TS Grewal Solutions

TS Grewal Accountancy Class 12 Solutions Chapter 2 Goodwill: Nature and Valuation – Here are all the TS Grewal solutions for Class 12 Accountancy Chapter 2. This solution contains questions, answers, images, explanations of the complete Chapter 2 titled Goodwill: Nature and Valuation of Accountancy taught in Class 12. If you are a student of Class 12 who is using TS Grewal Textbook to study Accountancy, then you must come across Chapter 2 Goodwill: Nature and Valuation. After you have studied lesson, you must be looking for answers of its questions. Here you can get complete TS Grewal Solutions for Class 12 Accountancy Chapter 2 Goodwill: Nature and Valuation in one place.

TS Grewal Accountancy Class 12 Solutions Chapter 2 Goodwill: Nature and Valuation

Question 1.
Goodwill is to be valued at three years purchase of four years average profit. Profits for last four years ending on 31st March of the firm were:
2015 ₹ 12,000; 2016 ₹ 18,000; 2017 ₹ 16,000; 2018 ₹ 14,000.
Calculate amount of Goodwill.
Solution:

Question 2.
The profit for the five years ending on 31st March, are as follows:
Year 2014 ₹ 4,00,000; Year 2015 ₹ 3,98,000; Year 2016 ₹ 4,50,000; Year 2017 ₹ 4,45,000; Year 2018 ₹ 5,00,000.
Calculate goodwill of the firm on the basis of 4 years purchase of 5 years average profit.
Solution:

Question 3.
Calculate value of goodwill on the basis of three years purchase of average profit of the preceding five years which were as follows:

Solution:

Question 4.
Calculate the value of firm’s goodwill on the basis of one and half years purchase of the average profit of the last three years. The profit for first year was ₹ 1,00,000, profit for the second year was twice the profit of the first year and for the third year profit was one and half times of the profit of the second year.
Solution:

Question 5.
A and B are partners sharing profits in the ratio of 3 : 2. They decided to admit C as a partner from 1st April, 2018 on the following terms:
(i) C will be given 2/5th share of the profit.
(ii) Goodwill of the firm be valued at two years purchase of three years normal average profit of the firm.
profits of the previous three years ended 31st March, were:
2018 – Profit ₹ 30,000 ( after debiting loss of stock by fire ₹ 40,000).
2017 – Loss ₹ 80,000 (includes voluntary retirement compensation paid ₹ 1,10,000).
2016 – Profit ₹ 1,10,000 (including a gain (profir) of ₹ 30,000 on the sale of fixed assets).
you are required to value the goodwell.
Solution:

Question 6.
X and Y are partners sharing profits and losses in the ratio of 3 : 2. They admit Z into partnership for 1/4th share in goodwill. Z brings in his share of goodwill in cash. Goodwill for this purpose is to be calculated at two years purchase of the average normal profit of past three years. Profits of the last three years ended 31st March, were:
2016 – Profit ₹ 50,000 (including profit on sale of assets ₹5,000).
2017 – Loss ₹ 20,000 (includes loss by fire ₹ 30,000).
2018 – Profit ₹ 70,000 (including insurance claim received ₹ 18,000 and interest on investments and Dividend received ₹ 8,000).
Calculate value of goodwill. Also, calculate goodwill brought in by Z.
Solution:

Question 7.
A and B are partners in a firm sharing profits and losses in the ratio of 2 : 1. They decide to take C into partnership for 1/4th share on 1st April, 2018. For this purpose, goodwill is to be valued at four times the average annual profit of the previous four or five years whichever is higher. The agreed profits for goodwill purpose of the past five years are:

Solution:

Question 8.
Sumit purchased Amit’s business on 1st April, 2018. Goodwill was decided to be valued at two years’ purchase of average normal profit of last
four years. The profits for the past four years were:

Books of Account revealed that:
(i) Abnormal loss of ₹ 20,000 was debited to Profit and Loss Account for the year ended 31st March, 2015.
(ii) A fixed asset was sold in the year ended 31st March, 2016 and gain (profit) of ₹ 25,000 was credited to Profit and Loss Account.
(iii) In the year ended 31st March, 2017 assets of the firm were not insured due to oversight. Insurance premium not paid was ₹ 15,000.
Calculate the value of goodwill.
Solution:

Question 9.
X and Y are partners in a firm. They admit Z into partnership for equal share. It was agreed that goodwill will be valued at three years purchase of average profit of last five years. Profits for the last five years were:

Books of Account of the firm revealed that:
(i) The firm had gain (profit) of ₹ 50,000 from sale of machinery sold in the year ended 31st March, 2015. The gain (profit) was credited in Profit and Loss Account.
(ii) There was an abnormal loss of ₹ 20,000 incurred in the year ended 31st March, 2016 because of a machine becoming obsolete in accident.
(iii) Overhauling cost of second hand machinery purchased on 1st July, 2016 amounting to ₹ 1,00,000 was debited to Repairs Account. Depreciation is charged @ 20% p.a. on Written Down Value Method.
Calculate the value of goodwill.
Solution:

Question 10.
Profits of a firm for the year ended 31st March for the last five years were:

Calculate value of goodwill on the basis of three years purchase of Weighted Average Profit after assigning weights 1, 2, 3, 4 and 5 respectively to the profits for years ended 31st March, 2014, 2015, 2016, 2017 and 2018.
Solution:

Question 11.
A and B are partners sharing profits and losses in the ratio of 5 : 3. On 1st April, 2018, C is admitted to the partnership for 1/4th share of profits. For this purpose, goodwill is to be valued at two years purchase of last three years profits (after allowing partners remuneration). Profits to be weighted 1 : 2 : 3, the greatest weight being given to last year. Net profit before partners remuneration were: 2015-16: ₹ 2,00,000; 2016-17: ₹ 2,30,000; 2017 -2018: ₹ 2,50,000. The remuneration of the partners is estimated to be ₹ 90,000 p.a. Calculate amount of goodwill.
Solution:

Question 12.
Manbir and Nimrat are partners and they admit Anahat into partnership. It was agreed to value goodwill at three tears purchase on Weighted Average Profit Method taking profits of last five years. Weights assigned to each year as 1, 2, 3, 4 and 5 respectively to profit for the year ended 31st March, 2014 to 2108. The profit for these years were: ₹ 70,000, ₹ 1,40,000, ₹ 1,00,000, ₹ 1,60,000 and ₹ 1,65,000 respectively.
Scrutiny of books of account revealed following information:
(i) There was an abnormal loss of ₹ 20,000 in the year ended 31st March, 2014.
(ii) There was an abnormal gain (profit) of ₹ 30,000 in the year ended 31st March, 2015.
(iii) Closing Stock as on 31st March, 2017 was overvalued by ₹ 10,000.
Calculate the value of goodwill.
Solution:

Question 13.
Calculate the goodwill of a firm on the basis of three years purchase of the weighted average profit of the last four years. The appropriate weights to be used and profits are:

On a scrutiny of the accounts, the following matters are revealed:
(i) On 1st December, 2016, a major repair was made in respect of the plant incurring ₹ 30,000 which was charged to revenue. The said sum is agreed to be capitalised for goodwill calculation subject to adjustment of depreciation of 10% p.a. on reducing balance method.
(ii) The closing stock for the year 2015-16 was overvalued by ₹ 12,000.
(iii) To cover management cost, an annual charge of ₹ 24,000 should be made for the purpose of goodwill valuation.
(iv) In 2015-16, a machine having a book value of ₹ 10,000 was sold for ₹ 11,000 but the proceeds were wrongly credited to Profit and Loss Account. No effect has been given to rectify the same. Depreciation is charged on machine @ 10% p.a. on reducing balance method.
Solution:

Question 14.
Gupta and Bose had a firm in which they had invested ₹ 50,000. On an average, the profits were ₹ 16,000. The normal rate of return in the industry is 15%. Goodwill is to be valued at four years purchase of profits in excess of profits @ 15% on the money invested. Value th goodwill.
Solution:

Question 15.
The total capital of the firm of Sakshi, Mehak and Megha is ₹ 1,00,000 and the market rate of interest is 15%. The net profits for the last 3 years were ₹ 30,000; ₹ 36,000 and ₹ 42,000. Goodwill is to be valued at 2 years purchase of the last 3 years super profits. Calculate the goodwill of the firm.
Solution:

Question 16.
The average net profit expected in future by XYZ firm is ₹ 36,000 per year. Average capital employed in the business by the firm is ₹ 2,00,000. The normal rate of return from capital invested in this class of business in 10%. Remuneration of the partners is estimated to be ₹ 6,000 p.a. Find out the value of goodwill on the basis of two years purchase of super profit.
Solution:

Question 17.
A partnership firm earned net profits during the last three years ended 31st March, as follows: 2016 – ₹ 17,000; 2017 – ₹ 20,000; 2018 – ₹ 23,000.
The capital investment in the firm throughout the above-mentioned period has been ₹ 80,000. Having regard to the risk involved, 15% is considered to be a fair return on the capital. Calculate value of goodwill on the basis of two years purchase of average super profit earned during the above-mentioned three years.
Solution:

Question 18.
A partnership firm earned net profits during the past three years as follows:

Capital investment in the firm throughout the above-mentioned period has been ₹ 4,00,000. Having regard to the risk involved, 15% in considered to be a fair return on the capital. The remuneration of the partners during this period is estimated to be ₹ 1,00,000 p.a.
Calculate value of goodwill on the basis of two years purchase of average super profit earned during the above-mentioned three years.
Solution:

Question 19.
A business earned an average profit of ₹ 8,00,000 during the last few years. The normal rate of profit in the similar type of business is 10%. The total value of assets and liabilities of the business were ₹ 22,00,000 and ₹ 5,60,000 respectively. Calculate the value of goodwill of the firm by super profit method if it is valued at 2\(\frac { 1 }{ 2 }\) years purchase of super profits.
Solution:

Question 20.
Capital of the firm of Sharma and Verma is ₹ 2,00,000 and the market rate of interest is 15%. Annual salary to partners is ₹ 12,000 each. The profits for the last three years were ₹ 60,000; ₹ 72,000 and ₹ 84,000. Goodwill is to be valued at 2 years purchase of last 3 years average super profit. Calculate goodwill of the firm.
Solution:

Question 21.
A and B are equal partners. They decide to admit C for 1/3rd share. For the purpose of admission of C, goodwill of the firm is to be valued at four years purchase of super profit. Average capital employed in the firm is ₹ 1,50,000. Normal rate of return may be taken as 15% p.a. Average profit of the firm is ₹ 40,000. Calculate value of goodwill.
Solution:

Question 22.
On 1st April, 2018, an existing firm had assets of ₹ 75,000 including cash of ₹ 5,000. Its creditors amounted to ₹ 5,000 on that date. The firm had a Reserve of ₹ 10,000 while Partners Capital Accounts showed a balance of ₹ 60,000. If Normal Rate of Return is 20% and goodwill of the firm is valued at ₹ 24,000 at four years purchase of super profit, find average profit per year of the existing firm.
Solution:

Question 23.
The average profit earned by a firm is ₹ 1,00,000 which includes undervaluation of stock of ₹ 40,000 on an average basis. The capital invested in the business is ₹ 6,30,000 and the normal tare of return is 5%. Calculate goodwill of the firm on the basis of 5 time the super profit.
Solution:

Question 24.
The average profit earned by a firm is ₹ 7,50,000 which includes overvaluation of stock of ₹ 30,000 on an average basis. The capital invested in the business is ₹ 4,20,000 and the normal tare of return is 15%. Calculate goodwill of the firm on the basis of 3 time the super profit.
Solution:

Question 25.
Ayub and Amit are partners in a firm and they admit Jaspal into partnership w. e. f. 1st April, 2018. They agreed to value goodwill at 3 years purchase of Super Profit Method for which they decided to average profit of last 5 years. The profit for the last 5 years were:

The firm has total assets of ₹ 20,00,000 and Outside Liabilities of ₹ 5,00,000 as on that date. Normal Rate of Return in similar business is 10%.
Calculate value of goodwill.
Solution:

Question 26.
From the following information, calculate value of goodwill of the firm by applying Capitalisation Method: Total Capital of the firm ₹ 16,00,000.
Normal rate of return 10%. Profit for the year ₹ 2,00,000.
Solution:

Question 27.
A business has earned average profit of ₹ 1,00,000 during the last few years. Find out the value of goodwill by capitalisation method, given that the assets of the business are ₹ 10,00,000 and its external liabilities are ₹ 1,80,000. The normal rate of return is 10%.
Solution:

Question 28.
Form the following particulars, calculate value of goodwill of a firm by applying Capitalisation of Average Profit Method:
(i) Profits of last five consecutive years ending 31st March are: 2018 – ₹ 54,000; 2017 – ₹ 42,000; 2016 – ₹ 39,000; 2015 – ₹ 67,000 and 2014 – ₹ 59,000.
(ii) Capitalisation rate 20%.
(iii) Net assets of the firm ₹ 2,00,000.
Solution:

Question 29.
A business has earned average profit of ₹ 4,00,000 during the last few years and the normal rate of return in similar business is 10%. Find value of goodwill by:
(i) Capitalisation of Super Profit Method, and
(ii) Super Profit Method if the goodwill is valued at 3 years purchase of super profits.
Assets of the business were ₹ 40,00,000 and its external liabilities ₹ 7,20,000.
Solution:

Question 30.
A firm earns profit of ₹ 5,00,000. Normal Rate of Return in a similar type of business is 10%. The value of total assets (excluding goodwill) and total outsiders liabilities as on the date of goodwill are ₹ 55,00,000 and ₹ 14,00,000 respectively. Calculate value of goodwill according to Capitalisation of Super Profit Method as well as Capitalisation of Average Profit Method.
Solution:

Question 31.
Average profit of the firm is ₹ 2,00,000. Total assets of the firm are ₹ 15,00,000 whereas Partners Capital is ₹ 12,00,000. If normal rate of return in a similar business is 10% of the capital employed, what is the value of goodwill by Capitalisation of Super Profit?
Solution:

Question 32.
Rajan and Rajani are partners in a firm. Their capitals were Rajan ₹ 3,00,000; Rajani ₹ 2,00,000. During the year 2017-18, the firm earned a profit of ₹ 1,50,000. Calculate the value of goodwill of the firm by capitalisation of super profit assuming that the normal rate of return is 20%.
Solution:

Question 33.
Average profit of GS & amp Co. is ₹ 50,000 per year. Average capital employed in the business is ₹ 3,00,000. If the normal rate of return of capital employed is 10%, calculate goodwill of the firm by:
(i) Super Profit Method at three years purchase; and
(ii) Capitalisation of Super Profit Method.
Solution:

Question 34.
From the following information, calculate value of goodwill of the firm:
(i) At three years purchase of Average Profit.
(ii) At three years purchase of Super Profit.
(iii) On the basis of Capitalisation of Super Profit.
(iv) On the basis of Capitalisation of Average profit.
Information:
(a) Average Capital Employed is ₹ 6,00,000.
(b) Net Profit/(Loss) of the firm for the last three years ended are:
31st March, 2108 – ₹ 2,00,000, 31st March, 2107 – ₹ 1,80,000, and 31st March, 2106 – ₹ 1,60,000.
(c) Normal Rate of Return in similar business is 10%.
(d) Remuneration of ₹ 1,00,000 to partners is to be taken as charge against profit.
(e) Assets of the firm (excluding goodwill, fictitious assets and not-trade investments) is ₹ 7,00,000 whereas Partners Capital is ₹ 6,00,000 and Outside Liabilities ₹ 1,00,000.
Solution:

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TS Grewal Accountancy Class 12 Solutions Chapter 1 Accounting for Partnership Firms – Fundamentals – Here are all the TS Grewal solutions for Class 12 Accountancy Chapter 1. This solution contains questions, answers, images, explanations of the complete Chapter 1 titled Accounting for Partnership Firms – Fundamentals of Accountancy taught in Class 12. If you are a student of Class 12 who is using TS Grewal Textbook to study Accountancy, then you must come across Chapter 1 Accounting for Partnership Firms – Fundamentals. After you have studied lesson, you must be looking for answers of its questions. Here you can get complete TS Grewal Solutions for Class 12 Accountancy Chapter 1 Accounting for Partnership Firms – Fundamentals in one place.

TS Grewal Accountancy Class 12 Solutions Chapter 1 Accounting for Partnership Firms – Fundamentals

Question 1.
In the absence of Partnership Deed, what are the rules relation to
(a) Salaries of partners,
(b) Interest on partners capitals
(c) Interest on partners loan
(d) Division of profit, and
(e) Interest on partners drawings
Solution:

Question 2.
Following differences have arisen among P, Q and R. State who is correct in each case:
(a) P used ₹ 20,000 belonging to the firm and made a profit of  ₹ 5,000. Q and R want the amount to be given to the firm?
(b) Q used ₹ 5,000 belonging to the firm and suffered a loss of ₹ 1000. He wants the firm to bear the loss?
(c) P and Q want to purchase goods from a Ltd., R does not agree
(d) Q and R want to admit C as partner, P does not agree?
Solution:

Question 3.
A, B and C are partners in a firm. They do not have a Partnership Deed. At the end of the first year of the commencement of the firm, they have faced the following problems:
(a) A wants that interest on capital should be allowed to the partners but B and C do not agree.
(b) B wants that the partners should be allowed to draw salary but A and C do not agree.
(c) C wants that the loan given by him to the firm should bear interest @ 10% p.a. but A and B do not agree.
(d) A and B having contributed larger amounts of capital, desire that the profits should be divided in the ratio of their capital contribution but C does not agree.
State how you will settle these disputes if the partners approach you for purpose.
Solution:

Question 4.
Jaspal and Rosy were partners with capital contribution of ₹ 10,00,000 and ₹ 5,00,000 respectively. They do not have a Partnership Deed. Jaspal wants that profits of the firm should be shared in their capital ratio. Rosy convinced jaspal that profits should be shared equally. Explain how Rosy would have convinced Jaspal for sharing the profit equally.
Solution:

Question 5.
Harshad and Dhiman are in partnership since 1st April, 2017. No partnership agreement was made. They contributed Rs 4,00,000 and 1,00,000 respectively as capital. In addition, Harshad advance an amount of Rs 1,00,000 to the firm on 1st October, 2017. Due to long illness, Harshad could not participate in business activities from 1st August to 30th September, 2017. The profit for the year ended 31st March, 2018 amounted to Rs 1,80,000. Dispute has arisen between Harshad and Dhiman.
Harshad Claims:
(i) He should be given interest @ 10% per annum on capital and loan;
(ii) Profit should be distributed in proportion of capital;
Dhiman Claims:
(i) Profit should be distributed equally;
(ii) He should be allowed Rs 2,000 p.m. as remuneration for the period he managed the business in the absence of Harshad;
(iii) Interest on Capital and loan should be allowed @ 6% p.a.
You are required to settle the dispute between Harshand and Dhiman. Also prepare Profit and Loss Appropriation Account.
Solution:

Question 6.
A and B are partners from 1st April, 2017, without a Partnership Deed and they introduced capitals of  ₹ 35,000 and ₹ 20,000 respectively. On 1st October, 2017, A advances a loan of ₹ 8,000 to the firm without any agreement as to interest. The profit and Loss Account for the year ended 31st March, 2018 shows a profit of ₹ 15,000 but the partners cannot agree on payment of interest and on the basis of division of profits.
You are required to divide the profits between them giving reasons for your method.
Solution:

Question 7.
A and B are partners in a firm sharing profits in the ratio of 3 : 2. They had advanced to the firm a sum of ₹ 30,000 as a loan in their profit-sharing ratio on 1st October, 2017. The Partnership Deed is silent on interest on loans from partners. Compute interest payable by the firm to the partners, assuming the firm closes its books every year on 31st March.
Solution:

Question 8.
A and B are partners in a firm sharing profits equally. They had advanced tot he firm a sum of ₹ 30,000 as a loan in their profit-sharing ratio on 1st October, 2017. The Partnership Deed is silent on the question of interest on the loan from partners. Compute the interest payable by the firm to the partners, assuming the firm closes its books on 31st March each year.
Solution:

Question 9.
X and Y are partners sharing profits and losses in the ratio of 2 : 3 with capitals ₹ 2,00,000 and ₹ 3,00,000 respectively. On 1st October, 2017, X and Y granted loans of ₹ 80,000 and ₹ 40,000 respectively to the firm. Show distribution of profits/losses for the year ended 31st March, 2018 in each of the following alternative cases:
Case 1 : If the profits before interest for the year amounted to ₹ 21,000.
Case 2 : If the profits before interest for the year amounted to ₹ 3,000.
Case 3 : If the profits before interest for the year amounted to ₹ 5,000.
Case 4 : If the loss before interest for the year amounted to ₹ 1,400.
Solution:

Question 10.
Bat and Ball are partners sharing the profits in the ratio of 2 : 3 with capitals of ₹ 1,20,000 and ₹ 60,000 respectively. On 1st October, 2017, Bat and Ball granted lonas of ₹ 2,40,000 and ₹ 1,20,000 respectively to the firm. Bat had allowed the firm to use his property for business for a monthly rent of ₹ 5,000. The loss for the year ended 31st March, 2018 before rent and interest amounted to ₹ 9,000. Show distribution of profit/loss.
Solution:

Question 11.
A and B are partners. A’s Capital is ₹ 1,00,000 and B’s Capital is ₹ 60,000. Interest on capital is payable @ 6% p.a. B is entitled to a salary of ₹ 3,000 per month. Profit for the current year before interest and salary to B is ₹ 80,000. Prepare Profit and Loss Appropriation Account.
Solution:

Question 12.
X, Y and Z are partners in a firm sharing profits in 2 : 2 : 1 ratio. The fixed capitals of the partners were : X ₹5,00,000; Y ₹ 5,00,000 and Z ₹ 2,50,000 respectively. The Partnership Deed provides that interest on capital is to be allowed @ 10% p.a. Z is to be allowed a salary of ₹ 2,000 per month. The profit of the firm for the year ended 31st March, 2018 after debiting Z’s salary was ₹ 4,00,000. Prepare Profit and Loss Appropriation Account.
Solution:

Question 13.
X and Y are partners sharing profits in the ratio of 3 : 2 with capitals of ₹ 80,000 and ₹ 60,000 respectively. Interest on capital is agreed @ 5% p.a. Y is to be allowed an annual salary of ₹ 6,000 which has not been withdrawn. Profit for the year ended 31st march, 2018 before interest on capital but after charging Y’s salary amounted to ₹ 24,000. A provision of 5% of the profit is to be made in respect commission to the manager. Prepare an account showing the allocation profits.
Solution:

Question 14.
Prem and Manoj are partners in a firm sharing profits in the ratio of 3 : 2. The Partnership Deed provided that Prem was to be paid salary of ₹ 2,500 per month and Manoj was to ger a commission of ₹ 10,000 per year. Interest on capital was to be allowed @ 5% p.a. and interest on drawings was to be charged @ 6% p.a. Interest on Prem’s drawings was ₹ 1,250 and on Manoj’s drawings was ₹ 425. Interest on Capitals of the partners were ₹ 10,000 and ₹ 7,500 respectively. The firm earned a profit of ₹ 90,575 for the year ended 31st March, 2018. Prepare Profit and Loss Appropriation Account of the firm.
Solution:

Question 15.
Reema and Seema are partners sharing profits equally. The Partnership Deed provides that both Reema and Seema will get monthly salary of Rs 15,000 each, Interest on Capital will be allowed @ 5% p.a. and Interest on Drawings will be charged @ 10% p.a. Their capitals were Rs 5,00,000 each and drawings during the year were Rs 60,000 each. The firm incurred a loss of Rs 1,00,000 during the year ended 31st March, 2018. Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2018.
Solution:

Question 16.
Bhanu and Partab are partners sharings profits eqully. Their fixed capitals as on 1st April, 2017 are ₹ 8,00,000 and ₹ 10,00,000 respectively. Their drawings the year were ₹ 50,000 and ₹ 1,00,000 respectively. Interest on Capital is a charge and is to be allowed @ 10% p.a. and interest on drawings is to be charged @ 15% p.a. Profit for the year ended 31st March, 2018 was ₹ 1,20,000. Prepare Profit and Loss Appropriation Account.
Solution:

Question 17.
Amar and Bimal entered into partnership on 1st April, 2017 contributing ₹ 1,50,000 and ₹ 2,50,000 respecitvely towards capital. The Partnership Deed provided for interest on capital @ 10% p.a. It also provided that Capital Accounts shall be maintained following Fixed Capital Accounts method. The firm earned net profit of ₹ 1,00,000 for the year ended 31st March 2018. Pass the Journal entry for interest on capital.
Solution:

Question 18.
Kamal and Kapil ar partners having fixed capitals of ₹ 5,00,000 each as on 31st March, 2017. Kamal introduced further captial of ₹ 1,00,000 on 1st October, 2017 whereas Kapil withdrew ₹ 1,00,000 on 1st October, 2017 out of capital. Interest on capital is to be allowed @ 10% p.a. The firm earned net profit of ₹ 6,00,000 for the year ended 31st March 2018. Pass the Journal entry for interest on capital and prepare Profit and Loss Appropriation Account.
Solution:

Question 19.
Simran and Reema are partners sharing profits in the ratio of 3 : 2. Their capitals as on 31st March, 2017 were ₹ 2,00,000 each whereas Current Accounts had balances of ₹ 50,000 and ₹ 25,000 respectively interest is to be allowed @ 5% p.a. on balances in Capital Accounts. The firm earned net profit of ₹ 3,00,000 for the year ended 31st March 2018. Pass the journal entries for interest on capital and distibution of profit. Also prepare Profit and Loss Appropriation Account for the year.
Solution:

Question 20.
Anita and Ankita are partners sharing profits equally. Their capitals, maintained following Fluctuating Capital Accounts Method, as on 31st March, 2017 were ₹ 5,00,000 and ₹ 4,00,000 respectively. Partnership Deed provided to allow interest on capital @ 10% p.a. The firm earned net profit of ₹ 2,00,000 for the year ended 31st March, 2018. Pass the journal entry for interest on capital.
Solution:

Question 21.
Ashish and Aakash are partners sharing profit in the ratio of 3 : 2. Their Capital Accounts showed a credit balance of ₹ 5,00,000 and ₹ 6,00,000 respectively as on 31st March, 2018 after debit of drawings during the year of ₹ 1,50,000 and ₹ 1,00,000 respectively. Net profit for the year ended 31st March was ₹ 5,00,000. Interest on capital is to be allowed @ 10% p.a. Pass the journal entry for interest on capital and prepare Profit and Loss Appropriation Account.
Solution:

Question 22.
Naresh and Sukesh are partners with capitals of ₹ 3,00,000 each as on 31st March, 2018. Naresh had withdrawn ₹ 50,000 against capital on 1st October, 2017 and also ₹ 1,00,000 besides the drawings against capital. Sukesh also had drawings of ₹ 1,00,000. Interest on capital is to be allowed @ 10% p.a. Net profit for the year was ₹ 2,00,000, which is yet to be distributed. Pass the journal entries for interest on capital and distribution of profit.
Solution:

Question 23.
On 1st April, 2013, Jay and Vijay entered into partnership for supplying laboratory equipments to government schools situated in remote and backward areas. They contributed capitals of ₹ 80,000 and ₹ 50,000 respectively and agreed to share the profits in the ratio of 3 : 2. The partnership Deed provided that interest on capital shall be allowed at 9% per annum. During the year the firm earned a profit of ₹ 7,800. Showing your calculations cleary, prepare Profit and Loss Appropriation Account of Jay and Vijay for the year ended 31st March, 2014.
Solution:

Question 24.
A, B and C are partners in a firm. A and B are to get annual salary of ₹ 1,20,000 p.a. each as they are fully involved in the business. Net profit for the year is ₹ 4,80,000. Determine the share of profit to be credited to each partner.
Solution:

Question 25.
A, B and C are partners sharing profits and losses in the ratio of 2 : 2 : 1 respectively. A is entitled to a commission of 10% on the net profit. Net profit for the year is ₹ 1,10,000. Determine the amount of commission payable to A.
Solution:

Question 26.
X, Y and Z are partners sharing profits and lossed equally. As per partnership Deed, Z is entitled to a commission of 10% on the net profit after charging such commission. The net profit before charging commission is ₹ 2,20,000. Determine the amount of commission payable to Z.
Solution:

Question 27.
A, B, C, and D are partners in a firm sharing profits as 4 : 3 : 2 : 1 respectively. It earned a profit of ₹ 1,80,000 for the year ended 31st March, 2018. As per the Partnership Deed, they are to charge a commission @ 20% of the profit after charging such commission which they will share as 2 : 3 : 2 : 3. You are required to show appropriation of profits among the partners.
Solution:

Question 28.
X and Y are partners in a firm. X is entitled to a salary of ₹ 10,000 per month and commission of 10% of the net profit after partners salaries but before charging commission. Y is entitled to a salary of ₹ 25,000 p.a. and commission of 10% of the net profit after chaging all commission and partners salaries. Net profit before providing for partners salaries and commission for the year ended 31st March, 2018 was ₹ 4,20,000, show distribution of profit.
Solution:

Question 29.
Ram and Mohan, two partners, drew for their personal use ₹ 1,20,000 and ₹ 80,000. Interest is chargeable @ 6% p.a. on the drawings. What is the amount of interest chargeable from each partner?
Solution:

Question 30.
B and M are partners in a firm. They withdrew ₹ 48,000 and ₹ 36,000 respectively during the year evenly in the middle of every month. According to the partnership agreement, interest on drawings is to be charged @ 10% p.a. Calculate interest on drawings of the partners using the appropriate formula.
Solution:

Question 31.
A and B are partners sharing profits equally. A drew regularly ₹ 4,000 in the beginning of every month for six months ended 30th September, 2018. Calculate interest on drawings @ 5% p.a. for a period of six months.
Solution:

Question 32.
A and B are partners sharing profits equally. A drew regularly ₹ 4,000 at the end of every month for six months ended 30th September, 2018. Calculate interest on drawings @ 5% p.a. for a period of six months.
Solution:

Question 33.
Calculate interest on drawings of Mr. Ashok @ 10% p.a. for the year ended 31st March, 2018, in each of the following alternative cases:
Case 1. If he withdrew ₹ 7,500 in the beginning of each quarte.
Case 2. If he withdrew ₹ 7,500 at the end of each quarter.
Case 3. If he withdrew ₹ 7,500 during the middle of each quarter.
Solution:

Question 34.
Kanika and Gautam are partners doing a dry cleaning business in Lucknow, sharing profits in the ratio 2 : 1 with capitals ₹ 5,00,000 and ₹ 4,00,000 respectively. Kanika withdrew the following amounts during the year to pay the hostel expenses of her son:
1st April ₹ 10,000
1st June ₹ 9,000
1st November ₹ 14,000
1st December ₹ 5,000
Gautam withdrew ₹ 15,000 on the first day of April, July, October and January to pay rent for the accommodation of his family. He also paid ₹ 20,000 per month as rent for the office of partnership which was  in a nearby shopping complex. Calculate interest on drawings @ 6% p.a.
Solution:

Question 35.
A and B are partners sharing Profit and Loss in the ratio 3 : 2 having Capital Account balances of ₹ 50,000 and ₹ 40,000 on 1st April, 2017. On 1st July, 2017, A introduced ₹ 10,000 as his additional capital whereas B introduced only ₹ 1,000. Interest on capital is allowed to partners @ 10% p.a. Calculate interest on capital for the financial year ended 31st March, 2018.
Solution:

Question 36.
Ram and Mohan are partners in a business. Their capitals at the end of the year were ₹ 24,000 and ₹ 18,000 respectively. During the year, Ram’s drawings and Mohan’s drawings were ₹ 4,000 and ₹ 6,000 respectively. Profit (Before charging interest on capital) during the year was ₹ 16,000. Calculate interest on capital @ 5% p.a. for the year ended 31st March, 2018.
Solution:

Question 37.
Following is the extract of the Balance Sheet of Neelkant and Mahadev as on 31st March, 2018.

During the year, Mahadev’s drawings were ₹ 30,000. Profits during the year ended 31st March, 2018 is ₹ 10,00,000. Calculate interest on capital @ 5% p.a. for the year ending 31st March, 2018.
Solution:

Question 38.
From the following Balance Sheet of Long and Short, calculate interst on capital @ 8% p.a. for the year ended 31st March, 2018.

During the year, Long withdrew ₹ 40,000 and Short withdrew ₹ 50,000. Profit for the year was ₹ 1,50,000 out of which ₹ 1,00,000 was transferred to General Reserve.
Solution:

Question 39.
X and Y contribute ₹ 20,000 and ₹ 10,000 respectively towards capital. They decide to allow interest on capital @ 6% p.a. Their respective share of profits is 2 : 3 and the net profit for the year is ₹ 1,500. Show distribution of profits:
(i) where there is no agreement except for interest on capitals; and
(ii) where there is an agreement that the interest on capital as a charge.
Solution:

Question 40.
A and B started business on 1st April, 2017 with capitals of ₹ 15,00,000 and ₹ 9,00,000 respectively. On 1st October, 2017, they decided that their capitals should be ₹ 12,00,000 each. The necessary adjustments in capitals were made by introducing or withdrawing by cheque. Interest on capital is allowed @ 8% p.a. Compute interest on capital for the year ended 31st March, 2018.
Solution:

Question 41.
X and Y are partners in a firm sharing profits and losses in the ratio of 3 : 2 . On 31st March, 2018 after closing the books of account, their Capital Accounts stood at ₹ 4,80,000 and ₹ 6,00,000 respectively. On 1st May, 2017, X introduced an additional capital of ₹ 1,20,000 and Y withdrew ₹ 60,000 form his capital.On 1st October, 2017, X withdrew ₹ 2,40,000 from his capital and Y introduced ₹ 3,00,000 . Interest on capital is allowed at 6% p.a. Subsequently, it was discovered that interest on capital @ 6% p.a. had been omitted. The profits for the year ended 31st March, 2018 amounted to ₹ 2,40,000 and the partners’ drawings had been: X ₹1,20,000 and Y ₹ 60,000. Compute the interest on capital if the capitals are (a) fixed, and (b) fluctuating.
Solution:

Question 42.
C and D are partners in a firm; C has contributed ₹ 1,00,000 and D ₹ 60,000 as capital. Interest in payable @ 6% p.a. and D is entitled to a salary of ₹ 3,000 per month. In 2017-18, the profit was ₹ 80,000 before interest and salary. Divide the amount between C and D.
Solution:

Question 43.
Amit and Vijay started a partnership business on 1st April,2017. Their capital contributions were ₹ 2,00,000 and ₹ 1,50,000 respectively. The Partnership Deed provided that:
(a) Interest on capital be allowed @ 10% p.a.
(b) Amit to get a salary of ₹ 2,000 per month and Vijay ₹ 3,000 per month.
(c) Profits are to be shared in the ratio of 3 : 2.
Profit for the year ended 31st March, 2018 befor above appropriations was ₹ 2,16,000. Interest on drawings amounted to ₹ 2,200 for Amit and ₹ 2,500 for Vijay. Prepare Profit and Loss Appropriation Account.
Solution:

Question 44.
Show how the following will be recorded in the Capital Accounts of the Partners Sohan and Mohan when their capitals are fluctuating:

Solution:

Question 45.
Sajal and Kajal are partners sharing profits and losses in the ratio of 2 : 1. On 1st April, 2017 their Capitals were: Sajal ₹ 50,000 and Kajal ₹ 40,000.
Prepare Profit and Loss Appropriation Account and the Partners Capital Accounts at the end of the year after considering the following items:
(a) Interest on Capital is to be allowed @ 5% p.a.
(b) Interest on the loan advanced by Kajal for the whole year, the amount of loan being ₹ 30,000.
(c) Interest on partners drawings @ 6% p.a. Drawings: Sajal ₹ 10,000 and Kajal ₹ 8,000.
(d) 10% of the divisible profit is to be transferred to Reserve.
The net profit for the year ended 31st March, 2018 ₹ 68,460.
Note: Net profit means net profit after debit of interest on loan by the partner.
Solution:

Question 46.
On 1st April, 2017, A and B entered into partnership contributing ₹ 60,000 and ₹ 45,000 respectively. They agreed to share profits and losses in the ratio of 3 : 2. B is allowed salary of ₹ 12,000 per year. Interest on capital is to be allowed @ 10% p.a. During the year, A withdrew ₹ 9,000 and B withdrew ₹ 18,000 as drawings, Interest on drawings paid by A and B were ₹ 150 and ₹ 210 respectively. Profit for the year ended 31st March, 2018 before the above adjustments was ₹ 35,000. Show distribution of profits by preparing Profit and Loss Appropriation Account of the firm. Prepare Partners Capital Accounts also.
Solution:

Question 47.
A and B are partners sharing profits and losses in the ratio of 3 : 1. On 1st April, 2017, their capitals were: A ₹ 50,000 and B ₹ 30,000. During the year ended 31st March, 2018 they earned a net profit of ₹ 50,000. The terms of partnership are:
(a) Interest on capital is to allowed @ 6% p.a.
(b) A will get a commission @ 2% on turnover.
(c) B will get a salary of ₹ 500 per month.
(d) B will get commission of 5% on profits after deduction of all expenses including such commission.
Partners drawings for the year were: A ₹ 8,000 and B ₹ 6,000. Turnover for the year was ₹ 3,00,000. After considering the above facts, you are required to prepare Profit and Loss Appropriation Account and Partners Capital Accounts.
Solution:

Question 48.
A, B and C were partners in a firm having capitals of ₹ 50,000 ; ₹ 50,000 and ₹ 1,00,000 respectively. Their Current Account balances were A: ₹ 10,000; B: ₹ 5,000 and C: ₹ 2,000 (Dr.). According to the Partnership Deed the partners were entitled to an interest on Capital @ 10% p.a. C being the working partner was also entitled to a salary of ₹ 12,000 p.a. The profits were to be capitals:
(a) The first ₹ 20,000 in proportion to their capitals.
(b) Next ₹ 30,000 in the ratio of 5 : 3 : 2.
(c) Remaining profits to be shared equally.
The firm earned net profit of ₹ 1,72,000 before charging any of the above items.
Prepare Profit and Loss Appropriation Account and pass necessary Journal entry for the appropriation of profits.
Solution:

Question 49.
A and B are partners sharing profits in the ratio of 3 : 2 with capitals of ₹ 50,000 and ₹ 30,000 respectively. Interest on cpital is agreed @ 6% p.a. B is to be allowed an annual salary of ₹ 2,500. During the year profit prior to interest on capital but after charging B’s salary amounted to ₹ 12,500. A provision of 5% of the profits if to be made in respect of Manager’s Commission.
Solution:

Question 50.
P, Q and R are in a partnership and as at 1st April, 2017 their respective capitals were: ₹ 40,000, ₹ 30,000 and ₹ 30,000. Q is entitled to a salary of ₹ 6,000 and R ₹ 4,000 p.a. payable before division of profits. Interest is allowed on capital @ 5% p.a. and is not charged on drawings. Of the divisible profits, P is entitled to 50% of the first ₹ 10,000, Q to 30% and R to 20%, rest of the profit are shared equally. Profits for the year ended 31st March, 2018, after debiting partners salaries but before charging interest on capital was ₹ 21,000 and the partners had drawn ₹ 10,000 each on account of salaries, interest and profit.
Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2018 showing the distribution of profit and the Capital Accounts of the partners.
Solution:

Question 51.
A, B and C are partners sharing profits and losses in the ratio of A 1/2, B 3/10, C 1/5 after providing for interest @ 5% on their respective capitals, viz., A ₹ 50,000; B ₹ 30,000 and C ₹ 20,000 and allowing B and C a salary of ₹ 5,000 each per annum. During the year ended 31st March, 2018, A has drawn ₹ 10,000 and B and C in addition to their salaries have drawn ₹ 2,500 and ₹ 1,000 respectively. The Profit and Loss Account for the year ended 31st March, 2018 showed a net profit of ₹ 45,000 before charging (a) interest on capital and (b) partners salaries. On 1st April, 2017, the balances in the current Account of the partners were A (cr.) ₹ 4,500; B (Cr.) ₹ 1,500 and C (Cr.) ₹ 1,000. Interest is not charged on Drawings or Current Account balances. Show Partners Capital and Current Accounts as at 31st March, 2018 after division of profits in accordance with the partnership agreement.
Solution:

Question 52.
Ali the Bahadur are partners in a firm sharing profits and losses as Ali 70% and Bahadur 30%. Their respective capitals as at 1st April, 2017 stand as Ali ₹ 25,000 and Bahadur ₹ 20,000. The partners are allowed interest on capitals @ 5% p.a. Drawings of the partners during the year ended 31st March, 2018 amounted to ₹ 3,500 and ₹ 2,500 respectively. Profit for the year, before charging interest on capital and annual salary of Bahadur @ ₹ 3,000, amounted to ₹ 40,000, 10% of divisible profit is to be transferred to Reserve. You are asked to show Partners Current Account and Capital Accounts recording the above transactions.
Solution:

Question 53.
Amal, Bimal and kamal are three partners. On 1st April, 2017, their Capitals stood as: Amal ₹ 40,000, Bimal ₹ 30,000 and Kamal ₹ 25,000. It was decided that:
(a) they would receive interest on Capital @ 5% p.a.
(b) Amal would get a salary of ₹ 250 per month.
(c) Bimal would receive commission @ 4% on net profit after deducting commission, interest on capital and salary, and
(d) After deducting all of these 10% of the profit should be transferred to the General Reserve.
Before the above items were taken into account, the profit for the year ended 31st March, 2018 was ₹ 33,360. Prepare Profit and Loss Appropriation Account and the Capital Accounts of the Partners.
Solution:

Question 54.
Amit, Binita and Charu are three partners. On 1st April, 2017, their Capitals stood as: Amit ₹ 1,00,000, Binita ₹ 2,00,000 and Charu ₹ 3,00,000. It was decided that:
(a) they would receive interest on Capital @ 5% p.a.
(b) Amit would get a salary of ₹ 10,000 per month.
(c) Binita would receive commission @ 5% of net profit after deduction of commission, and
(d) 10% of the net profit would be transferred to the General Reserve.
Before the above items were taken into account, the profit for the year ended 31st March, 2018 was ₹ 5,00,000. Prepare Profit and Loss Appropriation Account and the Capital Accounts of the partners.
Solution:

Question 55.
Anita, Bimla and Cherry are three partners. On 1st April, 2017, their Capitals stood as: Anita ₹ 1,00,000, Bimla ₹ 2,00,000 and Cherry ₹ 3,00,000. It was decided that:
(a) they would receive interest on Capital @ 5% p.a.
(b) Anita would get a salary of ₹ 5,000 per month.
(c) Bimla would receive commission @ 5% of net profit after deduction of commission, and
(d) 10% of the net divisible profit would be transferred to the General Reserve.
Before the above items were taken into account, the profit for the year ended 31st March, 2018 was ₹ 5,00,000. Prepare Profit and Loss Appropriation Account and the Capital Accounts of the partners.
Solution:

Question 56.
Anshul and Asha are partners sharing profits and losses in the ratio of 3 : 2. Anshul being a non-working partner contributed ₹ 8,00,000 as her capital. Asha being a working partner did not contribute capital. The partnership Deed provides for interest on capital @ 5% and salary to every working partner @ ₹ 2,000 per month. Net profit before providing for interest on capital and partner’s salary for the year ended 31st March, 2018 was ₹ 32,000.
Solution:

Question 57.
X and Y entered into partnership on 1st April, 2017 and contributed ₹ 2,00,000 and ₹ 1,50,000 respectively as their capitals. On 1st October, 2017, X provided ₹ 50,000 as loan to the firm. As per the provisions of the partnership Deed:
(i) 20% of Profits before charging interest on Drawings but after making appropriations to be transferred to General Reserve.
(ii) Interest on capital at 12% p.a. and Interest on Drawings @ 10% p.a.
(iii) X to ger monthly salary of ₹ 5,000 and Y to get salary of ₹ 22,500 per quarter.
(iv) X is entitled to a commission of 5% on sales. Sales for the year were ₹ 3,50,000.
(v) Profit and Loss to be shared in the ratio of their capital contribution up to ₹ 1,75,000 and above ₹ 1,75,000 equally.
The profit for the year ended 31st March, 2018 before providing for any interest was ₹ 4,61,000. The drawings of X and Y were ₹ 1,00,000 and ₹ 1,25,000 respectively. Pass the necessary Journal entries relating to appropriation our of profit and Loss Appropriation Account and the Partners Capital Accounts.
Solution:

Question 58.
P and Q were partners in a firm sharing profits and losses equally. Their fixed capitals were ₹ 2,00,000 and ₹ 3,00,000 respectively. The Partnership Deed provided for interest on capital @ 12% per annum. For the year ended 31st March, 2016, the profits of the firm were distributed without providing interest on capital. Pass necessary adjustment entry to rectify the error.
Solution:

Question 59.
Reya, Mona and Nisha shared profits in the ratio of 3 : 2 : 1. The profits for the last three year were ₹ 1,40,000; ₹ 84,000 and ₹ 1,06,000 respectively. These profits were by mistake shared equally for all the give necessary Journal entry for the same.
Solution:

Question 60.
Profits earned by a partnership firm for the year ended 31st March, 2017 were distributed equally between the partners Pankaj and Anu without allowing interest on capital. Interest due on capital was Pankaj ₹ 3,000 and Anu ₹ 1,000.
Solution:

Question 61.
Azad and Benny are equal partners. Their capitals are ₹ 40,000 and ₹ 80,000 respectively. After the accounts for the year have been prepared, it is discovered that interest @ 5% p.a. as provided in the partnership agreement has not been credited to the Capital Accounts before distribution of profits. It is decided t make an adjustment entry in the beginning of the next year. Record the necessary journal entry.
Solution:

Question 62.
Ram and Mohan are equal partners. Their capitals are ₹ 4,000 and ₹ 8,000 respectively. After the accounts for the year are prepared it is discovered that interest @ 5% p.a. on capital as provided in the Partnership Deed has not been credited to the Capital Accounts before distribution of profits. It is decided to make an adjusting entry in the beginning of the next year. Give necessary adjustment entry.
Solution:

Question 63.
Ram, Mohan and Sohan sharing profits and losses equally have capitals of ₹ 1,20,000, ₹ 90,000 and ₹ 60,000. For the year ended 31st March, 2018, interest was credited to them @ 6% instead of 5%. Give adjustment Jounral entry.
Solution:

Question 64.
Ram, Shyam and Mohan were partners in a firm sharing profits and losses in the ratio of 2 : 1 : 2. Their capitals were fixed at ₹ 3,00,000, ₹ 1,00,000, ₹ 2,00,000. For the year ended 31st March, 2018, interest on capital was credited to them @ 9% instead of 10% p.a. The profit for the year before charging interest was ₹ 2,50,000. Show your working notes clearly and pass necessary adjustment entry.

Solution:

Question 65.
Mita and Usha are partners in a firm sharing profits in the ratio of 2 : 3. Their Capital Accounts as on 1st April, 2015 showed balances of ₹ 1,40,000 and ₹ 1,20,000 respectively. The drawings of mita and Usha during the year 2015-16 were ₹ 32,000 and ₹ 24,000 respectively. Both the amounts were withdrawn on 1st January 2016. It was subsequently found that the following items had been omitted while preparing the final accounts for the year ended 31st March, 2016:
(a) Interest on Capital @ 6% p.a.
(b) Interest on Drawings @ 6% p.a.
(c) Mita was entitled to a commission of ₹ 8,000 for the whole year.
Showing your working clearly, pass a rectifying entry in the books of the firm.
Solution:

Question 66.
Mohan, Vijay and Anil are partners, the balances of their Capital Accounts being ₹ 30,000, ₹ 25,000 and ₹ 20,000 respectively. In arriving at these figures, the profits for the year ended 31st March, 2016, ₹ 24,000 had already been credited to partners in the proportion in which they shared profits. Their drawings were ₹ 5,000 (Mohan), ₹ 4,000 (Anil) during the year. Subsequently, the following omissions were noticed and it was decided to bring them into account:
(a) Interest on capital @ 10% p.a.
(b) Interest on drawings: Mohan ₹ 250, Vijay ₹ 200 and Anil ₹ 150.
Make necessary corrections through a Journal entry and show your workings clearly.
Solution:

Question 67.
Piya and Bina are partners in a firm sharing profits and losses in the ratio of 3 : 2. Following was the Balance Sheet of the firm as on 31st March, 2016:

The profits ₹ 30,000 for the year ended 31st March, 2016 were divided between the partners without allowing interest on capital @ 12% p.a. salary to Piya @ ₹ 1,000 per month. During the year Piya withdrew ₹ 8,000 and Bina withdrew ₹ 4,000. Showing your working notes clearly, pass the necessary rectifying entry.
Solution:

Question 68.
The firm of Harry, Porter and Ali, who have been sharing profits in the ratio of 2 : 2 : 1, have existed for same years. Ali wants that he should get equal share in the profits with Harry and Porter and he further wishes that the change in
the profit-sharing ratio should come into effect retrospectively were for the three years. Harry and Porter have agreement on this account. The profits for the last three years were:

Show adjustment of profits by means of a single adjustment Journal entry.
Solution:

Question 69.
On 31st March, 2018, after the closing of the accounts, the Capital Accounts of P, Q and R stood in the books of the firm at ₹ 40,000; ₹ 30,000 and ₹ 20,000 respectively. Subsequently, it was discovered that interest on capital @ 5% had been omitted. Profit for the year ended 31st March, 2018 amounted to ₹ 60,000 and the partners drawings had been P ₹ 10,000, Q ₹ 7,500 and R ₹ 4,500. The profit-sharing ratio of P, Q and R is 3 : 2 : 1. Give necessary adjustment entry.
Solution:

Question 70.
A, B and C were partners. Their capitals were A ₹ 30,000; B ₹ 20,000 and C ₹ 10,000 respectively. According to the Partnership Deed, they were entitled to an interest on capital @ 5% p.a. In addition, B was also entitled to draw a salary of ₹ 500 per month. C was entitled to a commission of 5% on the profits after charging the interest on capital, but before charging the salary payable to B. The net profit for the year were ₹ 30,000 distributed in the ratio of capitals without providing for any of the above adjustments. The profits were to be shared in the ratio of 5 : 3 : 2.
Pass necessary adjustment entry showing the workings clearly.
Solution:

Question 71.
Mannu and shristhi are partners in a firm sharing profit in the ratio of 3 : 2. Following is the balance sheet of the firm as on 31st March 2018:

Profit for the year ended 31st March, 2018 was ₹ 5,000 which was divided in the agreed ratio, but interest @ 5% p.a. on capital and @ 6% p.a. on drawings was inadvertently enquired. Adjust interest on drawings on an average basis for 6 months. Give the adjustment entry.
Solution:

Question 72.
A, B and C are partners in a firm. Net profit of the firm for the year ended 31st march, 2018 is ₹ 30,000, which has been duly distributed among the partners, in their agreed ratio of 3 : 1 : 1 respectively. It is discovered on 10th April, 2018 that the undermentioned transactions were not passed through the books of account of the firm for the year ended 31st March, 2018.
(a) Interest on Capital @ 6% per annum, the capital of A, B and C being ₹ 50,000; ₹ 40,000 and ₹ 30,000 respectively.
(b) Interest on drawings: A ₹ 350; B ₹ 250; C ₹ 150.
(c) Partners’ Salaries: A ₹ 5,000; B ₹ 7,500.
(d) Commission due to A (for some special transaction) ₹ 3,000.
You are required to pass a Journal entry, which will not affect Profit and Loss Account of the firm and rectify the position of partners.
Solution:

Question 73.
On 31st March, 2014, the balances in the Capital Accounts of Saroj, Mahinder and Umar after making adjustments for profits and drawings, etc., were ₹ 80,000, ₹ 60,000, ₹ 40,000 respectively. Subsequently, it was discovered that the interest on capital and drawings has been omitted.
(a) The profit for the year ended 31st March, 2014 was ₹ 80,000.
(b) During the year Saroj and Mahinder each withdrew a sum of ₹ 24,000 in equal instalments in the end of each month and Umar withdrew ₹ 36,000.
(c) The interest on drawings was to be charged @ 5% p.a. and interest on capital was to be allowed @ 10% p.a.
(d) The profit-sharing ratio among partners was 4 : 3 : 1.
Showing your workings clearly, pass the necessary rectifying entry.
Solution:

Question 74.
The Capitals of A, B and C as on 31st March, 2018 amounted to ₹ 90,000, ₹ 3,30,000 and ₹ 6,60,000 respectively. The profits amounting ₹ 1,80,000 for the year 2017-18 were distributed in the ratio of 4 : 1 : 1 after allowing interest on Capital @ 10% p.a. During the year, each partner withdrew ₹ 3,60,000. The Partnership Deed was silent as to profit-sharing ratio but provided for interest on capital @ 12%.
Pass the necessary adjustment entry showing the working clearly.
Solution:

Question 75.
The Capital Accounts of A and B stood at ₹ 4,00,000 and ₹ 3,00,000 respectively after necessary adjustments in respect of the drawings and the net profit for the year ended 31st March, 2018. It was subsequently discovered that 5% p.a. interest on capital and also drawings were not taken into account in arriving at the distributable profit. The drawings of the partners had been: A–₹ 12,000 drawn at the end of each quarter and B–₹ 18,000 drawn at the end of each half year. The profit for the year as adjusted amounted to ₹ 2,00,000. The partners share profits in the ratio of 3 : 2. You are required to pass Journal entries and show adjusted Capital Accounts of the partners.
Solution:

Question 76.
X and Y are partners sharing profits and losses in the ratio of 3 : 2. They employed Z as their Manager to whom they paid a salary of ₹ 7,500 per month. Z had deposited ₹ 2,00,000 on which interest was payable ₹ 9% p.a. At the end off the accounting year (i.e., 31st March, 2018) 2017-18 (after division of the year’s profits), it was decided that Z should be treated as a partner with effect from 1st April, 2014 with 1/6th share of profits, his deposit being considered as capital carrying interest @ 6% p.a. like capitals of other partners. The firm’s profits and losses after allowing interest on capitals were 2014-15:
Profit ₹ 5,90,000; 2015-16: Profit ₹ 6,26,000; 2016-17: Loss ₹ 40,000 and 2017-18: Profit ₹ 7,80,000.
Record necessary Journal entries to give effect to the above.
Solution:

Question 77.
A and B are partners sharing profits in the ratio of 2 : 1. They decided to admit C, their manager, as a partner form 1st April, 2017, giving him 1/5th share of profit. C, while a manager, was getting a salary of ₹ 50,000 p.a. plus a commission of 10% of the net profit after charging such salary and commission. It was also agreed that any excess amount which C receives as a partner (over his salary and commission) will be borne by A. Profit for the year ended 31st March, 2018 amounted to ₹ 6,44,000, before payment of salary and commission. Prepare Profit and Loss Appropriation Account.
Solution:

Question 78.
X and Y are partners in a firm sharing profits in the ratio of 3 : 2. The have a manager, Z, who gets ₹ 10,000 p.m. salary plus commission of 5% of the profit after charging his salary and commission, Now, they decide to admit Z as a partner, giving him 1/5th share in the profits of the firm. Any excess amount which Z receives as a partner (over his salary and commission) will be borne by X. The profit for the year ended 31st March, 2018 amounted to ₹ 8,40,000 after charging Z’s salary. Prepare Profit and Loss Appropriation Account showing the division of profit for the year.
Solution:

Question 79.
A, B and C were in partnership sharing profits and losses in the ratio of 4 : 2 : 1 respectively. It was provided that C’s share in profit for a year would not be less then ₹ 7,500. The profit for the year ended 31st March, 2018 amounted to ₹ 31,500. You are required to show the appropriation among the partners. The profit and Loss Appropriation Account is not required.
Solution:

Question 80.
A and B are partners sharing profits in the ratio of 3 : 2. C was admitted for 1/6th share of profit with a minimum guaranteed amount of ₹ 10,000. At the close of the first financial year the firm earned a profit of ₹ 54,000. Find out the share of profit which A, B and C will get.
Solution:

Question 81.
X, Y and Z entered into partnership on 1st October, 2017 to share profits and losses in the ratio of 4 : 3 : 3. X, personally guaranteed that Z’s share of profit after charging interest on capital @ 10% p.a. would not be less then ₹ 80,000 in any year. The capital contributions were: X ₹ 3,00,000, Y ₹ 2,00,000 and Z ₹ 1,50,000.
The profit for the year ended 31st March, 2018 amounted to ₹ 1,60,000. Prepare Profit and Loss Appropriation Account.
Solution:

Question 82.
A, B and C are partners in a firm. Their profit-sharing ratio is 2 : 2 : 1. C is guaranteed a minimum amount of ₹ 10,000 as share of profit every year. Any deficiency arising on that amount shall be met by B. The profits for the two years ended 31st March, 2017 and 2018 were ₹ 40,000 and ₹ 60,000 respectively. Prepare Profit and Loss Appropriation Account for the two years.
Solution:

Question 83.
A, B and C are partners sharing profits in the ratio of 5 : 4 : 1. C is given a guarantee that his minimum share of profit in any given year would be at least ₹ 5,000. Deficiency, if any, would be borne by A and B equally. The profit for the year 2017-18 amounted to ₹ 40,000.
Pass necessary Journal entries in the books of the firm.
Solution:

Question 84.
Vikas and Vivek were partners in a firm sharing profits in the ratio of 3 : 2. On 1st April, 2017, they admitted Vandana as a new partner for 1/8th share in the profits with a guaranteed profit of ₹ 1,50,000. The new profit-sharing ratio between Vikas and Vivek will remain same but they decided to bear any deficiency on account of guarantee to Vandana in the ratio 3 : 2. The profit of the firm for the year ended 31st March, 2018 was ₹ 9,00,000. Prepare Profit and Loss Appropriation Account of Vikas, Vivek and Vandana for the year ended 31st March, 2018.
Solution:

Question 85.
Pranshu and Himanshu are partners sharing profits and losses in the ratio of 3 : 2 respectively. They admit Anshu as partner with 1/6 share in the profits of the firm. Pranshu personally guaranteed that Anshu’s share of profit would not be less than ₹ 30,000 in any year. The net profit of the firm for the ear ending 31st March, 2013 was ₹ 90,000. Prepare Profit and Loss Appropriation Account.
Solution:

Question 86.
A, B and C are partners in a firm sharing profits in the ratio of 3 : 2 : 1. They earned a profit of ₹ 30,000 during 2017-18. Distribute profit among A, B and C if:
(a) C’s share of profit is guaranteed to be ₹ 6,000 Minimum.
(b) Minimum profit payable to C amounting to ₹ 6,000 is guaranteed by A.
(c) Guaranteed minimum profit of ₹ 6,000 payable to C is guaranteed by B.
(d) Any deficiency after making payment of guaranteed ₹ 6,000 will be borne by A and B in the ratio of 3 : 1.
Solution:

Question 87.
A and B are in partnership sharing profits and losses in the ratio of 3 : 2. They decided to admit C, their Manager, as a partner with effect from 1st April, 2017, giving him 1/4th share of profits.
C, while a Manager, was in receipt of a salary of ₹ 27,000 p.a. and a commission of 10% of the net profits after charging such salary and commission.
In terms of the Partnership Deed, and excess amount, which C will be entitled to receive as a partner over the amount which would have been due to him if he continued to be the manager, would have to be personally borne by A out of his share of profit. Profit for the year ended 31st March, 2018 amounted to ₹ 2,25,000. You are required to show Profit and Loss Appropriation Account for the year ended 31at March, 2018.
Solution:

Question 88.
Asgar, Chaman and Dholu are partners in a firm. Their Capital Accounts stood at ₹ 6,00,000; ₹ 5,00,000 and ₹ 4,00,000 respectively on 1st April, 2017. They shared Profits and Losses in the proportion of 4 : 2 : 3. Partners are entitled to interest on capital @ 8% per annum and salary to Chaman and Dholu @ ₹ 7,000 per month and ₹ 10,000 per quarter respectively as per the provision of the Partnership Deed. Sholu’s share of profit ( excluding interest on capital but including salary) is guaranteed at a minimum of ₹ 1,10,000 p.a. Any deficiency arising on that account shall be met by Asgar. The profit for the year ended 31st March, 2018 amounted to ₹ 4,24,000.
Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2018.
Solution:

Question 89.
Ankur, Bhavns and Disha are partners in a firm. On 1st April, 2017, the balance in their Capital Accounts stood at ₹ 14,00,000, ₹ 6,00,000 and ₹ 4,00,000 respectively. They shared profits in the proportion of 7 : 3 : 2 respectively. Partners are entitled to interest on capital @ 6% per annum and salary to Bhavna @ ₹ 50,000 p.a. and a commission of ₹ 3,000 per month to Disha as per the provisions of the partnership Deed. Bhavna’s share of profit (excluding interest on capital) is guaranteed at not less than ₹ 1,70,000 p.a. Disha’s share of profit (including interest on capital but excluding commission) is guaranteed at not less than ₹ 1,50,000 p.a. Any deficiency arising on that account shall be met by Ankur. The profit of the firm for the year ended 31st March, 2018 amounted to ₹ 9,50,000. Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2018.
Solution:

Question 90.
Ankur and Bobby were into the business of providing software solutions in India. They were sharing profits and losses in the ratio 3 : 2. They admitted Rohit for a 1/5 share in the firm. Rohit, an alumni or IIT, Chennai would help them to expand their business to various South African countries where he had been working earlier. Rohit is guaranteed a minimum profit of ₹ 2,00,000 for the year. Any deficiency in Rohit’s share is to be borne by Ankur and Bobby in the ratio 4 : 1. Loss for the year was ₹ 10,00,000. Pass the necessary Journal entries.
Solution:

Question 91.
Ajay, Binay and Chetan were partners sharing profits in the ratio of 3 : 3 : 2. The Partnership Deed provided for the following:
(i) Salary of ₹ 2,000 per quarter to Ajay and Binay.
(ii) Chetan was entitled to a commission of ₹ 8,000.
(iii) Binay was guaranteed a rofit of ₹ 50,000 p.a.
The profit of the firm for the year ended 31st March, 2015 was ₹ 1,50,000 which was distributed among Ajay, Binay and Chetan in the ratio of 2 : 2 : 1, without taking into consideration the provisions of Partnership Deed. Pass necessary rectifying entry for the above adjustments in the books of the firm. Show your workings clearly.
Solution:

Question 92.
P, Q and R entered into partnership on 1st April, 2015 to share profits and losses in the ratio of 12 : 8 : 5. It was provided that in no case R’s share in profit be less then ₹ 30,000 p.a. The profits and losses for the period ended 31st March were: 2015-16 Profit ₹ 1,20,000 2016-17 Profit ₹ 1,80,000; 2017-18 Loss ₹ 1,20,000.
Pass the necessary Journal entries in the books of the firm.
Solution:

]

Question 93.
Three Chartered Accountants A, B and C form a partnership, profits being shared in the ratio of 3 : 2 : 1 subject to the following:
(a) C’s share of profit guaranteed to be not less than ₹ 15,000 p.a.
(b) B gives a guarantee to the effect that gross fee earned by him for the firm shall be equal to his average gross fee of the preceeding five years when he was carrying on profession alone, which on an average works out at ₹ 25,000.
The profit for the first year of the partnership are ₹ 75,000. The gross fee earned by B for the firm is ₹ 16,000. You are required to show Profit and Loss Appropriation Account after giving effect to the above.
Solution:

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TS Grewal Accountancy Class 11 Solutions Chapter 16 Accounts from Incomplete Records Single Entry System – Here are all the TS Grewal solutions for Class 11 Accountancy Chapter 16. This solution contains questions, answers, images, explanations of the complete Chapter 16 titled Accounts from Incomplete Records Single Entry System of Accountancy taught in Class 11. If you are a student of Class 11 who is using TS Grewal Textbook to study Accountancy, then you must come across Chapter 16 Accounts from Incomplete Records Single Entry System. After you have studied lesson, you must be looking for answers of its questions. Here you can get complete TS Grewal Solutions for Class 11 Accountancy Chapter 16 Accounts from Incomplete Records Single Entry System in one place.

TS Grewal Accountancy Class 11 Solutions Chapter 16 Accounts from Incomplete Records Single Entry System

Question 1.
Following information of an accounting year is given:
Opening Capital ₹ 60,000; Drawings ₹ 5,000; Capital added during the year ₹ 10,000 and Closing Capital ₹ 90,000. Calculate the Profit and Loss for the year.
Solution:

Question 2.
Mayank does not keep proper records of his business, he gives you the following information:
Opening Capital – ₹ 1,00,000
Closing Capital – ₹ 1,25,000
Drawings during the year – ₹ 30,000
Capital added during the year – ₹ 37,500
Calculate the profit or loss for the year.
Solution:

Question 3.
Capital of Ganesh Gupta in the beginning of the year was ₹ 70,000. During the year his business earned a profit of ₹ 20,000, he withdrew ₹ 7,000 for his persona use. He sold ornaments of his wife for ₹ 20,000, and invested that amount into the business. Find out his Capital at the end of the year.
Solution:
Capital at the end of the year = Capital in the beginning + Additional Capital + Profit – Drawings
= 70,000 + 20,000 + 20,000 – 7,000
= Rs. 1,03,000

Question 4.
Vikas maintains his books of account on Single Entry System. He provides following information from his books. Find out additional capital
introduced in the business during the year 2017-18.
Opening Capital – ₹ 1,30,000 ; Drawing during the year ₹ 50,000
Closing Capital – ₹ 2,00,000 ; Profit made during the year ₹ 1,00,000
Solution:
Additional Capital = Closing Capital + Drawings – (Opening Capital + Profit) = 2,00,000 + 50,000 – (1,30,000 + 1,00,000)
= 2,50,000 – 2,30,000 = Rs.20,000

Question 5.
Mohan maintains books on Single Entry System. He gives you the following information:
Capital on 1st April, 2017 – ₹ 15,200
Capital on 31st March, 2018 – ₹ 16,900
Drawings made during the year – 4,800
Capital introduced on 1st August, 2017 – 2,000
You are required to calculat the Profit or Loss made by Mohan.
Solution:

Question 6.
Mahesh who keeps his books on Single Entry System sells goods at Cost plus 50%. On 1st April, 2017 his Capital was ₹ 4,00,000 and on 31st March, 2018 it was ₹ 3,50,000. He had withdrawn ₹ 20,000 per month besides goods of the sale value of ₹ 60,000. How much did he earn in 2017-18?
Solution:

Calculation For Cost of Goods Sold:
Sales = COGS + Profit
Cost of Goods Sold = 100
Gross Profit = 50
Sales = 150
Gross Profit = \(\frac { 50 }{ 150 }\) or \(\frac { 1 }{ 3 }\)
Sales = 60,000 x \(\frac { 1 }{ 3 }\) = 20,000
COGS = Sales – Gross Profit = 60,000 – 20,000 = 40,000
Drawings = Cash + Cost of Goods Sold
Drawings = 2,40,000 + 40,000 = 2,80,000

Question 7.
Krishan started his business on 1st April, 2017 with a Capital of ₹ 1,00,000. On 31st March, 2018, his assets were :
Cash – ₹ 3,200
Stock – ₹ 34,800
Debtors – ₹ 31,000
Plant – ₹ 85,000
He owed ₹ 12,000 to sundry creditors and ₹ 10,000 to his brother on that date. He withdrew ₹ 2,000 per month for the private expenses. Ascertain his profit.
Solution:

Question 8.
Ram Prashad keeps his books on Single Entry System and from them and the particulars supplied, the following figures were gathered together on 31st March, 2018:
Book Debts ₹ 10,000; Cash in Hand ₹ 510; Stock-in-Trade (estimated) ₹ 6,000; Furniture and Fittings ₹ 1,200; Trade Creditors ₹ 4,000; Bank Overdraft ₹ 1,000; Ram Prashad stated that he started business on 1st April with cash ₹ 6000 paid into bank but stocks valued at ₹ 4,000. During the year he estimated his drawings to be ₹ 2,400. You are required to prepare the statement, showing the profit for the year, after writing off 10% for Depreciation on Furniture and Fittings.
Solution:

Question 9.
Shruti maintains her books of account from Incomplete Records. Her books provide the following information:

She with drew ₹ 500 per month for personal expenses. She sold her Investments of ₹ 16,000 at 5% premium and introduced the amount into business.
You are required to prepare a Statement of Profit or Loss for the year ending 31st March, 2016.
Solution:

Question 10.
Hari maintains her books of account on Single Entry System. His books provide the following information:

His drawings during the year were ₹ 5,000 Depreciate furniture by 10% and provide a reserve for Bad and Doubtful Debts at 10% on Sundry Debtors.
Prepare the statement showing the profits for the year.
Solution:

Question 11.
A commenced business on 1st April, 2017 with a capital of ₹ 10,000. He immediately bought Furniture and Fixtures for ₹ 2,000. On 1st October, 2017, he borrowed ₹ 5,000 from his wife @ 9% p.a. (interest not yet paid) and introduced a further capital of his own amounting to ₹ 1,500. A drew @ ₹ 300 per month at the end of each month for household expenses. On 31st March, 2018 his position was as follows:
Cash in Hand ₹ 2,800; Sundry Debtors ₹ 4,800; Stock ₹ 6,800; Bills Receivable ₹ 1,600; Sundry Creditors ₹ 500 and owing for Rent ₹ 150. Furniture and Fixtures to be depreciated by 10%. Ascertain the profit or loss made by A during 2017-18.
Solution:

Question 12.
Kuldeep, a general merchant, keeps his accounts on Single Entry System. He wants to know the results, of his business on 31st March, 2018 and for that following information is available:

During the year, he had withdrawn ₹ 5,00,000 for his personal use and invested ₹ 2,50,000 as additional cpaital. Calculate his profits on 31st March, 2018 and prepare the Statement of Affairs as on that date.
Solution:

Question 13.
Following information is supplied to you by a shopkeeper:
During the year, he withdrew ₹ 2,500 per month for dometstic purposes. He also borrowed from a friend at 9% a sum of ₹ 20,000 on 1st October, 2017. He has not yet paid the interest. A provision of 5% on debotrs for doubtful debts is to be made.
Ascertain the profit or loss made by him during the period.
Solution:

Question 14.
Vikas is keeping his accounts according to Single Entry System. His capital on 31st December, 2015 was ₹ 2,50,000 and his capital on 31st December, 2016 was ₹ 4,25,000. He further informs you that during the year he gave a loan of ₹ 30,000 to his brother on private account and withdrew ₹ 1,000 per month for personal purposes. He used a flat for his personal purpose, the rent of which @ ₹ 1,800 per month and electricity charges at an average of 10% of rent per month were paid from the business account. During the year he sold his 7% Government Bonds of ₹ 50,000 at 1% premium and brought that money into the business.
Prepare a Statement of Profit or Loss for the year ended 31st December, 2016.
Solution:

Question 15.
Manu started business with a capital of ₹ 4,00,000 on 1st October, 2005. He borrowed from his friend a sum of ₹ 1,00,000. He brought further ₹ 75,000 as capital on 31st March, 2006, his position was:
Cash : ₹ 30,000; Stock : ₹ 4,70,000; Debtors : ₹ 3,50,000 and Creditors : ₹ 3,00,000.
He withdrew ₹ 8,000 per month during this period. Calculate profit on loss, for the period.
Solution:

Question 16.
From the following information relating to the business of Mr. X who keeps books on Single Entry System, ascertaint the profit or loss for the year 2017-18:

Mr. X withdrew ₹ 4,100 during the year to meet his household expenses. He introduced ₹ 300 as fresh capital on 15th January, 2018. Machinery and Furniture are to be depreciated at 10% and 5% p.a. respectively.
Solution:

Question 17.
X, a retailer, has not maintained proepr books of accont but it has been possible to obtain the follwoing details:

Calculate the net profit for this year and draft the Statement of Affairs at the end of the year after noting that:
(a) Shop Fittings are to be depreciated by ₹ 780.
(b) X has drawn ₹ 100 per week for his own use.
(c) Included in the Trade Debtors is an irrecoverable balance of ₹ 270.
(d) Interest at 5% p.a. is due on the loan from Naresh but has not been paid for the year.
Solution:

Question 18.
On 1st April, 2017, X started a business with ₹ 40,000 as his capital. On 31st March, 2018, his position was as follows:

During the year 2017-18, X drew ₹ 24,000. On 1st October, 2017, he introduced further capital amounting to ₹ 30,000. You are required to ascertain profit on loss made by him during the year 2017-18.
Adjustments:
(a) Plant is to be depreciated at 10%.
(b) A provision of 5% is to be made against debtors, Also prepare the Statement of Affairs as on 31st March, 2018.
Solution:

Question 19.
C maintains his books according to Single Entry System. Following figures were available from the books for the six months ended 31st December 2017:

Adjustments:
(a) He had withdrawn ₹ 200 in the beginning of every month for household purposes.
(b) Depreciation on Plant and Machinery @ 10% p.a.
(c) Further Bad Debts ₹ 5,000 and Provision for Doubtful Debts to be created @ 2%.
(d) During the period, salaries have been prepaid by ₹ 500 while wages outstanding were ₹ 1,000.
(e) Interest on drawings to be reckoned @ 6% p.a.
You are required to prepare the Statement of Profit or Loss for the half year ended 31st December, 2017, followed by Revised Statement of Affairs as on that date.
Solution:

Question 20.
A firm sells goods at a Gross profit of 25% of sales. On 1st April, 2017 the Stock was ₹ 40,000; Purchases were ₹ 1,10,000 and the Stock on 31st March, 2018 was ₹ 30,000. What was the value of Sales?
Solution:

Question 21.
A firm sells goods at Cost plus 25%. Sales to credit customers (\(\frac { 3 }{ 4 }\) of total) was ₹1,80,000. His Opening and Closing Stocks were ₹ 20,000 and ₹ 15,000 respectively. Find out the value of Purchases.
Solution:

Calculation For Gross Profit = 2,40,000 × 20% = 48,000

Question 22.
Calculate Stock in the beginning:
Sales – ₹ 80,000
Purchases – ₹ 60,000
Stock at the end – ₹ 8,000
Loss on Cost – \(\frac { 1 }{ 6 }\)
Solution:

Calculation For Gross Loss = 80,000 × 20% = 16,000

Question 23.
Calculate the Stock at the end:
Stock in the beginning – ₹ 20,000
Cash Sales – ₹ 60,000
Credit Sales – ₹ 40,000
Purchases – ₹ 70,000
Rate of Gross Profti on cost – \(\frac { 1 }{ 3 }\)
Solution:

Calculation For Gross Profit = 1,00,000 × 25% = 25,000

Question 24.
Calculate the value of CLosing Stock from the following information:
Purchases – ₹ 93,000
Wages – ₹ 20,000
Sales – ₹ 1,20,000
Carriage Outwards – ₹ 3,200
Opening Stock – ₹ 16,000
Rate of Gross Profit 25% on Cost
Solution:

Calculation For Gross Profit = 1,20,000 × 20% = 24,000
Note: Carriage Outward pass the entry on Profit and Loss A/c

Question 25.
Calculate Purchases:
Cost of Goods Sold – ₹ 65,000
Stock in the beginning – ₹ 4,000
Closing Stock – ₹ 5,000
Solution:
Purchases = Cost of Goods sold – Opening Stock + Closing Stock
Purchases = 65,000 – 4,000 + 5,000 = 66,000

Question 26.
Calculate Sales:
Cost of goods sold – ₹ 2,00,000
Rate of Gross Profit 20% on Sales
Solution:
Gross Profit = 2,00,000 × 25% = 50,000
COGS + Gross Profit = Sales
2,00,000 + 50,000 = 2,50,000

Question 27.
Debtors in the beginning of the year were ​₹ 30,000, Sales on credit during the year were ₹ 75,000, Cash received from the Debtors during the year was ₹ 35,000, Returns Inward (regarding credit sales) were ₹ 5,000 and Bills Receivable drawn during the year were ₹ 25,000. Find the balance of Debtors at th end of the year, assuming that there were Bad Debts during the year of ₹ 2,000.
Solution:

Question 28.
Creditors on 1st April, 2017 were ₹ 15,000, Purchases on credit were ₹ 30,000, Cash paid to Creditors during 2017-18 was ₹ 20,000, Returns Outward (regarding credit purchases) were ₹ 1,000 and Bills Payable accepted during the year ₹ 10,000. Find the balance of Creditors on 31st March, 2018.
Solution:

Question 29.
Following information is given of an accounting year:
Opening Creditors ₹ 15,000; Cash paid to creditors ₹ 15,000; Returns Outward ₹ 1,000 and Closing creditors ₹ 12,000.
Calculate Credit Purchases during the year.
Solution:

Question 30.
From the following information supplied by X, who keeps his books on Single Entry System, you are required to calculate Total Purchases:
Opening balance of Bills Payable – ₹ 5,000
Opening balance of Creditors – ₹ 6,000
Closing balance of Bills Payable – ₹ 7,000
Closing balance of Creditors – ₹ 4,000
Cash paid to Creditors during the year – ₹ 30,200
Bills Payable discharged during the year – ₹ 8,900
Returns Outward – ₹ 1,200
Cash Purchases – ₹ 25,800
Solution:

Total Purchases = Cash Purchases + Credit Purchases
Total Purchases = 25,800 + 40,300 = Rs 66,100

Question 31.
Cash sales of a business in a year were ​₹ 85,000, the Cost of Goods Sold (including direct expenses) was ₹ 97,000 and Gross Profit as shown by the Trading Account for the year was ₹ 1,29,000. Calculate Credit Sales during the year.
Solution:
Gross Profit = Net Sales – Cost of Goods Sold
1,29,000 = Net Sales – 97,000
Net Sales = Rs 2,26,000
Credit Sales = Total Net Sales – Cash Sales
Credit Sales = 2,26,000 – 85,000 = Rs 1,41,000

Question 32.
From the following information, calculate Total Sales made during the period:
Debtors as on 1st April, 2017 – ₹ 20,400
Cash received from debtors during the year (as per Cash Book) – ₹ 60,800
Returns Inward – ₹ 5,400
Bad Debts – ₹ 2,400
Debtors as on 31st March, 2018 – ₹ 27,600
Cash Sales (as per Cash Book) – ₹ 56,800
Solution:

Total Sales = Cash Sales + Credit Sales
Total Sales = 56,800 + 75,800 = Rs 1,32,600

Question 33.
Calculate Total Sales from the following information:
Bills Receivables as on 1st April, 2017 – ₹ 7,800
Debtors as on 1st April, 2017 – ₹ 30,800
Cash received on maturity of Bills Receivable during the year – ₹ 20,900
Cash received from Debtors – ₹ 70,000
Bad Debts written off – ₹ 4,800
Returns Inward – ₹ 8,700
Bills Receivable dishonoured – ₹ 1,800
Bills Receivable on 31st March, 2018 – ₹ 6,000
Debtors as on 31st March, 2018 – ₹ 25,500
Cash Sales during the year – ₹ 15,900
Solution:

Total Sales = Cash Sales + Credit Sales
Total Sales = 15,900 + 97,300 = Rs 1,13,200

Question 34.
From the following information, ascertain the opening balance of Sundry Debtors and the closing balance of Sundry Creditors:
Sundry Creditors as on 31st March, 2017 – ₹ 20,600
Sundry Debtors as on 31st March, 2018 – ₹ 37,400
Stock as on 31st March, 2017 – ₹ 26,000
Stock as on 31st March, 2018 – ₹ 24,000
During the year ended 31st March, 2018:
Purchases – ₹ 1,10,000
Discount allowed by creditors – ₹ 800
Discount allowed to customers – ₹ 1,100
Cash paid to sundry creditors – ₹ 95,000
Bills Payable issued by them – ₹ 14,000
Bills Receivable received from customers – ₹ 16,500
Cash received from customers – ₹ 1,30,000
Bills receivable dishonoured – ₹ 1,900
Solution:

Cost of Goods Sold = Opening Stock + Purchases – Closing Stock
Cost of Goods Sold = 26,000 + 1,10,000 – 24,000 = 1,12,000
Gross Profit = \(\frac { 30 }{ 70 }\) x 112000 = Rs. 48,000
Sales = Cost of Goods Sold + Gross Profit
Sales = 1,12,000 + 48,000 = Rs 1,60,000
Credit Sales = 1,60,000 – 20,000 = Rs 1,40,000

Question 35.
Roshan, whose accounts are maintained by Single Entry System, acquired a retail business on 1st April, 2017. He had ₹ 40,000 of his own and he borrowed ₹ 20,000 from his wife. He paid ₹ 15,000 for Goodwill ₹ 5,000 for Furniture and ₹ 35,000 for Stock.
Total cash received by him during the financial year from the Debtors was ₹ 2,30,000. His payments were:
Purchases – ₹ 1,56,000
Salary and Wages – ₹ 21,400
Trade Expenses – ₹ 7,200
Rent:
For business premises – ₹ 5,920
For private house – ₹ 2,960
Payments made for domestic purposes and drawings – ₹ 26,400
At the end of the year, the Stock was ₹ 37,500. He owed ₹ 13,500 to Creditors for goods and his customers owed to him ₹ 15,000. Provide 5% for Depreciation on Furniture, Interest at 5% on wife’s Loan and ₹ 1,000 for Doubtful Debts.
Prepare the Cash Account, the Profit and Loss Account for the year ended 31st March, 2018 and the Balance Sheet at the close of the year.
Solution:

Question 36.
Vijay commenced business as foodgrains merchant on 1st April, 2017 with a capital of ₹ 4,00,000. On the same day, he purchased furniture for ₹ 80,000. From the following particulars obtained from his books which do not conform to Double Entry principles, you are required to prepare the Trading and Profit and Loss Account for the year ended 31st March, 2018 and the Balance Sheet as on that date:
Sales (including Cash Sales ₹ 2,00,000) – ₹ 5,00,000
Purchases (including Cash Purchases ₹ 1,20,000) – ₹ 4,00,000
Vijay’s Drawings (in cash) – ₹ 40,000
Salaries to Staff – ₹ 48,000
Bad Debts written off – ₹ 4,000
Trade Expenses paid – ₹ 16,000
Vijay used goods of ₹ 12,000 for private purposes during the year. On 31st March, 2018, his Debtors amounted to ₹ 1,40,000 and Creditors ₹ 80,000. Stock-in-Trade on that date was ₹ 1,60,000.
Solution:

Question 37.
Following information is obtained from the books of Vinay, who maintained his books of account under Single Entry System:

Vinay banks all receipts and makes payments by means of cheque.

From the above information, prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as on that date.
Solution:

Question 38.
Surya does not keep a systematic record of his transactions. He is able to give you the following information regarding his assets and liabilities:

Following additional information is also avialable for the year ended 31st March, 2018:

Bad Debts during the year were ₹ 900. As regards sale, Surya tells you that he always sells goods at Cost plus 25%. Furniture and Fittings are to be depreciated at 10% of the value in the beginning of the year.
Prepare Surya’s Trading and Profit and Loss Account for the year ended 31st March, 2018 and his Balance Sheet on that date.
Solution:

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TS Grewal Accountancy Class 11 Solutions Chapter 15 Financial Statements of Sole Proprietorship – Here are all the TS Grewal solutions for Class 11 Accountancy Chapter 15. This solution contains questions, answers, images, explanations of the complete Chapter 15 titled Financial Statements of Sole Proprietorship of Accountancy taught in Class 11. If you are a student of Class 11 who is using TS Grewal Textbook to study Accountancy, then you must come across Chapter 15 Financial Statements of Sole Proprietorship. After you have studied lesson, you must be looking for answers of its questions. Here you can get complete TS Grewal Solutions for Class 11 Accountancy Chapter 15 Financial Statements of Sole Proprietorship in one place.

TS Grewal Accountancy Class 11 Solutions Chapter 15 Financial Statements of Sole Proprietorship

Question 1.
State whether the following expenses are capital or revenue in nature:
(i) Expenses on whitewashing and painting of a building purchased to make it ready for use.
(ii) ₹ 10,000 spent on construction platform for a new machine.
(iii) Repair expenses of ₹ 25,000 incurred for whitewashing of factory building.
(iv) Purchased a new car.
Solution:

Expenditure	Reason
(i) Capital Expenditure	Paid to make an asset ready to use
(ii) Capital Expenditure	Paid to make an asset ready to use
(iii) Revenue Expenditure	Made for the maintenance of asset
(iv) Revenue Expenditure	Part of normal operating cost
(v) Capital Expenditure	Used in business for a number of years

Question 2.
State with reasons whether the following are Capital or Revenue Expenses:
(i) Excise duty paid on purchase of new machine.
(ii) Wages paid to install a machine.
(iii) Repairs carried out on existing car.
(iv) Office block of building repainted for ₹ 50,000.
(v) Paid telephone bill ₹ 2,500.
Solution:

Expenditure	Reason
(i) Capital Expenditure	Paid for the acquisition of new asset
(ii) Capital Expenditure	Paid to make the asset ready to use
(iii) Revenue Expenditure	Paid for the running and maintenance of car
(iv) Revenue Expenditure	Paid for the maintenance of Building
(v) Revenue Expenditure	Part of normal operating cost

Question 3.
From the following information determine Gross Profit for the year ended 31st March, 2018.

Solution:
Gross Profit = Sales + Closing Stock – (Opening Stock + Goods Purchased + Freight and Packing)
= 1,90,000 + 30,000 – (25,000 +1,40,000 + 10,000)
= 2,20,000 – 1,75,000
= Rs. 45,000
Note: Packing Expenses on sales (Rs.6,000) is not a Direct Expense. Thus, it not considered while computing the amount of Gross Profit.

Question 4.
Calculate Closing Stock from the following details:

Solution:
Gross Profit on cost = 33\(\frac { 1 }{ 3 }\) %.
Cost = \(\frac { 1 }{ 3 }\)rd.
Gross Profit on sales = \(\frac { 1 }{ 4 }\)th
And, Sales = Cash Sales + Credit Sales = 60,000+40,000 = Rs.1,00,000
So, Gross Profit = 1,00,000 x \(\frac { 1 }{ 4 }\) = Rs.25,000
Cost of Goods Sold = Sales – Gross Profit = 1,00,000 – 25,000 = Rs.75,000
Cost of Goods Sold = Opening Stock + Purchases – Closing Stock
75,000 = 20,000 + 70,000 – Closing Stock
Closing Stock = Rs.15,000

Question 5.
Prepare Trading Account from the transactions givne below:

Solution:

Question 6.
Ascertain Gross Profit the following:

Solution:

Note: Carriage on Sales and Office Rent are not a Direct Expense. Thus, it is not considered while computing the amount of Gross Profit.

Question 7.
From the following information prepare Trading Account for the year ended 31st March, 2018:

Net Realisable Value (Market Value) of stock as on 31st March, 2018 was ₹ 1,20,000.
Solution:

Note: According to the Principle of Conservatism, closing stock is valued at Cost or Market Price, whichever is less. Hence, closing stock is valued at Market Price (i.e., Rs.1,20,000)

Question 8.
From the following information, prepare Trading Account for the year ended 31st March, 2018:
Adjusted Purchases ₹ 6,60,000; Sales ₹ 7,44,000; Closing Stock ₹ 50,400; Freight and Carriage Inwards ₹ 3,600; Wages ₹ 6,000; Freight and Cartage Outwards ₹ 2,000.
Solution:

Note :
1. Freight and Carriage Outwards are not a Direct Expense. Thus, it is not recorded in the trading Account.
2. Adjusted Purchases = Opening Stock + Net Purchases – Closing Stock
Therefore, Closing Stock (Rs.50,400) is not considered while preparing Trading Account.

Question 9.
Following balances appear in the Trail Balance of a firm as on 31st March, 2018:

Prepare Trading Account of the firm.
Solution:

Note: Freight Outwards are not a Direct Expense. Thus, it is not recorded in the Trading Account.

Question 10.
From the following information, prepare Trading account for the year ended 31st March, 2018:
Adjusted Purchases ₹ 5,50,000; Sales ₹ 6,25,000; Freight and Carriage Inwards ₹ 3,000; Wages ₹ 7,000; Freight and Cartage Outwards ₹ 2,500; Closing Stock ₹ 50,000.
Solution:

Note :
1. Freight and Carriage Outwards are not a Direct Expense. Thus, it is not recorded in the Trading Account.
2. Adjusted Purchases = Opening Stock + Net Purchases – Closing Stock
Therefore, Closing Stock (Rs.50,000) is not considered while preparing Trading Account.

Question 11.
From the following figures, calculate Operating Profit:

Solution:
Calculation of Operating Profit
Operating Profit = Net Profit – Rent Received – Gain of sales of Machine + Interest on Loan + Donation
= 1,00,000 – 10,000 – 15,000 + 20,000 + 2,000
= Rs.97,000
Operating Profit = Rs.97,000

Question 12.
From the following, prepare Profit and Loss Account of Sohan Lal as it would appear in the 1st year that ended 31st March, 2018:

The Gross Profit was 45% of sales, which amounted to ₹ 6,50,000.
Solution:

Question 13.
From the following information, prepare Profit and Loss Account for the year ended 31st March, 2018:

Solution:

Question 14.
From the following particular, prepare Balance Sheet as at 31st March, 2018:

Solution:

Question 15.
From the following information, prepare Balance Sheet of a trader as at 31st March, 2018 arranging the assets and liabilities-
(i) in order of permanence and
(ii) in order of liquidity:

Solution:

Question 16.
From the Balance Sheet given below, calculate:
(i) Fixed Assets
(ii) Current Assets
(iii) Current Liabilities
(iv) Working Capital

Solution:
i. Calculation of Fixed Asset
Fixed Assets = Land + Plant + Furniture + Goodwill = 20,000 + 32,000 + 8,000 + 20,000 = Rs.80,000
ii. Calculation of Current Assets
Current Assets = Stock + Debtors + Prepaid Expenses = 48,000 + 36,000 + 400 = Rs.84,400
iii. Calculation of Current Liabilities
Current Liabilities = Creditors + Expenses Accrued + Bank Overdraft + Interest on Loan = 42,000 + 3,200 + 4,800 + 1,000 = Rs. 51,000
iv. Calculation of Working Capital
Working Capital = Current Assets – Current Liabilities = 84,400 – 51,000 = Rs.33,400

Question 17.
Prepare Trading and Profit and Loss Account and Balance Sheet of Jagat Shah as at 31st March, 2018 from the following balances:

The Closing Stock was valued at ₹ 2,00,000.
Solution:

Question 18.
From the following balances, prepare Trading and Profit and Loss Account and Balance Sheet:

Closing Stock was valued at ₹ 30,000.
Solution:

Question 19.
The following are the balances as on 31st March, 2018 extracted from the books of Dass:

The stock on 31st March, 2018 was valued at ₹ 2,40,000.
You are required to prepare Trading Account, Profit and Loss Account and Balance Sheet as at 31st March, 2018.
Solution:

Question 20.
From the following balances of Anand, prepare Trading Account, Profit and Loss Account and Balance Sheet as at 31st March, 2018:

Value of goods on hand (31st March, 2018) was ₹ 1,43,000.
Solution:

Question 21.
From the following balances, prepare Final Accounts of M./s. Raja & Sons for the year ended 31st March, 2018:
Salary ₹ 5,400; Insurance ₹ 2,500; Cash ₹ 400; Purchases ₹ 84,170; Rent Received ₹ 3,150; Drawings ₹ 2,100; Bills Payable ₹ 3,900; Debtors ₹ 38,080; Stock (1st April, 2017) ₹ 29,500; Bank Overdraft ₹ 9,700; Carriage ₹ 2,200; Creditors ₹ 4,200; Trade Expenses ₹ 4,900; Sales Return ₹ 4,700; Machinery ₹ 12,000; Wages ₹ 45,000; Sales ₹ 1,47,200; Purchases Return ₹ 3,900; Capital ₹ 58,900; Closing Stock (31st March, 2018) ₹ 36,200.
Solution:

Question 22.
From the following balances, prepare Final Accounts of M./s. Mangal & Sons for the year ended 31st March, 2018:
Opening Stock ₹ 12,500; Bills Receivable ₹ 2,000; Sales ₹ 70,000; Purchases ₹ 37,500; Creditors ₹ 20,000; Salaries ₹ 3,850; Insurance ₹ 200; Debtors ₹ 32,500; Carriage ₹ 1,450; Commission ₹ 750; Interest ₹ 900; Printing ₹ 250; Bills Payable ₹ 3,150; Returns In ₹ 1,300; Returns Out ₹ 500; Bank ₹ 5,250; Rent and Taxes ₹ 1,300; Furniture ₹ 1,000; Capital ₹ 7,100; Stock on 31st March, 2018 ₹ 15,000.
Solution:

Question 23.
From the following balances, prepare Trading and Profit and Loss Account and the Balance Sheet:

Closing Stock was of ₹ 70,000 but its net realisable value was estimated at ₹ 60,000.
Solution:

Note: According to the Principle of Conservatism, closing stock is valued as whichever is less. Hence, closing stock is valued at (i.e., Rs.60,000)

Question 24.
From the following balances taken from the books of Hari & Co., prepare Trading and Profit and Loss Account for the year ended 31st March, 2018
and Balance Sheet as at that date:

Closing Stock was valued at ₹ 1,82,100.
Solution:

Question 25.
From the following balances, as on 31st March, 2018, prepare Trading and Profit and Loss Account and Balance Sheet:

Closing Stock on 31st March, 2018 was valued at ₹ 14,500.
Solution:

Question 26.
Trial Balance of Chatter Sen on 31st March, 2018 revealed the following balances:

Stock on 31st March, 2018 was valued at ₹ 35,000. Prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at the date.
Solution:

Question 27.
Following Trial Balance is extracted from the books of a merchant on 31st March, 2018:

Stock in Hand on 31st March, 2018 was valued at ₹ 32,500.
From the above, prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at that date.
Solution:

Question 28.
The following balances were extracted from the books of Harish Chandra on 31st March, 2018:

Stock on 31st March, 2018 was valued at ₹ 2,35,000.
Prepare final accounts for the year ended 31st March, 2018.
Solution:


Setting-off GST:
Input CGST + Input SGST – Output IGST = 15,000 + 15,000 – 30,000 = NIL

Question 29.
From the following Trial Balance and additional information of Mr. Gaurav, a proprietor, prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Seet as at that date:

Closing Stock at cost ₹ 1,00,000 but its market value is ₹ 88,500.
Solution:

We hope the TS Grewal Accountancy Class 11 Solutions Chapter 15 Financial Statements of Sole Proprietorship help you. If you have any query regarding TS Grewal Accountancy Class 11 Solutions Chapter 15 Financial Statements of Sole Proprietorship, drop a comment below and we will get back to you at the earliest.

TS Grewal Accountancy Class 11 Solutions Chapter 14 Adjustments in Preparation of Financial Statements – Here are all the TS Grewal solutions for Class 11 Accountancy Chapter 14. This solution contains questions, answers, images, explanations of the complete Chapter 14 titled Adjustments in Preparation of Financial Statements of Accountancy taught in Class 11. If you are a student of Class 11 who is using TS Grewal Textbook to study Accountancy, then you must come across Chapter 14 Adjustments in Preparation of Financial Statements. After you have studied lesson, you must be looking for answers of its questions. Here you can get complete TS Grewal Solutions for Class 11 Accountancy Chapter 14 Adjustments in Preparation of Financial Statements in one place.

TS Grewal Accountancy Class 11 Solutions Chapter 14 Adjustments in Preparation of Financial Statements

Question 1.
Following are the balances extracted from the books of Manish Gupta on 31st March, 2018:

Prepare Trading and Profit and Loss Account and Balance Sheet as at 31st March, 2018 after following adjustments are made:
(i) Closing Stock was ₹ 16,000.
(ii) Depreciate Plant and Machinery @ 10% and Delivery Vehicle @ 15%.
(iii) Unpaid Rent amounted to ₹ 500.
Solution:

Question 2.
Prepare Trading and Profit and Loss Account and Balance Sheet from the following balances relating to the year ended 31st March, 2018:

Additional Information:
(i) Closing Stock was valued at ₹ 14,500.
(ii) Depreciate Plant and Machinery by ₹ 4,000.
(iii) Write off Bad Debts ₹ 5,000.
(iv) A sum of ₹ 400 is due for repairs.
Solution:

Question 3.
Following Trial Balance has been extracted from the books of M/s. Ram Prasad & Sons on 31st March, 2018:

Additional Information:
(i) Outstanding salaries were ₹ 45,000.
(ii) Depreciate Machinery at 10%.
(iii) Wages outstanding were ₹ 5,000.
(iv) Rent prepaid ₹ 10,000.
(v) Provide for interest on capital 5% per annum.
(vi) Stock on 31st March, 2018 ₹ 8,00,000.
Prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at that date.
Solution:

Question 4.
From the following Trial Balance of M/s. Shradha & Sons as on 31st March, 2018, prepare Trading and Profit and Loss Account and Balance Sheet.

Adjustments:
(i) Closing Stock ₹ 64,000.
(ii) Wages outstanding ₹ 2,400.
(iii) Bad Debts ₹ 600.
(iv) Provision for Doubtful Debts to be 5%.
(v) Rent is paid for 11 months.
(vi) Insurance premium is paid per annum, ended 31st May, 2018.
(vii) Loan from the bank was taken on 1st October, 2017.
(viii) Provide Depreciation on machinery @ 10% and on Furniture @ 5%.
Solution:

Question 5.
Trial Balance of a business as at 31st March, 2018 is given below:

Prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at that date after taking into account the following adjustments:
(i) Closing Stock was valued at ₹ 7,000.
(ii) Outstanding liabilities for wages were ₹ 600 and salaries ₹ 1,400.
(iii) Depreciation is to be provided @ 5% p.a. on all fixed assets.
(iv) Included in Plant and Machinery is a machine purchased for ₹ 10,000 on 1st October, 2017.
(v) Insurance premium paid in advance ₹ 200.
Solution:

Question 6.
​Following are the balances extracted from the books of Narain Lal on 31st March, 2018:​

Additional Information:
(i) Closing Stock as on 31st March, 2018 was ₹ 2,00,600.
(ii) Depreciate: Business Premises by ₹ 3,000 and Furniture and Fittings by ₹ 2,500.
(iii) Make a provision of 5% on debtors for doubtful debts.
(iv) Carry forward ₹ 2,000 for unexpired insurance.
(v) Outstanding salary was ₹ 15,000.
Prepare Trading and Profit and Loss Account for the year and Balance Sheet as at that date.
Solution:

Question 7.
Following balances are taken from the books of Mr. Niranjan. You are required to prepare Trading and Profit and Loss Account and Balance Sheet for the year ended 31st March, 2018:

Adjustments:
(i) Closing Stock ₹ 75,000.
(ii) Depreciate Machinery by 10% and Furniture by 20%.
(iii) Wages ₹ 5,000 and salaries ₹ 2,000 are outstanding.
(iv) Write off ₹ 5,000 as further Bad Debts and create 5% Provision for Doubtful Debts.
(v) Investments were made on 1st July, 2017 and no interest has been received so far.
Solution:

Question 8.
From the following Trial Balance of Mahesh, prepare his Final Accounts for the year ended 31st March, 2018:


Additional Information:
(i) Closing Stock on 31st March, 2018 was ₹ 21,000.
(ii) Rent of ₹ 1,200 has been received in advance.
(iii) Outstanding liability for trade expenses ₹ 12,000.
(iv) Commission earned during the year but not received was ₹ 2,100.
(v) Goods costing ₹ 2,000 were taken by the proprietor for his personal use but no entry has been passed in the books of account.
Solution:

Question 9.
Following balances were extracted from the books of Vijay Kumar on 31st March, 2018:

Prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at that date after giving effect to the following adjustments:
(a) Stock as on 31st March, 2018 was valued at ₹ 2,30,000.
(b) Write off further ₹ 1,800 as Bad Debts and maintain the Provision for Doubtful Debts at 5%.
(c) Depreciate Machinery at 10%.
(d) Provide ₹ 7,000 as outstanding interest on loan.
Solution:

Question 10.
Following Trial Balance has been extracted from the books of Shri Sunder Lal on 31st March, 2018:


Closing Stock on 31st March, 2018 was ₹ 12,74,000. You are required to prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at that date after making the following adjustments:
(a) Depreciate Plant and Machinery @ 10% and Furniture @ 5%.
(b) Provision for Doubtful Debts to be maintained at ₹ 1,50,000.
(c) Insurance includes annual premium of ₹ 7,200 on a policy which will expire on 30th September, 2018.
(d) Purchases include a computer costing ₹ 60,000 purchased on 1st July, 2017 and is subject to depreciation @ 10% p.a.
Solution:



Working Note:
Calculation of Computer Depreciation
Computer Purchases 1 July 2017 = 60,000
Depreciation = 10%
Computer Depreciation= 60,000 × 10% × 9months = 4,500
Note: As per this Question correct Net Profit is Rs.1,86,200, while, as per the book solution is Net Profit Rs.1,82,600.

Question 11.
Sanjiv Sondhi started business on 1st April, 2017 with a capital of ₹ 3,00,000. Following Trial Balance was drawn up from his books at t he end of the year:

Value of Stock as on 31st March, 2018 was ₹ 2,60,000. You are required to prepare his Trading and Profit and Loss Account for the year ended 31st March 2018 and Balance Sheet as at that date after taking the following facts into account:
(a) Plant and Fixtures are to be depreciated by 10%.
(b) Salaries outstanding on 31st March, 2018 amounted to ₹ 35,000.
(c) Accrued Interest on investment amounted to ₹ 7,500.
(d) ₹ 5,000 are Bad Debts and a Provision for Doubtful Debts is to be created at 5% of the balance of debtors.
Solution:

Question 12.
Following Trial Balance were extracted from the books of Ram as on 31st March, 2018:

Prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at that date after taking into account the following:
(a) Depreciation is to be written off as follows: Leasehold premises 5%. Plant and Machinery 10%.
(b) Write off ₹ 5,000 as further Bad Debts and make a Provision for Doubtful Debts equal to ₹ 5,000.
(c) Wages amounted to ₹ 5,700 have become due but have not been paid.
(d) Wages include ₹ 10,000 incurred on installation of new machine. Machine was installed on 1st April, 2017.
(e) The value of stock on 31st March, 2018 was ₹ 1,49,200.
(f) Unexpired premium amount to ₹ 6,800 is to be carried forward to the next year.
Solution:



Note: Wages installation of machinery increases the value of machinery and reduces the value of wages.

Question 13.
From the following Trial Balance of M/s Arjun and Sons as on 31st March, 2018, prepare Trading and Profit and Loss Account and Balance Sheet:

Adjustments:
(i) Closing Stock ₹ 6,40,000.
(ii) Wages Outstanding ₹ 24,000.
(iii) Bad Debts ₹ 6,000 and Provision for Bad and Doubtful Debts to 5% on Debtors.
(iv) Rent is paid for 11 months.
(v) Loan from bank was taken on 1st October, 2017.
(vi) Provide Depreciation on Machinery @ 10% p.a.
(vii) Provide Manager’s Commission at 10% on net profit after charging such commission.
Solution:

Question 14.
From the following Trial Balance and other information prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at that date:

Stock on 31st March, 2018 was ₹ 1,24,500. Rent was unpaid to the extent of ₹ 850 and ₹ 1,500 were outstanding for General Expenses; ₹ 4,000 are to be written off as bad debts out of the above debtors; and 5% is to be provided for doubtful debts. Depreciate Plant and Machinery by 10% and Business Premises by 2%.
Manager is entitled to a commission of 5% on net profit after charging his commission.
Solution:


Note: During the year firm has incurred a loss of Rs. 42,750. Therefore, manager commission given in the question as 5% on Net profit after charging commission is not payable.

Question 15.
Following is the Trial Balance of Mr. Bharat on 31st March, 2018.


Following adjustments are to be made:
(a) Stock on 31st March, 2018 – ₹ 52,000.
(b) Three months factory lighting and heating due but not paid – ₹ 300.
(c) 5% depreciation to be written off on furniture.
(d) Write off further Bad Debts – ₹ 700.
(e) Provision for Doubtful Debts to be increased to ₹ 3,000 and Provision of Discount on Debtors @ 2% to be made.
(f) During the year, machinery was purchased for ₹ 20,000 but it was debtied to the Purchases Account.
You are required to prepare Trading Account, Profit and Loss Account and Balance Sheet.
Solution:

Question 16.
From the following Trial Balance, prepare Trading Account, Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at the date:

Following adjustments are to be considered:
(i) Closing Stock ₹ 15,270.
(ii) Printing and Stationery expenses due ₹ 58,650.
(iii) Outstanding liabilities for salaries ₹ 12,000.
(iv) An old machine value at ₹ 12,000 (Book Value of which was ₹ 2,000) was given in exchange for a new machine purchased on 1st April, 2017. The machine given in exchange was not recorded in the books. Cheque issued for new machine purchased was accounted in the books of account.
(v) Depreciation @ 10% p.a. is to be provided on all fixed assets except building.
Solution:

Question 17.
Following balances were extracted from the books of Modern Traders on 31st March, 2018:

Prepare Final Accounts for the year ended 31st March, 2018 after taking into account the following:
(a) Stock on 31st March, 2018 was valued at ₹ 1,50,000.
(b) Outstanding Wages ₹ 5,000.
(c) Provision for Doubtful Debts is to be maintaind at 5% of the Sundry Debtors.
(d) Prepaid Insurance was ₹ 1,000.
(e) An advance paid by the proprietor from his personal bank account of ₹ 50,000 for purchase of a machine on 1st April, 2017 was not recorded in the books. Plant and Machinery was not debited in the books by the amount paid from firm.
(f) Provide Depreciation on Plant and Machinery @ 10% on cost and on Furniture @ 5%.
Solution:



Note: Advance paid by proprietor for Purchased of Plant and Machinery 1st April 2016 out of his personal bank account but not recorded in the books. Therefore, will increase the Plant and Machinery Account and Capital Account balance by Rs.50,000. And also increase in the amount of depreciation by Rs.5,000.

Question 18.
From the following Trial Balance of Shubdo Banerjee, prepare final accounts for the year ended in 31st March, 2018 and Balance Sheet as at that date:


The following adjustments be taken care of:
(i) Depreciate Land and Building @ 6%, Plant and Machinery @ 10%, Office equipments @ 20% and Furniture and Fixtures @ 15%.
(ii) Calculate Provision for Doubtful Debts at 2% on Debtors.
(iii) Insurance premium includes ₹ 250 paid in advance.
(iv) Provide salary to Banerjee ₹ 15,000 p.a.
(v) Outstanding Salaries ₹ 11,500.
(vi) 10% of the final profit is to be transferred to General Reserve.
Solution:

Question 19.
Following is the Trial Balance as on 31st March, 2018. Prepare Trading and Profit and Loss Account and Balance Sheet:

You are to make adjustments in respect of the following:
(a) Depreciate Machinery at 10% p.a.
(b) Make a provision @ 5% for Doubtful Debts.
(c) Provide discount on debtors @ 2\(\frac { 1 }{ 2 }\) %.
(d) Rent includes Rent deposit of ₹ 400.
(e) Insurance Prepaid ₹ 120.
Solution:

Question 20.
Following is the Trial Balance obtained from the books of Mr. Vishwanath on 31st March, 2018:

You are required to prepare Mr. Vishwanath’s Trading and Profit and Loss Account for the year ended 31st March, 2018 and his Balance Sheet as at that date after taking into account the following adjustments:
(a) Stock on 31st March, 2018 was ₹ 15,600.
(b) Depreciate Motor Van and Plant and Machinery by 10% p.a. and Computers @ 20% p.a.
(c) Create Provision for Doubtful Debts @ 5%.
(d) General Expenses include ₹ 2,000 paid of wages.
Solution:

Question 21.
Followingt Trial Balance has been extracted from the books of Santosh on 31st March, 2018:


Following additional information is available:
(a) Stock on 31st March, 2018 was ₹ 3,08,000.
(b) Depreciation is to be charged on Plant and Machinery at 5% and Furniture and Fixtures at 6%. Loose Tools are revalued at ₹ 1,60,000.
(c) Provision for Doubtful Debts is to be maintained at 5% on Sundry Debtors.
(d) Remuneration of ₹ 20,000 paid to Shri B. Barua, a temporary employee, stands debited to his personal account and it is to be corrected.
(e) Unexpired insurance was ₹ 4,000.
You are to prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at that date.
Solution:

Question 22.
Prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at that date from the following Traial Balance:

Adjustments:
(i) Salaries ₹ 1,000 and Taxes ₹ 2,000 are outstanding but Insurance ₹ 500 is prepaid.
(ii) Commission ₹ 1,000 received in advance for the next year.
(iii) Interest ₹ 2,100 is to be received on Deposits and Interest and Bank Loan ₹ 3,000 is to be paid.
(iv) Provision for Doubtful Debts to be maintained at ₹ 10,000.
(v) Depreciate Furniture by 10%.
(vi) Stock on 31st March, 2018 is ₹ 45,000.
(vii) A fire occurred on 1st April, 2018 destroying goods costing ₹ 10,000. These goods were purchased paying CGST and SGST @ 6% each.
Solution:

Question 23.
​The Trial Balance of M/s. Taj & Co. as on 31st March, 2018 was as follows:​

Prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet after considering the following information:
(i) Depreciation on Furniture @ 10% to be charged.
(ii) Sundry Debtors include ₹ 500 due from a customer who has become insolvent.
(iii) Provision for Doubtful Debts @ 5% on Sundry Debtors is to be maintained.
(iv) Goods costing ₹ 1,500, purchased paying CGST and SGST @ 9% each, were destroyed by fire and insurance company admitted a claim for ₹ 1,000.
(v) Stock on 31st March, 2018 was ₹ 12,550.
Solution:

Question 24.
From the following Trial Balance of Mr. Gaurav and additional information given, prepare Trading and Profit and Loss Account for the year ended 31st March,2018 and Balance Sheet as at 31st March, 2018:​

Adjustments:
(i) Value of the Closing Stock as on 31st March, 2018 is ₹ 50,000.
(ii) Wages and Salaries outstanding are ₹ 12,500 and Insurance prepaid is ₹ 5,000.
(iii) Depreciate Machinery and Furniture @ 10% and 15% p.a. respectively. Machinery included a machine which was purchased for ₹ 38,500 on 30th September, 2017.
(iv) Goods costing ₹ 10,000 were taken by the proprietor for his personal use but no entry has been made in the books of account. These goods were purchased paying IGST @ 18%.
Solution:

Question 25.
Following is the Trial Balance of Shri Bansi Lal as on 31st March, 2018. You are required to prepare Final Accounts:

Following adjustments are to be made:
(a) Stock on 31st March, 2018 was valued at ₹ 68,000.
(b) Provision for Doubtful Debts is to be created to the extent of 5% on Debtors.
(c) Depreciate Machinery by 10% and Patents by 20%.
(d) Wages include a sum of ₹ 20,000 spent on the erection of a cycle shed for employees and customers.
(e) Salaries for the month of March, 2018 amounted to ₹ 15,000 were unpaid.
(f) Insurance includes a premium of ₹ 1,700 on a policy expiring on 30th September, 2018.
Solution:

Question 26.
From the following Trial Balance of M/s. Ram Lal and Sons, prepare Trading, Profit and Loss Account for the year ending 31st March, 2018 and a Balance Sheet as on that date:​


Adjustments:
(i) The cost of stock on 31st March, 2018 was ₹ 37,000. However, its market value was ₹ 35,000.
(ii) Wages outstanding were ₹ 6,000 and salaries outstanding were ₹ 5,000 on 31st March, 2018.
(iii) Depreciate Land and Building @ 2\(\frac { 1 }{ 2 }\) %, Plant and Machinery @ 10% p.a. and Furniture @ 15 p.a.
(iv) Purchase includes purchase of machinery for ₹ 10,000 on 1st October, 2017.
(v) Debtors include bad debts of ₹ 2,000. Maintain a provision for doubtful debts @ 10% on Debtors.
Solution:

Question 27.
Following is the Trial Balance of Mr. S. Kapur on 31st March, 2018:​


Taking into account the following adjustments, prepare Trading and Profit and Loss Account and Balance Sheet:
(a) Stock in Hand on 31st March, 2018 is ₹ 1,36,000.
(b) Machinery is to be depreciated @ 10% and patents @ 20%.
(c) Salaries for the month of March, 2018 amounting to ₹ 30,000 were unpaid.
(d) Insurance includes a premium of ₹ 1,700 for the year ending 31st March, 2019.
(e) Wages include a sum of ₹ 40,000 spent on constructing a scooter shed for employees and customers.
(f) Provision for Doubtful Debts is to be created to the extent of 5% on Sundry Debtors.
Solution:

Question 28.
Following is the Trial Balance of Shri Paras on 31st March, 2018:

Following adjustments are made:
(a) Stock on 31st March, 2018 was valued at ₹ 68,000.
(b) Provision for Doubtful Debts is to be made to the extent of 5% on Sundry Debtors.
(c) Depreciate Machinery by 10%, Patents 20% and Building 5%.
(d) Wages include a sum of ₹ 20,000 spent on constructiion of a cycle shed.
(e) Salaries for the months of February and March, 2018 were not paid.
(f) Insurance includes a premium of ₹ 1,700 on a policy expiring on 30th September, 2018.
(g) General Manager is entitled to a commission of 10% on the net profit after charging his commission.
You are required to prepare Final Accounts after giving effects to the adjustments.
Solution:


Note: There’s a misprint in the book. The correct Net Profit should be Rs.1,19,753 and not Rs.1,19,773 as given.

Question 29.
Following is the Trial Balance of Atam Prakash as on 31st March, 2018:

Adjustments:
(i) Stock on 31st March, 2018 was valued at ₹ 5,30,000.
(ii) Salaries have been paid so far for 11 months only.
(iii) Unexpired insurance is ₹ 1,000.
(iv) Commission earned but not yet received amounting to ₹ 1,220 plus IGST @ 12% is to be recorded in books of account.
(v) Provision for Doubtful Debts is to be bought up 3% of Sundry Debtors.
(vi) Manager is to be allowed a commission of 10% on net profits after charging such commission.
(vii) Furniture is depreciated @ 10% p.a.
(viii) Only one-fourth of advertisement expenses are to be written off.
Prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as on that date.
Solution:

Question 30.
Following balances were extracted from the books of Modern Traders on 31st March, 2018:

Prepare Profit and Loss Account for the year ended 31st March, 2018 and the Balance Sheet as at that date giving effect to the following:
(a) Closing Stock was ₹ 1,50,000.
(b) Wages Outstanding were ₹ 5,000.
(c) Provision for Doubtful Debts is to be maintained at 5% of Sundry Debtors.
(d) Depreciate Plant and Machinery by 10% and Furniture by 5% on Straight Line Method.
(e) Sundry Creditors include ₹ 10,000 due to Nayak who is also included in Sundry Debtors at ₹ 15,000.
(f) New furniture for ₹ 12,000 was purchased on 1st April, 2017. Old furniture valued at ₹ 2,000 was exchanged and balance was paid by cheque. Purchase of furniture was recorded at the net value of furniture, i.e., ₹ 10,000. The firm had purchased this furniture paying IGST @ 18%.
(g) A fire occurred on 27th March, 2018 destroying stock costing ₹ 10,000, which were purchased paying CGST and SGST @ 9% each. Insurance company conveyed acceptance of claim of ₹ 7,500 on 10th April, 2018. Final accounts were prepared on 1st July, 2018.
Solution:

Question 31.
On 31st March, 2018 the following Trial Balance was extracted from the books of Mohan:


Prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at that date after taking into account the following:
(a) Stock as at 31st March, 2018 was valued at ₹ 70,000.
(b) All debtors are considered good for recovery.
(c) Depreciate Motor Vehicles by 20%.
(d) Bank intimation of customer’s cheque of ₹ 10,000 being dishonoured is not recorded in the books.
(e) Travelling expenses of ₹ 5,000 paid to sales person was wrongly debited to his Personal Account and was included in debtors.
(f) Amount of ₹ 6,000 received from Ronit was credited to his account and was included in creditors. This amount was written off as bad debt in earlier years.
(g) Drawings included an amount of ₹ 2,000 being amount drawn in cash. It was used by Mohan for Purchase of stationery used in business.
Solution:

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TS Grewal Accountancy Class 11 Solutions Chapter 13 Rectification of Errors – Here are all the TS Grewal solutions for Class 11 Accountancy Chapter 13. This solution contains questions, answers, images, explanations of the complete Chapter 13 titled Rectification of Errors of Accountancy taught in Class 11. If you are a student of Class 11 who is using TS Grewal Textbook to study Accountancy, then you must come across Chapter 13 Rectification of Errors. After you have studied lesson, you must be looking for answers of its questions. Here you can get complete TS Grewal Solutions for Class 11 Accountancy Chapter 13 Rectification of Errors in one place.

TS Grewal Accountancy Class 11 Solutions Chapter 13 Rectification of Errors

Question 1.
How will you rectify the following errors?
(i) Purchases Book is overcast by ₹ 10,000.
(ii) Purchases Return Book is overcast by ₹ 1,000.
(iii) Purchases Return Book’s balance is carried forward in excess by ₹ 100.
(iv) Purchases Book’s balance is carried forward in excess by ₹ 1,000.
Solution:

Question 2.
How will you rectify the following errors?
(i) Sales Book is short casted by ₹ 5,000.
(ii) Sales Return Book is short casted by ₹ 500.
(iii) Balance of Sales Book is carried forward short by ₹ 1,000.
(iv) Balance of Sales Return Book is carried forward short by ₹ 100.
Solution:
b

Question 3.
How will you rectify the following errors?
(i) Sales Book is overcast by ₹ 5,000.
(ii) Sales Return Book is short casted by ₹ 500.
(iii) Balance of Sales Book is carried forward in excess by ₹ 1,000.
(iv) Balance of Sales Return Book is carried forward in excess by ₹ 100.
Solution:

Question 4.
Rectify the following errors assuming that there is no Suspense Account:
(i) Salary of ₹ 5,000 paid to Rahul was not posted to Salaries Account.
(ii) Sales to Amrish of ₹ 1,430 posted to his account as ₹ 1,340.
(iii) Sales to Vijay of ₹ 2,470 posted to his account as ₹ 2,740.
(iv) Purchases from Pal of ₹ 1,430 posted to his account as ₹ 1,340.
Solution:

Question 5.
Which of the following errors will affect the Trial Balance?
(i) The total of the Sales Book has not been posted to the Sales Account.
(ii) ₹ 1,000 paid as installation charges of a new machine has been debited to Repairs Account.
(iii) Goods costing ₹ 4,000 taken by the proprietor for personal use have debited to Debtors Account.
(iv) ₹ 1,000 paid for repairs to building have been debited to Building Account.
Solution:
The correct answer is option (i).
Total of Sales book has not been posted to Sales Account will affect the Trial Balance because due to undercast of Sales Accounts results in undercasting of credit side of the Trial Balance.

Question 6.
Rectify the following errors:
(i) The Sales Book of December was added short by ₹ 500.
(ii) A periodical total of the Purchases Book was cast short by ₹ 5,000.
(iii) The total of Purchases Return Book has been undercast by ₹ 1,500.
(iv) The Sales Return Book is added ₹ 200 short.
Solution:

Question 7.
Rectify the following errors assuming that there is no Suspense Account:
(i) The Returns Inward Book has been overcast by ₹ 200.
(ii) Purchases Book carried forward ₹ 75 less.
(iii) Sales Book carried forward ₹ 41 less on Page 10 and ₹ 43 more on Page 12.
(iv) Goods sold to Gautam were posted as ₹ 215 instead of ₹ 251.
Solution:

Question 8.
Following errors are discovered in the books of Sh. Ram Lal. Make the necessary entries to rectify them:
(i) Purchases Journal was undercast by ₹ 2,150.
(ii) ₹ 500 received from K. Krishna was debited to his account.
(iii) An amount of ₹ 3,000 withdrawn by the proprietor of the firm for his personal use was posted to the Travelling Expense Account.
(iv) An amount of ₹ 175 for a credit sale to R. Gopalan correctly entered in the Sales Book, has been debited to his account as ₹ 157.
Solution:

Question 9.
Pass the Journal entries rectifying the following errors:
(i) Purchases for ₹ 10,000 was omitted to be recorded.
(ii) Purchases of office furniture of ₹ 10,000 was recorded in Purchases Book.
(iii) Office Rent of ₹ 15,000 was debited to the Personal Account of the landlord.
(iv) Old machine was sold for ₹ 5,000 was credited to Sales Account.
Solution:

Question 10.
Following errors affecting the accounts of the year 2016-17 were detected in the books of Das & Co., Meerut:
(i) Sale of old furniture for ₹ 5,000 was treated as sales of goods.
(ii) Rent of proprietor’s residence ₹ 6,000 was debited to Rent Account.
(iii) Cash received from Rajesh ₹ 2,150 was credited to Brajesh.
Pass the rectifying Journal entries. State the nature of each of these mistakes.
Solution:

Question 11.
Rectify the following errors:
(i) Purchases Book has been undercast by ₹ 1,000.
(ii) Credit sale to Anu Prakash ₹ 7,000 was recorded in Purchases Book.
(iii) Credit sale to Rahul ₹ 7,000 was recorded as ₹ 700.
Solution:

Note: In the book, this transaction is incomplete, thus it has been assumed that Credit sales to Rahul was recorded as Rs.700 instead of Rs.7,000

Question 12.
Rectify the following errors:
(i) Total of one page of the Sales Book was carried forward to the next page as ₹ 2,785 instead of ₹ 2,587.
(ii) A cheque of ₹ 400 received from Mohan was dishonoured and had been posted to the debit side of the ‘Allowance Account’.
(iii) Return of goods worth ₹ 5,000 by a customer was entered in the Purchases Return Book.
(iv) Sum of ₹ 200 owed by ‘X’ has been included in the list of Sundry Creditors.
(v) Sale of old furniture worth ₹ 430 was credited to the Sales Account as ₹ 340.
Solution:

Question 13.
Rectify the following errors:
(i) Purchases Book is overcast by ₹ 500.
(ii) Salary paid to an employee, Mr. Ajay, is debited to his Personal account ₹ 3,000.
(iii) Goods sold to Shashi on credit ₹ 300 have been wrongly passed through the Purchases Book.
(iv) Total of returns inward has been added ₹ 9 short.
(v) Purchase of chair from Happy Traders for ₹ 35 has been entered in the Purchases Books as ₹ 53.
Solution:

Question 14.
Correct the following errors in Mohan Lal’s Book:
(i) A payment of ₹ 5,000 for salaries (to Mr. Ram) has been posted twice to the Salaries Account.
(ii) ₹ 750 received from Rajesh are entered on the debit side of the Cash Book. No posting was done in Rajesh’s Account.
(iii) Sales Book was overcast by ₹ 3,000.
(iv) Goods (Cost ₹ 2,000, Sales Price ₹ 2,500) distributed as free simples among prospective customers were not recorded anywhere.
Solution:

Question 15.
Rectify the following errors:
(i) Sales to Vinod of ₹ 143 posted to his account as ₹ 134.
(ii) Sales to Vinod of ₹ 143 debited to his account as ₹ 134.
(iii) Sales to Vinod of ₹ 143 credited to his account as ₹ 134.
Solution:

Question 16.
Give the rectifying entries of the following:
(i) Sales of ₹ 20,000 to Manoj were recorded as ₹ 2,000 in the Sales Book.
(ii) An amount of ₹ 25,000 spent for the extension of machinery has been debited to the Wages Account.
(iii) Discount received from Ram & Co. ₹ 350, has not been entered in the discount column of the Cash Book.
(iv) Goods of ₹ 3,000 sold to Mahesh were recorded in the Purchases Book.
Solution:

Question 17.
Correct the following errors in Mohan Lal’s Book:
(i) A sum of ₹ 1,500 written off as depreciation on furniture has not been debited to the Depreciation Account.
(ii) Returns Outward Journal has been overcast by ₹ 85.
(iii) Basudev returned goods worth ₹ 500; his account was debited by this amount.
(iv) Purchase from Krishna Mohan of ₹ 2,250 has been debited to his account.
Solution:

Question 18.
Correct the following errors in Hari’s Books:
(i) Credit sale of ₹ 132 to R. Krishan correctly entered in Sales Journal but posted to his account as ₹ 312.
(ii) The total of the credit side of Ramesh’s Account was overcast by ₹ 2,000.
(iii) Total of the Purchases Journal of ₹ 5,250 has been posted to Purchases Account as ₹ 5,205.
(iv) Printer purchased from R. Ltd. for ₹ 4,000 on credit was entered in the Purchases Book.
(v) An item of ₹ 2,000 entered in the Sales Return Book was posted to the debit of Pandey who had returned the goods.
Solution:

Question 19.
Rectify the following errors:
(i) A purchase of ₹ 5,000 from Ram was omitted to be entered in the Purchases Book.
(ii) A credit sale of ₹ 257 to Messrs Goodluck & Co. was recorded as ₹ 275.
(iii) A purchase of office furniture for ₹ 500 from Salwan Furnitures was entered through the Purchases Book.
(iv) Rent paid to Landlord ₹ 500 was debited to his Personal Account.
(v) A debt balance of ₹ 2,000 on the Personal Account of Mr. John (correctly shown in the Ledger) has been omitted when extracting a Trial Balance.
Solution:

Question 20.
Mukesh found that the Trial Balance did not agree. He found the following errors:
(i) In the Sales Book for the month of January, total of Page No. 3 was carried forward to Page No. 4 as ₹ 1,000 instead of ₹ 1,200 and total of Page No. 7 was carried forward to Page No. 8 as ₹ 5,600 instead of ₹ 5,000.
(ii) Goods returned to Anshuka ₹ 10,000 were recorded in the Sales Book.
(iii) Bill Receivable for ₹ 800 from Riya was dishonoured and posted to the debit of Allowances Account.
Solution:

Question 21.
Pass the rectifying entries for the following:
(i) Sales of goods ₹ 6,000 to Madan were recorded as ₹ 600 in the Sales Book.
(ii) Credit purchase of goods from Mohan amounting to ₹ 2,000 has been wrongly passed through the Sales Book.
(iii) Return of goods worth ₹ 500 by a customer was entered in ‘Purchases Return Book’.
(iv) Cheque of ₹ 400 received from Ranjan was dishonoured and debited to the Discount Account.
(v) Bill for ₹ 820 received from Ramesh for repair of machinery was entered in the Purchases Book as ₹ 720.
Solution:

Question 22.
Give rectifying Journal entries for the following errors:
(i) Sales of goods to Madan ₹ 6,000 were entered in the Sales Book as ₹ 600.
(ii) Credit purchase of ₹ 1,500 from Ajay has been wrongly passed through the Sales Book.
(iii) Repairs to building ₹ 300 were debited to Building Account.
(iv) ₹ 2,050 paid to Rohit is posted to the debit of Mohit’s Account as ₹ 5,020.
(v) Purchases Return Book is overcast by ₹ 400
Solution:

Question 23.
Give rectifying entries for the following:
(i) ₹ 5,400 received from Mr. A was posted to the debit of his account.
(ii) The total of Sales Return Book overcast by ₹ 800.
(iii) ₹ 2,740 paid for repairs to motor car was debited to Motor Car Account as ₹ 1,740.
(iv) Returned goods to Shyam ₹ 1,500 were passed through Returns Inward Book.
Solution:

Question 24.
Pass Journal entries rectifying the following errors:
(i) A cheque for ₹ 10,000 was received from Ranjan on which ₹ 200 Cash Discount was allowed. The cheque was not honoured on due date and the amount of discount was credited to Discount Received Account.
(ii) ₹ 2,000 paid as wages for machinery installation was debited to Wages Account.
(iii) ₹ 5,000 received from Rakesh were credited to his Personal Account. The amount had been written off as bad debt earlier.
(iv) Repair bill of machinery was recorded as ₹ 100 against the bill amount of ₹ 1,000.
Solution:

Question 25.
Rectifying the following errors:
(i) Sales Book has been totalled ₹ 1,000 short.
(ii) Goods worth ₹ 1,500 returned by Green & Co. have not been recorded anywhere.
(iii) Goods purchased worth ₹ 2,500 have been posted to the debit of the supplier, Gupta & Co.
(iv) Furniture purchased from Gulab & Co. worth ₹ 10,000 has been entered in Purchases Book.
(v) Cash received from A ₹ 2,500 has not been posted in his account.
Solution:

Question 26.
How will you rectify the following errors?
(i) ₹ 500 spent on building repairs has been debited to the Building Account.
(ii) Furniture worth ₹ 5,000 purchased from X on credit omitted from being recorded in the books.
(iii) Total of Returns Inward Book was added by ₹ 200 instead of ₹ 250.
(iv) Goods purchased from Mohan for ₹ 5,000 was passed through Returns Inward Book.
(v) Goods returned to Ram was passed through Sales Book.
(vi) Bills payable of ₹ 5,000 accepted in favour of Murari, was passed through bills receivable book with ₹ 500 but Murari’s account was correctly debited.
Solution:

Question 27.
Pass Journal entries to rectify the errors in the following cases:
(i) A purchase of goods from David amounting to ₹ 150 has been wrongly passed through the Sales Book.
(ii) A credit sale of goods of ₹ 120 to Peter has been wrongly passed through the Purchases Book.
(iii) ₹ 200, salary paid to Cashier, B. Naidu, stands wrongly debited to his Personal Account.
(iv) A credit sales of ₹ 4,230 to Krishan entered as purchase from Kishan ₹ 4,320.
(v) Ramesh’s Account was credited with ₹ 840 twice instead of once.
Solution:

Question 28.
(i) What are the different causes that make a Trial Balance incorrect?
(ii) Pass the rectifying Journal entries:
(a) A credit sale of goods for ₹ 2,500 to Krishna has been wrongly passed through the Purchases Book.
(b) ₹ 5,000 paid for freight on machinery purchased was debited to the Freight Account as ₹ 500.
(c) The Returns Inward Book has been wrongly overcast by ₹ 100.
(d) An amount of ₹ 500 due from Ramesh which had been written off as bad debt in previous year was recovered and had been posted to the Personal Account of Ramesh.
(e) A sum of ₹ 460 owed by Hari had not been included in the list of debtors.
Solution:
(i) The following are the causes that make a Trial Balance incorrect.
(a) Incomplete posting of Journal Entry
(b) Posting in the wrong side of Account.
(c) Wrong totalling of Subsidiary Books
(d) Wrong balance of Account
(e) Omission of total of Subsidiary book into Account
(f) Wrong totalling of the Trial Balance

Question 29.
Rectify the following errors:
(i) Wages paid for the construction of office debited to the Wages Account, ₹ 5,000
(ii) Machinery purchased for ₹ 35,000 was passed through the Purchases Book.
(iii) Old furniture sold for ₹ 1,000, passed through the Sales Book.
(iv) ₹ 2,000 paid to Mehta Bros. against acceptance were debited to Malhotra Bros. Account.
(v) Sales of ₹ 204 to Ram debited to his account as ₹ 402 and purchases of ₹ 1,012 from Shyam credited to his account as ₹ 1,210.
Solution:

Question 30.
There was an error in the Trial Balance of Ram Gopal on 31st March, 2018 and the difference in books was carried to the Suspense Account. On going through the books, you find that:
(i) ₹ 540 received from M. Mehta was posted to the debit side of his account.
(ii) ₹ 100 being purchases return was posted to the debit of the Purchases Account.
(iii) Discount of ₹ 300 received was posted to the debit of the Discount Account.
(iv) ₹ 374 paid for motor car repairs was debited to the Motor Car Account as ₹174.
(v) ₹ 400 paid to C. Das was debited to the account of G. Dass.
Pass the Journal entries to rectify the above errors and state what amount was carried to the Suspense Account.
Solution:

Question 31.
Trial Balance of a bookkeeper shows an excess of debits over credits by ₹ 261. This difference is placed in a Suspense Account to facilitate books closure. Later on the following errors were discovered:
(i) A credit item of ₹ 349 has been debited to a Personal Account as ₹ 439.
(ii) A sum of ₹ 625 written off from fixtures as depreciation has not been posted to the Depreciation Account.
(iii) ₹ 9,000 paid for furniture bought have been charged to the Purchases Account.
(iv) A discount allowed to a customer has been credited to him as ₹ 145 in place of ₹ 154.
(v) A sale of ₹ 594 was posted as ₹ 495 in the Sales Account.
(vi) The total of Returns Inward Book has been added ₹ 10 short.
Pass the Journal entries to correct these errors and prepare the Suspense Account.
Solution:

Question 32.
The accountant of a firm finds that the Trial Balance as on 31st December, 2017 is out by as excess debit of ₹ 283. He placed the amount in the Suspense Account. In the first week of January, 2018, he discovered the following errors. Pass the Journal entries necessary to rectify these errors and show the Suspense Account as it would appear at the end of the week. Have you any comment to make?
(i) Cash paid to Amar Nath, ₹ 75, was posted to the credit of Amar Singh’s Account as ₹ 57.
(ii) Discount allowed by Brijesh of ₹ 5 was not entered in the Cash Book but Brijesh stands debited correctly.
(iii) No entry was made of goods worth ₹ 40 taken away by proprietor for personal use.
(iv) ₹ 500 received from Jhaveri Bros. for interest on loan advanced to them were recorded in the Cash Book. But the entry was not posted in the Ledger.
(v) The total of Returns Outward Book was short by ₹ 100.
Solution:

As the Suspense account has not tallied, there are errors still to be rectified.

Question 33.
You are presented with a Trial Balance showing a difference which has been carried to the Suspense Account and the following errors are revealed:
(i) ₹ 1,700 paid in cash for an office equipment was charged to Office Expenses Account.
(ii) A cash sale of ₹ 5,000 to Black, correctly entered in the Cash Book, was posted to the credit of Black’s Account in the Ledger.
(iii) Goods amounting to ₹ 800, returned by Blue, were entered in the Sales Book and posted therefrom to the credit of Blue’s Account.
(iv) Furniture purchased for ₹ 8,100 was posted to Furniture Account as ₹ 810.
(v) Goods amounting to ₹ 10,000 sold to Red were correctly entered in Sales Book but posted to Red’s Account for ₹ 18,000.
(vi) Sales Return Book was overcast by ₹ 100.
You are required to pass the necessary rectification entries in respect of the above.
Solution:

Question 34.
Rectify the following errors found in the books of Mr. B. Trial Balance had ₹ 930 excess credit. The difference has been posted to a Suspense Account:
(i) The total of Returns Inward Book has been cast ₹ 1,000 short.
(ii) The purchase of an office table costing ₹ 3,000 has been passed through Purchases Book.
(iii) ₹ 3,750 paid for wages to workmen for making showcases had been charged to the Wages Account.
(iv) A purchases of ₹ 670 had been posted to the Creditors Account as ₹ 600.
(v) A cheque for ₹ 2,000 received from Mr. P.C. Joshi had been dishonoured and was passed to the debit of the Allowances Account.
(vi) An amount of ₹ 15,720 due from Prasad written off as had in a previous year, was recovered and credited to the Personal Account of Prasad.
After rectification reflect the transactions in the Suspense Account.
Solution:

Question 35.
Pass the rectification entries for the following transactions:
(i) An amount of ₹ 2,000 received from Mohan on 1st April, 2017 had been entered in the Cash Book as having been received on 31st March, 2017.
(ii) The balance in the account of Mr. Rahim ₹ 1,000 had been written off as bad but no other account has been debited.
(iii) An addition in the Returns Inward Book had been cast ₹ 100 short.
(iv) A cheque for ₹ 200 drawn for the Petty Cash Account has been posted in the account of Asif.
(v) A discounted Bill of Exchange for ₹ 20,000 returned by the firm’s bank had been credited to the Bank Account and debited to Bills Receivable Account. A cheque was received later from the customer for ₹ 20,000 and duly paid.
(vi) Ramesh’s Account was credited with ₹ 840 twice instead of once.
Solution:

Question 36.
The Trial Balance of M/s. Gupta & Sons shows a difference of ₹ 52,200. To prepare the Final Account on 31st March, 2009, this difference is placed in a Suspense Account. Afterwards the following errors were disclosed. Pass the necessary entries to rectify them and show the Suspense Account.
(i) Purchases Book total had been undercasted by ₹ 20,000.
(ii) A cheque received from Vasudev for ₹ 7,800 had been debited in the Cash Book but not posted in Vasudev’s Personal Account.
(iii) Returns Outward Book had been overcasted by ₹ 10,000.
(iv) Goods returned by Yash Pal worth ₹ 15,000 have been entered in Returns Outward Book. However, Yash Pal’s Account is correctly posted.
Solution:

Question 37.
A Trial Balance disclosed a difference of ₹ 417 placed on the credit side of the Suspense Account. Later on the following errors were located:
(i) Goods worth ₹ 200 purchased from Sohan had been posted to his account as ₹ 250.
(ii) A purchase of furniture for ₹ 500 was recorded in the Purchases Book.
(iii) Instead of crediting Gian’s Account with ₹ 512, it was debited with ₹ 215.
(iv) Goods worth ₹ 130 returned by Gian were entered in the Sales Book and posted therefrom to the credit of Gian’s Personal Account.
Pass the rectifying entries and prepare a Suspense Account.
Solution:

Question 38.
There was a difference of ₹ 720 in the Trial Balance which has been transferred to the credit side of the Suspense Account. Pass the rectifying entries and prepare a Suspense Account to rectify the following errors:
(i) An amount of ₹ 375 now posted on the debit side of the Commission Account instead of ₹ 275.
(ii) Credit amount of ₹ 260 posted to the debit of the Personal Account as ₹ 360.
(iii) Goods sold to Surinder recorded in Purchases Book ₹ 300.
(iv) D’s bill for erection of godown at a cost of ₹ 1,200 has been charged to the Repairs Account.
Solution:

Question 39.
Rectify the following errors by means of Journal entries:
(i) A cheque of ₹ 5,000 received from Ashish was dishonoured and was debited to Discount Account.
(ii) Purchases of ₹ 540 from Ramneek was written in Sales Book but was correctly posted to correct side to Ramneek’s Account.
(iii) Salary paid to Miss Yugakshi ₹ 1,000 was debited to her Personal Account as ₹ 900.
(iv) Furniture costing ₹ 500, purchased from Jyoti, was wrongly entered in Purchases Book as ₹ 450.
Solution:

Question 40.
The Trial Balance of S. Sen did not agree and the difference in books as carried to a Suspense Account. Pass the entries required to rectify the following errors which accounted for the difference. Also, prepare the Suspense Account:
(i) A Sales Invoice for ₹ 1,000 for goods sold on credit to B. Basu was entered in the Purchases Book but in the Ledge, the amount was correctly debited to the account of B. Basu.
(ii) Goods bought on credit from Ram Lal for ₹ 1,500 were wrongly debited to his account as ₹ 5,100.
(iii) An amount of ₹ 275 was posted as ₹ 325 to the debit side of the Commission Account.
(iv) The Sales Book for the month of April was undercast by ₹ 100.
(v) ₹ 460 paid for building repairs was debited to the Building Account as ₹ 640.
Solution:

Question 41.
Rectify the following errors:
(i) Sale of old furniture worth ₹ 3,000 treated as sales of goods.
(ii) Sales Book added ₹ 5,000 short.
(iii) Rent of proprietor’s residence, ₹ 6,500 debited to Rent Account.
(iv) Goods worth ₹ 11,970 returned by Manav posted to his debit as ₹ 11,790.
Solution:

Question 42.
There was a difference in the Trial Balance of M/s. Jain & Sons, prepared for the year ended 31st March, 2009. The accountant put the difference in Suspense Account.
The following errors were found:
(i) Purchases Return Book total ₹ 400 has not been posted to Ledger Account.
(ii) ₹ 5,100 spent on legal expense for the newly acquired Building was debited to the Building Account as ₹ 1,500.
(iii) A sale of ₹ 6,540 to Rajat has been credited to his account.
Rectify the errors and show the Suspense Account with Nil closing balance.
Solution:

Question 43.
Give the Journal entries to rectify the following errors:
(i) Purchases Book was overcast by ₹ 1,000.
(ii) Installation charges on new machinery purchased ₹ 500 were debited to Sundry Expenses Account as ₹ 50.
(iii) Radhey Shyam returned goods worth ₹ 500 which was entered in the Purchases Return Book.
(iv) Goods taken by the proprietor for ₹ 5,000 have not been entered in the books at all.
Solution:

Question 44.
Rectify the following errors:
(i) The total of one page of Sales Book was carried forward as ₹ 371 instead of ₹ 317.
(ii) ₹ 540 received from Yatin was posted to the debit of his Account.
(iii) Purchases Returns Book was overcast by ₹ 300.
(iv) An item of ₹ 1,062 entered in Sales Return Book had been posted to the debit of customer who returned the goods.
(v) ₹ 1,500 paid for furniture purchased had been charged to ordinary Purchase Account.
Solution:

Question 45.
Rectify the following errors by passing Journal entries:
(i) Old furniture sold for ₹ 500 has been credited to Sales Account.
(ii) Machinery purchased on credit from Raman for ₹ 2,000 recorded through Purchases Book as ₹ 16,000.
(iii) Cash received from Rajat ₹ 5,000 was posted to the debit of Bhagat as ₹ 6,000.
(iv) Depreciation provided on machinery ₹ 3,000 was posted to Machinery Account as ₹ 300.
Solution:

Question 46.
Rectify the following errors by passing Journal entries:
(i) A sum of ₹ 470 received from Ganga was posted to her debit as ₹ 740.
(ii) A debit balance of ₹ 550 in the personal account of Mr. John was undercast.
(iii) Bills Receivable from Brown for ₹ 3,000 posted to the credit of Bills Payable Account and credited to Brown’s Account.
(iv) Goods returned by Mridul ₹ 225 have been entered in the Returns Outward Book.
Solution:

Question 47.
While trying to close his books for the year ended 31st March, 2014, Mahesh found that the Trial Balance did not agree. He traced the following errors:
(i) In the Sales Book for the month of January total of Page No. 2 was carried forward to Page No. 3 as ₹ 1,000 instead of ₹ 1,200 and total of Page No. 6 was carried forward to Page No. 7 as ₹ 5,600 instead of ₹ 5,000.
(ii) Goods returned to Ram ₹ 1,000 were recorded in the Sales Book.
(iii) Bills Receivable for ₹ 1,600 from Noor was dishonoured and posted to debit of Allowances Account.
Rectify the above errors.
Solution:

Question 48.
Pass the rectification entries for the following transactions:
(i) Repairs to plant amounting to ₹ 2,000 had been charged to Plant and Machinery Account.
(ii) Wages paid to the firm’s workmen for making certain additions to machinery amounting to ₹ 1,340 were debited to Wages Account.
(iii) A cheque for ₹ 7,500 received from S. Desai was credited to the account of R. Gupta.
(iv) Goods to the value of ₹ 7,000 returned by X were included in closing stock, but no entry was made in the books.
(v) Goods costing ₹ 5,000 were purchased for various members of the staff and the cost was included in Purchases. A similar amount was deducted from the salaries of the staff members concerned and the net payments to them debited to Salaries Account.
(vi) Credit purchase of old machinery from Sohan for ₹ 1,70,000 was entered in the Purchase Book as purchase from Mohan for ₹ 7,10,000. ₹ 30,000 paid as repairing charges on the reconditioning of a newly purchased second had machinery were debited to General Expenses Account.
(vii) Debit and Credit totals of discount columns in the Cash Book which come to ₹ 400 and ₹ 370 respectively have not been posted to Discount Accounts.
Solution:

Question 49.
The bookkeeper of a firm found that his Trial Balance was out (excess credit) by ₹ 742. He placed the amount in a Suspense Account and subsequently found the following errors:
(i) A discount of ₹ 178 was allowed to Ramesh but in his account only ₹ 100 is recorded.
(ii) The total of the Purchases Book was ₹ 1,000 short.
(iii) A sale of ₹ 375 to Kohli was entered in the Sales Book as ₹ 735.
(iv) From the Purchases Book, Bose’s Account was debited with ₹ 175.
(v) Cash ₹ 250 received from Maitra against debt previously written off was credited to his account.
(vi) Purchase of office furniture worth ₹ 750 on credit from Delhi Furnitures was entered in the Purchases Book.
(vii) While carrying forward the total of the Sales Book from one page to another the amount of ₹ 11, 358 was written as ₹ 11,538.
(viii) The proprietor took goods of the value of ₹ 150 for his domestic consumption. No record of it has been made in the books.
(ix) Repairs bill for the proprietor’s personal car, ₹ 410, has been paid by the firm and debited to the Repairs Account.
(x) A sale to Kassim of ₹ 700 has been entered in the Purchases Book.
Rectify the errors by means of suitable Journal entries and show the Suspense Account.
Solution:

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