FINAL ACCOUNTING - SPECIMEN QUESTION WITH ANSWERS PART 2

Question 10 :

King, Queen and Jack are sharing profits and losses in the ratio of 3 : 2 : 1. They are also entitled to interest on loan at 10% p.a., but not interest on capital.

The partners decided to dissolve the firm on 31.03.2000. Balance Sheet was drawn up to 31.12.1999 which is reproduced below :

Liabilities	Rs.	Assets	Rs.
Capital of King	1,68,000	Building	2,10,000
Queen	1,15,500	Furniture	35,000
King’s loan	77,000	Motor cycle	1,40,000
Sundry creditors	2,80,000	Stock	1,92,500
Bank overdraft	1,05,000	Sundry debtors	1,40,000
		Jack’s Capital A/c	28,000
	7,45,500		7,45,500

Between the balance sheet date and the date of dissolution purchases amounted to Rs. 1,05,000 and sales Rs. 1,57,500. In addition to payments made to creditors, a sum of Rs. 42,000 and Rs. 21,000 were paid on account of salaries and general expenses.

Each partner withdrew Rs. 2,800 per month. On 31.03.2000 debtors, creditors and stock amounted to Rs. 2,10,000, Rs. 2,45,000 and Rs. 1,57,500 respectively.

 In course of proceedings the partners decided to transfer the entire business to a private limited company with all assets, liabilities and partners loan for a consideration of Rs. 3,15,000. Dissolution expenses amounted to Rs. 9,800 was borne by King.

You are advised to present the Balance Sheet as at 31.03.2000 along with necessary ledger accounts of the firm viz. KQJ & Co.

Answer :
Dr.	Sundry Debtors A/c		Cr.
Particulars	Rs.	Particulars	Rs..
To  Balance b/d	1,40,000	By  Bank	87,500
Sales	1,57,500	(balancing figure)
		Balance c/d	2,10,000
	2,97,500		2,97,500

Dr.	Sundry Creditors A/c		Cr.
Particulars	Rs.	Particulars	Rs..
To  Bank	1,40,000	By  Balance	2,80,000
(balancing figure)
Balance c/d	2,45,000	Purchase	1,05,000
	3,85,000		3,85,000

Dr.		Bank A/c	Cr.
Particulars	Rs.	Particulars	Rs..
To  Sundry Debtors	87,500	By  Balance b/d	1,05,000
Balance c/d	2,45,700	Sundry Creditors	1,40,000
		Salaries	42,000
		General expense	21,000
		Drawings	25,200
	3,33,200		3,33,200

Dr.	Profit and Loss A/c		Cr.
Particulars	Rs.	Particulars	Rs..
To  Opening Stock	1,92,500	By  Sales	1,57,500
Purchases	1,05,000	Closing stock	1,57,500
Salaries	42,000	Balance c/d	45,500
General expenses	21,000
	3,60,000		3,60,50

To   Balance c/d	45,500	By  Net loss :
Interest on loan	1,925	King	23,712
		Queen	15,808
		Jack	7,905
	47,425		47,425
Note :	Profit on realisation	Rs.
Total consideration		3,15,000
Less : Net assets	1,35,888
	91,292
	2,27,180
	– 44,305	1,82,875
Less : Realisation expenses		1,32,125
		9,800
		1,22,325

Dr.				Partners’ Capital Accounts						Cr.
			King	Queen		Jack		King	Queen	Jack
			Rs.	Rs.		Rs.		Rs.	Rs.	Rs.
To Balance c/d			—	—		28,000	By Balance b/d	1,68,000	1,15,000	—
	Profit & Loss A/c		23,712	15,808		7,904	Balance c/d	—	—	44,305
	(share of loss)
	Drawings		8,400	8,400		8,400
	Balance c/d	1,35,888		91,292		—
		1,68,000		1,15,500		44,305		1,68,000	1,15,000	44,305
						KQJ & Co.
				Balance Sheet as at 31-03-2000
	Liabilities			Rs.			Assets			Rs.
	Capital A/cs :		1,35,888				Building			2,10,000
	King						Furniture			35,000
	Queen		91,292	2,27,180			Motorcycle			1,40,000
	Sundry Creditors			2,45,000			Stock-in-trade			1,57,500
	Bank overdraft			2,45,700			Sundry Debtors			2,10,000
	King’s loan A/c		77,000				Capital A/c :
	Add : Interest on loan		1,925	78,925			Jack			44,305
				7,96,805						7,96,805

Question 11 :

From the information supplied below by Vinay Ventures, prepare Profit and Loss Account for the year ended 31-12-1999 and a Balance Sheet as on the date:

	1-1-1999	31-12-1999
Sundry Fixed Assets	1,80,000	2,00,000
Stock-in-hand	1,40,000	1,90,000
Cash in hand	82,000	48,000
Cash at Bank	22,000	80,000
Sundry Debtors	?	2,60,000
Sundry Creditors	1,20,000	98,000
Outstanding Expenses	10,000	6,000

During the year the following transactions took place:

		Rs.
(1)	Collection from Debtors and discount allowed to them	24,50,000
(2)	Return Inward	60,000
(3)	Bad Debts	10,000
(4)	Sales (cash and credit)	30,00,000
(5)	Return outward	30,000
(6)	Paid to suppliers by cheque	23,62,000
(7)	Collection from debtors and deposited into the bank	24,30,000
(8)	Cash Purchases	1,00,000
(9)	Salaries and wages paid by cheque	1,80,000
(10)	Miscellaneous cash expenses	50,000
(11)	Drawings in cash	94,000
(12)	Assets purchased by cheque	20,000
(13)	Cash withdrawals from bank	2,10,000
(14)	Cash sales deposited into bank	?
(15)	Discount received	40,000

Answer :

In the Books of Vinay Ventures Limited.

Trading and Profit and Loss Account for the period ended on 31.12.1999

		Particulars	Amount	Amount		Particulars	Amount	Amount
	To	Opening stock.		1,40,000	B y	Sales
	”	Purchases :				Cash	4,00,000
		Cash	1,00,000			Credit	26,00,000
		Credit	24,10,000				30,00,000
			25,10,000			Less :  Return
		Less :  Return				Inwards	60,000	29,40,000
		outward.	30,000	24,80,000	B y	Closing stock.		1,90,000
	”	Salary & Wages.		1,80,000
	”	Misc. expenses.		46,000	B y	discount received		40,000
		(50000 + 6000 - 10000)
	”	Discount allowed.		20,000
	”	Bad debt.		10,000
	”	Net Profit transferred		2,94,000				.
		to Capital A/c.
				31,70,000				31,70,000
				Balance Sheet as on 31.12.1999
		Liabilities	Amount	Amount		Assets	Amount	Amount
	Capital Account :				Sundry assets			2,00,000
	Opening balance.		4,74,000		(180000+20000)
	Add: Net Profit		2,94,000		Stock in trade			1,90,000
			7,68,000		Sundry debtors			2,60,000
	Less : Drawings.		94,000	6,74,000	Cash at Bank			80,000
	Sundry creditors			98,000	Cash in hand			48,000
	Outstanding expenses			6,000				.
				7,78,000				7,78,000
				Opening Balance Sheet
		Liabilities	Amount	Amount		Assets	Amount	Amount
	Sundry Creditors			1,20,000	Sundry Assets			1,80,000
	Outstanding expenses			10,000	Sundry debtors			1,80,000
	Capital Account (balancing				Stock in trade			1,40,000
	figure)			4,74,000	Rent			22,000
					Cash in hand			82,000
				6,04,000				6,04,000

Sundry Debtors Account

Particulars

Amount

Particulars.

Amount

To

Balance b/d.

1,80,000

B y

Bank

24,30,000

balancing figure

B y

Discount allowed

20,000

To

Credit sales.

26,00,000

B y

Return inward

60,000

B y

Bad debt

10,000

B y

Balance b/d

2,60,000

27,80,000

2 7,80,000

Sundry Creditors Account

Particulars

Amount

Particulars.

Amount

To

Bank

23,62,000

B y

Balance b/d

1,20,000

”

Discount

40,000

B y

Credit purchases

24,10,000

”

Returns

30,000

(balancing fig)

”

Balance c/d.

98,000

.

25,30,000

25,30,000

Cash & Bank Account

Particulars

Amount

Amount

Particulars

Amount

Amount

To

Balance b/d.

82,000

22,000

B y

Sundry creditors

23,62,000

To

Sundry Debtors

24,30,000

B y

Purchases

1,00,000

To

Cash sales

4,00,000

B y

Salary & Wages

1,80,000

(balancing figure)

B y

Misc. exp.

50,000

To

Bank.

2,10,000

B y

Drawings

94,000

B y

Cash.

2,10,000

B y

Fixed Assets.

20,000

B y

Balance B/D.

48,000

80,000

2,92,000

28,52,000

2,92,000

28,52,000

Question 12 :

Jamnadas furnishes you with the following trial balance as on 31st May, 2001:

	Dr.	Cr.
	Rs.	Rs.
Stock on 31.5.2000 (at cost)	35,000	—
Depreciation	5,000	—
Provision for depreciation	—	40,000
Fixed assets (at cost)	50,000	—
Profit/loss on sale of fixed assets	8,000	—
Investments at cost	1,25,000	—
Profit/loss on sale of investments	—	80,000
Sale (at 20% gross profit margin)	—	8,00,00

Purchases	7,50,000	—
Balances in customers’ accounts	1,00,000	20,000
Balances in suppliers’ accounts	5,000	60,000
Expenses	42,000	—
Discount	18,000	12,000
Commission	50,000	80,000
Amounts due to principals	—	8,000
Amounts due from consignees	75,000	—
Deposits with consignors	1,00,000	—
Deposits from consignees	—	1,50,000
Cash	7,000	—
Income on investments	—	5,000
Interest on deposits:	—	12,000
with consignors
from consignees	18,000	—
Prepaid/outstanding expenses:	7,000	13,000
as on 31.5.2000
as on 31.5.2001	9,000	6,000
Fixed deposits with bank	2,00,000	—
Interest on bank fixed deposit	—	20,000
Drawing/Capital	60,000	3,00,000
Bank	—	58,000
Rs.	16,64,000	16,64,000

You find that the cost of fixed assets sold was Rs. 30,000, the accumulated depreciation up to the date of sale was Rs. 9,000.

Jamnadas asks you to :

(a)       Show the following ledger accounts for the year ended 31st May, 2001:

(i)       provision for depreciation

(ii)       expenses

(iii)      trading account

(iv)       profit and loss account

(v)        capital account

(b)       Prepare the balance sheet as on 31st May, 2001.

Answer (a) :

In the Ledger book of JAMNADAS

Dr.				Provision for Depreciation A/c				Cr.
Date			Particulars	Amount (Rs.)	Date		Particulars	Amount (Rs.)
	31.5.01	To	Assets sold A/c	9,000	1.6.00	By	Balance b/d	44,000
31.5.01		To	Balance c/f	40,000	31.5.01	By	Depreciation A/c	5,000
				49,000				49,000

Opening balance is the balancing figure

Dr.

Expenses A/c

Cr.

Date

Particulars

Amount (Rs.)

Date

Particulars

Amount (Rs.)

1.6.00

To

Prepaid A/c

7,000

1.6.00

By

Outstanding liabilities A/c

13,000

”

To

Cash/Bank A/c

45,000

31.5.01

By

Prepaid A/c

9,000

31.5.01

By

Outstanding liability A/c

6,000

31.5.01

By

Profit & Loss A/c

36,000

58,000

58,000

Cash/Bank A/c is the balancing figure.

JAMNADAS

Dr.

Trading Account for the year ended 31st May 2001

Cr.

P.Y.

Particulars

Amount (Rs.)

P.Y.

Particulars

Amount (Rs.)

To

Opening stock

35,000

By

Sales

8,00,000

To

Purchases

7,50,000

To

Gross profit

Transferred

to P & L A/c

1,60,000

By

Closing stock

1,45,000

9,45,000

9,45,000

Dr.

Profit & Loss Account for the year ended 31st May 2001

Cr.

P.Y.

Particulars

Amount (Rs.)

P.Y.

Particulars

Amount (Rs.)

To

Expenses

36,000

By

Gross Profit b/d

1,60,000

To

Discount

18,000

By

Discount

12,000

To

Interest

18,000

By

Commission

80,000

To

Loss on sale of fixed assets

8,000

By

Interest

To

Commission

50,000

(i) On deposit

12,000

(ii) From bank

20,000

To

Depreciation

5,000

By

Income form investment

5,000

To

Net profit transferred

By

Profit on sale

to Capital A/c

2,34,000

of investment

80,000

3,69,000

3,69,000

Dr.			Capital A/c						Cr.
Date		Particulars	Amount (Rs.)	Date			Particulars	Amount (Rs.)
31.5.00	To	Drawings A/c	60,000	1-6-00		By	Balance	3,00,000
31.5.01	To	Balance c/d	4,74,000	31.5.01		By	Profit & Loss A/c	2,34,000
			5,34,000					5,34,000
Answer (b) :
			Jamandas
			Balance Sheet as at 31st May 2001
	Liabilities		Rs.			Assets		Rs.
Capital A/c			3,00,000		Fixed Assets :
Balance as per last A/c
Add : Profit for the year			2,34,000		At cost
			5,34,000		As per last A/c			80,000
Less : Drawings			60,000		Less : Cost of assets sold			30,000	50,000
			4,74,000		Less : Depreciation
					As per last A/c			44,000
					Less : For assets sold			9,000
									35,000
Bank overdraft			58,000		Add : For the year			5,000	40,000
Advances from consignees			1,50,000						10,000
		Sundry Creditors	94,000		Investments (At cost)				1,25,000
		For goods	60,000		Current Assets
		For expenses	6,000		Stock (At cost)			1,45,000
		For others -			Cash-in-hand			7,000
		Principals	8,000		Fixed deposit with bank			2,00,000
		Customers	20,000		— Customers			1,00,000	4,52,000
			94,000		Loans & Advances
					Amount due from
					Consignees			75,000
					Suppliers			5,000	80,000
					Deposit with consignors				1,00,000
					Prepaid expenses				9,000
			7,76,000						7,76,000