new fully prepared accounts notes for the year 2009 - 10 new

8/14/2019 New Fully Prepared Accounts Notes for the Year 2009 - 10 New

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H.S.C OMTEX CLASSES6TH YEAR

CH. 1. VALUATION OF GOODWILL [Q. 2

Note: - One practical problem on Valuation of Goodwill carrying 5 marks andone 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 Computer Awareness.

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 and

INTRODUCTION

Goodwill is an intangible (non visible) fixed asset having a realisable

(economic) value. It is the reputation of business. Valuation of goodwill is

very important in the case of admission, retirement and death of partners.

DEFINITION OF GOODWILL

Eric L. Kohler defined goodwill as under:

Goodwill is the excess of the price paid for the business as a whole over

the book value or over the computed value of all tangible assets

purchased. Normally, goodwill thus acquired is only one type appearing on

book of account and in financial statement.

We can define goodwill as under:

Goodwill is a monetary value of the reputation of a concern in terms of its future

earning capacity.

PROBLEMS1. The profits of the firm for the last five years are 2002 Rs. 20,000; 2003 Rs.

16,000; 2004 Rs. 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 goodwill of their firm is to be valued at three years purchase of the average profitfor the last five years. The profit and losses for the last five years have been.1st Year Rs. 16,000, 2nd Year, 15,000, 3rd Year, 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 atthree years purchase of average profit of the last six years. Profit and losses ofthe business in the last six years are as follows,

1st year, Rs, 40,000(Profit)

2nd Year, Rs, 60,000(Profit)

1BOOK KEEPING & ACCOUNTANCY


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3rd Year, Rs, 10,000(Loss)

4th Year, Rs, 50,000(Profit)

5th Year, Rs, 30,000 (Loss)

6th

Year, Rs, 80,000(Profit)

[Ans. Rs. 95,000]

4. Calculate the value of goodwill according to average profit method. Goodwill isvalued at three years purchase of last four year average profit. The profits and

losses for thelast four yearsare.

[Ans. Rs.

27,000]

5. The profit of a firm for the four years from 1991 to 1994 where_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.

[Ans. Rs. 1, 02,000]

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 for the last five years are

1st Year 4,800(p)

2nd Year 7,200(L)

3rd Year 10,000(L)

4th Year 3,000(P)


1st Year 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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5th Year 5,000(L)

[Ans. 0]

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 yearspurchase of average profit of five years. The Profit of the five years were_

1st Year 5,800

2nd Year 7,400

3rd Year 20,000

4th Year 3,500

5th Year 7,300

[Ans. Rs. 26,400]

9. Sales of trader for 3years ended 30th June 1995 are as follows199

5

Rs, 5,

50,000

199

4

Rs, 5,

46,000

1993

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 purchase of the average profit of the last 3years. Find the

value of good will. [Ans. Rs. 1, 22,680]

10.From the following particulars, value good will of 2yrs. Purchase of last 5 years.Year

ended

Turn

over

Net

profit

31-12-

1990

31-12-

1991

31-12-

1992

31-12-

1993

5,15,00

0

5,45,60

0

5,35,80

0

5,40,90

0

5%

6%

7%

7.5%

7%



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31-12-

1994

5,60,80

0

[Ans. Rs.

70,326]

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

12.Capital employed on 31st December, 1990 was Rs, 1, 00,000/-. The Profitsearned by the business for the last 5 years where.

1986 30,000

1987 40,000

1988 50,000

1989 40,000

1990 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.

[Ans. Rs. 87,000]

13.The books of a business showed that the capital employed on 31st December,1992 was Rs.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 valued at 2 years purchase of the Super profit of thebusiness. 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 inthe firm was Rs, 50,000. N.R.R on capital is 15%. The remuneration of thepartners during the period is Rs, 500 p.a. Good will is valued at 2 Yrs purchaseof Average super profit of the above mentioned years. [Ans. Rs. 4,000]

15.M/s Vijay trading company earned net profit during the last four years wasfollows.

1st Yea

r

Rs, 57,000

2nd

Year

Rs, 44,000

3rd

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 on capital is 20%. The remuneration of the partners during this period isRs, 500 p.m. Good will is valued at 2years purchase of Average Super profit of

above mentioned period. [Ans. Rs. 38,000]



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16.The average net profit expected in the business by ABC firm is Rs, 36,000 peryear. The average capital employed in the business by the firm is Rs, 2,00,000. The Rate of interest expected from capital invested in the business is10%. The remuneration of the partners is estimated to Rs, 6,000 P.a. Calculatethe value of goodwill based on 2years purchase of super profit. [Ans. Rs.20,000]

17.M/s Rajesh Trading company earned net profit during the last four years wereRs, 15,000, Rs, 28,000, Rs, 30,000 & Rs, 40,000. The capital investment madeby the company is 1, 00,000. Normal rate of return on capital is 15 %. Theremuneration of the partners during this period is Rs, 1,000p.a. Good will isvalued at 2 years purchase of average super profit of the above mentionedperiod. [Ans. Rs. 24,500]

18.The present average net profit of Braful, Shobha partnership firm beforedetecting partners remuneration is Rs, 27,000 p.a. The capital employed inthe business by the partner Braful Rs, 1, 00,000 & Shobha Rs, 50,000. The

profit expected from the total capital invested is 10% p.a. The totalremuneration is estimated to be Rs, 6,000 per annum. Find out the value ofgoodwill on the basis of 2years 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 Amount

Capital

Kantilal

Chandrakant

Reserve

Fund

Creditors

90,000

70,000

44,000

38,000

Machinery

Building

Investments

Stock

Debtor

Bank

Profit/loss

A/c

50,000

41,000

30,000

20,000

66,000

30,000

5,000

2,42,00

0

2,42,00

0

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 the 3years 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 March1995.

Balance sheet as on 31st march, 1995.

Liabilities Amount Assets Amount



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Capital

Anna

Chunna

Creditors

Profit/ Loss A/c

1,64,00

0

40,000

35,000

3,040

Machine

ry

Building

Plant

Stock

Debtor

Bank

10,000

26,000

56,000

56,000

19,040

75,000

2, 42,

040

2, 42,

040

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

year Rs, 32,280Normal 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.The average annual profit earned by a firm is Rs. 30, 000 including Rs. 2,000p.a. received as interest on Non Trading Investment and this average isexpected to continue in the future except for the following.

a. Rent paid in the past for temporary premises at Rs. 500 per month willno longer have to be paid as the firms own premises are now ready.

b. b. Salaries Rs. 7,000 p.a. paid in the past will increase by 20% in thefuture. Calculate goodwill at 3 times the Average Expected Profit.

[Ans. Rs. 97,800]

22.The firm of Mr. X and Mr. Y earned average annual profit of Rs. 60,000. Theprofit includes Rs. 5,000 p.a. as interest on non trading investment. The firmis expected to maintain the profit except the following.

1. The firm was conducting the business from rented premises. Rent paid Rs. 600p.a. The premises of the firm are now ready for conducting the business.

2. The business of the firm was managed by one manager who was paid salary of Rs.6,000 p.a. Mr. X has decided to manage the firm and replace the manager. Services ofMr. X will be worth Rs. 1,000 p.a.

Calculate Goodwill at 2 years purchase of average profit. [Ans. Rs.

1, 21,200]

1. Priti and Pritam are partners sharing profits and losses in the ratio of 3:2. They

admit Prasad for 1/6th share. For the purpose of admission of Prasad, goodwillof the firm should be valued on the basis of 3 years purchase of the last 5years average profit. The profits were. [Ans. Rs. 27,000]

Year 1990

91

1991

92

1992

93

1993

94

1994

95Profits

Rs.

60,000 62,500 45,000(

L)

42,500 80,000

2. Raghunaths revenue statements for the 3 years ended 31st Dec. wereas under:

Particulars 1995(Rs.)

1996(Rs.)

1997(Rs.)



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Sales

Less: Cost of

Sales

Gross Profit

Less :

Expenses

Net Profit

50000

(30000)

70000

(50000)

100000

(50000)

20000

(24000)

20000

(10000)

50000

(20000)

(-) 4000 (+)1000

0

(+)3000

0

Calculate the value of good will at 2 years purchase of the average

profit, earned in the past 3 years. [Ans. Rs. 24,000]

3. Raj Kumar revenue statements for the 3 years ended 31 Dec. were asunder:

Particulars 1995

(Rs.)

1996(

Rs.)

1997(

Rs.)

Sales

Less: Cost of

Sales

Gross Profit

Less :

Expenses

Net Profit

50000

(10000)

70000

(50000)

100000

(50000)

40000

(22000)

20000

(10000)

50000

(20000)

(+)22000 (+)10000 (+)30000

Calculate the value of good will at 2 years purchase of the average profit,

earned in the past 3 years. [Ans. Rs. 41,334]

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.

1991

92

1992

93

1993

94

1994

95

1995

96

Rs.

75,000

Rs.

1,00,000

Rs.

1,25,000

Rs.

85,000

Rs.

1,15,000



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

2. Jaya and Maya are carrying on a business in partnership for last 12 years.

Goodwill of the firm is to be valued at 3 years purchase of the average profit

of last 6 years.

2000-

01

2001-

02

2002-

03

2003-

04

2004-

05

2005-

062006-

07

Rs.

2,20,000(Profi

t)

Rs.

1,20,000(Loss

)

Rs.

2,60,000(Profi

t)

Rs.

1,80,000(Loss

)Rs.

2,90,000(Profi

t)

Rs.

3,20,000(Profi

t)

Rs.

2,10,000(Profi

t)

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 firm is 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:

1996-97

1997-981998-99

1999-2000

2000-01

(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:



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Balance Sheet as on 31st March 2007.

Liabilities Amou

nt

Assets Amou

nt

Capital

Ashok

Nayan

General

Reserve

Profit & Loss A/c

Sundry

Creditors

1,00,0

00

1,20,0

00

78,000

56,000

36,000

Plant and

Machinery

Furniture

Stock

Debtors

Bank

Prepaid

Expenses

1,78,0

00

62,000

48,000

40,000

35,000

27,000

3,90,0

00

3,90,0

00

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.

24,975]

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]

1. Following is the Balance Sheet of Mr. Atul as on 31st March, 1993:

Liabilities Amou

nt

Assets Amou

nt

Capital

General

Reserve

Creditors

Bills Payable

77,500

22,500

40,000

5,000

Fixed Assets

Current Assets

Prepaid

Advertisement

85,000

50,000

10,000

1,45,0

00

1,45,0

00



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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.

IMPORTANT POINTS TO REMEMBER

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

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

3. If there is a continuous loss in the Firm then the Good will of theFirm would be Zero (0).

4. If the total Profits/ Loss are negative then also the goodwill willbe Zero.



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

Answer the following questions1. 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 forprocessing. It is done with the help of input devices like punch card reader,paper tape reader, mark and character reader, keyboard, speech recognizeretc.

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 theform required by him. For this purpose the following devices are used. Printers,visual display unit etc. This is necessary to provide back up storage. It may be inthe 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 characterised 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 less expensive 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 fourthphase. The computer which used large scale integrated circuits used micro



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H.S.C OMTEX CLASSES6TH YEARprocessor 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 a 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 placewhere the computer program and data are stored during processing. Amemory unit is a random access storage device comprising number ofstorage locations. The data which is to be stored in the memory unit forprocessing are fixed by the computer program. The main or internalmemory 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 aredirected by the control unit. A control unit is called as the nerve centre ofthe computer since it controls and co ordinates all hardware operations.

The program and data are transferred from the input device into thememory as directed by the control unit during the execution of the programeach instruction is retrieved in turn from the memory and interpreted. Acontrol unit informs the Arithmetic logic unit as to how precisely theoperation to be preformed. It directs the transfer to the Arithmetic logic unit

of any item of data that is required for operation.iii. The Arithmetic Logic Unit (ALU): - The arithmetic logic unit comprises a

number of accumulators and registers. Accumulator means a register andassociated equipment in the arithmetic unit of the computer wherearithmetic and logical operations are performed. A register is a hardwaredevice for holding data to be operated upon. The ALU obtains the data fromthe main memory as per the direction given by the controlling unit basedon the program given to it. This data is loaded into accumulators in the ALU.

The ALU operates on the data which is available in the main memory. The ALUafter processing the data sent to output device.

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



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H.S.C OMTEX CLASSES6TH YEARdata 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

use of computer. In addition, computers can be put to other popular uses such asproduction, 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 makingmillions of computations per second. Hence, a powerful computer is capable of

completing 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 theinstructions 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, acomputer can produce results almost in whatever form it is most suitable.



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H.S.C OMTEX CLASSES6TH YEARMiscellaneous: - 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.

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

maintain various 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 and interpreting 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 such entries in the ledger. It is also used to prepare trial balance,

final account, accounting statements like Balance sheet, etc.



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CH. 2. BILLS OF EXCHANGE [Q. 3: 12

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

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 thebearer of the Instrument.

ESSENTIAL FEATURESOFBILLOFEXCHANGE

1. A bill of exchange must be in written form.2. It must contain an order. It should not be in the form of a request. The order

may be in the shape of a request but it must be imperative (very important orcompulsion).

3. It should be an unconditional order. There should be no condition for makingpayment.

4. It must be signed by the maker. A bill of exchange without the signature of themaker becomes invalid.

5. It must specify the definite amount to be paid.6. It must contain an order to pay a certain sum of money only.7. The amount must be payable to a person whose name is specified in the bill or

to his order or to the bearer.8. A bill of exchange must be dated.

THEREARETHREE PARTIESINTHE BILLOF EXCHANGE.DRAWER: - The drawer is the person or the party who draws the bill. He is thecreditor and he has to receive the money from other person.

DRAWEE: - The drawee is the person or the party on whom the bill is drawn. He is adebtor and he has to pay the amount to the drawer. Once he accepts the bill hebecomes and Acceptor.

PAYEE: - The payee is the person or the party to whom the bill is made payable. If

the bill is made payable to the drawer himself, the drawer and the payee are thesame person.

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

GRACE DAYS/ DAYSOF GRACE: - While calculating the due date of any time bill, threeextra days knows as days of grace should be added to the specified periodmentioned in the bill. For example, a bill drawn on 15 th January, 2007 for twomonth will become due on 18th March, 2007.

DUE DATES / MATURITYDATES: -The date on which the Bill is ready for the payment isknown as due date or maturity date of that Bill.



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H.S.C OMTEX CLASSES6TH YEARIf the due date falls on Sunday or any other public holiday the payment of the billshould be made on the immediately preceding working day. If a bill falls due forpayment on 15th August, it must be paid on 14th August. If a bill falls due on 26th

January, it must be paid on 25th January. In case 25th January is Sunday thepayment must be made on 24th January.

HONOUROFTHE BILL: - When the bill is paid on the due date is known as honour ofthe Bill.

DISHONOUROFTHE BILL: - When the Bill is not paid on the due date then it is known asdishonour of the bill.

RETIREMENTOFTHE 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.

ACCEPTANCEOFTHE BILL: - When the drawee puts the signature on the bill then it isknown as acceptance of the bill.

THEREARETWOTYPESOFACCEPTANCE

GENERAL ACCEPTANCE: - When the bill is accepted without any terms and conditionsthen it is known as general acceptance.

QUALIFIED ACCEPTANCE: - When the bill is accepted with certain terms and conditionsthen it is known as qualified acceptance.

THE QUALIFIED ACCEPTANCE MAY BE DONE IN ANY ONE OF THE

FOLLOWING WAYS.

i. Qualified as to the amount :- The drawee may not agree to pay the fullamount mentioned in the bill. He may agree to pay only a part of the amountmentioned in the bill. This type of acceptance is called qualified as to theamount.

ii. Qualified as to the Time : - If the drawee changes the period of the bill, it iscalled qualified acceptance as to the time.

iii. Qualified as to the place : - In this case, the drawee agrees to pay theamount at a particular place and there only.

iv. Qualified as to parties : - In this case, the bill is accepted by one or more ofthe drawees and not by all the drawees.

v. Conditional Acceptance : - When the drawee accepts the bill subject to thefulfilment of a condition, it is called a conditional acceptance.

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

ENDORSEMENTOF BILL: - When the ownership of the bill is transferred then it is knownas 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.

TYPESOF BILL: - There are two types of BillINLANDBILL: - A bill which is drawn & made payable in the same country, it is knownas Inland bill.



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H.S.C OMTEX CLASSES6TH YEARFOREIGN BILL: - A bill which is drawn in one country & made payable in anothercountry then it is known as foreign bill.

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

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



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STAMPRs. ______________/-Accepted

Sd/-

_______________

(Drawees name)

_______________

(Date of acceptance)


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: Forty five days after acceptance / sight, pay

3. If instead of the term, the due date itself is given the wording will be:

On such and 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)


19/167


20/167


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

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.


Date of Acceptance : 5th January, 1996



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

Drawee : Shri Bhaurao Deshmukh, Bazar Chauk,

Dhamangaon

Payee : Shri Prasad Shendage, MalvanAmount : Rs. 7,500/-

Period : 3 months


Date of Acceptance : 5th January, 1995

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 A\acceptance

Date of Bill 1st January, 2007

Amount Rs. 10,500/-

Date of Acceptance 3rd January, 2007

15. 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 months

Amount Rs. 7500

Date of Bill, 1st January, 2007

Date of Acceptance: - 3rd January, 2007

16. On 10th March, 1995, Rajesh Bhoyar, Gandhinagar, Nagpur draws a 2

months bill for Rs. 3,000 on Samir Chaudhary Main Road, Belapur. Samir

Chaudhary accepted the bill on 15th March, 1995.



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TRADE BILLS { IN THE BOOKS OF DRAWER }

&

TRADE BILLS { IN THE BOOKS OF DRAWEE }

1. On 1st March, Sudhir sells goods worth Rs. 10,000 to Narendra. On the sameday, Sudhir draws a bill on Narendra for the amount at 3 months. Narendraaccepts the bill. On the date of maturity, Narendra honoured the bill. Give

journal entries in the books Sudhir.

2. On 1st July, Sham sells goods worth Rs. 20,000 to Ram. On the same day,Sham draws a bill on Ram for the amount at 2 months. Ram accepts the bill.Ram pays the amount of the bill on due date. Give journal entries in the booksof Sham.

3. On 1

st

January, 2005; Bhaskar purchased goods from Randhir on credit worthRs. 5,000. On the same day Bhaskar gave an acceptance to the Bill drawn byRandhir at 3 months for Rs. 5,000. Randhir discounted the bill with his Bank at6% p.a. on 4th January, 2005. On the maturity of the Bill, Bhaskar paid theamount of Bill. Give journal entries in the Books of Randhir

Note: - Here the bill accepted by Randhir was discounted with the Bank.Hence, there will be no entry on the maturity as the amount will be

received by the Bank.

4. Anand brought goods worth Rs. 4,500 from Samant on August 1, 2006. On thesame day, Anand accepted the bill for Rs. 4,500 at 3 months drawn by Samant.Samant got the bill discounted with his bank at 6%. Before the due date,

Anand informed Samant about his inability to pay the amount of bill. He furtherrequested him to accept Rs. 2,500 in cash and immediately draw upon him anew bill for the remaining amount at 2 months together with interest at 8%p.a. Samant agreed. The second bill was duly paid on maturity. Give journalentries in the books of Samant.

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

5. On 1st March, Ramchandra sold goods to Raman worth Rs. 8,000/- and Ramanaccepted the Bill for Rs. 8,000/- at 3 months drawn by Ramchandra.Ramchandra discounted the bill with his bank @ 6% p.a. On due date the billwas 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 together with an interest at 10% p.a. Ramchandra agreed. The secondBill was duly honoured. Give Journal entries in the books of Ramchandra.

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

6. Premlal sold goods to Sunderlal worth Rs. 10,000/- and Sunderlal accepted thebill for Rs. 10,000/- at 3 months drawn by Premlal. Premlal Discounted the billwith his bank @ 6 % p.a. on due date the bill was dishonoured and Sunderlalrequested Premlal to accept Rs. 4,000 immediately and draw upon him a newbill 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 entriesin the books of Premlal. Note: - Here 1st part payment is made and thenthe interest is charged.



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H.S.C OMTEX CLASSES6TH YEAR7. 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 thebalance amount for four months. Babita discounted the bill with her bank forRs. 9600/- Before the due date Archana approached Babita with a request torenew the Bill Babita agreed with the condition that Archana should pay Rs.6000 with interest of Rs. 120 and accept a new bill for the balance. Thearrangement was duly carried 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.

8. Baloo owes Kaloo Rs.8000. Kaloo then draws a bill for Rs. 8000 on Baloo for aperiod of three months. Baloo accepts and return it to Kaloo. Kaloo discountedthe bill with his bank at 12 % p.a. On due date, the bill was dishonoured notingcharges amount to Rs. 30. Kaloo then draws a bill for the balance plus interestof Rs. 170. Before the due date of this bill Baloo pays the amount at a discountof 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 paymentoccurs.

9. Minal draws a bill on Usha for Rs. 5,000 at 3 months. Usha accepts the billand return to Minal. Minal discounted the bill @ 12 % p.a. with the bank. OnMaturity Usha finds herself unable to make payment of the bill and requestedMinal to renew the bill. Minal accepts the proposal on the condition that Ushashould 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 retiresthe bill by paying Rs. 3015/- Pass Journal Entries in the books of Minal. Note: -Here 1st part payment is made and then the interest is charged.

10.On 15th March, Ahmed sold goods worth Rs. 1,600 to Awasthi and draws

upon him a bill at 4 months for the amount. Awasthi returned the bill toAhmed with his due acceptance. On 15th April, Awasthi retired the billunder rebate of 5% per annum. Give Journal entries in the books ofAhmed.

MISCELLANEOUS PROBLEM11.On 1st April 1979, Pawan draws a bill for Rs. 6,000/- on Sanjay for a period of 4 months.

The bill is duly accepted by Sanjay. On 5th April, Pawan endorses the bill in favour ofLalit. However on 25th July, Sanjay approaches Pawan and requests that the bill is to berenewed for a further period of 4 months at 12% interest p.a. Pawan agrees and Paysthe necessary amount to Lalit. The new bill is duly accepted and paid by Sanjay. Passjournal entries in the books of Pawan.

12. Rupali accepted a bill for Rs. 2,000/- drawn by Deepali at three months. Deepali got thebill discounted with her bank for Rs. 1,900. Before the due date Rupali approachedDeepali for renewal of the bill. Deepali agreed on the condition that Rs. 1,000/- be paidimmediately together with interest on the remaining amount at 6% p.a. For balanceRupali should accept a new bill for three months. These arrangements were carriedthrough but afterwards, Rupali become Insolvent and only 40 % of the amount couldbe recovered from her estate. Give journal entries in the books of Deepali.

13.Chanda accepted a bill for Rs. 6,000 drawn by Nanda at three months. Nanda got thebill discounted with his bank for Rs. 5,700. Before the due date, Chanda approachedNanda for renewal of 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 fourmonths and for the balance Chanda should accept a new bill. But afterwards Chanda



24/167


become insolvent and only 25% of the amount could be recovered from her estate.Pass journal entries in the books of Nanda.

14.Pankaj draws a bill on Anil worth Rs. 8,000 for three months which was accepted byAnil. On the same date Pankaj discounted the bill with his bank @ 10 % p.a. On the duedate Anil dishonoured his acceptance. Anil paid Rs. 4,000/- to Pankaj and accepted a

fresh bill for two months for the balance including interest of Rs. 40. Anil becameinsolvent before the maturity of the bill and 50 paise in a rupee was received at firstand final dividend from his estate. Give Journal entries in the books of Pankaj.

15.Bhagwan sold goods to Deo for Rs. 3,000. On the same date Deo accepted a bill for 2months. Bhagwan endorsed the bill to Ishwar. On the due date of the bill, Ishwarinformed that the bill is dishonoured and the noting Charges were Rs. 20. Bhagwandrew a new bill on Deo for the amount due including noting charges and an interest ofRs. 130. Before the due date of the second bill Deo become bankrupt and 20 paise in arupee was received from his estate as first and final dividend. Pass the necessaryjournal entries in the books of Bhagwan.

16.Mahendra sold goods to Ravindra worth Rs. 6000 and for that Ravindra accepted a bill

drawn by Mahendra for 3 months. After a month Mahendra discounted the bill with hisbank at 10 % p.a. On the due date Ravindra dishonoured his acceptance. Ravindra paidRs.3, 000 to Mahendra and accepted a fresh bill for 3 months for the balance includinginterest @ 8% p.a. Before Maturity of the Bill Ravindra become insolvent and 50 paisein a rupee was discovered from his estate as first and final dividend. Give Journalentries in the books of Mahendra and Ravindra.

17.Prakash drew a bill for Rs. 4,000 on Anand on 1st May, 1976 for three months. This wasfor the amount which Anand owed to Prakash. Anand accepts the same and return it toPrakash who discounted at his bank for Rs. 3,900. On 1st Aug, 1976 Anand requestedPrakash to renew the bill and Prakash agreed on the condition that Rs. 1,000 is paidimmediately and Anand should accept the new bill for 3 months for the balancepayable plus interest of Rs. 45. These arrangements were carried through. However,on 1st October, 1976, Anand retired his acceptance for Rs. 3, 035. Pass journal entriesin the books of Prakash and Anand.

18.On 1st January, 1988 Vandana drew a bill for Rs. 6,000 for 2 months periods on Lata.Lata duly accepted the bill. On 4th January 1988 Vandana discounted the bill with herbank for Rs. 5850. However, on the due date the bill was dishonoured. Lata agreed toaccept a new bill with an interest of Rs. 100 for a period of one month. The bill wasduly met on the due date. Give the journal entries in the books of Vandana and showVandanas account in the books of Lata.

19.Mukund owes (be obligated) Prakash Rs. 4000 for which Prakash draws a bill for 2months on 1st February, 1989. Mukund accepts it and returns it to Prakash. On 4th

March, 1989, Mukund approaches Prakash and request him to accept Rs. 1000 in cashand draw a fresh bill for 3 months for the balance plus interest @ 10% p.a. Prakashaccepts the request and draw a bill accordingly which is accepted by Mukund. On 1 st

June 1989 Mukund retired his acceptance under discount of Rs. 30/-. Pass journalentries in the books of Prakash and prepare Prakash account in the ledger of Mukund.

20. Abhay draws a bill on Ajay for Rs. 1,400 at 3 months. Ajay accepts the bill and returnsit to Abhay. The bill is sent to the bank for collection. On maturity Ajay finds heunable to make payment of the bill and request Abhay to renew it. Abhay accepts theProposal on the condition that Abhay should pay Rs. 700 in cash along with notingcharges of Rs. 10 and draw a renew bill for one months for the balance. Thesearrangements were carried through. Afterwards Ajay retired the bill by paying Rs. 695.Give journal entries in the books of Abhay and Ajay.

21. Krishna accepted a bill for three months drawn by Rama for Rs. 4000. Ramadiscounted the bill with the bank at Rs. 3900. On the date of maturity, the bill wasdishonoured. Rama paid noting charges for Rs. 20 Krishna paid half the mount for the



25/167


bill and full amount of the noting charges and accepted a bill for the balance includinginterest of Rs. 50. The second bill was duly honoured. Pass necessary journal entries inthe books of Rama and show Krishnas account.

22. Jain purchased goods worth Rs. 3,000 from Sharma on 1st June 1977 and gave himacceptance on 3rd June for a period of three months. On 15th June Sharma discounted

the bill for Rs. 2980. On 6th

September, when the bill was presented for payment. Jaindishonoured the same. Rs. 20 was paid as noting charges. Pass journal entries in thebooks of Sharma and Sharmas account in the books of Jain.

23.Sagar owes Sindhu Rs. 8000 Sagar accepted a bill for 3 months by Sindhu for Rs. 8000.Sindhu discounted the bill with bank at Rs. 7800. On the due date, the bill wasdishonoured. Noting charges amounted to Rs. 20. Sagar Paid half the amount of the billand full amount of the noting charges including interest of Rs. 100. Pass journal entriesin the books of Sindhu and show the account of Sagar.

24.On 1st January, 1982 Shri Jameersheth of Jalgaon sold goods to Shri Nanchand ofNanded for Rs. 80,000. On the same date Shri Jameersheth drew a bill on ShriNanchand for the same amount for three months. Shri Nanchand accepted the bill and

returned the same to Shri Jameersheth on 4th January, 1982. Shri Jameershethdiscounted the bill with the banker at 10 % p.a. On the due date bank informed thatthe bill was dishonoured and Shri Nanchand requested Shri Jameersheth to accept 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 billwas duly honoured. Pass the necessary Journal entries in the books of Shri Jameershethof Jalgaon and show Shri Jameersheths account in the books of Shri Nanchand of Nagpur.



26/167


25.Ameet draws a bill for Rs. 7500 on Tushar for four months. Ameet discounts the billwith the bank at 8%p.a. On the due date Tushar requested Ameet to accept Rs. 4,700(including Rs. 200 for interest) and to draw a bill for the balance of three months.Ameet agrees this proposal. Before the due date of the new bill Tushar retires the bill

for Rs. 2960. Pass the journal entries in the books of Tushar and open Tushars accountin the books of Ameet.

26. Akbar owed to Barbar Rs. 6,000. Akbar accepted the bill drawn by Barbar for theamount at four months. Barbar discounted the bill with his bank for Rs. 5850. Beforethe Due date, Akbar approaches Barbar with the request for renewal of the bill. Barbaragreed on the condition that Rs. 4,000 is paid immediately in cash together with aninterest on the remaining amount at 12%p.a. for three months and for the balanceAkbar should accept a new bill at three months. These arrangements were carriedthrough. Barbar endorsed the new bill to Kadar. Akbar met the bill on due date. Givethe transaction in the books of Akbar and prepare Akbars account in the books ofBarbar.

27.Sonia draws a bill on Moni for Rs. 6,000 at 4 months. Moni accepts the bill and returnsit to Sonia who discounts the bill with the bank at a discount of 8%p.a. Before the duedate of Bill Moni requested Sonia to accept Rs. 4000 in cash and draw a bill for thebalance plus interest at 12%p.a. for two months. Sonia draws a bill as the request isagreed. The bill is sent to bank for collection. On the due date the bill was honoured.Pass the necessary journal entries in the books of Sonia and Moni.

28. 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 a new 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 of 12% p.a.d. The bank informs Kamesh that Sudhakars acceptance for Rs. 4,000 has beendishonoured and it has paid noting charges Rs. 80.

1. 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 incash.

d. Kailash sent a bill of Anita for Rs. 6,000 to bank for collection. But Bankinformed that the bill has been dishonoured by Anita.

1. 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.

1. Journalize the following transactions in the books of Maharaja.a. Ayub informs Maharaja that Sadashivs acceptance for Rs. 2,000 endorsed by 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 andaccepting a fresh bill for the balance plus interest at 12% p.a. for 3 months.



27/167

H.S.C OMTEX CLASSES6TH YEARc. Vaibhavs acceptance to Maharaja for Rs. 6000 retired one month before the due date

at a discount of 12%p.a.

d. Bank informs Maharaja as to the dishonour of Kasams acceptance for Rs. 2000 toMaharaja discounted with Bank noting charges Rs. 200.



28/167


1. Journalise the following transactions in the books of Mr. Ashok Agrawal.a. The bank informed Mr. Ashok Agrawal that Kamleshs acceptance for Rs. 12,000

sent to bank for collection had been honoured and bank charges debited were Rs.60.

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

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

d. Dinesh who had accepted Mr. Ashok Agrawals bill of Rs. 14,000 was declaredbankrupt and only 45% of the amount due could be recovered from his estate.

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

had been honoured and bank charges debited were Rs. 50.b. Nitin renewed his acceptance for Rs. 7,200 by paying Rs. 2,200 in cash and

accepting a new bill for the balance plus interest @8% p.a. for 3 months.

c. Discharged our acceptance to Pravin for Rs. 4,250 by endorsing Bhavinsacceptance to us for Rs. 4,000.

d. Jatin who had accepted Ashwins bill of Rs. 8,500 was declared insolvent and only40% of the amount due could be recovered from his estate.

3. Journalise the following transactions in the books of Kamalakar.a. Nisha informs Kamalakar that Shantis acceptance for Rs. 14,000 endorsed to Nisha

has been dishonoured and noting charges have been paid Rs. 200.b. Asha renews hare acceptance to Kamalakar for Rs. 12400 by paying Rs. 6000 in

cash and accepting a new bill for the balance plus interest @ 12% p.a. for 3months.

c. Devikas acceptance to Kamalakar for Rs. 42000 is retired one month before its due

date at a discount of 12% p.a.d. The bank informs Kamalakar that Sindhus acceptance for Rs. 15000 has beendishonoured and it has paid noting charges Rs. 100.

e. Bank informs Kamalakar that Sangitas acceptance for Rs. 12000 which was sent tobank for collection has been dishonoured.

4. Journalise the following transactions in the books of Ranbir.a. Sonam informs Ranbir that Salmans acceptance for Rs. 3200 endorsed to Sonam

has been dishonoured and the noting charges amounted to Rs. 80.

b. Ravindra renews his acceptance to Ranbir for Rs. 4,800 by paying Rs. 1800 in cash

and accepted a fresh bill for the balance, plus interest @ 12% p.a for 2 months.c. Dilips acceptance to Ranbir for Rs 8000 is retired one moth before the due date at

a discount of 12% p.a.d. The bank inform Ranbir that Shirins acceptance for Rs 5500 to Ranbir discounted

with the bank earlier has been dishounred and the noting charges



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CH. 3. DEPRECIATION [Q. 2: 10 MARKS]

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

required to study the followingtwo methods of depreciation only,

viz.

i. Fixed Instalment Method / Original Cost Method / Straight

Lime Method / Equal Instalment method.

ii. Reducing Balance Method / Written Down Value Method /

PROBLEMS1. A company purchased Machinery worth Rs. 2, 00,000 on 1st January, 1974.

Accounting year of the Company closes on 31st December every year. Companyprovides depreciation at 10% p.a. on the original cost. On 31st December, 1976 themachinery was sold for Rs. 1, 20,000. Give the machinery Account for three years.[F.I.M]

2. Aurangabadkar purchased furniture worth Rs. 20,000 on 1-4-73. He chargesdepreciation at the rate of 10% on the Reducing Balance method. On 1 7 75, hesold out a part of the Furniture for Rs. 2,000, the original cost of which on 1 4 73 was Rs. 4,000. The financial year of Aurangabadkar ends on 31st March everyyear. You are required to prepare his furniture account for the first four years, and

to pass journal entries for the transactions of the third year. [W.D.V.]

3. A Good luck manufacturing Co. Ltd. Luck now purchased new machinery for Rs.45,000 on 1st January, 1975 and immediately spent Rs. 5,000 on its fixation anderection. In the same year on 1st July additional machinery costing Rs. 25,000 waspurchased. On 1st July 1977 the machinery purchased on 1st January, 1975 becameobsolete and was sold for Rs. 30,000. Depreciation was provided for annually on31st December at the rate of 10% per annum on Fixed Instalment method. You arerequired to prepare Machinery Account for the period from 1975 to 1977. [F.I.M]

4. A company purchased a machine worth Rs. 2,00,000 on 1st Jan. 1976. On 1st Jan1977, the company purchased an additional machine for Rs. 40,000. On 1st July

1978, the company sold the machine purchased on 1

st

Jan 1977 for Rs. 32,000.Company writes off depreciation at the rate of 10% on the original cost and theaccounts are closed every year on 31st Dec. Show the Machinery Account andDepreciation Account for the three years ending 31st Dec. 1976, 1977 and 1978under Fixed Instalment Method. [F.I.M]

5. Vishal Traders, Bombay, purchased Machinery on 1-1-1970 for Rs. 68,000 and paidinstallation charges Rs. 2,000 and decided to depreciate the machinery at 10% perannum under the fixed instalment system. On 1-7-1972 machinery having anoriginal cost of Rs. 10,000 was sold for Rs. 5,000 and on the same date newmachinery was purchased for sr. 10,000. Give the required journal entries and alsowrite up the Machinery Account for 1 1 1970 to 31 12 72 assuming theaccounts of the firm are closed on every 31st December. [F.I.M]



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H.S.C OMTEX CLASSES6TH YEAR6. M/s Amol Industries, Pune, purchased machinery for Rs. 19,400 on 1 st January,

1976, and spent Rs. 600 for its erection. On 1st July 1976, additional machinerycosting Rs. 10,000 was acquired. On 1st July 1978 the machinery purchased on 1st

January, 1976 was sold for Rs. 12,000 and on the same date fresh machinery waspurchased at a cost of Rs. 16,000. Depreciation was provided annually on 31st

December at the rate of 10% on the original cost. Give the machinery account and

deprecation account for 1976, 1977 and 1978. [F.I.M]



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7. 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 at15% p.a. on Fixed Instalment basis. On 1 10 1979 they sold out one cupboard forRs. 2,200 original cost of which on 1-4-1977 was 4,000. On the same date a new

cupboard was purchased for Rs. 8,000. Show the furniture account and depreciationaccount for the year 1977-78, 1978-79 and 1979-80 assuming that the financial yearcloses on 31st March every year. [F.I.M]

8. Kamlesh bought the machine costing Rs. 11,000/ - on 1st January, 1977. He had to payRs. 1,000/- towards its installation. He writes off depreciation @ 10% of the originalcost every year. His books are closed on 31st December every year. On 1st July, 1979 hedisposed off the machine for Rs. 6,000/- Give journal entries in the books of Kamleshfor all these years till 31st December, 1979. [F.I.M]

9. M/s Tarachand Traders purchased machinery worth Rs. 45,000 on 1st January, 1978. On30th June, 1978 additional machinery worth Rs. 25,000 was purchased. On 31st

December, 1979 machinery which had cost Rs 4,000 on 1st January, 1978 was sold for

Rs. 3,200. On 31st December, 1980 a machinery costing Rs. 10,000 on 1st January, 1978was sold for Rs. 6,250. Prepare Machinery account and depreciation account for theyears ending 31-12-1978, 31-12-1979 and 31-12-1980 after providing depreciation @10% p.a. on straight line method. [F.I.M]

10.M/s B. Bijapure and Co. Ltd. Of Ahmednagar purchased on 1st January, 1978 themachinery costing Rs. 1,00,000. On 1st July, 1979 additions were made worth Rs.20,000. On 1st March, 1980 additions were made to the amount of Rs. 12,000. On 30 th

June, 1981, machinery which had original value of Rs. 16,000 on 1st January, 1978 wassold for Rs. 10,000. Depreciation was to be charged @ 10% p.a. on original cost. ShowMachinery account in the book of M/s B. Bijapure and Co. Ltd., of Ahmednagar for theyears from 1978 to 1981. The financial years closes on 31 st December, every year.

[F.I.M]

11.M/s Joshi Bros., Jalgaon purchased on 1st January, 1967 a cost of Machinery for Rs.17,400 and spent Rs. 600 on its erection. On 1st January, 1968, another set ofmachinery was purchased at Rs. 10,000. On 1st July, 1969, the machinery purchased on1st January, 1967, was sold at Rs. 8,000 and the same date a fresh machinery waspurchased at Rs. 15,000. Depreciation was charged at 10% p.a. under straight linemethod on the original cost of asset on 31st December every year. Prepare Machineryaccount for the three years, i.e. 1967, 1968 and 1969 and Depreciation account for thesame period in the books of Joshi Bros. Jalgaon. [F.I.M]

12.M/s Sharad Agency showed a debit balance of Rs. 36,000 to the Machinery account on1-7-1978. The original cost of machinery was Rs. 60,000. On 1st January, 1979 Sharad

Agency bought an additional machinery of Rs. 48,000 and spent Rs. 2,000 for itsinstallation. One more machinery costing Rs. 25,000 was purchased on 30 6 1979.On 30-6-1980 a part of machinery acquired on 1st January, 1979 was sold for Rs. 7,250the original cost of which was Rs. 10,000. On 31 st -12-1981 the Agency sold out themachinery for Rs. 16,000 which was purchased on 30-06-1979. Agency charged 10%Depreciation on fixed instalment basis and their financial year closes on 30 th June everyyear. Show machinery account for the years 1978-1979, 1979-1980, 1980-1981 and1981-1982. [F.I.M]

13.Janab Hasansab of Hyderabad made furniture for his own office on 1st October 1975.For this he had spent Rs. 36,000 on materials and Rs. 16,000 on wages. He estimatedhe life of the furniture to be 10years. He also estimated that its expected scrap valueat the end of its life would be Rs. 12,000. He closed his books of accounts on 31st Marchevery year. He sold the entire furniture for Rs. 40,000 on 1st October 1978. Show the



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furniture account and depreciation account for the year ended 31st March, 1976, 31st

March 1977, 31st December 1978 and 31st December 1979. [F.I.M]

14.The accounting year of M/s Kothari Fine Printers ends on 31st December every year.They decided to depreciate their machinery at 10% p.a. on fixed instalment system.Taking into consideration the following information, prepare machinery account anddepreciation account for the three years ending 31st December, 1982, 1983 and 1984.

On 1st January, 1982 machinery worth Rs. 20,000 was purchased. On 1 st July, 1982,another machinery costing 12,000 was purchased.

Machinery the cost of which on 1st January, 1982 was Rs. 5,000 was sold for Rs.3,000 on 1st July 1983.

A few machine of the value of Rs. 8,000 was purchased on 30th June, 1984. [F.I.M]

1. M/s Mallikarjun Bros. Washim purchased on 1st January 1982 machinery for Rs.47,000 and spent Rs. 3,000 on its erection. On 1st July, 1982 additional machinerycosting Rs. 5,000 was purchased. On 1st April, 1983 the machinery purchased on1st July, 1982 was sold for Rs. 3,000 and on the same date new machinery waspurchased for Rs. 12,000. Depreciation is to be charged at 10% p.a. under straightline method on 31st December, every year. Prepare machinery account for 3 yearsfrom 1st January, 1982 and pass journal entries for the year 1983 in the books of

M/s Mallikarjun Bros. [F.I.M]

2. Goodluck Manufacturing Co. Ltd., Jalgaon purchased new machinery for Rs. 45,000on 1st January 1981 and immediately spent Rs. 5,000 on its fixation and erection. Inthe same year on 1st July additional machinery costing Rs. 25,000 was purchased.On 1st July 1983 the machinery purchased on 1st January 1981 become absoluteand was sold for Rs. 30,000. Depreciation was provided for annually on 31st

December at the rate of 10% p.a. on Fixed Instalment Method. You are required toprepare machinery account and depreciation account for the period from 1981 to1983. [F.I.M]

3. On 1st January, 1981 Messrs Heera and Co. Kalyan purchased machinery for Rs.

80,000 and spent Rs. 5,000 on its installation. On 1

st

July in the same year theypurchased another machine for Rs. 60,000. On 31st December, 1982 the machinerypurchased on 1st January 1981 was sold for Rs. 68,000. On 1st January 1983 a newmachine was installed at a cost of Rs. 70,000. Messrs Heera and Co. Chargedepreciation @10% p.a. on the original cost. The accounts are closed on 31st

December every year. Show Machinery account and Depreciation account for theyear 1981, 1982 and 1983. [F.I.M]

4. Arun Traders, Nasik, purchased machinery on 1st July, 1984 for Rs. 14,000 anddecided to depreciate the machinery at 10% p.a. under straight line method. On 1st

January, 1985, new machinery was purchased for Rs. 20,000. On 1st July, 1986,machinery purchased on 1st July, 1984, was sold for Rs. 10,000 and on 31st

December, 1986, new machinery was purchased for Rs. 25,000. Preparemachinery account and deprecation account for the years 1984, 1985 and 1986assuming that the financial year ends on 31st December every year. [F.I.M]

5. Ameet Traders, Sinnar, purchased furniture on 1-1-1984 for Rs. 15,000. In thesame year on 1st July additional furniture was purchased for Rs. 8,000. On 1-7-1985, the furniture purchased on 1-1-1984 was sold for Rs. 10,000 and on thesame day new furniture was purchased for Rs. 12,000. The firm chargeddepreciation at 10% p.a. on Reducing Balance method. Prepare Furniture accountdeprecation account for the years ending on 31st December 1984, 1985 and 1986.[W.D.V.]

6. Deepak Washing Company, Shahpur, purchased a washing machine on 1st January

1980 for Rs. 40,000. On 1st July, 1980 another machine costing Rs. 20,000 waspurchased. On 1st July, 1982, the machine acquired on 1st January, 1980 was soldoff for Rs. 27,000 and on the same date a new machine was purchased at a cost of



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Rs. 15,000. Depreciation was provided annually on 31st December @ 10 % p.a. onthe original cost. Show machinery account and Depreciation account for the years1980, 1981 and 1982. [F.I.M]

7. Sangam Trading Co. purchased some machinery on 1st Jan. 1986 costing Rs.88,000 and spent Rs. 2,000 on its erection. On 30th June, 1986, additional

machinery is purchased for Rs. 10,000. On 31st December, 1987 a part of themachinery was sold for Rs. 2,100 which had a cost price of Rs. 4,000 on 1 st

January, 1986. Prepare Machinery account for the years 1986, 87 and 88 and passjournal entries for the year 1987 assuming that Machinery is depreciated at 10%p.a. on Diminishing balance method on 31st December, each year. [W.D.V.]

8. M/s Joshi and company purchased one machinery on 1st January, 1983 costing Rs.8,000. On the same date firm spent Rs. 2,000 for its erection. On 1 st July, 1983additional Machinery was purchased for Rs. 20,000. The machine costing Rs. 10,000 on1st January, 1983 was sold out on 30th June 1985 for Rs. 6,250. On the same date a newmachine costing Rs. 32,000 was purchased. Every year on 30 th June, depreciation atthe rate of 10% on cost price of machinery was charged. Prepare Machinery account

and deprecation account for three years i.e. 1982 83, 1983-84 and 1984-1985 in thebooks of the firm. [F.I.M]



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H.S.C OMTEX CLASSES6TH YEAR9. Ram and Shyam Co. Purchased machinery on 1-1-1986 for Rs. 2,00,000 and spent Rs.

10,000 on its installation. On 1st July, 1986 they purchased another machine for Rs.1,50,000. On 31-12-1987 the machinery purchased on 1st January, 1986 was sold forRs. 1,60,000. On 1-1-1988 another new machine was purchased at cost of Rs.1,75,000. Depreciation was charged @ 10% p.a. on the original cost. The account areclosed on 31st December every year. Show Machinery account and deprecation account

for the year 1986, 1987 and 1988. [F.I.M]

10.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 of10% 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 1-10-89the company purchased machinery for Rs. 10,000. As the company closes the financialyear 31st March every year. Prepare Machinery account and the deprecation accountfor the years 1987-88, 1988-89 and 1989-90. [F.I.M]

11.Seema automobiles Ltd. purchased a machine for Rs. 60,000 on 1st July, 1988. On 1st

January, 1989 Company purchased an additional machine costing Rs. 20,000. On 31st

December, 1990 the machinery purchased on 1st July 1988 become obsolete and was

sold for Rs. 40,000. Depreciation was provided annually on 31st December at the rateof 10% p.a. on the Reducing Balance method. Prepare Machinery account andDepreciation Account for the period from 1988 to 1990. [W.D.V.]

12.On 1st January, 1988, Nitin and Co. Bombay purchased Machinery for Rs. 50,000. On 1 st

July 1988 additional machinery purchased for Rs. 20,000. On 30th June 1990, thecompany sold a machine costing Rs. 10,000 on 1st January 1988 for Rs. 6,000.Company closes the account on 31st December, every year decided to charge 10% p.a.deprecation on original cost of the machinery. Prepare Machinery account andDepreciation account for 1988, 89 and 90. [F.I.M]

13.On 1st January, 1985, Sunil Traders purchased machinery for s. 20,000. On 1st July

1985, they purchased further machinery costing Rs. 10,000. On 1

st

July, 1987 they soldfor Rs. 6,000 the machine purchased on 1st January, 1985, and bought anothermachine for Rs. 12,000 on the same date. Depreciation was provided on machinery @10% p.a. on the Diminishing Balance method and the financial year closes on every31st December. Prepare the Machinery account and the Depreciation account for theyears 1985, 1986, 1987 and 1988. [W.D.V.]

14.Dhoni Manufacturing Co. purchased a Machine worth Rs. 77,600 and installs it at a costof Rs. 2,400 on 1st July 1986. On 1st January 1987 an additional Machine costing Rs.40,000 was purchased. The machine purchased on 1st January, 1987 having becomeobsolete was sold for Rs. 22,000 on 1st July 1989 and a new machine worth Rs 60,000was purchased on 1st August, 1989. The deprecation is provided annually on 31st

December, at 10% p.a. on original cost of machinery. Show machinery account for the

years 1986, 1987, 1988 and 1989. [F.I.M]

15.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 partof machinery 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 thesame date. The firm closes its books of accounts on 31st March every year. PrepareMachinery account and Depreciation account for the year 1989-90, 1990-91 and 1991-92 in the books of the firm. [F.I.M]

16.S. Narayan from Bombay purchased Furniture for his office costing Rs. 1,04,000 on 1st

July 1987. Estimated life of the Furniture is 10 years and scrap value Rs. 24,000. The

Furniture was sold on 31st December 1990 for Rs. 70,000. The accounts are closed on31st December every year. From the above information prepare Furniture account and



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Depreciation account for the years 1987, 1988, 1989 and 1990, by chargingdepreciation under Fixed Instalment Method. [F.I.M]

17.On 1st January 1990 Ashok and Co. Ltd., Aurangabad, purchased Machinery for Rs.1,00,000. On 1st July 1990 additional Machinery purchased for Rs. 40,000. On 30th June1992, the company sold a machine (costing Rs. 20,000 on 1st January 1990) for Rs.12,000. Company closes the accounts on 31st December every year and decided to

charge 10% p.a. depreciation on original cost of the machinery. Write Machineryaccount for the year 1990, 1991 and 1992. Give journal entries for the year 1992 only.[F.I.M]

18.Rahul Gupta Trading Co., Kalyan purchased furniture on 1.1.1992 for Rs.25,000. In the same year on 1st July additional furniture was purchased for Rs.10,000. On 1st July 1993 the furniture purchased on 1.1.1992 was sold for Rs.15,000 and on the same date new furniture was purchased for Rs. 12,000. Thecompany charges depreciation at 8% p.a. on reducing balance method.Prepare Furniture account and deprecation account for 3 years. Assuming thatthe accounting year of the company closes on 31st December every year.[W.D.V.]

19.On 1st July, 1992, Ajanta Traders, Pune, acquired a building for Rs. 8,00,000. On1st April, 1993, an extension was made to the above building by spending Rs.4,00,000. On 1st October 1994, half of the building was sold through a brokerfor Rs. 5,60,000 and brokerage at 2% of the selling price was paid.Depreciation is charged on 31st March every year at 10% p.a. under theDiminishing Balance Method. Prepare the Building Account and the Depreciationaccount for three years. [W.D.V.]

20.Mona Trading Company of Amravati purchased machinery for Rs. 65,000 on 1st

January, 1992 and immediately spent Rs. 5,000 on its fixation and erection. Inthe same year on 1st July, additional machinery costing Rs. 30,000 waspurchased. On 1st July 1994 the machinery purchased on 1st January, 1992

became obsolete and was sold for Rs. 51,000. On 1-10-94 a new machine wasalso purchased for Rs. 41,000. Depreciation was provided annually on 31st

December at the rate of 12% Per annum on fixed instalment method. PrepareMachinery account and depreciation account from 1992 1994. [F.I.M]

21.On 1 1 1992 Vijay Traders purchased furniture for Rs. 15,000. On 1 7 1992 additional furniture was purchased for Rs. 8,000. On 30 6 1993 thefurniture purchased on 1 1 1992 was sold for Rs. 10,000 and on 1 7 1993 new furniture was purchased for Rs. 12,000. The firm chargeddepreciation at 10% p.a. under the reducing balance method. Prepare furnitureaccount and deprecation account for the years 1992, 1993, 1994 assuming

that the accounting year of the firm is calendar year.[W.D.V.]

22.M/s Jalaram Mill, Mulund, showed a debit balance of Rs. 32,000 to theMachinery A/c on 1st April, 2001(Original cost of the Machinery was Rs. 40,000).On 1st October, 2001 the Mill bought additional Machinery for Rs. 15,000 andspent Rs. 1,000 for its installation. One more machinery costing Rs. 20,000 waspurchased on 31st March, 2003. Depreciation is charged on 31st March, everyyear at 10% p.a. under the Diminishing Balanced Method. On 31st March, 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. (February, 2008) [W.D.V.]

23.On 1

st

April, 2004 Saikripa enterprises purchased two computers of Rs. 40,000each. On 1st October, 2004 they purchased one more computer for Rs. 40,000.On 1st October, 2006 they sold one computer, which was purchased on 1st April,



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2004 for Rs. 18,780. Depreciation on computers was provided @ 10% p.a. ondiminishing balance method and the financial year closes on 31st March everyyear. Prepare computer A/c depreciation A/c for years 2004 05, 2005 06and 2006 07. (September. 2008) [W.D.V.]

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

st

April2002. Company purchased additional machinery for Rs. 36,000 on 1st October,2003. The company charges depreciation @10% p.a. on the original cost. Thefinancial year of the Company ends on 31st March every year. On 30th

September, 2004 a part of the machinery, original cost of which was Rs.30,000 on 1st April, 2002 was sold by the Company for Rs. 22,000. PrepareMachinery account for 3 years and give journal entries for the year 2002 2003.[F.I.M]



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CH. 4. JOINT VENTURE ACCOUNTS [Q. 4: 12

Method I When Separate set of Books is maintained.1. Dimple and Simple entered into a joint venture. They agreed to share profits

and losses in the proportion of their initial contributions to the joint venture. Theyopened a joint Bank A/c. and deposited Rs. 60,000 and Rs. 40,000 respectively asinitial contributions. They made cash purchases of Rs. 70,000. They also paid Rs.4,500 for insurance and freight and Rs. 1,750 for sundry expenses. At the end ofthe venture, the sales amounted to Rs. 1, 10,000/- There was unsold stock ofgoods worth Rs. 5000. Simple took over the unsold stock. The Joint Venture wasclosed. You are asked to prepare Joint Venture 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 anddeposited Rs. 1,20,000 and Rs. 60,000 respectively and agreed to share profitsand losses in the ratio 3 : 2. The following transactions were made from Joint BankA/c: Wages Rs. 70,000 and Material purchases Rs. 1,25,000. Apart from this Asupplied material of Rs. 12,000 and B paid the architect fees of Rs. 2,500 oncompletion of construction. X enterprises Ltd. paid the full amount and unsoldstock was taken over by B at an agreed value of Rs. 15,000. Prepare Joint ventureA/c, Joint Bank A/c and Co venturers A/c. Also pass journal entries.

3. Suresh and Ramesh entered into a joint venture to construct a building at acontract price of Rs. 7,00,000. They agreed to share profits and losses in the ratioof 2:1. Suresh deposited Rs. 5,00,000 and Ramesh Rs. 1,00,000 into joint bank.

The transactions were as follows.

1. Purchase of materials Rs. 3,50,000

2. Tools and equipment Rs. 1,00,000.

3. Wages Rs. 1,20,000

4. Architect fees Rs. 25,000

5. Besides these, Suresh supplied material worth Rs. 15,000 and Ramesh suppliedmaterial 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 journalentries.

1. Ashok, Kishor & Anup undertook the construction of an office building at acontract price of Rs. 10,00,000. Receivable in cash Rs. 6,00,000 and Rs, 4,00,000in shares. They agreed to share profits and losses equally. They opened the jointbank a/c and contributed the 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, Kishorbrought in the venture mixture of Rs. 25,000 and Anup brought in motor truck ofRs. 55,000. The following transactions were made from Joint bank A/c. Purchase ofmaterial 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. 15,000 and Anup took away the truckworth Rs. 35,000. The scrap value realised of the plant was Rs. 6,000. The Contractprice was received in full and Kishor took over the shares for Rs. 4,10,000. Prepare

Joint Venture A/c, Joint Bank A/c & co ventures A/c. Pass journal entries.

2. Sanjay, Ajay and Vijay entered into a Joint venture for construction of abuilding for contract price of Rs. 6, 00,000. Payable in cash Rs. 4,00,000 and Rs.2,00,000 in debentures. They decided to share profits and losses in the ratio of their



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initial contributions. They opened Joint Bank A/c. where Sanjay deposited Rs. 3,00,000Ajay Deposited Rs. 2,00,000 and Vijay deposited Rs. 1,00,000. The following paymentsare made 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. Ajay brings materials of Rs. 55,000 and Vijay brings

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