Accounting Model Test Paper - 9 (Answers) | Mock Tests & Past Year Papers for CA Foundation PDF Download

 Page 1


ANSWERS OF MODEL TEST PAPER 9 
FOUNDATION COURSE 
PAPER – 1: ACCOUNTING 
1. (a) (i) True: If closing stock appears in the trial balance then it is not entered 
in the trading account but it is shown only in the balance sheet 
because it has already been adjusted to purchase account. 
(ii) False: If the amount is posted in the wrong account or it is written 
on the wrong side of the account, it is called error of commission 
and not error of Principle. 
(iii) False: Accounting standards cannot override the statute. The 
standards are required to be framed within the ambit of prevailing 
statutes. 
(iv) True: In case of the promissory note, it is generally the maker who 
makes the payment, but in case of the bill of exchange, the person 
accepting the bill shall be liable to make the payment to the holder 
of the bill.                               
(v) False: Errors not affecting the trial balance can be rectified by 
passing a rectification journal entry. While other errors that affect 
one account of trial balance cannot be rectified by passing journal 
entries.  Totaling errors cannot be rectified by passing journal 
entries 
(vi) True: Revaluation is also called as profit and loss adjustment 
account. It is used to record the gain/loss arising from the 
revaluation of assets and liabilities of a firm at the time of 
reconstitution. 
 (b) (i) Accounting Policy: 
(a)  Accounting Policies refer to specific accounting principles and 
methods of applying these principles adopted by the enterprise 
in the preparation and presentation of financial statements; and  
(b) Policies are based on various accounting concepts, principles, 
and conventions. 
Conditions under which change takes place: 
 A change in accounting policies shall be made in the following 
conditions: 
(a) It is required by some statute or for compliance with an 
Accounting Standard 
(b) Change would result in more appropriate presentation of 
financial statement  
  (ii) (i) Cash Basis of Accounting is the method of recording financial 
transactions, by which revenues and expenditure and assets and 
liabilities are reflected in the accounts in the period in which the 
receipts or payments are actually effected/made. 
600
Page 2


ANSWERS OF MODEL TEST PAPER 9 
FOUNDATION COURSE 
PAPER – 1: ACCOUNTING 
1. (a) (i) True: If closing stock appears in the trial balance then it is not entered 
in the trading account but it is shown only in the balance sheet 
because it has already been adjusted to purchase account. 
(ii) False: If the amount is posted in the wrong account or it is written 
on the wrong side of the account, it is called error of commission 
and not error of Principle. 
(iii) False: Accounting standards cannot override the statute. The 
standards are required to be framed within the ambit of prevailing 
statutes. 
(iv) True: In case of the promissory note, it is generally the maker who 
makes the payment, but in case of the bill of exchange, the person 
accepting the bill shall be liable to make the payment to the holder 
of the bill.                               
(v) False: Errors not affecting the trial balance can be rectified by 
passing a rectification journal entry. While other errors that affect 
one account of trial balance cannot be rectified by passing journal 
entries.  Totaling errors cannot be rectified by passing journal 
entries 
(vi) True: Revaluation is also called as profit and loss adjustment 
account. It is used to record the gain/loss arising from the 
revaluation of assets and liabilities of a firm at the time of 
reconstitution. 
 (b) (i) Accounting Policy: 
(a)  Accounting Policies refer to specific accounting principles and 
methods of applying these principles adopted by the enterprise 
in the preparation and presentation of financial statements; and  
(b) Policies are based on various accounting concepts, principles, 
and conventions. 
Conditions under which change takes place: 
 A change in accounting policies shall be made in the following 
conditions: 
(a) It is required by some statute or for compliance with an 
Accounting Standard 
(b) Change would result in more appropriate presentation of 
financial statement  
  (ii) (i) Cash Basis of Accounting is the method of recording financial 
transactions, by which revenues and expenditure and assets and 
liabilities are reflected in the accounts in the period in which the 
receipts or payments are actually effected/made. 
600
(ii) Going Concern concept states that the financial statements are 
normally prepared on the assumption that an enterprise is a 
going concern and will continue in operation for the foreseeable 
future. Hence, it is assumed that the enterprise has neither the 
intention nor the need to liquidate or curtail materially the scale 
of its operations; if such an intention or need exists, the financial 
statements may have to be prepared on a different basis and, if 
so, the basis used needs to be disclosed. 
 The valuation of assets of a business entity is dependent on this 
assumption. Traditionally, accountants follow historical cost in 
majority of the cases. 
(c)     Journal entries in the books of Mr. Kapil 
S 
No. 
Particulars L.F. Amount  
Dr. (`) 
Amount 
Cr. (`) 
(i) Purchases A/c      Dr.  1,35,000  
 Input CGST A/c    Dr.    8,100  
 Input SGST A/c     Dr.    8,100  
   To Sonu’s A/c    1,51,200 
 (Being goods purchased from Sonu, 
CGST and SGST payable @ 6% each) 
   
(ii) Bank A/c       Dr.   22,000  
 Mohit’s A/c       Dr.  33,000  
     To Sales A/c   50,000 
    To Output CGST A/c 
   To Output SGST A/c 
     2,500 
2,500 
 (Being goods sold to Mohit, charged 
CGST and SGST @ 5% each and 
received 40% in cash) 
   
(iii) Drawings A/c     Dr.  28,000  
      To Purchase A/c   25,000 
      To Input CGST A/c    1,500 
      To Input SGST A/c    1,500 
 (Being goods withdrawn for personal 
use and input CGST and input SGST 
debited at the time of purchase 
reversed)  
   
(iv) Machinery A/c    Dr.  2,00,000  
 Input CGST A/c    Dr.      18,000  
 Input SGST A/c    Dr.      18,000  
    To Bank A/c   1,00,000 
    To Bright Industries    1,36,000 
 (Being machinery purchased and paid 
` 1,00,000 immediately, CGST and 
SGST @ 9% each) 
   
 
  
601
Page 3


ANSWERS OF MODEL TEST PAPER 9 
FOUNDATION COURSE 
PAPER – 1: ACCOUNTING 
1. (a) (i) True: If closing stock appears in the trial balance then it is not entered 
in the trading account but it is shown only in the balance sheet 
because it has already been adjusted to purchase account. 
(ii) False: If the amount is posted in the wrong account or it is written 
on the wrong side of the account, it is called error of commission 
and not error of Principle. 
(iii) False: Accounting standards cannot override the statute. The 
standards are required to be framed within the ambit of prevailing 
statutes. 
(iv) True: In case of the promissory note, it is generally the maker who 
makes the payment, but in case of the bill of exchange, the person 
accepting the bill shall be liable to make the payment to the holder 
of the bill.                               
(v) False: Errors not affecting the trial balance can be rectified by 
passing a rectification journal entry. While other errors that affect 
one account of trial balance cannot be rectified by passing journal 
entries.  Totaling errors cannot be rectified by passing journal 
entries 
(vi) True: Revaluation is also called as profit and loss adjustment 
account. It is used to record the gain/loss arising from the 
revaluation of assets and liabilities of a firm at the time of 
reconstitution. 
 (b) (i) Accounting Policy: 
(a)  Accounting Policies refer to specific accounting principles and 
methods of applying these principles adopted by the enterprise 
in the preparation and presentation of financial statements; and  
(b) Policies are based on various accounting concepts, principles, 
and conventions. 
Conditions under which change takes place: 
 A change in accounting policies shall be made in the following 
conditions: 
(a) It is required by some statute or for compliance with an 
Accounting Standard 
(b) Change would result in more appropriate presentation of 
financial statement  
  (ii) (i) Cash Basis of Accounting is the method of recording financial 
transactions, by which revenues and expenditure and assets and 
liabilities are reflected in the accounts in the period in which the 
receipts or payments are actually effected/made. 
600
(ii) Going Concern concept states that the financial statements are 
normally prepared on the assumption that an enterprise is a 
going concern and will continue in operation for the foreseeable 
future. Hence, it is assumed that the enterprise has neither the 
intention nor the need to liquidate or curtail materially the scale 
of its operations; if such an intention or need exists, the financial 
statements may have to be prepared on a different basis and, if 
so, the basis used needs to be disclosed. 
 The valuation of assets of a business entity is dependent on this 
assumption. Traditionally, accountants follow historical cost in 
majority of the cases. 
(c)     Journal entries in the books of Mr. Kapil 
S 
No. 
Particulars L.F. Amount  
Dr. (`) 
Amount 
Cr. (`) 
(i) Purchases A/c      Dr.  1,35,000  
 Input CGST A/c    Dr.    8,100  
 Input SGST A/c     Dr.    8,100  
   To Sonu’s A/c    1,51,200 
 (Being goods purchased from Sonu, 
CGST and SGST payable @ 6% each) 
   
(ii) Bank A/c       Dr.   22,000  
 Mohit’s A/c       Dr.  33,000  
     To Sales A/c   50,000 
    To Output CGST A/c 
   To Output SGST A/c 
     2,500 
2,500 
 (Being goods sold to Mohit, charged 
CGST and SGST @ 5% each and 
received 40% in cash) 
   
(iii) Drawings A/c     Dr.  28,000  
      To Purchase A/c   25,000 
      To Input CGST A/c    1,500 
      To Input SGST A/c    1,500 
 (Being goods withdrawn for personal 
use and input CGST and input SGST 
debited at the time of purchase 
reversed)  
   
(iv) Machinery A/c    Dr.  2,00,000  
 Input CGST A/c    Dr.      18,000  
 Input SGST A/c    Dr.      18,000  
    To Bank A/c   1,00,000 
    To Bright Industries    1,36,000 
 (Being machinery purchased and paid 
` 1,00,000 immediately, CGST and 
SGST @ 9% each) 
   
 
  
601
2. (a)    Journal Entries in the Books of Mr. Sarvesh Kumar 
Particulars L.F. Amount  
Dr. (`) 
Amount 
Cr. (`) 
(i) Returns Inward/ Sales Return A/c   Dr.  1,000  
  To Suspense A/c   1,000 
 (Being the mistake in totalling the Returns 
Inward Book corrected) 
   
(ii) Machinery A/c                       Dr.  6,500  
  To Freight A/c 
       To Suspense A/c 
  5,600 
   900 
 (Being the freight paid for installation of 
machinery should have been capitalised and 
not to be charged to freight Account) 
   
(iii) Returns Inward/Sales Return A/c      Dr.   
Sales A/c              Dr.  
 2,500 
2,500 
 
  To Suspense A/c   5,000 
 (Being value of goods returned by a customer 
wrongly posted to sales and omission of debit 
to sales returns account, now rectified) 
   
(iv) Drawings A/c       Dr.  18,000  
  To Conveyance A/c   18,000 
 (Being the motorcycle purchased for Mr. 
Suresh Kumar debited to his Drawings 
Account instead of Conveyance Account as 
previously done by mistake) 
   
(v) Suspense A/c            Dr.  700  
  To Creditors (personal) A/c   700 
 (Being the mistake in crediting the creditors 
account less by ` 700, now corrected) 
   
(vi) Suspense A/c       Dr. 
     To Mr. Avinash’s A/c 
  10,000  
10,000 
 (Being cash received for Rs 5,000 wrongly 
posted to the debit of his account now 
corrected) 
   
(vii) Mr. Alok’s A/c       Dr.   2,500  
       To Ashok’s A/c   2,500 
 (Being the cheque of Mr. Alok dishonoured, 
previously debited to Mr. Ashok) 
   
(viii) Deepak A/c         Dr.  17,000  
  To Suspense A/c 
(Being the correction of mistake by which the 
account of Deepak A/c was credited instead 
of being debited) 
  17,000 
(ix) Discount A/c       Dr.  3,800  
  To Suspense A/c   3,800 
 (Being the total of discount allowed during 
December not posted; error now rectified) 
   
602
Page 4


ANSWERS OF MODEL TEST PAPER 9 
FOUNDATION COURSE 
PAPER – 1: ACCOUNTING 
1. (a) (i) True: If closing stock appears in the trial balance then it is not entered 
in the trading account but it is shown only in the balance sheet 
because it has already been adjusted to purchase account. 
(ii) False: If the amount is posted in the wrong account or it is written 
on the wrong side of the account, it is called error of commission 
and not error of Principle. 
(iii) False: Accounting standards cannot override the statute. The 
standards are required to be framed within the ambit of prevailing 
statutes. 
(iv) True: In case of the promissory note, it is generally the maker who 
makes the payment, but in case of the bill of exchange, the person 
accepting the bill shall be liable to make the payment to the holder 
of the bill.                               
(v) False: Errors not affecting the trial balance can be rectified by 
passing a rectification journal entry. While other errors that affect 
one account of trial balance cannot be rectified by passing journal 
entries.  Totaling errors cannot be rectified by passing journal 
entries 
(vi) True: Revaluation is also called as profit and loss adjustment 
account. It is used to record the gain/loss arising from the 
revaluation of assets and liabilities of a firm at the time of 
reconstitution. 
 (b) (i) Accounting Policy: 
(a)  Accounting Policies refer to specific accounting principles and 
methods of applying these principles adopted by the enterprise 
in the preparation and presentation of financial statements; and  
(b) Policies are based on various accounting concepts, principles, 
and conventions. 
Conditions under which change takes place: 
 A change in accounting policies shall be made in the following 
conditions: 
(a) It is required by some statute or for compliance with an 
Accounting Standard 
(b) Change would result in more appropriate presentation of 
financial statement  
  (ii) (i) Cash Basis of Accounting is the method of recording financial 
transactions, by which revenues and expenditure and assets and 
liabilities are reflected in the accounts in the period in which the 
receipts or payments are actually effected/made. 
600
(ii) Going Concern concept states that the financial statements are 
normally prepared on the assumption that an enterprise is a 
going concern and will continue in operation for the foreseeable 
future. Hence, it is assumed that the enterprise has neither the 
intention nor the need to liquidate or curtail materially the scale 
of its operations; if such an intention or need exists, the financial 
statements may have to be prepared on a different basis and, if 
so, the basis used needs to be disclosed. 
 The valuation of assets of a business entity is dependent on this 
assumption. Traditionally, accountants follow historical cost in 
majority of the cases. 
(c)     Journal entries in the books of Mr. Kapil 
S 
No. 
Particulars L.F. Amount  
Dr. (`) 
Amount 
Cr. (`) 
(i) Purchases A/c      Dr.  1,35,000  
 Input CGST A/c    Dr.    8,100  
 Input SGST A/c     Dr.    8,100  
   To Sonu’s A/c    1,51,200 
 (Being goods purchased from Sonu, 
CGST and SGST payable @ 6% each) 
   
(ii) Bank A/c       Dr.   22,000  
 Mohit’s A/c       Dr.  33,000  
     To Sales A/c   50,000 
    To Output CGST A/c 
   To Output SGST A/c 
     2,500 
2,500 
 (Being goods sold to Mohit, charged 
CGST and SGST @ 5% each and 
received 40% in cash) 
   
(iii) Drawings A/c     Dr.  28,000  
      To Purchase A/c   25,000 
      To Input CGST A/c    1,500 
      To Input SGST A/c    1,500 
 (Being goods withdrawn for personal 
use and input CGST and input SGST 
debited at the time of purchase 
reversed)  
   
(iv) Machinery A/c    Dr.  2,00,000  
 Input CGST A/c    Dr.      18,000  
 Input SGST A/c    Dr.      18,000  
    To Bank A/c   1,00,000 
    To Bright Industries    1,36,000 
 (Being machinery purchased and paid 
` 1,00,000 immediately, CGST and 
SGST @ 9% each) 
   
 
  
601
2. (a)    Journal Entries in the Books of Mr. Sarvesh Kumar 
Particulars L.F. Amount  
Dr. (`) 
Amount 
Cr. (`) 
(i) Returns Inward/ Sales Return A/c   Dr.  1,000  
  To Suspense A/c   1,000 
 (Being the mistake in totalling the Returns 
Inward Book corrected) 
   
(ii) Machinery A/c                       Dr.  6,500  
  To Freight A/c 
       To Suspense A/c 
  5,600 
   900 
 (Being the freight paid for installation of 
machinery should have been capitalised and 
not to be charged to freight Account) 
   
(iii) Returns Inward/Sales Return A/c      Dr.   
Sales A/c              Dr.  
 2,500 
2,500 
 
  To Suspense A/c   5,000 
 (Being value of goods returned by a customer 
wrongly posted to sales and omission of debit 
to sales returns account, now rectified) 
   
(iv) Drawings A/c       Dr.  18,000  
  To Conveyance A/c   18,000 
 (Being the motorcycle purchased for Mr. 
Suresh Kumar debited to his Drawings 
Account instead of Conveyance Account as 
previously done by mistake) 
   
(v) Suspense A/c            Dr.  700  
  To Creditors (personal) A/c   700 
 (Being the mistake in crediting the creditors 
account less by ` 700, now corrected) 
   
(vi) Suspense A/c       Dr. 
     To Mr. Avinash’s A/c 
  10,000  
10,000 
 (Being cash received for Rs 5,000 wrongly 
posted to the debit of his account now 
corrected) 
   
(vii) Mr. Alok’s A/c       Dr.   2,500  
       To Ashok’s A/c   2,500 
 (Being the cheque of Mr. Alok dishonoured, 
previously debited to Mr. Ashok) 
   
(viii) Deepak A/c         Dr.  17,000  
  To Suspense A/c 
(Being the correction of mistake by which the 
account of Deepak A/c was credited instead 
of being debited) 
  17,000 
(ix) Discount A/c       Dr.  3,800  
  To Suspense A/c   3,800 
 (Being the total of discount allowed during 
December not posted; error now rectified) 
   
602
(x) Sales A/c               Dr.  2,200  
  To Furniture A/c   2,200 
 (Being the rectification of mistake by which 
sales of furniture was entered in sales book 
and hence now corrected by debiting the 
sales A/c) 
   
(b)      In the books of LMP Co. 
Machinery Account 
Date Particulars Amount 
(`) 
Date Particulars Amount 
(`) 
01.04.22 
 
01.10.22 
 
To Balance 
b/d 
To Bank 
9,72,000 
 
1,58,000 
01.10.22 
 
 
01.10.22 
 
01.10.22 
 
31.03.23 
 
By Depreciation on 
machinery sold 
(W.N.1) 
By Bank- Machinery 
sold 
By Loss on sale of 
machinery (W.N.1) 
By Depreciation on 
remaining 
machineries (W.N.4) 
3,240 
 
 
45,000 
 
16,560 
 
98,620 
 
   31.03.23 By Balance c/d 9,66,580 
  11,30,000   11,30,000 
Working Note: 
1. Calculation of amount of Depreciation, written down value 
and loss on sale of the part of the machinery 
Particulars Amount (`)  
Cost as on 01.04.2020 80,000 
Less: Depreciation @10% for the year 2020-
2021 
(8,000) 
Written Down Value (WDV) as on 31.03.2021 
or 01.04.2021 
72,000 
Less: Depreciation @10% for the year 2021-
2022 
(7,200) 
Written Down Value (WDV) as on 01.04.2022 64,800 
Less: Depreciation @10%for the half year till 
30
th
 September, 2022 
 (3,240) 
Written Down Value (WDV) as on 1.10.2022 61,560 
Less: Sale price of the asset sold on 
01.10.2022 
 (45,000) 
Loss on sale of Machinery sold 16,560 
2.  Computation of written down value of the remaining asset as 
on 01.04.2022 
 `  
Total WDV of the machinery as on 01.04.2022 9,72,000 
603
Page 5


ANSWERS OF MODEL TEST PAPER 9 
FOUNDATION COURSE 
PAPER – 1: ACCOUNTING 
1. (a) (i) True: If closing stock appears in the trial balance then it is not entered 
in the trading account but it is shown only in the balance sheet 
because it has already been adjusted to purchase account. 
(ii) False: If the amount is posted in the wrong account or it is written 
on the wrong side of the account, it is called error of commission 
and not error of Principle. 
(iii) False: Accounting standards cannot override the statute. The 
standards are required to be framed within the ambit of prevailing 
statutes. 
(iv) True: In case of the promissory note, it is generally the maker who 
makes the payment, but in case of the bill of exchange, the person 
accepting the bill shall be liable to make the payment to the holder 
of the bill.                               
(v) False: Errors not affecting the trial balance can be rectified by 
passing a rectification journal entry. While other errors that affect 
one account of trial balance cannot be rectified by passing journal 
entries.  Totaling errors cannot be rectified by passing journal 
entries 
(vi) True: Revaluation is also called as profit and loss adjustment 
account. It is used to record the gain/loss arising from the 
revaluation of assets and liabilities of a firm at the time of 
reconstitution. 
 (b) (i) Accounting Policy: 
(a)  Accounting Policies refer to specific accounting principles and 
methods of applying these principles adopted by the enterprise 
in the preparation and presentation of financial statements; and  
(b) Policies are based on various accounting concepts, principles, 
and conventions. 
Conditions under which change takes place: 
 A change in accounting policies shall be made in the following 
conditions: 
(a) It is required by some statute or for compliance with an 
Accounting Standard 
(b) Change would result in more appropriate presentation of 
financial statement  
  (ii) (i) Cash Basis of Accounting is the method of recording financial 
transactions, by which revenues and expenditure and assets and 
liabilities are reflected in the accounts in the period in which the 
receipts or payments are actually effected/made. 
600
(ii) Going Concern concept states that the financial statements are 
normally prepared on the assumption that an enterprise is a 
going concern and will continue in operation for the foreseeable 
future. Hence, it is assumed that the enterprise has neither the 
intention nor the need to liquidate or curtail materially the scale 
of its operations; if such an intention or need exists, the financial 
statements may have to be prepared on a different basis and, if 
so, the basis used needs to be disclosed. 
 The valuation of assets of a business entity is dependent on this 
assumption. Traditionally, accountants follow historical cost in 
majority of the cases. 
(c)     Journal entries in the books of Mr. Kapil 
S 
No. 
Particulars L.F. Amount  
Dr. (`) 
Amount 
Cr. (`) 
(i) Purchases A/c      Dr.  1,35,000  
 Input CGST A/c    Dr.    8,100  
 Input SGST A/c     Dr.    8,100  
   To Sonu’s A/c    1,51,200 
 (Being goods purchased from Sonu, 
CGST and SGST payable @ 6% each) 
   
(ii) Bank A/c       Dr.   22,000  
 Mohit’s A/c       Dr.  33,000  
     To Sales A/c   50,000 
    To Output CGST A/c 
   To Output SGST A/c 
     2,500 
2,500 
 (Being goods sold to Mohit, charged 
CGST and SGST @ 5% each and 
received 40% in cash) 
   
(iii) Drawings A/c     Dr.  28,000  
      To Purchase A/c   25,000 
      To Input CGST A/c    1,500 
      To Input SGST A/c    1,500 
 (Being goods withdrawn for personal 
use and input CGST and input SGST 
debited at the time of purchase 
reversed)  
   
(iv) Machinery A/c    Dr.  2,00,000  
 Input CGST A/c    Dr.      18,000  
 Input SGST A/c    Dr.      18,000  
    To Bank A/c   1,00,000 
    To Bright Industries    1,36,000 
 (Being machinery purchased and paid 
` 1,00,000 immediately, CGST and 
SGST @ 9% each) 
   
 
  
601
2. (a)    Journal Entries in the Books of Mr. Sarvesh Kumar 
Particulars L.F. Amount  
Dr. (`) 
Amount 
Cr. (`) 
(i) Returns Inward/ Sales Return A/c   Dr.  1,000  
  To Suspense A/c   1,000 
 (Being the mistake in totalling the Returns 
Inward Book corrected) 
   
(ii) Machinery A/c                       Dr.  6,500  
  To Freight A/c 
       To Suspense A/c 
  5,600 
   900 
 (Being the freight paid for installation of 
machinery should have been capitalised and 
not to be charged to freight Account) 
   
(iii) Returns Inward/Sales Return A/c      Dr.   
Sales A/c              Dr.  
 2,500 
2,500 
 
  To Suspense A/c   5,000 
 (Being value of goods returned by a customer 
wrongly posted to sales and omission of debit 
to sales returns account, now rectified) 
   
(iv) Drawings A/c       Dr.  18,000  
  To Conveyance A/c   18,000 
 (Being the motorcycle purchased for Mr. 
Suresh Kumar debited to his Drawings 
Account instead of Conveyance Account as 
previously done by mistake) 
   
(v) Suspense A/c            Dr.  700  
  To Creditors (personal) A/c   700 
 (Being the mistake in crediting the creditors 
account less by ` 700, now corrected) 
   
(vi) Suspense A/c       Dr. 
     To Mr. Avinash’s A/c 
  10,000  
10,000 
 (Being cash received for Rs 5,000 wrongly 
posted to the debit of his account now 
corrected) 
   
(vii) Mr. Alok’s A/c       Dr.   2,500  
       To Ashok’s A/c   2,500 
 (Being the cheque of Mr. Alok dishonoured, 
previously debited to Mr. Ashok) 
   
(viii) Deepak A/c         Dr.  17,000  
  To Suspense A/c 
(Being the correction of mistake by which the 
account of Deepak A/c was credited instead 
of being debited) 
  17,000 
(ix) Discount A/c       Dr.  3,800  
  To Suspense A/c   3,800 
 (Being the total of discount allowed during 
December not posted; error now rectified) 
   
602
(x) Sales A/c               Dr.  2,200  
  To Furniture A/c   2,200 
 (Being the rectification of mistake by which 
sales of furniture was entered in sales book 
and hence now corrected by debiting the 
sales A/c) 
   
(b)      In the books of LMP Co. 
Machinery Account 
Date Particulars Amount 
(`) 
Date Particulars Amount 
(`) 
01.04.22 
 
01.10.22 
 
To Balance 
b/d 
To Bank 
9,72,000 
 
1,58,000 
01.10.22 
 
 
01.10.22 
 
01.10.22 
 
31.03.23 
 
By Depreciation on 
machinery sold 
(W.N.1) 
By Bank- Machinery 
sold 
By Loss on sale of 
machinery (W.N.1) 
By Depreciation on 
remaining 
machineries (W.N.4) 
3,240 
 
 
45,000 
 
16,560 
 
98,620 
 
   31.03.23 By Balance c/d 9,66,580 
  11,30,000   11,30,000 
Working Note: 
1. Calculation of amount of Depreciation, written down value 
and loss on sale of the part of the machinery 
Particulars Amount (`)  
Cost as on 01.04.2020 80,000 
Less: Depreciation @10% for the year 2020-
2021 
(8,000) 
Written Down Value (WDV) as on 31.03.2021 
or 01.04.2021 
72,000 
Less: Depreciation @10% for the year 2021-
2022 
(7,200) 
Written Down Value (WDV) as on 01.04.2022 64,800 
Less: Depreciation @10%for the half year till 
30
th
 September, 2022 
 (3,240) 
Written Down Value (WDV) as on 1.10.2022 61,560 
Less: Sale price of the asset sold on 
01.10.2022 
 (45,000) 
Loss on sale of Machinery sold 16,560 
2.  Computation of written down value of the remaining asset as 
on 01.04.2022 
 `  
Total WDV of the machinery as on 01.04.2022 9,72,000 
603
Less: WDV of the part of the machinery sold as 
on 01.04.2022 
(64,800) 
Written down value of the remaining asset as on 
01.04.2022 
9,07,200 
3. Computation of the written down value of the machinery as 
on 31.03.2023 
 `   
Written down value of the remaining 
asset as on 01.04.2022 
9,07,200  
Less: Depreciation @ 10% for the year 
2022-2023 
 (90,720) 8,16,480 
Add: New machinery purchased on 
1.10.2022 (1,50,000 +8,000) 
1,58,000  
Less: Depreciation for 6 months @10%   (7,900) 1,50,100 
Written down value of the machinery 
as on 31.03.2023 
 9,66,580 
4. Total Depreciation to be charged to Profit and Loss Account 
during the year 2022-2023  
S. 
No. 
Particulars Depreciation 
(`) 
1.   Depreciation at 10% on existing machinery 
on 01.4.2022 i.e. (9,07,200*10%) 
90,720 
2. Depreciation on addition i.e. 1,58,000* 
10%*1/2 
     7,900 
 Sub-Total 98,620 
3. Depreciation on machinery sold 1.10.2022 3,240 
Grand Total 1,01,860 
3. (a)    In the books of Vandana Sports club. 
     Income and Expenditure Account for the year ending  
31
st
 March, 2024 
 Expenditure  Amount 
(`) 
Income Amount 
(`) 
To Salaries (W.N.2)  1,57,200 By  Subscription 
(WN. 2) 
2,95,500 
To Rent & Electricity 
(W.N.2) 
 70,850 By Interest on 
Investments 
8,000 
To Magazines & 
Newspapers 
 16,600 By Misc. Income 19,850 
To Sundry Expenses  71,050 By Entrance Fees   20,000 
To Depreciation:      
  Furniture 6,550     
604