In this post, we are going to solve the paper of Principles of Accounting, Solved Paper 2018 Annual, ICOM II, FBISE, MCQS, Short Questions, Extensive Questions. Principles of Accounting, Solved Paper 2018 Supplementary, ICOM II of FBISE has already posted. Practical problems of Chapter 6 Partnership Accounts Profits Distribution, Chapter 7 Partnership Accounts Admission of a Partner for ICOM II, DCOM, DBA have already posted. This post will also be helpful for the students of BCOM, ADP Commerce and other disciplines related to business, finance and commerce. In other posts, all other chapters related to partnership will be discussed and also solved papers of Principles of Accounting for ICOM II for FBISE, BISE Lahore, BISE Rawalpindi will be presented to you. Solved Papers of Business Statistics are already posted on the website.
Solved by Iftikhar Ali, M.Sc Economics, MCOM Finance Lecturer Statistics, Finance and Accounting
Principles of Accounting, Solved Paper 2018 Annual, ICOM II, FBISE, MCQS, Short Questions, Extensive Questions
Table of Contents
MCQS
Q. 1 Circle the correct option i.e. A / B / C / D. Each part carries one mark.
| 1) | The portion of issued capital which has been actually paid by shareholder is called: | |||
| A | Issued capital | B | Called up capital | |
| C | Subscribed capital | D | Paid up capital | |
| 2) | In Pakistan, the companies are registered under the company ordinance: | |||
| A | 1975 | B | 1980 | |
| C | 1982 | D | 1984 | |
| 3) | A public limited company is formed by: | |||
| A | Government | B | Directors | |
| C | Promoters | D | Underwriters | |
| 4) | The capital in the beginning of the accounting year is ascertained by: | |||
| A | Cash book | B | Statement of affairs | |
| C | Total Debtors account | D | Total Creditors account | |
| 5) | Arithmetical accuracy of the books of accounts can be checked under: | |||
| A | Single Entry System | B | Double Entry System | |
| C | Cash System | D | Accrual System | |
| 6) | Total Debtors account is prepared for ascertaining the: | |||
| A | Credit purchases | B | Credit sales | |
| C | Cash sales | D | Cash purchases | |
| 7) | In non-trading concerns, the subscription received in advance is considered as: | |||
| A | Income | B | Asset | |
| C | Expense | D | Liability | |
| 8) | Capital fund of a non-trading concerns is equal to: | |||
| A | Assets + liabilities | B | Assets + income | |
| C | Expenditure+ liabilities | D | Assets – liabilities | |
| 9) | Any profit on the sale of sports material of a club willbe taken to: | |||
| A | Receipts and payments account | B | Profit and loss account | |
| C | Income and expenditure account | D | Balance sheet | |
| 10) | The value of Assets may rise or fall on account of: | |||
| A | Depreciation | B | Depletion | |
| C | Fluctuation | D | Amortization | |
| 11) | In case of del credere commission, the liability for bad debts wilt be on: | |||
| A | Consignee | B | Consignor | |
| C | Broker | D | Clearing agent | |
| 12) | In sale, the risk and damaged attached to goods sold are transferred to: | |||
| A | Seller | B | Consignee | |
| C | Consignor | D | Buyer | |
| 13) | In straight line method, depreciation is calculated on: | |||
| A | Book value | B | Market value | |
| C | Scrap value | D | Original cost | |
| 14) | Original cost of machinery Rs. 5,500, scrap value Rs. 500, the useful life of machinery 10 years, then the annual value of deprecation will be: | |||
| A | Rs. 500 | B | Rs. 550 | |
| C | Rs.1000 | D | Rs. 1500 | |
| 15) | Current accounts of the partner should be opened when the capitals are: | |||
| A | Fluctuating | B | Fixed | |
| C | Either fixed or fluctuating | D | Variable | |
| 16) | In the absence of an agreement, the profit and loss are divided by partners in the ratio of: | |||
| A | Capital | B | Time devoted by each partner | |
| C | Equally | D | Sacrifice | |
| 17) | On the admission of a new partner, the decrease in the value of assets is debited to: | |||
| A | Profit and loss adjustment account | B | Old partner’s capital account | |
| C | Cash account | D | New partner’s capital account | |
| 18) | Goodwill is a/an: | |||
| A | Tangible asset | B | Intangible asset | |
| C | Wasting asset | D | Fictitious asset | |
| 19) | The amount payable to retiring partner is shown in the balance sheet as a: | |||
| A | Capital | B | Loan | |
| C | Asset | D | Profit | |
| 20) | In case of dissolution, the lossdue to insolvency of partner, when capital are fixed is to be shared by the solvent partner in: | |||
| A | Fixed Capital Sharing Ratio | B | Profit Sharing Ratio | |
| C | Gaining Ratio | D | Remaining Ratio | |
Short Questions
Q. 2 Attempt any TEN parts. The answer to each part should not exceed 3 to 4 lines. (10×3=30)
(i) What is memorandum of association?
Answer: Memorandum of Association is a document that defines the power of the company. In this document powers and rights of the company are defined. It is the constitution of the company that defines the relationship of the company with outsiders.
(ii) Write three dis-advantages of single entry system.
Answer:
- It lacks mathematical accuracy.
- Dual aspect of transaction is missing.
- True profit or loss cannot be ascertained due to lack of nominal accounts.
(iii) What is profit and loss appropriation account?
Answer: Profit & Loss Appropriation account is an account that is prepared to ascertain the profit or loss after recording adjustments related to dividend provision, provision for taxation, salary, commission, interest on drawings etc.
(iv) Define non Trading concerns.
Answer: Non trading concern represents activities other than normal trading activities in which basic motive is not to do trade such as clubs, welfare oriented activities, societies, libraries etc.
(v) How can a partnership come into existence?
Answer: Partnership come into existence when two or more than two persons make an agreement oral or written to combine their funds or efforts to do a business.
(vi) Prepare an Account sale with imaginary data.
Answer:
| Sales: 100 Bicycles Sold @ 10,000 each | 100 x 10,000 | 10,00,000 |
| Less Expenses & Commission: | ||
| Local Taxes | 5000 | |
| Godown Rent | 25,000 | |
| Insurance | 50,000 | |
| Commission 10% on sales: | ||
| 10,00,000 x 0.10 | 100,000 | (180,000) |
| Balance | 820,000 | |
| Less Advance | (500,000) | |
| Balance Due with bank draft enclosed | 320,000 |
(vii) What is scrap value? Write down the formula of depreciation if scrap value is given.
Answer: Scrap Value, Residual Value, Salvage Value or Break-up Value is estimated selling price value of scrap of asset after charging full depreciation.
Formula
![\[ \mathbf{Depreciation =}\frac{\mathbf{Cost - Scrap\ Value}}{\mathbf{Estimated\ Life\ of\ asset}}\ \]](https://bcfeducation.com/wp-content/ql-cache/quicklatex.com-eb084283186f6280edb74dc9b03afe54_l3.png "Rendered by QuickLaTeX.com")
(viii) On 1st January 2010, a firm purchased machinery worth Rs. 20,000 and spent Rs. 2,000 on its installation, the rate of depreciation is 10% p.a. then what will be the book value of asset under Written down value method after three years?
Solution:
Cost (C) = 22,000, Depreciation Rate (r) = 10%, Time Period (n) = 3 Years
Method = Written Down Value Method
Formula
![\[ Book\ Value = C\ (1 - r)^{n}\ \]](https://bcfeducation.com/wp-content/ql-cache/quicklatex.com-2a5555256c808cbf59121c5595dab873_l3.png "Rendered by QuickLaTeX.com")
![\[ Book\ Value = 22,000\ (1 - 0.10)^{3}\ \]](https://bcfeducation.com/wp-content/ql-cache/quicklatex.com-4c2ba038ff5e7ecb4b7f393189841b9d_l3.png "Rendered by QuickLaTeX.com")
![\[ Book\ Value = 16038\ \]](https://bcfeducation.com/wp-content/ql-cache/quicklatex.com-a819216240431df1a697a263326afbb5_l3.png "Rendered by QuickLaTeX.com")
(ix) What do you mean by wear and tear in depreciation?
Answer: Physical deterioration of physical asset due to usage over a period of time is called wear and tear.
(x) Define general reserve.
Answer: General reserve is an amount that is set aside from the profit to meet future contingencies and to do further activities such as offsetting future losses etc.
(xi) What is average profit method for the valuation of goodwill?
Answer: Under this method, the amount of goodwill of the whole firm is calculated through multiplying average profit by number of years purchase.
(xii) Write the six names of the various kinds of debentures issued by a company.
Answer:
- Bearer Debentures
- Redeemable Debentures
- Registered Debentures
- Perpetual or irredeemable Debentures
- Secured or Mortgage Debentures
- Unsecured or Naked Debentures
SECTION – C (Marks 50)
(Part I)
Extensive Questions
Q.3 A and B are partner in a firm sharing profits and losses as A, ¾ and B , ¼ On 1st January 2015, their position was as given below…..
Q.3 A and B are partner in a firm sharing profits and losses as A, ¾ and B , ¼ On 1st January 2015, their position was as given below:
| Assets | Rs. | Liabilities | Rs. |
| Bank Balance | 18,000 | Sundry Creditors | 20,000 |
| Stock | 10,000 | Capitals: | |
| Sundry Debtors | 30,000 | A 48,000 | |
| Plant & Machinery | 40,000 | B 30,000 | 78,000 |
| 98,000 | 98,000 |
C is now to join the partnership. He agrees to pay the partners Rs. 20,000 by way of goodwill and introduced 3/5 of the combined capital of the two existing partners after depreciating stock at 10% plant 20% and raising a reserve of 10% against sundry debtors. The partner is to be allowed ¼th share of the profit of the firm.
Required: Pass the journal entries and prepare the Revaluation account and balance sheet of the new firm.
Solution:
Journal
| Date | Particulars | L.F | Dr. | Cr. |
| Revaluation A/C | 12000 | |||
| Plant & Machinery A/C | 8000 | |||
| Reserve for Bad Debts A/C | 3000 | |||
| Stock A/C | 1000 | |||
| (Value of the asset is reduced and reserve for bad debt raised W:1 & W:2 & W:3) | ||||
| A’s Capital A/C | 9000 | |||
| B’s Capital A/C | 3000 | |||
| Revaluation A/C | 12000 | |||
| (Loss of Revaluation distributed between partners in ratio 3:1 W:4) | ||||
| Bank A/C | 59,600 | |||
| C’s Capital A/C | 39,600 | |||
| Goodwill A/C | 20,000 | |||
| (C introduces capital and goodwill W:5) | ||||
| Goodwill A/C | 20,000 | |||
| A’s Capital A/C | 15000 | |||
| B’s Capital A/C | 5000 | |||
| (Goodwill distributed between old partners in ratio 3:1 W:6) |
Revaluation Account
| Detail | Amount | Detail | Amount |
| Plant & Machinery A/C | 8000 | A’s Capital A/C W:4 | 9000 |
| Reserve for Bad Debts A/C | 3000 | B’s Capital A/C W:4 | 3000 |
| Stock A/C | 1000 | ||
| 12,000 | 12,000 |
New Balance Sheet of the New Firm
| Assets | Rs. | Liabilities | Rs. |
| Plant & Machinery less Depreciation | Capital Accounts: | ||
| (40,000 – 8000) | 32,000 | A’s | |
| Stock (10,000 – 1000) | 9000 | (48,000 – 9000 + 15000) | 54000 |
| Sundry Debtors 30,000 | B’s | ||
| Less New Provision (3000) | 27,000 | (30,000 – 3000 + 5000) | 32000 |
| Bank (18,000 + 59,600) | 77,600 | C’s | 39600 |
| Sundry Creditors | 20,000 | ||
| 145,600 | 145,600 | ||
W:1 Calculation of Depreciation of Plant
40,000 x 0.20 = 8000
W: 2 Calculation of Reserve of Bad Debts Raised
30,000 x 0.10 = 3000
W:3 Calculation of Depreciation of Stock
10,000 x 0.10 = 1000
W:4 Calculation of Revaluation Loss of Old Partners
![\[ A's\ Share = 12000 \times \frac{3}{4} = 9000\ \]](https://bcfeducation.com/wp-content/ql-cache/quicklatex.com-f1b45bcf20efbc4647a199798f1f9c49_l3.png "Rendered by QuickLaTeX.com")
![\[ B^{'}s\ Share = 12000 \times \frac{1}{4} = 3000\ \]](https://bcfeducation.com/wp-content/ql-cache/quicklatex.com-639106719c3ff5c58f76faca1082e842_l3.png "Rendered by QuickLaTeX.com")
W:5 Calculation of C’s Capital
48000 + 3000 – 12000 = 66,000
![\[ C^{'}s\ Capital = 66,000 \times \frac{3}{5} = 39600\ \]](https://bcfeducation.com/wp-content/ql-cache/quicklatex.com-52a9249cd50b0fc9d0bee4d20bde6c55_l3.png "Rendered by QuickLaTeX.com")
W:6 Calculation of Goodwill distributed to old partners
![\[ A^{'}s\ Share = 20000 \times \frac{3}{4} = 15000\ \]](https://bcfeducation.com/wp-content/ql-cache/quicklatex.com-bd4fd373d6415fb8b2fbcedb3febeea8_l3.png "Rendered by QuickLaTeX.com")
![\[ B^{'}s\ Share = 20000 \times \frac{1}{4} = 5000\ \]](https://bcfeducation.com/wp-content/ql-cache/quicklatex.com-90a9f2d995a2ef1a4086f5e2bf96b46b_l3.png "Rendered by QuickLaTeX.com")
W:7 New Profit Sharing Ratio of A, B & C
![\[ \mathbf{A}\mathbf{'s\ Old\ Ratio =}\frac{\mathbf{3}}{\mathbf{4}}\mathbf{,\ }\mathbf{B}^{\mathbf{'}}\mathbf{s\ Old\ Ratio =}\frac{\mathbf{1}}{\mathbf{4}}\mathbf{,\ }\mathbf{C}^{\mathbf{'}}\mathbf{s\ \ Ratio =}\frac{\mathbf{1}}{\mathbf{4}}\ \]](https://bcfeducation.com/wp-content/ql-cache/quicklatex.com-39d983d4aa1e3e472b0a38706976386f_l3.png "Rendered by QuickLaTeX.com")
![\[ \mathbf{Remaining\ Ratio = 1 -}\frac{\mathbf{1}}{\mathbf{4}}\mathbf{=}\frac{\mathbf{3}}{\mathbf{4}}\ \]](https://bcfeducation.com/wp-content/ql-cache/quicklatex.com-d05ad5f8e521bd00e1c85e49ebf11412_l3.png "Rendered by QuickLaTeX.com")
![\[ \mathbf{A}^{\mathbf{'}}\mathbf{s\ New\ Ratio =}\frac{\mathbf{3}}{\mathbf{4}}\mathbf{\times}\frac{\mathbf{3}}{\mathbf{4}}\mathbf{=}\frac{\mathbf{9}}{\mathbf{16}}\ \]](https://bcfeducation.com/wp-content/ql-cache/quicklatex.com-f5a314efc8c89a67e0fee2730470ba96_l3.png "Rendered by QuickLaTeX.com")
![\[ \mathbf{B}^{\mathbf{'}}\mathbf{s\ New\ Ratio =}\frac{\mathbf{1}}{\mathbf{4}}\mathbf{\times}\frac{\mathbf{3}}{\mathbf{4}}\mathbf{=}\frac{\mathbf{3}}{\mathbf{16}}\ \]](https://bcfeducation.com/wp-content/ql-cache/quicklatex.com-fbbf863f1390993daf381ae0d3b3e83a_l3.png "Rendered by QuickLaTeX.com")
![\[ \mathbf{New\ Ratio\ of\ }\mathbf{A,\ B\ \&\ C}\mathbf{=}\frac{\mathbf{9}}{\mathbf{16}}\mathbf{:}\frac{\mathbf{3}}{\mathbf{16}}\mathbf{:}\frac{\mathbf{1}}{\mathbf{4}}\ \]](https://bcfeducation.com/wp-content/ql-cache/quicklatex.com-59e83df94b10b50b9beedb3d72a400c9_l3.png "Rendered by QuickLaTeX.com")
![\[ \mathbf{New\ Ratio\ of\ }\mathbf{A,\ B\ \&\ C}\mathbf{=}\frac{\mathbf{9}}{\mathbf{16}}\mathbf{:}\frac{\mathbf{3}}{\mathbf{16}}\mathbf{:}\frac{\mathbf{4}}{\mathbf{16}}\ \]](https://bcfeducation.com/wp-content/ql-cache/quicklatex.com-bd30c2c9c88ca9975fb498ecdff91037_l3.png "Rendered by QuickLaTeX.com")
![\[ \mathbf{New\ Ratio\ of\ }\mathbf{A,\ B\ \&\ C}\mathbf{= 9:3:4}\ \]](https://bcfeducation.com/wp-content/ql-cache/quicklatex.com-e4609568e822067e4d99ceeba108b472_l3.png "Rendered by QuickLaTeX.com")
Q.4 P, Q and R were sharing profits and losses in the ratio of 5:3:2. On 1st January 2016 their balance sheet was as under…..
Q.4 P, Q and R were sharing profits and losses in the ratio of 5:3:2. On 1st January 2016 their balance sheet was as under:
| Assets | Rs. | Liabilities | Rs. |
| Furniture | 3000 | Creditors | 11,500 |
| Stock | 13,000 | General Reserve | 5000 |
| Debtors 20,000 | Capitals: | ||
| Less Provision (1000) | 19,000 | P 10,000 | |
| Cash | 1000 | Q 8,000 | |
| R 1500 | 19,500 | ||
| 36,000 | 36,000 |
The firm was dissolved on that date. The assets were realised as under:
Furniture Rs. 1000, stock Rs. 10,000, Debtors Rs. 12,000; remaining creditors were paid at a discount of 5%. It was found however that there was a liability for Rs. 3050 for damages which had to be paid. The expenses came to Rs. 1000. R could contribute only Rs. 100.
Required: Show the Realization account, cash account and partner’s capital accounts to close the books of the firm with the decision in Garner Vs. Murray.
Solution:
Realization Account
| Detail | Rs. | Detail | Rs. |
| Furniture A/c | 3000 | Provision on debt A/c | 1000 |
| Stock | 13,000 | Sundry Creditors A/c | 11,500 |
| Debtors | 20,000 | Cash A/c | 23,000 |
| Cash A/c: | |||
| Creditors | 10925 | Loss transferred to Partner’s Capital A/c | |
| Expenses | 3050 | P’s Capital A/c W:1 | 7738 |
| Damages | 1000 | Q’s Capital A/c W:1 | 4642 |
| R’s Capital A/c W:1 | 3095 | ||
| 50975 | 50975 |
P’s Capital Account
| Detail | Amount | Detail | Amount |
| Realization A/c | 7738 | Balance b/d | 10,000 |
| Cash A/c | 4762 | General Reserve A/c | 2500 |
| 12500 | 12500 |
Q’s Capital Account
| Detail | Amount | Detail | Amount |
| Realization A/c | 4642 | Balance b/d | 8,000 |
| Cash A/c | 4858 | General Reserve A/c | 1500 |
| 9500 | 9500 |
R’s Capital Account
| Detail | Amount | Detail | Amount |
| Realization A/c | 3095 | Balance b/d | 1500 |
| General Reserve A/c | 1000 | ||
| Cash A/c | 100 | ||
| Cash A/c | 495 | ||
| 3095 | 3095 |
Cash Account
| Detail | Amount | Detail | Amount |
| Balance b/d | 1000 | Realization A/c: | |
| Realization A/c: | Expenses | 3050 | |
| Debtors | 12,000 | Creditors | 10925 |
| Furniture | 1000 | Damages | 1000 |
| Stock | 10,000 | P’s Capital A/c | 4762 |
| R’s Capital A/c | 100 | Q’s Capital A/c | 4858 |
| R’s Capital A/c | 495 | ||
| 24595 | 24595 |
W:1 Calculation of Realization Loss
![\[ \mathbf{P}^{\mathbf{'}}\mathbf{s\ Share = 15475\ \times}\frac{\mathbf{5}}{\mathbf{10}}\mathbf{= 7738}\ \]](https://bcfeducation.com/wp-content/ql-cache/quicklatex.com-21374fb7e55390e886df5c26ec0a676e_l3.png "Rendered by QuickLaTeX.com")
![\[ \mathbf{Q}^{\mathbf{'}}\mathbf{s\ Share = 15475\ \times}\frac{\mathbf{3}}{\mathbf{10}}\mathbf{= 4642}\ \]](https://bcfeducation.com/wp-content/ql-cache/quicklatex.com-c1820de7ddd65f1c2563f17bfb643020_l3.png "Rendered by QuickLaTeX.com")
![\[ \mathbf{R}^{\mathbf{'}}\mathbf{s\ Share = 15475\ \times}\frac{\mathbf{2}}{\mathbf{10}}\mathbf{= 3095}\ \]](https://bcfeducation.com/wp-content/ql-cache/quicklatex.com-74d05a82a69cb67d8b68c5abb9dbc067_l3.png "Rendered by QuickLaTeX.com")
W:2 Calculation of General Reserve
![\[ \mathbf{P}^{\mathbf{'}}\mathbf{s\ Share = 5000\ \times}\frac{\mathbf{5}}{\mathbf{10}}\mathbf{= 2500}\ \]](https://bcfeducation.com/wp-content/ql-cache/quicklatex.com-52da51146b370e9ce86930097018015c_l3.png "Rendered by QuickLaTeX.com")
![\[ \mathbf{Q}^{\mathbf{'}}\mathbf{s\ Share = 5000\ \times}\frac{\mathbf{3}}{\mathbf{10}}\mathbf{= 1500}\ \]](https://bcfeducation.com/wp-content/ql-cache/quicklatex.com-55311128cc18fc76a882c0baaeaf4c92_l3.png "Rendered by QuickLaTeX.com")
![\[ \mathbf{R}^{\mathbf{'}}\mathbf{s\ Share = 5000\ \times}\frac{\mathbf{2}}{\mathbf{10}}\mathbf{= 1000}\ \]](https://bcfeducation.com/wp-content/ql-cache/quicklatex.com-97a746e71f2235aeeb8218e28137784b_l3.png "Rendered by QuickLaTeX.com")
(PART- II)
Note: Attempt any THREE questions. (3 x 10 = 30)
Q.5 Convert the following Receipts & Payments Account of the Pakistan Nursing Society for the year ended on 30th June 2015 into an income & expenditure account…..
Q.5 Convert the following Receipts & Payments Account of the Pakistan Nursing Society for the year ended on 30th June 2015 into an income & expenditure account and prepare a balance sheet.
| Receipts | Rs. | Payments | Rs. |
| Balance b/d (01-07-2014) | 2010 | Salaries of Nurses | 1036 |
| Subscriptions | 1115 | Rent, rates & taxes | 200 |
| Fee from non-members | 270 | Cost of Car | 2000 |
| Municipal Grant | 1000 | Car Expenses | 840 |
| Donation for Building Fund | 1560 | Drugs & incidental expenses | 670 |
| Interest | 38 | Balance c/d (30-06-2015) | 1247 |
| 5993 | 5993 |
The society owns freehold land costing Rs. 8000 on which it is proposed to build a Nurses hostel. A donation of Rs. 100 received to building fund was wrongly included in the subscription account. A bill for medicines purchased during the year amounting to Rs. 128 was outstanding.
Solution:
Pakistan Nursing Society
Income & Expenditure Account
For the Year Ended 30th June 2015
| Expenditure | Rs. | Income | Rs. |
| Salaries | 1036 | Subscription 1115 | |
| Rent & Taxes | 200 | Less wrongly included donation (100) | 1015 |
| Car Expenses | 840 | Fee from non-members | 270 |
| Drugs Expenses 670 | Municipal Grant | 1000 | |
| Add outstanding 128 | 798 | Interest | 38 |
| Deficit | 551 | ||
| 2874 | 2874 | ||
Pakistan Nursing Society
Balance Sheet
For the Year Ended 30th June 2015
| Assets | Rs. | Liabilities | Rs. |
| Cash | 1247 | Donation for Building Fund (1560+100) | 1660 |
| Cost of Car | 2000 | Capital 10010 | |
| Freehold Land | 8000 | Less Deficit (551) | 9459 |
| Outstanding Medicine bill | 128 | ||
| 11247 | 11247 | ||
Capital = Opening Assets – Opening Liabilities
Capital = (8000 Building + 2010 Cash) – 0 = 10010
Q.6 Ali keeps his books by single entry. He gives you the following information from which you are required to ascertain his profit or loss during…..
Q.6 Ali keeps his books by single entry. He gives you the following information from which you are required to ascertain his profit or loss during 2016:
| January 1st 2016 (Rs.) | December 31st 2016 (Rs.) | |
| Bank Balance | 740(Cr) | 400 (Dr) |
| Cash in Hand | 10 | |
| Sundry debtors | 5300 | 8800 |
| Sundry Creditors | 1500 | 1950 |
| Stock | 1700 | 1900 |
| Plant | 2000 | 2000 |
| Furniture | 140 | 140 |
Ali had withdrawn Rs. 3000 during the year but had introduced fresh capital of Rs. 600 on 1st July 2016. A provision of 5 per cent on sundry debtors is necessary. Write off depreciation on plant at 5% interest on capital is to be allowed at 5% p.a.
Solution:
Mr. Ali
Statement of Affairs
As on 1st Jan 2016
| Assets | Amount (Rs.) | Liabilities | Amount (Rs.) | |
| Sundry debtors | 5300 | Bank Balance Cr. (overdraft) | 740 | |
| Stock | 1700 | Sundry Creditors | 1500 | |
| Plant | 2000 | Balance (Capital Opening) | 6900 | |
| Furniture | 140 | |||
| 9140 | 9140 | |||
Mr. Ali
Statement of Affairs
As on 31st Dec 2016
| Assets | Amount (Rs.) | Liabilities | Amount (Rs.) | |
| Bank Balance | 400 | Sundry Creditors | 1950 | |
| Cash in hand | 10 | |||
| Sundry debtors 8800 | Balance (Capital Closing) | 10760 | ||
| Less Provision (440) | 8360 | |||
| 8800 x 0.05 | ||||
| Stock | 1900 | |||
| Plant 2000 | ||||
| Less Depreciation (100) | 1900 | |||
| 2000 x 0.05 | ||||
| Furniture | 140 | |||
| 12710 | 12710 | |||
Mr. Ali
Statement of Profit & Loss
For Year ended 31st Dec 2016
| Capital 31st Dec 2016 | 10760 |
| Add Drawings | 3000 |
| Less Capital Introduced during the year | (600) |
| Adjusted Capital | 13160 |
| Less Opening Capital 1st Jan 2016 | (6900) |
| Profit interest on capital: | |
| 6900 x 0.05 = 345 | |
| 600 x 0.05 x 6/12 =15 | (360) |
| Net Profit During the year | 5900 |
Q.7 On 1st January M/S A & Co forwarded to M/S X & Co. a consignment of 25 chest of tea at Rs. 500 per chest Paying Rs. 150 for freight on 18th March…..
Q.7 On 1st January M/S A & Co forwarded to M/S X & Co. a consignment of 25 chest of tea at Rs. 500 per chest Paying Rs. 150 for freight on 18th March M/S A & Co received an account dated 20th February showing that 20 cases were realized Rs. 15,000 gross and the following expenses have been incurred:
Octroi duty Rs. 100, storage and insurance Rs. 20, Delivery charges Rs. 150, commission 3% and del-credere commission 2%.
M/S X & Co enclosed a bill at three months for the amount due
Required: You are required to record the above transactions in the books of M/S A & Co. and prepare a consignment account.
Solution:
A & Co’s Journal
| Date | Particulars | Dr | Cr |
| Jan, 1 | Consignment A/C | 12500 | |
| Goods Sent on Consignment A/C | 12500 | ||
| (Goods sent by consignor) | |||
| Jan, 1 | Consignment A/C | 150 | |
| Cash A/C | 150 | ||
| (Expenses paid by consignor) | |||
| No date | Consignment A/C | 270 | |
| M/S X & Co A/C | 270 | ||
| (Expenses paid by consignee) | |||
| Mar, 18 | M/S X & Co A/C | 15,000 | |
| Consignment A/C | 15,000 | ||
| (Consignment sold by consignee) | |||
| Mar, 18 | Consignment A/C | 750 | |
| M/S X & Co A/C | 750 | ||
| (Commission of consignee 3% + 2% on sales) | |||
| Mar, 18 | Stock on Consignment A/C | 2550 | |
| Consignment A/C | 2550 | ||
| (Stock of consignment unsold) | |||
| Mar, 18 | Consignment A/C | 3880 | |
| Profit & Loss A/C | 3880 | ||
| (Profit transferred to balance sheet) | |||
| Mar, 18 | Goods sent on consignment A/C | 12500 | |
| Trading A/C | 12500 | ||
| B/R A/C | 13980 | ||
| M/S X & Co A/C | 13980 | ||
| (Bill received for remaining amount by consignee) |
Consignment A/C
| Date | Particulars | Amount | Date | Particulars | Amount |
| Goods Sent on Consignment A/C | 12500 | M/S X & Co A/C | 15,000 | ||
| Cash A/C | 150 | Stock on Consignment A/C | 2550 | ||
| M/S X & Co A/C(Expenses) | 270 | ||||
| M/S X & Co A/C (Commission) | 750 | ||||
| Profit & Loss transferred | 3880 | ||||
| 17550 | 17550 |
M/S X & Co A/C
| Date | Particulars | Amount | Date | Particulars | Amount |
| Consignment A/C | 15000 | Consignment A/C | 270 | ||
| Consignment A/C | 750 | ||||
| B/R (Balancing Figure) | 13980 | ||||
| 15000 | 15000 |
Valuation of Stock on Consignment
5 chest of tea at 500 each = 5 x 500 = 2500
![\[ \mathbf{Direct\ proportionate\ expenses\ of\ consignor =}\frac{\mathbf{150}}{\mathbf{25}}\mathbf{\times 5 = 30}\ \]](https://bcfeducation.com/wp-content/ql-cache/quicklatex.com-1de9cbe4a619ab608f451af9e1ea5264_l3.png "Rendered by QuickLaTeX.com")
![\[ \mathbf{Direct\ proportionate\ expenses\ of\ consignee =}\frac{\mathbf{100}}{\mathbf{25}}\mathbf{\times 5 = 20}\ \]](https://bcfeducation.com/wp-content/ql-cache/quicklatex.com-d4c9f875e16199480a22b4689466d325_l3.png "Rendered by QuickLaTeX.com")
Total Value of unsold stock = 2500 + 30 + 20 = 2550
Q.8 What journal entries will be made in the following cases?(a) A company issued Rs. 40,000, 6% debentures at par redeemable at par…..
Q.8 What journal entries will be made in the following cases?
(a) A company issued Rs. 40,000, 6% debentures at par redeemable at par.
(b) A company issued Rs. 40,000, 6% debentures at discount of 10% redeemable at par.
(c) A company issued Rs. 40,000, 6% debentures at premium of 5% redeemable at par.
(d) A company issued Rs. 40,000, 6% debentures at par redeemable at 10% Premium.
(e) A company issued Rs. 40,000, 6% debentures at a discount of 5% and redeemable at 5% Premium.
Solution:
| (a) | Bank A/c | 40,000 | |
| 6% Debentures A/c | 40,000 | ||
| (6% Debentures issued at par, redeemable at par) | |||
| (b) | Bank A/c | 36,000 | |
| Discount on issuance of Debentures A/c | 4000 | ||
| 6% Debentures A/c | 40,000 | ||
| (6% Debentures issued at 10% discount, redeemable at par) | |||
| (c) | Bank A/c | 42,000 | |
| Premium on issuance of Debentures A/c | 2000 | ||
| 6% Debentures A/c | 40,000 | ||
| (6% Debentures issued at 5% premium, redeemable at par) | |||
| (d) | Bank A/c | 40,000 | |
| Loss on issuance of debentures A/c | 4000 | ||
| Premium on redemption of Debentures A/c | 4000 | ||
| 6% Debentures A/c | 40,000 | ||
| (6% Debentures issued at par, redeemable at 10% premium) | |||
| (e) | Bank A/c | 38,000 | |
| Discount on issuance of debentures A/c | 2000 | ||
| Loss on issuance of debentures A/c | 2000 | ||
| Premium on redemption of Debentures A/c | 2000 | ||
| 6% Debentures A/c | 40,000 | ||
| (6% Debentures issued at 5% discount, redeemable at 5% premium) |
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