insurance Rs. 5400.
Additions were made to Buildings and Machinery on 1st July, 2008 and 1st
September 2008 respectively.
Prepare a Profit or Loss Statement for the year ended 31st March, 2009 and a
closing Statement of Affairs as on that date by considering the following
adjustments.
Adjustments:
i. Buildings and Machinery are to be depreciated by 5% p.a. and 10% p.a.
respectively.
ii. Bad debts are written off Rs. 5000 and provision for Bad and Doubtful debts
be made at 5% on debtors.
iii. Goodwill is valued at Rs. 40,000 and furniture are valued at Rs. 55,000.
iv. During the year 2008 – 2009, Sameer and Ashok had withdrawn Rs.
24,000 and Rs. 25,000 respectively.
v. During the year 2008 – 2009, Sameer and Ashok had introduced Rs.
20,000 and Rs. 35,000 respectively as further capital.
13. Usha, Asha and Harsha were partners in a firm sharing profit and losses as 2/5,
2/5 and 1/5 respectively. They kept their books on single entry system. The following
information is available from their records.
Liabilities Amt Amt Asset Amt Amt
Capital accounts Land & buildings 90000
Usha 90000 Plant & machinery 60000
Asha 90000 Furniture & fixtures 40000
Harsha 63000 243000 12% investments 20000
Sundry Creditors 8000 Stock in Trade 15000
Bills Payable 6000 Bills Receivable 5600
Outstanding Salaries 1200 Sundry Debtors 18000
10% Bank Loan 8400 Less: R.D.D. (600) 17400
Cash in hand 8000
Cash at bank 10000
Prepaid Rent 600
266600 266600
Further information
(1) During the accounting year 2001 – 2005 Usha, Asha and Harsha had
withdrawn Rs. 8,000, Rs. 6,000 and Rs. 7,000 respectively for their personal
40
use. On 1st October, 2004 Usha, Asha and Harsha had introduced Rs. 14,000,
Rs. 13,000 and Rs. 10,000 respectively as further capital.
(2) Interest on capital @12% p.a. and on drawing @10% p.a. is provided.
(3) As Usha was working as managing partner, she was given salary of Rs. 1,200
p.m. and Asha was given commission @ 2% on gross profit.
(4) Provide for Bad debts Rs. 600 and maintain R.D.D. @ 5% on debtors.
(5) The financial position of the firm as on 31st March 2005 was on follows:
Land & Building Rs. 90,000, Plant & machinery Rs. 70,000 and Furniture &
Fixtures Rs. 40,000, 12% Investments Rs. 30,000, Stock in trade Rs. 14,000,
Bills Receivable Rs. 10,200, Sundry Debtors Rs. 25,000, cash in hand Rs.
15,000, Cash at Bank Rs. 16,000, Prepaid Rent Rs. 1,600, Sundry creditors Rs.
6,500, Bills Payable Rs. 5,000, Outstanding salaries Rs. 1,800, 10% Bank Loan
Rs. 10,000.
(6) Additions to Plant & Machinery, Investments and Bank Loan were made on 1st
July 04, 1st August 04 and 1st October 04 respectively.
(7) Provide depreciation @10% p.a. on Plant and Machinery and 5% p.a. on
Furniture and Fixtures.
You are required to prepare : (1) Statement of Profit or Loss for the year ended
31st March, 2005 and (2) Closing Statement of Affairs as on same date.
14. Sharma and Varma were partners in the Partnership Firm, sharing profits and
losses in the ratio of 2:3 respectively. They kept their books under single entry system.
The following information is available form their records.
Particulars 1-4-2003 31-3-2004

(Rs.) (Rs.)
Cash in hand 17500 28600
Prepaid insurance 6200 8500
Outstanding wages 7800 6700
12% investments 45000 40000
Stock in trade 28000 36000
Bills receivable 15000 18000
Goodwill 42000 42000
Patents 32000 32000
Bills payable 12500 9600
Furniture & fixtures 51000 51000
Plant & Machinery 85000 85000
Land & Buildings 120000 120000
Adjustments
(1) On the revaluation of assets and liabilities it is found that land and building is
valued at Rs. 2,00,000 while Machinery & furniture valued at Rs. 78,000 and
Rs. 47,000 respectively.
(2) Bad debts incurred during the year 2003 – 04 are Rs. 2800 and it is decided to
create RDD at 5% on debtors.
41
(3) Interest on capital is allowed @ 12% p.a. while interest on partners drawings is
charged @ 10% p.a.
(4) Additions to investments was made on 1st July 2003 at the same rate of
interest.
(5) During the accounting year 2003 – 04, Sharma and Varma had withdrawn Rs.
28,200 and Rs. 24,000 respectively for their personal use.
(6) Write off Goodwill and Patents @ 10% and 5% respectively.
Prepare: (1) Opening and closing statement of Affairs and (2) Statement of
Profit or Loss for the year ended 31st March, 2004.
42
CH. 7. FINAL ACCOUNTS OF NPO

[NOT FOR PROFIT ORGANISATION]
[Q. 6: 16 MARKS]
1. Dr. Narendra commenced practice in the month of April 2007. He prepared the
following Receipts & Payments Account for the year ended 31st March, 2008.
Receipts and Payments A/c For the year ended 31st March, 2008
Receipts Amount Payments Amount
To Cash 10000 By Furniture 1500
To Visits 7000 By Equipment 2500
To Sundry Receipts 400 By Drugs 2000
By Salaries 1000
By Rent 500
By conveyance 700
By Stationery 100
By Lighting 125
By periodicals 100
By Drawings 4375
By Balance c/d 4500
17400 17400
1. Rs 200 were to be received on account of visits.
2. Unpaid Salaries Rs. 200
3. 60% of conveyance is for private purposes.
4. Value of drugs on hand was estimated at Rs. 1,000.
5. Depreciate furniture and equipment by 10%
6. Prepare Income and Expenditure account and balance sheet.
2. From the following Receipts and payments account of Western Gymkhana for the year
ended 31st March, 2007 and other information, prepare Income and Expenditure
account for the year ended on and a Balance Sheet as at that date.
To Balance B/F 1,040 By salaries 1300
T Subscriptions for: By Entertainment Expenses 645
2006 85 By Electric charges 234
2007 4000 By General Expenses 350
2008 103 By Rates and Taxes 120
To Donations 1200 By Investments 3000
To Entertainment Receipts 876 By Stationery and Printing 241
To Interest 81 By Expenses of 2006 600
To Entrance Fees 1000 By Fixed Deposit 1000
By Balance c/f 895
8385 8385
The Gymkhana has 450 members paying an annual subscription of Rs. 10/- each. Rs. 20/- is
still in arrears towards subscription for the year 2006 carry forward Rs. 20/- or rates paid in
advance. Provide Rs. 200/- for salaries outstanding. The Gymkhana owns Land and Building
standing in the books of Rs. 15,000/- and Furniture standing at Rs. 1,150, on which
depreciation at 5% and 15% respectively is to be written off. Interest for 3 months at 12% p.a.
is accrued on Investments. The Capital Fund as on 1st April, 2006 was Rs. 16,695/- 50% of
the Entrance Fees is to be capitalised. Donations are capitalised.
43
3. From the following information, prepare Income and Expenditure account for the year
ended 31st March, 2008 and a Balance Sheet as on that date.

To Cash in hand (1.4.2007) 1750 By Bank Overdraft 2500
To Subscriptions By Salaries 5300
2006 – 07 150 By Furniture 2000
2007 – 08 14100 By Investments in Securities 4000
2008 – 09 75 By Printing and Stationery 800
To proceeds from Drama 2500 By Cost of Staging drama 1500
To Entrance Fees 800 By Sundry Expenses 1300
To Interest on Securities 500 By Cash at Bank 2500
To sale of Old Furniture 200 By Cash in Hand 175
20075 20075
1. The society has 1500 members, each paying an annual subscription of Rs. 12.
2. Subscriptions of Rs. 100 pertaining to the year 2006 – 07 are still in arrears.
3. Value of Stationery at hand on 31st March, 2007 was Rs. 200 and on 31st March, 2008
was Rs. 150.
4. Entrance fees are to be treated as Capital receipts.
5. Salary of Rs. 700 for the current year is unpaid.
6. Balances as on 31st March, 2007: Investment Rs. 4500, Building Rs. 25000, Furniture
Rs. 200.
7. Depreciate building by 2 ½ % and furniture by 5%.
2006 – 07 150 By Furniture 2000
20100 20100
3. Value of Stationery at hand on 31st March, 2007 was Rs. 100 and on 31st March, 2008 was
Rs. 150.
4. 50% of Entrance Fees are to be treated as Capital receipts.
6. Balances as on 31st March, 2007: Investment Rs. 5000, Building Rs. 25000, Furniture Rs.
200.
7. Depreciate building by 10 % and furniture by 5%.
44
2006 – 07 150 By Furniture 2500
20000 20000
was Rs. 350.
Rs. 200.
2006 – 07 150 By Furniture 1500
16000 16000
was Rs. 350.
Rs. 500.
7. Depreciate building by 7 ½ % and furniture by 10%.
45
2006 – 07 150 By Furniture 2500
10000 10000
3. Value of Stationery at hand on 31st March, 2007 was Rs. 500 and on 31st
March, 2008 was Rs. 350.
6. Balances as on 31st March, 2007: Investment Rs. 15000, Building Rs.
125000, Furniture Rs. 600.
2006 – 07 50 By Furniture 2500
10000 10000
1. The society has 290 members, each paying an annual subscription of Rs.
15.5.
2. Subscriptions of Rs. 100 pertaining to the year 2006 – 07 are still in
arrears.
3. Value of Stationery at hand on 31st March, 2007 was Rs. 500 and on 31st
March, 2008 was Rs. 350.
6. Balances as on 31st March, 2007: Investment Rs. 15000, Building Rs.
125000, Furniture Rs. 600.
46
9. From the following balance Sheet and Receipts and Payments account of Nanavati
Hospital, Bombay, prepare Income and Expenditure account for the year ending on 31 st
March, 2007 and the Balance sheet as on that date.
Balance Sheet as on 1st April, 2006
Salaries Unpaid 2000 Cash 11000
Medicines Bill Unpaid 1500 Securities 150000
Capital Fund 383000 Furniture 4000
Land and Buildings 200000
Equipments 15000
Subscription Due 5000
Interest Accrued 1500
386500 386500
Receipts and Payment Account

Cash 11000 Furniture purchased on 1-4-2006 1900
To subscription 30000 Salaries including Rs. 2000/- of last year. 2300
Interest (Rs. 1500/- last year) 5000 Equipment purchased on 1-4-06 7500
Donations(Revenue) 4300 Dispensary expenses 4700
Life Membership Fee 10000 Medicines 5500
Taxes 500
Cash 17200
60300 60300
Adjustments.
1. Capitalise the amount of life membership fees.
2. Interest earned but not received Rs. 1,000/-
3. Subscription include Rs.1000/- for 2008 and outstanding subscription for 31st march,
2007 is 4,200
4. Unpaid salary for the year 2007 is Rs. 2500/-
5. Provide for depreciation on furniture 10%, Land and Building 5%, Equipments 20%.
6. Prepaid taxes Rs. 100/-
10. The Balance Sheet as at 1st April, 2006 and the Receipts and Payments account for the
year ended 31st March, 2007 of the Young Sports Club, Dadar are as under.
Young Sports Club – Balance Sheet as on 1st April, 2006
Capital Fund 30000 Building 9500
Outstanding Expenses: Furniture 5000
Salaries 400 Entrance Fee receivable 200
Printing 300 700 Subscriptions Fee receivable 800
Income and Expenditure A/c 23300 Sports Material & Equipments 28000
Cash in Hand 4200
Cash at Bank 6300
54000 54000
Young Sports Club, Dadar, Receipts and Payments A/c for the year ending 31st
March, 2007
To Opening Balance 4200 By Cricket Tournament Expenditure 16460
Cash in Hand 6300 10500 By Printing & Stationery
47
To Subscriptions 18000 By Salaries & Honorarium 860
To Receipts from Cricket Tournament 4000 By Repairs to Building 1600
To Interest on Bank A/c 14520 By Newspapers and Periodicals 500
300 By Advertising Expenses 470
By Insurance 300
By Investments 400
By Closing Balance 15000
Cash in Hand 5280
Cash in Bank 6450
11730
47320 47320
You are also given the following additional information.
1. Subscriptions of the amount of Rs. 800 were receivable as on 31st March, 2007
2. Subscriptions Rs. 200 and Entrance Fees Rs. 300 were received in advance.
3. Outstanding Expenses were: Salaries and Honorarium Rs. 100; Insurance Rs. 50;
Cricket Tournament Expenses Rs. 250.
You are required to prepare Income & Expenditure account for the year ending 31 st March,
2007 and a Balance Sheet as on that date.
11. The following is the Receipts and payments Account of Modern Sports Club, Satara, for
the year ended on 31st March, 2007.
Receipts and Payments Account for the year ended on 31st March, 2007.
To Balance b/d 1490 By Upkeep of Garden 9500
To Subscription 13600 By wages 2360
To Entrance Fees 520 By Salary 7000
To Interest on Investments 840 By Ground rent 210
To Proceeds from Matches 5180 By Printing 930
To Life member fees 5000 By Postage 190
By Bank balance 5000
By Balance c/d 1440
26630 26630
Adjustments:
1. Ledge balances of the club as on 31.3.2006 were
Capital fund Rs. 66,430, Club house and ground Rs. 40,000, Investments Rs. 18,640,
furniture Rs. 6,400, Outstanding subscription Rs. 600.
2. Printing includes Rs. 200, Upkeep of garden includes Rs. 500 and Subscription includes
Rs. 400 for the previous year.
3. Entrance fees are to be capitalized.
4. The Rotary club of Satara owed Rs. 210 for the use of club hall.
5. Provide 10% depreciation on furniture.
6. Subscriptions outstanding for the current year were Rs. 1,000.
Prepare _
Income and Expenditure account for the year ended 31st March, 2007 and Balance Sheet as on
that date.
48
12. Dr. Subhash Raje started practice as a medical practitioner on 1st April, 2007. He gives
you the Receipts & Payments Accounts for the year 2007 – 08 and the adjustments to
be made. Prepare his Income and Expenditure Account and Balance sheet for 2007 -08.
Receipts and payments account for the year ended 31st March, 2008.
To Cash Introduced 107500 By Furniture 50000
To Visits 84000 By Equipment 40000
To Receipts From Dispensary 64000 By Drugs 35000
To Sundry Receipts 12000 By Salary 24000
By Rent 6000
By Conveyances 18000
By Stationery 5600
By Lighting 10000
By Journals 1200
By Drawings 37700
By Balance c/f 40000
267500 267500
Adjustments:
1. Receipts in arrears are: Visits Rs. 11,500 and Dispensary Rs. 9,000.
2. The outstanding salaries are Rs. 1,800 and the outstanding expenses on drugs are also Rs.
3,000.
3. 40% of the amount spent on conveyance was for domestic use.
4. Stock of drugs in hand at the close of the year was worth Rs. 4,200.
5. Depreciate furniture at 5% p.a. and equipments at 10% p.a.
6. Furniture and equipment purchased on 1st April 2007.
13. The following is the Receipts and Payments A/c of the Saraswati Vidya Mandir, Latur.
Receipts and Payments Account for 2007 – 08.
To Cash Balance b/f 32,000 By Furniture (31-12-2007) 80000
To Admission Fees 68,000 By Salaries 124000
To Tuition Fees 46,000 By Office Expenses 42000
To Donations 90,000 By Sports Material 18000
To Govt. Grant 1,00.000 By Printing & Stationery 17000
To Life Members‟ Fees 62,000 By Fixed Deposit(@10% on 1.10.2007) 100000
To Term Fees 24,000 By Cash Balance c/f 41000
To Examination Fees 30,000
452000 452000
Additional Information:
1. The assets of the society on 1st April, 2007 were:
Building Rs. 50,000 Furniture Rs. 47,000 Library Rs. 40,000 Laboratory Rs.
48,000
2. The tuition fees receivable from students for 2007 – 08 is Rs. 12,000.
3. Furniture and Building are to be depreciated at 10% p.a. each.
4. The 50% of donations and entire amount of Life Members‟ Fees are to be capitalized.
5. Sports material is valued at Rs. 42,000 on 31-03-08.
6. The capital fund on 1st April, 2007 was Rs. 2,17,000.
Prepare Income and Expenditure Account for the year ended 31st March, 2004 and a Balance
sheet as on that date.
49
14. From the following Receipts and Payments Account of Ajanta Club, Ratnagiri and
additional information, prepare an Income and Expenditure Account for the year ended
31st March, 2008 and Balance Sheet as on that date.
Receipts and Payments A/c for the year ended 31st March, 08
To Balance b/d By Balance b/d
Cash 30000 Bank 25000
To Receipts from entertainment 84000 By Stationery A/c 11500
programme By Furniture A/c 40000
To Entrance Fees 26000 By Investments A/c 60000
To Interest on Investments 36000 By Salaries A/c 45000
To Charity 12000 By Expenses of entertainment 50000
To Subscriptions programme
2006 – 07 12100 By Balance c/d
2007 – 08 40300 Cash Balance 8500
2008 – 09 11600 Bank Balance 12000
252000 252000
Additional Information.
1. Capitalize 50% of the entrance fees.

2. Outstanding salary is Rs. 8,700 while outstanding interest on investment is Rs. 1500.
3. There are 500 members of the club, each of them is paying an annual subscription of
Rs. 100.
4. Opening stock of stationery was Rs. 1,800 and closing stock of stationery is Rs. 1900.
5. The assets of the Ajanta club on 1st April 2007 were Building: Rs. 1,50,000. Furniture
Rs. 50,000 and Equipment Rs. 30,000. The capital Fund as on 1st April 2007 was Rs.
2,48,900. New Furniture was purchased on 1st October, 2007.
6. Provide depreciation on Building and Furniture @10% and 5% respectively.
Equipment valued at Rs. 26,000 at the end of the accounting year 2007 – 08.
Note: In the absence of any information to the contrary, entrance fees should be treated as
revenue receipt. If any specific instruction is given in the problem, entrance fes should be treaed
accordingly.
15. Girgaon Library showed the following position on 1st April, 2007.
Balance Sheet as on 1st April, 2007
Rs. Rs.
Capital Fund 267650 Furniture 82500
Outstanding Liability for Expenses 2350 Books 120000
Investments 45000
Cash at Bank 22500
270000 270000
Receipts and Payments Account for the year ended 31st March, 2008
To Opening Balance 22500 By Electric Charges 2360
To Entrance Fes 41500 By Postage & Stationery 1250
To subscriptions 50000 By Telephone Charges 6250
To Sale Proceeds of old papers 1275 By Purchase of Books 33000
To Hire of Lecture Hall 21000 By Expenses of 2006 – 07 2350
To interest on investments 3400 By Rent 14400
By Investments 42000
By Salaries 23300
50
By closing Balance 14765
139675 139675
You are asked to prepare an Income and Expenditure A/c of the Library for the year ended 31 st
March, 2008 and a Balance Sheet as on that date after making the following adjustments.
1. Subscriptions include Rs. 12500 received in advance and subscriptions of Rs. 27500 in
respect of current year are still receivable.
2. Outstanding Liabilities on 31st March, 2008 were Rent Rs. 4,000 and Salaries Rs.
3,000.
3. Books, excluding any additions during the year, are to be depreciated at 10% p.a.
4. 50% of the Entrance Fees are to be capitalized.
16. From the following Balance Sheet and Receipts and Payments Account of Ashwini
Hospital, Mumbai, prepare an Income and Expenditure Account for 2007 – 08 and a
Balance Sheet as on 31-03-2008.
Balance Sheet as on 1-04-2007

Salaries unpaid 12000 Cash 41000
Medicines bill unpaid 11500 Securities 150000
Capital fund 446000 Furniture 24000
Land and buildings 200000
Equipment 45000
Subscriptions due 5000
Interest accrued 4500
469500 469500
Receipts and payments A/c for the year ended 31st March, 08

To Cash Balance b/f 41000 By Furniture 11900
To Subscriptions 60000 (Purchased on 1-4-07)
To interest 15000 By Salaries 48000
(including Rs. 4500 of last year) (Including Rs. 12000 of last year)
To Donations 14300 By Equipment 7500
(Revenue) (purchased on 1-4-07)
To Life Membership Fees 40000 By Dispensary Expenses 24700
By Medicines 45500
By Taxes 4500
By Cash Balance c/f 28200
170300 170300
Adjustments:
Capitalize the entire amount of life membership fees. Interest earned but not received
is Rs. 2,000. Subscriptions for 2007 – 08 are Rs. 4,200. Unpaid salary for the year
2007 – 08 is Rs. 12,500. Provide for depreciation on furniture at 10%, on land and
buildings at 5% and on equipment at20%. Prepaid taxes are Rs. 400.
51
17. The following is the Receipts and Payments Account of the Shree Sports Club,
Ahmednagar.
Receipts and payments account for the year ended 31st March, 2008.
To balance b/d By Salaries 8500
Cash 7000 By Badminton court (1.4.07) 22000
To subscriptions 20000 By Insurance 3000
To interest on investments 3000 By Furniture (1.4.07) 17000
To Rent 6000 By Sundry Expenses 6000
To Badminton Fees 12000 By Tournament Expenses 8000
To Tournament Fees 19000 By Printing Charges 1500
To Admission Fees 22000 By Newspapers & Magazines 600
To Donations. 45000 By 12% Investments 50000
By Balance c/d
Cash 17400
134000 134000
On 31st March, 2007, the club owned a building worth Rs. 1,50,000. The capital fund on
the same date was Rs. 1,57,000.
Prepare and Income and Expenditure account for the year ended 31st March, 2008 and a
Balance sheet as on that date after considering the following additional information.
1. Subscriptions received for 2008-09 Rs. 1500; subscriptions still due for 2007 – 08: Rs
4,000.
2. Outstanding salaries on 31st March, 2008: Rs. 3000 and Insurance premium is paid for
one year ending 30th June, 2008.
3. Depreciation on building, badminton court and furniture @10%, p.a. each.
4. Capitalize 70% of the admission fees.
5. Donations are received for endowment fund.
6. Investments purchased on 1st July 2007.
18. From the following Receipts and payments Account of South Indian Cultural Society,
Matunga, Mumbai, prepare Income and Expenditure Account for the year ended 31st
March 2008 and a Balance Sheet as on that date:
To Opening Cash in Hand 7420 By Opening Bank Overdraft 92700
To Subscriptions By Investments in Securities 53000
2006 – 07 7300 By Purchase of Furniture 41450
2007 – 08 185500 By Salaries 36200
2008 - 09 5000 By Printing & Stationery 1890
To Proceeds from Dramas 70000 By Cost of Staging Dramas 21710
To Interest on Securities 4200 By Closing Balances
To Miscellaneous Income 7500 Cash in hand 55550
3,16,920 3,16,920
1. The society has 1000 members each paying an annual subscription of Rs. 200.
Subscriptions of Rs. 9,000 are still in arrears in respect of 2006 – 07. Capital fund as
on 1st April, 2007 was 1,22,950.
2. Stock of stationery amounted to Rs. 1,125 on 31-3-2007 and Rs. 2,087 on 31-3-2008.
3. Half the entrance fees are to be capitalized.
4. Salary for the year 2007 – 08 Rs. 1550 is outstanding.
5. Outstanding Sundry Expenses on 31-3-2007 had amounted to Rs. 1320.
6. Sundry expenses paid in 2006-07 included telephone charges Rs. 1125 relating to
2007-08.
7. On 31-3-2007, the society owned premises worth Rs. 124500. Billiard Table worth Rs.
40,000 and investments worth Rs. 26,500.
52
8. Both the premises and the Billiards Table at the end of the year are to be depreciated at
10% on the opening balances.
19. From the following Balance sheet and Receipts and Payments Account of
Padmavati High School, Thane, prepare Income and Expenditure account
for the year ended 31-03-2007 and balance sheet as on that date.
Balance sheet as on 31st March, 2006

(Rs.) (Rs.)
Entrance fees 30000 Furniture 84000
Capital fund 519000 Computer laboratory 100000
Library 125000
Investment 200000
Cash in hand 5000
Cash at bank 15000
Outstanding Tuition Fees 2000
549000 549000
Receipts and Payment Account for the year ended 31st March, 2007

(Rs.) (Rs.)
To balance b/d By Furniture purchased 52000
Cash in hand 5000 By Salaries 300000
Cash at bank 15000 By rent 140000
To Tuition Fees 400000 By Sundry expenses 27000
To Term Fees 120000 By Stationery 49000
To Government Grant (salary) 104500 By Annual gathering expenses 24000
To Sundry receipts 11000 By repairs of buildings 32500
To sale of old newspapers 500 By Insurance 2000
To interest on investments 10000 By Balance c/d
To Donation of library 150000 Cash in Hand 44500
Cash at Bank 127000
816000 816000
Adjustments:
1. Tuition fees receivable Rs. 150000
2. Salary still payable Rs. 150000
3. Rent paid in advance Rs. 20000
4. Insurance premium is paid for one year ending 30-9-07
5. Depreciate furniture and library at 10% and computer laboratory at 20%. Depreciation
is to be charged on the closing balance of assets.
20. Following is the Balance sheet and receipts and payments account of the
Memorial Hospital, Sawantwadi. Prepare Income and expenditure account for the year
ended on 31.3.2010 and the balance sheet as on that date.
Balance sheet as on 1.4.2009

(Rs.) (Rs.)
Capital fund 10,04,000 Cash in hand 6000
Outstanding Cash at bank 34000
Salaries 22000 Land and building 800000
Medical bill 6000 Furniture 70000
53
Equipments 120000
Outstanding subscribtion 2000
1032000 1032000
Receipt and payments account
For the year ending 31.3.2010

(Rs.) (Rs.)
To balance b/d By Salaries 110000
Cash in hand 6000 (including of the previous year)
Cash at bank 34000 By medicines 52000
To subscription 130000 By equipments purchased 20000
(includes Rs. 2000 received for previous year) By taxes 3000
To Sale of furniture 20000 By general expenses 8600
(Book value Rs. 30000) By balance c/d
To Donations (revenue) 44000 Cash in hand 15400
To Life membership fees 25000 Cash at bank 50000
259000 259000
Consider the following adjustments.
1. Outstanding subscription Rs. 12000.
2. Capitalise the amount of membership fees.
3. Prepaid taxes Rs. 500.
4. Outstanding Salary Rs. 12000.
5. Write off depreciation Rs. 20000 from Land and Building and Rs. 30000 from equipments.
6. Outstanding medicine bill as on 1.4.09 is still due.
54
CH. 8. FINAL ACCOUNTS OF PARTNERSHIP FIRM

[Q. 7: 20 MARKS]
7. From the following Trial Balance of M/s Sonia and Sufi, you are required to prepare Trading
Profit and Loss Account for the year ended 31st December, 2004 and the Balance sheet as on
that date.
Trial Balance as on 31.12.2004
Particulars Debit (Rs.) Credit (Rs.)
Sonia’s Capital 1, 80, 000
Sufi’s capital 1, 50, 000
Sonia’s Drawing 14, 450
Sufi’s Drawing 10, 000
Stock on 1 – 1 – 2004 2, 00, 000
Bills Receivable 25, 000
Purchases 2, 75, 000
Sales 4, 00, 000
Bills Payable 60, 000
Return In ward 5, 000
Return Outward 4, 500
Plant and Machinery 1, 00, 000
Loose Tools 25, 000
Patents 25, 000
Sundry Debtors 1, 25, 000
Sundry Creditors 1, 40, 000
Cash at Bank 77, 550
Wages 19, 000
Salaries 17, 500
Rent and Taxes 7, 500
Insurance 3, 000
Printing and Stationery 2, 000
Power and Fuel 3, 500
9, 34, 500 9, 34, 500
Adjustments:
1. Stock as on 31st December, 1978 Rs. 1, 30,000 and its market value were Rs. 1, 40,000.
2. Write off Rs. 1000 for bad & Provide for Bad and Doubtful debts at 5% on Sundry Debtors.
3. Goods worth Rs. 1000 were distributed as free samples.
4. Prepaid Insurance Rs. 750.
5. Depreciate Plant and Machinery by 10% p.a. and Patent by 15% p.a.
6. Outstanding expenses
 Salaries Rs. 2,500
 Wages Rs. 1,000
 Printing and Stationery Rs. 500.
7. Uninsured goods worth Rs 1200 were lost by fire.
55
2. Misha and Latha are partners sharing profits and losses in the ratio of 2 : 1. From the
following Trial Balance prepare Trading and Profit and loss account for the year ending
31st December, 2004.
Stock (1st January) 10, 000
Sundry Debtors 28, 000
Bills payable 10, 101
Purchases 40, 000
Wages 8, 500
Returns Outward 2, 500
Salaries 2, 700
Office Expenses 2, 446
Insurance 1, 300
Plant & Machinery 30, 000
Sundry Creditors 21, 500
Rent 1, 800
Sales 60, 000
Reserve for Doubtful Debts 400
Travelling Expenses 1, 400
Returns Inward 3, 500
Land and Building 44, 800
Bank 6, 655
Misha‟s capital 60, 000
Latha‟s capital 30, 000
1, 84, 501 1, 84, 501
Adjustments:
1. Closing stock was valued at Rs. 26,500.

2. Provide 10% Depreciation on Plant and Machinery.
4. Prepaid Insurance Rs. 300.
5. Maintain Reserve for Doubtful debts at 1% of Sundry debtors.
6. Outstanding rent for the current year Rs. 200.
7. Goods worth Rs. 100 were taken over by Latha for her personal use, but no entry is made
in the books.
56
3. Surya and Abhijeet are in a Partnership firm. The trial Balance of the firm on 31 st
December, 2004 was as follows.
Trial Balance as on 31st December, 2004
Capitals:
Surya 15, 000
Abhijeet 10, 000
Drawings:
Surya 500
Abhijeet 200
Buildings 20, 000
Plant and Machinery 6, 000
Cash at bank 600
Purchases and Sales 47, 500 75, 500
Returns 1, 500 1, 000
Carriage 350
Opening stock 11, 000
Wages 6, 000
Debtors & Creditors 17, 600 12, 600
Salaries 2, 500
Rent and Insurances 400
Postage and Telegrams 200
Bad Debts 250
Discounts 100 50
Reserve for Bad Debts 750
Outstanding Salaries 100
Trade Expenses 300
1, 15, 000 1, 15, 000
Adjustments:
1. Partners share Profits and Losses in the ratio of their capitals.
2. Write off Rs. 450 for Bad debts & Reserve for Bad and Doubtful Debts is to be maintained
at 5% on the Debtors.
3. Depreciate Building @ 5% and Machinery @ 10% p.a.
4. Goods worth Rs. 1, 000 were destroyed by fire and the insurance company admitted a
claim for Rs. 800.
5. Stock as on 31st December, 2004 was valued at Rs. 8, 000.
7. Wages outstanding Rs. 1000.
Prepare Trading and Profit & Loss account for the year ended 31st December, 2004 and a
Balance sheet as on that date.
57
4. Agarkar and Dravid are in partnership sharing profit and losses in the ratio of 2: 1
from the following information of Trial balance and adjustments you are required
to prepare profit and loss account, trading account and Balance sheet as on 31st
march 2003.
Prepaid Insurance 400
Insurance 1, 000
R.B.D.D 500
Discount 400
Postage and Telephones 1, 600
Salaries 28, 000
Debtors 33, 000
Creditors 34, 000
Wages 12, 000
Opening Stock 24, 000
Carriage 500
Return Inward 2,800
Purchase and sales 96, 600 1, 50, 800
Bank Overdraft 60, 400
Land and Building 88, 000
Drawings:-
Agarkar 4,000
Dravid 2,000
Capitals:-
Agarkar 30, 000
Dravid 26, 000
3, 06, 300 3, 06, 300
Adjustments:
1. Write off Rs. 1,000 for bad debts and provide for R.B.D.D @ 5% on debtors.
2. Goods worth Rs. 2,000 were distributed as free samples.
3. Closing Stock 31 – 12- 2003 was valued at cost Rs. 28, 000 while its market value is
Rs. 30,000/-.
4. Salaries were outstanding Rs. 1,000.
5. Depreciate Land and Building @ 5% p.a. and Plant and Machinery @ 10% p.a.
6. Goods worth Rs. 3,000 were destroyed by fire, but insurance company admitted
the claim for Rs. 400 only.
7. Dravid had taken goods worth Rs. 1000 for his own use, but no entry is made in
the books.
58
5. From the following Trial Balance and adjustments you are required to prepare the
Trading account, Profit and loss account and Balance sheet as on 31st December,
2004.
Aishwarya’s Capital 2, 00, 000
Revathi’s Capital 1, 30, 000
Aishwarya’s Drawing 14, 000
Revathi’s Drawing 10, 000
Stock on 1 – 1 – 2004 2, 00, 000
Sales 3, 90, 000
Loose Tools 25, 500
Patents 15, 000
Cash at Bank 78,00 0
Wages 19, 000
Salaries 17, 500
Insurance 3, 000
9, 34, 800 9, 34, 800
Adjustments
1. Stock on 31st December, 2004 is valued at Rs. 50,000 but is market value is Rs.
45,000.
2. Depreciate plant and machinery @ 5% p.a. Patents by 10%.
3. Write off Rs. 1,000 for bad debts and provide for R.B.D.D @ 5% on debtors.
4. Insurance were prepaid for Rs. 200.
5. Salaries outstanding amounted to Rs. 800.
6. Goods worth Rs. 5000 were destroyed by fire.
59
6. From the following Trial Balance and Adjustments of Kumbhar and Maroti you
are required to prepare Trading and Profit and Loss Account for the year ended on
31st March, 2005 and Balance Sheet as on that date.
Trial Balance as on 31st March, 2005
Debit Balance Rs. Credit Balance Rs.
Stock (1.4.2004) 35000 Sales 330000
Salary and Wages 4200 Discount 4000
Cash 10000 Creditors 20000
Purchases 225200 Bank Overdraft 10000
Sundry expenses 13600 Interest on Investment 8000
Wages 12000 Capitals:
Bills Receivable 6000 Kumbhar 60000
Travelling Expenses 2000 Maroti 40000
Bad Debts 3000
Factory Expenses 8000
Commission 4000
Investments 20000
Debtors 40000
Tools and Equipments 6000
Furniture 12000
Goodwill 21000
Building 50000
472000 472000
Adjustments
1. Partners share Profits and Losses in the ratio of their capitals.
2. Closing stock is valued at Cost Price Rs. 40,000 and at Market Price Rs. 45,000.
3. Kumbhar has withdrawn goods worth Rs. 1,200 for his own use, but no entry is
made in the books.
4. Uninsured goods worth Rs. 12,000 were lost by fire.
5. Rs. 450 is to be written off as bad debts.
6. Unpaid expenses:
Salary and Wages Rs. 800
Rent Rs. 1,200
7. Depreciate building @ 7 ½ % p.a.
60
7. From the following information you are required to prepare the Trading account,
profit and loss account and Balance sheet as on 31st March, 2005.
Sachin’s Capital 1, 00, 000
Ganguly’s capital 2, 30, 000
Sachin’s Drawing 4, 000
Ganguly’s Drawing 1, 000
Stock on 1 – 1 – 2004 2, 20, 000
Sales 2, 00, 000
Bills Payable 1, 60, 000
Loose Tools 24, 000
Patents 25, 000
Wages 19, 000
Salaries 17, 500
Insurance 3, 000
9, 34, 500 9, 34, 500

Adjustment
1. Stock on 31st March, 2004 is valued at Rs. 30,000 but is market value is Rs.
35,000.
2. Depreciate plant and machinery @ 5% p.a. Patents by 20%.
3. Insurance were prepaid for Rs. 200.
4. Salaries outstanding amounted to Rs. 800.
5. Maintain Reserve for Doubtful debts at 10% of Sundry debtors.
6. Goods worth Rs. 5000 were destroyed by fire and the insurance company admitted
a claim for Rs. 3000 only.
7. Sachin has withdrawn goods worth Rs. 500 for his own use, but no entry is passed
in the books.
61
8. Abhijit, Pawan and Vikram are partners. The following balanced were extracted
from the books of a partnership firm as on 31st March, 1999.
Trial Balance As On 31st March, 1999

Purchases 165000 Capital Accounts:
Debtors 6000 Abhijit 24000
Stock (1st April, 1998) 25000 Vikram 12000
Wages 20000 Pawan 30000
Salaries 8000 Current Accounts:
Furniture 8000 Vikram 2000
Building 45200 Pawan 3000
Insurance 3500 Sales 250000
Loan at 5% to Vijay (1st Dec. 98) 4000 Reserved for Doubtful Debts 7800
Rent and Taxes 2000 Interest on Investment 720
Investment 10000 Creditors 25000
Cash in Hand 8820 Bills Payable 14000
Bills Receivable 10000 Return Outwards 3000
Current Account : Abhijit 2000
371520 371520
Adjustment
1. Closing stock Rs. 13,000.
2. Partners are allowed a salary at Rs. 3000 p.a.
3. Rs. 1200 paid during the year as building repairs wrongly debited to building
account.
4. Depreciate furniture at 12% p.a. and Building at 10% p.a.
5. Rs. 1000 due from customer is not recoverable and create R.D.D. at 5% on debtors.
6. Goods of Rs. 12,000 were destroyed by fire. The insurance company admitted a
claim for Rs. 7,410.
7. Prepare Final Accounts for the year ending 31st March, 1999.
62
9. Mr. Kale and Mr. Gore were partners sharing profits and losses equally. The Trial
Balance of their firm was as under: Prepare Trading and Profit and Loss Account
for the year ended on 31st March, 2004 and Balance Sheet as on that date:
Trial Balance as on 31st March, 2004.
Opening Stock 30000 Capitals:
Wages 9500 Mr. Kale 30000
Purchases 52500 Mr. Gore 60000
Investments 10000 Current Accounts:
Postage 1000 Mr. Kale 2100
Printing & Stationery 2500 Mr. Gore 1400
Carriage Outwards 1300 Bills Payable 7500
Insurance 3200 10% Bank Loan(Taken on 1.10.2003) 10000
Debtors 35000 Bank Overdraft 6500
Furniture 5500 Creditors 25000
Bad Debts 1200 Sales 70500
Carriage Inwards 1800 R.D.D. 3000
Cash in Hand 5400 Returns Outward 500
Machinery (Purchased on 1.7.03) 32000
Salaries (For 10 months) 15000
Sundry Expenses 2100
Bills receivable 8500
216500 216500
Adjustment
2. Printing and Stationery included Rs. 500 paid for purchase of postal stamps.
3. Depreciate Furniture and Machinery at 10% p.a.
4. 5% interest is to be allowed on capital.
5. Of the debtors Rs. 500 were bad and should be written off, and R.D.D. should be
maintained at 5%.
6. Goods of Rs. 7,500 were purchased on 30th March, 2004 and included in the
closing stock but those purchases were not recorded in the books of accounts.
7. Bills receivable include a dishonoured bill of Rs. 500.
63
10. Following is the Trial Balance of Kalavati and Lilavati as on 31st March, 2005
who share Profits and Loses to the ratio of 3:2. Interest on capital was allowed at
5% p.a.
Opening Stock 10000 Return Outward 1250
Sundry Debtors 14100 Sundry Creditors 15800
Purchases 20000 Sales 35000
Wages 4250 R.B.D.D. A/c. 200
Salaries 1350 Capital A/c.
Office expenses 1223 Kalavati 35000
Discount 650 Lilavati 10000
Rent, Rates & Taxes 900 Loan at 9% 2000
Plant & Machinery 15000 (Taken on 1.10.2004)
Return Inward 1750
Land & Building 20000
Cash at Bank 7327
Current A/c :
Kalavati 2100
Lilavati 600
99250 99250
Additional Information
2. Unpaid wages Rs. 750.
3. Outstanding salary Rs. 657.
4. Provide depreciation on Plant & Machinery at 10% p.a. and on land &
building at 5% p.a.
5. Write of Rs. 100 as bad debts and provide R.B.D.D. at 5% on debtors.
6. Rent, Rates and Taxes prepaid Rs. 100.
7. Prepare Trading A/c and Profit & Loss A/c for the year ending 31st
March, 2005 and a balance sheet as on that date.
64
11. Given below is the Trial Balance of M/s Radha and Krishna on 31st March, 2004.
Partners share profit & losses in the ratio of 3:2 respectively. From the following
trial balance and additional information, prepare a Trading & Profit & Loss account
for the year ended 31st March, 2004 and a Balance sheet as on that date.
Particulars(Debit) Amount Particulars(Credit) Amount
Partner's Current A/c Partners Capital Account
Radha 16000 Radha 80000
Partner's Drawings Krishna 50000
Radha 15000 Partners Current Account
Krishna 10000 Krishna 10000
Purchases 120000 Sales 365000
Returns 2500 Returns 3500
Debtors 65000 Creditors 10000
Furniture 50000 RDD 2000
Premises 160000 Provident fund 65000
Bad debts 7500 Interest on P.F. Investment 6000
Discount 5000 Outstanding Salaries & Wages 6500
Provident Fund Contribution 15000 General Reserve 45003
Provident Fund Investment 60000
Salaries & Wages 15003
Opening Stock 80000
Cash in hand 18000
Royalties 4000
643003 643003
Adjustments:
1. The closing stock was valued at marked price Rs. 90,000 which is 20% above
cost.
2. Write off bad debts Rs. 1500 and make a provision for doubtful debts @5% on
debtors.
3. Provide 2% Reserve for discount on debtors and creditors.
4. Depreciate Furniture @ 15% and Premises @ 20%.
5. Interest on capital is allowed @ 10% p.a. and interest on drawings be charged @
15% p.a.
6. Radha is entitled to receive rent for her premises at Rs. 300 p.m. where business is
carried out and Krishna is to be given 5% commission on „Gross Profit‟.
65
12. X, Y & Z are partners in a firm of following terms.
a. Y and Z to get salaries of Rs. 10,000 and Rs. 5,000 respectively for the year.
b. Interest on Capital and on drawings is to be calculated at 10% p.a.
c. They share profits and losses as X – 50%, Y – 30%, Z – 20%.
The Trial Balance of the firm as on 31st March 1996 was as follows.

Furniture 22,000 Capital A/c
Premises 60,000 X 80,000
Plant & Machinery 70,000 Y 50,000
Purchases 2,80,000 Z 30,000
Opening Stock 42,000 Current A/c
Works Manager‟s Salary 64,000 X 6,000
Office Expenses 45,200 Y 12,000
Rent & Insurance 10,500 Z 18,000
Legal Fees 3,500 Sales 4,65,000
Debtors 20,600 Creditors 37,500
Balance at bank 43,700
Drawings:
X 17,000
Y 11,000
Z 9,000
6,98,500 6,98,500
Your are informed that:
1. Stock on 31st march, 1996 is valued at Rs. 36,000

2. Outstanding expenses are Works Manager‟s salary Rs. 6,000, Rent Rs. 1,000
3. Prepaid insurance Rs. 500
4. Machinery of Rs. 2,000 is included in Purchases.
5. Depreciate all fixed assets at 10%
6. Provide for commission receivable Rs. 2,000
7. On 31st March 1996 goods worth Rs. 5,000 were destroyed by fire and insurance
co. Admitted claim for Rs. 2,000.
8. Goods distributed as free samples Rs. 1,000 were not recorded.
66
13. Following is the Trial Balance of Vinod and Vikas sharing profits and losses equally.
Prepare a Trading and Profit & Loss account for the year ending 31 st March, 1996 and a
Balance Sheet as on that date after considering the adjustment given below.

Stock (1-4-1995) 44000 Capital A/c
Purchases 170000 Vinod 80000
Returns Inwards 10000 Vikas 80000
Carriage 4000 Sales 320000
Motive Power 6000 Creditors 40000
Wages 56000 Commission 4000
Trade Expenses 4000 Bank Loan 32000
Sundry Debtors 72000
Salaries 38000
Insurance 2400
Postage 3600
Commission 5000
Plant & Machinery 60000
Furniture 16000
Advertising 8000
Office Rent (10 months) 10000
Drawings
Vinod 14000
Vikas 6000
Building 24000
Cash in Hand 3000
556000 556000
Adjustments
1. Stock on 31.3.1996 was valued at cost price Rs. 80,000 and market price Rs. 72,000.
2. Depreciate Plant & Machinery and Building at 20% and 10% respectively.
3. Insurance has been paid for one year ending 31.6.1996.
4. Goods withdrawn by Vinod amounting to Rs. 10,000 during the year were not recorded in
the books.
5. Bad debts were Rs. 2000 and an R.D.D. is to be created at 5% on debtors.
6. Goods of Rs. 6000 were purchased on 30.3.1996 and also included in the closing stock, but
the purchase was not recorded in the books of account.
67
14. From the following Trial Balance of Somnath and Ambadas being equal partners, you are
required to prepare Trading and Profit & Loss A/c for the year ended 31st March, 1996 and
Balance Sheet as on that date after taking into consideration the additional information.

Opening Stock 60000 Capital A/c
Drawings: Somnath 22000
Somnath 1000 Ambadas 18000
Ambadas 1500 Reserve Fund 21600
Insurance 600 Sales 130000
Salaries and Wages 4500 Bills Payable 1000
Carriage 2500 Creditors 16000
Purchase 65000 Reserve for Bad and Doubtful Debts 800
Bills Receivable 600 Returns 500
Rent 3500
Debtors 18000
Returns 1000
Machinery 12000
Travelling Expenses 3000
Cash at Bank 1000
Building 30000
Office Expenses 2700
Advertisement (for 3 years) 3000
209900 209900
Adjustments:
1. Closing stock: cost Rs. 25,000 and market price Rs. 30,000.
2. Allow interest on capital at 10% p.a.
3. Prepaid insurance Rs. 50.
4. Provide for R.B.D.D. at 5% on debtors.
5. Uninsured goods costing Rs. 3000 were destroyed by fire.
6. Outstanding expenses: Salaries Rs. 1000; Rent Rs. 500.
7. Provide depreciation on Machinery at 20%; Building 2 ½ %.
68
15. Pradeep and Prashant are partners sharing profits and losses in equal ratio. From the
following Trial Balance you are required to prepare Trading and Profit & Loss account for
the year ended 31st March, 1998 and Balance Sheet as on that date after taking into
consideration the additional information.

Land and Building 44500 Capitals
Plant(Addition on 1st Jan. 98, Rs. 3,000) 9750 Pradeep 60000
Drawings Prashant 40000
Pradeep 3000 Sales 57000
Prashant 2000 Suppliers Account 9500
Opening Stock 26000 Reserve for Doubtful Debts 500
Wages 5000 Outstanding Expenses 500
Purchases 34500
Carriage 700
Office Expenses 2270
Rent, Rates and Taxes 1750
Insurance 480
Motor van 20000
Salaries 1750
Bad debts 950
Customers Account 14600
Cash at Bank 250
167500 167500
1. Closing stock on 31st March, 1998 was at cost Rs. 40,000 and Market price Rs. 50,000.
2. Provide 10% p.a. interest on Capital.
3. Charge interest on drawings: Pradeep Rs. 100 and Prashant Rs. 150.
4. Depreciate plant at 10% p.a.
5. Prashant‟s withdrawal of goods worth Rs. 1,000 for personal use but not recorded in
the books.
69
16. Given below is the Trial Balance of Sagar and Sindhu who are partners sharing profits and
losses in equal ratio. You are required to prepare a Trading and Profits and Losses in equal
ratio. You are required to prepare a Trading and Profit & Loss A/c for the year ended 31 st
March, 2006 and a balance sheet as on that date after taking into account the given
adjustments.
Purchases 98000 Capitals
Patent Rights 4000 Sagar 30000
Buildings 100000 Sindhu 40000
Opening sock 15000 Provident Fund 17000
Printing & Stationery 1750 Creditors 45000
Sundry Debtors 35000 Bank Loan 42000
Wages & Salaries 11000 Sales 163250
Partner’s Drawings Reserve for Doubtful Debts 6250
Sagar 4500 Purchases Returns 3500
Sindhu 6500 General Reserve 10000
Audit Fees 700 Commission 9000
Sundry Expenses 3500 Bills Payable 10000
Furniture & Fixtures 8000
10% Investments (Purchased on 1st Oct. 2005) 10000
Conveyance Expenses 2000
Cash 4000
Provident Fund contribution 800
Carriage Inwards 1300
Trade Expenses 2700
Goodwill 20000
Machinery 20000
Shop Fittings 18000
Bad Debts 250
Bills Receivable 9000
376000 376000
Adjustments
1. The closing stock at the end of the year was valued at market price Rs. 1,44,000 which is
20% above cost.
2. Commission includes Rs. 1,400 received in advance.
3. Goods worth Rs. 15,000 were sold on 30th March 2006, but not yet recorded in the books
of accounts.
4. 1/6th shop fittings and 20% of goodwill were to be written of. The provision for Bad debts
was to be maintained @ 5% on debtors.
5. Provide interest on Partners‟ capital @ 10% p.a. and charge interest on drawings @ 12%
p.a.
6. Sagar is allowed a commission @ 2% on Gross profit.
7. Machinery and Buildings were to be depreciated at 15% and 205 respectively. Patent
Rights and Furniture and Fixtures were valued at Rs. 2,000 and Rs. 5,000 respectively.
8. Bills Receivable include a dishonoured bill for Rs. 2500. An amount of Rs. 2,000 spent on
repairs on machinery was wrongly included in machinery account.
70
17. Asha and Nir0sha are the partners sharing profits and losses equally. You are required to
prepare the Trading and profit and loss account for the year ended 31st December, 1997
and a Balance sheet as at that date after making the necessary adjustments.
Debit Balance Amount Credit Balance Amount
Buildings 70000 Asha’s Capital 80000
Plant and Machinery 60000 Nirosha’s Capital 100000
Furniture 16000 Discount Received 1800
Sundry Debtors 28800 Loan From Vijay 30500
Return Inwards 6000 Sales 120000
Discount 2600 Sundry Creditors 30000
Printing and Stationery 1500 Reserve for Bad Debts 2000
Insurance Charges 1600 Return Outward 3700
Bad debts 1400
Salaries 19300
Purchases 98000
Cash at Bank 25800
Stock ( on 1.1.97) 20000
Carriage Inwards 2500
Legal Charges 500
Asha’s Drawings 8000
Nirosha’s Drawings 6000
3,68,000 3,68,000
Adjustments:
1. The stock on 31.12.97 was of the value of Rs. 44,000 which is less than its market value by
2,000.
2. On 24th December, 1997 stock of the value of Rs. 6,000 was stolen Insurance company
admitted the claim for Rs. 4,000 only and paid the amount on 7th Jan 1998.
3. Goods worth Rs. 4,000 were received on 31st December, 1997 and were included in the
closing stock, but purchase invoice was omitted to be entered in the books.
4. The partnership firm distributed goods worth Rs. 1,500 as free samples and Asha
withdrew goods worth Rs. 3,000 for personal use, but no record was made of the same in
the books.
5. Of the sundry Debtors Rs. 800 were bad debts and should be written off.
6. Make reserve for discount at 5% on debtors and creditors.
7. Depreciation Plant and Machinery by 10% and Furniture by 5%.
71
18. Following is the Trial balance of a firm as on 31st December, 1997
Trial Balance as at 31st December, 1997
Bank 2,000 A’s Capital 25,000
Bills Receivable 8,000 B’s Capital 15,000
Sundry Debtors 23,000 Bills Payable 7,500
Stock on 31.12.96 31,000 Sundry Creditors 33,300
Purchases(net) 1,80,000 Reserve for bad debts 600
Petty cash A/c 4,000 Sales 2,90,000
Wages 38,300
Salaries 20,800
Rent (for 10 months) 1,000
Electricity Charges 2,180
Drawings – A 6,000
Drawings – B 4,000
Buildings 34,000
Furniture 4,000
Carriage Inwards 2,000
Donations 1,000
Carriage Outwards 3,500
Miscellaneous Expenses 1,500
Printing and Stationery 2,300
Postage and Telegram 1,430
Fuel and power 1,390
3,71,400 3,71,400
Adjustments:
1. Wages include Rs. 3,300 paid for the construction of a part of the building.
2. Provide for outstanding rent
3. Depreciation is to be provided on furniture@ 10% and Building @ 5%
4. Bills Receivable and Bills Payable include dishonoured bills for Rs. 2,000 and Rs. 1,500
respectively.
5. Bad debts to be written off Rs. 500. Provide reserve for doubtful debts @ 5% on debtors.
6. Petty cash A/c shows the amounts transferred from cash book. Actual petty cash expenses
are Rs. 3,100.
You are required to prepare Trading and profit and loss account for the year ended 31st
December 1997 and a balance sheet as on that date.
72
19. From the following Trial Balance of M/s Kale and Gore your are required to prepare
Trading and Profit and Loss account for the year ended 31st December, 1997 and the
Balance sheet as on that date after taking into account the necessary adjustments. Trial
Balance as on 31st December, 1997
Kale‟s Capital 1, 80, 000
Gore‟s capital 1, 50, 000
Kale‟s Drawing 14, 450
Gore‟s Drawing 10, 000
Stock on 1 – 1 – 2004 2, 00,000
Sales 4, 00, 000
Loose Tools 25, 000
Patents 25, 000
Sundry Debtors 55, 000
Sundry Creditors 40, 000
Wages 19, 000
Salaries 17, 500
Insurance 3, 000
8, 34, 500 8, 34, 500
Adjustments:
1. Depreciate Plant and Machinery by 5% and Patents by 15%.
2. Provide for Bad and Doubtful debts @ 5% on Sundry debtors.
3. Prepaid Insurance Rs. 750
4. Outstanding expenses : a. Salaries Rs. 2,500 b. Wages Rs. 1,000 c. Printing and
Stationery Rs. 500.
5. Stock as at 31st December 1997 Rs. 1,30,000.
6. Kale and Gore have taken goods worth Rs. 2,000 and Rs. 3,000 respectively for their
personal use. No entry has been passed in the books.
73
20. Keshav & Devidas are partners and the Trial Balance and the necessary
adjustments of their firm are given below. Trial Balance as at 31st March 1998
Purchases 1,25,225 Capital
Sales return 4,250 Keshav 27,000
Debtors 50,200 Devidas 35,000
Opening Stock 28,788 Sales 2,05,000
Wages 20,167 Purchase Returns 3,230
Salaries 13,677 Commission 245
Furniture( Balance as on 1.4.98) Creditors 21,073
Rs. 6750 Dividend in Investments 825
Add: Purchases Reserve for Doubtful debts 500
On 31.2.98 Rs. 700 7,450 Devidas Loan 10,000
Machines 7,500
Bad Debts 315
Advt. (for 3years w.e.f. 1stOct. 97) 3000
Investments 9,500
Insurance 320
Drawings
Keshav 3,000
Devidas 1,500
Cash and Bank Balances 27,981
3,02,873 3,02,873
Adjustments:
1. Closing Stock Rs. 15,000

2. Depreciation on Machines @ 5% and on furniture @ 10% p.a.
3. Deduct Rs. 200 for bad debts and provide 2% R.D.D
4. Interest on capital (Opening Balance) at 5% p.a. but on drawings at 10% p.a.
5. Keshav is to get 1% commission on Gross profit and Devidas is to be paid at Rs. 2,000 p.a.
as a salary.
6. After considering the adjustment, prepare the Trading, Profit and Loss A/c for the year
ending 31st March 1998 and a Balance sheet on that date.
74
21. Pankaj and Bindas are partners sharing profits in the ratio of their capital. Their Trial
Balance as on 31.03.1997 is as under.
Trial Balance as on 31.3.1997 is as under
Land and Building 1,00,000 Pankaj’s Capital 30,000
Plant and Machinery 30,000 Bindas’s Capital 50,000
Purchases 1,20,000 Bills Payable 6,000
Wages 3,500 Creditors 12,000
Opening Stock 10,000 Outstanding commission 500
Carriage Outward 400 10% Loan (taken on 1.7.96) 10,000
Sundry Debtors 25,000 Sales 2,00,000
Interest on Loan 250 Discount 1,100
Prepaid taxes 200 Commission 4,000
Salary 4,500 Reserve for bad debts 3,000
Commission 700 General Reserve 1,000
Loss by fire 2,000
Travelling Expenses 3.400
Electricity 650
Pankaj’s Drawings 2,000
Bindas’s Drawings 3,000
Cash on hand 10,000
Sales Returns 2,000
3,17,600 3,17,600
Prepare Trading and Profit and loss A/c for the year ended 31st March 1997 and the Balance
sheet as on that date after taking into account the following adjustments.
1. Closing stock cost price Rs. 20,000 and Market price is less than the cost price by 5000.
2. Goods distributed as free samples Rs. 1,000.
3. Purchase returns of Rs. 2,000 on 30th March, 1997 have not been recorded in the books.
4. Wages included Rs. 1,000 paid for installation of Plant and Machinery.
5. Bills payable include a dishonoured bill of Rs. 1,000
6. Depreciate Machinery by 10% and Land & Building by 5%
7. Reserve for Bad debts is to be maintained at 5% on Debtors.
75
22. Dalal & Raja are partners sharing profit and losses equally. From the following Trial
Balance of the firm, prepare Trading a/c Profit and Loss A/c and Balance sheet for the year
ending 31.12.1997.
Debit Rs. Credit Rs.
Stock 20,000 Capital Accounts:
Purchases 1,30,200 Dalal 15,000
Sales Return 500 Raja 15,000
Debtors 20,000 Current Accounts
Wages 6,000 Dalal 2,000
Royalties 1,000 Raja 2,000
Furniture 5,000 Sales 1,70,500
Machinery 30,000 Purchase Return 3,200
Advertisement for 4 years 4,000 Commission 300
Salary 3,000 Provident Fund 2,000
Provident fund contribution 500 Interest on Provident fund investments. 200
Provident fund investment 2,000 Reserve for Doubtful debts
Insurance 500 Creditors 500
Cash 3,000 20,000
Drawings :
Dalal 3,500
Raja 1,500
2,30,700 2,30,700
Adjustments.
1. Closing stock: Cost price Rs. 25,000. Market Price Rs. 30,000/-
2. Dalal has taken goods worth Rs. 500 for his personal use.
3. Goods amounting Rs. 3,000 were sold and dispatched on 27.12.1997 but no entry was
made in the sales book.
4. Prepaid insurance Rs. 100.
5. Depreciation Furniture by 15%, Machinery by 20%
6. Write off bad debts Rs. 400/- and provide for reserve for doubtful debts at 3% on debtors.
76
23. Hira and Manik are partners in a firm sharing profits and losses in the ratio of their
opening capitals. Below given is their Trial Balance as on 31st March 1998.
Trial Balance as at 31st March 1998
Plant and Machinery 50,000 Sales 2,40,000
Opening Stock 30,000 Discount 2,000
Purchases 80,000 Sundry Creditors 20,000
Freehold Land & Building 85,000 Bills Payable 10,750
Carriage inwards 1,700 Hira‟s Loan A/c 50,000
Carriage outwards 2,500 Capital A/c
Wages 16,000 Hira 50,000
Sundry Debtors 50,000 Manik 25,000
Salaries 12,000
Furniture 18,000
Trade Expenses 6,000
Return Inwards 950
Advt. Suspense A/c 12,500
Discount 900
Partner’s Drawings:
Hira 3,000
Manik 2,000
Bills Receivable 20,000
Insurance 1,200
Bad debts 1,000
Cash at Bank 5,000
3,97,750 3,97,750
You are required to prepare the Trading and Profit and Loss account of the firm for the year
ended 31st March 1998 and the Balance sheet as at that date after taking into consideration the
following adjustments.
1. Closing stock Rs. 45,000
2. Depreciate Plant @10% p.a. and Furniture @20%p.a.
3. Appreciate Freehold Land & Building to Rs. 90,000
4. Bad debts reserve to be written off against 2 ½ % on sundry debtors.
5. Advertisement Suspense A/c is to be written off against revenue over five years.
6. Partner‟s Drawings are to bear interest @10% p.a. amounts were withdrawn evenly
throughout the year.
7. Annual charge for insurance is Rs. 1,000 the balance represents amount paid in advance
8. Hira gave loan @ 10% to the firm on 30th September, 1997.
9. Manik was to be allowed a partnership salary of Rs. 250/- p.m.
77
24.Sridevi & Jayaprada were partners sharing profits and losses in ratio 3/5 & 2/5. Interest on
Capital was allowed @ 5% p.a. but interests on drawings were ignored. The following
balances of accounts were given on 30.9.1997.
Opening Stock 20,000 Return Outward 2,500
Sundry Debtors 28,200 Sundry Creditors 31,600
Purchases 40,000 Sales 70,000
Wages 8,500 Reserve for Bad Debts 400
Salaries 2,700 Capital Account:
Office Expenses 2,446 Sridevi 70,000
Conveyance 1,300 Jayaprada 20,000
Insurance 1,800 Loan @ 10% p.a. (Taken on 1.4.97) 4,000
Plant & Machinery 30,000
Return Inward 3,500
Land & Building 40,000
Cash at Bank 2,654
Drawings :
Sridevi 4,200
Jayaprada 1,200
1,98,500 1,98,500
You are given the following additional information.

1. Closing stock was valued at Rs. 52,000/-
2. Wages unpaid was Rs. 2,000/- & outstanding salaries were Rs. 1,600/-
3. Bills Receivable includes a dishonoured bill of Rs. 2,000
4. Write off Rs. 200/- as further bad debts and provide 6% reserve for bad debts on Sundry
debtors.
5. Depreciation Plant & Machinery @ 10% and Land & Building @ 5%
6. Goods distributed as free samples amounted to Rs. 2,000 were not recorded.
7. Sridevi was entitled to a salary @ Rs. 500 p.m. and Jayaprada was entitled to a
commission of 5% on Gross profit.
8. Carriage inward included Rs. 1, 000 paid for transport charges and octroi on new
machinery purchases on 1- 10 – 1996.
78
25. Prepare Trading and Profit & Loss account for the year ended 31st December, 1996 and
Balance sheet as on that date from the following Trial Balance of Kaveri and Narmada
Kaveri’s Drawings 4,000 Kaveri Capital 12,000
Narmada’s Drawings 4,000 Narmada’s Capital 20,000
Land & Building 21,000 Bills Payable 6,790
Plant & Machinery 12,600 Creditors 14,600
Stock(1.1.1996) 8,000 Purchase Returns 500
Purchases 12,000 Sales 43,000
Wages 5,000
Carriage Outward 500
Carriage Inward 400
Coal 1,260
Salary 7,500
Rent, Rates & Taxes 560
Discount Allowed 300
Cash & Bank Balance 5,080
Sundry Debtors 9,000
Printing & Stationery 460
Bad Debts 240
Advertisement 1,750
Sales Return 400
Furniture 1,240
96,890 96,890
Adjustments:
1. Closing Stock is valued at Rs. 10,000/- at cost whose market value was Rs. 15,000/-
2. Depreciation Land & Building and Plant & Machinery by 10% & Furniture by 5%.
3. Provision for doubtful debts should be maintained at 5% on sundry debtors.
4. Kaveri has withdrawn goods for his personal use Rs. 500 for which no entry is passed.
5. Fire occurred in the Godown and goods worth Rs. 5, 000 were destroyed, but Insurance
Company admitted Claim for Rs. 3, 500.
6. Salary outstanding Rs. 1,500.
7. Wages outstanding Rs. 1,000 and
8. Rates prepaid Rs. 60.
79
26.Kamesh and Mani are partners sharing profits and losses in equal ratio. From the
following Trial Balance you are required to prepare Trading and profit and Loss Account
for the year ended 31st December, 2005 and Balance sheet as on that date after taking into
consideration the additional information.
Land and Building 44, 500 Capitals
Plant (addition on 1st October, 2005 Rs. 3,000) 9, 750 Kamesh 60, 000
Drawings: Mani 40, 000
Kamesh 3, 000 Sales 57, 000
Mani 2, 000 Sundry Creditors 9, 500
Opening Stock 26, 000 Reserve for Doubtful Debts 500
Wages 5, 000 Outstanding Expenses 500
Purchases 34, 500
Carriage inwards 700
Office expenses 2, 270
Rent, Rates and Takes 1, 750
Insurance 480
Motor Van ( addition on 1st June Rs. 10, 000) 20, 000
Salaries 1, 750
Bad debts 950
Debtors 14, 600
Cash at Bank 250
1, 67, 500 1, 67, 500
1. Closing stock on 31st December, 2005 was at cist Rs, 40, 000/- and Market price Rs.
50,000/-
2. Depreciate Plant at 10% p.a. and Land and Building @ 20% p.a.
3. Mani withdrawal of goods worth Rs. 1, 000 for personal use but not recorded in the books.
4. Depreciate Motor van by 10% p.a.
5. The goods for Rs. 5, 600 purchases and received on 25th December, 2002 were not
recorded in the purchase book.
6. Goods worth Rs. 3, 000 were destroyed by fire but insurance company admitted claim for
the full amount.
7. Insurance is paid for the year ended 31st March 2005.
80
27. From the following Trial Balance of SKY Traders, you are required to Prepare Trading
and profit and Loss Account for the year ended 31st March, 2005 and the Balance sheet as
on that date.
Trial Balance as on 31st March 2005
Machinery 12, 000 Discount 400
Wages 4, 000 Sales 60, 000
Purchases 41, 000 Unpaid Salaries 200
Stock ( 1- 4 - 2004 ) 7, 000 Capital: Maridas 30, 000
Carriage inwards 400 Nambirajan 15, 000
Office Expenses 2, 600 Creditors 6, 900
Leasehold property 10, 000 Bills Payable 4, 300
Furniture 2, 000 Return Outwards 500
Insurance 2, 000
Bad debts 250
Discount 350
Rent ( 10 month) 1, 000
Drawing: Maridas 4, 000
Nambirajan 6, 000
Packing expenses 200
Cash at Bank 5, 700
Salaries 4, 000
Bills receivable 6, 000
Sundry debtors 5, 300
Cash in hand 3, 500
1, 17, 300 1, 17, 300
Adjustments:
1. Maridas and Nambirajan share profits and losses in the ratio 3: 2.
2. On 31st March 2005 Stock was valued at Rs. 11, 000/-
3. Rent is payable for two months.
4. On 29th March, 2005 goods were sold to a customer on credit for Rs. 2, 000 no entry has
been passed in the books for sale.
5. Machinery to be depreciated at 10% p.a.
6. R.D.D is to be created at 5% on sundry debtors.
81
28.From the following Trial Balance of Shyam and Sundar, You are required to prepare a
Trading and Profit and Loss account for the year ended 31st December, 2002 and Balance
sheet as on that date after taking into consideration the additional information. They share
profits and losses in their capital ratio.
Particulars Amounts Particulars Amounts
Drawings: Capital Accounts:
Shyam 2, 000 Shyam 40, 000
Sundar 1, 000 Sundar 60, 000
Opening Stock 12, 000 Creditors 30, 000
Purchases 80, 000 Sales 1, 40, 000
Office Salaries 6, 000 R.D.D 1, 000
Royalties 2, 000 Return Outwards 2, 400
Trade Expenses 1, 400 Bills Payable 6, 000
Advertisement 5, 200 Reserve Fund 4, 000
Wages and Salaries 10, 400
Cash in Hand 8, 000
Debtors 50, 000
Bad Debts 400
Investments 16, 000
Motor Van 30, 000
Furniture 10, 000
Office Rent 3, 400
Freehold Property 16, 000
Discount 1, 600
2, 83, 400 2, 83, 400
Adjustments:
1. Closing stock was valued at Rs. 17, 600
2. Audit Fee for the year was outstanding Rs. 2, 400
3. Create R.D.D at 5% on Debtors.
4. The goods for Rs. 5, 600 purchased and received on 25th December, 2002 were not
recorded in the purchase book.
5. Depreciate freehold property at 10% and Motor Van at 25%
82
29.Ram and Sham are partners sharing Profits & Losses in the ratio of 2:3. Their trial balance
as on 31st March, 2005 is given below. You are required to prepare Trading A/c and Profit
& Loss A/c For the year ending 31st March, 2005 and a Balance sheet as on that date after
taking into account the given adjustments.
Particulars Amounts Particulars Amounts
Purchases 98, 000 Capitals:
Patent rights 4, 000 Ram 30000
Buildings 1, 00, 000 Sham 40000
Stock(1-4-2004) 15, 000 Provident Fund 7000
Printing & Stationery 1, 750 Creditors 45000
Sundry Debtors 35, 000 Bank Loan 12000
Wages & Salaries 11, 000 Sales 158000
Audit Fees 700 Reserve for doubtful debts 250
Sundry Expenses 3, 500 Purchase Returns. 3500
Furniture 8, 000
10% investment (purchased on 1-10-2004) 10, 000
Cash 4, 000
Provident fund contribution 800
Carriage inward 1, 300
General expenses 2, 700
295750 295750
Adjustments
1. Closing stock is valued at cost Rs. 15, 000 while its market price Rs. 18, 000.
2. On 31st December 2004 the stock of stationery was Rs. 500.
3. Reserve for bad and doubtful debts at 5% on debtors.
4. Depreciate building at 5% and Patents at 10%
5. Interest on capital is to be allowed @5%.
6. Goods worth Rs. 10, 000 were destroyed by fire. The insurance company admitted a claim
for Rs. 8, 000/-.
83
CH. 7. OBJECTIVES [Q. 1: 20 MARKS]

SET I
1. Write word/term/phrase which can substitute each of the
followings:
1. Reputation of a firm expressed in terms of money.
2. Payment of expenses before they have become due.
3. Payment of bill of exchange before its due date at rebate.
4. The person on whom the bill of exchange is drawn.
5. The account that is credited when depreciation is charged.
6. A bill before acceptance.
7. Amount by which book value of fixed assets exceeds its selling price.
8. Expenses due but not paid.
9. Partners of joint venture business.
10. Normal Rate of Return x Capital employed.
11. Which types of expenses are debited to Trading Account?
12. What are „Not for Profit‟ Concerns?
13. How are drawings treated in preparing statement of Profit or Loss?
14. Who is an endorsee?
15. What is depreciation?
16. A partnership for specific purpose and for temporary period.
17. List of debit and credit balances of the ledger accounts.
18. A person who accepts the bill.
19. Written agreement among the partners.
20. The balance which cannot be recovered from the debtors.
21. The account that serves the purpose of P&L A/c for non trading organisation.
22. The system of book keeping under which only one aspect of the transactions is recorded.
23. The person on whom the bill of exchange is drawn.
24. The account that is credited when depreciation is charged.
25. The present value of tangible trading assets less all the liabilities, which is required for
valuation of goodwill.
26. Goods returned to the supplier.
27. It is a stick or lever used to change the position of the cursor on a screen.
28. A bill in which the period of the bill is counted from the date of the bill accepted.
29. The receipts that are an unusual nature not arising through named activities of the business.
30. A fixed asset which is not essential for conduct of business.
31. Debit balance of trading account.
32. Written terms of agreement between the partners.
33. Summary of actual cash receipts and cash payments.
34. A system in which accounts are prepared from incomplete records.
35. An account opened by covertures in the bank for recording cash transactions.
36. A statement showing financial position of the business.
37. Making the payment of bill before its due date.
38. Summary of actual cash receipts and cash payments.
39. The relationship between persons who have agreed to share profit or loss in Joint Venture
Business.
40. A Partner who only lends his name to the firm.
41. A Partner who lends only his name to the firm.
42. Concerns established for providing services.
43. Profit earned over and above normal profit.
44. A temporary partnership without firm name.
45. A person who endorses the bill.
84
46. The balance which cannot be recovered from the debtors.
47. An accounting system where rules of debit and credit are not followed.
48. Money value of business reputation.
49. A person entered into a joint venture.
50. The Gifts received from legal representative as per the will of a deceased person.
2. Match the following:
Group A Group B
1. Opening Stock a. Amount of depreciation remains
2. Fixed instalment method constant.
3. Software b. Trading account
4. Joint Bank Account c. Revenue income
5. Subscription d. Capital income
e. Balance sheet
f. Converting symbolic language
g. Separate set of books
h. Utility programme
Group A Group B
1. Unpaid expenses a. Electronic device
2. Single Entry System b. Partnership firm
3. Computer c. Drawee
4. Co – Venture d. Asset side
5. Maker of a bill e. Unscientific
f. Liability side
g. Drawer
h. Joint venture
Group A Group B
1. Not for profit concerns a. Capital A/c. of partner.
2. Fixed capital method. b. Current A./c of Partner.
3. Unexpired expenses c. Joint venture
4. Temporary Partnership d. Asset
5. Pure Single Entry System e. Liability
f. Only personal A/cs.
g. Profit & Loss A/c.
h. Income and Expenditure A/c.
Group A Group B
1. Goodwill a. Book Debts
2. Discount to customers b. Sundry Creditors
3. Statement of Affairs c. Tangible Asset
4. Income and Expenditure d. Intangible Asset
account e. Single Entry System
5. Fixed Instalment f. Double Entry System
Method. g. Original Cost
h. Not for Profit concerns
Group A Group B
1. Partner‟s Salary a. Balance sheet asset side.
2. Subscription received in advance for the b. Current asset.
current year. c. Deducted from gross profit.
3. Dishonour of bill. d. Credited to joint venture account.
4. Cash in hand. e. Credited to covertures A/c
5. Unsold goods taken over by co – f. Noting Charges.
ventures g. Closing balance sheet liability side.
h. Fixed assets.
Group A Group B
85
1. RAM a. Intangible Asset
2. Co – Ventures b. Records all cash transactions
3. Goodwill c. Trading A/c can‟t be prepared
4. Receipts & Payment A/c d. Current asset
5. Single Entry System of Book – e. Temporary memory
Keeping. f. Uniformity maintaining accounts.
g. Temporary partners
h. Nominal A/c
Group A Group B
1. Co - Venture a. Limited liability
2. Rebate b. Surplus
3. Credit balance of Income & c. Temporary partner
Expenditure Account d. Retirement of a bill
4. Dormant Partner e. Deficit
5. Trading Account f. Does not take active part in the business
g. Account showing the net profit / net loss
h. Power and Fuel / Gross profit.
A Group B Group
1. Not for profit concerns. a. Capital account of partner
2. Fixed Capital method. b. Current account of partner
3. Unexpired expenses. c. Joint venture
4. Temporary partnership d. Asset
e. Liability
5. Pure single entry system. f. Only Personal account
g. Profit and Loss account.
h. Income and expenditure account.
A B
1. Interest on partners loan 1. Deficit
2. Excess of income over expenditure 2. Before adding three grace days
3. Legal due date 3. Not Exceeding 6%
4. Printing and Stationery 4. After adding three grace days.
5. Goods sold by consignee 5. Surplus
6. Trading Account
7. Debited to Consignee‟s Account.
8. Profit / loss account.
A B
1. Depreciation 1. Temporary Partners
2. Dishonour of bill 2. Intangible Asset
3. Joint Venture 3. Wear and tear
4. Goodwill 4. Notary public
5. Co – Venturers 5. Temporary partnership
6. Tangible Asset
3. Select the most appropriate alternative from those given below

1. Debit Balance in Profit and Loss Account shows _______________
a. Net profit
b. Gross profit
c. Net loss
d. Gross loss
2. A bill of exchange must be accepted by _______________
86
a. A drawer
b. A payee
c. An endorsee
d. A drawee
3. At the end of the financial year balance of Depreciation account is transferred to _______
a. Depreciation account
b. Asset account
c. Trading account
d. Profit and loss account.
4. In the absence of partnership deed the partners share the profit and loss of the firm ____
a. In the ratio of capital
b. Equally
c. As per rights in management
d. On the basis of experience.
5. ____________ has to ultimately bear the noting charges.
a. Drawer
b. Drawee
c. Endorser
d. Bank
6. The Indian Partnership Act came into force in ____________________.
a. 1942
b. 1932
c. 1953
d. 1956
7. Excess of assets over liabilities is termed as ___________________.
a. Endowment Fund
b. Capital Fund
c. Special Fund
d. None of these
8. Fixed Instalment method of depreciation is also called as _______________
a. Straight Line Method.
b. Reducing Balance Method.
c. Written down value method.
d. Depreciation Fund Method.
9. Drawing a fresh bill in cancellation of old bill is called as _________________.
a. Retirement of Bill.
b. Discounting of bill.
c. Endorsement of Bill.
d. Renewal of bill.
10. When the co – ventures incur the joint venture expenses from his pocket _________ A/c
is credited.
a. Joint Venture A/c
b. Joint Bank A/c
c. Co – venture‟s A/c
d. Consignees A/c
11. The Indian Partnership Act is in force since ____________
a. 1932 b. 1942 c. 1952 d. 2002
12. Normally, Receipts and payments account shows ____________ balance.
a. Debit b. Credit c. Nil d. Overdraft
13. Excess of opening capital over the closing capital is considered as
a. Income b. Profit c. Gain d. Loss
14. Making payment of the bill before the due date is known as ____________ of a bill.
a. Retirement b. Honouring c. Dishonouring d. Renewal
87
15. If two or more persons come together to carry on a business activity for a short period, it
is known as ____________
a. Joint venture b. Consignment c. Partnership firm. d. Co – operative society.
16. The interest on capital of a partner is _______ to profit & loss account.
a. Credited
b. Added
c. Debited
d. Divided
17. If fixed capital method is adopted, Net profit is transferred to _______ account of the
partner.
a. Current
b. Capital
c. Balance sheet
d. Trading
18. Not for profit organisation prepares _________ to find out its financial position.
a. Balance sheet
b. Receipts & payments accounts.
c. Trading account
d. Income & Expenditure account.
19. Wages paid for Installation of Machinery should be debited to the ____________
account.
a. Installation
b. Wages
c. Salaries
d. Machinery.
20. There are ___________Parties to a bill of exchange.
a. Four
b. Three
c. Two
d. One.
21. Persons entering into a joint venture are called _______________
a. Partners
b. Co – partners
c. Co – venturers
d. Consignees
22. The _________ has to ultimately bear the noting charges.
a. Drawer
b. Endorser
c. Bank
d. drawee
23. The component of CPU that controls the various input output devices is ___________
a. Memory unit,
b. Control unit,
c. arithmetic logical unit
d. Key board
24. Loss on sale of asset is debited to _______________
a. Assets A/c
b. P&L A/c
c. Depreciation A/c
d. Trading A/c
25. In the absence of partnership deed the partners share profit & loss of the firm
___________
a. In the ratio of capital
b. Equally
c. As per rights in management
88
d. On the basis of experience
26. Partner‟s drawings are transferred to his __________ a/c under fixed capital method.
a. Capital A/c
b. Current A/c
c. Trading A/c
d. Profit and loss A/c
27. Sale of old materials must be shown on credit side of ____________
a. Cash book
b. Income and expenditure account
c. Balance sheet
d. Receipt and Payments account
28. Cost of asset = _____________
a. Purchase price + scrap value
b. Purchase price + depreciation
c. Purchase price + incidental cost
d. None of the above
29. A person in whose favour the bill is endorsed is called ___________
a. Endorsee
b. Endorser
c. Drawer
d. None of the above
30. Expenses incurred by covertures is debited to ___________
a. None of the below
b. Consignee‟s account
c. Co venturers account
d. Joint venture account.
31. Reserve for discount on ______________ has a debit balance.
a. Debtors
b. Creditors
c. Bills Receivable
d. Loan advanced.
32. Income and Expenditure Account is a _______________
a. Personal account
b. Real account
c. Nominal account
d. Asset account
33. Under ____________ single entry system, no records are kept separately for impersonal
accounts.
a. Quasi
b. Pure
c. Simple
d. Modern
34. There are ___________ parties to a bill of exchange.
a. Two
b. Three
c. Four
d. Five
35. Persons who enter into Joint Venture are called ___________
a. Co – ventures
b. Partners
c. Shareholders
d. Loan holders
36. Reserve for discount on ______________ has a debit balance.

a. Debtors
b. Creditors
c. Bills Receivable
d. Loan advanced.
37. Income Statements and Balance Sheet are prepared in a systematic and scientific manner
under ________________
a. Double Entry System.
89
b. Single Entry System
c. Partial Entry System.
d. Indian System.
38. Before accepting a bill, it is called a _________
a. Note
b. Draft
c. Hundi
d. Request.
39. Valuation of goodwill depends upon ________ capacity of business.
a. Normal
b. Repaying
c. Earning
d. Capital
40. If two or more persons come together to carry on a business activity for a short period, it is
known as ___________
a. Joint venture
b. Consignment
c. Partnership
d. Stock exchange
41. Subscription received in advance during the accounting year is ____________
a. an income
b. an expense
c. an asset
d. a liability
42. Depreciation is charged only on the ____________
a. Current asset
b. Intangible assets
c. Immovable assets
d. Fixed assets
43. Brain of computer is _____________
a. Micro processor (march 2008)
b. RAM
c. DRAM
d. DOS
44. Unsold stock of Joint Venture taken over by Co – venture is credited to ___________
a. Co – ventures‟ A/c
b. Joint Venture A/c
c. Joint Bank A/c
d. Stock A/c
45. A one month‟s bill drawn on 31st January, 2007 will be matured on ___________
a. 3rd March, 2007
b. 28th February, 2007
c. 29th February, 2007
d. 2nd March, 2007
46. Interest on the capital of partner is debited to _______________
a. Trading account
b. Profit and loss account
c. Partner‟s capital account
d. Partner‟s current account
47. Computer is a / an ______________

a. Mechanical device
b. Automation device
c. Electronic device
d. Electric device
48. Joint venture is a ________________

a. Trading concern
b. Non – trading concern
c. Religious concern
d. Public concern
90
49. A donation received for a specific purpose is a _______________
a. Capital receipt
b. Revenue receipt
c. Liability
d. Asset
50. A bill drawn and accepted on 12th June 2007 for two months will be due for payment on
___________
a. 12th August, 2007
b. 15th August, 2007
c. 16th August, 2007
d. 14th August, 2007
OMTEX WISHING YOU ALL THE VERY SUCCESS IN YOUR FORTH COMING
BOARD EXAMINATON BISMILLAH
Important points to remember

1. Bad debts = Trial balance amount (debit side)
2. Further bad debts = Adjustment Amount.
3. N.R.D.D. = Adjustment percentage
4. O.R.D.D. = Trial balance amount (credit side)
1. Interest on drawings is to be calculated for 6 months only.
2. If bills receivable is dishonoured then (-) from Bills receivable and (+)
to debtors.
3. If bills payable is dishonoured then (-) from bills payable and (+) to
creditors.
4. N.R.D.D. on debtors should be charged at second last.
5. Discount on debtors should be charged at last.
91
Format of Trading Account
Dr Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Opening Stock Xxx By Sales Xxx
To Purchases Xxx (-) Returns Xxx
(-) Returns Xxx By Goods loss by fire Xxx
To wages/ Wages & Salaries Xxx By Goods lost by theft Xxx
To Productive wages Xxx By Goods Withdrawn by Xxx
To Octroi Duty Xxx partner Xxx
To Royalties/Royalties on Xxx By Goods distributed as free Xxx
purchase Xxx samples
To carriage inward Xxx By Closing Stock
To cleaning Charges Xxx
To Factory Expenses Xxx
To Motive Power Xxx
To lighting & heating Xxx
To Power & Fuels Xxx
To factory insurance Xxx
To custom duty Xxx
To Factory electricity Xxx
To Factory Manager expenses Xxx
To Factory Rent Xxx
To Factory Repairs Xxx
To wages & Salaries Xxx
To carriage Xxx
To carriage on purchases Xxx
To freight Charges Xxx
To excise duty Xxx
To Import duty Xxx
To dock Charges Xxx
To Cartage charges Xxx
To Manufacturing expenses Xxx
To Gas, Fuel Xxx
To coal & Coke Xxx
To ware housing charges
To Gross Profit c/d xxx xxx

By Gross loss c/d
Xxx Xxx
92
Format of profit & loss Account
Dr Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Gross loss b/d Xxx By Gross Profit b/d Xxx
To salaries Xxx By income received Xxx
To carriage outward Xxx By commission Xxx
To sundry expenses Xxx By interest Xxx
To printing & Stationery Xxx By discount Xxx
To electricity charges Xxx By premium Xxx
To miscellaneous expenses Xxx By Rent Xxx
To advertisement Xxx By Sundry receivable Xxx
To office expenses Xxx By appreciation Xxx
To office rent Xxx By Profit on sales of Assets Xxx
To office insurance Xxx By Sale of scrap Xxx
To Royalty on sales Xxx
To salary & Wages Xxx
To Commission Xxx
To Interest Xxx
To Discount Xxx
To Bad Debts Xxx
(+) F.B.D. Xxx
(+) N.R.D.D. Xxx
(-) O.R.D.D. Xxx
To entertainment expenses Xxx
To Telephone Charges Xxx
To Rent & Rates Xxx
To Sales Tax. Xxx
To Postage & Telegram Xxx
To Office Manager Salary Xxx
To Unproductive Wages Xxx
To freight on sales Xxx
To legal fees Xxx
To Delivery van expenses xxx
To conveyance Expenses xxx
To Petty Cash expenses xxx
To Administrative expenses xxx
To Refreshment Expenses xxx
To loss on sale of asset xxx
To publicity expenses xxx
To loading charges xxx
To depreciation xxx
To loss on sale of assets xxx
To brokerage xxx
To net profit c/d xxx By net loss c/d xxx
Xxx Xxx
93
Format of Balance Sheet
Dr Cr
(Rs.) (Rs.)
Capital A/c Xxx Good will Xxx
A Xxx Land & Buildings Xxx
B Xxx Free hold Premises Xxx
Current A/c Xxx Machinery Xxx
A Xxx Furniture Xxx
B Xxx Lease Hold Premises Xxx
Reserves Xxx Office Equipments Xxx
General Reserves Xxx Sundry Debtors Xxx
Fund Xxx Cash in hand Xxx
Reserve Fund Xxx Cash at Bank Xxx
Loan Xxx Bill Receivable Xxx
Loan from partners Xxx Live stock Xxx
Bank Loan Xxx Shares & securities Xxx
Bank overdraft xxx Prepaid expenses Xxx
Sundry Creditors xxx Loan Given Xxx
Bills Payable xxx Computer Xxx
Outstanding expenses xxx Copy right Xxx
Income received in advance xxx Patients Xxx
Trade Mark Xxx
Brand Name Xxx
Loose Tools Xxx
Fittings Xxx
Fixed assets Xxx
Current Assets Xxx
Vehicles Xxx
Income receivable Xxx
Closing Stock Xxx
Insurance claim receivable Xxx
Patents & Patterns Xxx
Premises Xxx
Xxx Xxx
94

Accounts Notes For 2010 - 11

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H.S.

C OMTEX CLASSES 8TH YEAR

STANDARD: -S.Y.J.C (Second year junior college)

CLASSES :- OMTEX CLASSES

“You don’t know what you can do until you try”

It gives us great pleasure to present this thoroughly revised edition

Meticulous care has been taken to make this edition of Omtex

respect. However, suggestions, if any, for its improvement are most

Valuation of Goodwill: - As prescribed in the syllabus, the value of goodwill as on a

19. The following balance sheet of Kantilal, Chandrakant.

4. The following is the Balance Sheet of Ashok and Nayan:

6. Following is the Balance Sheet of Mr. Atul as on 31st March, 1993:

Note: Capital Employed = Partners‟ Capital + General Reserve + Accumulated Profit –

CH. 2. COMPUTER AWARENESS [Q. 2 (B): 5 MARKS]

Answer the following questions

1. What is the computer hardware?

2. Explain about the components of computer hardware?

3. Write a short note on – second generation computers.

4. Write short notes on „Third Generation Computers‟ (1965 – 71)

5. Write short note on “Fourth Generation of Computers” (1971 – 85)

6. Write short notes on – First generation Computers.

7. Write short notes on Central Procession Unit.

BILLS OF EXCHANGE: - “A Bills of Exchange is a Negotiable (exchangeable) Instrument,

THERE ARE THREE PARTIES IN THE BILL OF EXCHANGE.

THERE ARE TWO TYPES OF ACCEPTANCE

DRAFT: - Before the acceptance of the bill, it is known as draft.

TYPES OF BILL: - There are two types of Bill

PROTESTING: - It is also a fee charged by the government in case of foreign bill.

1. Drawer : Soundariya, Neelam Bhawan, Kalyan

3. Drawer : Vilas Patil, 20, M.G. Road, Pune.

4. Drawer : Shri Narayandas Kela, Gandhi Chauk, Dhamangaon

5. Drawee : K . Prabhakar, Nehur Road, Solapur.

6. Drawer : Vilas Ptil, 44, M.G. Road, Nanded.

8. Drawer : Shekhar Desai, Shastri Road, Mahad.

9. Drawer : Vijay Bhat, Main Road, Nagpur.

10. Drawer : Namdev Tukaram, Paithan.

11. Drawer : Priti Chavan, Chandika Road, Malvan.

12. Drawer : Shri Ravindra Patil, Housing Society, Ambajogai

14. Drawer: Yamini Gupta, Sarvapriya Vihar, Delhi

23. Journalize the following transactions in the books of Kamesh:

24.Journalise the following transactions in the books of Kailash.

25. Journalise the following transactions in the books of Rahul.

26.Journalize the following transactions in the books of Maharaja.

28.Journalise the following transactions in the books of Ashwin.

29.Journalise the following transactions in the books of Kamalakar.

CH. 5. JOINT VENTURE ACCOUNTS [Q. 4: 12 MARKS]

Method I When Separate set of Books is maintained.

2. A and B entered in to Joint Venture to construct a building for X enterprises limited.

 Purchase of materials Rs. 3,50,000

Method II: When no Separate set of Books is

2. The following information is available from Rajendra‟s records:

3. On 01/04/06, Mr. Bannerjee commenced business with a capital of Rs.25,000.

Particulars 31.3.06 31.3.07

Particulars 31-3-2006 31-3-2007

Particulars 31-3-2006 31-3-2007

She further introduced fresh capital of Rs. 25,000. Depreciation is to be charged

Prepare: (i) Statement of Affairs as on 31-3-2006

(ii) Statement of Affairs as on 31-3-2007

(iii) Statement of profit or loss for the year ending 31-3-2007.

Liabilities Amt Asset Amt

Particulars 1-4-2003 31-3-2004

CH. 7. FINAL ACCOUNTS OF NPO