Which of the following errors will affect the trial balance?

Repairs to building wrongly debited to Building A/c
Total of Purchase Journal cast short by Rs.1,000.
Freight paid on new machinery debited to Freight A/c
None of the three.

Solution

Total of purchase journal, if cast short by Rs.1, 000, will affect trial balance. All other errors will not affect.

The following particulars relate to the business of Mohan on March 31, 2010.
Balance as shown by the cash book Rs. 10,000
Cheques issued but not presented for payment Rs. 4,000
Cheque deposited but not yet collected Rs. 3,000
Balance as shown by the Bank pass book will be

Rs.9,000.
Rs.10,000.
Rs.11,000
None of the above.

Solution

Solution

Solution

In the books of Sen there is bills payable(dr.) in favour of Mohan of Rs. 5,000 and there is bills receivable(cr.)
of Rs. 5,000 accepted by Tania.

Rs. 5,400.
Rs. 6,700.
Rs. 8,600
Rs. 5,000.

Solution

FIFO stands for first-in, first-out, meaning that the oldest inventory items are recorded as sold first but do not necessarily mean that the exact oldest physical object has been tracked and sold.
Closing inventory = 700 units
Since FIFO is followed the closing inventory 700 units will include the purchases made on Jan 30 and Jan 25th
Value of the closing inventory = 400 units @ Rs.10 + 300 units @ Rs. 9 = 4,000 + 2,700 = Rs. 6,700

A Ltd. Company purchase machinery on 1st April, 2007 for Rs. 1,00,000. The depreciation on this machinery is charged @ 10% per annum on straight line method. On 30th September,
2009 machinery is sold for Rs.89,000. The profit or loss on sale of such machinery is:

Profit of Rs. 12,000.
Loss of Rs. 12,000.
Profit of Rs. 14,000.
Loss of Rs. 6,000.

Solution

Cost of machinery as on 1st april 2007 = Rs. 1,00,000
Depreciation for 2 years = (10% of 1,00,000) × 2 = Rs. 20,000
Depreciation for half year till 30th sept 2009 = 10,000/2 = Rs. 5,000
Thus WDV as on 30th sept 2009 = 1,00,000 – 20,000 – 5,000 = Rs. 75,000
Sales consideration of the machine = Rs. 89,000
Thus profit on sale = 89,000 – 75,000 = Rs. 14,000

The date of maturity of bill is 10th October, 2009. The Government of India suddenly declared 10th October, 2009 as the holiday under the Negotiable Instruments Act, then the bill will mature on _________

9th October, 2009
10th October, 2009.
12th October, 2009.
11th October, 2009.

Solution

In case of Sudeten declaration of govt. holiday, the bill will mature on the next working day.

Om, Jai and Jagdish are partners sharing profits and losses in the ratio of 5: 3 :2. Om retires and goodwill is valued at Rs. 50,000. New profit sharing ratio of Jai and
Jagdish will be equal. For the adjustment of goodwill, Jai and Jagdish’s capital accounts will be debited by:

Rs. 15,000 and Rs. 10,000 respectively
Rs. 10,000 and Rs. 15,000 respectively
Rs. 20,000 and Rs. 5,000 respectively
Rs. 5,000 and Rs. 20,000 respectively

Solution

Asha Deep Company Ltd. issued 1,00,000, 7% debentures of Rs.100 each at a discount of 4% redeemable after 5 years at a premium of 6%. Loss on issue of debentures is ________

Rs. 10,00,000
Rs. 6,00,000
Rs. 16,00,000
Rs. 4,00,000

Solution

Discount 4% of Rs. 1,00,00,000 = Rs. 4,00,000
Premium on repayment 6% of Rs. 1,00,00,000 = Rs. 6,00,000
Total loss on issue of debentures = 4,00,000 + 6,00,000 = Rs. 10,00,000

Omega Ltd. purchased assets of Alfa Ltd. for purchase consideration of Rs.60 lacs. It was decided that the purchase consideration will be discharged by issue of 10% debentures of Rs.1,000 each at a premium of 20%. The number of debentures issued will be ________

6,000
10,000
5,000
None of the above

Solution

The debentures are being issued at a premium thus the value of each debenture will be 1,000 + 20% of 1,000 = 1,200
Total value of asset purchased = Rs. 60,00,000
Number of debentures issued in consideration = total value of asset purchased/value per debenture = 60,00,000/1,200 = 5,000 debentures

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