Question
Explain any two Source Documents.
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Answer
- Cash Memo: Cash Memo is prepared by the seller when goods are sold against cash. It has details of goods sold, quantity, rate of each item and the total amount received, besides the date of transaction and other terms and conditions, if any. It is an evidence for the purchaser for, goods purchased against cash, and for the seller, it is an evidence of sales for cash.
- Invoice or Bill: An Invoice or Bill is prepared by the seller when the goods are sold on credit. It has details of the party to whom goods are sold, goods sold and the total sale amount. The original copy of the sales invoice is sent to the purchaser and a duplicate copy is retained as an evidence of the sales for recording it in the books of account and for future reference. For the purchaser, credit purchases are evidenced by bill received from the supplier. A specimen of a Invoice or a Bill is as follows:
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Following errors are discovered in the books of Sh. Ram Lal. Make the necessary entries to rectify them:
- Purchases Journal was undercasted by ₹ 2,150.
- ₹ 500 received from K. Krishna was debited to his account.
- An amount of ₹ 3,000 withdrawn by the proprietor of the firm for his personal use was posted to the Travelling Expenses Account.
- An amount of ₹ 175 for a credit sale to R. Gopalan correctly entered in the Sales Book, has been debited to his account as ₹ 157.
On 31st March, 2023, Bank Statement of Gopal shows credit balance of ₹ 33,570
whereas Cash Book showed debit balance of ₹ 53,000.
It was observed that the differences were because of the following:
i. Cheques and drafts sent to the bank but not collected and credited, amounted to ₹ 7,900 while cheque for ₹ 2,000 was received unpaid.
ii. Three cheques drawn for ₹ 3,000; ₹ 1,500 and ₹ 2,000 respectively were not presented for payment till 30th April, 2023.
iii. Bank has paid a cheque of ₹ 10,000 but it has not been entered in the Cash Book and a cheque of ₹ 5,000 which was discounted with the bank was dishonoured by the drawee on the due date.
iv. Bank has charged ₹ 130 as its commission for collecting outstation cheques and had credited an interest of ₹ 100 in the account.
v. A wrong debit of ₹ 5,000 was made by the bank, which was reversed on 4th April, 2023. Prepare Bank Reconciliation Statement as on 31st March, 2023.
whereas Cash Book showed debit balance of ₹ 53,000.
It was observed that the differences were because of the following:
i. Cheques and drafts sent to the bank but not collected and credited, amounted to ₹ 7,900 while cheque for ₹ 2,000 was received unpaid.
ii. Three cheques drawn for ₹ 3,000; ₹ 1,500 and ₹ 2,000 respectively were not presented for payment till 30th April, 2023.
iii. Bank has paid a cheque of ₹ 10,000 but it has not been entered in the Cash Book and a cheque of ₹ 5,000 which was discounted with the bank was dishonoured by the drawee on the due date.
iv. Bank has charged ₹ 130 as its commission for collecting outstation cheques and had credited an interest of ₹ 100 in the account.
v. A wrong debit of ₹ 5,000 was made by the bank, which was reversed on 4th April, 2023. Prepare Bank Reconciliation Statement as on 31st March, 2023.
From the following particulars prepare a bank reconciliation statement showing the balance as per cash book on December 31, 2016.
Two cheques of ₹ 2,000 and ₹ 5,000 were paid into bank in October, 2016 but were not credited by the bank in the month of December.
A cheque of ₹ 800 which was received from a customer was entered in the bank column of the cash book in December 2016 but was omitted to be banked in December, 2016.
Cheques for ₹ 10,000 were issued into bank in November 2016 but not credited by the bank on December 31, 2016.
Interest on investment ₹ 1,000 collected by bank appeared in the passbook.
Balance as per Passbook was ₹ 50,000
Two cheques of ₹ 2,000 and ₹ 5,000 were paid into bank in October, 2016 but were not credited by the bank in the month of December.
A cheque of ₹ 800 which was received from a customer was entered in the bank column of the cash book in December 2016 but was omitted to be banked in December, 2016.
Cheques for ₹ 10,000 were issued into bank in November 2016 but not credited by the bank on December 31, 2016.
Interest on investment ₹ 1,000 collected by bank appeared in the passbook.
Balance as per Passbook was ₹ 50,000
Give a definition of Bill of Exchange and give its four characteristics.
From the following information, prepare an Analytical Petty Cash Book:
| 2019 | ₹ | |
| April 1 | Received for cash payment | 20,000 |
| April 2 | Paid for postage | 1,600 |
| April 5 | Paid for stationery | 1,000 |
| April 8 | Paid for advertisement | 2,000 |
| April 12 | Paid for wages | 800 |
| April 16 | Paid for carriage | 600 |
| April 20 | Paid for conveyance | 880 |
| April 25 | Paid for travelling expenses | 3,200 |
| April 27 | Paid for postage | 480 |
| April 28 | Paid for office cleaning | 400 |
| April 29 | Paid for courier | 800 |
| April 30 | Sent registered notice to landlord | 190 |
Prepare accounting equation from the following:
- Started a business with cash ₹ 1,00,000 and goods worth ₹ 20,000.
- Sold 50% of above goods at a profit of ₹ 2,000 on credit to Ram.
- Rent paid ₹ 5,000.
- Ram paid 50% of his balance in cash.
Prepare an imaginary specimen of a promissory note.
'Business units last indefinitely.' Mention and explain the concept on which the statement is based.
On 15th June, 2019, Mohan sold goods to Sohan valued at ₹ 2,000. He drew a bill at 3 months for the amount and discounted the same with his bank for ₹ 1,960. On the due date the bill was dishonoured and Mohan paid to the bank the amount due plus the noting charges of ₹ 10.
Draft the Journal entries in the books of all parties.
Draft the Journal entries in the books of all parties.
On 31st March, 2017, Pass Book showed a balance of ₹ 25,000. Prepare a Bank Reconciliation Statement from the following particulars:
- Cheques of ₹ 20,000 were deposited in Bank on 27th March, 2017, out of which cheques of ₹ 5,000 were cleared on 1st April, 2017. Rest are not cleared.
- On 28th March, 2017, cheques were issued amounting to ₹ 15,000, out of which cheques of ₹ 3,000 were presented in March, ₹ 4,000 on 2nd April and rest were not presented.
- Cheques of ₹ 10,000 were deposited in Bank on 28th March, 2017, out of which cheques of ₹ 4,000 were cleared on 2nd April, 2017 and rest are dishonoured.
- Interest on investment collected by bank does not appear in the Cash Book ₹ 800.
- A B/R of ₹ 9,000 previously discounted from the bank was dishonoured on 30th March, 2017 but no intimation was received from the bank till 31st March.
- Bank has debited ₹ 1,500 and credited ₹ 1,200 in our account.