FUNDAMENTALS OF BUSINESS ACCOUNTING

Question 1: Record the following transactions in the journal Shri Anil, for January 2024:

1. Commenced Business with Rs. 1,00,000 in Cash as Capital.

2. Deposited Rs. 80,000 in ICICI Bank.
2. Purchased goods worth Rs. 50,000 from Sunil on credit.
3. Paid Rs. 500 for carriage inward.
4. Sold goods worth Rs. 20,000 to Ajay on Credit.
4. Cash sales Rs. 5,000.
5. Paid Rs. 15,000 to Sunil by cheque.
6. Received Rs. 15,000 from Ajay in cash.
7. Received balance amount from Ajay by cheque
8. Paid Brokerage to Vijay Rs. 500
9. Withdrew Rs. 1000 from bank for office use
10. Sold goods worth Rs. 1000 to Shalin
12. Withdrew Rs. 500 from Bank for personal use
13. Paid Carriage on goods Rs. 20
15. Borrowed Rs. 10000 from Sanjay in cash
18. Deposited Rs. 8000 in the bank
20. Paid rent to Landlord Rs. 100 by cheque
25. Received commission from Sanjeev Rs. 300
31. Paid following expenses in cash: Salary to Manager Rs. 500 ;Salary to other
Staff Rs. 1000; Postage Rs. 200; Sundry Expenses Rs. 250.

Question 2: Enter the following Transactions in the books of Paresh, for the month April, 2024:
1. Cash on hand Rs. 2000 and cash at Bank of India Rs. 15000
2. Purchased Books from Ajay Products, Rs. 50000 @ 5% Trade Discount
3. Sold our Shares (personal) for Rs. 25000 and invested that sum in business
4. Sold to Vijay Traders goods worth Rs. 30000 for cash
5. Deposited Rs. 20000 in bank sent a cheque of Rs. 25000 to Ajay Products
6. Paid Rs. 400 for the Fees of Son from Office (Paresh’s son)
7. LIC Premium Rs. 420 and insurance for the goods Rs. 320 (Rs. 420 paid
From House)
8. Purchased Goods worth Rs. 30000 from Jeet & Co. at 15 % Trade Discount and 10 %
Cash Discount
9. Settled Amount With Ajay Products
10. Sold Goods to Parth & Co. for Rs. 30000 at 10 % trade discount
11. Received Cash from Parth & Co. in full settlement
13. Goods worth Rs. 15000 destroyed by fire. Insurance company paid
Rs. 12000 as claim.

Question 3: Record the following Transactions in the Journal book of Mr. S. Kumar.
January 2024
1. Started Business with cash Rs. 8000 and machinery worth Rs. 2000
2. Purchased Motor car Worth Rs. 10000 from Nanavati on Credit
3. Cash purchases Rs. 5600
4. Cash Sales Rs. 53200
5. Purchased Goods from Kapoor worth Rs. 2100
6. Goods worth Rs. 200 returned to Kapoor
7. Purchased stationery for cash Rs. 125
8. Purchased Furniture worth Rs. 8000 in Exchange of Motor car worth Rs.10000
10. Goods Purchased from Kanji worth Rs. 1500
11. Sold half of the above goods to Kailas, getting a Profit of Rs. 75
12. Paid travelling expenses to Modi Rs 25
14. Paid Diwali advance to staff Rs. 1200
 16. Goods worth Rs. 110 distributed as free samples
18. Paid office Rent Rs. 250
19. Received Commission of Rs. 25 from Prakash & Sons
20. Purchased one bicycle for Cash Rs. 300
22. Borrowed a loan @ 10% from Samant Rs. 10000
29. Paid to Nanavati Rs. 9800 in full settlement of Rs 10000.

Question 4: Pass Journal Entries for the following Transactions as on April, 2024.
1. Started business with cash of Rs. 80000
2. Opened a Bank Account with State Bank of India Rs. 60000
3. Bought goods from Prakash on Credit Rs. 30000
5. Returned defective goods to Rs. 2000 & sent him a cheque for Rs. 5000
6. Cash Sales Rs. 16000
7. Credit sale to R & Sons Rs. 15000
8. R & Sons returned defective goods Rs. 500
9. Received a cheque of Rs. 10000 from R & Sons and allowed them discount
Rs 200
12. Paid for Advertisement Rs. 400
14. Paid for Travelling expenses Rs. 900
15. Withdrawn from bank Rs. 2500
18. Bought Furniture by cheque Rs. 5000
19. Paid to Prakash cash Rs. 4500 and enjoyed discount of Rs. 100
22. Paid for Postage Rs. 70
25. Bought Stationery Rs. 400
28. Paid Rent Rs. 1000
30. Paid for Office cleaning Rs. 200
30. Paid staff salary Rs. 25000
30. Withdrawn from Bank for the personal use of the Proprietor Rs. 500.

Question 5: Enter the following transactions in the books of Mr. Smart.

2024 Oct 1 Bought goods of Rs. 20,000 from Sunita at 5% T.D.
4 Sold the goods to Vijaya Rs. 30,000 less 2% T.D.
6 Purchased Machinery for cash Rs. 25,000 and paid Rs. 1,100 wages for the
installation of Machinery
8 Paid for travelling expenses Rs. 500.
12 Mr. Smart paid Rs. 11,000 to HR College for his daughter’s fees.
14 Placed an order for goods Rs. 7,000 to Veeru.
16 Paid to Sunita Rs. 15,000 on account
19 Veeru executed the order which was placed on 14th Nov.
22 Paid wages Rs. 600
25 Paid for proprietor’s house rent Rs. 2,000
28 Sold goods to Shashi at Rs. 35,000 and paid by cheque.
31 Vijaya becomes insolvent and could pay only 50 paise in rupee.

Question 6: Enter the following transactions in the journal of Mukesh.

October, 2024
3. Commenced business with Rs. 50000 cash and Rs. 10000 worth of goods
4. Opened an account with Dena Bank by depositing Rs. 10000
4. Placed on order with Kapil & Co. for purchase of goods worth Rs. 10000 @ 20%
Trade discount and received the goods the next day.
5. Sold goods worth Rs. 8000 to Sachin @ 10 % cash discount, if cash received
immediately. Received a cheque from him in full settlement
6. Cash sales Rs. 2000
8. Settled the account with Kapil & Company by paying them Rs. 7,500 in cash
9. Paid salaries Rs. 500 and miscellaneous expenses Rs. 90 by a cheque.
 10. Paid office rent for three month @Rs. 120 per month.
12. Received commission from Vinod Rs. 500 for selling their goods by a cheque.
13. Drew for household use Rs. 1500 from the bank.
15. Paid to Ajay & Co. Rs 4900 in full settlement of their dues of Rs. 5200 by cheque.

Question 7: Enter the following transactions in the journal of Manas Traders for the month July 2024.
2018
July 1 Started business with cash Rs. 1,00,000
2 Opened Current account with bank and deposited Rs. 35,000
3 Purchased goods of Rs. 12,000 from Pratik on credit.
4 Purchased office equipment of Rs. 9,000 and paid by cheque.
6 Paid to Pratik Rs 11,850 in full settlement of his account Rs. 12,000.
9 Sold goods for cash Rs 8,000 @ 10% cash discount.
11 Paid telephone bill Rs. 1,750 by cheque and octroi Rs. 3,000 by cash.
12 Receivedcheque of Rs. 8740 for credit sales affected to Minal on 25th June 2018.
16 Withdrew cash from bank for personal use Rs. 5,000.
20 Deposited into bank the cheque received on 12th July 2018.
22 Received crossed cheque of Rs. 3,400 for sales.
25 Withdrew cash from bank for office use Rs. 3,000.
27 Received commission from Swapna Rs. 1,700.
30 Paid office salary by cheque Rs. 12,000.
31 Deposited excess of Rs.1,000 into the bank
Question 8: Enter the following transactions of Mohan in the journal for the month of July 2018.
July 2018
1 Cash Balance Rs 29,000 and bank Overdraft Rs. 5,000
4 Deposited into bank Rs. 6,000
6 Bought additional capital Rs. 15,000 and deposited the same into bank.
9 Paid to Shantanu Rs. 19,800 by cheque in full settlement of his account Rs. 20,000
11 Paid Commission to salesman Rs. 3,250.
12 Received a cheque for Rs. 1,000 from Pradeep and deposited it into bank.
15 Gave charity to old age home Rs. 1,500.
18 Purchased goods for Rs. 15,000 @ 2% cash discount.
21 Sold goods for cash Rs. 10,000 @ 2.5% Trade Discount.
23 Issued a cheque for Rs. 2,230 to Anand Enterprise for advertisement.
24 Received a cheque from Beena for Rs. 3,450 and discount allowed Rs. 50
27 Carriage paid Rs. 150
28 Deposited Rs. 5,000 into the bank.
29 Paid salary Rs. 6,600 and rent Rs. 3,200.
30 Cheque received from Beena was dishonoured.

Question 9:
From the following Trial balance of M/s. Manali Traders, you are required to prepare a Trading and Profit
& Loss A/c for the year ended 31st March, 2024 and Balance Sheet as on that date:
Particulars Dr. Particulars Cr
Drawings 3,000 Capital 85,000
Opening Stock 10,000 Creditors 45,000
Purchases 82,400 Sales 1,44,000
Office Salary 6,000 R.D.D. 1,000
Royalty 2,000 Return Outward 2,400
Trade expenses 1,600 Bills Payable 5,000
Advertisement 5,200 Outstanding wages and Salaries 2,600
Wages and Salaries 10,400
Cash in hand 8,000
Sundry debtors 51,000
Bad debts 400
Investment 16,000
Motor Car 30,000
Furniture 10,000
Office Rent 3,400
Plant & Machinery 30,000
Freehold property 10,000
Bills Receivable 4,000
Interest 1,600
2,85,000 2,85,000
Adjustment:
1) Closing Stock was valued at Rs. 15,000.
2) 10% interest on investments is accrued for 6 months.
3) Depreciate Plant at 10% and Motor Car by 25%.
4) Write off Rs. 1,000 as bad debts and provide 5% R.D.D. on Sundry Debtors
5) Office Salary Rs. 1,000 paid in advance.
6) Office Rent accrued Rs. 600.

Question 10: Following is the Trial balance of M/s. Shetty Traders as on 31 st March 2024. Prepare trading
Profit and Loss Account for the year ended 31st March 2024 and balance Sheet as on that date.
Particulars Debit Credit

Land & Buildings 50,000

Machinery 40,000
Salaries 21,000
Cash in hand 50,000
Cash in bank 1,100
Office expenses 1,000
Motor Van 18,000
Capital 1,70,000
Carriage 5,000
Purchases and Sales 2,20,000 2,88,000
Returns 2,000 5,500
Bad debts 1,000
Debtors and Creditors 32,800 35,000
Rent 1,100
Printing and Stationery 1,500
Bills Payable 32,000
R.D.D. 1,000
Travelling expenses 5,500
Opening Stock 30,000
Insurance 1,500
Discount 6,000
Advertisements 14,000
Furniture 30,000
5,31,500 5,31,500
Adjustment:
1) Closing Stock valued 41,000.
2) Goods of 5,000 withdrawn for personal use.
3) Depreciate Machinery by 10% p.a. using straight line Method.
4) Depreciate Furniture by 10% p.a. using Reducing Balance Method.
5) Rent accrued 400.
6) Insurance prepaid 200

Question 11:
The following trial balance as on 31 st March, 2018 is extracted from the books of Umesh. You are
required to prepare Trading and Profit and Loss Account for the year ended on 31 st March, 2024 and the
Balance Sheet as on that date:
Debit (Rs.) Credit (Rs.)
Drawings and Capital 10,000 1,00,000
Bank of Maharashtra 40,000
Debtors and Creditors 72,000 50,000
Opening Stock 80,000
Purchases and Sales 6,00,000 7,10,000
Buildings 60,000
Furniture 3,000
Advertisement Expenses 4,600
Insurance 6,000
Sundry Expenses 12,000
Salaries 40,000
Commission 400
Provision for doubtful debts 5,600
Bad debts 4,000
Carriage 8,000
Printing and Stationery 1,000
Postage, Telephones and Telegram 1,000
Cash on hand 600
Bank of India 3,000
Carriage outwards 800
9,06,000 9,06,000
Adjustments:
(1) Closing Stock at cost Rs. 90,000 (At Market Value Rs. 95,000).
(2) Provision for doubtful debts to be maintained @ 5%.
(3) Old furniture worth Rs. 800 was sold at Rs. 1,200. This entry was recorded in sales book.
(4) Depreciate building @ 5% and furniture @ 10%.
(5) Carriage includes Carriaage outwards Rs. 5,000.

Question 12
Following is the Trial Balance of Mr. Y, a cloth merchant as at 31st December, 2024:
Debit Rs. Credit Rs.
Drawings 36,000 Capital 3,00,000
Cash in Hand 3,600 Loan (Taken on 1.7.2024) @ 18% p.a. 30,000
Cash at Bank 43,050 Creditors 50,400
Plant & Machinery 1,80,000 Sales 4,80,000
Furniture & Fixtures 18,000
Insurance Charges 2,400
Miscellaneous Expenses 1,200
Trade Mark Rights 60,000
(10 years from 1.1.2024)
Stock (1.1.2024) 81,000
Interest on Loan 1,350
Salaries and Wages 54,600
Sundry Debtors 68,400
Rent, Rates and Taxes 18,600
Trade Expenses 1,800
Purchases 2,85,600
Postage and Telegram 2,400
Bad Debts 1,600
Charities and Donations 800
8,60,400 8,60,400
st
You are required to prepare a Trading, Profit & Loss Account, for the year ended 31 December 2024 and
a Balance Sheet as at that date after making the following adjustments:
1. Stock as on 31st December, 2018 valued at Rs. 76,400
2. Depreciate Plant & Machinery at 10% and Furniture and Fixtures at 5% p.a.
3. Of the Sundry Debtors, Rs. 2,400 are bad and should be written off.
4. Create a reserve of 5% on Sundry Debtors for Bad and Doubtful Debts.

Question 13:
The following are the closing balances as on 31st December, 2018 extracted from the books of Mehta.
Prepare Trading and Profit & Loss Account for the year ended 31 st December, 2018 and the Balance
Sheet as on that date.
Rs. Rs.
Mr. Mehta’s Capital 1,65,000
Stock on 1.1.2024 70,200
Sales 4,34,400
Purchases 3,64,650
Carriage Inwards 27,900
Rent and Taxes 8,550
Sales Returns 12,900
Salaries 13,950
Purchases Returns 8,700
Sundry Debtors 36,000
Sundry Creditors 22,200
Bank Loan at 6% (1.1.2024) 30,000
Interest paid on above 1,350
Printing and Advertising 21,900
Drawing Account 15,000
Interest received from A.N.Sen 400
Cash at Bank 6,000
Discount received 6,300
Investments 7,500
Furniture and Fittings 8,700
Discount Allowed 11,310
General Expenses 6,000
Audit Fees 1,050
Insurance 900
Travelling Expenses 3,500
Postage and Telegrams 4,070
Cash in hand 570
Deposit with Mr. A.N. Sen (1.1.2024)(Interest at 9%) 45,000
6,67,000 6,67,000
Adjustments:
1. Stock on 31st December, 2018 was Rs. 1,20,000.
2. 25% of the Printing and Advertising was to be carried forward in the next year.
3. Provide 5% for bad debts and 2% for R.D.D.
4. Write off depreciation at 10% off Furniture and Fittings.
5. As on 31st December, 2018: Salaries and carriage inwards that remained unpaid were Rs. 1,200
and Rs. 150 respectively.
6. Insurance paid in advance as on 31st December, 2018 was Rs. 120.
7. Furniture purchased for Rs. 1,000 on 1st July, 2018 had been debited to Purchases Account.
8. Purchases to the value of Rs. 1,800 had been omitted to be entered in the books.
9. Provide for interest on the deposit with Mr. A. N. Sen and Bank Loan.

Question 14:
Following is the trial balance of Shri Kadam as on 31st March, 2024:
Dr. Rs. Cr. Rs.

Capital 50,000
Bank of India 4,000
Bank of Baroda 10,000
Stock (1-4-2024) 15,000
Salaries 6,000
Wages 22,000
Rent, Rates and Taxes 2,000
Machinery 30,000
Furniture 3,000
Power and Fuel 4,000
Purchases and Sales 1,80,000 3,00,000
Sales returns and purchases returns 15,000 10,000
Prepaid Insurance as on 1-4-2024 600
Outstanding Wages as on 1-4-2024 1,500
Insurance 1,500
 Postage, telephone and telegrams 2,000
Income Tax 8,000
Debtors and Creditors 50,000 40,000
Bad debts 6,900
Provision for doubtful debts (1-4-2024) 15,000
Investments 1,00,000
Income from Investments 10,000
Commission 20,000 30,000
Bad debts Recovery 3,500
4,70,000 4,70,000
Additional Information:
(1) Following transactions of the last week of March, 2018 were not recorded:
a) Purchases Rs. 4,000
b) Sales Rs. 10,000
(2) Stock on 31-3-2018 was worth Rs. 30,000
(3) Insurance includes Rs. 750 relating to the next year.
(4) Expenses outstanding as on 31-3-2018:
a) Wages Rs. 2,000
b) Rent, Rates and taxes Rs. 400
(5) Depreciate machinery and furniture @ 10%.
You are required to prepare Trading and Profit and Loss of Mr. Kadam for the year ended 31 st March,
2018. Also prepare Trial Balance after preparation of Trading and Profit & Loss Account.

Question 15:
From the following Trial Balance and the additional information prepare the Manufacturing Account,
Trading and P and L A/c and the Balance Sheet relating to 2018.
Debit Rs. Credit Rs.
Stock on 1-1-18 Sundry Creditors 1,50,000
Raw Material 2,10,000 Bills Payable 75,000
Work-in-Progress 95,000 Sale of Scrap 25,000
Finished Goods 1,15,000 Commission 4,500
Sundry Debtors 2,44,000 Provision for Doubtful Debts 16,500
Carriage Inward 15,000 Capital Account 9,00,000
Bills Receivable 1,50,000 Sales 17,70,000
Wages 1,30,000 Current A/c of Gopinath 10,200
Salaries 1,00,000
Telephone charges 10,000
Repairs to Plant 11,000
Repairs to Furniture 3,500
Purchases 8,00,000
Cash at Bank 1,20,000
Plant and Machinery 7,00,000
Office Furniture 1,10,000
Rent 50,000
Lightning 72,000
General Expenses 15,700
29,51,200 29,51,200
The following additional information is available:
a) Stock on 31st December, 2018 were:
Raw Materials Rs. 1,62,000; Finished goods Rs. 1,70,000 and Work in Progress Rs. 70,000.
b) Salaries and Wages outstanding for December, 2006 were Rs. 9,000 and Rs. 12,000
respectively.
c) Machinery is to be depreciated by 10% and office furniture by 10%.
d) Office premises occupy 1/3 of total area.
e) Lighting has to be charged as ¾ factory and ¼ to office.

Question 16: From the following Trial Balance of Mr. Atmaram and the additional information given
below that you are required to prepare Manufacturing a/c, Trading A/c and Profit & Loss A/c for the year
ended 31st March, 2024 and the Balance Sheet as on that date:
Debit Rs. Credit Rs.
Stock as on 1-4-2024 Capital of Atmaram 90,000
 Raw Material 13,000 Sales 1,12,000
Work-in-progress 8,000 Interest received 450
Finished Goods 19,000 Discount received 250
Machinery 20,000 Creditors 16,000
Furniture 8,000
Drawings 3,000
Debtors 18,500
Salaries 3,820
Factory Insurance 1,070
Balance with Bank 13,500
Cash on hand 810
Purchase of Raw Material 79,000
Return Inwards 390
Wages 8,500
Direct Manufacturing Expenses 2,300
Rent (50% for factory premises)
Power Expenses 4,700
Investments 1,200
Lighting (including for office Rs.1,200) 10,100
Carriage Outwards 1,960
Printing & Stationery 550
Bad debts 1,000
300
2,18,700 2,18,700
Additional Information:
1. Power to be divided into factory and office in 3:2 ratio.
2. Rent for office premises has been paid only for 11 months in the year.
3. Depreciate machinery at 10% p.a. and furniture at 15% p.a.
4. Closing stocks are: Raw Material Rs. 2,000; W.I.P.Rs. 16,330; Finished Goods
Rs. 28,000.

Question 17: From the following trial balance of Shri Karodimal, prepare Manufacturing account, Trading
and profit and loss account for the year ended 31st December, 2024 and the Balance Sheet as on that date:
Debit Rs. Credit Rs.
Drawings 36,000 Capital 4,50,000
Goodwill 40,000 Sundry Creditors 1,25,000
Plant & Machinery 2,00,000 Bank Loan 75,000
Land & Buildings 1,20,000 Reserve for Bad debts 5,500
Cash and Bank Balances 37,000 Sales 3,24,000
Sundry Debtors 59,000 Discount 3,500
Patents 9,000 Returns Outward 6,500
Salary to Manager 16,000
Purchases of Raw Materials 1,50,000
Opening Stock
Raw Materials 35,000
Work-in-Progress 60,000
Finished Goods 90,000
Carriage Inward 10,000
Wages and Salaries 75,000
Factory expenses 12,000
Factory Rent & Taxes 15,000
Office Expenses 8,000
Printing & Stationery 7,500
Discount 5,500
Bad debts 4,500
9,89,500 9,89,500
Adjustments:
1. On 31st December 2018, Stocks were valued as:
Raw Material Rs. 55,000
Work-in-Progress Rs. 75,000
Finished Goods Rs. 95,000
2. Outstanding expenses: Printing & Stationery Rs. 1,500.
3. Prepaid expenses: Factory rent and rates Rs. 2,000.
4. Manager’s salary to be divided in equal ratio between factory and office.
 5. Interest on Bank Loan still unpaid Rs. 1,200.
6. Depreciate Plant & Machinery @ 10% p.a.

Question 18:
From the following Trial Balance of Mohan, Trading and Profit & Loss A/c for the year ended 31 st
December, 2024 and Balance Sheet as at that date:
Dr. (Rs.) Cr. (Rs.)
Opening Stock:
- Raw Materials 12,000 -
7,000 -
- WIP
20,000 -
- Finished Goods 97,000 -
Purchase of Raw Materials 11,000 -
Octroi on Raw Materials 57,000 -
Direct Wages 7,000 -
Factory Rent 12,000 -
Other Direct Expenses 8,000 -
Rent 60,000 -
Machinery 12,000 -
Cash at Bank - 3,10,000
Sales 30,000 -
Insurance 14,000 -
Selling Expenses - 25,000
Creditors 7,000 -
Interest 4,000 -
Discount allowed 1,000 -
Bad Debts - 3,000
Provision for Bad Debts 50,000 -
Sundry Creditors 21,000 -
Drawings - 85,000
Capital - 7,000
Bills Payable
4,30,000 4,30,000
Adjustments:
1. Closing Stock was Raw Materials Rs. 8,000; Finished Goods Rs. 10,000 and WIP Rs. 4,000.
2. Outstanding Direct Wages at the end were Rs. 3,000.
3. Other Direct Expenses were prepaid to the extent of Rs. 1,000.
4. Depreciate Machinery @ 10% p.a.
5. Maintain provision for bad debts @ 5% of Sundry Debtors.
6. Factory occupies 5/8 of total area balance by office.
7. Insurance can be divided between factory and office in the ratio of 3:2.

Question 19:
The trial balance of Mr. Lakhamichand is as below. Prepare final accounts for the year ended 31 st
December, 2024.
Debit Balances Rs. Credit Balances Rs.
Cash in hand 1,000 Capital Account 41,860
Machinery 30,000 Sales 1,38,780
Drawings 2,500 R.D.D. 560
Factory, Power and Fuel 450 Sundry Creditors 8,800
Office Salaries 6,225
Carriage Outwards 500
Manufacturing Wages 9,300
Furniture and Fixture 3,400
Opening Stock:
Finished Goods 4,000
Work-in-Progress 7,250
Raw Materials 2,800
Carriage Inwards 1,000
Rent (Factory 3/4) 4,000
Sundry Debtors 21,600
Advertisement 775
Printing & Stationery 1,200
Factory Insurance 1,280
Purchase of Raw Material 82,950
Balance at Bank 8,530
Discount allowed 610
Miscellaneous Expenses 630
1,90,000 1,90,000
Adjustments:
1. Closing Stock of finished goods Rs. 6,500; Raw Materials Rs.750; and Work-in-Progress
Rs.4,750.
2. A Motor Car purchased on 1st October, 2024 for Rs. 10,000 has been included in purchases.
3. Depreciate Machinery at 15% p.a., Motor Car at 20% p.a., Furniture and Fixtures at 15% p.a. (half
of the furniture belongs to Factory).
4. Provision for R.D.D. should be maintained at 10% of the debtors.
5. Miscellaneous expenses to be distributed amongst office and factory in equal ratio.