PROBLEMS
Journal:
From the following transactions prepare the Journal in the books of Raghu
1-01-2020 He started business with cash Rs 14,00,000
2-01-2020 He purchased goods from Ramana for Rs 1,25,000
4-01-2020 Cash Deposited with Bank Rs 4,00,000
6-01-2020 Sold goods to Madhan on credit Rs 3,25,000
8-01-2020 Machinery purchased for Rs2,00000
10-01-2020 Stationery purchased for Rs 15,000
12-01-2020 Cash withdrawn from bank for office use Rs1,00,000
18-01-2020 Cash withdrawn from bank for his son's birthday Rs 25,000
22-01-2020 Goods sold on cash Rs 4,00,000
26-01-2020 Goods purchased from kishan on cash Rs1,40,000
28-01-2020 Furniture purchased for Rs 40,000
30-01-2020 Rent paid 22,000
31-01-2020 Salaries paid Rs 35,000
Sol:
Journal Entries in the books of Raghu
Date Particulars L.F Debit(Rs.) Credit(Rs.)
Cash A/c Dr 14,00,000
1/01/2020 To Capital A/c 14,00,000
(Being Business Started with Cash)
Purchase A/c Dr 1,25,000
2/01/2020 To Ramana A/c 1,25,000
(Being Goods Purchased on Credit)
Bank A/c Dr 4,00,000
4/01/2020 To Cash A/c 4,00,000
(Being Cash deposited in Bank)
Madhan A/c Dr 3,25,000
6/01/2020 To Sales A/c 3,25,000
(Being Goods sold on Credit)
Machinery A/c Dr 2,00,000
8/01/2020 To Cash A/c 2,00,000
(Being Machinery Purchased)
Stationery A/c Dr 15,000
10/01/2020 To Cash A/c 15,000
(Being Stationery Paid)
Cash A/c Dr 1,00,000
12/01/2020 To Bank A/c 1,00,000
(Being Cash withdrawn from Bank)
Drawings A/c Dr 25,000
18/01/2020 To Bank A/c 25,000
(Being Cash withdrawn from bank for
Personal use)
22/01/2020 Cash A/c Dr 4,00,000 4,00,000
To Sales A/c
(Being Goods Sold)
Purchase A/c Dr 1,40,000
26/01/2020 To Cash A/c 1,40,000
(Being Goods Purchased)
Furniture A/c Dr 40,000
28/01/2020 To Cash A/c 40,000
(Being Furniture purchased for Cash)
Rent A/c Dr 22,000
30/01/2020 To Cash A/c 22,000
(Being Rent Paid)
Salaries A/c Dr 35,000
31/01/2020 To Cash A/c 35,000
(Being Salaries Paid)
32,27,000 32,27,000
From the following information prepare Journal in the books of kumar
1-1-20 He started business with cash, Rs 14,00,000
2-1-20 Cash deposited with bank Rs.2,00,000
4-1-20 purchased goods from Rajesh Rs 22,500
6-1-20 Goods return to Rajesh worth of 2,000
8-1-20 Sold to Mahesh Rs 36,500
10-1-20 Goods return by Mahesh worth of 3,000/-
12-1-20 Stationery purchased Rs.2,000
16-1-20 Cash sales Rs. 50,000
22-1-20 Cash Purchases for Rs.40,000
24-1-20 Machinery purchased and paid by cheque Rs.80,000
26-1-20 Cash paid to Rajesh for full settlement of his account 20,000 and received discount for Rs 500
28-1-20 Cash received from Mahesh for the full of his account 33,000 and allowed discount Rs 500
29-1-20 Cash withdrawn from office for personal use Rs.5000
30-1-20 Cash withdrawn from bank for office use Rs 12,000
31-1-20 Salaries paid Rs. 5,000
Sol:
Journal Entries in the books of Kumar
Date Particulars L.F Debit(Rs.) Credit(Rs.)
Cash A/c Dr 14,00,000
1/01/2020 To Capital A/c 14,00,000
(Being Business Started with Cash)
Bank A/c Dr 2,00,000
2/01/2020 To Cash A/c 2,00,000
(Being Cash deposited in Bank)
Purchase A/c Dr 22,500
4/01/2020 To Rajesh A/c 22,500
(Being Goods Purchased on Credit)
6/01/2020 Rajesh A/c Dr 2,000 2,000
To Purchase Return A/c
(Being Goods return to Rajesh)
Mahesh A/c Dr 36,500
8/01/2020 To Sales A/c 36,500
(Being Goods sold on Credit)
Sales Return A/c Dr 3,000
10/01/2020 To Mahesh A/c 3,000
(Being Machinery Purchased)
Stationery A/c Dr 2,000
12/01/2020 To Cash A/c 2,000
(Being Stationery Paid)
Cash A/c Dr 50,000
16/01/2020 To Sales A/c 50,000
(Being Cash Sales)
Purchase A/c Dr 40,000
22/01/2020 To Cash A/c 40,000
(Being Goods Purchased)
Machinery A/c Dr 80,000
24/01/2020 To Bank A/c 80,000
(Being Machinery purchased paid by
cheque)
Rajesh A/c Dr 20,500
To Cash A/c 20,000
26/01/2020 To Discount Received A/c 500
(Being cash paid to Rajesh and discount
received)
Cash A/c Dr 33,000
Discount Allowed A/c Dr 500
28/01/2020 To Mahesh A/c 33,500
(Being cash received and discount
allowed)
Drawings A/c Dr 5,000
29/01/2020 To Cash A/c 5,000
(Being Cash withdrawn from office for
Personal use)
Cash A/c Dr 12,000
30/01/2020 To Bank A/c 12,000
(Being Cash withdrawn from Bank)
Salaries A/c Dr 8,000
31/01/2020 To Cash A/c 8,000
(Being Salaries Paid)
32,27,000 32,27,000
QUESTION BANK PROBLEM
Journalize the following transactions in the books of Gopal.
2022 June 03 Received cash from Ram- Rs.5,000
04 Purchased Goods for cash- Rs.500
11 Sold Goods to Hari- Rs.200
13 Paid Ramakrishna- Rs.400
17 Received from Hari- Rs.200
20 Bought Furniture from Raju- Rs.200
27 Paid Room Rent- Rs.80
30 Paid Stationery- Rs.100
Sol:
Journal Entries in the books of Gopal
Date Particulars L.F Debit(Rs.) Credit(Rs.)
Cash A/c Dr 5,000
03/06/2022 To Ram A/c 5,000
(Being Cash received from Ram)
Purchase A/c Dr 500
04/06/2022 To Cash A/c 500
(Being Goods Purchased)
Hari A/c Dr 200
11/06/2022 To Sales A/c 200
(Being Goods Sold on Credit)
Ramakrishna A/c Dr 400
13/06/2022 To Cash A/c 400
(Being Cash paid to Ramakrishna)
Cash A/c Dr 200
17/06/2022 To Hari A/c 200
(Being Cash received from Hari)
Furniture A/c Dr 200
20/06/2022 To Raju A/c 200
(Being Furniture purchased from Raju)
Rent A/c Dr 80
27/06/2022 To Cash A/c 80
(Being Rent Paid)
Stationery A/c Dr 100
30/06/2022 To Cash A/c 100
(Being Stationery Paid)
6,680 6,680
Journalize and Ledger the following transactions in the books of Hari.
2020 March 01 Started business with cash- Rs.6,000
02 Sold Goods- Rs.3,500
04 Bought Goods- Rs.1,500
07 Sold Goods to Rajesh on credit- Rs.3,800
08 Bought Furniture for cash from Krishna Murthy- Rs.1440
10 Bought Plant& Machinery- Rs.15,000
Sol:
Journal Entries in the books of Hari
Date Particulars L.F Debit(Rs.) Credit(Rs.)
Cash A/c Dr 6,000
01/03/2020 To Capital A/c 6,000
(Being Business Started with Cash)
Cash A/c Dr 3,500
02/03/2020 To Sales A/c 3,500
(Being Goods Sold)
Purchase A/c Dr 1,500
04/03/2020 To Cash A/c 1,500
(Being Goods Purchased)
Rajesh A/c Dr 3,800
07/03/2020 To Sales A/c 3,800
(Being Goods Sold on Credit)
Furniture A/c Dr 1,440
08/03/2020 To Cash A/c 1,440
(Being Furniture purchased for Cash)
Plant & Machinery A/c Dr 15,000
10/03/2020 To Cash A/c 15,000
(Being Furniture purchased for Cash)
31,240 31,240
Ledger:
Dr Cash A/c Cr
Date Particulars J.F Amount(Rs.) Date Particulars J.F Amount(Rs.)
01/03/20 To Capital A/c 6,000 04/03/20 By Purchase A/c 1,500
02/03/20 To Sales A/c 3,500 08/03/20 By Furniture A/c 1,440
10/03/20 By Plant & 15,000
31/03/20 To Balance c/d 8,440 Machinery A/c
17,940 17,940
01/04/20 By Balance b/d 8,440
Dr Capital A/c Cr
Date Particulars J.F Amount(Rs.) Date Particulars J.F Amount(Rs.)
01/03/20 By Cash A/c 6,000
31/03/20 To Balance c/d 6,000
6,000 6,000
01/04/20 By Balance b/d 6,000
Dr Purchase A/c Cr
Date Particulars J.F Amount(Rs.) Date Particulars J.F Amount(Rs.)
04/03/20 To Cash A/c 1,500
31/03/20 By Balance c/d 1,500
1,500 1,500
01/04/20 To Balance b/d 1,500
Dr Sales A/c Cr
Date Particulars J.F Amount(Rs.) Date Particulars J.F Amount(Rs.)
02/03/20 By Cash A/c 3,500
07/03/20 By Rajesh A/c 3,800
31/03/20 To Balance c/d 7,300
7,300 7,300
01/04/20 By Balance b/d 7,300
Dr Rajesh A/c Cr
Date Particulars J.F Amount(Rs.) Date Particulars J.F Amount(Rs.)
07/03/20 To Sales A/c 3,500
31/03/20 By Balance c/d 3,500
3,500 3,500
01/04/20 To Balance b/d 3,500
Dr Furniture A/c Cr
Date Particulars J.F Amount(Rs.) Date Particulars J.F Amount(Rs.)
08/03/20 To Cash A/c 1,440
31/03/20 By Balance c/d 1,440
1,440 1,440
01/04/20 To Balance b/d 1,440
Dr Plant & Machinery A/c Cr
Date Particulars J.F Amount(Rs.) Date Particulars J.F Amount(Rs.)
10/03/20 To Cash A/c 15,000
31/03/20 By Balance c/d 15,000
15,000 15,000
01/04/20 To Balance b/d 15,000
TRIAL BALANCE:
From the following balances prepare the trial balance in the books of Ramchandran Rao
Furniture 3,000/- Creditors 3,000/-
Machinery 8000/- Debtors 4,000/-
Stock at 01-01-2002 4,000/- Sales returns 300/-
Bank overdraft 1,000/- Rent taxes 500/-
Purchases 8,000/- Drawings 500/-
Wages 2,000/- Salaries 1000/-
Interest paid 40/- Bad debts 300/-
Discount allowed 60/-. Sales 19,000/-
Capital 10,000/- Carriage 900/-
Purchase returns 400/- Commission 600/-
Carriage outwards 200/-
Trial Balance of Ramachandra Rao as on ………………..
[Link] Particulars L.F Debit(Rs.) Credit(Rs.)
1 Furniture 3.000
2 Machinery 8.000
3 Stock at 01-01-2002 4.000
4 Bank overdraft 1.000
5 Purchases 8,000
6 Wages 2,000
7 Interest paid 40
8 Discount allowed 60
9 Capital 10,000
10 Purchase returns 400
11 Carriage outwards 200
12 Creditors 3.000
13 Debtors 4.000
14 Sales returns 300
15 Rent taxes 500
16 Drawings 500
17 Salaries 1,000
18 Bad debts 300
19 Sales 19,000
20 Carriage 900
21 Commission 600
33,400 33,400
From the following balances prepare trial balance in the books of Jagadish as on 31-03-2002
Capital 25,000/- Debtors 30,000/-
Discount received 200/- Cash in hand 500/-
Bills receivable 2000/- Trading exp 1,000/-
Salaries 6,000/- Creditors 21,000/-
Commission 600/- Cash at bank 3,600/-
Bills payable 6,800/- Wages 7,800/-
Purchases 26,000/- Furniture 3,000/-
Bad debts 1,200/- Fright 400/-
Opening stock (01-04-01) 7000/- Machinery 10,000/-
Sales 47,000/- Office expenses 500/-
Insurance 400
/
Trial Balance of Jagadish as on 31-03-2002
[Link] Particulars L.F Debit(Rs.) Credit(Rs.)
1 Capital 25,000
2 Discount received 200
3 Bills receivable 2,000
4 Salaries 6,000
5 Commission 600
6 Bills payable 6,800
7 Purchases 26,000
8 Bad debts 1,200
9 Opening stock 7,000
10 Sales 47,000
11 Debtors 30,000
12 Cash in hand 500
13 Trading exp 1,000
14 Creditors 21,000
15 Cash at bank 3,600
16 Wages 7,800
17 Furniture 3,000
18 Fright 400
19 Machinery 10,000
20 office expenses 500
21 Insurance 400
1,00,000 1,00,000
From the following balances prepare trial balance in the books of Lokeswara Rao as on 31-12-2005
Capital 3,90,000/-
Drawings 21,000/- Trade Creditors 1,50,000/-
6% Loan 40,000/- Cash at Bank 39,940/-
Cash in Hand 6,060/- Debtors 1,24,000/-
Bills Receivable 19,000/- Provision for Doubtful Debts 5,000/-
Furniture and Fittings 17,940/- Commission Received 11,280/-
Plant and Machinery 57,600/- Stock(1/01/05) 1,79,360/-
Purchases 5,13,180/- Sales 7,12,860/-
Wages 81,940 Sales Returns 5,560/-
Salaries 22,000/- Travelling Expenses 3,760/-
Taxes and Trade Expenses 11,240/- Bad Debts 7,240/-
Repair 6,740/- Interest & Discount 11,649/-
Insurance 800/-
Buildings 1,50,000/-
Trial Balance of Lokeswara Rao as on 31-12-2005
[Link] Particulars L.F Debit(Rs.) Credit(Rs.)
1 Capital 3,90,000
2 Drawings 21,000
3 6% Loan 40,000
4 Cash in Hand 6,060
5 Bills Receivables 19,000
6 Furniture and Fittings 17,940
7 Plant and Machinery 57,600
8 Purchases 5,13,180
9 Wages 81,940
10 Salaries 22,000
11 Taxes and Trade Expenses 11,240
12 Repair 6,740
13 Buildings 1,50,000
14 Trade Creditors 1,50,000
15 Debtors 1,24,000
16 Cash at Bank 39,940
17 Provision for Doubtful Debts 5,000
18 Commission Received 11,280
19 Stock(1/01/05) 1,79,360
20 Sales 7,12,860
21 Sales Returns 5,560
22 Travelling Expenses 3,760
23 Bad Debts 7,240
24 Interest & Discount 11,649
25 Insurance 800
26 Suspense Account 30,031
13,09,140 13,09,140
QUESTION BANK PROBLEM
A. Smrita Ltd. has current ratio of 3/1. If its stock is Rs.40,000 and Total current liabilities are
Rs.75,000. Find its Liquid Ratio.
B. A company has current ratio of 3/1 and liquid ratio of 2/1. If the working capital is Rs.1, 80,000. Find
current liabilities and stock.
A)
Sol: The current ratio is given by the formula:
Current Ratio= Current Assets
Current Liabilities
In this case, the current ratio is given as 3:1, which means that the current assets are three times the current
liabilities.
Let x be the total current liabilities. According to the given information, the current ratio is 3:1. Therefore,
the current assets (A) can be expressed as 3x.
Current Ratio = 3x =3:1
x
Now, you're given that the total current liabilities(x) is Rs. 75,000. So,
Now, you can find the current assets (A):
A=3x=3× 75,000=2,25,000
The stock is a part of current assets. Let S be the stock. The liquid assets (LA) can be calculated as:
Liquid Assets=Assets−Stock
Given that the stock (S) is Rs. 40,000,
LA=225,000−40,000
=1,85,000
Now, you can find the liquid ratio using the formula:
Liquid Ratio= Liquid Assets
Current Liabilities
Liquid Ratio = 185,000
75,000
Liquid Ratio = 2.47
So, the liquid ratio of Smrita Ltd. is approximately 2.47.
B)
Sol: Let's denote the current liabilities as CL and the stock as S.
The current ratio is given by the formula:
Current Ratio= Current Assets
Current Liabilities
In this case, the current ratio is given as 3:1. Therefore, the current assets (CA) can be expressed as
3× CL.
Current Ratio = 3× CL = 3:1
CL
Now, you're given that the working capital is Rs. 180,000, and working capital is calculated as the
difference between current assets and current liabilities:
Working Capital=CA−CL
Substitute the value of CA from the current ratio:
1,80,000=3× CL−CL
1,80,000=2× CL
CL=1,80,000
2
CL=90,000
Now that you have the value for current liabilities (CL), you can find the stock (S).
The liquid ratio is given by the formula:
Liquid Ratio= Liquid Assets
Current Liabilities
In this case, the liquid ratio is given as 2:1. Therefore, the liquid assets (LA) can be expressed as 2× CL.
Liquid Ratio = 2× CL = 2:1
CL
Now, substitute the value of CL:
2=2×90.000
90,000
Now, you can find the value for S, which is the stock:
S = Liquid Assets=2×CL
= 2×90,000
= 1,80,000
So, the current liabilities (CL) are Rs. 90,000, and the stock (S) is Rs. 180,000.
FINAL ACCOUNTS:
From the following Trail Balance and adjustments of Raj, prepare trading and profit and loss account for
the year December 31,2012 and a Balance Sheet as on that date.
Gangappa (Dr) 4,000/- Sales 25,900/-
Guptaji (Dr) 2,050/- Capital 45,000/-
John (Dr) 2,000/- Naidu (Cr) 9,800/-
Stock (1.1.2012) 6,920/- Syamalal (Cr) 6,300/-
Cash in Hand 2,200/- Cash at Bank 4,200/-
Motor Car 12,000/- Salaries 3,000/-
Buildings 35,000/- Advertisement Expenses 900/-
Furniture 1,280/- Commission 750/-
Sundry Creditors 16,100/- Repairs to Motor Car 220/-
Purchase 10,950/- General Expenses 1,580/-
Purchase Return 250/- Insurance 700/-
Drawings 150/- Repairs to Buildings 1,000/-
Adjustments:
1) The stock as on December 31st, 2012 was 8,000
2) Depreciate Furniture @ 10% per annum.
3) Outstanding Salaries 200/-
4) Prepaid Insurance 200/-
5) Interest on Capital 4%
6) Drawings 150/-
Working Notes:
Debtors= Gangappa+Guptaji+John Depreciation of Furniture= Furniture × 10%
= 4,000+2,080+2,000 = 1,280 × 10%
= 8,050 = 280
Interest on Capital = Capital × 4%
Creditors= Naidu+ Syamlal = 45,000 × 4%
= 9,800+6,300 = 1800
= 16,100
Dr Trading & Profit and Loss Account of Raj for the year ending 31/12/2012 Cr
Particulars Amount(Rs.) Particulars Amount(Rs.)
To Opening Stock 6,920 By Sales 25,900
To Purchases 10,950 By Closing Stock 8,000
(-) Returns 250
10,700
(-) Drawings 150 10,550
To Gross Profit c/d 16,430
33,900 33,900
To Salaries 3000 By Gross Profit b/d 16,430
(+) O/S 200 By Commission 750
To Advertisement 3,200
Expenses 900
To Repairs to Motor Car 220
To General Expenses 1,580
To Insurance 700
(-) Prepaid 200 500
To Repairs to Buildings 1,000
To Depreciation of
Furniture 280
To Interest on Capital 1,800
To Net Profit 7,700
(Transfer to Capital A/c)
17,180 17,180
Balance Sheet of Raj for the year ending 31/12/2012
Liabilities Amount(Rs.) Assets Amount(Rs.)
Creditors 16,100 Cash in Hand 2,200
Outstanding Salaries 200 Cash at Bank 4,200
Capital 45,000 1,56,260 Debtors 8,050
(+) Net Profit 7,700 Prepaid Expenses 200
Closing Stock 8,000
(+) IOC 1,800
Furniture 1,280
54,500
(-) Dep 280 1,000
(-)Drawings 150 54,350 Motor Car 12,000
Buildings 35,000
70,650 70,650
QUESTION BANK PROBLEM
From the following Trail Balance and adjustments of Raju Emporium, prepare trading and profit and loss
account for the year December 31,2022 and a Balance Sheet as on that date.
Particulars Debit (Rs) Credit (Rs)
Sundry debtors 64,000 ---
Stock (1.1.2022) 44,000 ---
Cash in hand 70 ---
Plant and machinery 35,000 ---
Sundry creditors --- 21,300
Trade expenses 2,150 ---
Sales --- 2,69,000
Salaries 4,450 ---
Carriage outwards 800 ---
Rent 1,800 ---
Bills payable --- 15,000
Purchases 2,37,740 ---
Discounts 2,200 ---
Business premises 69,000 ---
Capital (1.1.2022) --- 1,59,000
Cash at bank 3,090 ---
4,64,300 4,64,300
Adjustments:
1) The stock as on December 31st, 2022 was 24,900
2) Depreciate plant and machinery @ 10% per annum.
Working Notes:
Depreciation of Plant and Machinery = Plant and Machinery × 10%
= 35,000 × 10%
= 3,500
Dr Trading & Profit and Loss Account of Raju Emporium for the year ending 31/12/2022 Cr
Particulars Amount(Rs.) Particulars Amount(Rs.)
To Opening Stock 44,000 By Sales 2,69,000
To Purchase 2,37,740 By Closing Stock 24,900
To Gross Profit c/d 12,160
2,93,900 2,93,900
To Discount 2,200
By Gross Profit b/d 12,160
To Carriage Outwards 800 By Net Loss
1,800 2,740
To Rent (Transfer to Capital A/c)
To Salaries 4,450
To Trade Expenses 2,150
To Depreciation of P&M 3,500
14,900
14,900
Balance Sheet of Raju Emporium for the year ending 31/12/2022
Liabilities Amount(Rs.) Assets Amount(Rs.)
Sundry Creditors 21,300 Sundry Debtors 64,000
Bills Payable 15,000 Cash In Hand 70
Capital 1,59,000 P&M 35,000
(-) Net Loss 2,740 1,56,260 (-)Dep 10% 3500 31,500
Cash At Bank 3090
Closing Stock 24,900
Business Premises 69,000
1,92,560 1,92,560