Practice Test 27
Previous Solution Next

The bill of Rs. 10,000 accepted by Ritesh on 1 July 2009, was discounted by Hitesh on 15 July 2009 for Rs. 9,600. On 4th October 2009, the bill was dishonoured and bank notified it for Rs. 200. The amount to be received from Ritesh would be

  • Solution

    If noting charges are paid by the bank (if the bill has been discounted) it will be realised by the bank from the drawer, who will charge it from drawee.
    Thus the bank will deduct from Ritesh’s bank balance the amount of the bill plus noting charges.
    i.e. 10,000 + 200 = Rs. 10,200

In a Joint venture between A and B, A, on purchase of goods, spend Rs.2,000 on freight,Rs.1,000 as godown rent, and also raised a loan from bank of Rs.50,000 at 18% p.a. repayable after 1 month. B spend Rs. 5,000 as selling expenses and he also raised a loan from bank of Rs.1,50,000 at 18% repayable after 2 months. The total expenses of Joint venture other than purchases will be

  • Solution

A consignee sold goods costing Rs. 50,000 at a profit of Rs. 10,000. Out of total sales, 30% was credit sale. As per the agreement the consignee will get 5% ordinary commission, 2% del-credere commission on credit sale and 3% over-riding commission on amount in excess of cost price. The amount of commission will be

  • Solution

    Remuneration paid for services is called commission. Commission is always paid on sales. Extra commission paid to consignee for timely collection of debs and avoids bad debts is called Del creder commission.
    Since delcredere commission is given the consignee will bear the bad debt loss.
    Over-riding commission is an extra commission allowed to the consignee in addition to the normal commission. Such additional commission is generally allowed:
    (i) To provide additional incentive to the consignee for the purpose of introducing and creating a market for a new product
    (ii) To provide incentive for supervising the performance of other agents in a particular area
    (iii) To provide incentive for ensuring that the goods are sold by the consignee at the highest possible price.
    Thus ordinary commission = 5% of 60,000 = 3,000
    Del creder commission = 2% of (30% of 60,000) = 360
    Overriding commission = 3% of (60,000 – 50,000) = 300
    Total commission = Rs. 3,660

M/s Delhi Stationers purchase 1,000 pcs of cover file @ Rs. 275 per 100 pcs. The wholesaler charged 5% sales tax on cost price. Transport charges were Rs. 50. The purchase price per piece of cover file will be

  • Solution

    Cost of purchasing 1,000 pcs of cover files @ Rs. 275 per 100 pc = Rs. 2,750
    Sales tax on above = Rs. 137.5
    Transport charges = Rs. 50
    Thus purchase price per piece = (2,750 + 137.5 + 50)/1,000 = Rs. 2.9375

A purchase of Rs. 1,870 by cheques has been wrongly posted in the cashbook as Rs. 1,780. This has the effect of

  • Solution

    The wrong casting of purchases in the cash book will only effect the bank balances as in no other account it has been wrongly posted. As the purchase of Rs. 1870 was recorded as Rs. 1,780 in the cashbook, the cash book will show the bank balance more than actual by Rs. 90.

X of Kolkata sent out 2,000 boxes costing 100 each with the instruction that sales are to be made at cost + 45%. X draws a bill on Y for an amount equivalent to 60% of sales value. The amount of bill will be

  • Solution

    Cost of the boxes sent by X = 2,000 × 100 = 2,00,000
    Sales price of the boxes sent = 2,00,000 + 45% of 2,00,000 = 2,90,000
    The amount of bill drawn by X on Y will be = 60% of 2,90,000 = Rs 1,74,000

E Ltd. had allotted 10,000 shares to the applicants of 14,000 shares on pro rata basis. The amount payable on application is Rs.2. F applied for 420 shares. The number of shares allotted and the amount carried forward for adjustment against allotment money due from F

  • Solution

    When issue is over-subscribed, the company will have to allot to each applicant according to the number of share applied by him. The excess application money is adjusted towards the sum due on allotment. Pro rata actually means ‘in proportion’.
    So the proportion in which the shares will be allotted = total shares allotted/total shares applications received = 10,000/14,000 = 5/7
    F applied for 420 shares so the total shares allotted to him will be = 420 × 5/7 = 300 shares
    So excess application money received from F = (420 – 300) × 2 = Rs. 240

  • Solution

    Dividends payable are dividends that a company’s board of directors has declared to be payable to its shareholders. Until such time as the company actually pays the shareholders, the cash amount of the dividend is recorded within a dividends payable account as a current liability.
    Equity shares called up = 5,00,000
    Calls in arrear = 40,000
    Share capital on which dividend is to be paid = 5,00,000 – 40,000 = 4,60,000
    Proposed dividend = 15%
    Thus amount of dividend payable = 15% of 4,60,000 = Rs. 69,000

Sujal consigned goods costing Rs. 2,50,000 to Mridul on 1st January 2010 by incurring Rs. 20,000 on freight. Some goods were lost in transit. For remaining goods Mridul spend Rs. 15,000 to take the delivery including storage charges. During the quarter, Mridul sold 3/4 of the goods received by him for Rs. 3,00,000 and charged commission
@10% on it to Sujal. At the end of the quarter, Sujal asked the details of goods lost, sold, expenses commission and balance due to him alongwith the consignment inventory from Mridul. As desired, Mridul sent the periodical detail statement commonly known as

  • Solution

    The periodical statement sent by consignee to consignor is Account Sales.

Mohit, the acceptor of the bill has to honour a bill on 31st March 2010. Due to financial crisis, he is unable to pay the amount of bill of Rs. 20,000. Therefore, he approaches Rohit on 20th March 2010 for extension of bill for further 3 months. Rohit agrees to extend the credit period by drawing a new bill for Rs. 20,500 together with interest of Rs. 1,000 in cash. In this case, old bill of Rs. 20,000 will be considered as

  • Solution

    In the given case, old bill will be cancelled.

UnAttempted

0

Attempted

0

Correct

0

Wrong

0

Complete
FUNDAMENTALS OF ACCOUNTING
Attempted     
Correct
UnAttempted
Wrong