SUGGESTED ANSWER FOUNDATION EXAMINATION: JUNE 2024

Working Notes:
1. Trade Debtors Account
` `
To Balance b/d 1,45,400 By Cash/Bank 85,52,000
To Credit sales (Bal. fig.) 86,89,600 By Discount allowed 62,500
By Balance c/d 2,20,500
88,35,000 88,35,000

2. Trade Creditors Account

` `
To Cash/Bank 75,45,000 By Balance b/d 75,200
To Discount received 35,000 By Purchases credit 76,10,400
To Balance c/d 1,05,600
76,85,600 76,85,600

3. Computation of salary to be charged to Profit & Loss A/c

`
Salary expenses paid (as per cash book) 4,12,800
Less: Outstanding expenses as on 31.3.2023 (9,000)
4,03,800
Add: Outstanding expenses as on 31.3.2024 14,800
4,18,600
June 24
-

Question 5
-
sinx1 8 mins
-
:
amin sam

(a) Manish closed his books of account on 31stMarch, each year. Inventory taking
F

for the year ended 31st March, 2024 was completed by 10th April, 2024 on
which date value of the stock available in godown was of `4,50,000 at cost.
-

Following are the details of transactions that took place between

31st March, 2024 and 10th April, 2024:
(i) Goods sold to customers `1,10,000.
-
-

(ii) Sales return ` 10,000.

-

28
 SUGGESTED ANSWER FOUNDATION EXAMINATION: SEPTEMBER 2024

7/7/2023 Bank A/c Dr. 24,000

Bad debts A/c Dr. 36,000
To Harry 60,000
(The amount received from Harry and
the balance being written off as debt)

Harry ‘s A/c

Particulars ` Particulars `
To Bills Payable A/c 60,000 By Bank A/c 14,000
To Bank A/c 10,950 By Discount A/c 1,000
To Discount A/c 4,050 By Bills Receivable 80,000
To Bank A/c 80,000 By Bank A/c 24,000
By Bad Debts 36,000
1,55,000 1,55,000
10 8m 18 mins 6 : 57 9 : 15am
Question 3 / = -
-

(a) The following Trial Balance is the Trial Balance of a Proprietor as on

March 31 2024. Prepare Trading and Profit & Loss Account for the year
ending March 31st 2024 and a Balance Sheet as at that date.

Particulars Amount Particulars Amount

(` ) (` )
Plant and Machinery 5,00,000 Capital x)
(ax 4,00,000+

T
-
*

-Office Furniture * 26,000 Sundry Creditors -

5,20,000
-Opening Stock 4,80,000 -
Sales 48,00,000
-

Motor Van
v * 1,20,000 -
Bills Payable 56,000
-

Sundry
- Debtors * 4,57,000 Provision for Doubtful 25,000
-
-

Debts
-

-Cash in hand -4,000 Return

- Outwards 55,000
-

-
Cash at Bank 65,000 Discount
- Received 37,000
-

Wages
- 15,00,000

-
Salaries 1,40,000

8
Question 24)
3a) See

Trading and PeLall foye 31 3 24

. .

480000 Sales
Op Stk
.

- 4800000
Purchase 2135000
--
sales
-
Return 20004707 000 ,

Return outwards (3000)

↑

purchase
of P2M
2300000)
,
1780000
--
Stock 520000
-

1500000
wages

↑
GP
Qing
Profit
-

Gross bld 1467000

-

Baddebts 25000 Discount need 37000

·
S

+ additional b d : .
7000

+
prov for did
-
5000 37000
↑

140000
Salary -

Adut 60000
&

factory vent 8000

+
factory rent ols 3000
-
&
11000I

Insurance 63000
M

General expenses 10000

-

Discount allowed 65000

-

depn : Furn : 1300

PCM : 80000

MV :
-
↑
12000 93300
prov for dis to debt 8400
↑

NP 1016300
-
 BalanceSheet as on 31 3 24
.
.

Capital 400000 P& M 720000

-

Drawings 470.000) furniture Iniop

S

+ NP ↓
6300 1346300 Deotors 450000
Prov for dowb. debts (200)
-

additional provn (5000)

-

Creditors 520000
-- - prov for dis o 411600
-

Bills 56000
payable
3000
factory rent ols Bills Receivable 72000
-

Cash in hand 4008

cash at bank 65000

-

storl 520000
#
E

Motor Van 108000

-
&

-
-

1925300 1925300
- -
 PCM all furniture als

Op bal 500 000

- By .
depe 80000 opbal . 26000
By , deple 1300

To purchase
,
300000
-

-U-bal-
C :
bal ·
T20000
- -
-

Motor Van als Debtors

Op bal 10000 By depn 12000 Op -

bal 457000
- By .
baddebts 7000

Global- 450000
- =

vibal 108008
- -
 SUGGESTED ANSWER ACCOUNTING

~Purchases 21,35,000

~
Bills Receivable 72,000
F

Return
- Inwards 93,000
Drawings
- 70,000
-

- Advertisements 60,000
-

Factory Rent
- * 8,000
-

- Insurance 63,000
-

-
General Expenses 10,000
-

Bad debts - *
- 25,000
-

Discount allowed
- 65,000
-

58,93,000 58,93,000

Additional Information to be considered:

w
(i) Closing Stock on March 31st 2024 is ` 5,20,000.
-
-
(ii) During the year, Plant and Machinery was purchased for ` 3,00,000 but
~ - -

it was debited to Purchase Account.

-

(iii)
~ 3 months factory rent is due but not paid ` 3,000.
-

O
- -- -

(iv) Provide depreciation at O

- 5% per annum on furniture and 10% on plant
>

and machinery and motor van.

-
-

- -

- 00
(v) Further bad debts ` 7,000.
-

(vi) Provision for doubtful debts to be increased to ` 30,000 at year- end.

- ---

(vii) Provision for discount on Debtors to be made at 2%.

-
(10 Marks)
--

(b) The following is the Balance Sheet of Krish and Bala, sharing profit and loss
in the ratio 3: 2

Liabilities Amount Assets Amount

(`) (`)
Capital Accounts: Land & Buildings 28,000
Krish 25,000
Bala 15,000 40,000
General Reserve 30,000 Plant & Machinery 15,000

9
Question 5
als (31 3 4)
Trading
-
-
10 .

openingth (31 3) (bal

? 436150 sales
. ?
110000

) 100000
·

-
sales Return
Purchase
1250030
85000
M

-
Purchase Return
-

Goods received on cons 6000

4)
closinga
stock (10 .
450000
Gross
Profit in value) 4
⑳
&

C ↑ SP

100 25 125

x = 20000 100000
↑ -

&
i i
 SUGGESTED ANSWER ACCOUNTING

(iii) Purchases ` 85,000 (Including Cash Purchases ` 10,000).

--

(iv) Purchases return amounted to ` 2,500.

- -

(v) Goods costing 15,000 received in March, for sale on consignment basis,
--

out of which 60% of goods had been sold by 10th April. These sales are
- -

not included in above sales.

-
NRV/
(vi) After the stock was taken, it was found that there was certain very old
- -
-
slow- moving items costing ` 14,850, which should be taken at ` 9,500
⑳
- - -

to ensure disposal to an interested customer. 53

Goods are sold at a profit margin of 25% on cost. Ascertain the value of
- --

inventory for inclusion in the final accounts for the year ended 31st March,
2024. (5 Marks)
(b) Attempt any ONE of the two sub-parts i.e. either (i) or (ii)
(i) Mr. Prakash runs a factory which produces Pressure Cookers. The following
details were obtained about his manufacturing expenses for the year ended
31st March 2024:

Amount (`)
Opening Work-in – Progress 6,25,000
Closing Work–in Progress 7,15,000
Opening Inventory of Raw material 5,85,000
Closing Inventory of Raw material 4,70,000
Purchases 18,74,000
Purchase Returns 95,000
Indirect Material 1,88,000
Direct Wages 3,97,000
Indirect Wages 82,000
Power & Electricity 1,76,000
Repairs and Maintenance 2,65,000
Depreciation on Factory Shed 1,44,000
Depreciation on Plant & Machinery 1,62,000
Sale of scrap 36,000

29
 SUGGESTED ANSWER ACCOUNTING

Less: Calls–in–arrear (10,000 Equity shares of ` 2 each) 20,000 8,80,000

40,000 Equity shares of ` 10 each,` 4 cash paid up 1,60,000
Reserves and Surplus:
Capital Reserve (realized in cash) 60,000
Capital Redemption Reserve 1,60,000
Securities Premium 1,00,000
General Reserve 1,20,000
Profit and Loss Account 7,00,000

On 1stApril, 2024. The company makes final call @ 6 each on 40000 equity
shares. The call money is duly received by 30th April,2024.
On 1st May,2024 the Board of Directors of the company decided:
(i) To forfeit the share on which final call of ` 2 each is due:
(ii) To re- issue the forfeited share @` 11 each as fully paid up:
(iii) To issue fully paid bonus shares in the ratio of one fully paid bonus share
for every two fully paid shares held; and
(iv) To use minimum balance of Profit and Loss Account.
Pass necessary journal entries in the books of the company on the basis of
the above decisions. (10 Marks)
Answer
(a) Statement of Valuation of Inventory as on 31st March, 2024
Particulars Amount Amount
(`) (`)
Value of stock as on 10th April, 2024 4,50,000
Add: Cost of sales during the period from
31st March, 2024 to 10th April, 2024:
Sales (` 1,10,000-` 10,000) 1,00,000 St

Less: Gross profit (25% on cost i.e. 20% on (20,000) 80,000

sales) P -

5,30,000

31
SUGGESTED ANSWER FOUNDATION EXAMINATION: JUNE 2024

Less: Purchases during the period from

G
-

- 31 st March, 2024 to 10th April, 2024 (85,000- 82,500

2,500)
-

Unsold stock out of goods received on

consignment basis (40% of ` 15,000) 6
6,000
-

Loss on revaluation of
inventories (14,850-9,500)
slow-moving
G
5,350 93,850

4,36,150

ALTERNATE PRESENTATION
Statement of Valuation of Inventory as on 31st March, 2024
Particulars Amount Amount
(`) (`)
Value of stock as on 10th April, 2024 4,50,000
Add: Cost of sales during the period from
31st March, 2024 to 10th April, 2024:
Sales 1,10,000
Less: Gross profit (25% on cost i.e. 20% on (22,000) 88,000
sales) 2,500
Purchase Returns
5,40,500
Less: Purchases during the period from
31st March, 2024 to 10th April, 2024 85,000
Sales Returns 8,000
Unsold stock out of goods received on
consignment basis (40% of ` 15,000) 6,000
Loss on revaluation of slow-moving 5,350 1,04,350
inventories (14,850-9,500)
4,36,150

32
 SUGGESTED ANSWER ACCOUNTING

(b) Forecasting: Accounting helps in forecasting future performance and

financial position of the enterprise using past data and analyzing
trends.
(c) Decision-making: Accounting provides relevant information to the
users of accounts to aid rational decision-making.
(d) Comparison & Evaluation: Accounting assesses performance
achieved in relation to targets and discloses information regarding
accounting policies and contingent liabilities which play an important
role in predicting, comparing and evaluating the financial results.
(e) Control: Accounting also identifies weaknesses of the operational
system and provides feedback regarding effectiveness of measures
adopted to check such weaknesses.
(f) Government Regulation and Taxation: Accounting provides
necessary information to the government to exercise control on the
entity as well as in collection of tax revenues.
(c) In the books of Kay & Co.
Returns Inward Book
Date Particulars Details Amount
2024 (`)
Dec 6 Aar Store
30 shirt @ 300/- each 9000
15 Trousers @ 500/- each 7,500 16,500
Less: Trade Discount 8% (1,320) 15,180
Dec 16 Tulip Store
12 t-shirt @ 100/- each 1,200
Less: Trade Discount 10% (120) 1,080
Total 16,260

Note: Returns of goods sold from modern tailors will not be included in
return inward book as the sales were made in cash.
Questions 2
(a) A firm purchased a second-hand machinery on April 1, 2021 for ` 15,00,000
subsequent to which ` 2,00,000 were spent on its repairs and installation. On

3
 SUGGESTED ANSWER FOUNDATION EXAMINATION: JANUARY 2025

October 1, 2021 another machinery was purchased for ` 9,00,000 and cost
of installing the machine in a new plant is ` 20,000. The firm also shifted the
machinery purchased on April 1, 2021 to the new plant and incurred freight
of ` 10,000. They adopted a policy of charging depreciation @ 12% per
annum on diminishing balance method.
On April 1, 2023 it was decided to change the method and rate of
depreciation to straight line basis. On this date, the remaining useful life was
assessed as 5 years for both the machines purchased with no scrap value.
On October 1, 2023 the first machine become outdated and sold for
` 2,50,000. On the same date, another machinery was purchased for
` 8,50,000. The estimated useful life of the machine is 10 years and residual
value is ` 30,000.
You are required to prepare the machinery account for the year ending
March 31, 2024. (10 Marks)
~
(b) From the following information, prepare a Bank Reconciliation Statement as

⑭
on↳
-

June 30, 2024 for M/s XYZ Limited:

-

(i) The Bank column ofIt

-
Cash Book was overdrawn to the extent of ` 24,768.
- -

(ii) Bank charges amounting to ` 350 had not been entered in the Cash

⑳
--

Book.
-

(iii) Cheque amounting to ` 88,678 issued before June 30, 2024 but not yet
W -
-

presented to Bank.

Isuo I
X
(iv) One
-
=
payment of ` 4,590 was recorded in the Cash Book as if there is no
bank column.
- =

⑬ (v) The company paid ` O

-

-- 15,500 to a creditor and received a cash discount

O
= - -

@ 2%. The cashier erroneously entered the gross amount in the bank
-

column of the Cash Book.

= - -
-
-

O
=
-

(vi) A debit of ` 5,700 appeared in the Bank Statement for an unpaid cheque,
-
-
which had been returned marked out of date'. The cheque had been
- -
-

*
- - -

re-dated by the customer and paid into the Bank again on July 8, 2024.
-

- -
- -

(vii) Cheques deposited in bank but not yet cleared amount to ` 45,789.
- -
- -

(viii) Dividends of ` 1,980 collected by the Bank was not recorded in the Cash
-

Book.
- -
-

4
⑭ BRS

CB 24768

⑤
1

88678

⑤ 310 ② 350

⑳ 1980 4598

⑨ 2348⑥ 5700

⑩ 6789G 45789

⑳
⑬ 18900

⑪
ToI
SUGGESTED ANSWER ACCOUNTING

(ix) Amount of ` 2,340 wrongly credited by bank to company account for

B
--

which no details are available.

- - -

- -

(x) On June 25, 2024 the credit side of bank column of the Cash Book was
00
-

overcast by `6,789. (10 Marks)

-
-

-
-
-

Answer
(a) Machinery Account
Date Particulars Amount Date Particulars Amount
(` ) (` )

2023 2023
April 1 To Bal b/d- Oct. 1 By Depreciation- on 1,31,648
Machine 1 13,16,480 machinery 1 sold
Machine 2 7,61,024 20,77,504 Oct. 1 By Bank – machinery 1 2,50,000
Oct. 1 To Bank A/c (Machine 3) 8,50,000 Oct. 1 sold
By Profit & Loss– Loss on 9,34,832
2024 Sale of machinery (WN. 1)
Mar. 31
By Depreciation
(WN. 2)
Machine 2 1,52,205
Machine 3 41,000 1,93,205
Mar. 31 By bal c/d
14,17,819

29,27,504 29,27,504

Working Note 1:
Calculation of depreciation and Profit/loss on sale:

Machine 1 Machine 2 Total

purchased on purchased on
April 1,2021 Oct 1, 2021
(`) (`) (`)
Cost of Purchase 15,00,000 9,00,000
2,00,000 20,000
Total Cost 17,00,000 9,20,000
Less: Depreciation @ 12%