Meaning and Objectives of Accounting — Account STD 11 Commerce — Question

Enter the following transactions in the Journal of Suresh, Delhi who trades in ready-made garments:

2019		₹
April 1	Suresh paid into bank as Capital*	60,000
April 2	He bought goods and paid by cheque	24,000
April 3	Sold goods to Mukand & Co., Delhi	6,700
April 4	Sold goods for cash	10,900
April 5	Paid sundry expenses in cash*	3,000
April 8	Paid for office furniture and fittings by cheque	4,000
April 9	Bought goods from Ramesh & Bros., Faridabad (Haryana)	10,600
April 11	Returned goods to Ramesh & Bros.	1,500
April 12	Issued cheque to Ramesh & Bros. in full settlement*	9,500
April 30	Bank charged interest*	200
April 30	Borrowed from Ridhi @ 10% per annum interest*	50,000
April 30	Received from Mahendra on account*	6,000
April 30	Sold household furniture and paid the amount into business*	2,000
April 30	Sold goods costing ₹ 5,000 to Anita for cash at a profit of 20% on cost, less 20% trade discount
April 30	Sold goods costing ₹ 20,000 to Sunil at a profit of 20% on sale less 20% Trade Discount and paid cartage ₹ 150 (to be charged from customer).

CGST and SGST is levied @ 6% each on intra-state sale and purchase. IGST is levied @ 12% on inter-state sale and purchase. Out of the above, transactions marked with (*) are not subject to levy of GST.
[Hint: Household furniture is personal asset. When it is sold GST will not be levid. Since amount realised is invested in the firm, Suresh's Capital Account will be credited.}

What is a suspense account? Is it necessary that is suspense account will balance off after rectification of the errors detected by the accountant? If not, then what happens to the balance still remaining in suspense account?

Darshan sold goods for ₹ 40,000 to Varun on 8.1.2016 and drew upon him a bill of exchange payable after two months. Varun accepted the bill and returned the same to Darshan. On the due date the bill was met by Varun. Record the necessary Journal entries in the books of Darshan and Varun in the following circumstances.

• When the bill was retained by Darshan till the date of its maturity.
• When Darshan immediately discounted the bill @ 6% p.a. with his bank.
• When the bill was endorsed immediately by Darshan in favour of his creditor Suresh.
• When three days before its maturity, the bill was sent by Darshan to his bank for collection.

Following balances appeared in the books of Radhika Traders as on 1st April, 2017:
Assets: Cash ₹ 8,000; Cash at Bank ₹ 7,000; Stock ₹ 30,000; Debtors; ₹ 36,000 (Mohan ₹ 10,000; Sohan ₹ 12,000; Dinesh ₹ 14,000); Furniture ₹ 5,000; Building ₹ 25,000.
Liabilities: Creditors− X ₹ 5,000; Y ₹ 6,000.
In April, 2017, the following transaction took place:

2017		₹
April 2	Bought goods of the list price of ₹ 6,000 from Khanna Brothers less 15% trade discount and 2% cash discount and paid 40% price at the same time.
April 3	Received a draft from Mohan in full settlement and deposited it into Bank
April 5	Purchased goods from Suresh of the list price of ₹ 8,000 at 20% trade discount and paid him by cheque.	9,750
April 8	Sold goods and received a cheque	25,000
April 10	Deposited the above cheque into Bank	12,000
April 12	Sohan deposited in our Bank A/c	4,000
April 16	Paid Income Tax by Cheque	5,600
April 20	Received a cheque from Sohan and sent to Bank	7,800
	Discount allowed	200
April 21	Withdrew from Bank−for office	2,000
	for private use	4,000
April 23	Sent a cheque to X in full settlement of his A/c	4,900
April 27	Cheque of Sohan returned by the bank as dishonoured.
April 28	Dinesh was declared insolvent and a payment of 60 paise in a ₹ received from his estate by a Cheque
April 30	Bank allowed Interest	350
	Paid for Rent by cheque	1,500
	Paid for traveling expenses by cheque	500

Pass Journal entries for the above transactions.

Rectify the following errors which were detected before preparing the Trial Balance:

1. The total of Sales Book carried forward ₹ 5,000 less.
2. A credit sale to Sita ₹ 6,300 posted as ₹ 3,600.
3. A credit sale to Radha ₹ 2,400 posted as ₹ 4,200.
4. A credit sale to Parbati ₹ 3,000 credited to her account.
5. A credit sale to Laxmi ₹ 5,600 credited as ₹ 6,500.

Put the following on the proper side of a Cash Account, a Debtor's Account and a Creditor's Account:

S.No		₹
i	Sold goods to Sanjay on credit	50,000
ii	Sold goods to Mohan for cash	20,000
iii	Purchased goods from Ram on credit	25,000
iv	Cash received from Sanjay	19,000
v	Goods returned by Sanjay	2,000
vi	Paid rent	500
vii	Cash paid to Ram	15,000

Ram owes ₹ 2,000 to Mohan on 1st January, 2019. On this date, he accepted a draft for the amount for 3 months. Mohan got the bill discounted at his bank @ 6% p.a. On the due date, the bill was dishonured, nothing charges ₹ 20. Ram agreed to pay ₹ 520 immediately and accept another bill for the remaining amount for 3 months together with interest at 9% p.a. This bill was met on the due date. Give the Journal entries in the books of both the parties.

Rectify the following errors assuming that suspense account was opened. Ascertain the difference in trial balance.

1. Credit sales to Mohan ₹ 7,000 were recorded in Purchase Book. However, Mohan’s account was correctly debited.
2. Credit purchases from Rohan ₹ 9,000 were recorded in sales book. However, Rohan’s account was correctly credited.
3. Goods returned to Rakesh ₹ 4,000 were recorded in sales return book. However, Rakesh’s account was correctly debited.
4. Goods returned from Mahesh ₹ 1,000 were recorded through purchases return book. However, Mahesh’s account was correctly credited.
5. Goods returned to Naresh ₹ 2,000 were recorded through purchases book. However, Naresh’s account was correctly debited.

Prepare Accounting Equation from the following:

Pass entries for the following transactions in the books of M/s Karthikeyan & Co. of Chennai:

2019
June 10	Purchased goods from Ravichandran of Madurai of the list price of ₹ 2,00,000 at 25% trade discount at 4% cash discount on purchase price of goods. Paid CGST and SGST @ 9% each. Paid the entire amount by cheque on the same date.
June 25	Sold goods to Ramalingam of Erode of the list price of ₹ 3,75,000 at 20% trade discount and 2% cash discount on sale price. Charged CGST and SGST @ 9% each. Full amount was received by cheque on the same date.

Ignore adjustment and payment of GST.