AIOU 1339 Basics of Accounting Questions

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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 1Capital1500015000 Dr
May 1Property and Land500010000 Dr
May 2Prepaid Insurance15008500 Dr
May 15Service Revenue560014100 Dr
May 16Accounts Payable180012300 Dr
May 22Accounts Receivable188014180 Dr
May 31Utilities Expense50013680 Dr
May 31Salaries Expense300010680 Dr
Capital
Date Particulars Debit (Rs.) Credit (Rs.) Balance
May 1Cash, Equipment1900019000 Cr
Equipment
Date Particulars Debit (Rs.) Credit (Rs.) Balance
May 1Capital40004000 Dr
May 3Accounts Payable600010000 Dr
Property
Date Particulars Debit (Rs.) Credit (Rs.) Balance
May 1Cash and Note3900039000 Dr
Land
Date Particulars Debit (Rs.) Credit (Rs.) Balance
May 1Cash and Note2000020000 Dr
Notes Payable
Date Particulars Debit (Rs.) Credit (Rs.) Balance
May 1Property/Land5400054000 Cr
Prepaid Insurance
Date Particulars Debit (Rs.) Credit (Rs.) Balance
May 2Cash15001500 Dr
Supplies
Date Particulars Debit (Rs.) Credit (Rs.) Balance
May 3Accounts Payable500500 Dr
May 20Return240260 Dr
Accounts Payable
Date Particulars Debit (Rs.) Credit (Rs.) Balance
May 3Supplies and Equipment65006500 Cr
May 16Cash18004700 Cr
May 20Supplies Return2404460 Cr
Service Revenue
Date Particulars Debit (Rs.) Credit (Rs.) Balance
May 15Cash and A/R80308030 Cr
May 31Accounts Receivable490012930 Cr
Accounts Receivable
Date Particulars Debit (Rs.) Credit (Rs.) Balance
May 15Service Revenue24302430 Dr
May 22Cash1880550 Dr
May 31Service Revenue49005450 Dr
Utilities Expense
Date Particulars Debit (Rs.) Credit (Rs.) Balance
May 31Cash500500 Dr
Salaries Expense
Date Particulars Debit (Rs.) Credit (Rs.) Balance
May 31Cash30003000 Dr

c) Trial Balance

Trial Balance of Akber Ali as at May 31, 2024
Account Title Debit (Rs.) Credit (Rs.)
Cash10,680
Accounts Receivable5,450
Supplies260
Prepaid Insurance1,500
Equipment10,000
Property39,000
Land20,000
Accounts Payable4,460
Notes Payable54,000
Capital19,000
Service Revenue12,930
Utilities Expense500
Salaries Expense3,000
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

  1. Closing Stock Valued at 31-12-2013 for Rs. 40,000.
  2. Interest on Investment is receivable @ 10% per year.
  3. Interest on Loan from MCB is Payable @ 12% per year.
  4. Telephone Expense for the month of March 2011 is still Payable Rs. 8,000.
  5. Charge depreciation on Plant and Furniture @ 10%.

Required

  1. Prepare Trading and Profit and Loss A/C, and
  2. 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



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