Trial Balance and Rectification of Errors — Account STD 11 Commerce — Question

Explain the following terms:

1. Revenue.
2. Trade Payables.
3. Fictitious Assets.
4. Working Capital.

Working Capital = Current Assets - Current Liabilities.

Darshan sold goods for ₹ 40,000 to Varun on 8.1.2017 and drew upon him a bill of exchange payable after two months. Varun accepted the bill and returned the same to Darshan. On the due date the bill was met by Varun. Record the necessary Journal entries in the books of Darshan and Varun in the following circumstances:
When the bill was retained by Darshan till the date of its maturity.
When Darshan immediately discounted the bill @6% p.a. with his bank.
When the bill was endorsed immediately by Darshan in favour of his creditor Suresh.
When three days before its maturity, the bill was sent by Darshan to his bank for collection.

Pass Journal entries rectifying the following errors:

1. A cheque for ₹ 10,000 was received from Ranjan on which ₹ 200 Cash Discount was allowed. The cheque was not honoured on due date and the amount of discount was credited to Discount Received Account.
2. ₹ 2,000 paid as wages for machinery installation was debited to Wages Account.
3. ₹ 5,000 received from Rakesh were credited to his Personal Account. The amount had been written off as bad debts earlier.
4. Repair bill of machinery was recorded as ₹ 100 against the bill amount of ₹ 1,000.

On 30th June 2014 Pass Book showed a balance of ₹ 5,200. Prepare Bank Reconciliation Statement from the following particulars:-

1. Out of total cheques amounting to ₹ 16,000 deposited, cheques amounting to ₹ 9,000 were credited in June 2014, Cheques amounting to ₹ 3,000 were credited in July 2014, and the rest have not been collected so far.
2. Out of total cheques amounting to ₹ 45,000 drawn, cheques amounting to ₹ 7,500 were presented in June 2014, Cheques amounting to ₹ 18,000 were presented in July 2014, and the rest have not been presented so far.
3. Amount wrongly credited by bank ₹ 3,400.
4. Payment side of the Cash Book has been undercast by ₹ 200.
5. Cheques recorded in the Cash Book in June 2014 but sent to bank in July 2014 ₹ 2,500.
6. A cheque of ₹ 20,000 deposited in the bank has been dishonoured but no intimation was received till June 2014.

Prepare the trial balance of Mahesh as on 31st March, 2023. He has omitted to opena Capital Account:

	₹		₹
Bank Overdraft	95,000	Purchases	4,45,000
Sales	8,10,000	Cash in Hand	8,500
Purchases Return	22,500	Creditors	2,15,000
Debtors	4,00,500	Sales Return	15,750
Wages	96,000	Equipment	25,000
Capital	?	Opening Stock	3,00,500

Rectify the following errors:

1. Credit sales to Mohan ₹ 7,000 were recorded as ₹ 700.
2. Credit purchases from Rohan ₹ 9,000 were recorded. as ₹ 900.
3. Goods returned to Rakesh ₹ 4,000 were recorded as ₹ 400.
4. Goods returned from Mahesh ₹ 1,000 were recorded as ₹ 100.

A Company purchased a second-hand machine on 1st April, 2016, for ₹ 30,000 and immediately spent ₹ 4,000 on its repair and ₹ 1,000 on its installation. On Oct. 1, 2018, the machine was sold for ₹ 25,000. Prepare Machine Account after charging depreciation @ 10% p.a. by diminishing balance method, assuming that the books are closed on 31st March every year. IGST was charged @12% on purchase and sale of machine.

Name the qualitative characteristics of accounting information. Explain any two of them.

Y purchased goods for ₹ 6,000 on 1st June, 2011 from X and on the same date accepted a bill payable after three months. 3 days later, X endorsed the bill to Z. On maturity, the bill was dishonoured for non-payment and Z had to pay ₹ 50 as noting charges. Two days after the dishonour of bill, Y paid ₹ 2,000 to X and requested him to draw a second bill for the balance plus ₹ 90 for the amount of interest, payable after two months. X accepted the proposal and draws the bill on Y, which was accepted by Y and was duly met on maturity. Pass Journal entries for the above transactions in the books of X.

Give five examples of Capital Reserve.