Accounting Model Test Paper - 10 (Questions) | Mock Tests & Past Year Papers for CA Foundation PDF Download

 Page 1


MODEL TEST PAPER 10 
FOUNDATION COURSE 
PAPER – 1: ACCOUNTING 
Question No. 1 is compulsory. 
Attempt any four questions from the remaining five questions. 
Wherever necessary, suitable assumptions should be made and disclosed by way 
of note forming part of the answer. 
Working Notes should form part of the answer. 
(Time allowed: 3 Hours) (100 Marks) 
1. (a)  State with reasons, whether the following statements are True or False: 
(i) The rule of nominal accounts states that all expenses and losses 
are recorded on credit side. 
(ii)  Overhaul Expenses of a second-hand machinery purchased are 
Revenue Expenditure. 
(iii)  Valuation of inventory at cost or net realizable value is based on 
Principle of Conservatism. 
(iv)  A Promissory Note can be made payable to the Bearer. 
(v)  The Receipts and payment account for a non-profit organization 
follows the accrual concept of accounting. 
(vi)  Legal heirs of a deceased partner are entitled to his capital account 
balance only. (6 x 2=12 Marks) 
(b)  Differentiate between Book-keeping and Accounting.  (4 Marks) 
(c)  Pass the necessary journal entries to rectify the following errors, using a 
Suspense Account: 
(i)  Goods of the value of ` 500 returned by Mr. A were entered in the 
Sales Day Book and posted there from to the credit of his account; 
(ii)  ` 250 entered in the Sales Returns Book, has been posted to the 
debit of Mr. R, who returned the goods; 
(iii)  A sale of ` 700 made to Mr. Q was correctly entered in the Sales 
Day Book but wrongly posted to the debit of Mr. S as ` 70; 
(iv)  The total of "Discount allowed" Column in the Cash Book for 
September amounting to ` 350 was not posted.  (4 Marks) 
2. (a)  The cash book of Hari showed a debit balance of ` 1,36,800 as on 
31.12.2023 which was in disagreement with balance as per pass book. 
Following discrepancies were noticed: 
(i)  Dividend of ` 18,000 was deposited in the bank of which Hari had 
no information 
(ii)  Cheque was issued to Suresh of ` 14,780 on 18.12.2023 which was 
recorded in cash book as ` 14,870. 
73
Page 2


MODEL TEST PAPER 10 
FOUNDATION COURSE 
PAPER – 1: ACCOUNTING 
Question No. 1 is compulsory. 
Attempt any four questions from the remaining five questions. 
Wherever necessary, suitable assumptions should be made and disclosed by way 
of note forming part of the answer. 
Working Notes should form part of the answer. 
(Time allowed: 3 Hours) (100 Marks) 
1. (a)  State with reasons, whether the following statements are True or False: 
(i) The rule of nominal accounts states that all expenses and losses 
are recorded on credit side. 
(ii)  Overhaul Expenses of a second-hand machinery purchased are 
Revenue Expenditure. 
(iii)  Valuation of inventory at cost or net realizable value is based on 
Principle of Conservatism. 
(iv)  A Promissory Note can be made payable to the Bearer. 
(v)  The Receipts and payment account for a non-profit organization 
follows the accrual concept of accounting. 
(vi)  Legal heirs of a deceased partner are entitled to his capital account 
balance only. (6 x 2=12 Marks) 
(b)  Differentiate between Book-keeping and Accounting.  (4 Marks) 
(c)  Pass the necessary journal entries to rectify the following errors, using a 
Suspense Account: 
(i)  Goods of the value of ` 500 returned by Mr. A were entered in the 
Sales Day Book and posted there from to the credit of his account; 
(ii)  ` 250 entered in the Sales Returns Book, has been posted to the 
debit of Mr. R, who returned the goods; 
(iii)  A sale of ` 700 made to Mr. Q was correctly entered in the Sales 
Day Book but wrongly posted to the debit of Mr. S as ` 70; 
(iv)  The total of "Discount allowed" Column in the Cash Book for 
September amounting to ` 350 was not posted.  (4 Marks) 
2. (a)  The cash book of Hari showed a debit balance of ` 1,36,800 as on 
31.12.2023 which was in disagreement with balance as per pass book. 
Following discrepancies were noticed: 
(i)  Dividend of ` 18,000 was deposited in the bank of which Hari had 
no information 
(ii)  Cheque was issued to Suresh of ` 14,780 on 18.12.2023 which was 
recorded in cash book as ` 14,870. 
73
(iii) Cheques totaling of ` 55,000 were deposited into bank on 
30.12.2023 which were not cleared until 31.12.2023. 
(iv) Mediclaim premium of ` 14,160 was paid as per the standing 
instruction of Hari which was not recorded in cash book. 
(v) Goods amounting ` 1,60,000 were sold to Ajay in November 2023. 
He deposited cheque on 15.12.2023 after deducting 4% cash 
discount. This entry was missed while preparing cash book. 
(vi) Bank charges for issue of cheque book ` 150 was skipped while 
preparing cash book. 
(vii) Hari received a UPI of ` 1,000 on 29.12.2023 for sale of scrap which 
was not entered in cash book. 
(viii) Cheques amounting to ` 1,80,000 were issued during the month 
but cheques of ` 1,44,000 were only presented during the month 
for payment. 
 Prepare Bank Reconciliation Statement on 31.12.2023 and ascertain 
balance as per pass-book. (10 Marks) 
(b)  Harry draws a bill on Sejal for ` 60,000 on 01.01.2023 for 3 months. Sejal 
accepts the bill and sends it back to Harry to get it discounted for  
` 56,000. Harry remits 1/4
th
 amount to Sejal. On the due date, Harry was 
unable to remit his share to Sejal, rather accepts a bill of ` 80,000 for a 
period of 3 months. This bill was discounted by Sejal for ` 74,600. Sejal 
after making the payment of first bill sent 3/4
th
of the amount remaining 
to Harry. On maturity of the bill, Harry became bankrupt and his estate 
paying 40 paise in the rupee. 
 Give journal entries in the books of Sejal. Also prepare ledger account 
of Harry. All workings should form part of the answer. (10 Marks) 
3. (a) The following trial balance is the trial balance of a Proprietor as on  
March 31 2024. Prepare Trading and Profit & Loss Account for the year 
ending March 31
st  
2024 and a Balance Sheet as at that date. 
Particulars Amount 
(`) 
Particulars Amount 
(`) 
Plant and Machinery 5,00,000 Capital 4,00,000 
Office Furniture 26,000 Sundry Creditors 5,20,000 
Opening Stock 4,80,000 Sales 48,00,000 
Motor Van 1,20,000 Bills Payable 56,000 
Sundry Debtors 4,57,000 Provision for 
Doubtful Debts 
25,000 
Cash in hand 4,000 Return Outwards 55,000 
Cash at Bank 65,000 Discount Received 37,000 
Wages 15,00,000   
Salaries 1,40,000   
Purchases 21,35,000   
74
Page 3


MODEL TEST PAPER 10 
FOUNDATION COURSE 
PAPER – 1: ACCOUNTING 
Question No. 1 is compulsory. 
Attempt any four questions from the remaining five questions. 
Wherever necessary, suitable assumptions should be made and disclosed by way 
of note forming part of the answer. 
Working Notes should form part of the answer. 
(Time allowed: 3 Hours) (100 Marks) 
1. (a)  State with reasons, whether the following statements are True or False: 
(i) The rule of nominal accounts states that all expenses and losses 
are recorded on credit side. 
(ii)  Overhaul Expenses of a second-hand machinery purchased are 
Revenue Expenditure. 
(iii)  Valuation of inventory at cost or net realizable value is based on 
Principle of Conservatism. 
(iv)  A Promissory Note can be made payable to the Bearer. 
(v)  The Receipts and payment account for a non-profit organization 
follows the accrual concept of accounting. 
(vi)  Legal heirs of a deceased partner are entitled to his capital account 
balance only. (6 x 2=12 Marks) 
(b)  Differentiate between Book-keeping and Accounting.  (4 Marks) 
(c)  Pass the necessary journal entries to rectify the following errors, using a 
Suspense Account: 
(i)  Goods of the value of ` 500 returned by Mr. A were entered in the 
Sales Day Book and posted there from to the credit of his account; 
(ii)  ` 250 entered in the Sales Returns Book, has been posted to the 
debit of Mr. R, who returned the goods; 
(iii)  A sale of ` 700 made to Mr. Q was correctly entered in the Sales 
Day Book but wrongly posted to the debit of Mr. S as ` 70; 
(iv)  The total of "Discount allowed" Column in the Cash Book for 
September amounting to ` 350 was not posted.  (4 Marks) 
2. (a)  The cash book of Hari showed a debit balance of ` 1,36,800 as on 
31.12.2023 which was in disagreement with balance as per pass book. 
Following discrepancies were noticed: 
(i)  Dividend of ` 18,000 was deposited in the bank of which Hari had 
no information 
(ii)  Cheque was issued to Suresh of ` 14,780 on 18.12.2023 which was 
recorded in cash book as ` 14,870. 
73
(iii) Cheques totaling of ` 55,000 were deposited into bank on 
30.12.2023 which were not cleared until 31.12.2023. 
(iv) Mediclaim premium of ` 14,160 was paid as per the standing 
instruction of Hari which was not recorded in cash book. 
(v) Goods amounting ` 1,60,000 were sold to Ajay in November 2023. 
He deposited cheque on 15.12.2023 after deducting 4% cash 
discount. This entry was missed while preparing cash book. 
(vi) Bank charges for issue of cheque book ` 150 was skipped while 
preparing cash book. 
(vii) Hari received a UPI of ` 1,000 on 29.12.2023 for sale of scrap which 
was not entered in cash book. 
(viii) Cheques amounting to ` 1,80,000 were issued during the month 
but cheques of ` 1,44,000 were only presented during the month 
for payment. 
 Prepare Bank Reconciliation Statement on 31.12.2023 and ascertain 
balance as per pass-book. (10 Marks) 
(b)  Harry draws a bill on Sejal for ` 60,000 on 01.01.2023 for 3 months. Sejal 
accepts the bill and sends it back to Harry to get it discounted for  
` 56,000. Harry remits 1/4
th
 amount to Sejal. On the due date, Harry was 
unable to remit his share to Sejal, rather accepts a bill of ` 80,000 for a 
period of 3 months. This bill was discounted by Sejal for ` 74,600. Sejal 
after making the payment of first bill sent 3/4
th
of the amount remaining 
to Harry. On maturity of the bill, Harry became bankrupt and his estate 
paying 40 paise in the rupee. 
 Give journal entries in the books of Sejal. Also prepare ledger account 
of Harry. All workings should form part of the answer. (10 Marks) 
3. (a) The following trial balance is the trial balance of a Proprietor as on  
March 31 2024. Prepare Trading and Profit & Loss Account for the year 
ending March 31
st  
2024 and a Balance Sheet as at that date. 
Particulars Amount 
(`) 
Particulars Amount 
(`) 
Plant and Machinery 5,00,000 Capital 4,00,000 
Office Furniture 26,000 Sundry Creditors 5,20,000 
Opening Stock 4,80,000 Sales 48,00,000 
Motor Van 1,20,000 Bills Payable 56,000 
Sundry Debtors 4,57,000 Provision for 
Doubtful Debts 
25,000 
Cash in hand 4,000 Return Outwards 55,000 
Cash at Bank 65,000 Discount Received 37,000 
Wages 15,00,000   
Salaries 1,40,000   
Purchases 21,35,000   
74
Bills Receivable 72,000   
Return Inwards 93,000   
Drawings 70,000   
Advertisements 60,000   
Factory Rent 8,000   
Insurance 63,000   
General Expenses 10,000   
Bad debts 25,000   
Discount allowed 65,000   
 58,93,000  58,93,000 
Additional Information to be considered: 
(i) Closing Stock on March 31
st 
2024 is ` 5,20,000. 
(ii)  During the year, plant and machinery was purchased for ` 3,00,000 
but it was debited to purchase account. 
(iii)  3 months factory rent is due but not paid ` 3,000. 
(iv)  Provide depreciation at 5% per annum on furniture and 10% on 
plant and machinery and motor van. 
(v)  Further bad debts ` 7,000. 
(vi)  Provision for doubtful debts to be increased to ` 30,000 at year- 
end. 
(vii) Provision for discount on Debtors to be made at 2%. (10 Marks) 
(b) The following is the Balance Sheet of Krish and Bala, sharing profit and 
loss in the ratio 3: 2 
Liabilities Amount 
(`) 
Assets Amount 
(`) 
Capital Accounts:  Land & Buildings 28,000 
Krish   25,000    
Bala    15,000 40,000   
General Reserve 26,000 Plant & Machinery 15,000 
Workmen’s  Stock 10,000 
Compensation    
Reserve 10,000   
Creditors 10,000 Debtors             25,000  
Employee’s  Less: Provision for  
Provident Fund 8,000 Doubtful debts     4,000 21,000 
  Bank 20,000 
    
    
 94,000  94,000 
75
Page 4


MODEL TEST PAPER 10 
FOUNDATION COURSE 
PAPER – 1: ACCOUNTING 
Question No. 1 is compulsory. 
Attempt any four questions from the remaining five questions. 
Wherever necessary, suitable assumptions should be made and disclosed by way 
of note forming part of the answer. 
Working Notes should form part of the answer. 
(Time allowed: 3 Hours) (100 Marks) 
1. (a)  State with reasons, whether the following statements are True or False: 
(i) The rule of nominal accounts states that all expenses and losses 
are recorded on credit side. 
(ii)  Overhaul Expenses of a second-hand machinery purchased are 
Revenue Expenditure. 
(iii)  Valuation of inventory at cost or net realizable value is based on 
Principle of Conservatism. 
(iv)  A Promissory Note can be made payable to the Bearer. 
(v)  The Receipts and payment account for a non-profit organization 
follows the accrual concept of accounting. 
(vi)  Legal heirs of a deceased partner are entitled to his capital account 
balance only. (6 x 2=12 Marks) 
(b)  Differentiate between Book-keeping and Accounting.  (4 Marks) 
(c)  Pass the necessary journal entries to rectify the following errors, using a 
Suspense Account: 
(i)  Goods of the value of ` 500 returned by Mr. A were entered in the 
Sales Day Book and posted there from to the credit of his account; 
(ii)  ` 250 entered in the Sales Returns Book, has been posted to the 
debit of Mr. R, who returned the goods; 
(iii)  A sale of ` 700 made to Mr. Q was correctly entered in the Sales 
Day Book but wrongly posted to the debit of Mr. S as ` 70; 
(iv)  The total of "Discount allowed" Column in the Cash Book for 
September amounting to ` 350 was not posted.  (4 Marks) 
2. (a)  The cash book of Hari showed a debit balance of ` 1,36,800 as on 
31.12.2023 which was in disagreement with balance as per pass book. 
Following discrepancies were noticed: 
(i)  Dividend of ` 18,000 was deposited in the bank of which Hari had 
no information 
(ii)  Cheque was issued to Suresh of ` 14,780 on 18.12.2023 which was 
recorded in cash book as ` 14,870. 
73
(iii) Cheques totaling of ` 55,000 were deposited into bank on 
30.12.2023 which were not cleared until 31.12.2023. 
(iv) Mediclaim premium of ` 14,160 was paid as per the standing 
instruction of Hari which was not recorded in cash book. 
(v) Goods amounting ` 1,60,000 were sold to Ajay in November 2023. 
He deposited cheque on 15.12.2023 after deducting 4% cash 
discount. This entry was missed while preparing cash book. 
(vi) Bank charges for issue of cheque book ` 150 was skipped while 
preparing cash book. 
(vii) Hari received a UPI of ` 1,000 on 29.12.2023 for sale of scrap which 
was not entered in cash book. 
(viii) Cheques amounting to ` 1,80,000 were issued during the month 
but cheques of ` 1,44,000 were only presented during the month 
for payment. 
 Prepare Bank Reconciliation Statement on 31.12.2023 and ascertain 
balance as per pass-book. (10 Marks) 
(b)  Harry draws a bill on Sejal for ` 60,000 on 01.01.2023 for 3 months. Sejal 
accepts the bill and sends it back to Harry to get it discounted for  
` 56,000. Harry remits 1/4
th
 amount to Sejal. On the due date, Harry was 
unable to remit his share to Sejal, rather accepts a bill of ` 80,000 for a 
period of 3 months. This bill was discounted by Sejal for ` 74,600. Sejal 
after making the payment of first bill sent 3/4
th
of the amount remaining 
to Harry. On maturity of the bill, Harry became bankrupt and his estate 
paying 40 paise in the rupee. 
 Give journal entries in the books of Sejal. Also prepare ledger account 
of Harry. All workings should form part of the answer. (10 Marks) 
3. (a) The following trial balance is the trial balance of a Proprietor as on  
March 31 2024. Prepare Trading and Profit & Loss Account for the year 
ending March 31
st  
2024 and a Balance Sheet as at that date. 
Particulars Amount 
(`) 
Particulars Amount 
(`) 
Plant and Machinery 5,00,000 Capital 4,00,000 
Office Furniture 26,000 Sundry Creditors 5,20,000 
Opening Stock 4,80,000 Sales 48,00,000 
Motor Van 1,20,000 Bills Payable 56,000 
Sundry Debtors 4,57,000 Provision for 
Doubtful Debts 
25,000 
Cash in hand 4,000 Return Outwards 55,000 
Cash at Bank 65,000 Discount Received 37,000 
Wages 15,00,000   
Salaries 1,40,000   
Purchases 21,35,000   
74
Bills Receivable 72,000   
Return Inwards 93,000   
Drawings 70,000   
Advertisements 60,000   
Factory Rent 8,000   
Insurance 63,000   
General Expenses 10,000   
Bad debts 25,000   
Discount allowed 65,000   
 58,93,000  58,93,000 
Additional Information to be considered: 
(i) Closing Stock on March 31
st 
2024 is ` 5,20,000. 
(ii)  During the year, plant and machinery was purchased for ` 3,00,000 
but it was debited to purchase account. 
(iii)  3 months factory rent is due but not paid ` 3,000. 
(iv)  Provide depreciation at 5% per annum on furniture and 10% on 
plant and machinery and motor van. 
(v)  Further bad debts ` 7,000. 
(vi)  Provision for doubtful debts to be increased to ` 30,000 at year- 
end. 
(vii) Provision for discount on Debtors to be made at 2%. (10 Marks) 
(b) The following is the Balance Sheet of Krish and Bala, sharing profit and 
loss in the ratio 3: 2 
Liabilities Amount 
(`) 
Assets Amount 
(`) 
Capital Accounts:  Land & Buildings 28,000 
Krish   25,000    
Bala    15,000 40,000   
General Reserve 26,000 Plant & Machinery 15,000 
Workmen’s  Stock 10,000 
Compensation    
Reserve 10,000   
Creditors 10,000 Debtors             25,000  
Employee’s  Less: Provision for  
Provident Fund 8,000 Doubtful debts     4,000 21,000 
  Bank 20,000 
    
    
 94,000  94,000 
75
On admission of Sobha for 1/6th share in the profits, it was decided that: 
(1) Value of land and buildings to be increased by ` 5,000. 
(2)  Value of stock to be increased by ` 3,500. 
(3)  Provision of doubtful debts to be increased by ` 1,500. 
(4)  Liabilities of workmen's compensation reserve was determined to 
be ` 8,000. 
(5)  Sobha was to bring in cash of ` 25,000 as her capital. 
(6)  Sobha brought in her share of goodwill ` 12,000 in cash. 
 Prepare the Revaluation Account, the Capital Account and the Balance 
Sheet of the new firm. (10 Marks) 
4. (a) X, Y and Z were in a firm sharing profit and loss as 3: 2: 1. Their Balance 
Sheet on 31
st
 March, 2024 was as follows: 
Liabilities  Amount 
(`) 
Assets Amount 
(`) 
X’s Capital 78,000 Goodwill 12,000 
X’s Capital 42,000 Patents 30,000 
Z’s Capital 31,000 Machinery 60,000 
Investment  Investment (Market value  
` 27,600) 
25,000 
Fluctuation Fund 6,000 Stock    30,650 
Workmen’s    
Compensation 12,000 Debtors                  50,000  
Trade Creditors 31,000 Less: Provision for   
Employee’s 
Provident 
 doubtful debts          4,000 46,000 
Found 12,000 Cash at Bank 8,350 
    
 2,12,000  2,12,000 
Z retired on the above date on the following terms: 
(1)  Goodwill of the firm was valued at ` 60,000. 
(2)  Value of patents was to be reduced by 20% and that of machinery 
to 90%. 
(3)  Provision for doubtful debts was to be raised to 10%. 
(4)  Liability on account of Provident fund was only ` 6,000. 
(5)  Liability for workmen compensation to the extent of ` 6,000 is to be 
created. 
(6)  Z took over the investment at market value. 
76
Page 5


MODEL TEST PAPER 10 
FOUNDATION COURSE 
PAPER – 1: ACCOUNTING 
Question No. 1 is compulsory. 
Attempt any four questions from the remaining five questions. 
Wherever necessary, suitable assumptions should be made and disclosed by way 
of note forming part of the answer. 
Working Notes should form part of the answer. 
(Time allowed: 3 Hours) (100 Marks) 
1. (a)  State with reasons, whether the following statements are True or False: 
(i) The rule of nominal accounts states that all expenses and losses 
are recorded on credit side. 
(ii)  Overhaul Expenses of a second-hand machinery purchased are 
Revenue Expenditure. 
(iii)  Valuation of inventory at cost or net realizable value is based on 
Principle of Conservatism. 
(iv)  A Promissory Note can be made payable to the Bearer. 
(v)  The Receipts and payment account for a non-profit organization 
follows the accrual concept of accounting. 
(vi)  Legal heirs of a deceased partner are entitled to his capital account 
balance only. (6 x 2=12 Marks) 
(b)  Differentiate between Book-keeping and Accounting.  (4 Marks) 
(c)  Pass the necessary journal entries to rectify the following errors, using a 
Suspense Account: 
(i)  Goods of the value of ` 500 returned by Mr. A were entered in the 
Sales Day Book and posted there from to the credit of his account; 
(ii)  ` 250 entered in the Sales Returns Book, has been posted to the 
debit of Mr. R, who returned the goods; 
(iii)  A sale of ` 700 made to Mr. Q was correctly entered in the Sales 
Day Book but wrongly posted to the debit of Mr. S as ` 70; 
(iv)  The total of "Discount allowed" Column in the Cash Book for 
September amounting to ` 350 was not posted.  (4 Marks) 
2. (a)  The cash book of Hari showed a debit balance of ` 1,36,800 as on 
31.12.2023 which was in disagreement with balance as per pass book. 
Following discrepancies were noticed: 
(i)  Dividend of ` 18,000 was deposited in the bank of which Hari had 
no information 
(ii)  Cheque was issued to Suresh of ` 14,780 on 18.12.2023 which was 
recorded in cash book as ` 14,870. 
73
(iii) Cheques totaling of ` 55,000 were deposited into bank on 
30.12.2023 which were not cleared until 31.12.2023. 
(iv) Mediclaim premium of ` 14,160 was paid as per the standing 
instruction of Hari which was not recorded in cash book. 
(v) Goods amounting ` 1,60,000 were sold to Ajay in November 2023. 
He deposited cheque on 15.12.2023 after deducting 4% cash 
discount. This entry was missed while preparing cash book. 
(vi) Bank charges for issue of cheque book ` 150 was skipped while 
preparing cash book. 
(vii) Hari received a UPI of ` 1,000 on 29.12.2023 for sale of scrap which 
was not entered in cash book. 
(viii) Cheques amounting to ` 1,80,000 were issued during the month 
but cheques of ` 1,44,000 were only presented during the month 
for payment. 
 Prepare Bank Reconciliation Statement on 31.12.2023 and ascertain 
balance as per pass-book. (10 Marks) 
(b)  Harry draws a bill on Sejal for ` 60,000 on 01.01.2023 for 3 months. Sejal 
accepts the bill and sends it back to Harry to get it discounted for  
` 56,000. Harry remits 1/4
th
 amount to Sejal. On the due date, Harry was 
unable to remit his share to Sejal, rather accepts a bill of ` 80,000 for a 
period of 3 months. This bill was discounted by Sejal for ` 74,600. Sejal 
after making the payment of first bill sent 3/4
th
of the amount remaining 
to Harry. On maturity of the bill, Harry became bankrupt and his estate 
paying 40 paise in the rupee. 
 Give journal entries in the books of Sejal. Also prepare ledger account 
of Harry. All workings should form part of the answer. (10 Marks) 
3. (a) The following trial balance is the trial balance of a Proprietor as on  
March 31 2024. Prepare Trading and Profit & Loss Account for the year 
ending March 31
st  
2024 and a Balance Sheet as at that date. 
Particulars Amount 
(`) 
Particulars Amount 
(`) 
Plant and Machinery 5,00,000 Capital 4,00,000 
Office Furniture 26,000 Sundry Creditors 5,20,000 
Opening Stock 4,80,000 Sales 48,00,000 
Motor Van 1,20,000 Bills Payable 56,000 
Sundry Debtors 4,57,000 Provision for 
Doubtful Debts 
25,000 
Cash in hand 4,000 Return Outwards 55,000 
Cash at Bank 65,000 Discount Received 37,000 
Wages 15,00,000   
Salaries 1,40,000   
Purchases 21,35,000   
74
Bills Receivable 72,000   
Return Inwards 93,000   
Drawings 70,000   
Advertisements 60,000   
Factory Rent 8,000   
Insurance 63,000   
General Expenses 10,000   
Bad debts 25,000   
Discount allowed 65,000   
 58,93,000  58,93,000 
Additional Information to be considered: 
(i) Closing Stock on March 31
st 
2024 is ` 5,20,000. 
(ii)  During the year, plant and machinery was purchased for ` 3,00,000 
but it was debited to purchase account. 
(iii)  3 months factory rent is due but not paid ` 3,000. 
(iv)  Provide depreciation at 5% per annum on furniture and 10% on 
plant and machinery and motor van. 
(v)  Further bad debts ` 7,000. 
(vi)  Provision for doubtful debts to be increased to ` 30,000 at year- 
end. 
(vii) Provision for discount on Debtors to be made at 2%. (10 Marks) 
(b) The following is the Balance Sheet of Krish and Bala, sharing profit and 
loss in the ratio 3: 2 
Liabilities Amount 
(`) 
Assets Amount 
(`) 
Capital Accounts:  Land & Buildings 28,000 
Krish   25,000    
Bala    15,000 40,000   
General Reserve 26,000 Plant & Machinery 15,000 
Workmen’s  Stock 10,000 
Compensation    
Reserve 10,000   
Creditors 10,000 Debtors             25,000  
Employee’s  Less: Provision for  
Provident Fund 8,000 Doubtful debts     4,000 21,000 
  Bank 20,000 
    
    
 94,000  94,000 
75
On admission of Sobha for 1/6th share in the profits, it was decided that: 
(1) Value of land and buildings to be increased by ` 5,000. 
(2)  Value of stock to be increased by ` 3,500. 
(3)  Provision of doubtful debts to be increased by ` 1,500. 
(4)  Liabilities of workmen's compensation reserve was determined to 
be ` 8,000. 
(5)  Sobha was to bring in cash of ` 25,000 as her capital. 
(6)  Sobha brought in her share of goodwill ` 12,000 in cash. 
 Prepare the Revaluation Account, the Capital Account and the Balance 
Sheet of the new firm. (10 Marks) 
4. (a) X, Y and Z were in a firm sharing profit and loss as 3: 2: 1. Their Balance 
Sheet on 31
st
 March, 2024 was as follows: 
Liabilities  Amount 
(`) 
Assets Amount 
(`) 
X’s Capital 78,000 Goodwill 12,000 
X’s Capital 42,000 Patents 30,000 
Z’s Capital 31,000 Machinery 60,000 
Investment  Investment (Market value  
` 27,600) 
25,000 
Fluctuation Fund 6,000 Stock    30,650 
Workmen’s    
Compensation 12,000 Debtors                  50,000  
Trade Creditors 31,000 Less: Provision for   
Employee’s 
Provident 
 doubtful debts          4,000 46,000 
Found 12,000 Cash at Bank 8,350 
    
 2,12,000  2,12,000 
Z retired on the above date on the following terms: 
(1)  Goodwill of the firm was valued at ` 60,000. 
(2)  Value of patents was to be reduced by 20% and that of machinery 
to 90%. 
(3)  Provision for doubtful debts was to be raised to 10%. 
(4)  Liability on account of Provident fund was only ` 6,000. 
(5)  Liability for workmen compensation to the extent of ` 6,000 is to be 
created. 
(6)  Z took over the investment at market value. 
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(7)  Amount due to Z is to be settled on the following basis- 50% on 
retirement, 50% of the balance within one year and the balance by 
a bill of exchange (without interest) at 3 months. 
You are required the following: 
(i)  Show entries for the treatment of goodwill, 
(ii)  Prepare Revaluation Account, 
(iii)  Partner Capital Account, & 
(iv)  Balance Sheet. (10 Marks) 
(b) From the following Receipts and Payments Account of Delhi Club, 
prepare Income & Expenditure Account for the year ended 31.12.2023 
and its Balance Sheet as on that date. 
Receipts Amount 
(`) 
Payments Amount 
(`) 
Cash in hand (Opening) 8,100 Salary 3,000 
Cash in Bank (Opening) 15,000 Repair Expenses 500 
Donations 7,000 Purchase of furniture 7,000 
Subscriptions 10,000 Miscellaneous Expenses 500 
Entrance fees 1,500 Purchase of Investments 6,000 
Interest on Investments 100 Insurance Premium 300 
Interest received from 
Bank 
400 Billiards Table 10,000 
Sale of Old Newspaper 250 Paper, Ink, etc. 250 
Sale of Drama Tickets 1,250 Drama Expenses 500 
  Cash in hand (Closing) 4,500 
  Cash in Bank (Closing) 11,050 
 43,600  43,600 
Information: 
(1)  Subscriptions in Arrear for 2023` 1,200, subscription in advance for 
2024 ` 550. 
(2)  Insurance Premium outstanding ` 80, Miscellaneous Expenses 
prepaid ` 90. 
(3)  50% of Donation is to be capitalized. 
(4)  Entrance fee are to be treated as Revenue Income. 
(5)  8% Interest has accrued on Investments for 5 months. 
(6)  Billiards Table costing ` 30,000 were purchased during the last year 
and ` 20,000 were paid for it. (10 Marks) 
5. (a) Physical verification of stock in a business was done on 23
rd
 June, 2023. 
The value of the stock was ` 4,80,000. The following transactions took 
place between 23
rd 
June, 2023 and 30
th 
June, 2023: 
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