MEPL CLASSES

CA Foundation
Paper 1 – Principles & Practice of Accounting
Website- www.meplclasses.com
Mail Id:- [email protected]
Main Centre- 59 Jatindra Mohan Avenue Shobhabazar Kolkata-700005
(Time allowed: 3 hrs) (100 Marks)

(Note: Question 1 is compulsory; Attempt any 5 questions from the remaining 6 Questions)
Question 1
1. Cash book is a type of ……………. But treated as a …………….. of accounts.
(a) Subsidiary book, principle book (b) Principal book, subsidiary book
(c) Subsidiary book, Subsidiary book (d) Principal book, Principal book

2. The total of discounts column on the credit side of the cash book is posted to the –
(a) Credit of the discount allowed account.
(b) Debit of the discount received account.
(c) Credit of the discount received account.
(d) Debit of the discount allowed account.

3. Repairs of Machine after the machine after the machine is put to use is :
(a) Capital Expenditure (b) Revenue Expenditure
(c) Deferred Revenue Expenditure (d) Prepaid Expenses

4. In the case of ________________ either outflow of resources to settle the obligation is not probable or
the amount expected to be paid to settle the liability cannot be measured with sufficient reliability.
(a) Liability (b) Provision
(c) Contingent liabilities (d) Contingent assets.

5. Which one of the following statements is ‘false’?

(a) Pass Book is the statement of Account of the customer maintained by
the bank.
(b) Cheuqes sent for collection but not yet collected will result in increasing
the balance of the Cash Book.
(c) The Bank Reconciliation Statement is prepared to reconcile the balance
as shown by cash book and the balance as shown by Pass Book.
(d) Direct collections received by the bank on behalf of its customer will
decrease the balance as per Pass Book as compared to the balance as
per the cash Book.
(e) Cheques issued but not presented for payment will increase the balance as per Pass Book.

6. As per cash book of customer the balance with bank is Rs. 5610 (debit) and bank has paid LIC
premium of Rs. 150 to comply a standing instruction. To reconcile the cash book with bank pass book,
the said amount shall be:
 (a) Deducted (b) Added
(c) No change shall be made

7. Depreciation accounting is:

(a) A process of valuation of fixed asset
(b) A process of allocation of the cost of fixed assets.
(c) A method of providing funds for replacement.
(d) None of these

8. Which method is followed to have a uniform charge for deprecation and repairs and
maintenance together?
(a) Written Down Value Method (b) Straight Line Method
(c) Double Declining Method (d) Sum of Years Digits Method

9. Sale are equal to

(a) Cost of gods – Gross profit. (b) Cost of goods sold + Gross profit
(c) Gross profit – cost of goods sold. (d) Cost of goods sold + Net profit.

10. Profit & Loss Account shows –

(a) The financial performance at a particular date
(b) The financial position at a particular date
(c) The financial position for an accounting period
(d) The financial performance for an accounting period

11. The capital of a sole trade would charge as a result of

(a) A creditor being paid his account by cheque
(b) Raw materials being purchased on credit.
(c) Fixed assets being purchased on credit.
(d) Wages being paid in cash.

12. D’s Trial Balance contains the following information: Discount allowed Rs. 500, Provisions for discount
on debtors Rs. 1,100. It is desired to make a provision for discount on debtors of Rs. 1,800 at the end of
the year. The amount to be debited to the Profit & Loss Account is:
(a) Rs. 1,200 (b) Rs. 3,200
(c) Rs. 700 (d) Rs. 2,200

13. Contingent assets usually arise from unplanned or other unexpected events:
(a) True
(b) False
(c) Party True
(d) None

14. On 1.8.05 X draws a bill on Y “ for 30 days after sight”. The date of acceptance is 8.8.05. The due date
of the bill will be:
 (a) 8.9.05
(b) 10.9.05
(c) 11.9.05
(d) 9.9.05

15. A draws a bill on B for Rs 50,000 for 3 months. At maturity the bill returned dishonoured noting charges
Rs 500. 40 paise in a rupee is recovered from B’s estate. The amount of deficiency to recorded on
insolvency in books of B will be:
(a) Rs 20,200
(b) Rs 30,300
(c) Rs 19,800
(d) Rs 19,000

1. A
2. C
3. B
4. C
5. D
6. A
7. B
8. A
9. B
10. D
11. D
12. A
13. A
14. B
15. B
 Question 2 (14 Marks)
On 31st March, 2018, the following Trial Balance was extracted from the books of Mr. Ghayal.
Particulars ` Particulars `
Dr. Balances: Rates, Taxes and Insurance 28,910
Drawings 30,000 Advertising 32,640
Sundry Debtors 2,01,000 General Expenses 34,890
Interest on Loan 2,850 Bill Receivable 68,820
Cash in hand 20,500 Cr. Balances:
Opening Stock 68,390 Capital 2,80,000
Motor Vehicles 1,00,000 Sundry Creditors 1,04,010
Cash at Bank 35,550 Loan on Mortgage 95,000
Land and Buildings 1,20,000 Provision of doubtful debts 7,100
Bad Debts 5,250 Sales 11,02,430
Purchases 6,64,580 Purchases returns 13,460
Sales Returns 78,210 Discounts 5,400
Carriage Outward 24,190 Bills Payable 26,140
Carriage Inward 29,290 Rent Received 2,500
Salaries 90,970
Required: Prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as on that date,
after making adjustments for the following matters:
(a) Depreciate Land and Buildings at 21/2 per cent and Motor Vehicles at 20 per cent.
(b) Interest on Loan at 6 per cent per annum is unpaid for six months.
(c) Goods costing ` 5,000 were sent to a customer on sale or return for ` 6,000 on 30th March, 2018 and had been recorded in
the books as actual sales.
(d) Salaries amounting to ` 7,500 and rates amounting to y 3,500 are outstanding.
(e) Prepaid Insurance amounted to ` 1,500.
(f) The provision for Doubtful Debts is to be maintained at 5 per cent Sundry Debtors.
(g) Provide for Manager’s Commission at 10% on net profits after charging such commission.
(h) Closing Stock was valued at ` 62,500.
SOLUTION
TRADING AND PROFIT & LOSS ACCOUNT
Dr. for the year ending on 31st March, 2018 Cr.
Particulars ` Particulars `
To Opening Stock 68,390 By Sales 11,02,430
To Purchases 6,64,580 Less: Sale Price of
Less: Returns 13,460 6,51,120 Goods on approval 6,000
To Carriage Inwards 29,290 Less: Returns 78,210 10,18,220
To Gross Profit t/f to P & L A/c 3,36,920 By Stock in hand 62,500
Add: Cost of Goods
Sent on Approval 5,000 67,500
10,85,720 10,85,720
To Interest on Loan 2,850 By Gross Profit b/d 3,36,970
Add: Outstanding 2,850 5,700 By Discount 5,400
To Bad Debts 5,250 By Rent Received 2,500
Add: New Provision 9,750
Less: Old Provision 7,100 7,900
To Carriage Outwards 24,190

To Salaries ( ` 90,970 + 7,500) 98,470

To Rates, Taxes, & Ins. 28,910

Add: Rates due 3,500
Less: Insurance Prepaid 1,500 30,910
To Advertising 32,640
To General Expenses 34,890
To depreciation:
Land & Building @ 2'/2% 3,000
Motor vehicles @ 20% 20,000
To Manager’s Commission 7,920
To Net Profit t/f to Capital A/c 79,200
3,44,820 3,44,820
BALANCE SHEET AS AT 31 ST MARCH, 2018
 Liabilities ` Assets `
Billy Payable 26,140 Cash in hand 20,500
Sundry Creditors 1,04,010 Cash at bank 35,550
Outstanding Salaries 7,500 Bills Receivable 68,820
O/s Manager’s Commission 7,920 Prepaid Insurance 1,500
Outstanding Rates 3,500 Sundry Debtors 2,01,000
Loans on Mortgage 95,000 Less: Goods sent on app. 8,000
Add: Interest 2,850 97,850 Less: Provision 9,750 1,85,250
Capital: Stock ( ` 62,500 + ` 5,000) 67,500

Opening Balance 2,80,000 Land and Buildings 1,20,000

Less: Drawings ( ` 30,000) 30,000 Less: Depreciation 3,000 1,17,000

Add: Profit 79,200 3,29,200 Motor Vehicles 10,000

Less: Depreciation 20,000 80,000
5,76,120 5,76,120

Question 3 (7*2=14 Marks)

a. A Ltd. Ltd. forfeited 600 shares of Rs. 10 each issued at a premium of 30% to W who had applied for 1140 shares and paid
an application money of Rs. 5 (including Rs. 1 premium), for non-payment of allotment money of Rs. 5 (including Rs. 1
premium). At different intervals of time,out of these 100 shares were re-issued to Xas Rs. 8 called up for Rs. 7 per share,
100 shares were re-issued to Y as Rs. 8 paid up for Rs. 9 per share and 400 shares were re-issued to Z,credited as fully paid
for Rs. 9 per share. Record the journal entries for forfeiture and reissue of shares assuming that the company follows the
policy of adjusting excess Application Money towards other sums due on shares.
SOLUTION
JOURNAL OF A LTD
Date Particulars L.F. Dr. (Rs.) Cr.( Rs.)
On Forfeiture of 600 Shares
1. Share Capital A/c (600 x Rs. 8) Dr. 4,800
Dr. 300
Securities Premium A/c ( Rs. 3,000- Rs. 2,700)
 To Share Allotment A/c 300
To Forfeited Shares A/c ( Rs. 5,700 - Rs. 600 - Rs. 300) 4,800

(Being 600 shares forfeited for non-payment of Allotment

money

On Re-issue of 100 Shares as Rs. 8 paid-up for Rs. 7 per

share
2. Bank A/c (100 x Rs. 7) Dr. 700
Dr. 100
Forfeited Shares A/c (100 x Rs. 1)

To Share Capital A/c (100 x Rs. 8) 800

(Being 100 shares re-issued as Rs. 8 paid-up for Rs. 7 per

share)
3. Forfeited Shares A/c [( Rs. 4,800 x 100/600) - Rs. 100 ] Dr. 700

To Capital Reserve A/c 700

(Being the transfer of profit on re-issue)

On Re-issue of 100 Shares as Rs. 8 paid-up for Rs. 9 per

share
4. Bank A/c (100 x Rs. 9) Dr. 900

To Share Capital A/c (100 x Rs. 8) 800

100
To Securities Premium A/c (100 x Rs. 1)

(Being 100 shares re-issued as Rs. 8 paid-up for Rs. 9 per

share)
5. Forfeited Shares A/c ( Rs. 4,800 x 100/600) Dr. 800

To Capital Reserve A/c (Being the transfer of profit on re-issue) 800

6. On Re-issue of 400 Shares Dr. 3,600
Bank A/c (400 x Rs. 9) Dr. 400

Forfeited Shares A/c (400 x Rs. 1)

To Share Capital A/c (400 x Rs. 10) 4,000

(Being 400 shares re-issued as fully paid-up for Rs. 9 per

share)
 7. Forfeited Shares A/c [( Rs. 4,800 x 400/600) - Rs. 400 ] Dr. 2,800

To Capital Reserve A/c 2,800

(Being the transfer of profit on re-issue)
CALCULATION OF ALLOTMENT MONEY DUE BUT NOT RECEIVED
Particulars Rs.

Application Money received from defaulter (1140 x Rs. 5) 5,700

Less: Application Money adjusted (600 x Rs. 5) (3,000)

Excess Application Money 2,700

Allotment Money due (600 x '5) 3,000
Amount due but not received on Allotment towards Securities Premium 300

b. X Ltd. furnishes the following stores transactions for July, 2018:

1 Opening Balance 200 Units value ` 2,000
4 Receipts from B & Co. GRN No. 11 300 Units @ ` 12 per unit
7 Issues Req. No. 101 400 Units
10 Receipts from M & Co. Grn No. 12 400 Units @ ` 14 per unit
19 Issues Req. No. 102 300 Units
22 Receipts from N Co. Grn No. 13 200 Units @ ` 16 per unit
28 Issues Req. No. 103 300 Units.
30 Shortage in stock taking 20 Units
Required: Prepare the Stores Ledger using FIFO method.
SOLUTION STORES LEDGER OF X LTD. (FIFO METHOD)
Date Receipts Issues Balance
2018 GRN No. Of/ Rate Amt. Requisition Qty. Rate Amt. Qty. Rate Amt.
July Units ` ` No. Units ` ` Units `
1 Op. Bal. 200 10 2,000
4 11 300 12 3,600 200 10 2,000
300 12 3,600
7 101 200 10 2,000
200 12 2,400 100 12 1,200
10 12 400 14 5,600 100 12 1,200
400 14 5,600
19 102 100 12 1,200
200 14 2,800 200 14 2,800
22 13 200 16 3,200 200 14 2,800
200 16 3,200
28 103 200 14 2,800
100 16 1,600 100 16 1,600
30 Shortage 20 16 320 80 16 1,280

Question 4 (7*2=14 Marks)

a. On April 1,2015, a firm purchased a machinery for ` 2,00,000. On 1st October in the same accounting year, additional
machinery costing ` 1,00,000 was purchased. On 1st October, 2016, the machinery purchased on 1st April, 2015, having
become obsolete, was sold off for ` 90,000. On October 1, 2017, new machinery was purchased for ` 2,50,000 while the
machinery purchased on 1st October, 2015 was sold for ` 85,000 on the same day. The firm provides depreciation on its
machinery @ 10% per annum on original cost on 31st March every year. Show Machinery Account, Provision for Depreciation
Account for the period of three accounting years ending March 31,2018.
SOLUTION
Dr. MACHINERY ACCOUNT Cr.
Date Particulars ` Date Particulars `
01.04.2015 To Bank A/c 2,00,000 31.03.2016 By Balance c/d 3,00,000
01.12.2015 To Bank A/c 1,00,000
3,00,000 3,00,000
01.04.2016 To Balance b/d 3,00,000 01.12.2016 By Bank A/c 90,000
By Provision for 30,000
Depreciation A/c
By Profit and Loss A/c 80,000
31.03.2017 By Balance c/d 1,00,000
3,00,000 3,00,000
01.04.2017 To Balance b/d 1,00,000 01.12.2017 By Bank A/c 85,000
 01.12.2017 To Bank A/c 2,50,000 By Provision for 20,000
Depreciation A/c
To Profit and Loss A/c 5,000 31.03.2018 By Balance c/d 2,50,000
3,55,000 3,55,000
Dr. PROVISION FOR DEPRECIATION ACCOUNT Cr.
Date Particulars ` Date Particulars `
31.03.2016 To Balance c/d 25,000 31.03.2016 By Depreciation A/c ( ` 25,000

20,000 + ` 5,000)
25,000 25,000
01.12.2016 To Machinery A/c 01.04.2016 By Balance b/d 25,000

( ` 20,000 + ` 10,000) 30,000 01.12.2016 By Depreciation A/c 10,000

31.03.2017 To Balance c/d 15,000 31.03.2017 By Depreciation ,4/c 10,000

45,000 45,000
01.12.2017 To Machinery A/c 01.04.2017 By Balance b/d 15,000

( ` 5,000 + ` 10,000 + 20,000 01.12.2017 By Depreciation A/c 5,000

`5,000)
31.03.2018 To Balance c/d 12,500 31.03.2018 By Depreciation A/c 12,500
32,500 32,500

b. Mr David draws two bills of exchange on 1st Jan. for ` 6,000 and ` 10,000. The bills of exchange for ` 6,000 is for two months
while the bill of exchange for ` 10,000 is for three months. These bills are accepted by Mr Thomas. On 4th March Mr Thomas
requests Mr David to renew the first bill with interest at 18% p.a. for a period of two months. Mr David agrees to this proposal.
On 20th March, Mr Thomas retires the acceptance for ` 10,000, the interest rebate i.e., discount being ` 100. Before the due
date of the renewed bill, Mr Thomas becomes insolvent and only 50 paise in a rupee could be recovered from the estate. You
are to required to give the journal entries in the books of Mr David.
SOLUTION JOURNAL OF MR DAVID
Date Particulars L.F. Dr. ( `) Cr.( `)
Jan. 1 Bills Receivable No. 1 A/c Dr. 6,000
Bills Receivable No. 2 A/c Dr. 10,000
To Mr Thomas 16,000
 (Beings bills due on 4th March and 4th April respectively
accepted by Mr Thomas)
Mar. 4 Mr Thomas Dr. 6,000
To Bills Receivable No. 1 A/c (Being cancellation of B/R 6,000
No. 1 upon renewal)
Mar. 4 Mr Thomas Dr. 180
To Interest A/c 180
(Being the interest due on ` 6,000 @ 18% p.a. for 2
months on renewal of bill)
Mar. 4 Bills Receivable No. 3 A/c Dr. 6,180
To Mr Thomas 6,180
(Being B/R No. 3 due on 7th May, accepted by Mr Thomas in
lieu of bill already cancelled)
Mar. 20 Cash A/c Rebate A/c Dr. 9,900
Dr. 100
To Bills Receivable No. 2 A/c 10,000
(Being the amount received on retirement of B/R No. 2 before
due date)
May 7 Mr Thomas Dr. 6,180
To Bills Receivable No. 3 A/c (Being the entry for 6,180
dishonour of B/R No. 3 on maturity)
Cash A/c Bad Debts A/c Dr. 3.090
Dr. 3.090
To Mr Thomas 6,180
(Being a dividend of 50 paise in a rupee received from official
assignee of Mr Thomas and the irrecovered balance written off
as bad debts)
 Q 5. 14 Marks
Jalan Cricket Club provides you the following formation:
INCOME & EXPENDITURE ACCOUNT
Dr. for the year ended 31st March, 2018 Cr.
Expenditure Rs. Income Rs.
To Remuneration to coach 18,000 By Donation and Subscription 1,00,000
To Salaries and Wages 24,000 By Bar Room:
To Rent 23,000 Receipts 24,000
To Miscellaneous expenses 7,000 Less: Expenses 20,000 4,000
To Honorarium to Secretary 18,000 By Bank Interest 2,000
To Depreciation on Equipment 5,000 By Hire-Club-Hall 14,000
To Surplus 25,000
1,20,000 1,20,000

BALANCE SHEETS
Particulars 31.3,2017 31.3,2018
Rs. Rs.
Capital Fund 48,000 48,000
Add: Entrance Fees 10,000
Add: Surplus 25,000
Subscription in advance 4,000 3,000
Miscellaneous expenses 5,500 5,000
Salaries & Wages — 1,000
Honorarium to Secretary 1,000 —
Equipment 25,000 20,000
Outstanding subscription 6,000 6,000
Cash in hand 4,000 2,000
Cash at bank 2,500 10,000
Fixed Deposit 20,000 50,000
Accrued Hire charges of Club Hall — 2,000
Prepaid Rent 1,000 2,000
Required: Prepare the Receipts & Payments Account of the Club for the year ended March 31,2018 SOLUTION
 RECEIPTS & PAYMENTS ACCOUNT OF JALAN CRICKET CLUB
Dr. for the year ending on 31st March, 2018 Cr.
Receipts Rs. Payments Rs.
To Balance b/d: By remuneration to Cash 18,000
Cash in hand .4,000 By Rent 24,000
Cash at bank 2,500 By Miscellaneous Expenses 7,500
To Donations & Subscriptions 99,000 By Salaries & wages 23,000
To Entrance Fees 10,000 By Honorarium to Secretary 19,000
To Bar Receipts 24,000 By Fixed deposits 30,000
To Bank Interest 2,000 By Bar expenses 20,000
To Hire of Club Hall 12,000 By balance c/d
Cash in hand 2,000
Cash at bank 10,000
1,53,500 1,53,500
Working Notes:
Dr. (I) DONATIONS AND SUBSCRIPTIONS ACCOUNT Cr.
Particulars Rs. Particulars Rs.
To Balance b/d 6,000 By Balance b/d 4,000
To Income & Expenditure A/c 1,00,000 By Bank A/c (balancing figure) 99,000
To Balance c/d 3,000 By Balance c/d 6,000
1,09,000 1,09,000
Dr (II) MISCELLANEOUS EXPENSES ACCOUNT Cr.
Particulars Rs. Particulars Rs.
To Bank A/c (balancing figure) 7,500 By balance b/d 5,500
To Balance c/d 5,000 By Income & Expenditure a/c 7,000
12,500 12,500
Dr. (Ill) SALARIES AND WAGES ACCOUNT Cr
Particulars Rs. Particulars Rs.
To Bank A/c (balancing figure) To Balance 23,000 By Income & Expenditure A/c 24,000
c/d 1,000
24,000 24,000
Dr (IV) HONORARIUM TO SECRETARY ACCOUNT Cr
Particulars Rs. Particulars Rs.
To Bank A/c (balancing figure) 19,000 By Balance b/d 1,000
By Income & Expenditure A/c 18,000
19,000 19,000
Dr. (V) RENT ACCOUNT Cr.
Particulars Rs. Particulars Rs.
To Balance b/d 1,000 By Income & Expenditure A/c 23,000
To Bank A/c (balancing figure) 24,000 By Balance c/d 2,000
25,000 25,000
Dr. (VI) CLUB HALL HIRE CHARGES ACCOUNT Cr.
Particulars Rs. Particulars Rs.
To Income & Expenditure A/c 14,000 By Bank A/c (balancing figure) 12,000
By Balance c/d 2,000
14,000 14,000

Question 6 14 marks
A, B and C were partners sharing profits and losses in the ratio of 5 :3 :2. On 31.12,2017, the Balance Sheet was as under:
Liabilities Rs. Assets Rs.
Trade Creditors 26,500 Bank 20,000
Employees’ Provident Fund 3,500 Debtors 30,000
Reserve 20,000 Stock 55,000
As Capital 1,00,000 Fixed Assets 1,15,000
B’s Capital 50,000 Goodwill 15,000
C’s Capital 40,000 Advertisement Expenditure 5,000
2,40,000 2,40,000
B retires on 1.1,2018. For the purpose, the following adjustments were agreed upon:
(a) That the goodwill be valued at 2 years’ purchase of the average profits of 3 completed years preceding the Date of
retirement. The profits for previous years were: 2014 Rs. 45,000, 2015 Rs. 50,000, 2016 Rs. 55,000, 2017 Rs. 60,000.

(b) That Fixed Assets were found undervalued by Rs. 25,000.

(c) That Stock was found overvalued by Rs. 5,000.
(d) That the new profit sharing ratio of A and C will be 3 : 2
(e) That B be paid through cash brought in by A and C in such a way as to make their capitals proportionate. Minimum Bank
Balance is to be maintained at Rs. 10,000.
(f) The partners decide that Goodwill is not to appear in the Balance Sheet of New Firm. Required: Prepare Revaluation
Account, Capital Account of Partners.

SOLUTION
Dr. REVALUATION ACCOUNT Cr.
Particulars Rs. Particulars Rs.
To Stock 5,000 By Fixed Assets 25,000
To Profit on Revaluation t/f to:
A’s Capital A/c (5/10) 10,000
B’s Capital A/c (3/10) 6,000
C’s Capital A/c (2/10) 4,000
25,000 25,000
Dr. CAPITAL ACCOUNTS OF PARTNERS Cr.
Particulars A (Rs.) B(Rs.) C (Rs. ) Particulars A (Rs.) B (Rs.) C (Rs.)
To B’s Capital A/c 2,000 — 4,000 By Balance b/d 1,00,000 50,000 40,000
To Goodwill A/c 7,500 4,500 3,000 By Revaluation 10,000 6,000 4,000
To B’s Capital A/c 9,000 — 18,000 By Reserve 10,000 6,000 4,000
To Adv. Exp. A/c 2,500 1,500 1,000 By A’s Capital A/c — 11,000 —
To Balance c/d 99,000 89,000 22,000 By C’s Capital A/c — 22,000 —
1,20,000 95,000 48,000 1,20,000 95,000 48,000
To Bank A/c - 89,000 — By Balance b/d 99,000 89,000 22,000
To Balance b/d 1,20,000 — 80,000 By Bank A/c 21,000 — 58,000
1,20,000 89,000 80,000 1,20,000 89,000 80,000
Working Notes:
1. Average Profits = (7 50,000 + Rs. 55,000 + Rs. 60,000)/3 = Rs. 55,000

2. Firm’s Goodwill = Rs. 55,000 x 2 = Rs. 1,10,000

3. B's Share of Goodwill = Rs. 1,10,000 x 3/10 = Rs. 33,000

4. Shortage of Cash = Rs. 89,000 - Rs. 10,000 (i.e. Rs. 20,000 — Rs. 10,000) = Rs. 79,000
5. Total Capital of New Firm = Rs. 99,000 + Rs. 22,000 + Rs. 79,000 = Rs. 2,00,000
6. A’s New Capital = Rs. 2,00,000 x 3/5 = Rs. 1,20,000,
C’s New Capital Rs. 2,00,000 x 2/5 = Rs. 80,000.

Q 7. 14 Marks
Rectify the following errors in the books of SB Ltd.
(a) Goods sold to Mohan for ₹ 30,000 was wrongly passed through the purchases book.
(b) Goods sold to Sohan for ₹ 40,000 was wrongly passed through purchases book but correctly posted on the debit side of
Sohan’s account.
(c) Goods purchased from Rohan for ₹ 3,000 passed through sales book.
(d) Goods purchased from Shyam for ₹ 3,000 was passed through sales book but correctly credited to Shyam’s account.
(e) Goods returned by Ram for ₹ 4,000 were passed through returns outward book.
(f) Bills drawn on Murli for ₹ 6,000 was passed through bills payable book.
(g) Bills payable worth ₹ 3,000 accepted in favour of Murari, was passed through bills receivable book with ₹ 300 and Murari’s
account was correctly debited.
(h) Goods returned to Bankey for ₹ 1,000 was passed through sales Book.
(i) Goods purchased from Bihari for 1 1,000 was passed through return inward book.
SOLUTION
JOURNAL
Date Particulars L.F. Dr.( ₹ ) Cr.( ₹)
(a) Mohan Dr. 60,000
To Sales A/c 30,000
To Purchases A/c 30,000
(Being sales passed through purchases book, now recorded)
(b) Suspense A/c Dr. 80,000
To Sales A/c 40,000
To Purchases A/c 40,000
(Being the sales passed through purchases book but Sohan’s
A/c correctly posted, now rectified)
(c) Sales A/c Dr. 3,000
Purchases A/c Dr. 3,000
To Rohan's A/c 6,000
(Being purchases passed through sales book, now rectified)
(d) Sales A/c Dr. 3,000
Purchases A/c Dr. 3,000
 To Suspense A/c 6,000
(Being purchases passed through sales book but Shyam’ A/c
correctly posted, now rectified)
(e) Sales Returns A/c Dr. 4,000
Purchase Returns A/c Dr. 4,000
To Ram 8,000
(Being sales returned passed through returns outward book,
now rectified)
(f) Bills Receivable A/c Dr. 6,000
Bills Payable A/c Dr. 6,000
To Murli 12,000
(Being B/R drawn recorded in B/P Book, now rectified)
(g) Suspense A/c Dr. 3,300
To B/R A/c 300
To B/P A/c 3,000
(Being B/P recorded in B/R Book but Murari’s A/c correctly
posted, now rectified)
(h) Sales A/c Dr. 1,000
To Purchase Returns A/c 1,000
(Being purchase returns recorded in sales book, now rectified)
0) Purchase A/c Dr. 11,000
To Return Inward A/c 11,000
(Being purchase recorded in return inward book, now
rectified)