Classroom Exercises - Practice

PICT-SITM PGDBM –I (Batch 2008-2010)

Financial Accounting Exercises Classroom Teaching: Journalising: 1.) Amol commenced business with cash Rs. 10,000 and machinery Rs. 20,000. He bought goods from Mr. Ravi Rs. 7,55 on credit. Sold goods for cash to Mr. Bajaj for cash worth Rs. 5,000 Sold goods on credit to Mr. Naidu for Rs.6,500 Received commission Rs. 500 Received from Mr. Naidu Rs. 6,500 Paid salaries in cash Rs. 4,000 Returned goods to Mr. Ravi Rs. 1,250 Paid Mr. Ravi Rs. 6,250 by cheque. Simple Entries : Financial Accounting & Financial Statement Analysis (FA&FSA) Simple Entries: Classroom Teaching: 2.) 1. AB Ltd. Received Rs.5, 000 from Geet & Co. on 5/1/2000. 2. X Ltd. Received Rs. 15,000 from Gupta & Co. on 10/2/2000 3.PQR Ltd. purchased Rs.6000 worth of goods from Y & Co. on 2/4/2000. 4.XYZ Ltd paid salaries of Rs.15,500 through bank on 7/5/2000. Solution: 1.AB Ltd. Received Rs.5, 000 from Geet & Co. on 5/1/2000. Recording the journal entry in the books of AB Ltd. 5/1/2000 Cash A\c ----- Dr. 5,000 To Geet & Co. a\c 5,000 2. X Ltd. Received Rs. 15,000 from Gupta & Co. on 10/2/2000 Recording the entry in the books of X Ltd. 10/2/2000 Cash a\c ------Dr. 15,000 To Gupta & co. a\c 15,000 3.PQR Ltd. purchased Rs.6000 worth of goods from Y & Co. on 2/4/2000. Recording the entry in the books of PQR Ltd. 2/4/2000 Purchases A\c ---Dr. 6000 To Y & Co. 6000 4.XYZ Ltd paid salaries of Rs.15,500 through bank on 7/5/2000.

Recording the entry in the books of XYZ Ltd. 7/5/2000 Salaries a\c ------Dr. 15,500 To Bank a\c. 15,500 3.) Journalize the following transactions in the books of Dixit Enterprises. 1. Started business with a capital of Rs.7, 50,000 on 3/4/2000 2. Opened a bank a\c with State Bank of India for Rs 2, 00,000 on 4/4/2000 3. Purchased goods from Tandon & Co. for cash Rs. 1, 00,000 on 6/4/2000 4. Purchased goods from Burman for Rs 2,00,000 on 21/4/2000 5. Goods returned to Burman Rs. 50, 000 on 23/4/2000 6. Paid Mr. Dharam , the landlord Rs.50,000 towards rent on 25/4/2000 7. Sold goods to Mr. Karan for cash Rs. 2, 50,000 on 5/6/2000 8. Sold goods to Mr Dean on credit Rs. 1, 00,000 on 10/6/2000 9. Goods returned by Mr. Dean for Rs.25, 000 on 12/6/2000 10. Paid cartage on goods purchased Rs. 35,000 on 21/4/2000 11. Paid cartage on goods sold Rs. 80,000 on 5/6/2000 12. Purchased furniture for office purpose Rs. 1, 00,000 on 2/7/2000 1. Started business with a capital of Rs.7, 50,000 on 3/4/2000 3/4/2000 Cash a\c ---------Dr. 7, 50,000 To Capital a\c 7, 50,000 2. Opened a bank a\c with State Bank of India for Rs 2, 00,000 on 4/4/2000 4/4/2000 Bank a\c ---------Dr. 2, 00,000 To Cash a\c 2, 00,000 3. Purchased goods from Tandon & Co. for cash Rs. 1, 00,000 on 6/4/2000 6/4/2000 Purchase a\c --------Dr. 1, 00,000 To Cash a\c 1, 00,000 4. Purchased goods from Burman for Rs 2,00,000 on 21/4/2000 21/4/2000 Purchase a\c -------Dr.2, 00,000 To Burman a\c 2,00,000 5. Goods returned to Burman Rs. 50, 000 on 23/4/2000 23/4/2000 Burman a\c --------Dr. 50,000 To Return Outwards a\c 50,000 6. Paid Mr. Dharam , the landlord Rs.50,000 towards rent on 25/4/2000 25/4/2000 Rent a\c ----------Dr. 50,000 To Cash a\c 50,000 7. Sold goods to Mr. Karan for cash Rs. 2, 50,000 on 5/6/2000 5/6/2000 Cash a\c --------Dr. 2,50,000 To Sales a\c 2, 50,000 8.Sold goods to Mr Dean on credit Rs. 1,00,000 on 10/6/2000 10/6/2000 Mr. Dean a\c ------Dr. 1,00,000 To Sales a\c 1, 00,000 9. Goods returned by Mr. Dean for Rs.25, 000 on 12/6/2000 12/6/2000 Returns Inwards a\c ----Dr. 25,000

To Mr. Dean A\c 25,000 10. Paid cartage on goods purchased Rs. 35,000 on 21/4/2000 21/4/2000 Cartage Inwards a\c -------Dr. 35,000 To Cash a\c 35,000 11. Paid cartage on goods sold Rs. 80,000 on 5/6/2000 5/6/2000 Cartage Outwards a\c ----Dr. 80,000 To Cash a\c 80,000 12. Purchased furniture for office purpose Rs. 1, 00,000 on 2/7/2000 2/7/2000 Furniture a\c ---------Dr. 1, 00,000 To Cash a\c 1, 00,000 Journal Entries: Special & Compound Entries: 4.) 1. Paid Rs. 1, 10,000 to Mr. Rehman in full settlement of his dues on 30/4/2000 of Rs. 1, 25,000. 2. Withdrawn cash for household expenses Rs.60, 000 on 2/6/2000 3. Received cash from Mr. Dean Rs. 90,000 in full settlement on 25/6/2000 of Rs. 1,05,0000. 5.) Journalize the entries in the books of Accenture Ltd. 1. Withdrawn goods for personal use (Sale price Rs.1, 500, Cost price Rs.1, 250) on 2/1/2001 2. Goods distributed to children in an orphanage on 8/1/2001 (Sale price Rs.2000, Cost price Rs.1, 700) 3. Goods distributed as free samples on 10/1/2001 (Sale price Rs. 1, 200; Cost price Rs. 1000) 4. Goods stolen on 11/1/2001 (Sale price Rs. 1000; Cost price Rs. 800) 5. Goods destroyed by fire on 12/1/2001(Sale price Rs.1500; Cost price Rs.1250) 6. Goods used in furnishing the office (Sale price Rs.2000; Cost price Rs. 1750) on 15/1/2001 6. Rs 250 payable by Rakesh was written off as bad on 22/1/2001 7. Recovered from Pramod on 25/1/2001 half the amt which was written off as bad Rs.300 earlier. Solution: 1. Withdrawn goods for personal use (Sale price Rs.1, 500, Cost price Rs.1, 250) on 2/1/2001 2/1/2001 Drawings a\c ---------Dr. 1,250 To Purchase a\c 1,250 2. Goods distributed to children in an orphanage on 8/1/2001 (Sale price Rs.2000, Cost price Rs.1, 700) 8/1/2001 Donation a\c ------------Dr. 1700 To Purchase a\c 1700 3. Goods distributed as free samples on 10/1/2001 (Sale price Rs. 1200; Cost price Rs. 1000)

10/1/2001 Sales Promotion a\c --------Dr. 1000 To Purchase a\c 1000 4. Goods stolen on 11/1/2001 (Sale price Rs. 1000; Cost price Rs. 800) 11/1/2001 Loss by theft a\c --------Dr. 800 To Purchase a\c 800 5. Goods destroyed by fire on 12/1/2001( Sale price Rs.1500 ; Cost price Rs.1250 ) 12/1/2001 Loss by fire a\c --------Dr. 1250 To Purchase a\c 1250 6. Goods used in furnishing the office ( Sale price Rs.2000 ; Cost price Rs. 1750 ) on 15/1/2001 15/1/2001 Office furniture a\c ------Dr. 1750 To Purchase a\c 1750 7. Rs 250 payable by Rakesh was written off as bad on 22/1/2001 22/1/2001 Bad Debts a\c ------------Dr. 250 To Rakesh a\c 250 8. Recovered from Pramod on 25/1/2001 half the amt which was written off as bad Rs.300 earlier 25/1/2001 Cash a\c --------------Dr. 150 6.) Journalize the following transactions in the books of Mr. Singh. 1. 2/1/2002 Purchased goods from Arora at the list price of Rs.8, 000. A trade discount of 10% was allowed. 2. 8/1/2002 Sold goods to Flora at a list price of Rs.4000.A trade discount of 5% was allowed. 3. 15/1/2002 Received a cheque from Flora for Rs.3600 in full settlement. 4. Paid Arora Rs.7, 000 in full settlement by cheque on 20/1/2002 5. 25/1/2002 Sham is declared insolvent, and 60 paise in a rupee on a debt of Rs.2500 recovered. Journalize the following transactions in the books of Mr.Singh. 1. 2/1/2002 Purchased goods from Arora at the list price of Rs.8000. A trade discount of 10% was allowed. 2/1/2002 Purchase a\c -------------Dr. 7200 To Arora a\c 7200 2. 8/1/2002 Sold goods to Flora at a list price of Rs.4000.A trade discount of 5% was allowed. 8/1/2002 Flora a\c ------------------Dr. 3800 To Sales a\c 3800 3. 15/1/2002 Received a cheque from Flora for Rs.3600 in full settlement. 15/1/2002 Bank a\c --------------------Dr. 3600 Discount Allowed a\c -----Dr. 200 To Flora a\c 3800 4. Paid Arora Rs.7, 000 in full settlement by cheque on 20/1/2002 20/1/2002 Arora a\c ------------------Dr. 7200 To Bank a\c 7000 To Discount Received 200

5. 25/1/2002 Sham is declared insolvent, and 60 paise in a rupee on a debt of Rs.2500 recovered. 25/1/2002 Cash a\c ----------------Dr. 1500 Bad debts a\c ----------Dr.1000 To Sham a\c 2500 To Sham a\c 2500 Special & Compound Entries : 7.) 1. Paid Rs. 1, 10,000 to Mr. Rehman in full settlement of his dues on 30/4/2000 of Rs. 1, 25,000 30/4/2000 Rehman a\c -------Dr. 1, 25,000 To Cash a\c 1, 10,000 To Discount Received a\c 15,000 2. Withdrawn cash for household expenses Rs.60, 000 on 2/6/2000 2/6/2000 Drawings a\c ------Dr. 60,000 To Cash a\c 60,000 3. Received cash from Mr. Dean Rs. 90,000 in full settlement on 25/6/2000 of Rs. 1,05,000 25/6/2000 Cash a\c ---------------------Dr. 90,000 Discount allowed a\c -----Dr. 15,000 To Mr. Dean A\c 1, 05,000 Ledger: 8.) Exercise No.3.) on Dixit Enterprises: Prepare Ledger Accounts.

Trial Balance: FA& FSA Page 159- Illus. 2.6 9.) Prepare the correct Trial Balance as on 30/12/2006. Particulars Capital Drawings Opening Inventory Purchases Sales Salaries Lighting Equipments Freights Sales Returns Purchase Return Return Postage Discount Allowed Discount Recd. Insurance Motor Vehicles Cash Receivables Accounts Payable Bank Overdraft

Debit RS. 8,950

Credit RS. 1,050

3,725 23,100 34,425 6,205 310 3,600 230 105 290 350 285 315 1,115 1,475 110 18,920 4,925 975 55,230

55,230

FA & FSA Page 50- Problem 23 10.) Prepare a Trial Balance as on 31.3.2007 from the following data for Sun Systems. Particulars RS Purchases Sales Sales returns Purchase returns Stock 1.4.2006 Sundry debtors Wages Salaries Furniture Bad debts reserve Sundry creditors Patents Postage Bills payable Lighting

Rs 1,65,625 2,56,650 4,250 3,120 26,725 40,200 20,137 8,575 6,575 5,200 25,526 4,500 3,226 8,950 350

Particulars Trade expenses 2,314 Rent, 3,517 Bad debts 525 Interest on investments 800 Loan to A 3,000 Investments 11,500 Capital 28,000 Outstanding wages 2,017 Outstanding rent 750 Prepaid insurance 524 Bank balance 5,725 Bills receivables 17,070 Drawings 6,000 Depreciation on furniture675

FA& FSA Page 159- Illus. 2.6 11.) Prepare the correct Trial Balance. Particulars Capital Drawings Opening Inventory Purchases Sales Salaries Lighting Equipments Freights Sales Returns Purchase Return Return Postage Discount Allowed Discount Recd. Insurance Motor Vehicles Cash Receivables Accounts Payable Bank Overdraft

Debit RS. 8,950

Credit RS. 1,050

3,725 23,100 34,425 6,205 310 3,600 230 105 290 350 285 315 1,115 1,475 110 18,920 4,925 975 55,230

Trading Account and Profit & Loss Account:

55,230

12.) Prepare Trading Account of Markon Electric as on 31/12/2005. Opening stock Purchases Carriage Inward Freight Return outward Sales Custom Duty Return Inward Closing Stock

25,000 42 000 1,200 1,700 5,000 82,700 1,500 2,700 18,300

13.) The following is the trial balance of Gupta as on 30th June, 2005 Trial Balance Of Gupta For The Year Ending 30TH June ,2005 Dr

Rs

Cash Bank Purchases Return Inwards

540 2,630 40,675 680

Wages Fuel and Power Carriage on purchases Buildings Freehold land Machinery Patents Salaries General Expenses Insurance Drawings Accounts Receivables Carriage on sales Inventory 1/7/2004

8,480 4,730 2,040 32,000 10,000 20,000 75,000 15,000 3,000 600 5,245 14,500 3,200 5,760

1, 76,580

Cr Sales Return Outwards Capital Accounts Payable Rent

Rs 98,780 500 62,000 6,300 9,000

1,76,580

Taking into account the following adjustments prepare the Trading, Profit and Loss Account as on 30TH June, 2005. 1. Inventory on hand on 30TH June ,2005 is Rs 6,800 2. Machinery to be depreciated at the rate of 10% and patents at the rate of 20% 3. Salaries for the month of June 2005 amounting to Rs1, 500 were unpaid. 4. Insurance includes an annual premium of Rs 170 on a policy expiring on 31ST December ,2005 5. Bad debts to be written off are Rs 725 6. Rent receivableRs1, 000. 14.) Page 52-problem 31 Given below is the Trial Balance of Sunshine & Co as on 31st December, 2004. Particulars Rs Land 30,600 Purchases 42,400 Salaries 4,400 Rent 1,200 Postage 600 Stationary 480 Wages 10,400 Carriage on purchases 1,120 Miscellaneous expenses 1,000 Carriage on sales 1,600 Repairs 1,800 Bad debts 240 Opening Inventory 6,200 Buildings 3,400 Furniture 2,000 Accounts receivables 12,000 Cash in hand 2,600 Return inwards 2,040 1, 24,080

Particulars Sales Return outwards Interest Accounts payable Loan Capital

Rs 82,920 840 480 9,840 6,000 24,000

1,24,080

In addition, the following information is also given:1. A provision at 5% for doubtful debts has to be made. 2. The value of inventory on 31st December, 2001 was estimated as Rs 5,960. 3. Depreciation on buildings was to be charged at 10%. 4. Salaries for the month of December amounting to Rs 400 are still to be paid. From the above information, prepare a Trading and Profit and Loss account of Sunshine and Co.

15.) Page: 187; Illustration: 11.6; The following is the Trial Balance of Evergreen & Co. as on December 31, 2005.

Dr.

Rs.

Opening Inventory 72,000 Purchases 2, 25,000 Furniture 15,000 Motor car 30,000 Buildings 4, 25,000 Commission 7,500 Advertisements 22,000 Repairs and maintenance13, 000 General expenses 16,000 Insurance 7,000 Cash in hand 3,500 Cash at bank 6,000 Salaries 30,000 Debtors 43,300 9, 15,300

Cr. Capital Sales Purchase returns Creditors

Rs. 5, 00,000 3, 50,000 1,800 63,500

9,15,300

You are required you draft Profit and Loss accounts and Balance sheet as on 31st December 2005. 1. 2. 3. 4. 5.

Closing Inventory as at 31.12.2005, Rs 80,000. Prepaid advertisements RS2, 000. Goods used for domestic purpose RS 1,800. Outstanding salaries RS3, 000. Depreciation on buildings at 5%, furniture 5%, and Motor car at 10%.

16.) Page: 183; Illustration: 11.1 From the following trial balance of Ultratech Co.prepare trading and profit and loss account and balance sheet. Trial balance as on December 31, 2003 Particulars Cash in hand Purchases Stock as on 1-1-20x1 Debtors Plant and machinery Furniture Bills receivable Rent Wages Salaries Capital Bills payable Creditors Sales Total

Dr. Rs 3,600 3, 60,000 1, 05,000 1, 50,000 1, 80,000 45,000 60,000 30,000 48,000 56,400

Cr. Rs

3, 00,000 66,000 72,000 6, 00,000 10, 38,000

10, 38,000

Additional Information: 1. Closing Inventory as on 31st December ,2003,RS 75,000 2. Outstanding wages RS 7,500 3. Depreciation on Plant and Machinery at 10% and Furniture at 5%