Question
How will you rectify the following errors?
  1. Sales Book is overcasted by ₹ 5,000.
  2. Sales Return Book is short casted by ₹ 500.
  3. Balance of Sales Book is carried forward in excess by ₹ 1,000.
  4. Balance of Sales Return Book is carried forward in excess by ₹ 100.

Answer

Solution is as follows.

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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.
What do you understand by Grouping of Accounts?
Explain the objects of preparing Profit and Loss Account.
Give the journal entries for the following adjustments:
  1. Outstanding salary ₹ 3,500.
  2. Rent unpaid for one month at ₹ 6,000 per annum.
  3. Insurance prepaid for a quarter at ₹ 16,000 per annum.
  4. Purchase of furniture costing ₹ 7,000 entered in the purchases book.
Record the following transactions in Double Columns Cash Book and balance the book on 31st March, 2019:
2019
 
March 1
Cash in Hand
12,750
 
Cash at Bank
72,400
March 4
Received from Asha cash ₹ 1,200 and a cheque for ₹ 3,200, allowed discount ₹ 400
 
March 7
Paid salary to staff by cheque
25,600
March 9
Withdrawn cash from bank for office use
21,900
March 12
Interest paid by bank on bank balance
1,200
March 16
Purchased furniture in cash
16,500
March 21
Paid Mohan & Co. by cheque, discount received ₹ 100
10,900
March 24
Proprietor withdrew from office cash for his personal use
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March 29
Sold goods to Manoj for cash
14,800
March 31
Deposited office cash into bank
21,200
Extract of a Trial Balance as at March 31, 2017 is as follows:
Sundry Debtors
₹ 1,02,000
Bad Debts
₹ 1,400
Provision for doubtful debts
₹ 3,400
Additional information: A debtor of ₹ 2,000 could not be recovered. It is decided to maintain Provision for Doubtful Debtors @ 5% on Debtors and Provision for Discount at @ 2%. How these adjustments will be shown in Financial Statements?
In the following Machinery Account, determine the missing values, if depreciation is to be charged @ 10% p.a. on the Original Cost. On 1st October, 2018, the machinery was sold for ₹ 1,20,000.
The Trial Balance of M/s. Gupta & Sons shows a difference of $₹\ 52,200$. To prepare the Final Account on $31^{st}$ March, $2019,$ this difference is placed in a Suspense Account. Afterwards the following errors were disclosed. Pass the necessary entries to rectify them and show the Suspense Account.
  1. Purchases Book total had been undercasted by $₹\ 20,000.$
  2. A cheque received from Vasudev for $₹\ 7,800$ had been debited in the Cash Book but not posted in Vasudev’s Personal Account.
  3. Returns Outward Book had been overcasted by $₹\ 10,000.$
  4. Goods returned by Yash Pal worth $₹\ 15,000$ have been entered in Returns Outward Book. However, Yash Pal’s Account is correctly posted.
Explain how the following may be ascertained from incomplete records:
Opening capital and closing capital.