accounts notes for 2010 - 11

8/6/2019 Accounts Notes for 2010 - 11

1/94

H.S.C OMTEX CLASSES 8TH

YEAR

1

BOOK KEEPING & ACCOUNTANCY

OMTEX CLASSES

8th years of success

BOOK KEEPING

AND

ACCOUNTANCY

NAME : - ______________________________

STANDARD: -S.Y.J.C (Second year junior college)

CLASSES : - OMTEX CLASSES

FOR PRIVATE CIRCULATION ONLY

You dontknow what you can do until you try

IF YOU ARE SATISFIED WITH OUR TEACHING TELL TO OTHERS IF NOT TELL TO US


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YEAR

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Preface

It gives us great pleasure to present this thoroughly revised edition

of Omtex Book

Keeping and Accountancy for Standard XII,

prepared according to the pattern prescribed by the board.

A thorough study and practice of this edition with the help of Omtex

guidance (teaching + coaching) will enable the students to pass the HSC

Examination with good marks.

Meticulous care has been taken to make this edition of Omtex

Book Keeping and Accountancyperfect and useful in every

respect. However, suggestions, if any, for its improvement are most

welcome.

- OmtexNote: - No part of this book may be copied, adapted, abridged or translated, stored in any retrieval

system, computer system, photographic or other system or transmitted in any form or by any

means without a prior written permission of the Omtex classes.


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CH. 1. VALUATION OF GOODWILL [Q. 2 (A): 5 MARKS]

Note: - One practical problem on Valuation of Goodwill carrying 5 marks and one theory

question on Computer Awareness carrying 5 marks will be asked in Q. 2 of the Board Paper

in option to one practical problem on Depreciation carrying 10 marks. The students may

either attempt problem on Depreciation or Goodwill and theory question on ComputerAwareness.

Valuation of Goodwill: -As prescribed in the syllabus, the value of goodwill as on a

particular date is ascertained by using any one of the following methods:

i. The Average Profit Method andii. The Super Profit Method.

INTRODUCTION

Definition: Goodwill is an intangible (non visible) fixed asset having a realizable

(economic) value. It is the reputation of business. Valuation of goodwill is veryimportant in the case of admission, retirement and death of partners.

PROBLEMS

1. The profits of the firm for the last five years are 2002 Rs. 20,000; 2003 Rs. 16,000; 2004Rs. 24,000; 2005 Rs. 8000; 2006 Rs. 12,000. Calculate the goodwill of the firm. [Ans.Rs. 16,000]

2. Mona, Reena and Sona have been carrying on a partnership business and good will of theirfirm is to be valued at three years purchase of the average profit for the last five years. Theprofit and losses for the last five years have been. 1st Year Rs. 16,000, 2nd Year, 15,000, 3rdYear, 8,000(Loss), 4th Year, 7,000, 5th Year, 10,000. [Ans. Rs. 24,000]

3. Calculate the good will from the following information goodwill is valued at three yearspurchase of average profit of the last six years. Profit and losses of the business in the lastsix years are as follows, [Ans. Rs. 95,000]

1st year, Rs, 40,000(Profit)2nd Year, Rs, 60,000(Profit)3rd Year, Rs, 10,000(Loss)4th Year, Rs, 50,000(Profit)5th Year, Rs, 30,000 (Loss)

6th Year, Rs, 80,000(Profit)

4. Calculate the value of goodwill according to average profit method. Goodwill is valued atthree years purchase of last four year average profit. The profits and losses for the last fouryears are. [Ans. Rs. 27,000]

1stYear Rs, 10,000(Profit)2nd Year Rs, 12,000(Profit)3rd Year Rs, 4,000(Loss)

4th Year Rs, 18,000(Profit)


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5. The profit of a firm for the four years from 1991 to 1994 where_ [Ans. Rs. 1, 02,000]1991 Rs, 40,000

1992 Rs, 45,000

1993 Rs, 55,000

1994 Rs, 53,000

Calculate the goodwill of the firm at 2yrs. Purchase of the average profit for the last three

years.

6. Mr. X a businessperson has earned the following profits in the last five years.1995 1, 05,800

1994 1, 02,600

1993 98,400

1992 96,800

1991 95,500

Value goodwill of Mr. X on the basis of three years purchase of average of the past five

years. [Ans. Rs. 2,99,460]

7. Good will is valued at three years purchase of last five years average profit. The profits forthe last five years are. [Ans. 0]

1stYear 4,800(p)2nd Year 7,200(L)3rd Year 10,000(L)4th Year 3,000(P)

5th Year 5,000(L)

Note: -Since the companys average profit is negative. Therefore the firms goodwill is zero.

8. Compute the goodwill the following case good will is valued at three years purchase ofaverage profit of five years. The Profit of the five years were_ [Ans. Rs. 26,400]

1stYear 5,8002nd Year 7,400

3rd Year 20,000

4th Year 3,500

5th Year 7,300

9. Sales of trader for 3years ended 30th June 1995 are as follows [Ans. Rs. 1, 22,680]1995 Rs, 5, 50,0001994 Rs, 5, 46,0001993 Rs, 5, 25,000

The profit margin for the 3 years ended 30th June 1995 was 10%, 12%, 12% respectively. For

the purpose of selling the business of the trader, goodwill is to be valued at 2years purchaseof the average profit of the last 3years. Find the value of good will.

10. From the following particulars, value good will of 2yrs. Purchase of last 5 years. [Ans.Rs. 70,326]

Year ended Turn over Net profit31-12-199031-12-199131-12-199231-12-199331-12-1994

5,15,0005,45,6005,35,8005,40,9005,60,800

5%6%7%7.5%7%


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11.A firm with an average capital employed of Rs. 1, 60,000 is expected to earn Rs, 40,000per annum in future. Calculate goodwill at three times the super profit taking the normalrate of return as 15%. [Ans. Rs. 48,000]

12.Capital employed on 31st December, 1990 was Rs, 1, 00,000/-. The Profits earned by thebusiness for the last 5 years where. [Ans. Rs. 87,000]

1986 30,0001987 40,0001988 50,0001989 40,0001990 60,000

Normal rate of return is 15%. Good will is valued at 3 years purchase of the super profits of

the business. Find out the value of goodwill.

13.The books of a business showed that the capital employed on 31st December, 1992 wasRs.1, 00,000/-. Profits for the last five years are_1988, 1989, 1990, 1991 & 1992 were Rs,60,000, Rs, 55,000, Rs, 75,000, Rs, 85,000 & Rs, 65,000 respectively. Goodwill is valuedat 2 years purchase of the Super profit of the business. NRR is 10%. [Ans. Rs. 1, 16,000]

14.M/s XYZ partnership firm earned net profit during the last four years were Rs, 7,000. Rs,13,000. Rs, 12,000 and Rs, 8,000. The capital investment made in the firm was Rs,50,000. N.R.R on capital is 15%. The remuneration of the partners during the period is Rs,500 p.a. Good will is valued at 2 Yrs purchase of Average super profit of the abovementioned years. [Ans. Rs. 4,000]

15.M/s Vijay trading company earned net profit during the last four years was follows.1stYear Rs, 57,0002nd Year Rs, 44,0003rd Year Rs, 61,000

4th Year Rs, 58,000

The capital investment made by the company is Rs, 1, 50,000. Normal Rate of return oncapital is 20%. The remuneration of the partners during this period is Rs, 500 p.m. Good

will is valued at 2years purchase of Average Super profit of above mentioned period.

[Ans. Rs. 38,000]

16.The average net profit expected in the business by ABC firm is Rs, 36,000 per year. Theaverage capital employed in the business by the firm is Rs, 2, 00,000. The Rate of interestexpected from capital invested in the business is 10%. The remuneration of the partners isestimated to Rs, 6,000 P.a. Calculate the value of goodwill based on 2years purchase ofsuper profit. [Ans. Rs. 20,000]

17.M/s Rajesh Trading company earned net profit during the last four years were Rs, 15,000,Rs, 28,000, Rs, 30,000 & Rs, 40,000. The capital investment made by the company is 1,00,000. Normal rate of return on capital is 15 %. The remuneration of the partners duringthis period is Rs, 1,000p.a. Good will is valued at 2 years purchase of average super profitof the above mentioned period. [Ans. Rs. 24,500]


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18.The present average net profit of Braful, Shobha partnership firm before detectingpartners remuneration is Rs, 27,000 p.a. The capital employed in the business by thepartner Braful Rs, 1, 00,000 & Shobha Rs, 50,000. The profit expected from the totalcapital invested is 10% p.a. The total remuneration is estimated to be Rs, 6,000 perannum. Find out the value of goodwill on the basis of 2 years purchase of super profit.[Ans. Rs. 12,000]

19.The following balance sheet of Kantilal, Chandrakant.Balance sheet as on 31st March, 1995

Liabilities Amount Assets AmountCapital

KantilalChandrakantReserve FundCreditors

90,00070,00044,00038,000

MachineryBuildingInvestmentsStockDebtorBankProfit/loss A/c

50,00041,00030,00020,00066,00030,000

5,0002,42,000 2,42,000

The net profits of the firm for the year ended 31st March, 1995 were Rs, 15,000 Rs, 25,000

Rs, 26,000. Ascertain the value of good will at 2 years purchase of the super profit of the3years taking the normal rate of return on capital employed is 10%. [Ans. Rs. 4,200]

20. The following is the balance sheet of M/s Anna and Chunna as on 31st March 1995.

Balance sheet as on 31st march, 1995.

Liabilities Amount AssetsAmountCapital

AnnaChunnaCreditorsProfit/ Loss A/c

1,64,00040,00035,000

3,040

MachineryBuildingPlantStockDebtor

Bank

10,00026,00056,00056,00019,040

75,0002, 42, 040 2, 42, 040

Net profits for the past 3years are 1st year Rs, 43,350, 2nd year Rs, 36870, 3rd year Rs,

32,280. Normal rate of return on capital employed is 10%. Calculate the value of goodwill

at 2years purchase of the average super profit. [Ans. Rs. 33,592]

21.Priti and Pritam are partners sharing profits and losses in the ratio of 3:2. They admitPrasad for 1/6th share. For the purpose of admission of Prasad, goodwill of the firm shouldbe valued on the basis of 3 years purchase of the last 5 years average profit. The profitswere. [Ans. Rs. 1,20,000]

Year 1990 91 1991 92 1992 93 1993 94 1994 95Profits Rs. 60,000 62,500 45,000(L) 42,500 80,000


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HOME WORK SECTION1. Mahipati and Ganpati are partners sharing profits and losses in the ratio of 4:3. They

admitted in partnership Shripati for 1/8 share. For the purpose of admission of Shripati,

goodwill of the firm should be valued on the basis of 2 years purchase of the last 5 years

average profit. Calculate the goodwill of the firm. [Ans. Rs. 2,00,000]

1991 92

1992 931993 941994 951995 96

Rs. 75,000

Rs. 1,00,000Rs. 1,25,000Rs. 85,000Rs. 1,15,000

2. Jaya and Maya are carrying on a business in partnership for last 12 years. Goodwill of thefirm is to be valued at 3 years purchase of the average profit of last 6 years.

2000-012001-022002-032003-042004-05

2005-062006-07

Rs. 2,20,000(Profit)Rs. 1,20,000(Loss)Rs. 2,60,000(Profit)Rs. 1,80,000(Loss)Rs. 2,90,000(Profit)

Rs. 3,20,000(Profit)Rs. 2,10,000(Profit)

You are required to calculate the value of Goodwill of the firm. [Ans. Rs. 4,55,000]

[Note: - Last 6 years are to be counted in reverse order of years given. Therefore, profit given

for the year (2000 01) is to be ignored].

3. Vijay and Azim carrying on a business in partnership for last 5 years. Goodwill of the firmis to be valued at 3 years purchases of the average profits of last 5 years. The profits and

losses for the last 5 years were:

1996-971997-98

1998-991999-20002000-01

(Profit) Rs. 32,000(Profit) Rs. 30,000

(Loss) Rs. 16,000(Profit) Rs. 14,000(Profit) Rs. 20,000

You are required to calculate the value of goodwill of the firm. [Ans. Rs. 48,000]

4. The following is the Balance Sheet of Ashok and Nayan:Balance Sheet as on 31st March 2007.

Liabilities Amount Assets AmountCapital

AshokNayanGeneral ReserveProfit & Loss A/cSundry Creditors

1,00,0001,20,000

78,00056,00036,000

Plant and MachineryFurnitureStockDebtorsBankPrepaid Expenses

1,78,00062,00048,00040,00035,00027,000

3,90,000 3,90,000

The trading result for the last four years was 2003 04: Rs. 65,000 (Profit), 2004 05: Rs.

5,000(loss), 2005 06: Rs. 78,000 (Profit) and 2006 07: Rs. 92,000 (Profit).

Calculate the value of goodwill of the firm at 2 years purchases of the super profit

considering the Normal rate of return on the capital employed is 13%. [Ans. Rs. 37,475]


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IMPORTANT POINTS TO REMEMBER

Any Number which is followed by the word Years Purchase / Times / Thrice /Twice are considered as number of years purchase.

If Number of Years of purchase is not given then assume it as 1 yearspurchase.

If there is a continuous loss in the Firm then the Good will of the Firm wouldbe Zero (0).

If the total Profits/ Loss are negative then also the goodwill will be Zero.

5. Calculate the value of goodwill of the firm from the following information:i. Total capital employed in the business Rs. 4,00,000.

ii. Net profits of the firm or the past three years were Rs. 53,800, Rs. 45,350, Rs. 56,250.iii. Normal rate of return at 10%.iv. Goodwill is to be valued at three years purchase of super profit. [Ans. Rs. 35,400]

6. Following is the Balance Sheet of Mr. Atul as on 31st March, 1993: Liabilities Amount Assets Amount

CapitalGeneral ReserveCreditorsBills Payable

77,50022,50040,000

5,000

Fixed AssetsCurrent AssetsPrepaid Advertisement

85,00050,00010,000

1,45,000 1,45,000

The net profits for the last three years were Rs. 19,500; Rs. 22,500; Rs. 30,000.

Calculate the value of goodwill at two times of super profit, taking into consideration the

standard rate of return on the capital employed is 15%. [Ans. Rs. 21,000]

Note: Capital Employed = Partners Capital + General Reserve + Accumulated Profit Unadjusted losses Expenses yet to be written off.


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CH. 2. COMPUTER AWARENESS [Q. 2 (B): 5 MARKS]

Answer the following questions

1. What is the computer hardware?

Ans. Computer hardware refers to physical components like input devices, central processing

unit and output devices of a computer system.

2. Explain about the components of computer hardware?

Ans. The computer hardware comprises of the following components.

i. Input devices: - The data is required to be transmitted to computer for processing. Itis done with the help of input devices like punch card reader, paper tape reader, markand character reader, keyboard, speech recognizer etc.

ii.

Central processing Unit: - This unit processes raw data according to theinstructions given to the computer. It has mainly three parts. Control unit, Arithmetic /Logic unit and memory unit.

iii. Output devices: - The processed data is to be made available to the user in the formrequired by him. For this purpose the following devices are used. Printers, visual display unitetc. This is necessary to provide back up storage. It may be in the form magnetic tapes,magnetic dises, floppies, C.D.s etc.

3. Write a short note on second generation computers.

Ans. The computers of the second generation: - We are initially characterized by either

magnetic drum or magnetic core storage later on they used transistors in place of vacuum

tubes the transistors being small in size occupied lesser space and power. They were lessexpensive and generated less heat as compared to the vacuum tubes. The computer became

compact. These computers were also applied in other field such as scientific and mathematical

application in addition to application in the fields of business and industry. The United states

of America had more than 5000 computers. Some of the important second generation

computers are IBM 1620, IBM 1401, IBM 7094, CDC 1604, CDC 3600, RCA 501 and

UNIVAC 1108 of these the most popular model of the second generation was IBM 1401.

4. Write short notes on Third Generation Computers (1965 71)

Ans. In the early sixties integrated circuits were developed which were later on used in

computers. Integrated circuits (I.C.) improved secondary stage devices, new input output

devices such as Visual Display Unit (V.D.U) and high speed printers. These computers came to

be known as Mini computers. I.C.s were more efficient and they were having much higher

speed than transistors. Because of the I.C.s it became possible to have lot of functions from

computers. They had a very large memory. Also many computer languages were introduced.

5. Write short note on Fourth Generation of Computers (1971 85)

Ans. In 1971, Intel corporation developed and I.C. which was a revolutionary in a computer

world. Later in 1974, another breed of computer known as Micro computers came into

existence and which became popular during the fourth phase. The computer which used large


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scale integrated circuits used micro processor chips like 8080, 8085, 8086, 6800, 68000 of

this 8086 and 68000 are 16 Bit chips and rest are 8 Bit chips. It reduced the size and

increased the number of functions. Secondary devices are further developed. These computers

left no field in human life uncovered. Some of the important models of fourth generation are

Intel 4004, Apple I & II, DCM Spectrum, 2X Spectrum, BBCs ACCOM, IBM Compatibles

etc. and sinclairs ZX 81.

6. Write short notes on First generation Computers.

Ans. The first generation computers were voluminous computers in which electronic valves

were used. They were built by using vacuum tube. As the vacuum tubes were used as an

electronic component, the computers were very large in size. ENIAC was the first computer of

this category. Thus, the computer from ANIAC to IBM 650 belongs to this generation. The

data manipulation capacity of ENIAC was thirty times more than the previous computers

vacuum tubes were replaced by the transistors. Transistors were very small in size and weighs

as compared to vacuum tubes and consumed very low power.

7. Write short notes on Central Procession Unit.

Ans. It is popularly known as the heart, Brain and Nervous system of the computer. It provides

central control of the operation of the whole computing machine. The CPU is known as a part

of the computer system. The CPU consists of a memory unit, control unit and An Arithmetic

and logic unit.

i. Memory unit: - A memory unit of the central processing unit is a place where thecomputer program and data are stored during processing. A memory unit is a randomaccess storage device comprising number of storage locations. The data which is to bestored in the memory unit for processing are fixed by the computer program. The main

or internal memory is called as primary storage. It normally consists of the program tobe executed and the data required by the program.ii. The Control Unit: - All the operations carried out by the computer are directed by

the control unit. A control unit is called as the nerve centre of the computer since itcontrols and co ordinates all hardware operations. The program and data aretransferred from the input device into the memory as directed by the control unitduring the execution of the program each instruction is retrieved in turn from thememory and interpreted. A control unit informs the Arithmetic logic unit as to howprecisely the operation to be preformed. It directs the transfer to the Arithmetic logicunit of any item of data that is required for operation.

iii. The Arithmetic Logic Unit (ALU): - The arithmetic logic unit comprises a numberof accumulators and registers. Accumulator means a register and associated

equipment in the arithmetic unit of the computer where arithmetic and logicaloperations are performed. A register is a hardware device for holding data to beoperated upon. The ALU obtains the data from the main memory as per the directiongiven by the controlling unit based on the program given to it. This data is loaded intoaccumulators in the ALU. The ALU operates on the data which is available in the mainmemory. The ALU after processing the data sent to output device.


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8. EXPLAIN THE IMPORTANCE OF COMPUTER IN MODERN AGE.

Today computers are put to a variety of uses. They have been designed with highly improved

performances. Computers can be used to process voluminous data at a high speed. As regards

its application in the field of accounting, a computer should be able to deal with routine

accounting. It means all normal accounting processes such as financial transactions should be

dealt with the use of a computer. All cash and bank transactions, handling of accounts of

debtors and creditors and calculation of wages and salaries etc should be handled with the useof computer. In addition, computers can be put to other popular uses such as production,

programming and control, flexible budgetary control, variance analysis, sales and forward

trends etc.

Following points explain the importance of computer in modern age.

Speed: - In the modern world, the desire of a man to complete tasks within the stipulated time

limits has been, to a large extent, fulfilled by using a computer. Computers enable us to do

arithmetical computations with a high degree of speed and ease. It has enables us to do things,

which would have been almost impossible earlier. The speed which computers functions are

measured in Pico seconds (1/1000 of Nano second). Thus, computers are capable of

making millions of computations per second. Hence, a powerful computer is capable ofcompleting the tasks in less than an hour, which could have taken a year for a group of people

to compute.

Accuracy: - Computers are not only fast in completing a job at a great speed, but it is also

performed with a high degree of accuracy. Sometimes, it is common to say that there is a

Computer error. As a matter of fact, it is Human error and not a Computer error since a

computer carries out the instructions efficiently given by the programmer. As such, if the

instructions are faulty, the errors creep in the computers output. Therefore, if the computer is

provided with accurate data and instructions, there will be no error in the output given by a

computer. Thus, a computer offers the greatest advantage of achieving high degree of accuracy

in accounting processes.

Diligence: - By doing similar job continuously, human beings get tired which results into some

mistakes. As against this, a computer is capable of doing the same job continuously error free.

A computer takes the same time to complete the first calculation as well as the 10000th

calculation. Thus, the degree of diligence possessed by a computer is impossible in case the

same job is done by human beings.

Storage: - Another advantage offered by a computer is that of its enormous capability to store

data. A computer is capable of storing data along with the instructions given by the

programmer in the primary (main) memory. In case, the primary memory is not sufficient it

can be stored in its secondary (auxiliary) memory. There are various devices used for storing

the secondary memory. Some of the common devices used in secondary memory are Compact

Disks, Tapes, Drums, pen Drives etc. Having large capacity to store data.Versatility: - A computer possesses great versatility, which is capable of performing arithmetic

calculations, logic operation of comparison and moving data within different sections of the

computer and in input and output operations. Although, a computer lacks a brain of its own, it

can be put to a varied uses such as preparation of mark lists, financial accounting, share

analysis etc. Further, a computer can produce results almost in whatever form it is most

suitable.

Miscellaneous: - In addition to the above mentioned advantages, a computer can offer

economies in the form of effective managerial control, saving in labour cost because it is fully

automatic.


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9. EXPLAIN THE ROLE OF COMPUTER IN ACCOUNTING.

Ans. The role of computer in accounting is explained as follows.

1. For various reasons, every business organization is required to prepare and maintainvarious books of account. The computer is used by many business organizations to carry

out accounting operations at a greater speed and accuracy.

2. The computer is useful for classifying, processing, analyzing, tabulating, recording andinterpreting the accounting data for various purposes.

3. It is useful for improving the financial system of the organization.4. With the help of the computer, accountants can easily, accurately and speedily prepare

the different source documents like voucher, invoice, quotation, receipt, etc.

5. The computer is useful for recording accounting entries in the journal and posting suchentries in the ledger. It is also used to prepare trial balance, final account, accounting

statements like Balance sheet, etc.

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CH. 3. BILLS OF EXCHANGE [Q.3: 17 MARKS]

Note: - In Q.3 of the Board paper, one problem on Renewal of bills of exchange and another

problem on dealing of multiple bills by a drawer (one drawer and multiple drawees) will be asked.

Students are required to attempt any one out of these two.

DEFINITION:-

BILLS OF EXCHANGE: - A Bills of Exchange is a Negotiable (exchangeable) Instrument,containing an unconditional order signed by the maker (drawer) directing a certain person(drawee) to pay a certain sum of money only to the bearer of the Instrument.

THERE ARE THREE PARTIES IN THE BILL OF EXCHANGE.DRAWER: - The drawer is the person or the party who draws the bill. He is the creditor and hehas to receive the money from other person.

DRAWEE: - The drawee is the person or the party on whom the bill is drawn. He is a debtorand he has to pay the amount to the drawer. Once he accepts the bill he becomes an Acceptor.

PAYEE: - The payee is the person or the party to whom the bill is made payable. If the bill ismade payable to the drawer himself, the drawer and the payee are the same person.

TERM OF THE BILL: -A bill of exchange is subject to certain terms and conditions. Such termsand conditions include period of the bill, place of payment, amount of the bill, etc.

GRACE DAYS/DAYS OF GRACE: - While calculating the due date of any time bill, three extradays knows as days of grace should be added to the specified period mentioned in the bill. Forexample, a bill drawn on 15th January, 2007 for two month will become due on 18th March,2007.

DUE DATES / MATURITY DATES: - The date on which the Bill is ready for the payment isknown as due date or maturity date of that Bill.If the due date falls on Sunday or any other public holiday the payment of the bill should bemade on the immediately preceding working day. If a bill falls due for payment on 15th August,it must be paid on 14th August. If a bill falls due on 26th January, it must be paid on 25thJanuary. In case 25th January is Sunday the payment must be made on 24th January.

HONOUR OF THE BILL: - When the bill is paid on the due date is known as honour of the Bill.

DISHONOUR OF THE BILL: -When the Bill is not paid on the due date then it is known as dishonourof the bill.

RETIREMENT OF THE BILL: - When the Bill is paid before the due date then it is known asretirement of the Bill.

HUN DIES: - When the subject matter of the Bill is in Indian language say Tamil, Telungu,Guajarati, Hindi etc. then it is known as hundies.

ACCEPTANCE OF THE BILL:-When the drawee puts the signature on the bill then it is knownas acceptance of the bill.

THERE ARE TWO TYPES OF ACCEPTANCE

GENERALACCEPTANCE: - When the bill is accepted without any terms and conditions then it

is known as general acceptance.


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QUALIFIEDACCEPTANCE: - When the bill is accepted with certain terms and conditions thenit is known as qualified acceptance.

DRAFT: - Before the acceptance of the bill, it is known as draft.

ENDORSEMENT OF BILL: - When the ownership of the bill is transferred then it is known as

endorsement of Bill. There are two parties in the endorsement of Bill.

ENDORSER: - A person who transfers the ownership of the bill is known as endorser.

ENDORSEE: - A person on whom the bill has been transferred is known as endorsee.

TYPES OF BILL: - There are two types of BillINLAND BILL: - A bill which is drawn & made payable in the same country, it is known asInland bill.FOREIGN BILL: - A bill which is drawn in one country & made payable in another countrythen it is known as foreign bill.

NOTING CHARGES: - It is a fee charged by the Notary Public, In case of dishonour of Inlandbill. Notary Public is a government officer who is appointed to register the dishonour bill.

PROTESTING:- It is also a fee charged by the government in case of foreign bill.


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Pro Forma of a bill of exchange

Notes: -

1. If the question includes Prepare a demand bill or if the term is On demand,or if the period is not given at all, the wording will be: On demand, pay

2. If the term given in 45 days after acceptance/sight, the wording will be: Fortyfive days after acceptance / sight, pay

3. If instead of the term, the due date itself is given the wording will be: On suchand such a date, pay

BILL OF EXCHANGE

________________

________________

(Drawers Name &

Address)

_______________

(Date of Bill drawn)

______________ after date, pay __________________________________________________

_________________________ or his / her order, the sum of Rupees _____________________

_______________________________________________ only for value received.

Sd /-

_______________(Drawers Name)

To

___________________

(Drawees Name)

___________________

___________________

(Drawees Address)

STAMP

Rs. ______________/-

Accepted

Sd/-

_______________

(Drawees name)

_______________

(Date of acceptance)


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PREPARE A BILL OF EXCHANGE FROM THE FOLLOWING

DETAILS. [Q. 1. (F) - 5 Marks]

1. Drawer : Soundariya, Neelam Bhawan, Kalyan

Drawee : Sugandi, Dastur Nagar, Amaravati

Payee : Umesh , Deogad

Period : 90 days Amount : Rs. 7,555

Date of bill : 15th March 1995

Accepted on : 20th March 1995

2. On 10th March, 1995 Rajesh Bhoyar, Gandhinagar, Nagpur draws a 2 months bill for Rs. 3,000 on

Samir Choudhary, Main Road, and Belapur. Samir Choudhary accepted the bill on 15 th March 1995

3. Drawer : Vilas Patil, 20, M.G. Road, Pune.

Drawee: Vikas Pawar, 31, S.V. Road, Nashik

Payee: Viraj Potade, 41, A.B. Road, Sholapur,

Period, 3 monthsAmount Rs. 7500

Date of Bill, 1st January, 2007

Date of Acceptance: - 3rd January, 2007

4. Drawer : Shri Narayandas Kela, Gandhi Chauk, Dhamangaon

Drawee : Shri Atul Khatke, Mandrup Road, Solapur

Payee : Shri Ranjeet Chavan, Ambajogi

Amount : Rs. 5,000

Period : 90 days.

Date of Bill : 15th March, 1995

Accepted on : 20th March, 1995

5. Drawee : K . Prabhakar, Nehur Road, Solapur.

Drawer : M. Sudhakaran, Shivaji Nagar, Nanded.

Period : 3 Months.

Date of Bill : 5th February,1996

Amount of the Bill : Rs. 4000/-

Accepted On : 9th February,1996

6. Drawer : Vilas Ptil, 44, M.G. Road, Nanded.

Drawee : Pankaj Pawar, 70, Bhavani Galli, Solapur.

Payee : Ramchandra Rampure, Rampur.

Period : 60 days.Date of Bill : 28th January, 1995

Date of Acceptance : 29th January, 1995

Amount of the Bill : Rs. 2,800/-


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7. Drawer : Rekha, Main Road, Jalgaon.Drawee : Basant, Sandesh, Nandura.

Payee : Uma Chandak, Khamgaon.

Amount : Rs. 2500/-

Period : 2 months.

Date of Bill : 21st January, 1995

Date of Acceptance: 25th January, 1995

8. Drawer : Shekhar Desai, Shastri Road, Mahad.

Drawee : Sharad Verma, Narayanpeth, Pune

Payee : Mukund Pande, Panel.

Amount : Rs. 3,500/-

Period : 3months.

Date of Bill : 21st June, 1995

Bill accepted : for 3,000 on 25th June, 1995.

9. Drawer : Vijay Bhat, Main Road, Nagpur.

Drawee : Ashok Kulkarni, M.G. Road, Nagpur.

Payee : Anil Jadhav, Pune. Amount : Rs. 6,950.

Period : 80 days.

Date of Bill : 7th March, 1996.

Accepted on : 10th March, 1996. For 90 days.

10. Drawer : Namdev Tukaram, Paithan.

Drawee : Nivruti Sopan, Dehu.

Payee : Vitthal Pandurang, Pandharpur.

Amount : Rs. 5,111

Period : 3 months

Date of Bill : 17th August, 1995

Date of Acceptance : 20th August, 1995

11. Drawer : Priti Chavan, Chandika Road, Malvan.

Drawee : Snehlata Patil, Prashant Nagar, Ambajogai

Payee : Archana Ghime, Amaravati

Amount of Bill : Rs, 10,000/-

Period : 2 months.



12. Drawer : Shri Ravindra Patil, Housing Society, Ambajogai

Drawee : Shri Bhaurao Deshmukh, Bazar Chauk, DhamangaonPayee : Shri Prasad Shendage, Malvan

Amount : Rs. 7,500/-

Period : 3 months




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13. Drawer : Abhijit Patil, Vikram nagar, Patna.

Drawee : Tejas Kapare, Kothrud, Pune.

Payee : Amey Patki, Nagpur.

Amount : Rs. 7500

Period : 60 days

Term : After sight

Date of Bill Drawn : 1st June 2006

Date of Acceptance : 11th June 2006

Accepted bill for Rs. : 7000 only.

14. Drawer: Yamini Gupta, Sarvapriya Vihar, Delhi

Drawee Kamini Sharma, Raj baug, Agra.

Period 100 days.

Term After acceptance

Date of Bill 1st January, 2007

Amount Rs. 10,500/-

Date of Acceptance 3rd January, 2007


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TRADE BILLS {IN THE BOOKS OF DRAWER & DRAWEE}1. Anand brought goods worth Rs. 4,500 from Samant on August 1, 2006. On the same day, Anand

accepted the bill for Rs. 4,500 at 3 months drawn by Samant. Samant got the bill discounted withhis bank at 4%. Before the due date, Anand informed Samant about his inability to pay the amountof bill. He further requested him to accept Rs. 2,500 in cash and immediately draw upon him a newbill for the remaining amount at 2 months together with interest at 8% p.a. Samant agreed. Thesecond bill was duly paid on maturity. Give journal entries in the books of Samant and Anand.

Note: - Here 1st part payment is made and then the interest is charged.

2. On 1st March, Ramchandra sold goods to Raman worth Rs. 8,000/- and Raman accepted the Bill forRs. 8,000/- at 3 months drawn by Ramchandra. Ramchandra discounted the bill with his bank @6% p.a. On due date the bill was dishonoured and Raman requested Ramchandra to accept Rs.4,000/- immediately and draw upon him a new bill for the remaining amount at 3 months togetherwith an interest at 10% p.a. Ramchandra agreed. The second Bill was duly honoured. Give Journalentries in the books of Ramchandra.

Note: - Here 1st part payment is made and then the interest is charged.

3. Premlal sold goods to Sunderlal worth Rs. 10,000/- and Sunderlal accepted the bill for Rs. 10,000/-at 3 months drawn by Premlal. Premlal Discounted the bill with his bank @ 6 % p.a. on due date thebill was dishonoured and Sunderlal requested Premlal to accept Rs. 4,000 immediately and draw

upon him a new bill for the remaining amount at 3months together with an interest at 10% p.a.Premlal agreed and the second bill was duly honoured. Give the Journal entries in the books ofPremlal. Note: - Here 1st part payment is made and then the interest is charged.

4. Archana purchased goods from Babita on Credit for Rs. 20,000. On next day Archana paid Rs.10,000 to Babita and accepted a bill drawn by Babita for the balance amount for four months.Babita discounted the bill with her bank for Rs. 9600/- Before the due date Archana approachedBabita with a request to renew the Bill Babita agreed with the condition that Archana should payRs. 6000 with interest of Rs. 120 and accept a new bill for the balance. The arrangement was dulycarried out. New bill is met on the due date. Pass journal entries in the books of Babita.Note: - Here 1st interest is charged and then the part payment is made.

5. Baloo owes Kaloo Rs.8000. Kaloo then draws a bill for Rs. 8000 on Baloo for a period of threemonths. Baloo accepts and return it to Kaloo. Kaloo discounted the bill with his bank at 12 % p.a.On due date, the bill was dishonoured noting charges amount to Rs. 30. Kaloo then draws a bill forthe balance plus interest of Rs. 170. Before the due date of this bill Baloo pays the amount at adiscount of Rs. 40 to retire the bill. Pass Journal Entries in the books of Kaloo.

Note: - Here only the interest is charged and there is no part payment occurs.

6. Minal draws a bill on Usha for Rs. 5,000 at 3 months. Usha accepts the bill and return to Minal.Minal discounted the bill @ 12 % p.a. with the bank. On Maturity Usha finds herself unable to makepayment of the bill and requested Minal to renew the bill. Minal accepts the proposal on thecondition that Usha should Pay Rs. 2,000 in cash and accept a new bill at one month along withinterest at 10% p.a. These arrangements were carried through. Usha retires the bill by paying Rs.3015/- Pass Journal Entries in the books of Minal. Note: - Here 1st part payment is made andthen the interest is charged.

MISCELLANEOUS PROBLEM

7. Rupali accepted a bill for Rs. 2,000/- drawn by Deepali at three months. Deepali got the billdiscounted with her bank for Rs. 1,900. Before the due date Rupali approached Deepali for renewalof the bill. Deepali agreed on the condition that Rs. 1,000/- be paid immediately together withinterest on the remaining amount at 6% p.a. For balance Rupali should accept a new bill for threemonths. These arrangements were carried through but afterwards, Rupali become Insolvent andonly 40 % of the amount could be recovered from her estate. Give journal entries in the books ofDeepali.

8. Chanda accepted a bill for Rs. 6,000 drawn by Nanda at three months. Nanda got the billdiscounted with his bank for Rs. 5,700. Before the due date, Chanda approached Nanda for renewalof the Bill. Nanda agreed on the condition that Rs. 3,000 is paid immediately together with an

interest on remaining amount at 18% p.a. for four months and for the balance Chanda should


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accept a new bill. But afterwards Chanda become insolvent and only 25% of the amount could berecovered from her estate. Pass journal entries in the books of Nanda.

9. Pankaj draws a bill on Anil worth Rs. 8,000 for three months which was accepted by Anil. On thesame date Pankaj discounted the bill with his bank @ 10 % p.a. On the due date Anil dishonouredhis acceptance. Anil paid Rs. 4,000/- to Pankaj and accepted a fresh bill for two months for thebalance including interest of Rs. 40. Anil became insolvent before the maturity of the bill and 50paise in a rupee was received at first and final dividend from his estate. Give Journal entries in thebooks of Pankaj.

10.Bhagwan sold goods to Deo for Rs. 3,000. On the same date Deo accepted a bill for 2 months.Bhagwan endorsed the bill to Ishwar. On the due date of the bill, Ishwar informed that the bill isdishonoured and the noting Charges were Rs. 20. Bhagwan drew a new bill on Deo for the amountdue including noting charges and an interest of Rs. 130. Before the due date of the second bill Deobecome bankrupt and 20 paise in a rupee was received from his estate as first and final dividend.Pass the necessary journal entries in the books of Bhagwan.

11.Mahendra sold goods to Ravindra worth Rs. 6000 and for that Ravindra accepted a bill drawn byMahendra for 3 months. After a month Mahendra discounted the bill with his bank at 10 % p.a. Onthe due date Ravindra dishonoured his acceptance. Ravindra paid Rs.3, 000 to Mahendra andaccepted a fresh bill for 3 months for the balance including interest @ 8% p.a. Before Maturity ofthe Bill Ravindra become insolvent and 50 paise in a rupee was discovered from his estate as firstand final dividend. Give Journal entries in the books of Mahendra and Ravindra.

12.Prakash drew a bill for Rs. 4,000 on Anand on 1st May, 1976 for three months. This was for theamount which Anand owed to Prakash. Anand accepts the same and return it to Prakash whodiscounted at his bank for Rs. 3,900. On 1st Aug, 1976 Anand requested Prakash to renew the billand Prakash agreed on the condition that Rs. 1,000 is paid immediately and Anand should acceptthe new bill for 3 months for the balance payable plus interest of Rs. 45. These arrangements werecarried through. However, on 1st October, 1976, Anand retired his acceptance for Rs. 3, 035. Passjournal entries in the books of Prakash and Anand.

13.On 1st January, 1988 Vandana drew a bill for Rs. 6,000 for 2 months periods on Lata. Lata dulyaccepted the bill. On 4

th

January 1988 Vandana discounted the bill with her bank for Rs. 5850.However, on the due date the bill was dishonoured. Lata agreed to accept a new bill with an interestof Rs. 100 for a period of one month. The bill was duly met on the due date. Give the journal entriesin the books of Vandana and show Vandanas account in the books of Lata.

14.Mukund owes (be obligated) Prakash Rs. 4000 for which Prakash draws a bill for 2 months on 1stFebruary, 1989. Mukund accepts it and returns it to Prakash. On 4 th March, 1989, Mukundapproaches Prakash and request him to accept Rs. 1000 in cash and draw a fresh bill for 3 monthsfor the balance plus interest @ 10% p.a. Prakash accepts the request and draw a bill accordinglywhich is accepted by Mukund. On 1st June 1989 Mukund retired his acceptance under discount ofRs. 30/-. Pass journal entries in the books of Prakash and prepare Prakash account in the ledger ofMukund.

15.Abhay draws a bill on Ajay for Rs. 1,400 at 3 months. Ajay accepts the bill and returns it to Abhay.The bill is sent to the bank for collection. On maturity Ajay finds he unable to make payment ofthe bill and request Abhay to renew it. Abhay accepts the Proposal on the condition that Abhayshould pay Rs. 700 in cash along with noting charges of Rs. 10 and draw a renew bill for onemonths for the balance. These arrangements were carried through. Afterwards Ajay retired the billby paying Rs. 695. Give journal entries in the books of Abhay and Ajay.

16.Krishna accepted a bill for three months drawn by Rama for Rs. 4000. Rama discounted the billwith the bank at Rs. 3900. On the date of maturity, the bill was dishonoured. Rama paid notingcharges for Rs. 20 Krishna paid half the mount for the bill and full amount of the noting chargesand accepted a bill for the balance including interest of Rs. 50. The second bill was duly honoured.Pass necessary journal entries in the books of Rama and show Krishnas account.


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17.Jain purchased goods worth Rs. 3,000 from Sharma on 1st June 1977 and gave him acceptance on3rd June for a period of three months. On 15 th June Sharma discounted the bill for Rs. 2980. On 6thSeptember, when the bill was presented for payment. Jain dishonoured the same. Rs. 20 was paidas noting charges. Pass journal entries in the books of Sharma and Sharmas account in the books ofJain.

18.Sagar owes Sindhu Rs. 8000 Sagar accepted a bill for 3 months by Sindhu for Rs. 8000. Sindhudiscounted the bill with bank at Rs. 7800. On the due date, the bill was dishonoured. Notingcharges amounted to Rs. 20. Sagar Paid half the amount of the bill and full amount of the notingcharges including interest of Rs. 100. Pass journal entries in the books of Sindhu and show theaccount of Sagar.

19.On 1st January, 1982 Shri Jameersheth of Jalgaon sold goods to Shri Nanchand of Nanded for Rs.80,000. On the same date Shri Jameersheth drew a bill on Shri Nanchand for the same amount forthree months. Shri Nanchand accepted the bill and returned the same to Shri Jameersheth on 4thJanuary, 1982. Shri Jameersheth discounted the bill with the banker at 10 % p.a. On the due datebank informed that the bill was dishonoured and Shri Nanchand requested Shri Jameersheth toaccept Rs. 40000 immediately and draw upon him the new bill for the remaining amount for twomonths together and interest at 12% p.a. Shri Jameersheth agreed and the second bill was dulyhonoured. Pass the necessary Journal entries in the books of Shri Jameersheth of Jalgaon and showShri Jameersheths account in the books of Shri Nanchand of Nagpur.

20. Ameet draws a bill for Rs. 7500 on Tushar for four months. Ameet discounts the bill with thebank at 8%p.a. On the due date Tushar requested Ameet to accept Rs. 4,700 (including Rs. 200for interest) and to draw a bill for the balance of three months. Ameet agrees this proposal. Beforethe due date of the new bill Tushar retires the bill for Rs. 2960. Pass the journal entries in the booksof Tushar and open Tushars account in the books of Ameet.

21.Akbar owed to Barbar Rs. 6,000. Akbar accepted the bill drawn by Barbar for the amount at fourmonths. Barbar discounted the bill with his bank for Rs. 5850. Before the Due date, Akbarapproaches Barbar with the request for renewal of the bill. Barbar agreed on the condition that Rs.4,000 is paid immediately in cash together with an interest on the remaining amount at 12%p.a. forthree months and for the balance Akbar should accept a new bill at three months. These

arrangements were carried through. Barbar endorsed the new bill to Kadar. Akbar met the bill ondue date. Give the transaction in the books of Akbar and prepare Akbars account in the books ofBarbar.

22.Sonia draws a bill on Moni for Rs. 6,000 at 4 months. Moni accepts the bill and returns it to Soniawho discounts the bill with the bank at a discount of 8%p.a. Before the due date of Bill Monirequested Sonia to accept Rs. 4000 in cash and draw a bill for the balance plus interest at 12%p.a.for two months. Sonia draws a bill as the request is agreed. The bill is sent to bank for collection. Onthe due date the bill was honoured. Pass the necessary journal entries in the books of Sonia andMoni.

23.Journalize the following transactions in the books of Kamesh:a. Nanda informs Kamesh that Shantis acceptance for Rs. 4,000 endorsed to Nanda has been

dishonoured and noting charges have been Rs. 100b. Ashok renews his acceptance to Kamesh for Rs. 2400 by paying Rs. 800 in cash and accepting anew bill for the balance plus interest @ 12 p.a. for 3 months.

c. Devas acceptance to Kamesh Rs. 12,000 is retired one month before its due date at a discount of12% p.a.

d. The bank informs Kamesh that Sudhakars acceptance for Rs. 4,000 has been dishonoured and ithas paid noting charges Rs. 80.

24.Journalise the following transactions in the books of Kailash.a. Sandeep informs Kailash that Vilas acceptance for Rs. 8,000 endorsed to Sandeep has been

dishonoured. Noting Charges amounted to Rs. 200.b. Kalpana renews her acceptance to Kailash for Rs. 7,500 by paying Rs. 3,500 in cash and accepting a

fresh bill for the balance plus interest at 10% p.a. for 3 months.

c.

Uma retired her acceptance to Kailash for Rs. 3,000 by paying Rs. 2,900 in cash.


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d. Kailash sent a bill of Anita for Rs. 6,000 to bank for collection. But Bank informed that the bill hasbeen dishonoured by Anita.

25.Journalise the following transactions in the books of Rahul.a. Pradeep informed Rahul that, Vijays acceptance for Rs. 1,000 endorsed to Pradeep has been

dishonoured. Noting charges amounted to Rs. 50.b. Nilesh renews his acceptance to Rahul for Rs. 600 by paying Rs. 200 in cash and accepting a fresh

bill for balance plus interest at 12% p.a. for 3 months.c. Prashants acceptance to Rahul for Rs. 3,000 retired one month before due date at a discount of

12% p.a.d. Bank informs Rahul as to the dishonour of Avirajs acceptance for Rs. 1,000 to Rahul, discounted

with the bank. Noting charges are Rs. 20.

26.Journalize the following transactions in the books of Maharaja.a. Ayub informs Maharaja that Sadashivs acceptance for Rs. 2,000 endorsed to Ayub has been

dishonoured, noting charges amounted to Rs. 150

b. Pankaj renews his acceptance to Maharaja for Rs. 1200 by paying Rs. 400 in cash and acceptinga fresh bill for the balance plus interest at 12% p.a. for 3 months.

c. Vaibhavs acceptance to Maharaja for Rs. 6000 retired one month before the due date at adiscount of 12%p.a.

d. Bank informs Maharaja as to the dishonour of Kasams acceptance for Rs. 2000 to Maharajadiscounted with Bank noting charges Rs. 200.27.Journalise the following transactions in the books of Mr. Ashok Agrawal.

The bank informed Mr. Ashok Agrawal that Kamleshs acceptance for Rs. 12,000 sent to bankfor collection had been honoured and bank charges debited were Rs. 60.

Discharged Dr. Ashok Agrawals acceptance to Mahesh for Rs. 15,250 by endorsing Prakashsacceptance to Mr. Ashok Agrawal for Rs. 15,100.

Vishal renewed his acceptance to Mr. Ashok AGrawal for Rs. 11,200 by paying Rs. 6000 in cashand accepting a fresh bill for the balance plus interest @ 12% p.a. for three months.

Dinesh who had accepted Mr. Ashok Agrawals bill of Rs. 14,000 was declared bankrupt andonly 45% of the amount due could be recovered from his estate.

28.Journalise the following transactions in the books of Ashwin. Bank informed that Sachins acceptance for Rs. 5,750 sent to bank for collection had been

honoured and bank charges debited were Rs. 50.

Nitin renewed his acceptance for Rs. 7,200 by paying Rs. 2,200 in cash and accepting a new billfor the balance plus interest @8% p.a. for 3 months.

Discharged our acceptance to Pravin for Rs. 4,250 by endorsing Bhavins acceptance to us forRs. 4,000.

Jatin who had accepted Ashwins bill of Rs. 8,500 was declared insolvent and only 40% of theamount due could be recovered from his estate.

29.Journalise the following transactions in the books of Kamalakar.

Nisha informs Kamalakar that Shantis acceptance for Rs. 14,000 endorsed to Nisha has beendishonoured and noting charges have been paid Rs. 200.

Asha renews hare acceptance to Kamalakar for Rs. 12400 by paying Rs. 6000 in cash andaccepting a new bill for the balance plus interest @ 12% p.a. for 3 months.

Devikas acceptance to Kamalakar for Rs. 42000 is retired one month before its due date at adiscount of 12% p.a.

The bank informs Kamalakar that Sindhus acceptance for Rs. 15000 has been dishonoured andit has paid noting charges Rs. 100.

Bank informs Kamalakar that Sangitas acceptance for Rs. 12000 which was sent to bank forcollection has been dishonoured.


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30. Journalise the following transactions in the books of Ranbir. Sonam informs Ranbir that Salmans acceptance for Rs. 3200 endorsed to Sonam has been

dishonoured and the noting charges amounted to Rs. 80.

Ravindra renews his acceptance to Ranbir for Rs. 4,800 by paying Rs. 1800 in cash andaccepted a fresh bill for the balance, plus interest @ 12% p.a for 2 months.

Dilips acceptance to Ranbir for Rs 8000 is retired one moth before the due date at a discountof 12% p.a.

The bank inform Ranbir that Shirins acceptance for Rs 5500 to Ranbir discounted with the bank earlier

has been dishounred and the noting charges Rs. 100.


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CH. 4. DEPRECIATION [Q. 2 : 10 MARKS]

Note: -As per the syllabus a Standard XII (SYJC), the students are required to study the following

two methods of depreciation only, viz.

i. Fixed Installment Method / Original Cost Method / Straight Lime Method / EqualInstallment method.

ii. Reducing Balance Method / Written Down Value Method / Diminishing BalanceMethod.

PROBLEMS1. M/s Modern company purchased Machinery worth Rs. 2, 00,000 on 1st April, 2006.

Accounting year of the Company closes on 31st March every year. Company providesdepreciation at 10% p.a. on the original cost. On 31st March, 2008 the machinery was sold

for Rs. 1, 20,000. Give the machinery Account and depreciation account for three years.[F.I.M]

2. M/s Classic company purchased Machinery worth Rs. 1, 00,000 on 1 st April, 2006. Accounting year of the Company closes on 31st March every year. Company providesdepreciation at 10% p.a. on the original cost. On 31st March, 2008 the machinery was soldfor Rs. 20,000. Give the machinery Account and Depreciation account for three years

3. Shri Yuvraj and company, Kolhapur, purchased furniture for Rs. 60,000 on 1.4.2007. On1.10.2009 the company sold out a part of the furniture for Rs. 6000, the original cost ofwhich on 1.4.2007 was Rs. 12,000. The company charges depreciation at the rate of 10%p.a. on Original Cost method. The financial year of the company ends on 31st March, everyyear. Prepare: Furniture account and depreciation account for the years 2007 2008-,2008 2009, 2009-2010. [F.I.M]

4. M/s. Deepali International bought furniture worth Rs. 24,000 on 1 4 1977 andadditional furniture on 1 10 1977 worth Rs. 16,000. They charged depreciation at 15%p.a. on Fixed Instalment basis. On 1 10 1979 they sold out one cupboard for Rs. 2,200original cost of which on 1-4-1977 was 4,000. On the same date a new cupboard waspurchased for Rs. 8,000. Show the furniture account and depreciation account for the year1977-78, 1978-79 and 1979-80 assuming that the financial year closes on 31 st March everyyear. [F.I.M]

5. Janab Hasansab of Hyderabad made furniture for his own office on 1st October 1975. Forthis he had spent Rs. 36,000 on materials and Rs. 16,000 on wages. He estimated he life ofthe furniture to be 10years. He also estimated that its expected scrap value at the end of itslife would be Rs. 12,000. He closed his books of accounts on 31st March every year. He soldthe entire furniture for Rs. 40,000 on 1st October 1978. Show the furniture account anddepreciation account for the year ended 31st March, 1976, 31st March 1977, 31st December1978 and 31st December 1979. [F.I.M]

6. The company purchased machinery worth Rs. 36,000 on 1-4-1987 and spent Rs. 4,000towards installation charges. The company depreciates the machinery at the rate of 10%p.a. on original cost. On 1-10-1989 the company sold out a part machinery for Rs. 3,200.The original cost of the sold machinery on 1-4-1987 was Rs. 6,000. On 1-10-89 the

company purchased machinery for Rs. 10,000. As the company closes the financial year


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31st March every year. Prepare Machinery account and the deprecation account for theyears 1987-88, 1988-89 and 1989-90. [F.I.M]

7. Shirish Enterprises purchased a machinery costing Rs. 36,000 on 1-4-1989 and wasinstalled on the same date. The installation expenses amounted to Rs. 4,000. The firmdecided to charge depreciation at 10% p.a. on straight line method. On 1-10-91 a part ofmachinery with an original price of Rs. 6,000/- (including the installation charges) was

sold for Rs. 3,200 and a new machinery costing Rs. 10,000 was purchased on the samedate. The firm closes its books of accounts on 31st March every year. Prepare Machineryaccount and Depreciation account for the year 1989-90, 1990-91 and 1991-92 in the booksof the firm. [F.I.M]

8. S. Narayan from Bombay purchased Furniture for his office costing Rs. 1,04,000 on 1stJuly 1987. Estimated life of the Furniture is 10 years and scrap value Rs. 24,000. TheFurniture was sold on 31st December 1990 for Rs. 70,000. The accounts are closed on 31 stDecember every year. From the above information prepare Furniture account andDepreciation account for the years 1987, 1988, 1989 and 1990, by charging depreciationunder Fixed Instalment Method. [F.I.M]

9. M/s J.K. Company, Maroda, purchased machinery for Rs. 80,000 on 1 st April 2002.Company purchased additional machinery for Rs. 36,000 on 1st October, 2003. Thecompany charges depreciation @10% p.a. on the original cost. The financial year of theCompany ends on 31st March every year. On 30th September, 2004 a part of the machinery,original cost of which was Rs. 30,000 on 1 st April, 2002 was sold by the Company for Rs.22,000. Prepare Machinery account for 3 years and give journal entries for the year 2002 2003. [F.I.M] [MARCH 2009].

10. M/s Dolphin, New delhi, showed a debit balance of Rs. 32,000 to the Machinery A/con 1st April, 2001(Original cost of the Machinery was Rs. 40,000). On 1st October, 2001 theMill bought additional Machinery for Rs. 15,000 and spent Rs. 1,000 for its installation.

One more machinery costing Rs. 20,000 was purchased on 31st

March, 2003. Depreciationis charged on 31st March, every year at 10% p.a. under the straight line method. On 31stMarch, 2004, the machinery which was purchased on 1st October, 2001 was sold for Rs.12000. Prepare Machinery A/c and Depreciation A/c for the years 2001 2001, 2002 2003 and 2003 2004. [F.I.M]

11.M/s Philips company purchased Machinery worth Rs. 2, 00,000 on 1st April, 2006. Accounting year of the Company closes on 31st March every year. Company providesdepreciation at 10% p.a. on the written down value. On 31st March, 2008 the machinery was sold for Rs. 1, 20,000. Give the machinery Account and depreciation Account forthree years. [F.I.M]

12.M/s View Sonic company purchased Machinery worth Rs. 1, 00,000 on 1st April, 2006. Accounting year of the Company closes on 31st March every year. Company providesdepreciation at 10% p.a. on the Diminishing balance method. On 31 st March, 2008 themachinery was sold for Rs. 20,000. Give the machinery Account and Depreciationaccount for three years.

13.Aurangabadkar purchased furniture worth Rs. 20,000 on 1-4-73. He charges depreciationat the rate of 10% on the Reducing Balance method. On 1 7 75, he sold out a part of theFurniture for Rs. 2,000, the original cost of which on 1 4 73 was Rs. 4,000. Thefinancial year of Aurangabadkar ends on 31st March every year. You are required toprepare his furniture account for the first four years, and to pass journal entries for thetransactions of the third year. [W.D.V.]


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14.On 1st July, 1992, Ajanta Traders, Pune, acquired a building for Rs. 8,00,000. On 1 st April,1993, an extension was made to the above building by spending Rs. 4,00,000. On 1stOctober 1994, half of the building was sold through a broker for Rs. 5,60,000 andbrokerage at 2% of the selling price was paid. Depreciation is charged on 31st March everyyear at 10% p.a. under the Diminishing Balance Method. Prepare the Building Account andthe Depreciation account for three years. [W.D.V.]

15.M/s Jalaram Mill, Mulund, showed a debit balance of Rs. 32,000 to the Machinery A/c on1st April, 2001(Original cost of the Machinery was Rs. 40,000). On 1st October, 2001 theMill bought additional Machinery for Rs. 15,000 and spent Rs. 1,000 for its installation.One more machinery costing Rs. 20,000 was purchased on 31st March, 2003. Depreciationis charged on 31st March, every year at 10% p.a. under the Diminishing Balanced Method.On 31st March, 2004, the machinery which was purchased on 1st October, 2001 was sold forRs. 12000. Prepare Machinery A/c and Depreciation A/c for the years 2001 2001, 2002 2003 and 2003 2004. (February, 2008) [W.D.V.]

16.On 1st April, 2004 Saikripa enterprises purchased two computers of Rs. 40,000 each. On1st October, 2004 they purchased one more computer for Rs. 40,000. On 1st October, 2006they sold one computer, which was purchased on 1st April, 2004 for Rs. 18,780.Depreciation on computers was provided @ 10% p.a. on diminishing balance method andthe financial year closes on 31st March every year. Prepare computer A/c depreciation A/cfor years 2004 05, 2005 06 and 2006 07. (September. 2008) [W.D.V.]

17.Shri Yashraj and company, Kolhapur, purchased furniture for Rs. 60,000 on 1.4.2007. On1.10.2009 the company sold out a part of the furniture for Rs. 6000, the original cost ofwhich on 1.4.2007 was Rs. 12,000. The company charges depreciation at the rate of 10%p.a. on Reducing balance method. The financial year of the company ends on 31st March,every year. Prepare: Furniture account and depreciation account for the years 2007 2008-, 2008 2009, 2009-2010. [W.D.V] FEBRUARY 2011.

18.M/s J.K. Company, Maroda, purchased machinery for Rs. 80,000 on 1

st

April 2002.Company purchased additional machinery for Rs. 36,000 on 1st October, 2003. Thecompany charges depreciation @10% p.a. on the diminishing balance. The financial year ofthe Company ends on 31st March every year. On 30th September, 2004 a part of themachinery, original cost of which was Rs. 30,000 on 1 st April, 2002 was sold by theCompany for Rs. 22,000. Prepare Machinery account for 3 years and give journal entriesfor the year 2002 2003.


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CH. 5. JOINT VENTURE ACCOUNTS [Q. 4: 12 MARKS]

Method I When Separate set of Books is maintained.

1. Dimple and Simple entered into a joint venture. They agreed to share profits andlosses in the proportion of their initial contributions to the joint venture. They opened a joint Bank A/c. and deposited Rs. 60,000 and Rs. 40,000 respectively as initialcontributions. They made cash purchases of Rs. 70,000. They also paid Rs. 4,500 forinsurance and freight and Rs. 1,750 for sundry expenses. At the end of the venture, thesales amounted to Rs. 1, 10,000/- There was unsold stock of goods worth Rs. 5000. Simpletook over the unsold stock. The Joint Venture was closed. You are asked to prepare JointVenture A/c. Joint Bank A/c and Co ventures A/c. Also pass journal entries.

2. A and B entered in to Joint Venture to construct a building for X enterprises limited.The contract price was Rs. 2, 50,000. They opened joint bank account and deposited Rs.1,20,000 and Rs. 60,000 respectively and agreed to share profits and losses in the ratio 3 :2. The following transactions were made from Joint Bank A/c: Wages Rs. 70,000 andMaterial purchases Rs. 1,25,000. Apart from this A supplied material of Rs. 12,000 andB paid the architect fees of Rs. 2,500 on completion of construction. X enterprises Ltd.paid the full amount and unsold stock was taken over by B at an agreed value of Rs.15,000. Prepare Joint venture A/c, Joint Bank A/c and Co venturers A/c. Also passjournal entries.

3. Suresh and Ramesh entered into a joint venture to construct a building at a contractprice of Rs. 7,00,000. They agreed to share profits and losses in the ratio of 2:1. Sureshdeposited Rs. 5,00,000 and Ramesh Rs. 1,00,000 into joint bank. The transactions wereas follows.

Purchase of materials Rs. 3,50,000 Tools and equipment Rs. 1,00,000. Wages Rs. 1,20,000 Architect fees Rs. 25,000 Besides these, Suresh supplied material worth Rs. 15,000 and Ramesh supplied

material worth Rs. 13,500. Building was ready and contract price received. Prepare

Joint venture A/c, Joint Bank A/c & Co Venturers A/c. Also pass journal entries.

4. Ashok, Kishor & Anup undertookthe construction of an office building at a contractprice of Rs. 10,00,000. Receivable in cash Rs. 6,00,000 and Rs, 4,00,000 in shares. Theyagreed to share profits and losses equally. They opened the joint bank a/c and contributedthe following amount. Ashok Rs. 3,00,000, Kishor - Rs. 3,00,000, and Anup Rs.2,00,000. Ashok paid Rs. 10,000 as architect fees, Kishor brought in the venturemixture of Rs. 25,000 and Anup brought in motor truck of Rs. 55,000. The followingtransactions were made from Joint bank A/c. Purchase of material Rs. 4, 50,000, Plant Rs. 30,000 and freight and wages Rs. 1, 50,000. At the close of the venture, Ashok took

away the unused material worth Rs. 8,000. Kishor took away the mixture worth Rs.


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15,000 and Anup took away the truck worth Rs. 35,000. The scrap value realised of theplant was Rs. 6,000. The Contract price was received in full and Kishor took over theshares for Rs. 4,10,000. Prepare Joint Venture A/c, Joint Bank A/c & co ventures A/c.Pass journal entries.

5. Sanjay, Ajay and Vijay entered into a Joint venture for construction of a building forcontract price of Rs. 6, 00,000. Payable in cash Rs. 4,00,000 and Rs. 2,00,000 indebentures. They decided to share profits and losses in the ratio of their initialcontributions. They opened Joint Bank A/c. where Sanjay deposited Rs. 3,00,000 AjayDeposited Rs. 2,00,000 and Vijay deposited Rs. 1,00,000. The following payments aremade out through Joint Bank A/c . Purchase of material Rs. 2,50,000, Plant Rs. 45,000,Wages Rs. 77,000 and other charges Rs. 11,000. Sanjay brings truck of Rs. 40,000. Ajaybrings materials of Rs. 55,000 and Vijay brings mixture of Rs. 10,000. At the end of theventure unused material was taken over by Sanjay for Rs. 5,000. Ajay took over mixturefor Rs. 15,000 and Vijay took over Plant for Rs. 12,000. The truck was sold in the marketfor Rs. 22,000. Contract price was received and debentures were taken over by Vijay forRs. 1,90,000. Prepare Joint Venture A/c., Joint Bank A/c., Co ventures A/c and alsopasses journal entries.

6. Harish, Iqbal and Joseph undertookto construct a building for Prabhu & Co. at acontract price of Rs. 2, 50,000. The price was to be paid as follows: Rs. 2,00,000 in cashand balance in preference shares of the company. Profit was agreed to be divided in theratio of 2:2:1. The participants contributed cash as follows. Harish Rs. 30,000 Iqbal Rs.25,000 and Joseph Rs. 20,000. These amount were credited to a joint bank A/c. Iqbal wasto be paid a remuneration of Rs. 1,500 for managing the business. Harish prepared theplats and paid Rs. 3,500 for them. Iqbal brought a concrete mixture for Rs. 12,000 and

Joseph brought a truck for Rs. 25,000. They brought Plant for Rs. 15,000 Material for Rs.1,20,000 and paid wages Rs. 1,05,000. When the contract was completed Harish took overunused material for Rs. 10,000. Iqbal took back the concrete mixture for Rs. 11,000 andJoseph agreed to take back the truck for Rs. 18,000. The plant was sold as scrap for Rs.6,000. When the contract price was received, Harish agreed to take over preference sharesat a discount of 20%. All the accounts were closed. Prepare Joint venture A/c, Joint BankAccount and the Co venturers account also pass journal entries.

7. X, Y and Z entered into a joint venture to construct a premises and the contract pricewas Rs. 4,00,000. Payable Rs. 2,00,000 in cash and Rs. 2,00,000 in shares. X,Y and Z

contributed Rs. 1,00,000 each. The following payments were made through bank: Rawmaterials Rs. 75,000; Transportation charges Rs. 25,000; Machinery Rs. 50,000;Insurance Rs. 25,000. Besides this X paid other expenses Rs. 20,000. Y paid for mixtureworth Rs. 20,000 and Z brought in materials of Rs. 20,000. After completion X and Z tookover unused materials of Rs. 5,000 each and Y took over the mixture for Rs. 10,000. Thescrap of plant was sold for Rs. 8,000. Due to a certain defect, contract price was reducedby Rs. 10,000 and shares were taken over by X at a premium of 5%. Prepare Joint VentureA/c. Joint Bank A/c and Co venturers.

8. X,Y and Z entered into a Joint Venture to sell a certain plot of land. They contributedRs. 25,000 each. They purchased land of 5,000 sq. m. at Rs. 10 per sq. m. 1/5 th of the land


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was left over for public roads and the balance was divided into 8 plots of equal size. A planwas got prepared for Rs. 2,000 and other expenses were Rs. 3,500. 5 plots were sold @ Rs,15 per sq. m. and 3 plots were sold @ Rs. 14 per sq. m. Prepare joint venture A/c JointBank A/c and Co Venturers A/c. Pass journal entries.

9. A, B & C entered into a joint venture sharing profits and losses in the ratio of their initialcontributions. They opened a Joint Bank A/c. wherein they deposited Rs. 1,00,000 Rs.1,50,000 and Rs. 2,00,000 respectively. Expenses made through Joint Bank were asfollows. Purchase of Raw material Rs. 50,000. Paid architect fees Rs. 10,000, Plant Rs.25,000 Besides this, A brought in mixture of Rs. 20,000, B paid insurance charges Rs.,5,000 and C brought in machinery worth RS. 12,000. At the end of the venture, A tookback the mixture worth Rs. 5,000, B took back the unused materials for Rs. 4,000 and Ctook back the machinery for Rs. 8,000. Scrap of plat realized Rs. 2,000. On completionthey received the contract price Rs. 1,00,000 in cash and Rs. 1,00,000 in debenture whichwhere taken over by A at a loss of Rs. 10,000. Prepare Joint Venture A/c Joint Bank A/cand Co venture A/c. Pass Journal entries.

10.Ram and Rajiv entered into a Joint venture to construct a conference hall at a contractprice of Rs. 3,00,000. Ram contributed Rs. 1,00,000 and Rajiv contributed Rs. 1,50,000.

Ram brought in material worth Rs. 2,000 and Rajiv Paid transportation charges worth Rs.

6,000 Plant was purchased for Rs. 50,000 and material worth Rs. 2,00,000 were also

purchased. On completion, plant was sold for Rs. 20,000. Due to certain defect, one bill of

Rs. 20,000 was not recovered and the balance was received in cash. Venturers share

profits in the ratio of their initial contributions. Prepare Joint Venture A/c, Joint Bank A/c

and Co venturers A/c and pass Journal entries.

11. A and B entered into a Joint venture. They contributed Rs. 75,000 each andpurchases a plot of 6,000 sq. m. @ Rs. 20 per sq. m. Besides this A got the plan preparedfor Rs. 2,000 and B paid the stamp duty of Rs. 3,000. Fencing expenses were Rs. 5,000and other expenses amounting to Rs. 3,000 were paid from Joint Bank A/c. Later on, 1/6thof the land was left over for roads and the balance was divided into 10 equal plots. 5 plotswere sold for Rs. 30 per sq. m. and 4 plots were sold for Rs. 40 per sq. m. Remaining oneplot was taken over by A for Rs. 10,000. Prepare Joint Venture A/c. Joint Bank A/c and CoVenturers A/c. Also pass the necessary Journal Entries.

12.Pramod and Amit jointly undertook to construct a factory building for a limitedcompany. The contract price was Rs. 5, 00,000 and was received after work has beencompleted. They contributed_ Pramod Rs. 80,000 & Amit Rs. 40,000 and deposited inJoint Bank Account. They agreed to share profit or Loss in the capital ratio. Pramod gotplans ready and paid Rs. 5, 000 for that Amit brought into the venture Plant andMachinery valued at Rs. 20, 000 and a motor truck at Rs. 16, 000. For the purpose oferection of factory building, materials of the value of Rs. 3, 50, 000 were purchased andwages paid Rs. 60, 000. They also paid other sundry expenses amounting to Rs. 25, 000.The contract was completed and the company settled their account fully. UninsuredMaterial valued at Rs. 4, 000 was taken over by Pramod. The plant and Machinery was

sold as scrap for Rs. 3, 000 and Amit took back the motor truck at an agreed value of RS.


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5000. You are required to show Joint venture A/c, Joint Bank A/c in the books of the Jointventure.

13.Raghu and Ramesh entered into a joint venture to produce an advertisement film forBharati Traders, at a contract price of 40,000. Raghu contributed Rs. 10, 000 and RameshRs. 20,000 and opened a joint account in the bank with these contributions. Raghupurchases from his own funds raw film for Rs. 8, 000 and a Camera for Rs. 7,000 for joint

venture. They Paid from the Joint Bank Account:Artists fees Rs. 18, 000, Hire of sets Rs.2,000 and technician Charges RS. 10,000. The firm was completed but due to certaindefects in the firm, the contract Price was reduced by 10% the amount being received bycheque from Bharati Traders. At the end of venture, the camera was sold for Rs. 5,000 andRamesh took over the unused film for Rs. 400. Raghu and Ramesh shared profit andlosses in the proportion of 1:2 and settled account of the venture. Prepare the Joint ventureAccount the Joint Bank account and the accounts of the Co ventures.

14.Suratwala and Bodochwala entered into a joint venture to construct a bridge of Koynariver at a contract price of Rs. 7, 00, 000. Suratwala and Bodochwala introduced Rs.1,50,000 and Rs. 1, 00, 000 and opened a joint account in the bank. Suratwala suppliedmaterial worth Rs. 60, 000 and Bodochwala brought a Motor Truck costing Rs. 50, 000.

Total Material used amounted to Rs. 2,50,000; payment for wages Rs. 3,00,000 and otherexpenses amounted to Rs. 40,000. Suratwala took over unused material at Rs. 5, 000.Motor truck was sold as a scrap of Rs. 4,000 contract prices was received in full oncompletion of contract. Prepare Joint Venture A/c, Co-ventures accounts and Joint BankAccount.

15.Shri Nandkarni of Nanded and Shri Kulkarni of Kolhapur undertook in January 1983the construction of Ajanta Market Hall for Rs. 5, 00, 000 to be completed within oneyear. On the same date Nandkarni brought in Rs. 5, 000 and Kulkarni brought Rs. 10,000.These amounts were deposited in a Joint Bank account which was newly opened by themfor the purpose. Both agreed to share profits and losses equally. The work was completedin time and the following expenses were incurred and paid from Bank accounts, Material

Rs. 2,30,000; Wages, Rs. 1,90,000 and Plant Rs. 40,000. The payments werereceived in instalments but due to certain defects a bill of Rs. 15,000 was not paid. Whenthe work was over, as half of plant was taken over by Nandkarni @ 20% below while theother half could be sold for Rs. 15,000.

Prepare: Joint venture A/c, Joint Bank A/c, Accounts of Co- ventures.

16.Manoj and Ambalal enter into a joint venture to prepare a building for the government,who agrees to pay Rs. 2,00,000. A Bank Account is opened in their joint names; Manojcontributing Rs. 25,000 and Ambalal Rs. 25,000 and it is agreed that they will share theprofit and losses in the proportion of 2/5th and 3/5th respectively.

Payment made out of the Joint Bank accounts were:Purchases of Equipments : Rs. 14,000Hire Purchases of Equipments : Rs. 13,000 Wages : Rs. 85,000Purchases of Materials : Rs. 18,000Office expenses : Rs. 8,000Manoj and Ambalal then paid Rs. 5, 000 and Rs. 3,000 respectively for other expenses.The building was completed the government paid the amount by cheque and the jointventure was closed. Ambalal taking up the equipments at Rs. 4,000 and Manoj taking upthe unused material at Rs. 2, 000. Prepare Joint Venture A/c, Joint Bank A/c and Co-Ventures A/c.


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Method II: When no Separate set of Books ismaintained.

I.e. Individual Books of Accounts are maintained.17.Abhay Kumar and Jaywant entered into a joint venture to share profits and losses in

equal proportion. The following transactions were made: Abhay Kumar brought goods for Rs. 60,000/- Abhay Kumar paid for expenses incurred on the above purchases Rs. 3,500/- Jaywant supplied goods of Rs. 24,000 from the stock. Jaywant had to pay Rs. 600/- and Rs. 700/- for loading and freight respectively

on supply of goods. Abhay Kumar paid Rs. 350/- and Rs. 250/- for warehousing charges and other

expenses respectively. Abhay Kumar sold goods for Rs. 1,20,000/- Jaywant sold goods for Rs. 10,000/- The unsold stock of goods was taken over by Jaywant for Rs. 5,000/-You are asked to prepare Joint Venture account and Jaywant A/c in the books of

Abhay Kumar

18.A and B entered into a joint venture to sell carpets. A purchased 200 carpets at Rs. 20each and B purchased 100 at Rs. 25 each. A paid transportation expenses Rs. 500 and alsopaid freight Rs. 200. B Paid advertising expenses Rs. 100. Later on A sold 150 carpets forRs. 35 each and B sold 125 carpets for Rs. 30 each. Remaining 25 carpets were taken overby B for Rs. 500. Venturers settle their accounts.You are asked to prepare Joint Ventureaccount and Bs Account in the books of A.

19.Humayun and Phiroz entered into a joint venture. They agreed to share the profits andlosses equally. Following transactions were made by them.

Humayun bought goods Rs. 90,000Phiroz paid for freight Rs. 7000Phiroz sold goods Rs. 75,000Phiroz paid commission on sales Rs. 2500Humayun paid for warehousing charges Rs. 3500Humayun sold rest of the goods Rs. 45,000Humayun paid commission on sales Rs. 3500

You are asked to show as to how the above transactions will be entered in the books of Humayun.

20.Ramrao and Shamrao decided to undertake a business venture jointly. They agreed toshare the profits and losses in the proportion of 2/3 and 1/3 respectively. Ramrao suppliedgoods for the joint venture worth Rs. 15,000 and paid Rs. 650 for carriage and freight.Shamrao supplied goods worth Rs. 12,000 and spent Rs. 500 for sundry expenses. Shamraosold goods for Rs. 35,000. Shamrao is entitled to get a commission of 10% on sales as peragreement. Shamrao settled the account of Ramrao by remitting the amount due by bank draft.Open the necessary ledger account in the books of Ramrao.

21.East and West entered into a joint venture to share profits and losses in the ratio 2:1 to sellrice. East purchased 100 bags of rice at Rs. 200 each. He also paid packing charges Rs. 2000and freight Rs. 300. West paid warehousing charges Rs. 1000 and sold all the bags for Rs. 300each. He was entitled to a commission of 5% on sales. They settled their account by a draft.Prepare necessary ledger accounts in the books of west.

22.Kapil and Rohan entered into a joint venture to deal in computers. They agreed to shareprofits and losses in the ratio 3:2. Kapil purchased 20 computers @ Rs. 25,000 each and

supplied 5 computers @ Rs. 20,000 each from his own shop while Rohan purchased 15


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computers @ Rs. 24,000 each and got 5 computers from his godown @ Rs. 20,000 each. Kapilpaid for the transportation charges amounting to Rs. 30,000 while Rohan paid for insuranceand other charges totally amounting to Rs. 40,000. Finally all the computer were sold except 4computers out of which both took back 2 computer each @ Rs. 17,000 each. Kapil sold 16computers and Rohan sold the remaining computers. The selling price of each computer wasRs. 32,000 each. Both the venturers were to get 4% commission on the sales made b y them.The venturers settle their accounts by a draft. You are required to prepare Joint venture A/c

and Co Venturers account in the books ofKapil.

23.Jaganlal of Mumbai purchases cotton goods and supplied them to Babanlal of Delhi for sale on joint venture basis. They have agreed to share the profits and losses equal proportion. Jaganlal bought goods worth Rs. 35,000/- and sent them to Babanlal in Delhi. Jaganlal paid Rs. 2500towards the freight charges. Jaganlals bill of exchange for Rs. 20000 payable after 3 months drawnon Babanlal was accepted by Babanlal. Jaganlal discounted the same bill with bank for Rs. 18200.Babanlal informed Jaganlal that he had incurred Rs. 4500 expenses and the entire goods were soldfor Rs. 50,000. Babanlal remitted the required amount to Jaganlal. You are required to prepareJoint venture A/c and Coventurers account in the books ofJaganlal of Mumbai.

24.Satish and Ramesh enter into a joint venture to deal in TV. Sets. Satish is to purchase TV sets inMumbai and sent it to Ramesh in Pune. They agreed to share profits and losses in the ratio of 3:1.

Satish purchased 50 TV sets in Mumbai costing Rs. 7000 each and paid Rs. 10,000 astransportation cost. Ramesh received the consignment and sold all the TV sets at a lump sum priceof Rs. 4, 45,000. Ramesh sent a draft of Rs. 75,000 to Satish as an advance. The expenses incurredby Ramesh were Rs. 6000 to sell the TC sets. Venturers settle their a ccounts. You are requested toopen Joint Venture A/c and Ramesh A/c in the books of Satish.

25.Mahesh and Kalpesh enter into a joint venture to share profits and losses in the proportion of3:2. Mahesh paid Rs. 25,000 for purchases of goods and supplied goods of Rs. 3500 from his stock.Kalpesh made purchases of R. 78000 for the joint venture in addition to goods supplied from hisgodown worth Rs. 14000. Mahesh accepted a bill drawn by Kalpesh of Rs. 25000 which wasdiscounted by Kalpesh for Rs. 24000 and the discount to be treated as an expense of the jointventure. Kalpesh also received Rs. 5000 cash as an advance from Mahesh. The expenses of the joint venture amounted to Rs. 10000 which were paid by Mahesh and Kalpesh equally. Mahesh sold

goods amounting to Rs. 3000 and Kalpesh could sell goods worth Rs. 70000. The unsold goodswere taken away by Mahesh for Rs. 4000. The Coventurers are entitled for a commission of 10% ofsales made by them. Venturers settled their accounts by cheque. Prepare Joint venture account andcoventurers account in the books ofMahesh.

26.Usha and Sulbha decided to undertake a venture jointly. They agreed to share profits and lossesin the ratio of and respectively. Usha supplied from her own stock goods worth Rs. 90,000and paid Rs. 3,600 for freight. Sulbha supplied goods worth Rs. 72,000 and spent Rs. 3,000 forsundry expenses. Usha drew a 4 months bill on Sulbha for Rs. 12,000 as an advance. The same wasdiscounted by her at 15% p.a. and discount was charged to Joint Venture A/c. Sulbha sold all thegoods for Rs. 2,10,000. At the end of the venture, the accounts were settled. Give journal entries inthe books of Usha.

27.Narayani and Indrayani entered into a joint venture to buy and sell second hand motor carsand agreed to share profits & losses equally. Narayani purchased two cars for Rs. 75,000 and Rs.78,000 respectively, paid Rs. 4,000 for repairing these cars and sold them for Rs. 1,30,000 and Rs.1,40,000 respectively. Indrayani purchased three cars for RS. 2,70,000 in all, incurred an expenseof Rs. 4,000 for reconditioning these cars, sold two cars at a total price of Rs. 2,40,000 and took

over the third car at an agreed price of Rs. 90,000. Prepare the Joint Venture A/c and the Co Ventures A/c in the books ofNarayani.

28.Pritam of Sindhudurg and Prasad of Ratnagiri entered into a joint venture to consign 100computers to Priti of Mumbai to sell at their joint risk which is in proportion of 2/3 and 1/3respectively. Pritam supplied 55 computers at Rs. 25,000 each paying freight of Rs. 7,500 andother charges Rs. 1,500. Prasad suppled 45 computers at Rs. 24,000 each paying insurance Rs.750, freight Rs. 350 and other charges Rs. 1,800. Pritam advanced to Prasad Rs. 25,000 on

account of venture. All the computers were sold by Priti for Rs. 28,00,000 out of which she


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deducted 2% for her expenses and 2% for her commission on total sales. Priti remitted Rs.13,00,000 to Pritam by bank draft and balance to Prasad by accepting a bil drawn by Prasadfor one month. Pass Journal Entries in the books of Pritam assuming that all accounts havebeen finally settled.

29.Ramsingh of Rampur and Narsingh of Nagpur entered into Joint Venture. They decided tosend 500 TV sets to Harsingh of Hyderabad on their joint risk. They share profits and losses in

the ratio of 3/5 and 2/5 respectively. Ramsingh sent 300 sets at Rs. 2,500/- each and paid Rs.17,000/- for the expenditure of sending the goods. Narsingh sent 200 TV sets at Rs, 2,000/-each and paid Rs. 13,000 for the expenditure of sending the goods. Ramsingh advanced toNarsingh Rs. 50,000/- on account of Joint Venture. All the TV sets were sold by Harsingh forRs. 14,00,000/- from which he deducted 3% for his expenses and 2% commission on totalsales and he remitted Rs. 10,00,000 to Ramsingh and the balance amount to Narsingh. Theco venturers closed their venture and settled their accounts. Prepare: Joint Venture A/c,Narsingh A/c, Harsingh A/c in the books of Ramsingh.

30.Anil and Sunil entered in to a joint venture to consign 500 bales of cotton to Mukesh to besold on their joint risk

accounts notes for 2010 - 11

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