Accounting Sample Paper Series - II, Solution | Mock Tests & Past Year Papers for CA Foundation PDF Download

 Page 1


1 
 
FOUNDATION COURSE 
MOCK TEST PAPER 2 
PAPER – 1: PRINCIPLES AND PRACTICE OF ACCOUNTING 
ANSWERS 
1. (a) (i)  False - Debenture interest is payable before the payment of any dividend on shares. 
(ii)  True: Amount paid to management company for consultancy to reduce the working expenses 
is capital expenditure as this expenditure will generate long-term benefit to the entity. 
(iii)  False: The additional commission to the consignee who agrees to bear the loss on account 
of bad debts is called del credere commission. 
(iv)  False: According to the Indian Partnership Act, in the absence of any agreement to the 
contrary, profits and losses of the firm are shared equally among partners. 
  (v)   False: Goods taken by the proprietor for personal use should be credited to Purchases 
Account as less goods are left in the business for sale. 
(vi) False: Quick ratio is known as Acid Test Ratio and not Cash Ratio. 
(b) Objective and Advantages of Accounting Standards: An Accounting Standard is a selected set 
of accounting policies or broad guidelines regarding the principles and methods to be chosen out 
of several alternatives.  The Accounting Standards Board formulates Accounting Standards to be 
established by the Council of the Institute of Chartered Accountants of India. 
The main objective of Accounting Standards is to establish standards which have to be complied 
with to ensure that financial statements are prepared in accordance with generally accepted 
accounting standards.  Accounting Standards seek to suggest rules and criteria of accounting 
measurements.  These standards harmonize the diverse accounting policies and practices at 
present in use in India.   
The main advantage of setting accounting standards is that the adoption and application of 
Accounting Standards ensure uniformity, comparability and qualitative improvement in the 
preparation and presentation of financial statements. 
The other advantages are as follows: 
(i) Reduction in variations. 
(ii) Disclosure beyond that required by law. 
(iii) Facilities comparison. 
(c)           Statement of Valuation of Stock on 31st March, 2018    
        Rs.           Rs. 
Value of stock as on 15th April, 2018  50,000 
Add: Cost of sales during the period from 31st March, 2018 to 15th April, 
2018 
Sales (Rs. 41,000 – Rs. 1,000)   
 
 
40,000 
 
 Less: Gross Profit (20% of Rs. 40,000)   8,000 32,000 
 Cost of goods sent on approval basis 
(80% of Rs. 6,000) 
  
  4,800 
   86,800 
© The Institute of Chartered Accountants of India
Page 2


1 
 
FOUNDATION COURSE 
MOCK TEST PAPER 2 
PAPER – 1: PRINCIPLES AND PRACTICE OF ACCOUNTING 
ANSWERS 
1. (a) (i)  False - Debenture interest is payable before the payment of any dividend on shares. 
(ii)  True: Amount paid to management company for consultancy to reduce the working expenses 
is capital expenditure as this expenditure will generate long-term benefit to the entity. 
(iii)  False: The additional commission to the consignee who agrees to bear the loss on account 
of bad debts is called del credere commission. 
(iv)  False: According to the Indian Partnership Act, in the absence of any agreement to the 
contrary, profits and losses of the firm are shared equally among partners. 
  (v)   False: Goods taken by the proprietor for personal use should be credited to Purchases 
Account as less goods are left in the business for sale. 
(vi) False: Quick ratio is known as Acid Test Ratio and not Cash Ratio. 
(b) Objective and Advantages of Accounting Standards: An Accounting Standard is a selected set 
of accounting policies or broad guidelines regarding the principles and methods to be chosen out 
of several alternatives.  The Accounting Standards Board formulates Accounting Standards to be 
established by the Council of the Institute of Chartered Accountants of India. 
The main objective of Accounting Standards is to establish standards which have to be complied 
with to ensure that financial statements are prepared in accordance with generally accepted 
accounting standards.  Accounting Standards seek to suggest rules and criteria of accounting 
measurements.  These standards harmonize the diverse accounting policies and practices at 
present in use in India.   
The main advantage of setting accounting standards is that the adoption and application of 
Accounting Standards ensure uniformity, comparability and qualitative improvement in the 
preparation and presentation of financial statements. 
The other advantages are as follows: 
(i) Reduction in variations. 
(ii) Disclosure beyond that required by law. 
(iii) Facilities comparison. 
(c)           Statement of Valuation of Stock on 31st March, 2018    
        Rs.           Rs. 
Value of stock as on 15th April, 2018  50,000 
Add: Cost of sales during the period from 31st March, 2018 to 15th April, 
2018 
Sales (Rs. 41,000 – Rs. 1,000)   
 
 
40,000 
 
 Less: Gross Profit (20% of Rs. 40,000)   8,000 32,000 
 Cost of goods sent on approval basis 
(80% of Rs. 6,000) 
  
  4,800 
   86,800 
© The Institute of Chartered Accountants of India
2 
Less: Purchases during the period from 31st March, 2018 to 15th April, 
2018 
 
 
 
5,034 
  81,766 
2. (a)       PETTY CASH BOOK 
Receipts 
 
Rs.  
Date 
 
2017 
V. 
No. 
Particulars Total 
 
Rs.  
Con- 
veyance 
Rs.  
Cartage 
 
Rs.  
Statio- 
nery 
Rs.  
Postage & 
Telegrams 
Rs.  
Wages 
 
Rs.  
Sundries 
 
Rs.  
20,000 April1  To Cash        
 2 1 By Conveyance 500 500      
 3 2 By Cartage 2,500  2,500     
 4 3 By Postage and 
Telegrams 
500    500   
 5 4 By Wages 600     600  
 5 5 By Stationery 400   400    
 6 6 By Repairs to 
machine 
1,500      1,500 
 6 7 By Conveyance 100 100      
 7 8 By Cartage 400  400     
 7 9 By Postage and 
Telegrams 
700    700   
 8 10 By Cartage 3,000  3,000     
 9 11 By Stationery 2,000   2,000    
 10 12 By Sundry 
Expenses 
5,000      5,000 
    17,200 600 5,900 2,400 1,200 600 6,500 
   By Balance c/d 2,800       
20,000    20,000       
2800   To Balance b/d        
17,200 11  To Cash        
(b)      
Balance as per Cash Book 
  
(49,350) 
Add :  Cheques issued but not presented for payment 
 
3,700 
 
 
Crossed Cheque issued to Abdul not presented for 
payment 
 
750 
 
 
Amounts collected by Bank on our behalf but 
   
 
not entered in the Cash Book 
   
 
Dividend 150 
  
 
Insurance claim 800 
  
  
950 
  
 
(-) Bank Commission   15 935 
 
 
Amount paid in A/c No. 2 credited by the  
   
 
Bank wrongly to this A/c 
 
500      5885 
    
(43,465) 
Less :  Cheques deposited in the bank but no cleared 
 
1550 
 
 
(Rs. 1,300 + Rs. 250) 
   
© The Institute of Chartered Accountants of India
Page 3


1 
 
FOUNDATION COURSE 
MOCK TEST PAPER 2 
PAPER – 1: PRINCIPLES AND PRACTICE OF ACCOUNTING 
ANSWERS 
1. (a) (i)  False - Debenture interest is payable before the payment of any dividend on shares. 
(ii)  True: Amount paid to management company for consultancy to reduce the working expenses 
is capital expenditure as this expenditure will generate long-term benefit to the entity. 
(iii)  False: The additional commission to the consignee who agrees to bear the loss on account 
of bad debts is called del credere commission. 
(iv)  False: According to the Indian Partnership Act, in the absence of any agreement to the 
contrary, profits and losses of the firm are shared equally among partners. 
  (v)   False: Goods taken by the proprietor for personal use should be credited to Purchases 
Account as less goods are left in the business for sale. 
(vi) False: Quick ratio is known as Acid Test Ratio and not Cash Ratio. 
(b) Objective and Advantages of Accounting Standards: An Accounting Standard is a selected set 
of accounting policies or broad guidelines regarding the principles and methods to be chosen out 
of several alternatives.  The Accounting Standards Board formulates Accounting Standards to be 
established by the Council of the Institute of Chartered Accountants of India. 
The main objective of Accounting Standards is to establish standards which have to be complied 
with to ensure that financial statements are prepared in accordance with generally accepted 
accounting standards.  Accounting Standards seek to suggest rules and criteria of accounting 
measurements.  These standards harmonize the diverse accounting policies and practices at 
present in use in India.   
The main advantage of setting accounting standards is that the adoption and application of 
Accounting Standards ensure uniformity, comparability and qualitative improvement in the 
preparation and presentation of financial statements. 
The other advantages are as follows: 
(i) Reduction in variations. 
(ii) Disclosure beyond that required by law. 
(iii) Facilities comparison. 
(c)           Statement of Valuation of Stock on 31st March, 2018    
        Rs.           Rs. 
Value of stock as on 15th April, 2018  50,000 
Add: Cost of sales during the period from 31st March, 2018 to 15th April, 
2018 
Sales (Rs. 41,000 – Rs. 1,000)   
 
 
40,000 
 
 Less: Gross Profit (20% of Rs. 40,000)   8,000 32,000 
 Cost of goods sent on approval basis 
(80% of Rs. 6,000) 
  
  4,800 
   86,800 
© The Institute of Chartered Accountants of India
2 
Less: Purchases during the period from 31st March, 2018 to 15th April, 
2018 
 
 
 
5,034 
  81,766 
2. (a)       PETTY CASH BOOK 
Receipts 
 
Rs.  
Date 
 
2017 
V. 
No. 
Particulars Total 
 
Rs.  
Con- 
veyance 
Rs.  
Cartage 
 
Rs.  
Statio- 
nery 
Rs.  
Postage & 
Telegrams 
Rs.  
Wages 
 
Rs.  
Sundries 
 
Rs.  
20,000 April1  To Cash        
 2 1 By Conveyance 500 500      
 3 2 By Cartage 2,500  2,500     
 4 3 By Postage and 
Telegrams 
500    500   
 5 4 By Wages 600     600  
 5 5 By Stationery 400   400    
 6 6 By Repairs to 
machine 
1,500      1,500 
 6 7 By Conveyance 100 100      
 7 8 By Cartage 400  400     
 7 9 By Postage and 
Telegrams 
700    700   
 8 10 By Cartage 3,000  3,000     
 9 11 By Stationery 2,000   2,000    
 10 12 By Sundry 
Expenses 
5,000      5,000 
    17,200 600 5,900 2,400 1,200 600 6,500 
   By Balance c/d 2,800       
20,000    20,000       
2800   To Balance b/d        
17,200 11  To Cash        
(b)      
Balance as per Cash Book 
  
(49,350) 
Add :  Cheques issued but not presented for payment 
 
3,700 
 
 
Crossed Cheque issued to Abdul not presented for 
payment 
 
750 
 
 
Amounts collected by Bank on our behalf but 
   
 
not entered in the Cash Book 
   
 
Dividend 150 
  
 
Insurance claim 800 
  
  
950 
  
 
(-) Bank Commission   15 935 
 
 
Amount paid in A/c No. 2 credited by the  
   
 
Bank wrongly to this A/c 
 
500      5885 
    
(43,465) 
Less :  Cheques deposited in the bank but no cleared 
 
1550 
 
 
(Rs. 1,300 + Rs. 250) 
   
© The Institute of Chartered Accountants of India
3 
 
Payments made by Bank on our behalf but not 
   
 
entered in the Cash Book 
   
 
Interest 320 
  
 
Premium 160 
  
 
Second call 600 1,080 
 
 
Cheques issued against A/c No. 2 but wrongly  
   
 
debited by the Bank to this A/c 
 
300 (2,930) 
 
Overdraft as per Pass Book 
  
46,395 
3. (a)       Books of Manoj 
Consignment to Jaipur Account 
Particulars Rs. Particulars Rs. 
To Goods sent on 
Consignment A/c 
1,87,500 By Goods sent on 
 Consignment A/c (loading) 
37,500 
To Cash A/c 15,000 By Abnormal Loss 16,500 
To Kiran(Expenses) 12,000 By Kiran(Sales) 1,50,000 
To Kiran(Commission) 16,406 By Inventories on Consignment 
 A/c 
30,375 
To Inventories Reserve A/c 5,625 By General Profit & Loss A/c 2,156 
 2,36,531  2,36,531 
Working Notes: 
1. Calculation of value of goods sent on consignment: 
 Abnormal Loss at Invoice price               = Rs.       18,750 
 Abnormal Loss as a percentage of total consignment           =   10%. 
 Hence the value of goods sent on consignment = Rs.  18,750 X 100/ 10 = Rs.  1,87,500 
 Loading of goods sent on consignment = Rs.  1,87,500 X 25/125          = Rs.     37,500 
2. Calculation of abnormal loss (10%): 
 Abnormal Loss at Invoice price =  Rs.  18,750. 
 Abnormal Loss at cost = Rs.  18,750 X 100/125 = Rs.  15,000 
 Add: Proportionate expenses of Manoj (10 % of Rs.  15,000) =  Rs.    1,500 
   Rs.  16,500 
3. Calculation of closing Inventories (15%): 
 Manoj’s Basic Invoice price of consignment= Rs.  1,87,500 
 Manoj’s expenses on consignment                 =     Rs.     15,000 
    Rs.  2,02,500 
 Value of closing Inventories = 15% of Rs.  2,02,500=  Rs.  30,375 
 Loading in closing Inventories = Rs. 37,500 x 15/100=  Rs.  5,625 
 Where Rs. 28,125 (15% of Rs.  1,87,500) is the basic invoice price of the goods sent on 
consignment remaining unsold. 
© The Institute of Chartered Accountants of India
Page 4


1 
 
FOUNDATION COURSE 
MOCK TEST PAPER 2 
PAPER – 1: PRINCIPLES AND PRACTICE OF ACCOUNTING 
ANSWERS 
1. (a) (i)  False - Debenture interest is payable before the payment of any dividend on shares. 
(ii)  True: Amount paid to management company for consultancy to reduce the working expenses 
is capital expenditure as this expenditure will generate long-term benefit to the entity. 
(iii)  False: The additional commission to the consignee who agrees to bear the loss on account 
of bad debts is called del credere commission. 
(iv)  False: According to the Indian Partnership Act, in the absence of any agreement to the 
contrary, profits and losses of the firm are shared equally among partners. 
  (v)   False: Goods taken by the proprietor for personal use should be credited to Purchases 
Account as less goods are left in the business for sale. 
(vi) False: Quick ratio is known as Acid Test Ratio and not Cash Ratio. 
(b) Objective and Advantages of Accounting Standards: An Accounting Standard is a selected set 
of accounting policies or broad guidelines regarding the principles and methods to be chosen out 
of several alternatives.  The Accounting Standards Board formulates Accounting Standards to be 
established by the Council of the Institute of Chartered Accountants of India. 
The main objective of Accounting Standards is to establish standards which have to be complied 
with to ensure that financial statements are prepared in accordance with generally accepted 
accounting standards.  Accounting Standards seek to suggest rules and criteria of accounting 
measurements.  These standards harmonize the diverse accounting policies and practices at 
present in use in India.   
The main advantage of setting accounting standards is that the adoption and application of 
Accounting Standards ensure uniformity, comparability and qualitative improvement in the 
preparation and presentation of financial statements. 
The other advantages are as follows: 
(i) Reduction in variations. 
(ii) Disclosure beyond that required by law. 
(iii) Facilities comparison. 
(c)           Statement of Valuation of Stock on 31st March, 2018    
        Rs.           Rs. 
Value of stock as on 15th April, 2018  50,000 
Add: Cost of sales during the period from 31st March, 2018 to 15th April, 
2018 
Sales (Rs. 41,000 – Rs. 1,000)   
 
 
40,000 
 
 Less: Gross Profit (20% of Rs. 40,000)   8,000 32,000 
 Cost of goods sent on approval basis 
(80% of Rs. 6,000) 
  
  4,800 
   86,800 
© The Institute of Chartered Accountants of India
2 
Less: Purchases during the period from 31st March, 2018 to 15th April, 
2018 
 
 
 
5,034 
  81,766 
2. (a)       PETTY CASH BOOK 
Receipts 
 
Rs.  
Date 
 
2017 
V. 
No. 
Particulars Total 
 
Rs.  
Con- 
veyance 
Rs.  
Cartage 
 
Rs.  
Statio- 
nery 
Rs.  
Postage & 
Telegrams 
Rs.  
Wages 
 
Rs.  
Sundries 
 
Rs.  
20,000 April1  To Cash        
 2 1 By Conveyance 500 500      
 3 2 By Cartage 2,500  2,500     
 4 3 By Postage and 
Telegrams 
500    500   
 5 4 By Wages 600     600  
 5 5 By Stationery 400   400    
 6 6 By Repairs to 
machine 
1,500      1,500 
 6 7 By Conveyance 100 100      
 7 8 By Cartage 400  400     
 7 9 By Postage and 
Telegrams 
700    700   
 8 10 By Cartage 3,000  3,000     
 9 11 By Stationery 2,000   2,000    
 10 12 By Sundry 
Expenses 
5,000      5,000 
    17,200 600 5,900 2,400 1,200 600 6,500 
   By Balance c/d 2,800       
20,000    20,000       
2800   To Balance b/d        
17,200 11  To Cash        
(b)      
Balance as per Cash Book 
  
(49,350) 
Add :  Cheques issued but not presented for payment 
 
3,700 
 
 
Crossed Cheque issued to Abdul not presented for 
payment 
 
750 
 
 
Amounts collected by Bank on our behalf but 
   
 
not entered in the Cash Book 
   
 
Dividend 150 
  
 
Insurance claim 800 
  
  
950 
  
 
(-) Bank Commission   15 935 
 
 
Amount paid in A/c No. 2 credited by the  
   
 
Bank wrongly to this A/c 
 
500      5885 
    
(43,465) 
Less :  Cheques deposited in the bank but no cleared 
 
1550 
 
 
(Rs. 1,300 + Rs. 250) 
   
© The Institute of Chartered Accountants of India
3 
 
Payments made by Bank on our behalf but not 
   
 
entered in the Cash Book 
   
 
Interest 320 
  
 
Premium 160 
  
 
Second call 600 1,080 
 
 
Cheques issued against A/c No. 2 but wrongly  
   
 
debited by the Bank to this A/c 
 
300 (2,930) 
 
Overdraft as per Pass Book 
  
46,395 
3. (a)       Books of Manoj 
Consignment to Jaipur Account 
Particulars Rs. Particulars Rs. 
To Goods sent on 
Consignment A/c 
1,87,500 By Goods sent on 
 Consignment A/c (loading) 
37,500 
To Cash A/c 15,000 By Abnormal Loss 16,500 
To Kiran(Expenses) 12,000 By Kiran(Sales) 1,50,000 
To Kiran(Commission) 16,406 By Inventories on Consignment 
 A/c 
30,375 
To Inventories Reserve A/c 5,625 By General Profit & Loss A/c 2,156 
 2,36,531  2,36,531 
Working Notes: 
1. Calculation of value of goods sent on consignment: 
 Abnormal Loss at Invoice price               = Rs.       18,750 
 Abnormal Loss as a percentage of total consignment           =   10%. 
 Hence the value of goods sent on consignment = Rs.  18,750 X 100/ 10 = Rs.  1,87,500 
 Loading of goods sent on consignment = Rs.  1,87,500 X 25/125          = Rs.     37,500 
2. Calculation of abnormal loss (10%): 
 Abnormal Loss at Invoice price =  Rs.  18,750. 
 Abnormal Loss at cost = Rs.  18,750 X 100/125 = Rs.  15,000 
 Add: Proportionate expenses of Manoj (10 % of Rs.  15,000) =  Rs.    1,500 
   Rs.  16,500 
3. Calculation of closing Inventories (15%): 
 Manoj’s Basic Invoice price of consignment= Rs.  1,87,500 
 Manoj’s expenses on consignment                 =     Rs.     15,000 
    Rs.  2,02,500 
 Value of closing Inventories = 15% of Rs.  2,02,500=  Rs.  30,375 
 Loading in closing Inventories = Rs. 37,500 x 15/100=  Rs.  5,625 
 Where Rs. 28,125 (15% of Rs.  1,87,500) is the basic invoice price of the goods sent on 
consignment remaining unsold. 
© The Institute of Chartered Accountants of India
4 
4. Calculation of commission: 
 Invoice price of the goods sold = 75% of Rs.  1,87,500 = Rs.  1,40,625 
 Excess of selling price over invoice price   = Rs.  9,375 ( Rs.  1,50,000 - Rs.  1,40,625) 
 Total commission      = 10% of Rs.  1,40,625 + 25% of Rs.  9,375 
          = Rs.  14,062.5 + Rs.  2,343.75 
          = Rs.  16,406 
(b)       A’s Books 
 Joint Venture with B A/c 
2017 Particulars Amount 
(Rs.) 
2017 Particulars Amount 
(Rs.) 
July 1 To Bank - draft sent  July 16 By Bank-sale proceeds 1,21,500 
 on A/c 3,75,000    
July 15 To Bank - freight 3,000 July 31 By Bank-sale proceeds 3,36,000 
Aug 25 To Profit and Loss A/c      
  share of profit 81,150 Aug 14 By Bank-sale proceeds 3,07,800 
 To Bank - draft sent     
  in settlement 3,06,150    
  7,65,300   7,65,300 
Memorandum Joint Venture A/c 
Particulars  Amount 
(Rs.) 
Particulars Amount 
(Rs.) 
To  Cost of 200 sets  6,00,000 By  Sales proceeds (net)  
To Freight   3,000 30 sets @ Rs.  4,050  1,21,500 
To Profit :   80 sets @ Rs.  4,200  3,36,000 
 A 81,150  80 sets @ Rs.  3,847.5  3,07,800 
 B 81,150 1,62,300   
     
  7,65,300  7,65,300 
4.        Smith Library Society 
Income and Expenditure Account 
for the year ended 31
st
 March, 2019 
Dr.     Cr. 
Expenditure Rs.  Rs.  Income  Rs.  
To  Electric charges 
To  Postage and stationary 
 7,200 
5,000 
By  By Entrance fee (25% of  
 Rs.  30,000) 
 7,500 
To  Telephone charges 
To  Rent 
Add: Outstanding 
 
88,000 
4,000 
5,000 
 
92,000 
By  By  Membership subscription 
Less: Received in advance 
2,00,000 
10,000 
 
1,90,000 
To  Salaries 
 Add: Outstanding 
To Depreciation (W.N.1) 
66,000 
3,000 
 
69,000 
By Sale proceeds of old papers 
By  Hire of lecture hall 
 1,500 
 
20,000 
© The Institute of Chartered Accountants of India
Page 5


1 
 
FOUNDATION COURSE 
MOCK TEST PAPER 2 
PAPER – 1: PRINCIPLES AND PRACTICE OF ACCOUNTING 
ANSWERS 
1. (a) (i)  False - Debenture interest is payable before the payment of any dividend on shares. 
(ii)  True: Amount paid to management company for consultancy to reduce the working expenses 
is capital expenditure as this expenditure will generate long-term benefit to the entity. 
(iii)  False: The additional commission to the consignee who agrees to bear the loss on account 
of bad debts is called del credere commission. 
(iv)  False: According to the Indian Partnership Act, in the absence of any agreement to the 
contrary, profits and losses of the firm are shared equally among partners. 
  (v)   False: Goods taken by the proprietor for personal use should be credited to Purchases 
Account as less goods are left in the business for sale. 
(vi) False: Quick ratio is known as Acid Test Ratio and not Cash Ratio. 
(b) Objective and Advantages of Accounting Standards: An Accounting Standard is a selected set 
of accounting policies or broad guidelines regarding the principles and methods to be chosen out 
of several alternatives.  The Accounting Standards Board formulates Accounting Standards to be 
established by the Council of the Institute of Chartered Accountants of India. 
The main objective of Accounting Standards is to establish standards which have to be complied 
with to ensure that financial statements are prepared in accordance with generally accepted 
accounting standards.  Accounting Standards seek to suggest rules and criteria of accounting 
measurements.  These standards harmonize the diverse accounting policies and practices at 
present in use in India.   
The main advantage of setting accounting standards is that the adoption and application of 
Accounting Standards ensure uniformity, comparability and qualitative improvement in the 
preparation and presentation of financial statements. 
The other advantages are as follows: 
(i) Reduction in variations. 
(ii) Disclosure beyond that required by law. 
(iii) Facilities comparison. 
(c)           Statement of Valuation of Stock on 31st March, 2018    
        Rs.           Rs. 
Value of stock as on 15th April, 2018  50,000 
Add: Cost of sales during the period from 31st March, 2018 to 15th April, 
2018 
Sales (Rs. 41,000 – Rs. 1,000)   
 
 
40,000 
 
 Less: Gross Profit (20% of Rs. 40,000)   8,000 32,000 
 Cost of goods sent on approval basis 
(80% of Rs. 6,000) 
  
  4,800 
   86,800 
© The Institute of Chartered Accountants of India
2 
Less: Purchases during the period from 31st March, 2018 to 15th April, 
2018 
 
 
 
5,034 
  81,766 
2. (a)       PETTY CASH BOOK 
Receipts 
 
Rs.  
Date 
 
2017 
V. 
No. 
Particulars Total 
 
Rs.  
Con- 
veyance 
Rs.  
Cartage 
 
Rs.  
Statio- 
nery 
Rs.  
Postage & 
Telegrams 
Rs.  
Wages 
 
Rs.  
Sundries 
 
Rs.  
20,000 April1  To Cash        
 2 1 By Conveyance 500 500      
 3 2 By Cartage 2,500  2,500     
 4 3 By Postage and 
Telegrams 
500    500   
 5 4 By Wages 600     600  
 5 5 By Stationery 400   400    
 6 6 By Repairs to 
machine 
1,500      1,500 
 6 7 By Conveyance 100 100      
 7 8 By Cartage 400  400     
 7 9 By Postage and 
Telegrams 
700    700   
 8 10 By Cartage 3,000  3,000     
 9 11 By Stationery 2,000   2,000    
 10 12 By Sundry 
Expenses 
5,000      5,000 
    17,200 600 5,900 2,400 1,200 600 6,500 
   By Balance c/d 2,800       
20,000    20,000       
2800   To Balance b/d        
17,200 11  To Cash        
(b)      
Balance as per Cash Book 
  
(49,350) 
Add :  Cheques issued but not presented for payment 
 
3,700 
 
 
Crossed Cheque issued to Abdul not presented for 
payment 
 
750 
 
 
Amounts collected by Bank on our behalf but 
   
 
not entered in the Cash Book 
   
 
Dividend 150 
  
 
Insurance claim 800 
  
  
950 
  
 
(-) Bank Commission   15 935 
 
 
Amount paid in A/c No. 2 credited by the  
   
 
Bank wrongly to this A/c 
 
500      5885 
    
(43,465) 
Less :  Cheques deposited in the bank but no cleared 
 
1550 
 
 
(Rs. 1,300 + Rs. 250) 
   
© The Institute of Chartered Accountants of India
3 
 
Payments made by Bank on our behalf but not 
   
 
entered in the Cash Book 
   
 
Interest 320 
  
 
Premium 160 
  
 
Second call 600 1,080 
 
 
Cheques issued against A/c No. 2 but wrongly  
   
 
debited by the Bank to this A/c 
 
300 (2,930) 
 
Overdraft as per Pass Book 
  
46,395 
3. (a)       Books of Manoj 
Consignment to Jaipur Account 
Particulars Rs. Particulars Rs. 
To Goods sent on 
Consignment A/c 
1,87,500 By Goods sent on 
 Consignment A/c (loading) 
37,500 
To Cash A/c 15,000 By Abnormal Loss 16,500 
To Kiran(Expenses) 12,000 By Kiran(Sales) 1,50,000 
To Kiran(Commission) 16,406 By Inventories on Consignment 
 A/c 
30,375 
To Inventories Reserve A/c 5,625 By General Profit & Loss A/c 2,156 
 2,36,531  2,36,531 
Working Notes: 
1. Calculation of value of goods sent on consignment: 
 Abnormal Loss at Invoice price               = Rs.       18,750 
 Abnormal Loss as a percentage of total consignment           =   10%. 
 Hence the value of goods sent on consignment = Rs.  18,750 X 100/ 10 = Rs.  1,87,500 
 Loading of goods sent on consignment = Rs.  1,87,500 X 25/125          = Rs.     37,500 
2. Calculation of abnormal loss (10%): 
 Abnormal Loss at Invoice price =  Rs.  18,750. 
 Abnormal Loss at cost = Rs.  18,750 X 100/125 = Rs.  15,000 
 Add: Proportionate expenses of Manoj (10 % of Rs.  15,000) =  Rs.    1,500 
   Rs.  16,500 
3. Calculation of closing Inventories (15%): 
 Manoj’s Basic Invoice price of consignment= Rs.  1,87,500 
 Manoj’s expenses on consignment                 =     Rs.     15,000 
    Rs.  2,02,500 
 Value of closing Inventories = 15% of Rs.  2,02,500=  Rs.  30,375 
 Loading in closing Inventories = Rs. 37,500 x 15/100=  Rs.  5,625 
 Where Rs. 28,125 (15% of Rs.  1,87,500) is the basic invoice price of the goods sent on 
consignment remaining unsold. 
© The Institute of Chartered Accountants of India
4 
4. Calculation of commission: 
 Invoice price of the goods sold = 75% of Rs.  1,87,500 = Rs.  1,40,625 
 Excess of selling price over invoice price   = Rs.  9,375 ( Rs.  1,50,000 - Rs.  1,40,625) 
 Total commission      = 10% of Rs.  1,40,625 + 25% of Rs.  9,375 
          = Rs.  14,062.5 + Rs.  2,343.75 
          = Rs.  16,406 
(b)       A’s Books 
 Joint Venture with B A/c 
2017 Particulars Amount 
(Rs.) 
2017 Particulars Amount 
(Rs.) 
July 1 To Bank - draft sent  July 16 By Bank-sale proceeds 1,21,500 
 on A/c 3,75,000    
July 15 To Bank - freight 3,000 July 31 By Bank-sale proceeds 3,36,000 
Aug 25 To Profit and Loss A/c      
  share of profit 81,150 Aug 14 By Bank-sale proceeds 3,07,800 
 To Bank - draft sent     
  in settlement 3,06,150    
  7,65,300   7,65,300 
Memorandum Joint Venture A/c 
Particulars  Amount 
(Rs.) 
Particulars Amount 
(Rs.) 
To  Cost of 200 sets  6,00,000 By  Sales proceeds (net)  
To Freight   3,000 30 sets @ Rs.  4,050  1,21,500 
To Profit :   80 sets @ Rs.  4,200  3,36,000 
 A 81,150  80 sets @ Rs.  3,847.5  3,07,800 
 B 81,150 1,62,300   
     
  7,65,300  7,65,300 
4.        Smith Library Society 
Income and Expenditure Account 
for the year ended 31
st
 March, 2019 
Dr.     Cr. 
Expenditure Rs.  Rs.  Income  Rs.  
To  Electric charges 
To  Postage and stationary 
 7,200 
5,000 
By  By Entrance fee (25% of  
 Rs.  30,000) 
 7,500 
To  Telephone charges 
To  Rent 
Add: Outstanding 
 
88,000 
4,000 
5,000 
 
92,000 
By  By  Membership subscription 
Less: Received in advance 
2,00,000 
10,000 
 
1,90,000 
To  Salaries 
 Add: Outstanding 
To Depreciation (W.N.1) 
66,000 
3,000 
 
69,000 
By Sale proceeds of old papers 
By  Hire of lecture hall 
 1,500 
 
20,000 
© The Institute of Chartered Accountants of India
5 
 Electrical fittings 15,000  By  By  Interest on securities 8,000  
Furniture 5,000   (W.N.2)   
Books 46,000 66,000 
 
 
  
  Add: Receivable 
By By  Deficit- excess of 
 expenditure over income 
500 8,500 
16,700 
 
  
  2,44,200   2,44,200 
Balance Sheet of Smith Library Society 
as on 31
st
 March, 2019 
Liabilities Rs.  Rs.  Asset Rs.  Rs.  
Capital fund 7,93,000  Electrical fittings 1,50,000  
Add: Entrance fees _22,500  Less: Depreciation (15,000) 1,35,000 
 8,15,500  Furniture 50,000  
Less: Excess of expenditure 
over income 
 
(16,700) 
 
7,98,800 
Less: Depreciation 
Books 
(5,000) 
4,60,000 
45,000 
Outstanding expenses: 
Rent 
 
4,000 
 Less Depreciation 
Investment: 
(46,000) 4,14,000 
Salaries 3,000 7,000 Securities 1,90,000  
Membership subscription in 
advance 
  
10,000 
Accrued interest 
Cash at bank 
       500 1,90,500 
20,000 
  _______ Cash in hand  11,300 
  8,15,800   8,15,800 
Working Notes: 
1. Depreciation        Rs.  
 Electrical fittings 10% of Rs. 1,50,000 15,000 
 Furniture 10% of Rs. 50,000                 5,000 
 Books 10% of Rs. 4,60,000 46,000 
2.  Interest on Securities 
 Interest @ 5% p.a. on Rs. 1,50,000 for full year 7,500 
 Interest @ 5% p.a. on Rs. 40,000 for half year 1,000 8,500 
 Less: Received   (8,000) 
 Receivable       500 
5. (a)       Revaluation Account 
 
Rs. 
 Rs. 
To Buildings A/c  10,000 By Investments A/c 3,000 
To Plant and Machinery A/c  26,000 By Loss to Partners: 
 
To Provision for Doubtful Debts A/c  27,800  P  30,400 
 
  
 Q 18,240  
  
 R 12,160 60,800 
 
63,800 
 
63,800 
 
© The Institute of Chartered Accountants of India