ASSIGNMENT III UNIT 3: RECORDING OF BUSINESS TRANSACTIONS. Q1:- Why is the evidence provided by source documents important to Accounting?

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1 ASSIGNMENT III UNIT 3: RECORDING OF BUSINESS TRANSACTIONS. VERY SHORT ANSWER TYPE QUESTIONS: Q1:- Why is the evidence provided by source documents important to Accounting? Q2:- Differentiate between source documents and vouchers. Q3:- Explain the meaning of pay-in-slip and invoice. Q4:- What is Double entry system? Give its advantages. Q5:- Describe the fundamental accounting equation. Q6:- What is an Account? Draw a format of an Account. Q7:- From the following information calculate total Assets of the business: Capital Rs 40,000, Creditors Rs 30,000, Revenue earned during the period Rs 75,000, Expenses incurred during the period Rs 20,000, value of stock unsold Rs 20,000. Q8:- What is the purpose of contra entry. Q9:- Explain types of Accounts and give their rules. Q10:- Differentiate between trade discount and cash discount. Q.11: Give the meaning of imprest system of petty cash book. Q.12: What is petty cash book? Write down its advantages. Q.13: What is Journal? Show its format. Q.14: Give the debit and credit rules of an account. Q.15: Give an example of decrease in asset and decrease in liability. Q.16: What is an opening entry of Journal? Q.17: What do you understand by Special Purpose Books? Q.18: Cash book is both Journal and Ledger. Elucidate. Q.19: Why payments made to creditors in no way affect the purchases day book? Q.20: What are compound Journal entries? Give an example. SHORT ANSWER TYPE QUESTIONS: Q1: Give Accounting equation for the following transactions: (i) Ram Started business with Rs 50,000. (ii) Purchased goods on credit Rs (iii) Purchased goods for cash Rs (iv) Purchased furniture Rs 500.

2 (v) Withdrew for private use Rs 700. (vi) Paid rent Rs 200. Q.2: Calculate the amount of external equities as on 31 st march 2007: Shyam started a business with a capital of Rs on 1 st April 2006.On the same day; he also borrowed Rs 5000 from a friend to invest in business. During , he earned a profit of Rs 5000, also introduced an additional capital of Rs 6000 and had withdrawn Rs 3000 for his personal use. On 31 st march, 2007 the total assets were Rs Q.3: Enter the following transactions in cash book with cash and bank columns, Year 2009:- Jan 1: Cash in hand Rs 800, Bank overdraft Rs Jan 2: Received a cheque from bharati Rs Jan 7: Deposited the above cheque into bank. Jan 9: Cheque received from shami Rs Jan 15: Bharati s cheque returned dishonored. Jan 20: Shami s cheque was endorsed to Kamal. Jan 25: Income tax paid by cheque Rs 150 Q.4: Prepare a petty cash book (2009) June1: Recived from bank as imp rest cash balance Rs June 7: Bought postage stamps Rs 200. June 8: Paid for stationary Rs 290. June17: Paid for cartage Rs 40. June 20: Paid taxi charges Rs 50. June 22: Paid to Sham against his all Rs 130. June 24: Paid for stationary purchased Rs 100. June 25: Paid tips to canteen bearer Rs 50. June 30: Paid for Tea etc Rs 30. Q.5: Journalize the following transactions: 2009 May 1 saniya invested Rs. 1, 00,000 in cash, goods worth Rs.20,000 and plant Rs. 50,000. May 3 opened a bank account with Vijaya bank by depositing Rs. 70,000. May 5 bought plant from sachin for Rs. 40, 000, paid carriage charges Rs.1, 000 and installation charges Rs.2, 000. May 10 Received advance Rs. 10,000 from David against an order of goods for Rs. 40,000 May 12 executed the order received from David. May 17 Purchased goods from Rahul of list price Rs.30, 000 less 10% trade discount. May 20 sold 1/3 goods received from Rahul to yuvraj at a profit of 25% on cost. May 22 Bank charged interest Rs. 500 and bank charges Rs. 100 for services providing by it.

3 Q.6: Mr. Gupta started business on 1 st Jan with a capital of Rs from the following transactions prepare single column cash book for the month ended 31 st Jan 2009: 2009 Rs Jan. 1 opened a bank account by depositing cash 5000 Jan. 2 bought furniture 500 Jan. 4 bought goods for cash 7000 Jan.5 sold goods for cash 1000 Jan.7 bought goods form Ram 2000 Jan.8 received cash from Raj 500 Jan.10 paid cash to Amit & Son s for goods purchased from them 1500 Jan.11 paid for stationary 200 Jan.13 borrowed money from K.Financers 3500 Jan.15 goods sold for cash 1300 Jan.19 paid rent 100 Jan.21 paid wages 300 Jan.27 paid telephone bill by cheque 1000 Jan.31 paid interest to K.Financers 5000 Jan.31 deposited into bank Q.7: Suhail started business with the cash investment of Rs the following business transactions has been recorded: 1. Paid three months advance rent for office accommodation Rs Bought car for office Rs Purchased office furniture Bought office typewriter from J&K Ltd. Rs Sold extra office furniture at cost to Amir for Rs 1000.Amir paid Rs 600 in cash & accepted a bill at three months for the balance. 6. Amir paid the amount of the bill at maturity and Suhail paid half the amount he owed to J&K Ltd. 7. Collected Rs 6000 as commission. 8. Paid telephone bill amounting to Rs 150. Create the Accounting Equations for above given transactions.

4 Q.8: Distinguish between Journal and ledger. Q.9: Why do we prepare Bank reconciliation statement? Q.10: From the following information prepare a BRS: (a) Credit balance as per cash book as on 31 January Rs 7100 (b) Cheques issued but not presented for payment Rs 2300 (c) Interest on overdraft not recorded in cash book Rs 180 LONG ANSWER TYPE QUESTIONS: Q1: Prepare accounting equation from the following: (i) Raja started business with cash Rs (ii) Bought goods for cash Rs and on credit for Rs (iii) Goods costing Rs 75000, sold at a profit of 10%, half of the payment received in cash. (iv) Goods costing Rs sold for Rs on credit. (v) Paid for rent Rs 2000 and for salaries Rs (vi) Accrued interest Rs 500. Q2: Enter the following transactions in a cash book with cash and bank columns: 2007 April 1 balance of cash in hand Rs 400, overdraft at bank Rs April 4 invested further capital Rs out of which Rs 6000 deposited into the bank. April 5 sold goods cash Rs April 6 received from gopi Rs 8000; discount allowed to him Rs 200. April 10 purchased goods for cash April 11 paid to Ram our creditor Rs 2500; discount allowed by him Rs 65. April 14 office furniture purchased from Kamal in cash Rs 200. April 14 rent paid Rs 50. April 14 electricity charges paid Rs 100. April 16 drew cheque for personal use Rs 850. April 17 cash sales Rs April 18 collection from Anu Rs 4000, deposited in the bank on 19 th April. April 19 drew from the bank for office use Rs 5000 April 24 dividend received by cheque Rs 500, deposited in the bank on the same day. April 25 commission received by cheque Rs 2300 deposited in the bank on 28 th April. April 29 drew from the bank for salary of the office staff Rs April 29 paid salary of the manager by cheque Rs April 30 deposited cash in the bank Rs 1000.

5 Q.3: Post the following transactions into the Ledger accounts April 1 started business with cash Rs April 2 bought goods for cash Rs April 3 bought furniture on credit from Sona & co. Rs April 5 bought goods from L.K Bros. Rs April 6 paid to Sona & co Rs 4900 in full settlement. April 7 paid rent of building Rs 750 only 1/3 rd of the building is used for office purposes. 2/3 rd is for private use. April 8 sold household furniture Rs 7000 and amount invested in the business. April 9 sold to Jay, costing Rs at 10% profit on cost. April 11 received from Jay a cheque of Rs April 17 paid rent Rs 1500, half of which is paid in advance. April 20 commission received Rs 300. April 21 paid cash for stationary Rs 20. April 22 paid for carriage Rs 50. April 23 cheque issued for insurance premium Rs 500. April 24 received in cash, the balance due from Jay. April 26 paid trade expenses Rs 250. April 28 additional cash invested in business Rs April 30 paid to K.L Bros. Rs 19500, in full settlement. Q.4: From the following particulars ascertain the balance that would appear in the bank pass book of Vijay as on 31 st march, (i) The bank overdraft as per cash book on 31 st march, 2008 Rs (ii) Bank charges of Rs.15 for the above period are debited in the pass book. (iii) Interest on overdraft for 6 months ending 31 st march 2009 Rs.80 was entered in the pass book. (iv) Interest on investment collected by bank and credited in Pass book Rs 600. (v) Cheque paid into bank but not cleared before 31 st march 2009, was for Rs (vi) Cheque issued but not cashed prior to 31 st march, 2009, amounted to Rs.584. Q.5: Record the following transactions of M/S Rahil Electronics in the Returns Inwards Book: Jan.2009 Jan.15 One washing machine sold on credit to M/S Mohan & co. for Rs received back. Jan.18 Received back Santro car sold for Rs Jan.25 Paid Rs 4500 to Sara for return of one T.V. Jan.26 Received back one electric toaster sold to Ajay on credit for Rs 500 after a trade discount of Rs 50.

6 Q.6: Prepare a Triple column cash book from the following transactions: 2010 Jan.1: Cash in hand Rs 50000, Bank overdraft Rs Jan.2: General expenses paid Rs 5000 Jan.3: Deposited into bank Rs Jan. 7: Purchased goods from Hari on credit Rs Jan. 8: Drew from bank for personal use Rs 1000 Jan.10: Paid to Hari in full settlement Rs Jan.15 Recovered from Ravi, who owes Rs 5000, Rs 2000 only. Q.7: Prepare a Bank Reconciliation Statement from the following information and ascertain the balance as per cash book as on 31 st Dec.2009: i) Cheques issued to creditors amounting to Rs 20000, in the month of December 2009, of cheques worth Rs 3000 were presented to the bank up to 31 st December ii) A cheque of Rs 6000 received from Raj was deposited in the bank account on 26 December 2009 but no entry was passed in the cash book. The same was collected and credited to Rahul account on 29 December iii) A cheque of Rs 2000 received from Ramesh on 20 th December 2009 was recorded in the discount column of the cash book but was not banked. iv) The Pass book showed that the bank had collected Rs 4000 as interest on Government Securities. The bank had charged interest Rs 500 and bank charges Rs 200. There was no entry in the cash book for the same. Q.8: From the following transactions pass the journal entries, post them into ledger and prepare a Trial balance: Jan.1 started business with cash Rs Jan.5 purchased goods from ram Rs Jan.10 bought furniture for the shop Rs Jan.17 sold goods for Rs.1500 to pardeep. Jan.20 paid Rs.2900 to ram in full settlement Jan.24 paid rent Rs.150 and rent outstanding Rs.250 Jan.27 sold goods for Rs. 500 Jan.29 received Rs.1350 from pardeep in full settlement Jan.31 purchased type writer for Rs.1100 Q.9: Record the following transactions in petty cash book. On 1 ST May 2009 Rs.250 were given to petty cash clerk who made the following payments: 2009 May 2 stationary Rs.10, postage Rs. 15, travelling expenses Rs.15 May 7 buses fare Rs.4. collie wages Rs.5, telegram Rs.9 May 12 thela hire Rs.5, repair expenses Rs.10 May 20 collie wages Rs.6 May 25 refreshment expenses Rs. 12, printing Rs, 50, thela hire Rs.6 May 27 postage Rs.20, railway freight Rs.18 May 31 entertainment expenses Rs.16, taxi fare Rs.23, Chowkidar s wages Rs.25 Q.10: Prepare purchases and sales book of Hindustan general merchants from the following: 2010 Sept.1 purchased from Ram, Agra: 20 tins per tin 20 bags sugar@ Rs.40 per bag

7 Sept.5 sold to Gupta stores Kanpur: 20 bags Rs. 30 per bag 15 bags Rs. 30 per bag Sept.10 purchased from Rastogi Bros. Meerut 30 tins per tin 15 bags Rs.40 per bag Less 10% trade discount Sept.20 sold to Aneel Gupta &Co. Agra: 20 bags per bag 10 tins Rs.225 per tin Sept.25 bought from Anil Bros, Aligrah 10 tins Rs. 180 per tins 25 bags Rs 40 per bag Sept.26 sold to Om Prakash & co, New Delhi 100 tins Rs 170 per tin 200 bags Rs 50 per bag Sept.28 bought from Santosh Bors, Mumbai 10 tins Rs 150 per tin Less 10% Trade Discount Sept.30 sold to Anu stores, Gandhi Nagar, Delhi 100 bags Rs 45 per bag Less 10% Trade Discount

Chapter 3 JOURNAL LEDGER AND TRIAL BALANCE

1 Chapter 3 JOURNAL LEDGER AND TRIAL BALANCE Concept Capsule 1 Classify the following a/c under traditional approach. Account Name Personal Account Real Account Nominal Account Capital Introduced Drawing