Q1. Record the following transactions in the Journal of Mr. "X" 2018
January 1 X Started business by with cash Rs. 50,000/-
January 2 Purchased goods for cash Rs. 5,000/-
January 3 Sold goods to A Rs. 10,000/-
January 4 Bought goods from B Rs. 8,500/-
January 5 Purchased furniture for cash Rs. 5,000/-
January 10 Goods bought from C Rs. 3,700/-
January 13 Received from A cash on account Rs. 5,000/-
January 20 Paid C Rs. 1,000/-
January 25 Sold goods to D Rs. 4,500/-
January 28 Sold goods for cash Rs. 2,500/-
| Date |
Particulars |
Debit (Rs.) |
Credit (Rs.) |
| Jan 1 2018 |
Cash |
50,000 |
|
| Capital |
|
50,000 |
| Being business started with cash |
| Jan 2 2018 |
Purchases |
5,000 |
|
| Cash |
|
5,000 |
| Being goods purchased for cash |
| Jan 3 2018 |
A |
10,000 |
|
| Sales |
|
10,000 |
| Being goods sold to A on credit |
| Jan 4 2018 |
Purchases |
8,500 |
|
| B |
|
8,500 |
| Being goods bought from B on credit |
| Jan 5 2018 |
Furniture |
5,000 |
|
| Cash |
|
5,000 |
| Being furniture purchased for cash |
| Jan 10 2018 |
Purchases |
3,700 |
|
| C |
|
3,700 |
| Being goods bought from C on credit |
| Jan 13 2018 |
Cash |
5,000 |
|
| A |
|
5,000 |
| Being cash received from A on account |
| Jan 20 2018 |
C |
1,000 |
|
| Cash |
|
1,000 |
| Being cash paid to C |
| Jan 25 2018 |
D |
4,500 |
|
| Sales |
|
4,500 |
| Being goods sold to D on credit |
| Jan 28 2018 |
Cash |
2,500 |
|
| Sales |
|
2,500 |
| Being goods sold for cash |
Q2. On 1st January 2017 Mr. A. Rashid started business with a Capital of Rs. 250,000/- and his transactions during the month were as follows:-
Janurary 2 Purchased furniture for Cash Rs.2,000/-
" 3 Purchased stationery for cash Rs.500/-
" 5 Purchased goods from Tariq for Cash Rs. 150,000/-
" 8 Goods purchased on credit from Tariq Rs.100,000/-
" 15 Sold goods for Cash to Mahmud. Rs.200,000/-
" 20 Sold goods to Mahmud on credit Rs.160,000/-
" 25 Received cash from Mahmud on account Rs.100,000/-
" 28 Paid Cash to Tariq on account Rs. 80,000/-
" 31 Paid Rent of the shop Rs.1,500/-
" 31 Paid Salaries for the month Rs.20,000/-
Record the above transactions in the journal of Mr. A. Rashid.
| Date |
Particulars |
Debit (Rs.) |
Credit (Rs.) |
| Jan 1 2017 |
Cash |
250,000 |
|
| Capital |
|
250,000 |
|
Being business started with cash
|
| Jan 2 2017 |
Furniture |
2,000 |
|
| Cash |
|
2,000 |
|
Being furniture purchased for cash
|
| Jan 3 2017 |
Stationery Expense |
500 |
|
| Cash |
|
500 |
|
Being stationery purchased for cash
|
| Jan 5 2017 |
Purchases |
150,000 |
|
| Cash |
|
150,000 |
|
Being goods purchased from Tariq for cash
|
| Jan 8 2017 |
Purchases |
100,000 |
|
| Tariq |
|
100,000 |
|
Being goods purchased on credit from Tariq
|
| Jan 15 2017 |
Cash |
200,000 |
|
| Sales |
|
200,000 |
|
Being goods sold for cash to Mahmud
|
| Jan 20 2017 |
Mahmud |
160,000 |
|
| Sales |
|
160,000 |
|
Being goods sold to Mahmud on credit
|
| Jan 25 2017 |
Cash |
100,000 |
|
| Mahmud |
|
100,000 |
|
Being cash received from Mahmud on account
|
| Jan 28 2017 |
Tariq |
80,000 |
|
| Cash |
|
80,000 |
|
Being cash paid to Tariq on account
|
| Jan 31 2017 |
Rent Expense |
1,500 |
|
| Cash |
|
1,500 |
|
Being rent of the shop paid
|
| Jan 31 2017 |
Salary Expense |
20,000 |
|
| Cash |
|
20,000 |
|
Salaries paid for the month
|
Q3. Akber Ali informs you that the transactions occurred during May 2024, the first month of business operations.
May 1. Akber Ali transferred Rs. 15000 cash from a personal bank account and equipment with a value of Rs. 4000 to his business.
1. A property was acquired for Rs. 39000, alongside land costing Rs. 20000. An initial payment of Rs. 5000 was made in cash, with a note payable issued for the balance.
2. Premium for property insurance was paid in the amount of Rs. 1500 for May.
3. Supplies costing Rs. 500 and equipment costing Rs. 6000 were purchased on account.
15. Cash received for professional services performed, Rs. 5600; other clients were billed for services in the amount of Rs. 2430.
16. Paid cash to creditors on account, Rs. 1800.
20. Returned portion of the supplies costing Rs. 240 since they were not of the proper grade.
22. Received Rs. 1880 cash from clients on account.
31. Paid utility bill, Rs. 500.
31. Paid monthly salaries, Rs. 3000.
31. Recorded additional amount owed by clients for services performed in May, Rs. 4900; payment is due within 30 days.
You are required to:
a) Prepare the General Journal
b) Ledger Accounts
c) Trial Balance
d) Trial Balance
a) Prepare the General Journal
| Date |
Particulars |
Debit |
Credit |
| May 1 |
Cash |
15,000 |
|
|
Equipment |
4,000 |
|
|
Capital |
|
19,000 |
| Owner invested cash and equipment into business |
| May 1 |
Property |
39,000 |
|
|
Land |
20,000 |
|
|
Cash |
|
5,000 |
|
Notes Payable |
|
54,000 |
| Purchase property and building. |
| May 2 |
Prepaid Insurance |
1,500 |
|
|
Cash |
|
1,500 |
| Paid insurance premium. |
| May 3 |
Supplies |
500 |
|
|
Equipment |
6,000 |
|
|
Accounts Payable |
|
6,500 |
| Purchased supplies and equipment. |
| May 15 |
Cash |
5,600 |
|
|
Accounts Receivable |
2,430 |
|
|
Service Revenue |
|
8,030 |
| Cash received and billed clients for services. |
| May 16 |
Accounts Payable |
1,800 |
|
|
Cash |
|
1,800 |
| Paid creditors on account |
| May 20 |
Accounts Payable |
240 |
|
|
Supplies |
|
240 |
| Returned part of the supplies purchased earlier. |
| May 22 |
Cash |
1,880 |
|
|
Accounts Receivable |
|
1,880 |
| (Received cash from clients previously billed) |
| May 31 |
Utilities Expense |
500 |
|
|
Cash |
|
500 |
| Paid utility bill. |
| May 31 |
Salaries Expense |
3,000 |
|
|
Cash |
|
3,000 |
| Paid monthly salaries. |
| May 31 |
Accounts Receivable |
4,900 |
|
|
Service Revenue |
|
4,900 |
| Recorded additional services performed on account. |
b) Ledger Accounts
| Cash |
|---|
| Date |
Particulars |
Debit (Rs.) |
Credit (Rs.) |
Balance |
| May 1 | Capital | 15000 | | 15000 Dr |
| May 1 | Property and Land | | 5000 | 10000 Dr |
| May 2 | Prepaid Insurance | | 1500 | 8500 Dr |
| May 15 | Service Revenue | 5600 | | 14100 Dr |
| May 16 | Accounts Payable | | 1800 | 12300 Dr |
| May 22 | Accounts Receivable | 1880 | | 14180 Dr |
| May 31 | Utilities Expense | | 500 | 13680 Dr |
| May 31 | Salaries Expense | | 3000 | 10680 Dr |
| Capital |
|---|
| Date |
Particulars |
Debit (Rs.) |
Credit (Rs.) |
Balance |
| May 1 | Cash, Equipment | | 19000 | 19000 Cr |
| Equipment |
|---|
| Date |
Particulars |
Debit (Rs.) |
Credit (Rs.) |
Balance |
| May 1 | Capital | 4000 | | 4000 Dr |
| May 3 | Accounts Payable | 6000 | | 10000 Dr |
| Property |
|---|
| Date |
Particulars |
Debit (Rs.) |
Credit (Rs.) |
Balance |
| May 1 | Cash and Note | 39000 | | 39000 Dr |
| Land |
|---|
| Date |
Particulars |
Debit (Rs.) |
Credit (Rs.) |
Balance |
| May 1 | Cash and Note | 20000 | | 20000 Dr |
| Notes Payable |
|---|
| Date |
Particulars |
Debit (Rs.) |
Credit (Rs.) |
Balance |
| May 1 | Property/Land | | 54000 | 54000 Cr |
| Prepaid Insurance |
|---|
| Date |
Particulars |
Debit (Rs.) |
Credit (Rs.) |
Balance |
| May 2 | Cash | 1500 | | 1500 Dr |
| Supplies |
|---|
| Date |
Particulars |
Debit (Rs.) |
Credit (Rs.) |
Balance |
| May 3 | Accounts Payable | 500 | | 500 Dr |
| May 20 | Return | | 240 | 260 Dr |
| Accounts Payable |
|---|
| Date |
Particulars |
Debit (Rs.) |
Credit (Rs.) |
Balance |
| May 3 | Supplies and Equipment | | 6500 | 6500 Cr |
| May 16 | Cash | 1800 | | 4700 Cr |
| May 20 | Supplies Return | 240 | | 4460 Cr |
| Service Revenue |
|---|
| Date |
Particulars |
Debit (Rs.) |
Credit (Rs.) |
Balance |
| May 15 | Cash and A/R | | 8030 | 8030 Cr |
| May 31 | Accounts Receivable | | 4900 | 12930 Cr |
| Accounts Receivable |
|---|
| Date |
Particulars |
Debit (Rs.) |
Credit (Rs.) |
Balance |
| May 15 | Service Revenue | 2430 | | 2430 Dr |
| May 22 | Cash | | 1880 | 550 Dr |
| May 31 | Service Revenue | 4900 | | 5450 Dr |
| Utilities Expense |
|---|
| Date |
Particulars |
Debit (Rs.) |
Credit (Rs.) |
Balance |
| May 31 | Cash | 500 | | 500 Dr |
| Salaries Expense |
|---|
| Date |
Particulars |
Debit (Rs.) |
Credit (Rs.) |
Balance |
| May 31 | Cash | 3000 | | 3000 Dr |
c) Trial Balance
| Trial Balance of Akber Ali as at May 31, 2024 |
|---|
| Account Title |
Debit (Rs.) |
Credit (Rs.) |
| Cash | 10,680 | |
| Accounts Receivable | 5,450 | |
| Supplies | 260 | |
| Prepaid Insurance | 1,500 | |
| Equipment | 10,000 | |
| Property | 39,000 | |
| Land | 20,000 | |
| Accounts Payable | | 4,460 |
| Notes Payable | | 54,000 |
| Capital | | 19,000 |
| Service Revenue | | 12,930 |
| Utilities Expense | 500 | |
| Salaries Expense | 3,000 | |
| Total |
90,390 |
90,390 |
d) Balance sheet
Akber Ali
Balance Sheet
As at May 31, 2024
Assets
Current Assets
- Cash: Rs. 10,680
- Accounts Receivable: Rs. 5,450
- Supplies: Rs. 260
- Prepaid Insurance: Rs. 1,500
Total Current Assets: Rs. 17,890
Non-Current Assets
- Equipment: Rs. 10,000
- Property: Rs. 39,000
- Land: Rs. 20,000
Total Non-Current Assets: Rs. 69,000
Total Assets: Rs. 86,890
Liabilities
Current Liabilities
- Accounts Payable: Rs. 4,460
Non-Current Liabilities
- Notes Payable: Rs. 54,000
Total Liabilities: Rs. 58,460
Owner’s Equity
- Capital – Akber Ali: Rs. 19,000
- Add: Net Income
- Revenue: Rs. 12,930
- Less: Expenses
- Utilities Expense: Rs. 500
- Salaries Expense: Rs. 3,000
- Insurance Expense: Rs. 1,500
- Total Expenses: Rs. 5,000
- Net Income: Rs. 7,930
Total Owner’s Equity: Rs. 26,930
Total Liabilities and Owner’s Equity: Rs. 86,890
Q4(a) . Mr. Hamza started his own business. He executed the following transaction in the first month of his business. April 2024
01: Mr. Naeem started business with cash Rs.250, 000, Furniture. Rs.200, 000 and building Rs.800,000.
02: Opened a bank account with cash of Rs.80, 000.
03: Paid Rs.1, 000 for office expenses.
05: Purchased stationary for office use Rs.50.
07: Bought goods from Mr Zahid for Rs.15, 000, paying cash Rs.5, 000 and balance after one month.
10: Withdraw cash from the bank for office use Rs.8000.
13: Sold goods to Tanveer and Co for Rs.15, 000 and paid carriage Rs 200 for delivery.
21: Cash received from Tanveer and Co Rs.2, 000.
24: Issued a cheque of Rs.1, 000 for advertisement
28: Withdraw from bank Rs.8, 000 for personal use.
31: Goods amounting to Rs.500 were given as charity.
Required: You are required to prepare an Accounting Equation for the month.
| Assets = Liabilities + Capital |
| Date |
Particulars |
Assets |
Liabilities |
Capital |
| 01-April-2024 |
Started Business (Cash) |
250,000 |
- |
250,000 |
| Started Business (Furniture) |
200,000 |
- |
200,000 |
| Started Business (Building) |
800,000 |
- |
800,000 |
| 02-April-2024 |
Open a bank account (cash) |
-80,000 |
- |
- |
| Open a bank account (bank) |
80,000 |
- |
- |
| 03-April-2024 |
Paid Office Expenses (Cash) |
-1,000 |
- |
-1,000 |
| 05-April-2024 |
Purchased stationary (Cash) |
-50 |
- |
-50 |
| 07-April-2024 |
Bought goods from Mr. Zahid (Cash) |
-5,000 |
- |
- |
| Bought goods from Mr. Zahid (Creditors) |
- |
10,000 |
- |
| Goods Purchased (Stock) |
15,000 |
- |
- |
| 10-April-2024 |
Withdraw cash from bank (Bank) |
-8,000 |
- |
- |
| Withdraw cash from bank (Cash) |
8,000 |
- |
- |
| 13-April-2024 |
Sold goods to Tanveer and Co (Debtors) |
15,000 |
- |
- |
| Sold goods to Tanveer and Co (Sales) |
- |
- |
15,000 |
| Paid carriage for delivery (Cash) |
-200 |
- |
-200 |
| 21-April-2024 |
Cash received from Tanveer and Co (Cash) |
2,000 |
- |
- |
| Cash received from Tanveer and Co (Debtors) |
-2,000 |
- |
- |
| 24-April-2024 |
Issued cheque for advertisement (Bank) |
-1,000 |
- |
-1,000 |
| 28-April-2024 |
Withdraw from bank for personal use (Bank) |
-8,000 |
- |
-8,000 |
| 31-April-2024 |
Goods given as charity (Stock) |
-500 |
- |
-500 |
| Total |
Final Balance |
1,264,250 |
10,000 |
1,254,250 |
| Total |
1,264,250 |
1,264,250 |
Q4(b). Dr. Hassan Raza, a medical practitioner, opened a clinic in his home town. After one month, the business had the following assets: Cash Rs.2, 000; debtors Rs.680; office supplies Rs.3,000; office equipment Rs.15,000 and the car Rs.50,000. Creditors on the same day were Rs.25,000. During a short period of time the following transactions were completed:
1. Paid one month’s rent Rs.350.
2. Billed patient Rs.150 for services rendered.
3. Made payment to the creditors Rs.300.
4. Paid staff salaries Rs.300
5. Received Rs.800 cash from patients.
6. Withdraw Rs.500 cash for personal use.
7. Paid telephone bill Rs.120
8. Received Rs.500 from the debtors.
9. Purchased additional office equipment on credit Rs.3000.
10. Purchased office supplies on credit for Rs.500.
Required: Arrange the assets, liabilities and owner’s equity in an equation.
| Assets = Liabilities + Capital |
| Date |
Particulars |
Assets |
Liabilities |
Capital |
| 1 |
Cash |
2,000 |
- |
2,000 |
| Debtors |
680 |
- |
680 |
| Office Supplies |
3,000 |
- |
3,000 |
| Office Equipment |
15000 |
- |
15,000 |
| Car |
50,000 |
- |
50,000 |
| Creditors |
25000 |
25000 |
- |
| 1 |
Rent paid |
(350) |
- |
(350) |
| 2 |
Billed patient (Debtors) |
150 |
- |
150 |
| 3 |
Payment creditors |
(300) |
(300) |
- |
| 4 |
Paid staff salaries |
(300) |
- |
(300) |
| 5 |
Received cash from patients |
800 |
- |
- |
| Debtors |
(800) |
- |
- |
| 6 |
Withdraw cash for personal use |
(500) |
- |
(500) |
| 7 |
Paid telephone bill |
(120) |
- |
(120) |
| 8 |
Received from the debtors |
500 |
- |
- |
| Debtors |
(500) |
- |
- |
| 9 |
Purchased office equipment |
3000 |
3000 |
- |
| 10 |
Purchased office supplies |
500 |
500 |
- |
| Total |
Final Balance |
97,760 |
28,200 |
69,560 |
| Total |
97,760 |
97,760 |
Q5. From the following particulars prepare a three column cashbook of Humza Ahmed for the month of January 2013.
1. Balance of cash Rs.4000. Credit balance of bank (overdraft) Rs.10000.
2. Received for cash sales Rs 6000
3. Deposited a cheque for Rs.1500 received from Idnan and allowed him discount Rs.100.
5. Mr. Iqbal settled his account by cheque of Rs.1800 after a discount of Rs.300 was allowed.
10. Paid to Mr. Zia by cheque of Rs.1250 and received a discount of Rs.50.
17. Paid cheques into bank received earlier for Rs.3000.
18. Paid wages by cash Rs.1100.
25. Drew cash Rs.100 for personal use by proprietor
30. Drew from bank Rs.400 for office use.
| Debit (Receipts) |
|
Credit (Payments) |
| Date |
Particulars |
Discount Allowed |
Cash |
Bank |
Date |
Particulars |
Discount Received |
Cash |
Bank |
| Jan 01 |
Balance b/d |
|
4,000 |
|
Jan 01 |
Balance b/d |
|
|
10,000 (Cr) |
| Jan 02 |
Cash Sales |
|
6,000 |
|
|
|
|
|
|
| Jan 03 |
Idnan |
100 |
|
1,500 |
|
|
|
|
|
| Jan 04 |
Iqbal |
300 |
|
1,800 |
|
|
|
|
|
|
|
|
|
|
Jan 05 |
Mr. Zia |
50 |
|
1,250 |
| Jan 06 |
Bank (Cheque deposit) |
|
|
3,000 |
|
|
|
|
|
|
|
|
|
|
Jan 07 |
Wages |
|
1,100 |
|
|
|
|
|
|
Jan 08 |
Drawings |
|
100 |
|
| Jan 09 |
Bank (C) |
|
400 |
|
Jan 09 |
Cash (C) |
|
|
400 |
| Total |
400 |
10,400 |
6,300 |
Total |
50 |
1,200 |
11,650 |
Q6. From the following transactions draw up Two Column Cashbook in the books of a trader for the month of December 2013:
01. Cash in hand Rs.12750
05. Paid to Rustom Bros. Rs.3950; discount received Rs.50
10. Purchased good for Rs.1500
15. Received from Hameed Co, Rs.6900; discount allowed Rs.100
17. Cash sale of Rs.5000
20. Paid to Saleem Bros. Rs.3000
24. Cash received from Rahim Rs.13890 discount allowed Rs.110
28. Paid wages Rs.700 and Carriage Rs.1500
29. Bought machinery for Cash Rs.1500
30. Paid rent for the month Rs.2000
| Debit Side (Receipts) |
|
Credit Side (Payments) |
| Date |
Particulars |
Discount (Rs.) |
Cash (Rs.) |
|
Date |
Particulars |
Discount (Rs.) |
Cash (Rs.) |
| 01 |
Balance b/d |
- |
12750 |
|
05 |
Rustom Bros. |
50 |
3950 |
| 15 |
Hameed Co. |
100 |
6900 |
|
10 |
Purchase A/c |
- |
1500 |
| 17 |
Cash Sales |
- |
5000 |
|
20 |
Saleem Bros. |
- |
3000 |
| 24 |
Rahim |
110 |
13890 |
|
28 |
Wages A/c |
- |
700 |
|
|
|
|
|
28 |
Carriage A/c |
- |
1500 |
|
|
|
|
|
29 |
Machinery A/c |
- |
1500 |
|
|
|
|
|
30 |
Rent A/c |
- |
2000 |
| Total |
310 |
38540 |
|
Total |
50 |
14150 |
| Balance c/d |
- |
24390 |
|
|
|
Q7. From the following transactions write up single column Cashbook for the month of January 2012.
01: Cash in hand Rs.1275
05: Paid to Rustam Bros. Rs.400
07: Purchased goods for cash Rs.150
10: Received from Hameed and Co. Rs.700
15: Cash sales Rs.500
17: Paid Saleem Trading and Co. Rs.300
20: Received from Rahim Rs.1400
24: Paid wages Rs.70 and Carriage Rs.25
28: Bought machinery for cash Rs.1500
31: Paid rent Rs.150
| Debit (Receipts) |
|
Credit (Payments) |
| Date |
Particulars |
Amount (Rs.) |
|
Date |
Particulars |
Amount (Rs.) |
| 01 |
Cash in hand (Opening) |
1,275 |
|
05 |
Paid to Rustam Bros. |
400 |
| 10 |
Received from Hameed and Co. |
700 |
|
07 |
Purchased goods for cash |
150 |
| 15 |
Cash Sales |
500 |
|
17 |
Paid Saleem Trading and Co. |
300 |
| 20 |
Received from Rahim |
1,400 |
|
24 |
Paid Wages |
70 |
|
|
|
|
24 |
Paid Carriage |
25 |
|
|
|
|
28 |
Bought Machinery |
1,500 |
|
|
|
|
31 |
Paid Rent |
150 |
| Total |
3,875 |
|
Total |
2,595 |
| Closing Balance |
1,280 |
|
Q8. Fashion Textiles gives the following transactions of their firm during the year 2008, you are required to classify the transactions into capital or revenue.
a) Rs. 2,500 spent on purchasing a tire for their lorry.
b) They had old machinery of value Rs.10,000 was sold for Rs.9,500.
c) They received Rs.5000 towards dividend from their investments in shares.
d) They were able to sell cotton ‘T’ shirts (cost Rs. 1,200) for Rs.1,500.
e) Rs.600 was spent on alteration of machinery in order to reduce power.
a. Revenue
b. Capital
c. Revenue
d. Revenue
e. Capital
Q9. ABC Company has incurred the following expenditure. You are required to identify the capital, revenue.
a) Rs.60,000 travelling expenses of their sales manager who traveled to Japan to attend meeting in order to increase sales.
b) Rs.500 spent for installing machinery.
c) Rs.600,000 spent on research and development.
d) Rs.500 paid for fuel.
a. Revenue
b. Capital
c. Revenue
d. Revenue
Q10. Classify the following into capital and revenue.
a) Legal expenses incurred for raising a loan Rs 100.
b) Paid expenses Rs 50/- or repairing the machinery.
c) Rs 1000/- spent on the repair of machinery newly purchased.
d) Sold an old equipment costing Rs 5000/- accumulated depreciation Rs 400/- and selling price received is Rs 4500/-.
e) Purchased land for Rs 90000/- and partial payment of Rs 40000/-.
f) A part of the land purchased for Rs 10000/- was sold for Rs 12000/-.
g) Legal expenses Rs 100/- was paid on an income tax case.
h) Preliminary expenses in the formation of a company.
i) Compensation paid to a director for loss of office.
j) Intensive advertising undertaken by a company to popularize a new product.
a. Capital
b. Revenue
c. Capital
d. Revenue
e. Capital
f. Revenue
g. Revenue
h. Capital
i. Revenue
j. Revenue
Q11. Classify each of the following as Capital or Revenue.
a) Rs 2,000 spent on overhauling a second-hand machine before use.
b) Paid Rs 500 for routine maintenance of office computers.
c) Rs 15,000 paid for installation of a new elevator.
d) Received Rs 12,000 on sale of furniture (book value Rs 14,000).
e) Paid Rs 5,000 as brokerage on purchase of a building.
f) Sold a vehicle for Rs 100,000 which originally cost Rs 120,000.
g) Rs 2,500 paid as audit fees for the current year.
h) Rs 8,000 spent on branding and logo design during business setup.
i) Rs 10,000 paid as compensation to an employee terminated early.
j) Advertising expenditure of Rs 20,000 to launch a new store.
a) Capital
b) Revenue
c) Capital
d) Capital
e) Capital
f) Capital
g) Revenue
h) Capital
i) Revenue
j) Capital
Q12. Classify the following into capital and revenue.
a) Legal expenses incurred for raising a loan Rs 100.
b) Paid expenses Rs 50/- or repairing the machinery.
c) Rs 1000/- spent on the repair of machinery newly purchased.
d) Sold an old equipment costing Rs 5000/- accumulated depreciation Rs 400/- and selling price received is Rs 4500/-.
e) Purchased land for Rs 90000/- and partial payment of Rs 40000/-.
f) A part of the land purchased for Rs 10000/- was sold for Rs 12000/-.
g) Legal expenses Rs 100/- was paid on an income tax case.
h) Preliminary expenses in the formation of a company.
i) Compensation paid to a director for loss of office.
j) Intensive advertising undertaken by a company to popularize a new product.
a) Revenue
b) Revenue
c) Capital
d) Capital
e) Capital
f) Capital
g) Revenue
h) Capital
i) Revenue
j) Revenue
Q13. Classify the following into capital and revenue.
a) Carriage paid on installation and erection of new machinery.
b) Premium paid on the redemption of debentures.
c) Repair to second hand car purchased.
d) Repair to furniture which is used in the business.
e) Acquired land for an agricultural farm at an annual rent of Rs 1500/-.
f) Outdated machinery sold for Rs 6000/- and cash received.
g) Cost of overhauling and painting a second hand tractor newly bought.
h) Cost of annual taxes and insurance paid Rs 500.
i) Legal expenses incurred in an action for infringement of its trade mark.
j) Wages paid to farmers for cultivation Rs 1500 and for digging well Rs 500.
k) Amount realized from the sale of rice 20000/-.
a) Capital
b) Capital
c) Capital
d) Revenue
e) Revenue
f) Capital
g) Capital
h) Revenue
i) Revenue
j)
- Cultivation Wages (1500): Revenue
- Digging Well Wages (500): Capital
k) Revenue
Q.14 The following Trial Balance was extracted from the books of Salman Traders on 31-12-2013.
| Particulars |
Debit Rs. |
Credit Rs. |
| Investment |
200,000 |
|
| Purchases |
300,000 |
|
| Returns |
8,000 |
10,000 |
| Opening Stock |
60,000 |
|
| Plant |
350,000 |
|
| Discount |
15,000 |
10,000 |
| General Expense |
10,000 |
|
| Telephone Expenses |
35,000 |
|
| Salaries |
45,000 |
|
| Loan from MCB |
|
100,000 |
| Traveling |
15,000 |
|
| Accounts Receivable |
90,000 |
|
| Repair Expense |
10,000 |
|
| Advertisement |
20,000 |
|
| Furniture |
60,000 |
|
| Cash in Hand |
32,000 |
|
| Capital |
|
600,000 |
| Sales |
|
470,000 |
| Accounts Payable |
|
60,000 |
| Total |
1,250,000 |
1,250,000 |
Adjustments
- Closing Stock Valued at 31-12-2013 for Rs. 40,000.
- Interest on Investment is receivable @ 10% per year.
- Interest on Loan from MCB is Payable @ 12% per year.
- Telephone Expense for the month of March 2011 is still Payable Rs. 8,000.
- Charge depreciation on Plant and Furniture @ 10%.
Required
- Prepare Trading and Profit and Loss A/C, and
- Statement of Financial Position as on 31-12-2013.
Solution
| Salman Traders Trading Account for the year ended 31-12-2013 |
| Particulars |
Amount (Rs.) |
Particulars |
Amount (Rs.) |
| Opening Stock |
60,000 |
Sales |
470,000 |
| Purchases |
300,000 |
Less: Sales Return |
(10,000) |
| Less: Purchase Return |
(8,000) |
Net Sales |
460,000 |
| Net Purchases |
292,000 |
Closing Stock |
40,000 |
| Total |
352,000 |
Total |
500,000 |
| Gross Profit |
148,000 |
|
|
| Total |
500,000 |
Total |
500,000 |
| Salman Traders Profit and Loss Account for the year ended 31-12-2013 |
| Particulars |
Amount (Rs.) |
Particulars |
Amount (Rs.) |
| General Expenses |
10,000 |
Gross Profit |
148,000 |
| Telephone Expenses |
43,000 |
Interest on Investment |
20,000 |
| Salaries |
45,000 |
|
|
| Traveling |
15,000 |
|
|
| Repair Expense |
10,000 |
|
|
| Advertisement |
20,000 |
|
|
| Net Discount Allowed |
5,000 |
|
|
| Depreciation on Plant |
35,000 |
|
|
| Depreciation on Furniture |
6,000 |
|
|
| Interest on Loan |
12,000 |
|
|
| Total |
201,000 |
Total |
168,000 |
|
|
Net Loss transferred to Capital A/c |
33,000 |
| Total |
201,000 |
Total |
201,000 |
| Salman Traders Statement of Financial Position as on 31-12-2013 |
| Assets |
Equity and Liabilities |
| Plant (350,000 – 35,000) |
315,000 |
Capital |
600,000 |
| Furniture (60,000 – 6,000) |
54,000 |
Less: Net Loss |
(33,000) |
| Investment |
200,000 |
Adjusted Capital |
567,000 |
| Interest Receivable |
20,000 |
Loan from MCB |
100,000 |
| Closing Stock |
40,000 |
Add: Interest Payable |
12,000 |
| Accounts Receivable |
90,000 |
Total Loan Payable |
112,000 |
| Cash in Hand |
32,000 |
Accounts Payable |
60,000 |
|
|
Outstanding Telephone Expense |
8,000 |
|
|
Suspense Account |
4,000 |
| Total Assets |
751,000 |
Total Liabilities + Capital |
751,000 |
Q15. Trial balance of Rahim did not agree. Rahim put the difference to suspense account. Subsequently, he located the following errors:
a) Wages paid for installation of Machinery Rs. 600 was posted to wages account.
b) Repairs to Machinery Rs. 400 debited to Machinery account.
c) Repairs paid for the overhauling of second hand machinery purchased Rs. 1,000 was debited to Repairs account.
d) Own business material Rs. 8,000 and wages Rs. 2,000 were used for construction of building. No adjustment was made in the books.
e) Furniture purchased for Rs. 5,000 was posted to purchase account as Rs. 500.
f) Old machinery sold to Karim at its book value of Rs. 2,000 was recorded through sales book.
g) Total of sales returns book Rs. 3,000 was not posted to the ledger.
Rectify the above errors and prepare suspense account to ascertain the original difference in trial balance.
| Sr. No. |
Particulars |
Debit (Rs.) |
Credit (Rs.) |
| a |
Machinery |
600 |
|
| Wages |
|
600 |
| Wages paid for installation of machinery wrongly debited to wages account, now rectified. |
| b |
Repairs |
400 |
|
| Machinery |
|
400 |
| Repairs paid wrongly debited to machinery account now rectified. |
| c |
Machinery |
1000 |
|
| Repairs |
|
1000 |
| Repairs of second hand machinery purchased, wrongly debited to repairs account, now rectified. |
| d |
Building |
10000 |
|
| Purchases |
|
8000 |
| Wages |
|
2000 |
| Material and wages used for construction of building, not debited to building account. |
| e |
Furniture |
5000 |
|
| Purchases |
|
500 |
| Suspense A/c |
|
4500 |
| Furniture purchased for Rs.5000 wrongly debited to purchases account as Rs.500, now rectified. |
| f |
Sales |
2000 |
|
| Machinery |
|
2000 |
| Sale of machinery wrongly recorded in sales book, now rectified. |
| g |
Sales Return |
3000 |
|
| Suspense A/c |
|
3000 |
| Total of sales returns book not posted to ledger, now rectified. |
Q16. Samina prepared a trial balance of her shop for the year ended on 31st March, 2009. The debit total of the trial balance was short by Rs.9,145. She transferred the deficiency to a suspense account. In April 2009, after a close examination, she found the following errors:
a) Purchases day book for September 2008 was under cast by Rs.500.
b) Sales day book of November 2008, was overcast by Rs.5,000
c) A second hand computer purchased for office use for Rs.4,050 was recorded in the office equipment account as Rs.405.
d) A bill drawn by her for Rs.20,000 was not entered in the bills receivable book.
e) A machinery purchased for Rs.50,000 was entered in the Purchases day book.
Pass the necessary journal entries to rectify the above errors to help Samina in finalizing the trial balance.
| Sr. No. |
Particulars |
Debit (Rs.) |
Credit (Rs.) |
| a |
Purchases |
500 |
|
| Suspense A/c |
|
500 |
| Purchases Day Book total under cast by Rs.500, now rectified. |
| b |
Sales |
5,000 |
|
| Suspense A/c |
|
5,000 |
| Sales Day Book, total overcast by Rs.5,000, now rectified. |
| c |
Office Equipment |
3,645 |
|
| Suspense A/c |
|
3,645 |
| Office equipment was under debited by Rs.3,645, now rectified. |
| d |
Bills Receivable |
20,000 |
|
| Sundry Debtors |
|
20,000 |
| Bill drawn completely omitted in the books, now recorded. |
| e |
Machinery |
50,000 |
|
| Purchases |
|
50,000 |
| Purchases account wrongly debited instead of machinery account, now rectified. |
| TOTAL |
79,145 |
79,145 |
Q17.
The following are the transactions of a business for the month of January 2022; you are required to show the effect of the transactions in the Accounting Equation.
Jan. 02 Started Business with cash Rs. 1,000,000.
Jan. 07 Deposited Rs. 270,000 into bank.
Jan. 08 Purchase merchandise for cash Rs. 70,000.
Jan. 09 Purchased building and payment made by cheque Rs. 150,000
Jan. 13 Goods purchased by cash Rs. 55,000
Jan. 18 Paid Rs. 9,500 as Salaries Expenses.
Jan. 20 Owner withdrew Rs. 70,000 for personal use.
Jan. 27 Paid to Creditor Rs. 60,000.
Jan. 27 Paid salaries Rs. 40,000
| Assets = Liabilities + Capital |
| Date |
Particulars |
Assets |
Liabilities |
Capital |
| 02-Jan-2022 |
Started Business (Cash) |
1000000 |
- |
1000000 |
| 07-Jan-2022 |
Bank Deposit (Bank) |
270000 |
- |
- |
| Bank Deposit (Cash) |
(270000) |
- |
- |
| 08-Jan-2022 |
Purchased Merchandise |
70000 |
- |
- |
| Cash |
(70000) |
- |
- |
| 09-Jan-2022 |
Purchase Building |
150000 |
- |
- |
| Cash |
(150000) |
- |
- |
| 13-Jan-2022 |
Purchase Goods |
55000 |
- |
- |
| Cash |
(55000) |
- |
- |
| 18-Jan-2022 |
Paid Salaries |
(9500) |
- |
(9500) |
| 20-Jan-2022 |
Drawings |
(70000) |
- |
(70000) |
| 27-Jan-2022 |
Paid to Credtiors |
(60000) |
(60000) |
- |
| 27-Jan-2022 |
Paid Salaries |
(40000) |
- |
(40000) |
| Total |
Final Balance |
820500 |
(60000) |
880,500 |
| Total |
820500 |
820500 |
