Questions on Finance and Accounts

Topics: Variable cost, Costs, Marginal cost Pages: 9 (2302 words) Published: December 1, 2014
Question 1-
Analyze the following transaction under traditional approach. 18.1.2011 Received a cheque from a customer, Sanjay at 5 p.m. Rs.20,000 19.1.2011 Paid Ramu by cheque Rs.1,50,000
20.1.2011 Paid salary Rs. 30,000
20.1.2011 Paid rent by cheque Rs. 8,000
21.1.2011 Goods withdrawn for personal use Rs. 5,000
25.1.2011 Paid an advance to suppliers of goods Rs. 1,00,000 26.1.2011 Received an advance from customers Rs. 3,00,000
31.1.2011 Paid interest on loan Rs. 5,000
31.1.2011 Paid instalment of loan Rs. 25,000
31.1.2011 Interest allowed by bank Rs. 8,000
Analysis of transaction –with accounts involved-nature of account-affects and debit/credit Solution:

Date
Accounts Involved
Nature of Account
Affects
Debit/credit
18.1.2011
Cash a/c
Sanjay a/c
Real
Personal
Cash is coming in
Sanjay is the giver
Debit
Credit
19.1.2011
Ramu’s a/c
Bank a/c
Personal
Personal
Ramu is the receiver
Bank is the giver
Debit
Credit
20.1.2011
Salary a/c
Cash a/c
Nominal
Real
Salary is an expense
Cash is going out
Debit
Credit
20.1.2011
Rent a/c
Bank a/c
Nominal
Personal
Rent is an expense
Bank is the giver
Debit
Credit
21.1.2011
Drawings a/c
Purchase a/c
Personal
Nominal
Owner is the receiver
Decrease is stock
Debit
Credit
25.1.2011
Advance to Suppliers a/c
Cash a/c
Personal
Real
Suppliers are the receivers
Cash is going out
Debit
Credit
26.1.2011
Cash a/c
Advance from customers a/c
Real
Personal
Cash is coming in
Customers are givers
Debit
Credit
31.1.2011
Interest on loans a/c
Cash a/c
Nominal
Real
Interest is expense
Cash is going out
Debit
Credit
31.1.2011
Loan a/c
Cash a/c
Personal
Real
Lender is the receiver
Cash is going out
Debit
Credit
31.1.2011
Bank a/c
Bank interest a/c
Personal
Nominal
Bank is the receiver
Bank interest is an income
Debit
Credit

Question 2: The trial balance of Evergreen Co Ltd., as taken on 31st December, 2002 did not tally and the difference was carried to suspense account. The following errors were detected subsequently.

a Sales book total for November was under cast by Rs. 1200. b Purchase of new equipment costing Rs. 9475 has been posted to Purchases a/c. c Discount received Rs.1250 and discount allowed Rs. 850 in September 2002 have been posted to wrong sides of discount account. d A cheque received from Mr. Longford for Rs. 1500 for goods sold to him on credit earlier, though entered correctly in the cash book has been posted in his account as Rs. 1050. e Stocks worth Rs. 255 taken for use by Mr Dayananda, the Managing Director, have been entered in sales day book. f While carrying forward, the total in Returns Inwards Book has been taken as Rs. 674 instead of Rs. 647. g An amount paid to cashier, Mr. Ramachandra, Rs. 775 as salary for the month of November has been debited to his personal account as Rs. 757. Pass journal entries and draw up the suspense account.

Solution:
Date
Particulars
LF
Debit Rs
Credit Rs
31-12-2002
Suspense account Dr
To Sales account
(Being under casting of sales book rectified)

1200

1200
31-12-2002
New Equipment account Dr
To Purchases account
(Being wrong debit given to
purchases account rectified)

9,475

9,475
31-12-2002
Discount allowed account Dr
Suspense accountDr
To Discount received account
(Being discount received and
discount allowed posted to wrong sides of discount account rectified)

1,700
800

2,500
31-12-2002
Suspense account
To Longford’s account
(Being short credit given to Longford
rectified)

450

450
31-12-2002
Sales accountDr
To Suspense account
(Being stock used for personal
purpose wrongly credited to sales
account rectified)

255

255
31-12-2002
Suspense accountDr
To Returns Inwards account
(Being excess debit given to returns inwards account to the extent of Rs27, now rectified)

27

27...
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