Fully Prepared Accounts

8/6/2019 Fully Prepared Accounts

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O M T E X C L A S S E SO M T E X C L A S S E SO M T E X C L A S S E SO M T E X C L A S S E S A C C O U N T SA C C O U N T SA C C O U N T SA C C O U N T S

Achieve Success Through OMTEX CLASSES The Home of Text1

ACCOUNTS

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SUCCESSFULLY

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ACCOUNTS PORTION

CHAPTERS NAME Marksallotted

to each

chapter

1.FINAL ACCOUNTS OF PARTNERSHIP FIRM. 22

2.FINAL ACCOUNTS OF NON PROFITABLE

ORGANISATION

19

3.SINGLE ENTRY SYSTEM 12

4.DEPRECIATION OR 14

1. COMPUTER AWARENESS 7

2. GOOD WILL OF PARTNERSHIP FIRM 7

5.BILLS OF EXCHANGE 19

6.JOINT VENTURE 14


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INTRODUCTION

Goodwill is an intangible (non visible) fixed asset having a realisable (economic) value. It is the reputation

of business. Valuation of goodwill is very important in the case of admission, retirement and death of

partners.

DEFINITION OF GOODWILL

Eric L. Kohler defined goodwill as under:

Goodwill is the excess of the price paid for the business as a whole over the book value or over the

computed value of all tangible assets purchased. Normally, goodwill thus acquired is only one type

appearing on book of account and in financial statement.

We can define goodwill as under:

Goodwill is a monetary value of the reputation of a concern in terms of its future earning capacity.

(A) Write the word / term / phrase which can substitute each of the following statements:

1. Pecuniary (financial) value of the reputation of the business. Ans. Goodwill

2. Profit earned over and above normal profit. Ans. Super profit.

3. The expected profit from a particular line of business. Ans. Normal profit.

4. The profit, which is normally earned by majority of units in a particular industry. Ans. Normal profit.

5. An asset, which cannot be seen but only, be felt and which has a realizable value. Ans. Goodwill.

(B) STATE TRUE OR FALSE.

1. Goodwill is a tangible asset. Ans. False.

2. Super profit is the difference between average actual profit and normal profit. Ans. True.

3. Goodwill is a worthless asset. Ans. False

4. Goodwill is an intangible asset. Ans. True.

5. Goodwill cannot bought or sold. Ans. False.

(C) ANSWER IN ONE SENTENCE

1. What is goodwill?Ans. Goodwill is a monetary value of the reputation of a concern in terms of its future earning capacity.

2. What is Normal Profit?Ans. Reasonable profit earned by business concern after paying the cost of production and remuneration of

entrepreneur (partners) is known as Normal profit.

3. What is Super Profit?Ans. Profit, which is earned over and above, the normal profit, is known as Super profit.

4. What are the methods of valuing Goodwill?

Ans. There are three methods of valuing goodwill.

a. Average profit method,b.

Super profit method andc. Capitalisation method.


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(D) Fill in the gaps:

1. Goodwill is an intangible asset.2. Machinery is tangible asset.3. Goodwill is not a tangible asset.4. Super profit is equal to average profit minus normal profit.

IMPORTANT POINTS TO REMEMBER

1. Any Number which is followed by the word Years Purchase / Times / Thrice / Twice are considered asnumber of years purchase.

2. If Number of Years of purchase is not given then assume it as 1, 2, 3, 4&5. But not as 6,7,15,700 etc.3. In Weighted Average Profit Method if Weights are not given assume it as, 2, 3, 4 4. If there is a continuous loss in the Firm then the Good will of the Firm would be Zero (0).5. If the total Profits/ Loss are negative then also the goodwill will be Zero.

PROBLEMS1. The profits of the firm for the last five years are 2002 Rs. 20,000; 2003 Rs. 16,000; 2004 Rs. 24,000;

2005 Rs. 8000; 2006 Rs. 12,000. Calculate the goodwill of the firm. [Ans. Rs. 16,000]

2. Mona, Reena and Sona have been carrying on a partnership business and good will of their firm is to be valued atthree years purchase of the average profit for the last five years. The profit and losses for the last five years have

been. 1st Year Rs. 16,000, 2nd Year, 15,000, 3rd Year, 8,000(Loss), 4th Year, 7,000, 5th Year, 10,000.[Ans. Rs.

24,000]

3. Calculate the good will from the following information goodwill is valued at three years purchase of average profitof the last six years. Profit and losses of the business in the last six years are as follows,

1st

year, Rs, 40,000(Profit)

2nd

Year, Rs, 60,000(Profit)

3rd

Year, Rs, 10,000(Loss)

4th


5th Year, Rs, 30,000 (Loss)

6th


[Ans. Rs. 95,000]

4. Calculate the value of goodwill according to average profit method. Goodwill is valued at three yearspurchase of last four year average profit. The profits and losses for the last four years are.

[Ans. Rs. 27,000]

5. The profit of a firm for the four years from 1991 to 1994 where_1991 Rs, 40,0001992 Rs, 45,000

1993 Rs, 55,000

1994 Rs, 53,000

Calculate the goodwill of the firm at 2yrs. Purchase of the average profit for the last three years.

[Ans. Rs. 1, 02,000]

6. Mr. X a businessperson has earned the following profits in the last five years.1995 1, 05,800

1994 1, 02,600

1993 98,4001992 96,800

1991 95,500

Value goodwill of Mr. X on the basis of three years purchase of average of the past five years. [Ans. Rs. 2, 99,460]

1st

Year Rs, 10,000(Profit)

2nd


3rd

Year Rs, 4,000(Loss)

4th



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7. Good will is valued at three years purchase of last five years average profit. The profits for the last five years are

1st

Year 4,800(p)

2nd

Year 7,200(L)

3rd

Year 10,000(L)

4th

Year 3,000(P)

5th

Year 5,000(L)

[Ans. 0]Note: - Since the companys average profit is negative. Therefore the firms goodwill is zero.

8. Compute the goodwill the following case good will is valued at three years purchase of average profit offive years. The Profit of the five years were_

1st

Year 5,800

2nd

Year 7,400

3rd

Year 20,000

4th

Year 3,500

5th

Year 7,300

[Ans. Rs. 26,400]

9. Sales of trader for 3years ended 30th June 1995 are as follows

1995 Rs, 5, 50,000

1994 Rs, 5, 46,000

1993 Rs, 5, 25,000

The profit margin for the 3 years ended 30th

June 1995 was 10%, 12%, 12% respectively. For the purpose

of selling the business of the trader, goodwill is to be valued at 2years purchase of the average profit of the

last 3years. Find the value of good will. [Ans. Rs. 1, 22,680]

10.From the following particulars, value good will of 2yrs. Purchase of last 5 years.Year ended Turn over Net profit

31-12-199031-12-1991

31-12-1992

31-12-1993

31-12-1994

5,15,0005,45,600

5,35,800

5,40,900

5,60,800

5%6%

7%

7.5%

7%

[Ans. Rs. 70,326]

11.A firm with an average capital employed of Rs. 1, 60,000 is expected to earn Rs, 40,000 per annum in

future. Calculate goodwill at three times the super profit taking the normal rate of return as 15%.

[Ans. Rs. 48,000]

12.Capital employed on 31st December, 1990 was Rs, 1, 00,000/-. The Profits earned by the business for thelast 5 years where.

1986 30,000

1987 40,000

1988 50,000

1989 40,000

1990 60,000

Normal rate of return is 15%. Good will is valued at 3 years purchase of the super profits of the business.

Find out the value of goodwill. [Ans. Rs. 87,000]

13.13. The books of a business showed that the capital employed on 31 st December, 1992 was Rs.1,00,000/-. Profits for the last five years are_1988, 1989, 1990, 1991 & 1992 were Rs, 60,000, Rs, 55,000,Rs, 75,000, Rs, 85,000 & Rs, 65,000 respectively. Goodwill is valued at 2 years purchase of the Super

profit of the business. NRR is 10%. [Ans. Rs. 1, 16,000]


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14.14. M/s XYZ partnership firm earned net profit during the last four years were Rs, 7,000. Rs, 13,000.Rs, 12,000 and Rs, 8,000. The capital investment made in the firm was Rs, 50,000. N.R.R on capital is

15%. The remuneration of the partners during the period is Rs, 500 p.a. Good will is valued at 2 Yrs

purchase of Average super profit of the above mentioned years. [Ans. Rs. 4,000]

15.M/s Vijay trading company earned net profit during the last four years was follows.1

stYea r Rs, 57,000

2nd Year Rs, 44,000

3rd

Year Rs, 61,000

4th

Year Rs, 58,000

The capital investment made by the company is Rs, 1, 50,000. Normal Rate of return on capital is 20%.

The remuneration of the partners during this period is Rs, 500 p.m. Good will is valued at 2years

purchase of Average Super profit of above mentioned period. [Ans. Rs. 38,000]

16.The average net profit expected in the business by ABC firm is Rs, 36,000 per year. The average capitalemployed in the business by the firm is Rs, 2, 00,000. The Rate of interest expected from capital

invested in the business is 10%. The remuneration of the partners is estimated to Rs, 6,000 P.a. Calculate

the value of goodwill based on 2years purchase of super profit. [Ans. Rs. 20,000]

17.M/s Rajesh Trading company earned net profit during the last four years were Rs, 15,000, Rs, 28,000,Rs, 30,000 & Rs, 40,000. The capital investment made by the company is 1, 00,000. Normal rate of

return on capital is 15 %. The remuneration of the partners during this period is Rs, 1,000p.a. Good will

is valued at 2 years purchase of average super profit of the above mentioned period. [Ans. Rs. 24,500]

18.The present average net profit of Braful, Shobha partnership firm before detecting partnersremuneration is Rs, 27,000 p.a. The capital employed in the business by the partner Braful Rs, 1, 00,000

& Shobha Rs, 50,000. The profit expected from the total capital invested is 10% p.a. The total

remuneration is estimated to be Rs, 6,000 per annum. Find out the value of goodwill on the basis of

2years purchase of super profit. [Ans. Rs. 12,000]

19.The following balance sheet of Kantilal, Chandrakant.Balance sheet as on 31

stMarch, 1995

Liabilities Amount Assets Amount

90,000

70,000

44,000

38,000

50,000

41,000

30,000

20,000

66,000

30,000

5,000

Capital

Kantilal

Chandrakant

Reserve Fund

Creditors

2,42,000

Machinery

Building

Investments

Stock

Debtor

Bank

Profit/loss A/c

2,42,000The net profits of the firm for the year ended 31

stMarch, 1995 were Rs, 15,000 Rs, 25,000 Rs, 26,000. Ascertain

the value of good will at 2 years purchase of the super profit of the 3years taking the normal rate of return oncapital employed is 10%. [Ans. Rs. 4,200]

20.The following is the balance sheet of M/s Anna and Chunna as on 31st March 1995.Balance sheet as on 31

stmarch, 1995.

Liabilities Amount Assets Amount

1,64,000

40,000

35,000

3,040

10,000

26,000

56,000

56,000

19,040

75,000

Capital

Anna

Chunna

Creditors

Profit/ Loss A/c

2, 42, 040

Machinery

Building

Plant

Stock

Debtor

Bank2, 42, 040

Net profits for the past 3years are 1st

year Rs, 43,350, 2nd year Rs, 36870, 3rd year Rs, 32,280


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Normal rate of return on capital employed is 10%. Calculate the value of goodwill at 2years purchase of

the average super profit. [Ans. Rs. 33,592]

21.The average annual profit earned by a firm is Rs. 30, 000 including Rs. 2,000 p.a. received as interest onNon Trading Investment and this average is expected to continue in the future except for the

following.

a. Rent paid in the past for temporary premises at Rs. 500 per month will no longer have to be paidas the firms own premises are now ready.

b. b. Salaries Rs. 7,000 p.a. paid in the past will increase by 20% in the future. Calculate goodwillat 3 times the Average Expected Profit. [Ans. Rs. 97,800]

22.Priti and Pritam are partners sharing profits and losses in the ratio of 3:2. They admit Prasad for 1/6thshare. For the purpose of admission of Prasad, goodwill of the firm should be valued on the basis of 3

years purchase of the last 5 years average profit. The profits were. Ans. Rs. 27,000]

Year 1990 91 1991 92 1992 93 1993

94

1994 95

Profits Rs. 60,000 62,500 45,000(L) 42,500 80,000

23.Raghunaths revenue statements for the 3 years ended 31st

Dec. were as under:

Calculate the value of good will at 2 years purchase of the average profit, earned in the past 3 years.

[Ans. Rs. 24,000]

24.Raj Kumar revenue statements for the 3 years ended 31 Dec. were as under:

Calculate the value of good will at 2 years purchase of the average profit, earned in the past 3 years.

[Ans. Rs. 41334]

25.The profit of a firm where Rs. 36,000/- for 1991, Rs. 42,000/- for 1992 and Rs. 57,000/- for 1993.Compute goodwill at twice the weighted average profit method. [Ans. Rs. 97,000]26.The profit of a firm were Rs. 72,000/- for 1991, Rs. 84,000/- for 1992 and Rs. 1,14,000/- for 1993.

Calculate goodwill at 4 times the weighted average profit. [Ans. Rs. 3,88,000]

27.The profit for the last 3 years were 1,50,000/-, 1,60,000/- and 1,80,000/-. Compute goodwill will from 3times the weighted average profit for the last 3 years, weights are 2, 3 & 5 respectively.

[Ans. Rs. 5,04,000]

28.28. The total profit of a firm before providing for partner salaries 6,000/- per month was Rs.3,00,000/-for 1991, 3,20,000/- for 1992 and 3,60,000/- for 1993. Calculate goodwill at 6 year purchase of the

weighted average profit. The weights are being 4 for 1991, 6 for 1992 & 10 for 1993. [Ans. Rs.15,84,000]


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29.The total profit of a firm before providing for partner salary of Rs. 3,000/- per month was Rs. 1,50,000/-for 1990, Rs. 1,60,000/- 1991 & Rs. 1,80,000/- for 1992. Calculate goodwill at 4 times the weighted

average profit. The weights are being 2, 3 & 4 respectively. [Ans. Rs. 5,22,668]

30. The profits earned by the firm in 2004, 2005, 2006 are Rs. 60,000; Rs. 70,000 and Rs. 95,000;respectively. Calculate goodwill by Weighted Average Profit method. [Ans. Rs. 80,833]

31.The firm of Mr. X and Mr. Y earned average annual profit of Rs. 60,000. The profit includes Rs. 5,000p.a. as interest on non trading investment. The firm is expected to maintain the profit except the

following.

1. The firm was conducting the business from rented premises. Rent paid Rs. 600 p.a. The premises of thefirm are now ready for conducting the business.

2. The business of the firm was managed by one manager who was paid salary of Rs. 6,000 p.a. Mr. X hasdecided to manage the firm and replace the manager. Services of Mr. X will be worth Rs. 1,000 p.a.

Calculate Goodwill at 2 years purchase of average profit. [Ans. Rs. 1, 21,200]

32.The net profits of a firm after providing for taxation, for the past five years are Rs. 40,000; Rs, 42,000;Rs. 45,000; Rs. 46,000 and Rs. 47,000. Average capital employed is Rs. 4,00,000 on which a reasonable

rate of return of 10% is expected. It is expected that the firm will be able to maintain its super profits forthe next five years.

Calculate the value of goodwill of business on the basis of an annuity of super profit, taking thepresent value of annuity of one rupee for five years at 10% interest as Rs. 3.78. [Ans. Rs. 15120]

How would your answer differ if the goodwill is calculated by capitalising the excess of the annualaverage distributable profits over the reasonable return on capital employed on the basis of the same

return of 10%. [Ans. Rs. 40,000]

Calculate goodwill on 5years purchase of super profit. [Ans. Rs. 20,000]33.The firms actual profit is Rs. 10,000. Total investment made by the form Rs. 50,000. Normal rate of

return in similar type of business is 10%.

Find out the value of Goodwill if:

It is equal to super profit. [Ans. Rs. 5,000]It is 3 years purchase of super profits. [Ans. Rs. 15,000]

It is equal to the capitalised value of super profits. [Ans. Rs. 50,000]

34.The net profits of the firm after taxation for the last five years were.a. Rs. 80,000; Rs. 1,00,000; Rs. 1,20,000; Rs. 1,25,000 and Rs. 2,00,000 respectively. Capital

employed in the business is Rs. 10, 00,000 and the Normal rate of return is 10%.

b. Calculate the value of goodwill by Annuity of Super profit where Annuity value of Re. for 5 years at10% is 3.7907(Approx). Also calculate the value of goodwill by Capitalisation of super profit

method. [Ans. Rs. 94,768] [Ans. Rs. 2,50,000]

35.From the following information, calculate the value of goodwill by super profit method. i.e. 3 yearspurchase of super profit.

Capital employed in business Rs. 5, 00,000. Trading profits are 2004 Rs. 1, 07,606; 2005 Rs. 90,700; and 2006 Rs. 1, 12,500. Normal Rate or Return 10% Fair remuneration to partners for their services Rs. 10,000 p.a. [Ans. Rs. 1,30,806]


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Achieve Success Through OMTEX CLASSES The Home of Text

10

BILLS OF EXCHANGE: - A Bills of Exchange is a Negotiable (un changeable) Instrument, containing anunconditional order signed by the maker (drawer) directing a certain person (Drawee) to pay a certain sum

of money only to the bearer of the Instrument.

ESSENTIAL FEATURES OF BILL OF EXCHANGE

1. A bill of exchange must be in written form.2. It must contain an order. It should not be in the form of a request. The order may be in the shape of a

request but it must be imperative (very important or compulsion).

3. It should be an unconditional order. There should be no condition for making payment.4. It must be signed by the maker. A bill of exchange without the signature of the maker becomes invalid.5. It must specify the definite amount to be paid.6. It must contain an order to pay a certain sum of money only.7. The amount must be payable to a person whose name is specified in the bill or to his order or to the bearer.8. A bill of exchange must be dated.THERE ARE THREE PARTIES IN THE BILL OF EXCHANGE.DRAWER: - The drawer is the person or the party who draws the bill. He is the creditor and he has to receive

the money from other person.

DRAWEE: - The drawee is the person or the party on whom the bill is drawn. He is a debtor and he has to

pay the amount to the drawer. Once he accepts the bill he becomes and Acceptor.

PAYEE: - The payee is the person or the party to whom the bill is made payable. If the bill is made payable

to the drawer himself, the drawer and the payee are the same person.

TERM OF THE BILL: -A bill of exchange is subject to certain terms and conditions. Such terms and

conditions include period of the bill, place of payment, amount of the bill, etc.

GRACE DAYS/DAYS OF GRACE: - While calculating the due date of any time bill, three extra days knows

as days of grace should be added to the specified period mentioned in the bill. For example, a bill drawn on

15th

January, 2007 for two month will become due on 18th

March, 2007.

DUE DATES/MATURITY DATES: - The date on which the Bill is ready for the payment is known as due date

or maturity date of that Bill.

If the due date falls on Sunday or any other public holiday the payment of the bill should be made on the

immediately preceding working day. If a bill falls due for payment on 15

th

August, it must be paid on 14

th

August. If a bill falls due on 26th

January, it must be paid on 25th

January. In case 25th

January is Sunday the

payment must be made on 24th

January.

HONOUR OF THE BILL: - When the bill is paid on the due date is known as honour of the Bill.

DISHONOUR OF THE BILL: - When the Bill is not paid on the due date then it is known as dishonour of the bill.

RETIREMENT OF THE BILL: - When the Bill is paid before the due date then it is known as retirement of the Bill.

HUN DIES: - When the subject matter of the Bill is in Indian language say Tamil, Telungu, Gujarathi, Hindi

etc. then it is known as hundies.

ACCEPTANCE OF THE BILL :- When the drawee puts the signature on the bill then it is known as acceptance

of the bill.


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THERE ARE TWO TYPES OF ACCEPTANCE

GENERAL ACCEPTANCE: - When the bill is accepted without any terms and conditions then it is known as

general acceptance.

QUALIFIED ACCEPTANCE: - When the bill is accepted with certain terms and conditions then it is known as

qualified acceptance.

The qualified acceptance may be done in any one of the following ways.

i. Qualified as to the amount:- The drawee may not agree to pay the full amount mentioned in the bill.He may agree to pay only a part of the amount mentioned in the bill. This type of acceptance is called

qualified as to the amount.

ii. Qualified as to the Time: - If the drawee changes the period of the bill, it is called qualified acceptanceas to the time.

iii. Qualified as to the place: - In this case, the drawee agrees to pay the amount at a particular place andthere only.

iv. Qualified as to parties: - In this case, the bill is accepted by one or more of the drawees and not by allthe drawees.

v. Conditional Acceptance: - When the drawee accepts the bill subject to the fulfilment of a condition, itis called a conditional acceptance.

DRAFT: - Before the acceptance of the bill, it is known as draft.

ENDORSEMENT OF BILL: - When the ownership of the bill is transferred then it is known as endorsement of

Bill. There are two parties in the endorsement of Bill.

ENDORSER: - A person who transfers the ownership of the bill is known as endorser.

ENDORSEE: - A person on whom the bill has been transferred is known as endorsee.

TYPES OF BILL: - There are two types of Bill

INLAND BILL: - A bill which is drawn & made payable in the same country, it is known as Inland bill.

FOREIGN BILL: - A bill which is drawn in one country & made payable in another country then it is known

as foreign bill.

NOTING CHARGES: - It is a fee charged by the Notary Public, In case of dishonour of Inland bill. Notary

Public is a government officer who is appointed to register the dishonour bill.

PROTESTING:- It is also a fee charged by the government in case of foreign bill.

Q1.OBJECTIVE TYPE QUESTIONS.

(A)WRITE THE WORD/TERM/PHRASE WHICH CAN SUBSTITUTE EACH OF THE FOLLOWING

STATEMENTS:

1. A person to whom a bill is endorsed. Ans. Endorsee2. A person who draws a bill. Ans. Drawer3. A person to whom the bill amount is payable Ans. Payee4. Encashment of bill with the bank at some rebate. Ans. Discounting of bill5. A bill drawn in one country and payable in other country. Ans. Foreign Bill6. The date on which bill is payable. Ans. Due date / Date of maturity7. Payment of bill before due date. Ans. Retirement of bill8.

Payment of bill on the due date. Ans. Honour of bill9. A person who notes dishonour of the bill Ans. Notary Public

10.3 days allowed over and above the period of the bill. Ans. Grace days11.A person who transfers the bill to others. Ans. Endorser


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12

12.Cancellation and replacement of bill with prior arrangement between drawee and drawer.And. Renewal of Bill

13.Payment of bill on due date.Ans. Honour of bill

14.A person who agrees to pay the amount of the bill drawn on him.Ans. Drawee

15.Bill given to bank so that bank can receive money on the due date and handover the proceeds to drawer.Ans. Bill sent to bank for collection.

16.Amount paid for getting the fact of dishonour of bill recorded in government record.Ans. Noting charges

17.Amount not recovered from the person who is declared bankrupt.Ans. Bad Debts

18.A person whose liabilities are more than his assets.Ans. Insolvent / Bankrupt

19.Law which govern all transferable documents.Ans. Indian Negotiable Instruments Act 1881.

20.The bill of exchange before acceptance.Ans. Draft.

21.Transferring the rights in the bill by writing persons name on the back of the bill.Ans. Endorsement

22.Drawee signing the bill and thereby taking up the responsibility to pay the bill on the due date.Ans. Acceptance

23.Liability towards the bill of exchange, which are accepted.Ans. Bills Payable

24.A person who accepts the bill.Ans. Acceptor / Drawee

25.The person who endorses the bill.Ans. Endorser

26.Extra days added to meet the bill.Ans. Grace Days.

(B)STATE WHETHER THE FOLLOWING STATEMENTS ARE TRUE OR FALSE.

1. On the due date, the bill must be presented to the drawee by the holder of the bill.2. The ownership of a bill of exchange can be changed by endorsing it.3. When the amount of the bill is paid on due date, it is said to be retired.4. When the discounted bill is honoured by the drawee, no entry is passed in the books of drawer.5. Nothing charges should be borne by the drawee.6. Noting charges are to be paid to the notary public.7. The discounting charges are to be deducted by the bank at the time of discounting of the bills of

exchange.

8. A bill can be endorsed only once.9. Bill if exchange needs acceptance.10. The due date of the bill is calculated from the date of acceptance and not from the date of drawing the bill.11.The payee and the drawer cannot be the same person.12.Endorsee is the creditor of the endorser.13.The drawer and the payee of the bill of exchange may be one and the same person.14. If the bill falls due for payment on Sunday, its due date will be on Monday.


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(C)ANSWER IN ONE SENTENCE.

1. What is the due date of the exchange?

Ans. The date on which the bill falls due for payment is called due dates of the bill.

2. What is endorsement of a bill?

Ans. Signing of the backside of the bill by the holder with the intention of transferring its title to another.

3. What is noting charges?

Ans. The fees charged by notary public for noting dishonour on the face of the bill and in his register.

4. When is a bill said to be honoured?Ans. When the acceptor or drawee makes the full payment of the bill amount on its due date, the bill

is said to be honoured.

5. Who is payee?Ans. The person to whom the amount of the bill is made payable.

6. What is inland bill?Ans. A bill of exchange which is drafted and accepted and made payable between the parties from one

and the same country is called inland bill.

7. What is foreign bill of exchange?Ans. A bill of exchange which is drafted and accepted in one country and made payable in other

countries called foreign bill of exchange.

8. What do you mean by qualified acceptance?Ans. A qualified acceptance is the one where the drawee makes a change in the terms of the bill before

accepting it.

9. What is discounting of a bill?Ans. Discounting means selling a bill to a bank before due date for cash.

10.Who is drawer of a bill?Ans. The drawer is the person who draws a bill.

11.What is bill of exchange?Ans. The bill of exchange is a written order to pay a certain sum of money on demand or on a certain

future date.

12.What is retirement of bill of exchange?Ans. Retirement of a bill means making payment of bill before the due date.

13.Mention the parties to a bill of exchange?Ans. There are three parties to a bill of exchange i.e. drawer, drawee and payee.

14.Who is drawee?Ans. Drawee is a person on whom the bill is drawn.

15. If the endorsed bill is dishonoured, from whom the amount is collected by the endorsee?Ans. If the endorsed bill is dishonoured, the amount is collected from the endorser.

16.What is notary public?Ans. A Notary Public is a public officer authorised to note and protest the dishonour of bill.


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PREPARE A BILL OF EXCHANGE FROM THE FOLLOWING DETAILS.

1. Drawer : Soundariya, Neelam Bhawan, KalyanDrawee : Sugandi, Dastur Nagar, Amaravati

Payee : Umesh Narigrekar, Deogad

Period : 90 days

Amount : Rs. 7,555

Date of bill : 15th

March 1995

Accepted on : 20th

March 1995

2.On 10th March, 1995 Rajesh Bhoyar, Gandhinagar, Nagpur draws a 2 months bill for Rs. 3,000 on SamirChoudhary, Main Road, and Belapur. Samir Choudhary accepted the bill on 15

thMarch 1995

3. Drawer : Elavarasi, 35, Lakhani Apartment, UlhasnagarDrawee : Elavarasan, 23, Prasad Bhawan, Thane (East)Payee : Subita Ambarnath

Period : 90 days

Amount : Rs. 9,755

Date of Bill : 15th

March, 1995

Accepted on : 20th

March, 1995

4. Drawer : Shri Narayandas Kela, Gandhi Chauk, Dhamangaon

Drawee : Shri Atul Khatke, Mandrup Road, Solapur

Payee : Shri Ranjeet Chavan, Ambajogi

Amount : Rs. 5,000

Period : 90 days.

5. Drawee : K . Prabhakar, Nehur Road, Solapur.

Drawer : M. Sudhakaran, Shivaji Nagar, Nanded.

Period : 3 Months.

Date of Bill : 5th

February,1996

Amount of the Bill : Rs. 4000/-

Accepted On : 9th

February,1996

6. Drawer : Vilas Ptil, 44, M.G. Road, Nanded.

Drawee : Pankaj Pawar, 70, Bhavani Galli, Solapur.

Payee : Ramchandra Rampure, Rampur.

Period : 60 days.

Date of Bill : 28th

January, 1995

Date of Acceptance : 29th

January, 1995

Amount of the Bill : Rs. 2,800/-

7. Drawer : Rekha, Main Road, Jalgaon.Drawee : Basant, Sandesh, Nandura.

Payee : Uma Chandak, Khamgaon.

Amount : Rs. 2500/-

Period : 2 months.

Date of Bill : 21st

January, 1995

Date of Acceptance : 25

th

January, 1995


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8. Drawer : Shekhar Desai, Shastri Road, Mahad.

Drawee : Sharad Verma, Narayanpeth, Pune

Payee : Mukund Pande, Panel.

Amount : Rs. 3,500/-

Period : 3months.

Date of Bill : 21st

June, 1995

Bill accepted : for 3,000 on 25th

June, 1995.

9. Drawer : Vijay Bhat, Main Road, Nagpur.

Drawee : Ashok Kulkarni, M.G. Road, Nagpur.

Payee : Anil Jadhav, Pune.

Amount : Rs. 6,950.

Period : 80 days.

Date of Bill : 7th

March, 1996.

Accepted on : 10th

March, 1996.

10. Drawer : Namdev Tukaram, Paithan.

Drawee : Nivruti Sopan, Dehu.

Payee : Vitthal Pandurang, Pandharpur.

Amount : Rs. 5,111Period : 3 months

Date of Bill : 17th

August, 1995

Date if Acceptance : 20th

August, 1995

11. Drawer : Priti Chavan, Chandika Road, Malvan.

Drawee : Snehlata Patil, Prashant Nagar, Ambajogai

Payee : Archana Ghime, Amaravati

Amount of Bill : Rs, 10,000/-

Period : 2 months.

Date of Bill : 1st

January, 1996

Date of Acceptance : 5

th

January, 1996

12. Drawer : Shri Ravindra Patil, Housing Society,

Ambajogai

Drawee : Shri Bhaurao Deshmukh, Bazar Chauk,

Dhamangaon

Payee : Shri Prasad Shendage, Malvan

Amount : Rs. 7,500/-

Period : 3 months

Date of Bill : 1st

January, 1995

Date of Acceptance : 5th

January, 1995


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T R A D E B I L L

I N T H E B O O K S O F D R A W E R

1. On 1st March, Sudhir sells goods worth Rs. 10,000 to Narendra. On the same day, Sudhir draws a bill onNarendra for the amount at 3 months. Narendra accepts the bill. On the date of maturity, Narendra

honoured the bill. Give journal entries in the books Sudhir.

2. On 1st July, Sham sells goods worth Rs. 20,000 to Ram. On the same day, Sham draws a bill on Ram forthe amount at 2 months. Ram accepts the bill. Ram pays the amount of the bill on due date. Give journal

entries in the books of Sham.

3. On 1st January, 2005; Bhaskar purchased goods from Randhir on credit worth Rs. 5,000. On the sameday Bhaskar gave an acceptance to the Bill drawn by Randhir at 3 months for Rs. 5,000. Randhir

discounted the bill with his Bank at 6% p.a. on 4th

January, 2005. On the maturity of the Bill, Bhaskar

paid the amount of Bill. Give journal entries in the Books of RandhirNote: - Here the bill accepted by Randhir was discounted with the Bank. Hence, there will be no entry on the maturity as the amount

will be received by the Bank

4.

Anand brought goods worth Rs. 4,500 from Samant on August 1, 2006. On the same day, Anandaccepted the bill for Rs. 4,500 at 3 months drawn by Samant. Samant got the bill discounted with his

bank at 6%. Before the due date, Anand informed Samant about his inability to pay the amount of bill.

He further requested him to accept Rs. 2,500 in cash and immediately draw upon him a new bill for the

remaining amount at 2 months together with interest at 8% p.a. Samant agreed. The second bill was duly

paid on maturity. Give journal entries in the books of Samant.Note: - Here 1st part payment is made and then the interest is charged.

5.On 1st March, Ramchandra sold goods to Raman worth Rs. 8,000/- and Raman accepted the Bill for Rs.8,000/- at 3 months drawn by Ramchandra. Ramchandra discounted the bill with his bank @ 6% p.a. On

due date the bill was dishonoured and Raman requested Ramchandra to accept Rs. 4,000/- immediately

and draw upon him a new bill for the remaining amount at 3 months together with an interest at 10% p.a.

Ramchandra agreed. The second Bill was duly honoured. Give Journal entries in the books ofRamchandra.

Note: - Here 1st

part payment is made and then the interest is charged.

6.Premlal sold goods to Sunderlal worth Rs. 10,000/- and Sunderlal accepted the bill for Rs. 10,000/- at 3months drawn by Premlal. Premlal Discounted the bill with his bank @ 6 % p.a. on due date the bill was

dishonoured and Sunderlal requested Premlal to accept Rs. 4,000 immediately and draw upon him a new

bill for the remaining amount at 3months together with an interest at 10% p.a. Premlal agreed and the

second bill was duly honoured. Give the Journal entries in the books of Premlal. Note: - Here 1st partpayment is made and then the interest is charged.

7.Archana purchased goods from Babita on Credit for Rs. 10,000 and accepted a bill drawn by Babita forfour months. Babita discounted the bill with her bank for Rs. 9600/- Before the due date Archanaapproached Babita with a request to renew the Bill Babita agreed with the condition that Archana should

pay Rs. 6000 with interest of Rs. 120 and accept a new bill for the balance. The arrangement was duly

carried out. New bill is met on the due date. Pass journal entries in the books of Babita.

Note: - Here 1st interest is charged and then the part payment is made.

8.Baloo owes Kaloo Rs.8000. Kaloo then draws a bill for Rs. 8000 on Baloo for a period of three months.Baloo accepts and return it to Kaloo. Kaloo discounted the bill with his bank at 12 % p.a. On due date,

the bill was dishonoured noting charges amount to Rs. 30. Kaloo then draws a bill for the balance plus

interest of Rs. 170. Before the due date of this bill Baloo pays the amount at a discount of Rs. 40 to retire

the bill. Pass Journal Entries in the books of Kaloo.

Note: - Here only the interest is charged and there is no part payment occurs.


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9. Minal draws a bill on Usha for Rs. 5,000 at 3 months. Usha accepts the bill and return to Minal. Minaldiscounted the bill @ 12 % p.a. with the bank. On Maturity Usha finds herself unable to make payment

of the bill and requested Minal to renew the bill. Minal accepts the proposal on the condition that Usha

should Pay Rs. 2,000 in cash and accept a new bill at one month along with interest at 10% p.a. These

arrangements were carried through. Usha retires the bill by paying Rs. 3015/- Pass Journal Entries in the

books of Minal. Note: - Here 1st part payment is made and then the interest is charged.

10.On 15th March, Ahmed sold goods worth Rs. 1,600 to Awasthi and draws upon him a bill at 4 monthsfor the amount. Awasthi returned the bill to Ahmed with his due acceptance. On 15

thApril, Awasthi

retired the bill under rebate of 5% per annum. Give Journal entries in the books of Ahmed.

IN THE BOOKS OF DRAWEE

11.On 1st March, Sudhir sells goods worth Rs. 10,000 to Narendra. On the same day, Sudhir draws a bill onNarendra for the amount at 3 months. Narendra accepts the bill. On the date of maturity, Narendra

honoured the bill. Give journal entries in the books of Narendra.

12.On 1st January, 2005; Bhaskar purchased goods from Randhir on credit worth Rs. 5,000. On the sameday Bhaskar gave an acceptance to the Bill drawn by Randhir at 3 months for Rs. 5,000. Randhir

discounted the bill with his Bank at 6% p.a. on 4th January, 2005. On the maturity of the Bill, Bhaskarpaid the amount of Bill. Give journal entries in the Books of Bhaskar.

13.On 1st July, Sham sells goods worth Rs. 20,000 to Ram. On the same day, Sham draws a bill on Ram forthe amount at 2 months. Ram accepts the bill. Ram pays the amount of the bill on due date. Give journal

entries in the books of Ram.

14.On 1st March, Ramchandra sold goods to Raman worth Rs. 8,000/- and Raman accepted the Bill for Rs.8,000/- at 3 months drawn by Ramchandra. Ramchandra discounted the bill with his bank @ 6% p.a. On

due date the bill was dishonoured and Raman requested Ramchandra to accept Rs. 4,000/- immediately

and draw upon him a new bill for the remaining amount at 3 months together with an interest at 10% p.a.

Ramchandra agreed. The second Bill was duly honoured. Give Journal entries in the books of Raman.

15.Premlal sold goods to Sunderlal worth Rs. 10,000/- and Sunderlal accepted the bill for Rs. 10,000/- at 3months drawn by Premlal. Premlal Discounted the bill with his bank @ 6 % p.a. on due date the bill was

dishonoured and Sunderlal requested Premlal to accept Rs. 4,000 immediately and draw upon him a new

bill for the remaining amount at 3months together with an interest at 10% p.a. Premlal agreed and thesecond bill was duly honoured. Give the Journal entries in the books of Sunderlal.

16.Archana purchased goods from Babita on Credit for Rs. 10,000 and accepted a bill drawn by Babita forfour months. Babita discounted the bill with her bank for Rs. 9600/- Before the due date Archana

approached Babita with a request to renew the Bill Babita agreed with the condition that Archana should

pay Rs. 6000 with interest of Rs. 120 and accept a new bill for the balance. The arrangement was duly

carried out. New bill is met on the due date. Pass journal entries in the books of Archana.

17.Baloo owes Kaloo Rs.8000. Kaloo then draws a bill for Rs. 8000 on Baloo for a period of three months.Baloo accepts and return it to Kaloo. Kaloo discounted the bill with his bank at 12 % p.a. On due date,

the bill was dishonoured noting charges amount to Rs. 30. Kaloo then draws a bill for the balance plus

interest of Rs. 170. Before the due date of this bill Baloo pays the amount at a discount of Rs. 40 to retire

the bill. Pass Journal Entries in the books of Baloo.

18.Minal draws a bill on Usha for Rs. 5,000 at 3 months. Usha accepts the bill and return to Minal. Minaldiscounted the bill @ 12 % p.a. with the bank. On Maturity Usha finds, herself unable to make payment

of the bill and requested Minal to renew the bill. Minal accepts the proposal on the condition that Usha

should Pay Rs. 2,000 in cash and accept a new bill at one month along with interest at 10% p.a. These

arrangements were carried through. Usha retires the bill by paying Rs. 3015/- Pass Journal Entries in thebooks of Usha.


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MISCELLANEOUS PROBLEM

19.On 1st April 1979, Pawan draws a bill for Rs. 6,000/- on Sanjay for a period of 4 months. The bill is dulyaccepted by Sanjay. On 5

thApril, Pawan endorses the bill in favour of Lalit. However on 25

thJuly,

Sanjay approaches Pawan and requests that the bill is to be renewed for a further period of 4 months at

12% interest p.a. Pawan agrees and Pays the necessary amount to Lalit. The new bill is duly accepted

and paid by Sanjay. Pass journal entries in the books of Pawan.

20.Rupali accepted a bill for Rs. 2,000/- drawn by Deepali at three months. Deepali got the bill discountedwith her bank for Rs. 1,900. Before the due date Rupali approached Deepali for renewal of the bill.

Deepali agreed on the condition that Rs. 1,000/- be paid immediately together with interest on the

remaining amount at 6% p.a. For balance Rupali should accept a new bill for three months. These

arrangements were carried through but afterwards, Rupali become Insolvent and only 40 % of the

amount could be recovered from her estate. Give journal entries in the books of Deepali.

21.Chanda accepted a bill for Rs. 6,000 drawn by Nanda at three months. Nanda got the bill discounted withhis bank for Rs. 5,700. Before the due date, Chanda approached Nanda for renewal of the Bill. Nanda agreed on

the condition that Rs. 3,000 is paid immediately together with an interest on remaining amount at 18% p.a. for four

months and for the balance Chanda should accept a new bill. But afterwards Chanda become insolvent and only

25% of the amount could be recovered from her estate. Pass journal entries in the books of Nanda.

22.Pankaj draws a bill on Anil worth Rs. 8,000 for three months which was accepted by Anil. On the samedate Pankaj discounted the bill with his bank @ 10 % p.a. On the due date Anil dishonoured his

acceptance. Anil paid Rs. 4,000/- to Pankaj and accepted a fresh bill for two months for the balance

including interest of Rs. 40. Anil became insolvent before the maturity of the bill and 50 paise in a rupee

was received at first and final dividend from his estate. Give Journal entries in the books of Pankaj.

23.Bhagwan sold goods to Deo for Rs. 3,000. On the same date Deo accepted a bill for 2 months. Bhagwanendorsed the bill to Ishwar. On the due date of the bill, Ishwar informed that the bill is dishonoured and the noting

Charges were Rs. 20. Bhagwan drew a new bill on Deo for the amount due including noting charges and aninterest of Rs. 130. Before the due date of the second bill Deo become bankrupt and 20 paise in a rupee was

received from his estate as first and final dividend. Pass the necessary journal entries in the books of Bhagwan.

24.Mahendra sold goods to Ravindra worth Rs. 6000 and for that Ravindra accepted a bill drawn byMahendra for 3 months. After a month Mahendra discounted the bill with his bank at 10 % p.a. On the

due date Ravindra dishonoured his acceptance. Ravindra paid Rs.3, 000 to Mahendra and accepted a

fresh bill for 3 months for the balance including interest @ 8% p.a. Before Maturity of the Bill Ravindra

become insolvent and 50 paise in a rupee was discovered from his estate as first and final dividend. Give

Journal entries in the books of Mahendra and Ravindra.

25.Prakash drew a bill for Rs. 4,000 on Anand on 1st May, 1976 for three months. This was for the amountwhich Anand owed to Prakash. Anand accepts the same and return it to Prakash who discounted at his

bank for Rs. 3,900. On 1st

Aug, 1976 Anand requested Prakash to renew the bill and Prakash agreed on

the condition that Rs. 1,000 is paid immediately and Anand should accept the new bill for 3 months for thebalance payable plus interest of Rs. 45. These arrangements were carried through. However, on 1

stOctober,

1976, Anand retired his acceptance for Rs. 3, 035. Pass journal entries in the books of Prakash and Anand.

26.On 1st January, 1988 Vandana drew a bill for Rs. 6,000 for 2 months periods on Lata. Lata duly acceptedthe bill. On 4

thJanuary 1988 Vandana discounted the bill with her bank for Rs. 5850. However, on the

due date the bill was dishonoured. Lata agreed to accept a new bill with an interest of Rs. 100 for a

period of one month. The bill was duly met on the due date. Give the journal entries in the books of

Vandana and show Vandanas account in the books of Lata.

27.Mukund owes (be obligated) Prakash Rs. 4000 for which Prakash draws a bill for 2 months on 1 st February,1989. Mukund accepts it and returns it to Prakash. On 4

thMarch, 1989, Mukund approaches Prakash and

request him to accept Rs. 1000 in cash and draw a fresh bill for 3 months for the balance plus interest @ 10%p.a. Prakash accepts the request and draw a bill accordingly which is accepted by Mukund. On 1

stJune 1989

Mukund retired his acceptance under discount of Rs. 30/-. Pass journal entries in the books of Prakash andprepare Prakash account in the ledger of Mukund.


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28.Abhay draws a bill on Ajay for Rs. 1,400 at 3 months. Ajay accepts the bill and returns it to Abhay.The bill is sent to the bank for collection. On maturity Ajay finds he unable to make payment of

the bill and request Abhay to renew it. Abhay accepts the Proposal on the condition that Abhay

should pay Rs. 700 in cash along with noting charges of Rs. 10 and draw a renew bill for one

months for the balance. These arrangements were carried through. Afterwards Ajay retired the bill

by paying Rs. 695. Give journal entries in the books of Abhay and Ajay.

29.Krishna accepted a bill for three months drawn by Rama for Rs. 4000. Rama discounted the billwith the bank at Rs. 3900. On the date of maturity, the bill was dishonoured. Rama paid noting

charges for Rs. 20 Krishna paid half the mount for the bill and full amount of the noting charges and

accepted a bill for the balance including interest of Rs. 50. The second bill was duly honoured. Pass

necessary journal entries in the books of Rama and show Krishnas account.

30.Jain purchased goods worth Rs. 3,000 from Sharma on 1st June 1977 and gave him acceptance on3rd June for a period of three months. On 15th June Sharma discounted the bill for Rs. 2980. On 6th

September, when the bill was presented for payment. Jain dishonoured the same. Rs. 20 was paid asnoting charges. Pass journal entries in the books of Sharma and Sharmas account in the books of Jain.

31.Sagar owes Sindhu Rs. 8000 Sagar accepted a bill for 3 months by Sindhu for Rs. 8000. Sindhudiscounted the bill with bank at Rs. 7800. On the due date, the bill was dishonoured. Noting charges

amounted to Rs. 20. Sagar Paid half the amount of the bill and full amount of the noting chargesincluding interest of Rs. 100. Pass journal entries in the books of Sindhu and show the account of Sagar.

32.On 1st January, 1982 Shri Jameersheth of Jalgaon sold goods to Shri Nanchand of Nanded for Rs.80,000. On the same date Shri Jameersheth drew a bill on Shri Nanchand for the same amount for

three months. Shri Nanchand accepted the bill and returned the same to Shri Jameersheth on 4 th

January, 1982. Shri Jameersheth discounted the bill with the banker at 10 % p.a. On the due date

bank informed that the bill was dishonoured and Shri Nanchand requested Shri Jameersheth to

accept Rs. 40000 immediately and draw upon him the new bill for the remaining amount for two

months together and interest at 12% p.a. Shri Jameersheth agreed and the second bill was dulyhonoured. Pass the necessary Journal entries in the books of Shri Jameersheth of Jalgaon and show

Shri Jameersheths account in the books of Shri Nanchand of Nagpur.

33.Ameet draws a bill for Rs. 7500 on Tushar for four months. Ameet discounts the bill with the bankat 8%p.a. On the due date Tushar requested Ameet to accept Rs. 4,700 (including Rs. 200 for

interest) and to draw a bill for the balance of three months. Ameet agrees this proposal. Before the

due date of the new bill Tushar retires the bill for Rs. 2960. Pass the journal entries in the books of

Tushar and open Tushars account in the books of Ameet.

34.Akbar owed to Barbar Rs. 6,000. Akbar accepted the bill drawn by Barbar for the amount at fourmonths. Barbar discounted the bill with his bank for Rs. 5850. Before the Due date, Akbarapproaches Barbar with the request for renewal of the bill. Barbar agreed on the condition that Rs.

4,000 is paid immediately in cash together with an interest on the remaining amount at 12%p.a. for

three months and for the balance Akbar should accept a new bill at three months. These

arrangements were carried through. Barbar endorsed the new bill to Kadar. Akbar met the bill on

due date. Give the transaction in the books of Akbar and prepare Akbars account in the books of

Barbar.

35.Sonia draws a bill on Moni for Rs. 6,000 at 4 months. Moni accepts the bill and returns it to Soniawho discounts the bill with the bank at a discount of 8%p.a. Before the due date of Bill Moni

requested Sonia to accept Rs. 4000 in cash and draw a bill for the balance plus interest at 12%p.a.

for two months. Sonia draws a bill as the request is agreed. The bill is sent to bank for collection.

On the due date the bill was honoured. Pass the necessary journal entries in the books of Sonia and

Moni.


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36.On 4th March, 1992 Ram purchased goods of Rs. 10,000 from Sita on Credit. On 7th March heaccepted 4 bills of Rs. 2,500/- each maturing after 1, 2, 3 and 4 months respectively. Sita deals with

the four bills as under:

a. Retains the first bill till maturity. b. Discounts the second bill @ 12% p.a. with a bankc. Endorses the third bill to her creditor Laxman. d. Sends the fourth bill to the bank for collection.

All the four bills are dishonoured on their due date.

Give journal entries in the books of Sita and Ram assuming that the noting charges incurred by

the holder on dishonour were Rs. 25 for each bill.37.On 10th July, 1998 Sachin owes Swapna Rs.15000 and immediately accepts the bills of Rs. 5000

each. They are due after 1, 2 & 3 months respectively.

d. The first bill is kept by Swapna till its due date. It was honoured on maturity.e. The second bill is discounted with the Bank by giving Rs. 20 as discount. It was also met on the due date.f. The third bill is endorsed to Karthik. It was dishonoured on due date. The noting charges

incurred by Karthik are Rs. 75

g. Sachin pays Rs. 2,000 cash and accepts a new bill due in 3 months interest of Rs. 60. Swapnaretains the bill till its due date.

h. On due date of the new bill, it was dishonoured, the noting charges being Rs. 50. AfterwardsSachin is declared as insolvent. He could pay the dividend of 50 paise in a Rupee in full and

final settlements. Give Journal entries in the books of Swapna and Sachin.

38.Reena draws the following bills at 3 months eachi. On Seema for Rs. 1,000

j. On Hema for Rs. 1,500k. On Leena for Rs. 2,000l. On Meena for Rs. 2500All the bills accepted by respective parties and return to Reena. Seemas acceptance is retained by

her till its due date. Heemas acceptance is discounted with the Bank for Rs. 1480. Leenas

acceptance is endorsed to Neena. Meenas acceptance is sent to Bank for collection. On the due date

all the acceptors dishonoured the bills. Give Journal entries in the books of Reena.

39.Ranjeet draws the following bills at 2 months each, on September, 15, 1998: On Rajiv for Rs. 750,on Sanjiv for Rs. 1,600, on Rama for Rs, 400, on Laxman for Rs 2,500.

Rajivs acceptance is retained by him till its due date.

Sanjivs acceptance is discounted with the Bank for Rs. 1,540 on September, 16, 1998.

Ramas acceptance is endorsed to Sita on sept.16, 1998. On due date, all the acceptors dishonoured

the bills. Give journal entries in the books of Ranjeet assuming that the noting charges incurred by

the holders on dishonour were Rs. 20 for each bill.

40.Journalize the following transactions in the books of Kamesh:m. Nanda informs Kamesh that Shantis acceptance for Rs. 4,000 endorsed to Nanda has been

dishonoured and noting charges have been Rs. 100n. Ashok renews his acceptance to Kamesh for Rs. 2400 by paying Rs. 800 in cash and accepting a

new bill for the balance plus interest @ 12 p.a. for 3 months.

o. Devas acceptance to Kamesh Rs. 12,000 is retired one month before its due date at a discount of 12% p.a.p. The bank informs Kamesh that Sudhakars acceptance for Rs. 4,000 has been dishonoured and

it has paid noting charges Rs. 80.

41.Journalise the following transactions in the books of Kailash.q. Sandeep informs Kailash that Vilas acceptance for Rs. 8,000 endorsed to Sandeep has been

dishonoured. Noting Charges amounted to Rs. 200.

r. Kalpana renews her acceptance to Kailash for Rs. 7,500 by paying Rs. 3,500 in cash andaccepting a fresh bill for the balance plus interest at 10% p.a. for 3 months.

s. Uma retired her acceptance to Kailash for Rs. 3,000 by paying Rs. 2,900 in cash.t. Kailash sent a bill of Anita for Rs. 6,000 to bank for collection. But Bank informed that the bill

has been dishonoured by Anita.


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42.Shahajahan accepts the bill for Rs. 4,000 drawn by Mumbai. What journal entries will be made in thebooks of Shahajahan under the following circumstances?

u. If he pays the amount on due date.v. If he dishonours the bill on due date.w. If he retires the bill before due date under rebate of Rs. 100.x. If he renews the bill by giving cash of Rs. 1,000 and the new bill for the remaining amount including

interest of Rs. 50.

43.Journalise the following transactions in the books of Rahul.y. Pradeep informed Rahul that, Vijays acceptance for Rs. 1,000 endorsed to Pradeep has been

dishonoured. Noting charges amounted to Rs. 50.

z. Nilesh renews his acceptance to Rahul for Rs. 600 by paying Rs. 200 in cash and accepting a freshbill for balance plus interest at 12% p.a. for 3 months.

aa.Prashants acceptance to Rahul for Rs. 3,000 retired one month before due date at a discount of 12%p.a.

bb.Bank informs Rahul as to the dishonour of Avirajs acceptance for Rs. 1,000 to Rahul, discountedwith the bank. Noting charges are Rs. 20.

44.Anand brought goods worth Rs. 4,500 from Samant on August 1, 2006. On the same day, Anandaccepted the bill for Rs. 4,500 at 3 months drawn by Samant. Samant got the bill discounted with his

bank at 6%. Before the due date, Anand informed Samant about his inability to pay the amount of bill.

He further requested him to accept Rs. 2,500 in cash and immediately draw upon him a new bill for the

remaining amount at 2 months together with interest at 8% p.a. Samant agreed. The second bill was duly

paid on maturity. Give journal entries in the books of Anand.

45.On 15th March, Ahmed sold goods worth Rs. 1,600 to Awasthi and draws upon him a bill at 4 monthsfor the amount. Awasthi returned the bill to Ahmed with his due acceptance. On 15

thApril, Awasthi

retired the bill under rebate of 5% per annum. Give Journal entries in the books of Awasthi.

46.Samant draws a bill for Rs.2, 500 on Sheshadri who accepts it. What journal entries will pass in theJournal of Samant under the following circumstances?

cc.If he retains the bill with him.dd.If he discounts the bill with bank at Rs. 2,400.ee.If he endorses the bill of Rastogi.ff.

If he sends the bill to bank for collection.

47.Mr. Sunil draws a bill on Mr. Anil for Rs. 7000 for 3 months Anil accepts the bill and returns the sameto Sunil. The bill was discounted by Sunil for Rs. 6950 with the bank. On Maturity, Anil finds himself

unable to make the payment of the bill. He requested Sunil to renew it. Sunil accepts his requests and

draws a bill for one month for Rs. 7350 including interest Sunil deposited the bill with the bank for

collection. On due date Anil honours the bill. Pass the necessary Journal entries in the books of Sunil

and open Sunils account in the ledger of Anil.

48.Journalize the following transactions in the books of Maharaja.i. Ayub informs Maharaja that Sadashivs acceptance for Rs. 2,000 endorsed by Ayub has been dishonoured,

noting charges amounted to Rs. 150

j.

Pankaj renews his acceptance to Maharaja for Rs. 1200 by paying Rs. 400 in cash and accepting a fresh billfor the balance plus interest at 12% p.a. for 3 months.

k. Vaibhavs acceptance to Maharaja for Rs. 6000 retired one month before the due date at a discount of 12%p.a.l. Bank informs Maharaja as to the dishonour of Kasams acceptance for Rs. 2000 to Maharaja discounted with

Bank noting charges Rs. 200.


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IN THE BOOKS OF DRAWER

49.Amar draws a bill on Samar for Rs. 15,000 at 3 months. Samar accepts the bill. Amar sends the bill tobank for collection on maturity. Samar unable to find to honour the bill & requests for renewal. Amar

accepts on the condition that Samar should pay Rs. 8000 in cash along with interest of Rs. 100 and

accept a new bill for the balance at two months. These arrangements were carried through. Samar retired

the new bill at a rebate of Rs. 70. Give journal entries & Samars account in the books of Amar.

50.Tanmay owed to Chinmay Rs. 6000 for which he accepted a bill as drawn by chinmay at 3 months. Thebill was discounted with the bank at 3 months. The bill was discounted with the bank at a discount of Rs.

150. Before the due date Tanmay approached Chinmay with request to renew the bill. Chinmay agreed

on the condition that Rs. 3000 be paid immediately in cash & for balance accept a new bill with interest

at 12% p.a. for 2 months. These arrangements were carried through. The new bill was endorsed to

Sanjay, which was duly honoured by Tanmay. Record these transactions in the books of Tanmay.

51.Ajay draws Vijay a bill at three months for Rs. 14000 due to him. Vijay accepts it. The bill is sent tobank for collection. On maturity Vijay finds himself unable to honour the bill. Bank pays noting charges

of Rs. 50. Vijay then accepts a new bill for Rs. 7000 and pays Ajay Rs. 7050 in cash including noting

charges. New bill is retired by Vijay by paying Rs. 5940. Give the journal entries in the books of Ajay.

52.X sold on credit goods worth Rs. 6500 to Y and Rs. 7500 to Z respectively. He received acceptancefrom both the parties at 2 months and 3 months as period of bills. The first bill was endorsed by him to R

to settle his account of Rs. 6650. The second bill was discounted with the bank @ 12% p.a. on the due

date Z honoured his acceptance by Y failed to do so. X then settle the account of R in Cash without the

benefit of discount and received fresh acceptance from Y with interest of Rs. 200 at 1 month. On the due

date of fresh bill, Y was declared insolvent & dividend of Rs. 3000 could be recovered from his estate.

Pass the journal entries in the books of X..

53.Amol draws a bill on Rahul for Rs. 9000 at two months. The bill is sent to bank for collection onmaturity. On due date it was dishonoured. Noting charges paid by the bank amounted to Rs. 35 Rahul

paid half the amount of the bill and noting charges in cash and accepted a bill for the balance includinginterest of Rs. 100 at one month. Amol endorsed the renewed bill to Suket in full settlement of his

account of Rs. 4700. Due to Rahuls insolvency the renewed bill was dishonoured, Amol settled Sukets

Account without benefit of discount in cash and could recover 40% of the amount due from Rahul.

54.Vaidya sold goods to Sathe for Rs. 5000 @ 5% T.D. and on the same date drew on Sathe a bill for 2months for the amount due who accepted the same. Vaidya then endorsed the bill to Joshi. On the due

date Joshi informed Vaidya about the dishonour of bill and noting charge paid by his Rs. 50 Vaidya

settled Joshis account and drew a fresh bill on Sathe for the amount due plus noting charges plus

interest Rs. 100 for one month. Before the due date Sathe became insolvent and 40 paise in rupee were

received from his estate as first and final dividend. Pass the journal entries in the book of Vaidya. Joint


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10.Journalise the following transactions in the books of Kamalakar.Nisha informs Kamalakar that Shantis acceptance for Rs. 14,000 endorsed to Nisha has been

dishonoured and noting charges have been paid Rs. 200.

Asha renews hare acceptance to Kamalakar for Rs. 12400 by paying Rs. 6000 in cash and

accepting a new bill for the balance plus interest @ 12% p.a. for 3 months.

Devikas acceptance to Kamalakar for Rs. 42000 is retired one month before its due date at a

discount of 12% p.a.

The bank informs Kamalakar that Sindhus acceptance for Rs. 15000 has been dishonoured

and it has paid noting charges Rs. 100.

Bank informs Kamalakar that Sangitas acceptance for Rs. 12000 which was sent to bank for

collection has been dishonoured.


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METHOD I WHEN SEPARATE SET OF BOOKS IS MAINTAINED.

1. Dimple and Simple entered into a joint venture. They agreed to share profits and losses in theproportion of their initial contributions to the joint venture. They opened a joint Bank A/c. anddeposited Rs. 60,000 and Rs. 40,000 respectively as initial contributions. They made cash

purchases of Rs. 70,000. They also paid Rs. 4,500 for insurance and freight and Rs. 1,750 for

sundry expenses. At the end of the venture, the sales amounted to Rs. 1, 10,000/- There was

unsold stock of goods worth Rs. 5000. Simple took over the unsold stock. The Joint Venture was

closed. You are asked to prepare Joint Venture A/c . Joint Bank A/c and Co ventures A/c. Also passjournal entries.

2. A and B entered in to Joint Venture to construct a building for X enterprises limited. The contractprice was Rs. 2, 50,000. They opened joint bank account and deposited Rs. 1,20,000 and Rs.

60,000 respectively and agreed to share profits and losses in the ratio 3 : 2. The following

transactions were made from Joint Bank A/c: Wages Rs. 70,000 and Material purchases Rs.

1,25,000. Apart from this A supplied material of Rs. 12,000 and B paid the architect fees of Rs.2,500 on completion of construction. X enterprises Ltd. paid the full amount and unsold stock was

taken over by B at an agreed value of Rs. 15,000. Prepare Joint venture A/c, Joint Bank A/c and

Co venturers A/c. Also pass journal entries.

3. Suresh and Ramesh entered into a joint venture to construct a building at a contract price of Rs.7,00,000. They agreed to share profits and losses in the ratio of 2:1. Suresh deposited Rs. 5,00,000

and Ramesh Rs. 1,00,000 into joint bank. The transactions were as follows.

1. Purchase of materials Rs. 3,50,0002. Tools and equipment Rs. 1,00,000.3. Wages Rs. 1,20,0004. Architect fees Rs. 25,0005. Besides these, Suresh supplied material worth Rs. 15,000 and Ramesh supplied material

worth Rs. 13,500. Building was ready and contract price received. Prepare Joint venture A/c,

Joint Bank A/c & Co Venturers A/c. Also pass journal entries.

4. Ashok, Kishor & Anup undertook the construction of an office building at a contract price of Rs.10,00,000. Receivable in cash Rs. 6,00,000 and Rs, 4,00,000 in shares. They agreed to share

profits and losses equally. They opened the joint bank a/c and contributed the following amount.

Ashok Rs. 3,00,000, Kishor - Rs. 3,00,000, and Anup Rs.2,00,000. Ashok paid Rs. 10,000 as

architect fees, Kishor brought in the venture mixture of Rs. 25,000 and Anup brought in motor

truck of Rs. 55,000. The following transactions were made from Joint bank A/c. Purchase of

material Rs. 4, 50,000, Plant Rs. 30,000 and freight and wages Rs. 1, 50,000. At the close of

the venture, Ashok took away the unused material worth Rs. 8,000. Kishor took away the mixtureworth Rs. 15,000 and Anup took away the truck worth Rs. 35,000. The scrap value realised of the

plant was Rs. 6,000. The Contract price was received in full and Kishor took over the shares for

Rs. 4,10,000. Prepare Joint Venture A/c, Joint Bank A/c & co ventures A/c. Pass journal entries.

5. Sanjay, Ajay and Vijay entered into a Joint venture for construction of a building for contract price of Rs. 6,00,000. Payable in cash Rs. 4,00,000 and Rs. 2,00,000 in debentures. They decided to share profits andlosses in the ratio of their initial contributions. They opened Joint Bank A/c. where Sanjay deposited Rs.

3,00,000 Ajay Deposited Rs. 2,00,000 and Vijay deposited Rs. 1,00,000. The following payments are made

out through Joint Bank A/c . Purchase of material Rs. 2,50,000, Plant Rs. 45,000, Wages Rs. 77,000 and

other charges Rs. 11,000. Sanjay brings truck of Rs. 40,000. Ajay brings materials of Rs. 55,000 and Vijay

brings mixture of Rs. 10,000. At the end of the venture unused materials of Rs. 55,000 and Vijay brings

mixture of Rs. 10,000. At the end of the venture unused material was taken over by Sanjay for Rs. 5,000.

Ajay took over mixture for Rs. 15,000 and Vijay took over Plant for Rs. 12,000. The truck was sold in themarket for Rs. 22,000. Contract price was received and debentures were taken over by Vijay for Rs.

1,90,000. Prepare Joint Venture A/c., Joint Bank A/c., Co ventures A/c and also pass journal entries.


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6. Harish, Iqbal and Joseph undertook to construct a building for Prabhu & Co. at a contractprice of Rs. 2, 50,000. The price was to be paid as follows: Rs. 2,00,000 in cash and

balance in preference shares of the company. Profit was agreed to be divided in the ratio

of 2:2:1. The participants contributed cash as follows. Harish Rs. 30,000 Iqbal Rs. 25,000

and Joseph Rs. 20,000. These amount were credited to a joint bank A/c. Iqbal was to be

paid a remuneration of Rs. 1,500 for managing the business. Harish prepared the plats and

paid Rs. 3,500 for them. Iqbal brought a concrete mixture for Rs. 12,000 and Josephbrought a truck for Rs. 25,000. They brought Plant for Rs. 15,000 Material for Rs.

1,20,000 and paid wages Rs. 1,05,000. When the contract was completed Harish took

over unused material for Rs. 10,000. Iqbal took back the concrete mixture for Rs. 11,000

and Joseph agreed to take back the truck for Rs. 18,000. The plant was sold as scrap for

Rs. 6,000. When the contract price was received, Harish agreed to take over preference

shares at a discount of 20%. All the accounts were closed. Prepare Joint venture A/c, Joint

Bank Account and the Co venturers account also pass journal entries.

7. X and Y enter into a joint venture to build a multi storied building. They agree to share theprofit and losses equally upto Rs. 50,000 of the profit or loss from the venture. Thereafter, the

profit and losses are to be shared in the following proportion. X = 3/5; Y = 2/5. X contributesplant and machinery worth Rs. 40,000 and meets registration expenses worth Rs. 10,000. Y

contributes the plot on which the building is to be built, valued at Rs. 1,00,000. Other expenses

incurred are : Fuel and electricity charges : Rs. 40,000; Raw Materials : Rs. 1,60,000; Labour

charges : Rs. 75,000; Advertisement expenses : Rs. 5,000. All the above expenses were met from

the Bank A/c. opened for the joint venture. At the end of the venture, X agreed to take the plant

and machinery valued at Rs. 10,000. Y sold off the multi storied building for a total of Rs.

7,20,000 and collected all dues from the buyers, except for one flat, valued at Rs. 1,80,000 which

he kept for himself in lieu of his expected share of profit. The ventures who had agreed to

maintain their venture accounts in separate sets of books, ask you to prepare the Joint venture A/c,

Joint Bank A/c and Venturers Capital A/c. Also pass journal entries.

8. X, Y and Z entered into a joint venture to construct a premises and the contract price was Rs.4,00,000. Payable Rs. 2,00,000 in cash and Rs. 2,00,000 in shares. X,Y and Z contributed Rs.1,00,000 each. The following payments were made through bank: Raw materials Rs. 75,000;

Transportation charges Rs. 25,000; Machinery Rs. 50,000; Insurance Rs. 25,000. Besides this X

paid other expenses Rs. 20,000. Y paid for mixture worth Rs. 20,000 and Z brought in materials

of Rs. 20,000. After completion X and Z took over unused materials of Rs. 5,000 each and Y took

over the mixture for Rs. 10,000. The scrap of plant was sold for Rs. 8,000. Due to a certain defect,

contract price was reduced by Rs. 10,000 and shares were taken over by X at a premium of 5%.

Prepare Joint Venture A/c. Joint Bank A/c and Co venturers.

9. X,Y and Z entered into a Joint Venture to sell a certain plot of land. They contributed Rs. 25,000each. They purchased land of 5,000 sq. m. at Rs. 10 per sq. m. 1/5

thof the land was left over for

public roads and the balance was divided into 8 plots of equal size. Plans was got prepared for Rs.2,000 and other expenses were Rs. 3,500. 5 plots were sold @ Rs, 15,000 per sq. m. and 3 plots

were sold @ Rs. 14 per sq. m. Prepare joint venture A/c Joint Bank A/c and Co Venturers A/c.

Pass journal entries.

10.A, B & C entered into a joint venture sharing profits and losses in the ratio of their initialcontributions. They opened a Joint Bank A/c. wherein they deposited Rs. 1,00,000 Rs. 1,50,000

and Rs. 2,00,000 respectively. Expenses made through Joint Bank were as follows. Purchase of

Raw material Rs. 50,000. Paid architect fees Rs. 10,000, Plant Rs. 25,000 Besides this, A brought

in mixture of Rs. 20,000, B paid insurance charges Rs., 5,000 and C brought in machinery worth

RS. 12,000. At the end of the venture, A took back the mixture worth Rs. 5,000, B took back the

unused materials for Rs. 4,000 and C took back the machinery for Rs. 8,000. Scrap of plat

realized Rs. 2,000. On completion they received the contract price Rs. 1,00,000 in cash and Rs.

1,00,000 in debenture which where taken over by A at a loss of Rs. 10,000. Prepare Joint Venture

A/c Joint Bank A/c and Co venture A/c. Pass Journal entries.


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11. Ram and Rajiv entered into a Joint venture to construct a conference hall at a contract price of Rs.3,00,000. Ram contributed Rs. 1,00,000 and Rajiv contributed Rs. 1,50,000. Ram brought in materialworth Rs. 2,000 and Rajiv Paid transportation charges worth Rs. 6,000 Plant was purchased for Rs.

50,000 and material worth Rs. 2,00,000 were also purchased. On completion, plant was sold for Rs.20,000. Due to certain defect, one bill of Rs. 20,000 was not recovered and the balance was received incash. Venturers share profits in the ratio of their initial contributions. Prepare Joint Venture A/c, Joint

Bank A/c and Co venturers A/c and pass Journal entries.

12. X and Y entered into a Joint Venture to construct a building for Rs. 4,00,000. Rs. 1,00,000 was to bereceived in shares. X contributed Rs. 1,50,000 and Y contributed Rs. 1,00,000. X brought in Plant ofRs. 30,000 and Y brought in mixture of Rs. 10,000. Following expenses were paid from Joint Bank

A/c. Insurance Rs. 5000 wages Rs 10,000 and other expenses Rs. 5,000. Materials worth Rs. 2,10,000

were purchased on credit from Z. After contract was over X took over plant for Rs. 5,000. Y took backthe mixture for Rs. 5,000. Materials (unused stock) was sold for Rs. 10,000. Contract price was

received and Zs A/c was settled for Rs. 2, 00,000. They shared profit in the ratio of their initialcontributions and shares were taken over by X at a profit of Rs. 5,000. Prepare Joint Venture A/c JointBank A/c Co venturers A/c. Also pass journal entries.

13. A and B entered into a joint venture to construct a building for Rs. 1,00,000. Both contributed Rs.30,000 each. A brought in material of Rs. 5,000 and B brought in plant of Rs. 10,000. Material of Rs.

40,000 were purchased on credit from C. Insurance charges Rs. 500 and transportation cost Rs. 2,500were paid from Joint Bank A/c. Settle Cs A/c by accepting a bill. After contract was over plant was

depreciated by 30%, half of it was taken over by A at book value other half was sold for Rs. 2,000.Contract price was received in full. The bill was duly honoured. Prepare Joint venture A/c Joint Bank

A/c and Co venturers A/c. Also pass journal entries.

14. A and B entered into a Joint Venture. They agreed to share profits and losses in the proportion of theirinitial contributions. They opened a Joint bank A/c. And deposited Rs. 1,50,000 out of which A deposited

Rs. 1,00,000. Cash purchases worth Ts. 90,000 were made. They also paid Rs. 10,000 for other expenses. B

was to be paid a remuneration of Rs. 4,000 for managing the business. At the end of the venture the sales

amounted to Rs. 1,40,000 out of which Rs. 40,000 was sold on credit to C. B was also to be paid a

commission of 5% on Sales. C was allowed a discount of 5% while receiving the payment from him. Theunsold stock of goods amounting to Rs. 2,000 was taken over by A. the joint venture was closed. You are

asked to prepare Joint Venture A/c Joint Bank A/c Co venturers A/.c. Also pass journal entries.

15. Rahul and Kunal entered in to a joint venture and both contributed Rs. 1,00,000 each. They decided toshare profits and losses equally upto Rs. 20,000 and any further profits or losses would be shared in

the ratio of 3:2. Cash purchases were Rs. 1,20,000 while credit purchases from Vivek amounted to Rs.50,000. Rahul paid Rs. 5,000 for insurance while Kunal Paid Rs. 8,000 for transportation. All the

goods were sold on credit to Arun for Rs. 1,70,000 who accepted a bill of exchange for the same. Thebill was discounted with the bank at a discount of 5%. Kunal was to be given a commission of 2% onsales. Viveks A/c was settled for Rs. 48,000. The Joint venture was closed. Prepare Joint Venture A/c;

Joint bank A/c; Co venturers A/c. Also pass journal entries.

16. A and B entered into a Joint venture. They contributed Rs. 75,000 each and purchases a plot of 6,000sq. m. @ Rs. 20 per sq. m. Besides this A got the plat prepared for Rs. 2,000 and B paid the stampduty of Rs. 3,000. Fencing expenses were Rs. 5,000 and other expenses amounting to Rs. 3,000 were

paid from Joint Bank A/c Later on , 1/6th

of the land was left over for roads and the balance was

divided into 10 equal plots. 5 plots were sold for Rs. 30 per sq. m. and 4 plots were sold for Rs. 40 persq. m. Remaining one plot was taken over by A for Rs. 10,000. Prepare Joint Venture A/c. Joint BankA/c and Co Venturers A/c. Also pass the necessary Journal Entries.

17. Anik and Sridhar entered into a joint venture to deal in a certain plot of land. Both contributed Rs.1,00,000 each towards the Joint Bank A/c. The plot which measured 12,000 sq. m. was purchased forRs. 1,50,000. The various expenses amounted to Rs. 15,000. According to the plan, 3,000 sq. m. was

used for roads and the remaining area was divided into 3 plots of 2,000 sq. m. each and 3 plots of

1,000 sq. m. each. The bigger plots were sold @ Rs. 18 per sq. m. each and the smaller plots @ Rs. 22per sq. m. Anik was to get a commission of 3% on sale of big plots and Sridhar 5% on sale of the

smaller plots. Their profit sharing ratio was equal. Prepare Joint Venture A/c Joint Bank A/c. and Co venturers A/c Also pass journal entries.


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H O M E W O R K S E C T I O N H O M E W O R K S E C T I O N H O M E W O R K S E C T I O N H O M E W O R K S E C T I O N

1. Pramod and Amit jointly undertook to construct a factory building for a limited company. The contractprice was Rs. 5, 00,000 and was received after work has been completed. They contributed_ Pramod Rs.80,000 & Amit Rs. 40,000 and deposited in Joint Bank Account. They agreed to share profit or Loss in the

capital ratio.

Pramod got plans ready and paid Rs. 5, 000 for that Amit brought into the venture Plant and Machinery

valued at Rs. 20, 000 and a motor truck at Rs. 16, 000. For the purpose of erection of factory building,

materials of the value of Rs. 3, 50, 000 were purchased and wages paid Rs. 60, 000. They also paid othersundry expenses amounting to Rs. 25, 000.

The contract was completed and the company settled their account fully. Uninsured Material valued at Rs.

4, 000 was taken over by Pramod. The plant and Machinery was sold as scrap for Rs. 3, 000 and Amit took

back the motor truck at an agreed value of RS. 5000. You are required to show Joint venture A/c, Joint

Bank A/c in the books of the Joint venture.

2. Raj and Dev entered into a Joint venture to prepare film for the Government which agrees to pay Rs. 2, 00,000. A Bank account was opened in their joint names. Raj contributing Rs. 20, 000 and Dev Rs. 30, 000.

They are to share the profits and losses in proportion of 2/5th

and 3/5th

respectively. Payments made out of

Joint Banking Accounts were_Purchase of Equipments Rs. 12, 000

Hire charges of Equipments Rs. 10, 000

Wages Rs. 90, 000

Materials Rs. 20, 000

Office Expenses Rs. 10, 000Raj Paid Rs. 4, 000 for other expenses. The film was completed and the Government paid the amount by

cheque. The joint venture was closed, Dev taking up equipment at a valuation of Rs. 6, 000. Show Joint

venture A/c & Joint Bank A/c after the final distribution.

3. Raghu and Ramesh entered into a joint venture to produce an advertisement film for Bharati Traders, at acontract price of 40,000. Raghu contributed Rs. 10, 000 and Ramesh Rs. 20,000 and opened a joint accountin the bank with these contributions.

Raghu purchases from his own funds raw film for Rs. 8, 000 and a Camera for Rs. 7,000 for joint venture.They Paid from the Joint Bank Account:

Artists fees Rs. 18, 000, Hire of sets Rs. 2,000 and technician Charges RS. 10,000.

The firm was completed but due to certain defects in the firm, the contract Price was reduced by 10%

the amount being received by cheque from Bharati Traders.

At the end of venture, the camera was sold for Rs. 5,000 and Ramesh took over the unused

film for Rs. 400. Raghu and Ramesh shared profit and losses in the proportion of 1:2 and settled

account of the venture. Prepare the Joint venture Account the Joint Bank account and the accounts of theCo ventures.

4. Suratwala and Bodochwala entered into a joint venture to construct a bridge of Koyna river at acontract price of Rs. 7, 00, 000. Suratwala and Bodochwala introduced Rs. 1,50,000 and Rs. 1, 00,

000 and opened a joint account in the bank.Suratwala supplied material worth Rs. 60, 000 and Bodochwala brought a Motor Truck costingRs. 50, 000. Total Material used amounted to Rs. 2,50,000; payment for wages Rs. 3,00,000 and other

expenses amounted to Rs. 40,000. Suratwala took over unused material at Rs. 5, 000. Motor truck was sold

as a scrap of Rs. 4,000 contract prices was received in full on completion of contract.

Prepare Joint Venture A/c, Co- ventures a

Fully Prepared Accounts

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