Master Test – 05 Sampurna Dec-2023 (CA Foundation) Maximum Marks 100

Total Number of Questions: 15 Time allowed: 3 Hr.

Instructions to Candidates
Working Notes should form part of the respective answers

(a) State with reasons, whether the following statements are True or False:

1. The Sales book is kept to record both cash and credit sales.
(2 Marks)

2. Bank reconciliation statement is prepared to arrive at the bank balance.

(2 Marks)

3. Finished goods are normally valued at cost or market price whichever is higher.
(2 Marks)

4. Reducing balance method of depreciation is followed to have a uniform charge for depreciation and repairs and
maintenance together.
(2 Marks)

5. Discount at the time of retirement of a bill is a gain for the drawee.

(2 Marks)

6. A withdrawal of cash from the business by the proprietor should be charged to the profit and loss account as an
expense.
(2 Marks)
(b) Subjective

7. Write a Short note on the Machine Hour Rate method of calculating depreciation.
(4 Marks)

8. Differentiate between Trade bill and Accommodation bill.

(4 Marks)

9. On 1st January, 2019 Radha Tourist & travels Company purchased a Bus for 𝑅𝑠. 8, 00, 000. On 1 st July, 2020
this bus was damaged due to fire and was completely destroyed and 𝑅𝑠. 6, 00, 000 were received by a cheque
from the Insurance Company in full settlement on 1 st October, 2020. On 1st July, 2020 another Bus was
purchased by the company for 𝑅𝑠. 10, 00, 000.
The Company charges Depreciation @ 20% per annum under the WDV Method. Calculate the amount of
depreciation for the year ended 31st March, 2021 and gain or loss on the destroyed Bus.

(5 Marks)
10. Mr. Grow and Mr. Green had the following mutual dealings. They desired to settle their account on the average
due date:
Purchases by Grow from Green:

6th January, 2021 60, 000

2nd February, 2021 28, 000

31st March, 2021 20, 000

Sales by Grow to Green:

6th January, 2021 66, 000

9th March, 2021 24, 000

20th March, 2021 5, 000

You are asked to ascertain the average due date taking base date as 6th January 2021.
(5 Marks)

11. Pass the necessary Journal entries in the books of Krishan.

Goods taken by an employee (cost Rs 2500 Sales Price Rs. 3000) on the occasion of Diwali and the same was
deducted from the salary of the employee in the same month.
Income Tax paid Rs. 45000.
Goods costing Rs 2000 were given as charity.
Purchased goods from Ramesh 20000. Trade discount 10% given. Cash discount given for quick payment Rs.
3000.
(5 Marks)
12. From the following details, prepare an account current, as sent by A to B on 30th June, 2021 by means of
products method charging interest @ 6% p.a:.
2021 Particulars Amount
January 1 Balance due from B 600
January 11 Sold due from B 520
January 18 B returned goods 125
February 11 B paid by cheque 400
February 14 B accepted a bill drawn by A for one month 300
April 29 Goods sold to B 615
May 15 Received cash from B 700
(5 Marks)

13. The cash book of a firm showed an overdraft (Cr) of on 31st March,2016. 𝑅𝑠. 30, 000 A comparison of the
entries in the cash book and pass book revealed that -
On 22nd March, 2016, cheques totalling 𝑅𝑠. 6, 000 were sent to bankers for collection. Out of these, a cheque for
𝑅𝑠. 1, 000 was wrongly recorded on the credit side of the cash book and cheques amounting to 𝑅𝑠. 300 could not
be collected by the bank before 1st April, 2016.
A cheque for 𝑅𝑠. 4, 000 was issued to a supplier on 28th March, 2016. The cheque was presented to the bank on
4th April, 2016.
There were debits of 𝑅𝑠. 2, 600 in the pass book for interest on overdraft and bank charges, but the same had not
been recorded in the cash book.
A cheque for 𝑅𝑠. 1, 000 was issued to a creditor on 27th March, 2016 but by mistake the same was not recorded
in the cash book. The cheque was, however, duly encashed by 31st March, 2016.
As per standing instructions, the banker collected a dividend of 𝑅𝑠. 500 on behalf of the firm and credited the
same to its account by 31st March,2016. The fact was, however, intimated to the firm on 3rd April, 2016.
You are required to prepare a bank reconciliation statement as on 31st March, 2016.
(5 Marks)
14. The accountant of X prepared the Trial Balance for the year ended 31st March, 2016. But there was a difference
and the accountant put the difference in the Suspense Account. Rectify the following errors found and prepare
the Suspense Account.
(1) The total of the Returns outward book, has not been 𝑅𝑠. 420 posted in the ledger.
(2) Purchase of 𝑅𝑠. 350 from Y has been entered in the sales book. However Y's a/c has been correctly entered.
(3) A sale of 𝑅𝑠. 390 to Z has been credited to his account as 𝑅𝑠. 290.
(4) Old furniture sold for 𝑅𝑠. 5400 had been entered as 𝑅𝑠. 4500 in the sales account.
(5) Goods taken by proprietor, 𝑅𝑠. 500 have not been entered in the books at all.
(5 Marks)

15. Mr. Samphat who was the holder of 12,000 preference shares of ₹ 100 each, on which ₹ 60 per share has been
called up, could not pay his dues on Allotment and First call each at ₹ 20 per share. The Directors forfeited the
above shares and reissued 10,000 of such shares to Mr. Sushil at ₹ 50 per share paid-up as ₹ 60 per share.
You are required to prepare journal entries to record the above forfeiture and reissue in the books of the
company.
(5 Marks)

16. Ram and Rahim are in partnership sharing profits and losses in the ratio of 3:2. As Ram, on account of his
advancing years, 3: 2 feels he cannot work as hard as before, the chief clerk of the firm, Ratan, is admitted as a
1
partner with effect from 1st January, 2019, and becomes entitled to th of the net profits and nothing else, the
10
mutual ratio between Ram and Rahim remaining unaltered.
Before becoming a partner, Ratan was getting a salary of ₹ 500 p.m. together with a commission of 4% on the
net profits after deducting his salary and commission.
It is provided in the partnership deed that the share of Ratan’s profits as a partner in excess of the amount to
which he would have been entitled if he had continued as the chief clerk, should be taken out of Ram’s share of
profits.
The net profit for the year ended December 31, 2019 is ₹ 1, 10, 000. Show the distribution of net profit amongst
the partners.
(5 Marks)

17. The Profit and loss account of Hanuman showed a net profit of ₹6, 00, 000, after considering the closing stock of
₹3, 75, 000 on 31st March, 2020. Subsequently the following information was obtained from scrutiny of the
books:
Purchases for the year included ₹15, 000 paid for new electric fittings for the shop.
Hanuman gave away goods valued at ₹40, 000 as free samples for which no entry was made in the books of
accounts.
Invoices for goods amounting to ₹ 2, 50, 000 have been entered on 27th March, 2020, but the goods were not
included in stock.
In March, 2020 goods of ₹2, 00, 000 sold and delivered were taken in the sales for April, 2020.
1
Goods costing ₹75, 000 were sent on sale or returned in March, 2020 at a margin of profit of 33 3% on cost.
Though approval was given in April, 2020 these were taken as sales for March, 2020. Calculate the value of
stock on 31st March, 2020 and the adjusted net profit for the year ended on that date.
(5 Marks)
18. Raghav Ltd. was registered with an authorized Capital of 𝑅𝑠. 5, 00, 000 divided into shares of 𝑅𝑠. 10 each. It
purchased a Building from Y for 𝑅𝑠. 2, 00, 000 and issued fully paid shares to Y for purchase consideration. It
invited applications for the balance 30, 000 shares payable as under : 𝑅𝑠. 3 on Application, 𝑅𝑠. 3 on Allotment,
𝑅𝑠. 2 on First Call and 𝑅𝑠. 2 on Final call. Ashok, who had been allotted 500 shares failed to pay both the Calls.
His shares were forfeited and reissued at 𝑅𝑠. 9 per share to Hari , as fully paid up. Make necessary entries in the
Journal of the company.
(10 Marks)
19. Rajat of Jaipur appointed Sourabh of Noida as its selling agent on the following terms:
Goods to be sold at invoice price or over Sourabh to be entitled to a commission of 7. 5% on the invoice price
and 20% of any surplus price realized over invoice price. The principals to draw on the agent a 30 days bill for
80% of the invoice price. On 1st February, 2020, 1000 cycles were consigned to Sourabh , each cycle costing
₹640 including freight and invoiced at ₹800. Before 31st March, 2020, (when the principal’s books are closed)
Sourabh met his acceptance on the due date; sold off 820 cycles at an average price of ₹930 per cycle, the sale
expenses being ₹12500; and remitted the amount due by means of bank draft.
Twenty of the unsold cycles were shop-spoiled and were to be valued at a depreciation of 50% of cost. Show by
means of ledger accounts how these transactions would be recorded in the books of Sourabh and find out the
value of closing inventory with Sourabh to be recorded in the books of Rajat at cost.
(10 Marks)

20. Summary of Receipts and Payments of Grover Society for the year ended 31st March, 2021 are as follows:

Receipt Amount Payment Amount

Subscription Received 5, 00, 000 Payment 3, 00, 000
Donation Raised for meeting 1, 50, 000 Honorarium to 1, 00, 000
revenue expenditure Doctors
Interest on Investments @ 996 p.a. 90,000 Salaries 2, 80, 000
Charity Show Collection 1, 25, 000 Sundry Expenses 10,000
Equipment Purchase
Charity Show
Expenses

Additional Information:

Particulars 01. 04. 2020 31. 03. 2021

Subscription due 15,000 22,000
Subscription received in advance 12,000 7,000
Stock of medicine 1,00,000 1, 50, 000
Amount due for medicine supply. 90,000 1, 30, 000
Value of equipment 2, 10, 000 3, 00, 000
Value of building 5, 00, 000 4, 80, 000
Cash Balance 80,000 90,000
Opening Balance of Capital Fund 18, 03, 000

You are required to prepare :

(i) Income and Expenditure Account for the year ended 31st March, 2021.
(ii) Balance Sheet as on 31st March, 2021
(15 Marks)

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