In financial accounting, every single event occurring in monetary terms is recorded. Sometimes, it just so happens that some events are either not recorded or it is recorded in the wrong head of account or wrong figure is recorded in the correct head of account.
Whatever the reason may be, there is always a chance of error in the books of accounts. These errors in accounting require rectification. When there is a difference in a trial balance a suspense account is opened with the amount of the difference so that the trial balance agrees (pending the discovery and correction of the errors causing the difference).

Here the total of the debit and credit side of a trial balance of Mr. Rajiv as on 31st March, 2012 were Rs. 20,000 and Rs. 10,000 respectively. Thus suspense account will have a credit balance of Rs. 10,000. Now purchase return book which has a credit balance was overcasted by Rs. 1,500 – Rs. 1,400 =Rs. 100. Thus we have to credit suspense account and debit purchase return account by rs 100. After crediting suspense account by Rs. 100 the balance of suspense account will be Rs. 10,100 (cr).

Total amount of sales = Rs. 10,20,000
Sale of damaged stock at loss = Rs. 20,000
Thus sales made at 25% profit on sale = 10,20,000 – 20,000 = Rs. 10,00,000
Gross profit = 25% on sale less loss on sale of damaged stock = 25% on 10,00,000 less (30,000 – 20,000)
= 2,50,000 – 10,000 = Rs. 2,40,000

Betterments, which extend the useful life or improve the efficiency of the asset and meet the capitalization threshold of the asset class to which it relates, must be added to the historical cost and amortized. A revenue expenditure which increases the utility or productive capacity of an asset, is treated as capitalized expenditure. Thus Rs.5,000 was spent by Saroj for addition to machinery in order to increase the production capacity. The amount is Capital in nature.

Many times during the operation of business, the owner may take out some cash from the business for his personal use. These withdrawals from the business are considered as Drawings. Considering the fact that the business is a separate accounting entity, it charges an interest on the drawings to the owner.
Where interest is charged it is usually calculated at fixed rate percent from the date of each drawing to the date the accounts are closed. If the dates on which the amounts are drawn are not given, interest is calculated on the whole amount on the assumption that the money was drawn evenly throughout the year. In such case interest will be charged for 6 months.
Here drawings = Rs. 50,000
Interest on drawings = 10% of 50,000 × 6/12 = Rs. 2,500

Expenses which have been incurred but not been paid for till the end of the accounting year are known as Accrued expenses or outstanding expenses. Outstanding expense amount is added to that particular expense account in the Profit and loss or Trading Account because it was the expense for that year. (Based on the matching principle)

Outstanding expenses are liabilities for the business. Thus they will appear under the Current Liabilities in the Balance Sheet.
Here Salary has been paid for 11 months from April 2011 to February, 2012 amounting Rs. 22,000.
So the salary for 1 month is outstanding
Salary for 11 months = 22,000
Salary for 1 month = 22,000/11 = Rs. 2,000
Thus outstanding salary shown in balance sheet will be Rs. 2,000.

Invoice value of the goods destroyed = 1,600 which is 25% above cost
Thus cost = (100/125) × 1,600 = 1,280
Insurance claim will be settled at the actual value of the goods destroyed
Thus insurance claim accepted will be 50% of 1,280 = Rs. 640

When shares issued at par are forfeited the accounting treatment will be as follows:
(i) Debit Share Capital Account with amount called up (whether received or not) per share up to the time of forfeiture.
(ii) Credit Share Forfeited A/c. with the amount received up to the time of forfeiture.
(iii) Credit ‘calls in arrear A/C’ with the amount due on forfeited shares. This cancels the effect of debit to such calls which take place when the amount is made due.
Here the amount due from the forfeited shares were = 1,000 × 2 + 1,000 × 3 = Rs. 5,000

When the shares forfeited are reissued at discount, Bank account is debited by the amount received and Share capital account is credited by the paid up amount. The amount of discount allowed is debited to Share Forfeited Account. This is for adjusting the amount of discount so allowed from the amount forfeited at the time of forfeiture.
Now the amount of discount allowed on reissue of shares at the most can be equal to the forfeited amount on such shares. In that case the share forfeited account after reissue will show a zero balance.
But in case, this amount of discount is less than the amount forfeited, the remaining forfeited amount will be profit for the company. This profit is a capital gain to the company and is transferred to Capital Reserve account.
In the above question discount on shares reissued = Rs. 200 × 5 – 900 = Rs. 100
Amount available in shares forfeiture account = 200 × 2.5 = Rs. 500
The surplus amount to be transferred to capital reserve account = 500 – 100 = Rs. 400

The equity shares are being issued at a premium of 20% thus the value of each share will be 10 + 2 = Rs. 12
Total value of assets purchased = Rs. 3,64,800
Number of shares issued in consideration = total value of assets purchased/value per share = 3,64,800/12 = 30,400 shares
To record this transaction share capital needs to be credited by the face value of the shares issued i.e.
30,400 × 10 = Rs. 3,04,000