Accounting Model Test Paper - 6 (Questions) | Mock Tests & Past Year Papers for CA Foundation PDF Download

 Page 1


Maximum Marks: 100 
1. (a)  State with reasons, whether the following statements are true or false:
(i) Wages paid for erection of machinery are debited to Profit and Loss
Account.
(ii) Amount spent for the construction of temporary huts, which were
necessary for construction of the Cinema House and were
demolished when the Cinema House was ready, is capital
expenditure.
(iii) If the effect of errors committed cancel out, the errors will be called
compensating errors and the trial balance will disagree.
(iv) Promissory note is different from bill of exchange because the
amount is paid by the maker in case of former and by the acceptor
in the later.
(v) The business of partnership must be carried on by all the partners.
(vi) Debenture interest is payable after the payment of preference
dividend but before the payment of equity dividend.
(6 Statements x 2 Marks = 12 Marks) 
(b) Explain Cash and Mercantile system of accounting? (4 Marks) 
(c) Calculate the missing amount for the following.
Assets Liabilities Capital 
(a) 45,00,000 7,50,000 ? 
(b) ? 4,50,000  2,25,000 
(c) 43,50,000 ?  41,25,000 
(d) 1,71,00,000 (8,40,000) ? (4 Marks) 
MODEL TEST PAPER 6
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 
41
Page 2


Maximum Marks: 100 
1. (a)  State with reasons, whether the following statements are true or false:
(i) Wages paid for erection of machinery are debited to Profit and Loss
Account.
(ii) Amount spent for the construction of temporary huts, which were
necessary for construction of the Cinema House and were
demolished when the Cinema House was ready, is capital
expenditure.
(iii) If the effect of errors committed cancel out, the errors will be called
compensating errors and the trial balance will disagree.
(iv) Promissory note is different from bill of exchange because the
amount is paid by the maker in case of former and by the acceptor
in the later.
(v) The business of partnership must be carried on by all the partners.
(vi) Debenture interest is payable after the payment of preference
dividend but before the payment of equity dividend.
(6 Statements x 2 Marks = 12 Marks) 
(b) Explain Cash and Mercantile system of accounting? (4 Marks) 
(c) Calculate the missing amount for the following.
Assets Liabilities Capital 
(a) 45,00,000 7,50,000 ? 
(b) ? 4,50,000  2,25,000 
(c) 43,50,000 ?  41,25,000 
(d) 1,71,00,000 (8,40,000) ? (4 Marks) 
MODEL TEST PAPER 6
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 
41
2. (a) Savin & Co. purchased a machine for ` 1,00,000 on 1.4.2021 Another
machine costing `1,50,000 was purchased on 1.10.2022. On 31.3.2024 the 
machine purchased on 1.4.2021 was sold for ` 50,000. The company 
provides depreciation at 15% on Written Down Value Method. Prepare – (i) 
Machinery Account, (ii) Machinery Disposal Account and (iii) Provision for 
Depreciation Account.     (10 Marks) 
(b) On 30
th
 June. 2024, Cash Book of Ms. Suman (Bank Column of Account
No. 1) shows a Bank Overdraft of ` 1,97,400. On going through the Bank
Pass book for reconciling the Balance, she found the following:
(a) Out of cheques drawn on 26
th
 June, those for ` 14,800 were cashed
by the bankers on 2
nd
 July.
(b) A crossed cheque for ` 3000 given to Abdul was returned by him
and a bearer cheque was issued to him in lieu on 1
st
 July.
(c) Cash and cheques amounting to ` 13,600 were deposited in the
Bank on 29
th
 June, but cheques worth ` 5,200 were cleared by the
Bank on 1
st
 July., and one cheque for ` 1,000 was returned by them
as dishonoured on the latter date.
(d) According to Suman’s standing instructions, the bankers have on
30
th
 June, paid ` 1,280 as interest to her creditors, paid quarterly
premium on her policy amounting to ` 640 and have paid a second
call of ` 2,400 on shares held by her and lodged with the bankers
for safe custody. They have also received ` 600 as dividend on her
shares and recovered an Insurance Claim of ` 3,200, as their
charges and commission charged on the above being ` 400. On
receipt of information of the above transaction, she has passed
necessary entries in her Cash Book on 1
st
 July.
(e) Bankers seem to have given a wrong credit for ` 2,000 paid in by
her in No. 2 account and wrong debit in respect of a cheque for
` 1,200 drawn against her No. 2 account.
Prepare a Bank Reconciliation Statement as on 30
th
 June, 2024. 
    (10 Marks) 
(10 + 10 = 20 Marks) 
3. (a)  The Receipts and Payments account of Gold Smith Club prepared on
31
st
 March, 2024 is as follows: 
Receipts and Payments Account 
Receipts ` Amount 
` 
Payments Amount 
` 
To 
To 
Balance b/d 
Annual Income 
from Subscription 
91,800 
9,000 By Expenses 
(including 
Payment for 
sports material 
` 54,000) 
1,26,000 
42
Page 3


Maximum Marks: 100 
1. (a)  State with reasons, whether the following statements are true or false:
(i) Wages paid for erection of machinery are debited to Profit and Loss
Account.
(ii) Amount spent for the construction of temporary huts, which were
necessary for construction of the Cinema House and were
demolished when the Cinema House was ready, is capital
expenditure.
(iii) If the effect of errors committed cancel out, the errors will be called
compensating errors and the trial balance will disagree.
(iv) Promissory note is different from bill of exchange because the
amount is paid by the maker in case of former and by the acceptor
in the later.
(v) The business of partnership must be carried on by all the partners.
(vi) Debenture interest is payable after the payment of preference
dividend but before the payment of equity dividend.
(6 Statements x 2 Marks = 12 Marks) 
(b) Explain Cash and Mercantile system of accounting? (4 Marks) 
(c) Calculate the missing amount for the following.
Assets Liabilities Capital 
(a) 45,00,000 7,50,000 ? 
(b) ? 4,50,000  2,25,000 
(c) 43,50,000 ?  41,25,000 
(d) 1,71,00,000 (8,40,000) ? (4 Marks) 
MODEL TEST PAPER 6
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 
41
2. (a) Savin & Co. purchased a machine for ` 1,00,000 on 1.4.2021 Another
machine costing `1,50,000 was purchased on 1.10.2022. On 31.3.2024 the 
machine purchased on 1.4.2021 was sold for ` 50,000. The company 
provides depreciation at 15% on Written Down Value Method. Prepare – (i) 
Machinery Account, (ii) Machinery Disposal Account and (iii) Provision for 
Depreciation Account.     (10 Marks) 
(b) On 30
th
 June. 2024, Cash Book of Ms. Suman (Bank Column of Account
No. 1) shows a Bank Overdraft of ` 1,97,400. On going through the Bank
Pass book for reconciling the Balance, she found the following:
(a) Out of cheques drawn on 26
th
 June, those for ` 14,800 were cashed
by the bankers on 2
nd
 July.
(b) A crossed cheque for ` 3000 given to Abdul was returned by him
and a bearer cheque was issued to him in lieu on 1
st
 July.
(c) Cash and cheques amounting to ` 13,600 were deposited in the
Bank on 29
th
 June, but cheques worth ` 5,200 were cleared by the
Bank on 1
st
 July., and one cheque for ` 1,000 was returned by them
as dishonoured on the latter date.
(d) According to Suman’s standing instructions, the bankers have on
30
th
 June, paid ` 1,280 as interest to her creditors, paid quarterly
premium on her policy amounting to ` 640 and have paid a second
call of ` 2,400 on shares held by her and lodged with the bankers
for safe custody. They have also received ` 600 as dividend on her
shares and recovered an Insurance Claim of ` 3,200, as their
charges and commission charged on the above being ` 400. On
receipt of information of the above transaction, she has passed
necessary entries in her Cash Book on 1
st
 July.
(e) Bankers seem to have given a wrong credit for ` 2,000 paid in by
her in No. 2 account and wrong debit in respect of a cheque for
` 1,200 drawn against her No. 2 account.
Prepare a Bank Reconciliation Statement as on 30
th
 June, 2024. 
    (10 Marks) 
(10 + 10 = 20 Marks) 
3. (a)  The Receipts and Payments account of Gold Smith Club prepared on
31
st
 March, 2024 is as follows: 
Receipts and Payments Account 
Receipts ` Amount 
` 
Payments Amount 
` 
To 
To 
Balance b/d 
Annual Income 
from Subscription 
91,800 
9,000 By Expenses 
(including 
Payment for 
sports material 
` 54,000) 
1,26,000 
42
Add: Outstanding 
of last year 
received this year 3,600 
95,400 
By 
By 
Loss on Sale of 
Furniture (cost 
price ` 9,000) 
Balance c/d 
3,600 
18,09,000 
Less: Prepaid of 
last year 
1,800 93,600 
To Other fees 36,000 
To Donation for 
Building 
18,00,000 
19,38,600 19,38,600 
Additional information: 
Gold Smith Club had balances as on 1.4.2023: 
Furniture ` 36,000; Investment at 5% ` 5,40,000; 
Sports material ` 1,33,200; 
Balance as on 31.3.2024: Subscription Receivable ` 5,400; 
Subscription received in advance ` 1,800; 
Stock of sports material ` 36,000.  (15 Marks) 
Do you agree with above Receipts and Payments account? If not, 
prepare correct Receipts and Payments account and Income and 
Expenditure account for the year ended 31
st
 March, 2024 and Balance 
Sheet on that date.   
(b) P and Q were partners in a firm, sharing profit and losses in the ratio of
3: 2. They admit R for 1/6
th
 share in profits and guaranteed that his share
of profits will not be less than 50,00,000. Total profits of the firm for the
year ended 31
st
 March, 2024 were 1,80,00,000.
Calculate share of profit for each partner when:
(i) Guarantee is given by firm
(ii) Guarantee is given by P and Q equally. (5 Marks) 
(15 + 5 = 20 Marks) 
4. (a) The Balance Sheet of a Partnership Firm M/s Thomas & Associates
consisted of two partners Albert and Andrew who were sharing Profits and 
Losses in the ratio of 5 : 3 respectively. The position as on 31-03-2024 was 
as follows: 
Liabilities ` Assets ` 
Albert's Capital 8,20,000 Land & Building 7,60,000 
Andrew's Capital 6,60,000 Plant & Machinery 3,40,000 
Profit & Loss A/c 2,24,000 Furniture 2,18,960 
Trade Creditors 1,09,600 Stock 2,90,520 
43
Page 4


Maximum Marks: 100 
1. (a)  State with reasons, whether the following statements are true or false:
(i) Wages paid for erection of machinery are debited to Profit and Loss
Account.
(ii) Amount spent for the construction of temporary huts, which were
necessary for construction of the Cinema House and were
demolished when the Cinema House was ready, is capital
expenditure.
(iii) If the effect of errors committed cancel out, the errors will be called
compensating errors and the trial balance will disagree.
(iv) Promissory note is different from bill of exchange because the
amount is paid by the maker in case of former and by the acceptor
in the later.
(v) The business of partnership must be carried on by all the partners.
(vi) Debenture interest is payable after the payment of preference
dividend but before the payment of equity dividend.
(6 Statements x 2 Marks = 12 Marks) 
(b) Explain Cash and Mercantile system of accounting? (4 Marks) 
(c) Calculate the missing amount for the following.
Assets Liabilities Capital 
(a) 45,00,000 7,50,000 ? 
(b) ? 4,50,000  2,25,000 
(c) 43,50,000 ?  41,25,000 
(d) 1,71,00,000 (8,40,000) ? (4 Marks) 
MODEL TEST PAPER 6
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 
41
2. (a) Savin & Co. purchased a machine for ` 1,00,000 on 1.4.2021 Another
machine costing `1,50,000 was purchased on 1.10.2022. On 31.3.2024 the 
machine purchased on 1.4.2021 was sold for ` 50,000. The company 
provides depreciation at 15% on Written Down Value Method. Prepare – (i) 
Machinery Account, (ii) Machinery Disposal Account and (iii) Provision for 
Depreciation Account.     (10 Marks) 
(b) On 30
th
 June. 2024, Cash Book of Ms. Suman (Bank Column of Account
No. 1) shows a Bank Overdraft of ` 1,97,400. On going through the Bank
Pass book for reconciling the Balance, she found the following:
(a) Out of cheques drawn on 26
th
 June, those for ` 14,800 were cashed
by the bankers on 2
nd
 July.
(b) A crossed cheque for ` 3000 given to Abdul was returned by him
and a bearer cheque was issued to him in lieu on 1
st
 July.
(c) Cash and cheques amounting to ` 13,600 were deposited in the
Bank on 29
th
 June, but cheques worth ` 5,200 were cleared by the
Bank on 1
st
 July., and one cheque for ` 1,000 was returned by them
as dishonoured on the latter date.
(d) According to Suman’s standing instructions, the bankers have on
30
th
 June, paid ` 1,280 as interest to her creditors, paid quarterly
premium on her policy amounting to ` 640 and have paid a second
call of ` 2,400 on shares held by her and lodged with the bankers
for safe custody. They have also received ` 600 as dividend on her
shares and recovered an Insurance Claim of ` 3,200, as their
charges and commission charged on the above being ` 400. On
receipt of information of the above transaction, she has passed
necessary entries in her Cash Book on 1
st
 July.
(e) Bankers seem to have given a wrong credit for ` 2,000 paid in by
her in No. 2 account and wrong debit in respect of a cheque for
` 1,200 drawn against her No. 2 account.
Prepare a Bank Reconciliation Statement as on 30
th
 June, 2024. 
    (10 Marks) 
(10 + 10 = 20 Marks) 
3. (a)  The Receipts and Payments account of Gold Smith Club prepared on
31
st
 March, 2024 is as follows: 
Receipts and Payments Account 
Receipts ` Amount 
` 
Payments Amount 
` 
To 
To 
Balance b/d 
Annual Income 
from Subscription 
91,800 
9,000 By Expenses 
(including 
Payment for 
sports material 
` 54,000) 
1,26,000 
42
Add: Outstanding 
of last year 
received this year 3,600 
95,400 
By 
By 
Loss on Sale of 
Furniture (cost 
price ` 9,000) 
Balance c/d 
3,600 
18,09,000 
Less: Prepaid of 
last year 
1,800 93,600 
To Other fees 36,000 
To Donation for 
Building 
18,00,000 
19,38,600 19,38,600 
Additional information: 
Gold Smith Club had balances as on 1.4.2023: 
Furniture ` 36,000; Investment at 5% ` 5,40,000; 
Sports material ` 1,33,200; 
Balance as on 31.3.2024: Subscription Receivable ` 5,400; 
Subscription received in advance ` 1,800; 
Stock of sports material ` 36,000.  (15 Marks) 
Do you agree with above Receipts and Payments account? If not, 
prepare correct Receipts and Payments account and Income and 
Expenditure account for the year ended 31
st
 March, 2024 and Balance 
Sheet on that date.   
(b) P and Q were partners in a firm, sharing profit and losses in the ratio of
3: 2. They admit R for 1/6
th
 share in profits and guaranteed that his share
of profits will not be less than 50,00,000. Total profits of the firm for the
year ended 31
st
 March, 2024 were 1,80,00,000.
Calculate share of profit for each partner when:
(i) Guarantee is given by firm
(ii) Guarantee is given by P and Q equally. (5 Marks) 
(15 + 5 = 20 Marks) 
4. (a) The Balance Sheet of a Partnership Firm M/s Thomas & Associates
consisted of two partners Albert and Andrew who were sharing Profits and 
Losses in the ratio of 5 : 3 respectively. The position as on 31-03-2024 was 
as follows: 
Liabilities ` Assets ` 
Albert's Capital 8,20,000 Land & Building 7,60,000 
Andrew's Capital 6,60,000 Plant & Machinery 3,40,000 
Profit & Loss A/c 2,24,000 Furniture 2,18,960 
Trade Creditors 1,09,600 Stock 2,90,520 
43
Sundry debtors 1,20,000 
Cash at Bank 84,120 
18,13,600 18,13,600 
On the above date, David was admitted as a partner on the following 
terms: 
(a) David should get 1/5
th
 of share of profits.
(b) David brought ` 4,80,000 as his capital and ` 64,000 for his share
of Goodwill.
(c) Plant and Machinery would be depreciated by 15% and Land &
Buildings would be appreciated by 40%.
(d) A provision for doubtful debts to be created at 5% on sundry
debtors.
(e) An unrecorded liability of ` 12,000 for repairs to Buildings would be
recorded in the books of accounts.
(f) Immediately after David’s admission, Goodwill brought by him
would be adjusted among old partners. Thereafter, the capital
accounts of old partners would be adjusted through the current
accounts of partners in such a manner that the capital accounts of
all the partners would be in their profit sharing ratio.
Prepare Revaluation A/c, Capital Accounts of the partners, new profit 
sharing ratio and Balance Sheet of the Firm after the admission of David. 
(15 Marks) 
(b) Hari Om & Co.  employs a team of 8 workers who were paid ` 1,20,000 
per month each in the year ending 31
st
 December, 2023. At the start of 
2024, the company raised salaries by 10% to ` 1,32,000 per month each. 
On 1 July, 2024 the company hired 2 trainees at salary of ` 63,000 per 
month each. The work force are paid salary on the first working day of 
every month, one month in arrears, so that the employees receive their 
salary for January on the first working day of February, etc.
You are required to calculate:
(i) Amount of salaries which would be charged to the profit and loss 
account for the year ended 31st December, 2024.
(ii) Amount actually paid as salaries during 2024.
(iii) Outstanding salaries as on 31
st
 December, 2024 (5 Marks) 
(15+5 =20 Marks) 
44
Page 5


Maximum Marks: 100 
1. (a)  State with reasons, whether the following statements are true or false:
(i) Wages paid for erection of machinery are debited to Profit and Loss
Account.
(ii) Amount spent for the construction of temporary huts, which were
necessary for construction of the Cinema House and were
demolished when the Cinema House was ready, is capital
expenditure.
(iii) If the effect of errors committed cancel out, the errors will be called
compensating errors and the trial balance will disagree.
(iv) Promissory note is different from bill of exchange because the
amount is paid by the maker in case of former and by the acceptor
in the later.
(v) The business of partnership must be carried on by all the partners.
(vi) Debenture interest is payable after the payment of preference
dividend but before the payment of equity dividend.
(6 Statements x 2 Marks = 12 Marks) 
(b) Explain Cash and Mercantile system of accounting? (4 Marks) 
(c) Calculate the missing amount for the following.
Assets Liabilities Capital 
(a) 45,00,000 7,50,000 ? 
(b) ? 4,50,000  2,25,000 
(c) 43,50,000 ?  41,25,000 
(d) 1,71,00,000 (8,40,000) ? (4 Marks) 
MODEL TEST PAPER 6
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 
41
2. (a) Savin & Co. purchased a machine for ` 1,00,000 on 1.4.2021 Another
machine costing `1,50,000 was purchased on 1.10.2022. On 31.3.2024 the 
machine purchased on 1.4.2021 was sold for ` 50,000. The company 
provides depreciation at 15% on Written Down Value Method. Prepare – (i) 
Machinery Account, (ii) Machinery Disposal Account and (iii) Provision for 
Depreciation Account.     (10 Marks) 
(b) On 30
th
 June. 2024, Cash Book of Ms. Suman (Bank Column of Account
No. 1) shows a Bank Overdraft of ` 1,97,400. On going through the Bank
Pass book for reconciling the Balance, she found the following:
(a) Out of cheques drawn on 26
th
 June, those for ` 14,800 were cashed
by the bankers on 2
nd
 July.
(b) A crossed cheque for ` 3000 given to Abdul was returned by him
and a bearer cheque was issued to him in lieu on 1
st
 July.
(c) Cash and cheques amounting to ` 13,600 were deposited in the
Bank on 29
th
 June, but cheques worth ` 5,200 were cleared by the
Bank on 1
st
 July., and one cheque for ` 1,000 was returned by them
as dishonoured on the latter date.
(d) According to Suman’s standing instructions, the bankers have on
30
th
 June, paid ` 1,280 as interest to her creditors, paid quarterly
premium on her policy amounting to ` 640 and have paid a second
call of ` 2,400 on shares held by her and lodged with the bankers
for safe custody. They have also received ` 600 as dividend on her
shares and recovered an Insurance Claim of ` 3,200, as their
charges and commission charged on the above being ` 400. On
receipt of information of the above transaction, she has passed
necessary entries in her Cash Book on 1
st
 July.
(e) Bankers seem to have given a wrong credit for ` 2,000 paid in by
her in No. 2 account and wrong debit in respect of a cheque for
` 1,200 drawn against her No. 2 account.
Prepare a Bank Reconciliation Statement as on 30
th
 June, 2024. 
    (10 Marks) 
(10 + 10 = 20 Marks) 
3. (a)  The Receipts and Payments account of Gold Smith Club prepared on
31
st
 March, 2024 is as follows: 
Receipts and Payments Account 
Receipts ` Amount 
` 
Payments Amount 
` 
To 
To 
Balance b/d 
Annual Income 
from Subscription 
91,800 
9,000 By Expenses 
(including 
Payment for 
sports material 
` 54,000) 
1,26,000 
42
Add: Outstanding 
of last year 
received this year 3,600 
95,400 
By 
By 
Loss on Sale of 
Furniture (cost 
price ` 9,000) 
Balance c/d 
3,600 
18,09,000 
Less: Prepaid of 
last year 
1,800 93,600 
To Other fees 36,000 
To Donation for 
Building 
18,00,000 
19,38,600 19,38,600 
Additional information: 
Gold Smith Club had balances as on 1.4.2023: 
Furniture ` 36,000; Investment at 5% ` 5,40,000; 
Sports material ` 1,33,200; 
Balance as on 31.3.2024: Subscription Receivable ` 5,400; 
Subscription received in advance ` 1,800; 
Stock of sports material ` 36,000.  (15 Marks) 
Do you agree with above Receipts and Payments account? If not, 
prepare correct Receipts and Payments account and Income and 
Expenditure account for the year ended 31
st
 March, 2024 and Balance 
Sheet on that date.   
(b) P and Q were partners in a firm, sharing profit and losses in the ratio of
3: 2. They admit R for 1/6
th
 share in profits and guaranteed that his share
of profits will not be less than 50,00,000. Total profits of the firm for the
year ended 31
st
 March, 2024 were 1,80,00,000.
Calculate share of profit for each partner when:
(i) Guarantee is given by firm
(ii) Guarantee is given by P and Q equally. (5 Marks) 
(15 + 5 = 20 Marks) 
4. (a) The Balance Sheet of a Partnership Firm M/s Thomas & Associates
consisted of two partners Albert and Andrew who were sharing Profits and 
Losses in the ratio of 5 : 3 respectively. The position as on 31-03-2024 was 
as follows: 
Liabilities ` Assets ` 
Albert's Capital 8,20,000 Land & Building 7,60,000 
Andrew's Capital 6,60,000 Plant & Machinery 3,40,000 
Profit & Loss A/c 2,24,000 Furniture 2,18,960 
Trade Creditors 1,09,600 Stock 2,90,520 
43
Sundry debtors 1,20,000 
Cash at Bank 84,120 
18,13,600 18,13,600 
On the above date, David was admitted as a partner on the following 
terms: 
(a) David should get 1/5
th
 of share of profits.
(b) David brought ` 4,80,000 as his capital and ` 64,000 for his share
of Goodwill.
(c) Plant and Machinery would be depreciated by 15% and Land &
Buildings would be appreciated by 40%.
(d) A provision for doubtful debts to be created at 5% on sundry
debtors.
(e) An unrecorded liability of ` 12,000 for repairs to Buildings would be
recorded in the books of accounts.
(f) Immediately after David’s admission, Goodwill brought by him
would be adjusted among old partners. Thereafter, the capital
accounts of old partners would be adjusted through the current
accounts of partners in such a manner that the capital accounts of
all the partners would be in their profit sharing ratio.
Prepare Revaluation A/c, Capital Accounts of the partners, new profit 
sharing ratio and Balance Sheet of the Firm after the admission of David. 
(15 Marks) 
(b) Hari Om & Co.  employs a team of 8 workers who were paid ` 1,20,000 
per month each in the year ending 31
st
 December, 2023. At the start of 
2024, the company raised salaries by 10% to ` 1,32,000 per month each. 
On 1 July, 2024 the company hired 2 trainees at salary of ` 63,000 per 
month each. The work force are paid salary on the first working day of 
every month, one month in arrears, so that the employees receive their 
salary for January on the first working day of February, etc.
You are required to calculate:
(i) Amount of salaries which would be charged to the profit and loss 
account for the year ended 31st December, 2024.
(ii) Amount actually paid as salaries during 2024.
(iii) Outstanding salaries as on 31
st
 December, 2024 (5 Marks) 
(15+5 =20 Marks) 
44
5. (a) Mr. Prakash furnishes following information for his readymade garments
business: 
(i) Receipts and Payments during 2023-24:
Receipts Amount 
` 
Payments Amount 
` 
Bank Balance as on 
1-4-2023
Received from 
Sundry
debtors
Cash sales 
Capital brought in 
the business during 
the year 
Interest on 
Investment 
received 
16,250 
4,81,000 
1,70,800 
50,000 
9,750 
Payment to Sundry 
creditors 
Salaries 
General expenses 
Rent and taxes 
Drawings 
Cash purchases  
Balance at bank on 
31-03-2024
Cash in hand on
31-03-2024
3,43,000 
75,000 
22,500 
11,800 
96,000 
1,22,750 
36,600 
20,150 
7,27,800 7,27,800 
(ii) Particulars of other Assets and Liabilities are as follows:
1
st
 April, 2023 31
st
 March, 2024 
(`) (`) 
Machinery  85,000 85,000 
Furniture 24,500 24,500 
Trade Debtors 1,55,000 ? 
Trade Creditors 60,200 ? 
Inventory 38,600 55,700 
12% Investment 85,000 85,000 
Outstanding Salaries 12,000 14,000 
(iii) Additional information:
(1) 20% of total sales and 20% of total purchases are in cash.
(2) Of the debtors, a sum of ` 7,200 should be written off as Bad
debt and further a provision for doubtful debts is to be
provided @2%.
(3) Provide depreciation @10% p.a. on machinery and furniture
You are required to prepare Trading and Profit & Loss Account for 
the year ended 31
st
 March, 2024, and Balance Sheet as on that 
date.  (10 Marks) 
45