XI ACCOUNTING REGULAR / PRIVATE

Transcription

1 The workings under the heading of Additional Working are not required according to the requirement of the examiner. These are only for understanding the solutions. For more help, visit XI ACCOUNTING REGULAR / PRIVATE Compiled and Solved by: S.Hussain

2 ACCOUNTING 1993 REGULAR / PRIVATE Compiled & Solved by: S.Hussain Time: 3 Hours Max. Marks: 100 Q.No.1 ACCOUNTING EQUATION a. For each of the following determine the underlined missing item:- (i) The liabilities of a business entity having assets of Rs.200,000 and owner s equity of Rs.90,000. (ii) The assets of a business entity having liabilities of Rs.50,000 and owner s equity of Rs.100,000. (iii) The owner s equity of a business having assets of Rs.80,000 and liabilities of Rs.40,000. (iv) The revenue of a business entity having expenses of Rs.60,000 and net income of Rs.15,000. (v) The expenses of a business entity having revenues of Rs.90,000 and net loss of Rs.8,000. b. Transactions given below relate to the business of Atlas Company. For each of the transaction, you are required to indicate the effects on the elements of accounting equation using (+) for increase (-) for decrease, and (0) for no change. Use the headings and follow the example given below:- Transaction no. Assets Liabilities Owner s equity (i) Invest cash in business. (ii) Purchased furniture on account. (iii) Purchased office equipment for cash. (iv) Paid a liability. (v) Received cash for service rendered. (vi) Paid salaries expense in cash. (vii) Withdrew cash from the business for personal use of owner. SOLUTION 1 (a) (i) Assets = Liabilities + Owner s equity Liabilities = Assets Owner s equity Liabilities = 200,000 90,000 Liabilities = 110,000 (ii) Assets = Liabilities + Owner s equity Assets = 50, ,000 Assets = 150,000 (iii) Owner s equity = Assets Liabilities Owner s equity = 80,000 40,000 Owner s equity = 40,000 (iv) Revenue = Expenses + Profit Revenue = 60, ,000 Revenue = 75,000 (v) Expenses = Revenue + Loss Expenses = 90, ,000 Expenses = 98,000 X I A c c o u n t i n g 1993 ( R e g u l a r / P r i v a t e ) Page 2

3 SOLUTION 1 (b) Transaction No. Assets Liabilities Owner s Equity (i) (ii) (iii) (iv) (v) (vi) (vii) Q.No.2 CASH BOOK GIVEN Mr. Dinsha, a sole proprietor, uses a Three Column Cash Book. On March 1, 1993 cash on hand was Rs.18,000 and cash in bank Rs.20,500. During the month, he completed the following transactions:- March 1: Issued a cheque for Rs.500 for establishing a Petty Cash Fund. March 3: Received a cheque for Rs.4,900 from Mr. Ghani in full settlement of his account Rs.5,000. March 5: Deposited Mr. Ghani s cheque into bank. March 7: Issued a cheque for Rs.2,940 to Sunrise Company in full settlement of their account of Rs.3,000. March 8: Issued a cheque for Rs.4,000 in payment of a bill of exchange. March 11: Sold merchandise for cash Rs.10,500 of which of Rs.6,500 was deposited into bank. March 15: Purchased merchandise for Rs.8,000 for which Rs.2,000 was paid in cash and a cheque was issued for the balance of Rs.6,000. March 18: Withdrew cash from bank for use in office Rs.3,000. March 22: Withdrew cash from bank for personal use of the proprietor Rs.1,500. March 25: Collected Rs.5,000 cash at maturity of a bill receivable. March 31: March 31: Paid salaries to employees Rs.5,000 in cash. Issued a cheque for Rs.450 to replenish the Petty Cash Fund. (Debit Miscellaneous Expense Account). REQUIRED a) Open the Cash Book with the balance on March 1, 1993 and record the transactions therein. b) Balance and rule off the Cash Book on March 31 and bring down the balance on April 1, c) Set up T-accounts for Sales Discount and Purchase Discount and make postings to them giving date and reference. SOLUTION 2 GENERAL LEDGER Sales Discount 31.March.1993 CB Rs.100 Purchase Discount 31.March.1993 CB Rs.60 X I A c c o u n t i n g 1993 ( R e g u l a r / P r i v a t e ) Page 3

4 Date 1.March 3.March 5.March 11.March 18.March 25.March 1.April Particulars Balances A/R (Ghani) Cash (Deposited) Sales Bank (Withdrew) Bill receivable B/D Balance P/R (C) (C) S.Disc Cash 18,000 4,900 4,000 3,000 5,000 34,900 23,000 Bank 20,500 4,900 6,500 31,900 13,510 Date 1.March 5.March 7.March 8.March 15.March 18.March 22.March 31.March 31.March 31.March Particulars Petty cash fund Bank (Deposited) A/P (Sunrise Company) Bill payable Purchases Cash (Withdrew) Drawings Salaries expenses Miscellaneou s expense C/D Balance P/R (C) (C) P.Disc Cash 4,900 2,000 5,000 11,900 23,000 34,900 Bank 500 2,940 4,000 6,000 3,000 1, ,390 13,510 31,900 MR. DINSHA THREE COLUMN CASH BOOK FOR THE MONTH OF MARCH 1993 Compiled & Solved by: S.Hussain X I A c c o u n t i n g 1993 ( R e g u l a r / P r i v a t e ) Page 4

5 Q.No.3 GENERAL JOURNAL GIVEN Take transactions given in Question numbered 2 in this paper. REQUIRED Record the transactions in the standard form of General Journal. Give explanation below each entry. SOLUTION 3 MR. DINSHA GENERAL JOURNAL FOR THE MONTH OF MARCH 1993 Date Particulars P/R Debit Credit 1.Mar Petty cash fund 500 Bank 500 (To record the establishment of petty cash fund) 3.Mar Cash 4,900 Sales discount 100 Accounts receivable (Mr. Ghani) 5,000 (To record the cheque received from customer after allowing him discount) 5.Mar Bank 4,900 Cash ` 4,900 (To record the Mr. Ghani s cheque deposited into bank) 7.Mar Accounts payable (Sunrise Company) 3,000 Purchase discount 60 Bank 2,940 (To record the cheque issued to supplier after discount) 8.Mar Bill payable 4,000 Bank 4,000 (To record the cheque issued in payment of bill of exchange) 11.Mar Cash 4,000 Bank 6,500 Sales 10,500 (To record the goods sold for cash and deposited into bank) 15.Mar Purchases 8,000 Cash 2,000 Bank 6,000 (To record the goods purchase for cash and issued cheque for balance) 18.Mar Cash 3,000 Bank 3,000 (To record the cash withdrew from bank for office use) 22.Mar Drawings 1,500 Bank 1,500 (To record the cash withdrew from bank for personal use) X I A c c o u n t i n g 1993 ( R e g u l a r / P r i v a t e ) Page 5

6 Date Particulars P/R Debit Credit 25.Mar Cash 5,000 Bill receivable 5,000 (To record the cash received against bill of exchange) 31.Mar Salaries expenses 5,000 Cash 5,000 (To record the salaries paid to employees) 31.Mar Miscellaneous expenses 450 Bank 450 (To record the cheque issued to replenish the petty cash fund) Q.No.4 FINANCIAL STATEMENT GIVEN The following balances have been taken from the pre-closing trial balance prepared from the ledger of Edijii Traders on December 31, 1992:- Debit Balances Cash Rs.6,000; Accounts receivable Rs.10,000; Merchandise inventory ( ) Rs.4,500; Prepaid office rent Rs.2,000; Sales equipment Rs.8,500; Edijii drawings Rs.1,000; Sales returns & allowances Rs.800; Purchases Rs.20,000; Transportation in Rs.2,000; Office salaries expense Rs.5,000; Sales salaries expenses Rs.6,000. Credit Balances Allowance for bad debts Rs.1,500; Allowance for depreciation on sales equipment Rs.2,500; Accounts payable Rs.6,500; Edijii capital Rs.12,300; Sales Rs.40,000; Purchase returns & allowances Rs.1,400; Purchase discount Rs.1,600. Data for Adjustment on December 31, 1992 (i) Increase allowance for bad debts by Rs.500. (ii) Prepaid office rent expired Rs.800. (iii) Provide depreciation on sales equipment for the year Rs.1,000. (iv) Office salaries expense outstanding Rs.900. (v) Sales salaries were prepaid to the extent of Rs.800. (vi) Merchandise inventory on December 31, 1992 was valued at Rs.6,200. (vii) A purchase of merchandise of Rs.500 was wrongly charged to sales Equipment account. (viii) Salary to a sales person for the last week of December Rs.400 was paid by the owner from business cash, which was mistakenly debited to his Drawing account. REQUIRED a) Prepare INCOME STATEMENT for the period ended on December 31, 1992, grouping properly revenues and expenses. b) Prepare Classified BALANCE SHEET as of December 31, SOLUTION 4 (a) EDIJII INCOME STATEMENT FOR THE PERIOD ENDED 31 DECEMBER 1992 Sales 40,000 Less: Sales returns (800) Net sales 39,200 Less: Cost of Goods Sold: Merchandise inventory (beg) 4,500 X I A c c o u n t i n g 1993 ( R e g u l a r / P r i v a t e ) Page 6

7 Add: Net Purchases: Purchases (20, ) 20,500 Add: Transportation in 2,000 Delivered purchases 22,500 Less: Purchase discount (1,600) Less: Purchase returns & allowances (1,400) Net purchases 19,500 Merchandise available for sale 24,000 Less: Merchandise inventory (end) (6,200) Cost of goods sold (17,800) Gross profit 21,400 Less: Operating Expenses: Office salaries expense (5, ) 5,900 Sales salaries expenses (6, ) 5,600 Bad debts expense 500 Office rent expense 800 Depreciation expense 1,000 Total operating expenses (13,800) Net profit 7,600 SOLUTION 4 (b) EDIJII BALANCE SHEET AS ON 31 DECEMBER 1992 ASSETS EQUITIES Current Assets: Current Liabilities: Cash 6,000 Accounts payable 6,500 Accounts receivable 10,000 Office salaries payable 900 Les: All for bad debts (2,000) 8,000 Total liabilities 7,400 Merchandise inventory 6,200 Prepaid office rent 1,200 Owner s Equity: Prepaid sales salaries 800 Capital 12,300 Total current assets 22,200 Add: Net profit 7,600 Fixed Assets: 19,900 Sales equipment 8,000 Less: Drawings (600) Less: All for depreciation (3,500) Total owner s equity 19,300 Total fixed assets 4,500 Total assets 26,700 Total equities 26,700 Q.No.5 ADJUSTING AND REVERSING ENTRIES GIVEN a) Take the data for adjustments and also relevant balances entries on December 31, 1992 in the General Journal. b) Give Reversing entries in the General Journal where necessary. X I A c c o u n t i n g 1993 ( R e g u l a r / P r i v a t e ) Page 7

8 SOLUTION 5 (a) EDIJII ADJUSTING ENTRIES FOR THE PERIOD ENDED 31 DECEMBER 1992 Date Particulars P/R Debit Credit 1 Bad debts expense 500 Allowance for bad debts 500 (To adjust the bad debts expense) 2 Office rent expense 800 Prepaid office rent 800 (To adjust the prepaid office rent) 3 Depreciation expense 1,000 Allowance for depreciation Sales equipment 1,000 (To adjust the depreciation expense) 4 Office salaries expenses 900 Office salaries payable 900 (To adjust the office salaries expense) 5 Prepaid sales salaries 800 Sales salaries expense 800 (To adjust the sales salaries expense) 6 Merchandise inventory 6,200 Expense and revenue summary 6,200 (To close the merchandise inventory) 7 Purchases 500 Sales equipment 500 (To correct the sales equipment account) 8 Sales salaries expense 400 Drawings 400 (To correct the drawings account) SOLUTION 5 (b) EDIJII REVERSING ENTRIES FOR THE PERIOD 1 JANUARY 1993 Date Particulars P/R Debit Credit 1 Office salaries payable 900 Office salaries expenses 900 (To reverse the office salaries expenses) 2 Sales salaries expense 800 Prepaid sales salaries 800 (To reverse the sales salaries expense) Q.No.6 CLOSING PROCESS GIVEN Take the EXPENSE and REVENUE account balances and the data for adjustment as given in Question numbered 4 in this paper. REQUIRED a) Determine the adjusted balances of the EXPENSE and REVENUE accounts. X I A c c o u n t i n g 1993 ( R e g u l a r / P r i v a t e ) Page 8

9 b) Set up T-account for cost of goods sold account and post relevant account balances to it and close it. (General Journal entries for closing are not required here). c) Set up T-account for Expense and Revenue Summary. Post the balances of relevant account to it and close it. (Closing Journal entries are not required here). d) Give a Journal entry to close the Drawings account. SOLUTION 6 (a) ADJUSTED BALANCES EXPENSES: Office salaries expense (5, ) 5,900 Sales salaries expenses (6, ) 5,600 Bad debts expense 500 Office rent expense 800 Depreciation expense 1,000 Sales returns and allowances 800 Merchandise inventory (beg) 4,500 Purchases 20,500 Transportation in 2,000 Adjusted balance of expenses 41,600 ADJUSTED BALANCES REVENUE: Sales 40,000 Merchandise inventory (end) 6,200 Purchase discount 1,600 Purchase returns 1,400 Adjusted balance of revenue 49,200 SOLUTION 6 (b) GENERAL LEDGER Cost of Goods Sold Merchandise inv. (beg) 4,500 Purchase returns 1,400 Purchases 20,500 Purchase discount 1,600 Transportation in 2,000 Merchandise inv. (end) 6,200 9,200 Cost of goods sold 17,800 27,000 27,000 SOLUTION 6 (c) GENERAL LEDGER Expense and Revenue Summary Merchandise inv. (beg) 4,500 Purchase returns 1,400 Purchases 20,500 Purchase discount 1,600 Transportation in 2,000 Merchandise inv. (end) 6,200 Office salaries expense 5,900 Sales 40,000 Sales salaries expenses 5,600 Bad debts expense 500 Office rent expense 800 Depreciation expense 1,000 Sales returns ,600 Net income 7,600 49,200 49,200 X I A c c o u n t i n g 1993 ( R e g u l a r / P r i v a t e ) Page 9

10 SOLUTION 6 (d) EDIJII CLOSING ENTRY Date Particulars P/R Debit Credit 1 Capital 600 Drawings 600 (To close the drawings account) Q.No.7 SPECIAL JOURNALS GIVEN The following is the copy of page 16 of the single-column Sales Journal of Globe Traders prepared incorrectly by a newly appointed and inexperienced employee:- GLOBE TRADERS SALES JOURNAL Date Invoice No. Name of Customer P/R Amount Sales of merchandise to Tanvir Sons on credit, terms: Rs.5,000 2/10, n/ Sales of merchandise for cash 3, Sales of an old furniture on credit 2, Sale of merchandise to Guljee on credit, terms: n/30 8, Sale of merchandise to Tata on credit, terms: 1/10, n/30 7, Sale of NIT Units for cash 6,800 REQUIRED a) Prepare in good form a revised and correct Sales Journal from the above data. Rule off the Journal on April 30, 1993 giving the journal entry to post the total and posting references. Accounts Receivable Control bears No.5 and Sales Account no.41. b) Set up Standard T-Accounts for Controlling account in the General Ledger and three column account for each customer in the Accounts Receivable Subsidiary Ledger and make postings to the accounts affected giving date and reference. SOLUTION 7 (a) GLOBE TRADERS SALES JOURNAL FOR THE MONTH OF APRIL 1993 (Page # 16) Date Invoice No. Name of Customer P/R Amount Tanvir 5, Guljee 8, Tata 7, Accounts receivable Dr. 5 20,500 Sales Cr. 41 SOLUTION 7 (b) GENERAL LEDGER Accounts Receivable (5) Date Particulars P/R Amount Date Particulars P/R Amount 30.April Sales SJ-16 20, April c/d bal 20,500 20,500 20,500 1.May b/d bal 20,500 X I A c c o u n t i n g 1993 ( R e g u l a r / P r i v a t e ) Page 10

11 Sales (41) Date Particulars P/R Amount Date Particulars P/R Amount 30.April c/d bal 20, April A/R SJ-16 20,500 20,500 20,500 1.May b/d bal 20,500 GLOBE TRADERS SUBSIDIARY LEDGER FOR THE MONTH OF APRIL 1993 Tanvir Sons Date Explanation Reference Debit Credit Balance 1.April.1993 SJ-16 5,000 5,000 Guljee Date Explanation Reference Debit Credit Balance 15.April.1993 SJ-16 8,000 8,000 Tata Date Explanation Reference Debit Credit Balance 20.April.1993 SJ-16 7,500 7,500 Q.No.8 BANK RECONCILIATION STATEMENT GIVEN On a comparison of cash book entries with those of the bank statement of Rahim & Co. on May 31, 1993 the following differences were found:- (i) Cash book balance (Dr.) on May 31 was Rs.5,650. (ii) Bank statement balance (Dr.) overdraft on May 31 was Rs.8,780. (iii) Markup charged by bank, Rs.500 was not recorded in the cash book. (iv) Service charged levied by bank not recorded in the cash book Rs.150. (v) A cheque for Rs.9,500 deposited into bank was wrongly entered in the bank statement as for Rs.5,900. (vi) Cheques outstanding Rs.5,820. (vii) Deposit of Rs.16,000 on May 31 not shown on bank statement. (viii) Bank statement showed a direct deposit of Rs.1,500 by a customer. (ix) Accompanying the bank statement was a customer s cheque for Rs.1,200 returned unpaid by bank. (x) A cheque for Rs.800 issued in settlement of accounts payable was erroneously entered in cash book as for Rs.500. REQUIRED a) Prepare a Bank Reconciliation Statement as of May 31, b) Give entries in General Journal for updating the cash records. X I A c c o u n t i n g 1993 ( R e g u l a r / P r i v a t e ) Page 11

12 SOLUTION 8 (a) RAHIM & CO. BANK RECONCILIATION STATEMENT FOR THE MONTH OF MAY 1993 Particulars Cash Book Pass Book Balance 31 May ,650 (8,780) Less: Mark up charges (iii) (500) 5,150 Less: Service charges (iv) (150) 5,000 Add: Error by bank in deposit (v) 3,600 (5,180) Less: Outstanding cheques (vi) (5,820) (11,000) Add: Last day deposit cheque (vii) 16,000 5,000 Add: Direct deposit (viii) 1,500 6,500 Less: Dishonoured cheque (1,200) 5,300 Less: Accounts payable (error) (300) Reconcile Balance 5,000 5,000 SOLUTION 8 (b) RAHIM & CO. GENERAL JOURNAL FOR THE MONTH OF MAY 1993 Date Particulars P/R Debit Credit 1 Mark up charges 500 Bank 500 (To record the mark up charged by bank) 2 Service charges 150 Bank 150 (To record the service charges) 3 Bank 1,500 Accounts receivable 1,500 (To record the direct deposit by a customer) 4 Accounts receivable 1,200 Bank 1,200 (To record the dishonoured cheque) 5 Accounts payable 300 Bank 300 (To record the error in accounts payable) X I A c c o u n t i n g 1993 ( R e g u l a r / P r i v a t e ) Page 12