CA Foundation Exam > CA Foundation Notes > Mock Tests & Past Year Papers for CA Foundation > Mock Test: Principles and Practice of Accounting(Paper-1) Answers - Series-II (Dec. 2022)
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Page 1
1
Test Series: November, 2022
MOCK TEST PAPER 2
FOUNDATION COURSE
PAPER – 1: PRINCIPLES AND PRACTICE OF ACCOUNTING
ANSWERS
1. (a) (i) False: Prior Period Items should be separately disclosed in the current statement of profit and
loss together with their nature and amount in a manner that their impact on current profit or
loss can be perceived.
(ii) False: The right hand side of the equation includes cash twice- once as a part of current
assets and another separately. The basic accounting equation is
Equity + Long Term Liabilities = Fixed Assets + Current Assets - Current Liabilities
(iii) False: The sale value of the by product is credited to Manufacturing Account so as to reduce to
that extent, the cost of manufacture of main product.
(iv) True: Discount at the time of retirement of a bill is a gain for the drawee and loss for the
drawer.
(v) True: If a partner retires, his share of profit or loss will be shared by the other partners in their
profit sharing ratio.
(vi) False: Net income is determined by preparing income and expenditure in case of persons
practicing vocation.
(b) Limitations which must be kept in mind while evaluating the Financial Statements are as follows:
The factors which may be relevant in assessing the worth of the enterprise don’t find place in the
accounts as they cannot be measured in terms of money.
Balance Sheet shows the position of the business on the day of its preparation and not on the
future date while the users of the accounts are interested in knowing the position of the business
in the near future and also in long run and not for the past date.
Accounting ignores changes in some money factors like inflation etc.
There are occasions when accounting principles conflict with each other.
Certain accounting estimates depend on the sheer personal judgement of the accountant.
Different accounting policies for the treatment of same item adds to the probability of manipulations.
(c) Trade receivables= Sales- Amount received during the Year
= ` (13,75,000-13,15,000)
= ` 60,000
Since, we know Assets= Capital+ Liabilities
Therefore, balance of assets is also ` 12,25,000 and Cash balance will be computed as under:
Particulars Amount (`)
Total Assets 12,25,000
Less: Machinery (10,00,000)
Less: Inventory (56,000)
Less: Cash at bank (75,000)
© The Institute of Chartered Accountants of India
Page 2
1
Test Series: November, 2022
MOCK TEST PAPER 2
FOUNDATION COURSE
PAPER – 1: PRINCIPLES AND PRACTICE OF ACCOUNTING
ANSWERS
1. (a) (i) False: Prior Period Items should be separately disclosed in the current statement of profit and
loss together with their nature and amount in a manner that their impact on current profit or
loss can be perceived.
(ii) False: The right hand side of the equation includes cash twice- once as a part of current
assets and another separately. The basic accounting equation is
Equity + Long Term Liabilities = Fixed Assets + Current Assets - Current Liabilities
(iii) False: The sale value of the by product is credited to Manufacturing Account so as to reduce to
that extent, the cost of manufacture of main product.
(iv) True: Discount at the time of retirement of a bill is a gain for the drawee and loss for the
drawer.
(v) True: If a partner retires, his share of profit or loss will be shared by the other partners in their
profit sharing ratio.
(vi) False: Net income is determined by preparing income and expenditure in case of persons
practicing vocation.
(b) Limitations which must be kept in mind while evaluating the Financial Statements are as follows:
The factors which may be relevant in assessing the worth of the enterprise don’t find place in the
accounts as they cannot be measured in terms of money.
Balance Sheet shows the position of the business on the day of its preparation and not on the
future date while the users of the accounts are interested in knowing the position of the business
in the near future and also in long run and not for the past date.
Accounting ignores changes in some money factors like inflation etc.
There are occasions when accounting principles conflict with each other.
Certain accounting estimates depend on the sheer personal judgement of the accountant.
Different accounting policies for the treatment of same item adds to the probability of manipulations.
(c) Trade receivables= Sales- Amount received during the Year
= ` (13,75,000-13,15,000)
= ` 60,000
Since, we know Assets= Capital+ Liabilities
Therefore, balance of assets is also ` 12,25,000 and Cash balance will be computed as under:
Particulars Amount (`)
Total Assets 12,25,000
Less: Machinery (10,00,000)
Less: Inventory (56,000)
Less: Cash at bank (75,000)
© The Institute of Chartered Accountants of India
2
Less: Trade receivables (60,000)
Cash in hand 34,000
Computation of Closing Capital:
Particulars Amount (`)
Opening Capital 7,50,000
Add: Introduced during the year 1,00,000
Add: Profit during the year 45,000
Closing Capital 8,95,000
Computation of Amount of Loans:
Loans= Total Liabilities and capital - Closing capital - Trade payables
= ` (12,25,000 - 8,95,000 - 70,000)
= ` 2,60,000
2. (a) Quarry Lease Account
Dr. Cr.
`
`
01.04.2019 To Bank A/c 2,00,00,000 31.03.2019 By Depreciation A/c 2,00,000
[(4,000/4,00,000) ×
` 2,00,00,000]
31.03.2019 By Balance c/d
1,98,00,000
2,00,00,000 2,00,00,000
01.04.2020 To Balance b/d 1,98,00,000 31.03.2021 By Depreciation A/c 10,00,000
31.03.2021 By Balance c/d 1,88,00,000
1,98,00,000 1,98,00,000
01.04.2021 To Balance b/d 1,88,00,000 31.03.2022 By Depreciation A/c 15,00,000
31.03.2022 By Balance c/d 1,73,00,000
1,88,00,000 1,88,00,000
Depreciation Account
Dr. Cr.
`
`
31.03.2020 To Quarry lease
A/c
2,00,000 31.03.2020 By Profit & Loss
A/c
2,00,000
2,00,000 2,00,000
31.03.2021 To Quarry lease
A/c
10,00,000 31.03.2021 By Profit & Loss
A/c
10,00,000
10,00,000 10,00,000
31.03.2022 To Quarry lease
A/c
15,00,000 31.03.2022 By Profit & Loss
A/c
15,00,000
15,00,000 15,00,000
© The Institute of Chartered Accountants of India
Page 3
1
Test Series: November, 2022
MOCK TEST PAPER 2
FOUNDATION COURSE
PAPER – 1: PRINCIPLES AND PRACTICE OF ACCOUNTING
ANSWERS
1. (a) (i) False: Prior Period Items should be separately disclosed in the current statement of profit and
loss together with their nature and amount in a manner that their impact on current profit or
loss can be perceived.
(ii) False: The right hand side of the equation includes cash twice- once as a part of current
assets and another separately. The basic accounting equation is
Equity + Long Term Liabilities = Fixed Assets + Current Assets - Current Liabilities
(iii) False: The sale value of the by product is credited to Manufacturing Account so as to reduce to
that extent, the cost of manufacture of main product.
(iv) True: Discount at the time of retirement of a bill is a gain for the drawee and loss for the
drawer.
(v) True: If a partner retires, his share of profit or loss will be shared by the other partners in their
profit sharing ratio.
(vi) False: Net income is determined by preparing income and expenditure in case of persons
practicing vocation.
(b) Limitations which must be kept in mind while evaluating the Financial Statements are as follows:
The factors which may be relevant in assessing the worth of the enterprise don’t find place in the
accounts as they cannot be measured in terms of money.
Balance Sheet shows the position of the business on the day of its preparation and not on the
future date while the users of the accounts are interested in knowing the position of the business
in the near future and also in long run and not for the past date.
Accounting ignores changes in some money factors like inflation etc.
There are occasions when accounting principles conflict with each other.
Certain accounting estimates depend on the sheer personal judgement of the accountant.
Different accounting policies for the treatment of same item adds to the probability of manipulations.
(c) Trade receivables= Sales- Amount received during the Year
= ` (13,75,000-13,15,000)
= ` 60,000
Since, we know Assets= Capital+ Liabilities
Therefore, balance of assets is also ` 12,25,000 and Cash balance will be computed as under:
Particulars Amount (`)
Total Assets 12,25,000
Less: Machinery (10,00,000)
Less: Inventory (56,000)
Less: Cash at bank (75,000)
© The Institute of Chartered Accountants of India
2
Less: Trade receivables (60,000)
Cash in hand 34,000
Computation of Closing Capital:
Particulars Amount (`)
Opening Capital 7,50,000
Add: Introduced during the year 1,00,000
Add: Profit during the year 45,000
Closing Capital 8,95,000
Computation of Amount of Loans:
Loans= Total Liabilities and capital - Closing capital - Trade payables
= ` (12,25,000 - 8,95,000 - 70,000)
= ` 2,60,000
2. (a) Quarry Lease Account
Dr. Cr.
`
`
01.04.2019 To Bank A/c 2,00,00,000 31.03.2019 By Depreciation A/c 2,00,000
[(4,000/4,00,000) ×
` 2,00,00,000]
31.03.2019 By Balance c/d
1,98,00,000
2,00,00,000 2,00,00,000
01.04.2020 To Balance b/d 1,98,00,000 31.03.2021 By Depreciation A/c 10,00,000
31.03.2021 By Balance c/d 1,88,00,000
1,98,00,000 1,98,00,000
01.04.2021 To Balance b/d 1,88,00,000 31.03.2022 By Depreciation A/c 15,00,000
31.03.2022 By Balance c/d 1,73,00,000
1,88,00,000 1,88,00,000
Depreciation Account
Dr. Cr.
`
`
31.03.2020 To Quarry lease
A/c
2,00,000 31.03.2020 By Profit & Loss
A/c
2,00,000
2,00,000 2,00,000
31.03.2021 To Quarry lease
A/c
10,00,000 31.03.2021 By Profit & Loss
A/c
10,00,000
10,00,000 10,00,000
31.03.2022 To Quarry lease
A/c
15,00,000 31.03.2022 By Profit & Loss
A/c
15,00,000
15,00,000 15,00,000
© The Institute of Chartered Accountants of India
3
(b) (i) Profit and Loss Adjustment Account
` `
To Advertisement (samples) 3,20,000 By Net profit 32,00,000
To Sales 8,00,000 By Electric fittings 1,20,000
(goods approved in April to By Samples 3,20,000
be taken as April sales) By Stock (Purchases of March 20,00,000
To Adjusted net profit 67,20,000 not included in stock)
By Sales (goods sold in March
wrongly taken in April sales)
16,00,000
By Stock (goods sent on
approval basis not included in
stock)
6,00,000
78,40,000 78,40,000
Calculation of value of inventory on 31
st
March, 2022
`
Stock on 31
st
March, 2022 (given) 30,00,000
Add: Purchases of March, 2022 not included in the stock 20,00,000
Goods lying with customers on approval basis 6,00,000
56,00,000
3. (a) Journal Entries in the Books of Mr. X
Date Particulars L.F. Dr.
Amount `
Cr.
Amount `
2021
August 1 Bills Receivable A/c Dr. 50,000
To Y 50,000
(Being the acceptance received from B to settle his
account)
August 1 Bank A/c Dr. 49,000
Discount A/c Dr. 1,000
To Bills Receivable A/c 50,000
(Being the bill discounted for ` 49,000 from bank)
November 4 Y Dr. 50,000
To Bank A/c 50,000
(Being the Y’s acceptance is to be renewed)
November 4 Y Dr. 1,200
To Interest Account 1,200
(Being the interest due from Y for 3 months i.e.,
40,000 x 3/12 ? 12% = 1,200)
November 4 Bank A/c Dr. 11,200
Bills Receivable A/c Dr. 40,000
To Y 51,200
(Being amount and acceptance of new bill
received from Y)
© The Institute of Chartered Accountants of India
Page 4
1
Test Series: November, 2022
MOCK TEST PAPER 2
FOUNDATION COURSE
PAPER – 1: PRINCIPLES AND PRACTICE OF ACCOUNTING
ANSWERS
1. (a) (i) False: Prior Period Items should be separately disclosed in the current statement of profit and
loss together with their nature and amount in a manner that their impact on current profit or
loss can be perceived.
(ii) False: The right hand side of the equation includes cash twice- once as a part of current
assets and another separately. The basic accounting equation is
Equity + Long Term Liabilities = Fixed Assets + Current Assets - Current Liabilities
(iii) False: The sale value of the by product is credited to Manufacturing Account so as to reduce to
that extent, the cost of manufacture of main product.
(iv) True: Discount at the time of retirement of a bill is a gain for the drawee and loss for the
drawer.
(v) True: If a partner retires, his share of profit or loss will be shared by the other partners in their
profit sharing ratio.
(vi) False: Net income is determined by preparing income and expenditure in case of persons
practicing vocation.
(b) Limitations which must be kept in mind while evaluating the Financial Statements are as follows:
The factors which may be relevant in assessing the worth of the enterprise don’t find place in the
accounts as they cannot be measured in terms of money.
Balance Sheet shows the position of the business on the day of its preparation and not on the
future date while the users of the accounts are interested in knowing the position of the business
in the near future and also in long run and not for the past date.
Accounting ignores changes in some money factors like inflation etc.
There are occasions when accounting principles conflict with each other.
Certain accounting estimates depend on the sheer personal judgement of the accountant.
Different accounting policies for the treatment of same item adds to the probability of manipulations.
(c) Trade receivables= Sales- Amount received during the Year
= ` (13,75,000-13,15,000)
= ` 60,000
Since, we know Assets= Capital+ Liabilities
Therefore, balance of assets is also ` 12,25,000 and Cash balance will be computed as under:
Particulars Amount (`)
Total Assets 12,25,000
Less: Machinery (10,00,000)
Less: Inventory (56,000)
Less: Cash at bank (75,000)
© The Institute of Chartered Accountants of India
2
Less: Trade receivables (60,000)
Cash in hand 34,000
Computation of Closing Capital:
Particulars Amount (`)
Opening Capital 7,50,000
Add: Introduced during the year 1,00,000
Add: Profit during the year 45,000
Closing Capital 8,95,000
Computation of Amount of Loans:
Loans= Total Liabilities and capital - Closing capital - Trade payables
= ` (12,25,000 - 8,95,000 - 70,000)
= ` 2,60,000
2. (a) Quarry Lease Account
Dr. Cr.
`
`
01.04.2019 To Bank A/c 2,00,00,000 31.03.2019 By Depreciation A/c 2,00,000
[(4,000/4,00,000) ×
` 2,00,00,000]
31.03.2019 By Balance c/d
1,98,00,000
2,00,00,000 2,00,00,000
01.04.2020 To Balance b/d 1,98,00,000 31.03.2021 By Depreciation A/c 10,00,000
31.03.2021 By Balance c/d 1,88,00,000
1,98,00,000 1,98,00,000
01.04.2021 To Balance b/d 1,88,00,000 31.03.2022 By Depreciation A/c 15,00,000
31.03.2022 By Balance c/d 1,73,00,000
1,88,00,000 1,88,00,000
Depreciation Account
Dr. Cr.
`
`
31.03.2020 To Quarry lease
A/c
2,00,000 31.03.2020 By Profit & Loss
A/c
2,00,000
2,00,000 2,00,000
31.03.2021 To Quarry lease
A/c
10,00,000 31.03.2021 By Profit & Loss
A/c
10,00,000
10,00,000 10,00,000
31.03.2022 To Quarry lease
A/c
15,00,000 31.03.2022 By Profit & Loss
A/c
15,00,000
15,00,000 15,00,000
© The Institute of Chartered Accountants of India
3
(b) (i) Profit and Loss Adjustment Account
` `
To Advertisement (samples) 3,20,000 By Net profit 32,00,000
To Sales 8,00,000 By Electric fittings 1,20,000
(goods approved in April to By Samples 3,20,000
be taken as April sales) By Stock (Purchases of March 20,00,000
To Adjusted net profit 67,20,000 not included in stock)
By Sales (goods sold in March
wrongly taken in April sales)
16,00,000
By Stock (goods sent on
approval basis not included in
stock)
6,00,000
78,40,000 78,40,000
Calculation of value of inventory on 31
st
March, 2022
`
Stock on 31
st
March, 2022 (given) 30,00,000
Add: Purchases of March, 2022 not included in the stock 20,00,000
Goods lying with customers on approval basis 6,00,000
56,00,000
3. (a) Journal Entries in the Books of Mr. X
Date Particulars L.F. Dr.
Amount `
Cr.
Amount `
2021
August 1 Bills Receivable A/c Dr. 50,000
To Y 50,000
(Being the acceptance received from B to settle his
account)
August 1 Bank A/c Dr. 49,000
Discount A/c Dr. 1,000
To Bills Receivable A/c 50,000
(Being the bill discounted for ` 49,000 from bank)
November 4 Y Dr. 50,000
To Bank A/c 50,000
(Being the Y’s acceptance is to be renewed)
November 4 Y Dr. 1,200
To Interest Account 1,200
(Being the interest due from Y for 3 months i.e.,
40,000 x 3/12 ? 12% = 1,200)
November 4 Bank A/c Dr. 11,200
Bills Receivable A/c Dr. 40,000
To Y 51,200
(Being amount and acceptance of new bill
received from Y)
© The Institute of Chartered Accountants of India
4
December 31 Y A/c Dr. 40,000
To Bills Receivable A/c 40,000
(Being Y became insolvent)
December 31 Bank A/c Dr. 16,000
Bad debts A/c Dr. 24,000
To Y 40,000
(Being the amount received and written off on Y’s
insolvency)
(b) Calculation of Average Due Date
(Taking 3
rd
March, 2022 as base date)
Date of bill
2022
Term Due date
2022
Amount No. of days from
the base date i.e.
3
rd
March,2022
Product
(`) (`) (`)
28
th
January 1 month 3
rd
March 5,000 0 0
20
th
March 2 months 23
rd
May 4,000 81 3,24,000
12
th
July 1month 14
th
Aug. 7,000 164 11,48,000
10
th
August 2 months 13
th
Oct. 6,000 224 13,44,000
22,000 28,16,000
Average due date = Base date + Days equal to
Sum of Products
Sum of Amounts
= 3
rd
March, 2022 +
28,16,000
22,000
= 3
rd
March, 2022 + 128 days = 9
th
July, 2022
Working Note:
Bill dated 12
th
July, 2022 has the maturity period of one month, due date (after adding 3 days of
grace) falls on 15
th
August, 2022. 15
th
August being public holiday, due date would be preceding
date i.e. 14
th
August, 2022.
(c) Journal Entries
Date Particulars Dr. Cr.
2021 ` `
31
st
Sales A/c Dr. 10,500
Dec. To Shama’s A/c 10,500
(Being cancellation of entry for sale of goods, not
yet approved)
Inventories with customers A/c (Refer W.N.) Dr. 7,875
To Trading A/c 7,875
(Being Inventories with customers recorded at
market price)
Working Note:
Calculation of cost and market price of Inventories with customer
Sale price of goods sent on approval ` 10,500
© The Institute of Chartered Accountants of India
Page 5
1
Test Series: November, 2022
MOCK TEST PAPER 2
FOUNDATION COURSE
PAPER – 1: PRINCIPLES AND PRACTICE OF ACCOUNTING
ANSWERS
1. (a) (i) False: Prior Period Items should be separately disclosed in the current statement of profit and
loss together with their nature and amount in a manner that their impact on current profit or
loss can be perceived.
(ii) False: The right hand side of the equation includes cash twice- once as a part of current
assets and another separately. The basic accounting equation is
Equity + Long Term Liabilities = Fixed Assets + Current Assets - Current Liabilities
(iii) False: The sale value of the by product is credited to Manufacturing Account so as to reduce to
that extent, the cost of manufacture of main product.
(iv) True: Discount at the time of retirement of a bill is a gain for the drawee and loss for the
drawer.
(v) True: If a partner retires, his share of profit or loss will be shared by the other partners in their
profit sharing ratio.
(vi) False: Net income is determined by preparing income and expenditure in case of persons
practicing vocation.
(b) Limitations which must be kept in mind while evaluating the Financial Statements are as follows:
The factors which may be relevant in assessing the worth of the enterprise don’t find place in the
accounts as they cannot be measured in terms of money.
Balance Sheet shows the position of the business on the day of its preparation and not on the
future date while the users of the accounts are interested in knowing the position of the business
in the near future and also in long run and not for the past date.
Accounting ignores changes in some money factors like inflation etc.
There are occasions when accounting principles conflict with each other.
Certain accounting estimates depend on the sheer personal judgement of the accountant.
Different accounting policies for the treatment of same item adds to the probability of manipulations.
(c) Trade receivables= Sales- Amount received during the Year
= ` (13,75,000-13,15,000)
= ` 60,000
Since, we know Assets= Capital+ Liabilities
Therefore, balance of assets is also ` 12,25,000 and Cash balance will be computed as under:
Particulars Amount (`)
Total Assets 12,25,000
Less: Machinery (10,00,000)
Less: Inventory (56,000)
Less: Cash at bank (75,000)
© The Institute of Chartered Accountants of India
2
Less: Trade receivables (60,000)
Cash in hand 34,000
Computation of Closing Capital:
Particulars Amount (`)
Opening Capital 7,50,000
Add: Introduced during the year 1,00,000
Add: Profit during the year 45,000
Closing Capital 8,95,000
Computation of Amount of Loans:
Loans= Total Liabilities and capital - Closing capital - Trade payables
= ` (12,25,000 - 8,95,000 - 70,000)
= ` 2,60,000
2. (a) Quarry Lease Account
Dr. Cr.
`
`
01.04.2019 To Bank A/c 2,00,00,000 31.03.2019 By Depreciation A/c 2,00,000
[(4,000/4,00,000) ×
` 2,00,00,000]
31.03.2019 By Balance c/d
1,98,00,000
2,00,00,000 2,00,00,000
01.04.2020 To Balance b/d 1,98,00,000 31.03.2021 By Depreciation A/c 10,00,000
31.03.2021 By Balance c/d 1,88,00,000
1,98,00,000 1,98,00,000
01.04.2021 To Balance b/d 1,88,00,000 31.03.2022 By Depreciation A/c 15,00,000
31.03.2022 By Balance c/d 1,73,00,000
1,88,00,000 1,88,00,000
Depreciation Account
Dr. Cr.
`
`
31.03.2020 To Quarry lease
A/c
2,00,000 31.03.2020 By Profit & Loss
A/c
2,00,000
2,00,000 2,00,000
31.03.2021 To Quarry lease
A/c
10,00,000 31.03.2021 By Profit & Loss
A/c
10,00,000
10,00,000 10,00,000
31.03.2022 To Quarry lease
A/c
15,00,000 31.03.2022 By Profit & Loss
A/c
15,00,000
15,00,000 15,00,000
© The Institute of Chartered Accountants of India
3
(b) (i) Profit and Loss Adjustment Account
` `
To Advertisement (samples) 3,20,000 By Net profit 32,00,000
To Sales 8,00,000 By Electric fittings 1,20,000
(goods approved in April to By Samples 3,20,000
be taken as April sales) By Stock (Purchases of March 20,00,000
To Adjusted net profit 67,20,000 not included in stock)
By Sales (goods sold in March
wrongly taken in April sales)
16,00,000
By Stock (goods sent on
approval basis not included in
stock)
6,00,000
78,40,000 78,40,000
Calculation of value of inventory on 31
st
March, 2022
`
Stock on 31
st
March, 2022 (given) 30,00,000
Add: Purchases of March, 2022 not included in the stock 20,00,000
Goods lying with customers on approval basis 6,00,000
56,00,000
3. (a) Journal Entries in the Books of Mr. X
Date Particulars L.F. Dr.
Amount `
Cr.
Amount `
2021
August 1 Bills Receivable A/c Dr. 50,000
To Y 50,000
(Being the acceptance received from B to settle his
account)
August 1 Bank A/c Dr. 49,000
Discount A/c Dr. 1,000
To Bills Receivable A/c 50,000
(Being the bill discounted for ` 49,000 from bank)
November 4 Y Dr. 50,000
To Bank A/c 50,000
(Being the Y’s acceptance is to be renewed)
November 4 Y Dr. 1,200
To Interest Account 1,200
(Being the interest due from Y for 3 months i.e.,
40,000 x 3/12 ? 12% = 1,200)
November 4 Bank A/c Dr. 11,200
Bills Receivable A/c Dr. 40,000
To Y 51,200
(Being amount and acceptance of new bill
received from Y)
© The Institute of Chartered Accountants of India
4
December 31 Y A/c Dr. 40,000
To Bills Receivable A/c 40,000
(Being Y became insolvent)
December 31 Bank A/c Dr. 16,000
Bad debts A/c Dr. 24,000
To Y 40,000
(Being the amount received and written off on Y’s
insolvency)
(b) Calculation of Average Due Date
(Taking 3
rd
March, 2022 as base date)
Date of bill
2022
Term Due date
2022
Amount No. of days from
the base date i.e.
3
rd
March,2022
Product
(`) (`) (`)
28
th
January 1 month 3
rd
March 5,000 0 0
20
th
March 2 months 23
rd
May 4,000 81 3,24,000
12
th
July 1month 14
th
Aug. 7,000 164 11,48,000
10
th
August 2 months 13
th
Oct. 6,000 224 13,44,000
22,000 28,16,000
Average due date = Base date + Days equal to
Sum of Products
Sum of Amounts
= 3
rd
March, 2022 +
28,16,000
22,000
= 3
rd
March, 2022 + 128 days = 9
th
July, 2022
Working Note:
Bill dated 12
th
July, 2022 has the maturity period of one month, due date (after adding 3 days of
grace) falls on 15
th
August, 2022. 15
th
August being public holiday, due date would be preceding
date i.e. 14
th
August, 2022.
(c) Journal Entries
Date Particulars Dr. Cr.
2021 ` `
31
st
Sales A/c Dr. 10,500
Dec. To Shama’s A/c 10,500
(Being cancellation of entry for sale of goods, not
yet approved)
Inventories with customers A/c (Refer W.N.) Dr. 7,875
To Trading A/c 7,875
(Being Inventories with customers recorded at
market price)
Working Note:
Calculation of cost and market price of Inventories with customer
Sale price of goods sent on approval ` 10,500
© The Institute of Chartered Accountants of India
5
Less: Profit (10,500 x 20/120) `1,750
Cost of goods `8,750
Market price = 8,750 - (8,750 x 10%) = ` 7,875
4. (a) Revaluation Account
` `
To Plant & Machinery
(3,40,000 x 15%)
51,000
By Land & Building A/c 3,04,000
To Provision for Bad & Doubtful Debts
(1,200,000 x 5%)
6,000
To Outstanding Repairs to Building 12,000
To Anil’s Capital A/c (5/8) 1,46,875
To Bharat’s Capital A/c (3/8) 88,125
3,04,000 3,04,000
Capital Accounts of Partners
Anil Bharat Dev Anil Bharat Dev
To Anil’s Capital
A/c
- - 40,000 By Balance b/d 8,20,000 6,60,000 -
To Bharat’s
Capital A/c
24,000 By Revaluation A/c 1,46,875 88,125 -
To Bharat’s
Current A/c
- 1,36,125 By Profit & Loss A/c 1,40,000 84,000 -
To Balance c/d 12,00,000 7,20,000 4,80,000 By Bank 5,44,000
By Dev’s Capital
A/c
40,000 24,000
By Anil’s Current
A/c
53,125
12,00,000 8,56,125 5,44,000 12,00,000 8,56,125 5,44,000
Calculation of New Profit Sharing Ratio and gaining ratio:
Dev’s Share of Profit = 1/5 = 2/10
Remaining Share = 1 – 1/5 = 4/5
Anil’s Share = 5/8 x 4/5 = 20/40 = 5/10
Bharat’s Share = 3/8 x 4/5 = 12/40 = 3/10
New Profit sharing Ratio = 5:3:2
Gaining ratio = 5:3 (same as old profit sharing ratio among old partners)
Balance sheet of Pradeep & Associates as on 31.3.2022
Liabilities ` Assets
Capital Accounts: Land & Buildings 10,64,000
Anil 12,00,000 Plant & Machinery 3,40,000
Bharat 7,20,000 Less: Depreciation 51,000 2,89,000
© The Institute of Chartered Accountants of India
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