Provisions and Reserves — Account STD 11 Commerce — Question

Explain the following briefly with appropriate example:
Money Measurement Concept.

Vishal sold goods for ₹ 70,000 to Manju on Jan. 5, 2019 and drew upon her a bill of exchange payable after 2 months. Manju accepted Vishal's draft and handed over the same to Vishal after acceptance. Vishal immediately discounted the bill with his bank @ 12% p.a. On the due date Manju met her acceptance. Journalise the above transactions in the books of Vishal and Manju.

Pass Journal entry for purchase of goods by Amrit, Delhi from Add Gel Pens, Delhi for ₹ 15,000 less Trade Discount 10% and Cash Discount 3%. CGST and SGST is levied @ 6% each. Assume payment is made at the time of purchase.

Rectify the following errors:

1. Sale of old furniture worth ₹ 3,000 treated as sales of goods.
2. Sales Book added ₹ 5,000 short.
3. Rent of proprietor’s residence, ₹ 6,500 debited to Rent Account.
4. Goods worth ₹ 11,970 returned by Manav posted to his debit as ₹ 11,790.

On checking the Bank Pass Book it was found that it showed an overdraft of ₹ 5,220 as on 31.12.2014, while as per Ledger it was different to Bank Debit. The following differences were noted:

1. Cheques deposited but not yet credited by bank ₹ 6,000.
2. Cheques dishonoured and debited by bank but not given effect to it in the Ledger ₹ 800.
3. Bank charges debited by bank but Debit Memo not received from bank ₹ 50.
4. Interest on overdraft excess credited in the Ledger ₹ 200.
5. Wrongly credited by bank to account, deposit of some other party ₹ 900.
6. Cheques issued but not presented for payment ₹ 400.

On April 01, 2010 Jain & Sons purchased a second hand plant costing ₹ 2,00,000 and spent ₹ 10,000 on its overhauling. It also spent ₹ 5,000 on transportation and installation of the plant. It was decided to provide for depreciation @ 20% on written down value. The plant was destroyed by fire on Oct. 31, 2013 and an insurance claim of ₹ 50,000 was admitted by the insurance company. Prepare plant account assuming that the company closes its books on March 31, every year.

A Limited purchased a machine on 1st July 2011 for ₹ 3,00,000 and on 1st January 2013 bought another machinery for ₹ 2,00,000. On 1st August 2013 machine bought in 2011 was sold for ₹ 1,60,000. Another machine was bought for ₹ 1,50,000 on 1st October 2013. It was decided to provide depreciation @ 10% p.a. on written down value method assuming books are closed on 31st March each year. Prepare Machinery Account and Provision for depreciation account for 3 years.

Elucidate the following statement:
‘Only cash transactions are recorded in Cash Book'.