OMTEX - CLASSES

Accounts revision of Depreciation.

1. Usha purchased goods from Shoba on credit for Rs. 5,000 and accepted a bill drawn
by Shoba for four months. Before due date Usha approached Shoba with a request to
renew the bill. Shoba agreed but with the condition that Usha should pay Rs. 3000
with interest of Rs. 60 and accept a new bill for the balance due. These arrangements
were duly carried through. The new bill was met on due date. Pass Journal entries in
the books of Shoba.
2. Prashant drew a bill on Rohit worth Rs. 8000 for three months, which was accepted
by Rohit. On the same date Prashant discounted the bill with his bank @10% per
annum. On due date Rohit dishonoured his acceptance. Rohit paid Rs. 4,1000 to
Prashant and accepted a fresh bill for two months for the balance including interest of
Rs. 40. Rohit became insolvent before the due date of the bill and 50 paise in a rupee
were received as first and final dividend from his estate.
3. Mr. Amol draws a bill on Mr. Atul for Rs. 14,000 at 3 months. Mr. Atul accepts the bill.
The bill is sent to bank for collection on maturity. Atul finds himself unable to make
payment of the bill and requests Amol to renew it. Amol accepts the proposal on the
condition that Atul should pay Rs. 7000 in cash along with interest of Rs. 100 and
accept a new bill at one month for the balance. These arrangements were carried
through. Afterwards Atul retired the bill by paying Rs. 6950. Give journal entries and
Atul’s account in the books of Amol.
4. Malati drew on Priti a bill for Rs. 12000 at three months and Priti accepted it. On the
same date Malati discounted the bill with her bank at 10% p.a. On the due date Priti
dishonoured her acceptance. Priti then paid Rs. 4000 to Malati and accepted a fresh
bill at two months for the balance including interest of Rs. 200. Before due date of
this fresh bill, Priti became insolvent and only 50 paise in a rupee was received as
first and final dividend from her estate.
5. Rahul sold goods for Rs. 7000 to Sudhir. Sudhir accepted a bill of Rs. 7000 drawn by
Rahul at 3 months. Rahul got the bill discounted with his bank at 12% p.a. Before the
due date Sudhir approached Rahul for renewal of the bill. Rahul agreed on the
condition that Rs. 4,000 be paid immediately and for the balance due he should
accept a new bill for 3 months together with interest of Rs. 150. These arrangements
were carried through. Afterwards Sudhir retired the bill by paying Rs. 3,100. Pass
Journal entries in the books of Rahul and Show Rahul’s account in the books of Sudhir.
6. Anil sold goods to Ravindra for Rs. 6000. Ravindra accepted Anil’s bill for Rs. 6,000
payable after 3 months. After a month, Anil discounted the bill his bank at 10% p.a.
On the due date Ravindra dishonoured his acceptance Ravindra paid Rs. 3000 to Anil
and accepted a fresh bill for 3 months for the balance including interest @ 8% p.a.
Anil sent the bill to bank for collection. On due date Ravindra honoured the bill. Pass
the journal entries in the books of Anil.
7. Journalise the following transaction in the books of Sonali.
a. Sanjay informs Sonali that Monali’s acceptance for Rs. 16000 endorsed to
Sanjay has been dishonoured Noting charges Rs. 400.
b. Deepali renews her acceptance to Sonali for Rs. 15,000 by paying Rs. 7000 in
cash and accepting fresh bill for the balance plus interest at 10% p.a. for 3
months.
c. Usha retired her acceptance to Sonali for Rs. 6,000 by paying Rs. 5,800 in
cash.
d. Sonali sent a bill of Rupali for Rs. 12,000 to bank for collection. But bank
informed that the bill has been dishonoured by Rupali.
8. Mahesh draws a bill on Nilesh for Rs. 5,000 at 3 months. Nilesh accepts it and return
it to Mahesh. The bill is discounted by Mahesh for Rs. 4,925 with bank. On maturity
Nilesh finds himself unable to pay the bill and requests Mahesh to renew it. Mahesh
accepts the request and draws a new bill at one month for Rs. 5050(including
interest)Mahesh deposits the new bill with his bank for collection. On due date Nilesh
honoures the bill. Give journal entries and show Nilesh’s account in the books of
Mahesh.
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Accounts revision of Depreciation.
9. Anjali of Nagpur sold goods worth Rs. 25000 to Rupali of Amaraoti. On next day
Rupali paid Rs. 10,000 in cash and accepted two months bill for the balance drawn by
Anjali. Anjali discounted the bill at 12% p.a. with her bank. Before due date Rupali
find herself unable to make payment of the bill, and requests Anjali to renew it. Anjali
accepts the proposal on the condition that Rupali should pay Rs. 5000 in cash and
accept new bill for one months along with interest Rs. 200 for the balance. These
arrangements were carried through. The new bill was met on due date.
10. Jaya sold goods on credit to Prada for Rs. 8000. Jaya draws bill on Prada for 3 months
for Rs. 8000; and the same was accepted by Prada. On due date the bill was
dishonoured, noting charges amounted to Rs. 40 paid by Jaya. Prada paid half the
amount of bill and full amount of noting charges and accepted a new bill for the
balance including interest Rs. 200. These arrangements were carried through. Prada
became insolvent and only 50 paise in a rupee could be recovered from her private
estate.
11. Journalise the following transactions in the books of Rahul.
a. Pradeep informed Rahul that, Vijay’s acceptance for Rs. 1,000 endorsed to
Pradeep has been dishonoured. Noting charges amounted to Rs. 50.
b. Nilesh renews his acceptance to Rahul for Rs. 600 by paying Rs. 200 in cash
and accepting a fresh bill for balance plus interest at 12% p.a. for 3 months.
c. Prashant’s acceptance to Rahul for Rs. 3,000 retired one month before due
date at a discount of 12% p.a.
d. Bank informs Rahul as to the dishonour of Aviraj’s acceptance for Rs. 1,000 to
Rahul, discounted with the bank. Noting charges are Rs. 20.
12. Journalize the following transactions in the books of Maharaja.
a. Ayub informs Maharaja that Sadashiv’s acceptance for Rs. 2,000 endorsed by
Ayub has been dishonoured, noting charges amounted to Rs. 150
b. Pankaj renews his acceptance to Maharaja for Rs. 1200 by paying Rs. 400 in
cash and accepting a fresh bill for the balance plus interest at 12% p.a. for 3
months.
c. Vaibhav’s acceptance to Maharaja for Rs. 6000 retired one month before the
due date at a discount of 12%p.a.
d. Bank informs Maharaja as to the dishonour of Kasam’s acceptance for Rs.
2000 to Maharaja discounted with Bank noting charges Rs. 200.
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Accounts revision of Depreciation.

1. The capital employed of Ravindra Trading is Rs. 1,50,000/- Its average profit for last 3
years is Rs. 22,000/ and the normal rate of return in the business is 8%. Calculate
Goodwill at 3 years purchase of Super profit. (Ans. 30,000)
2. Calculate the value of Goodwill of the firm from the following information:
a. The present average net profit of Ram and Shyam’s partnership firm before
deducting partner’s remuneration is Rs. 18,000.
b. The total remuneration of the partner is estimated to be Rs. 4,000 p.a.
c. The capitals employed in the business by the partners are Ram Rs. 60,000
and Shyam Rs. 40000.
d. The profit expected from the total capital invested is 10% p.a.
e. Goodwill is to be valued at 2 years purchase of Super profit. (Ans. 8000)
3. Suresh and Sanjay carrying on a business in partnership for last 10 years. Goodwill of
the firm is to be valued at 2 ½ years purchase of the average profit of last six years.
Year Amounts
s (Rs.)
2 2,95,000
002 (Profit)
2 2,00,000
001 (Profit)
2 1,60,000
000 (Profit)
1 1,00,000
999 (Loss)
1 1,10,000
998 (Profit)
1 97,000
997 (Profit)
You are required to calculate the value of Goodwill of the firm. (Ans. 3,17,500)
4. Following is the Balance Sheet of Mr. Atul as on 31st March, 1993.
Balance sheet as on 31st March, 1993
Liabilities Rs. Assets Rs.
Capital 77,50 Fixed Assets 85,000
General 0 Current Assets 50,000
Reserve 22,50 Prepaid 10,000
Creditors 0 Advertisement
Bills 40,00 1,45,0
Payable 0 00
5,000
1,45,
000

The net profits for the last three years were Rs. 19,500; Rs. 22,500; Rs. 30,000.
Calculate the value of goodwill at two times of super profit, taking into consideration
the standard rate of return on the capital employed is 15%. (Ans. Rs. 21,000)
5. The profits of Partnership firm for the last four years were:
Year Profits
s (Rs.)
1 60,000
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Accounts revision of Depreciation.
997 70,000
1 72,000
998 78,000
1
999
2
000
The capital employed of the firm was Rs. 8,00,000. The reasonable return on capital
employed is 6%. Calculate the value of goodwill on the basis of two years purchase of
Super profit. (Ans. 44,000)
6. The profits of a firm for the 4 years from 1992 to 1995 were. Rs. 40,000; Rs. 45,000;
Rs. 55,000 and Rs. 53,000. Calculate the goodwill of the firm at 2 ½ years purchase
of the average profit for the last 3 years. (Ans. 1,27,500)
7. Rakesh and Ramesh carrying on a business in partnership for last 5 years. Goodwill of
the firm is to be valued at 3 years purchases of the average profits of last 5 years.
The profits and losses for the last 5 years were:
1 Profi Rs.
996 t 32,000
1 Profi Rs.
997 t 30,000
1 Loss Rs.
998 16,000
1 Profi Rs.
999 t 14,000
2 Profi Rs.
000 t 20,000
You are required to calculate the value of goodwill of the firm. (Ans. 48,000)
8. Amol and Ameet are partners sharing profits and losses int he ratio of 2:1. They
admit Atul for ¼ share. For the purpose of admission of Atul goodwill of the firm
should be valued on the basis of 2 years purchase of last 4 years average profit. The
profits were as follows.
Years Profits
(Rs.)
1991 – 1,24,00
92 0
1992 – 1,20,00
93 0
1993 – 80,000
94 1,30,00
1994 – 0
95
Calculate the value of goodwill. (Ans. 2,27,000)
9. Mahipati and Ganpati are partners sharing profits and losses in the ratio of 4:3. They
admitted in partnership Shripati for 18 share. For the purpose of admission of
Shripati, goodwill of the firm should be valued ont he basis of 2 years purchase of the
last 5 years average profit.
Year Profits
s (Rs.)
1 75,000
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Accounts revision of Depreciation.
991 1,00,000
1 1,25,000
992 85,000
1 1,15,000
993
1
994
1
995
Calculate the goodwill of the firm. (Ans. 2,00,000)
10. M/s Tirupati Traders capital employed is Rs. 1,00,000. The normal rate of return in
similar type of business is 10%. The last three years profits of M/s Triupati Traders are
Rs. 20,000; Rs. 18,000 and Rs. 22,000 respectively. The goodwill of the firm is to be
valued at two years purchase of super profit. (Ans. 20,000)
11. Shiva, Sambha and Rama carrying on the business in partnership. Goodwill of the
firm is to be valued at 3 years purchase of average profit of last 6 years.
Year Profits (Rs.)
s
1 Rs. 10,500
(Profit)
2 Rs.
22,000(Profit)
3 Rs. 3,500
(Loss)
4 Rs. 27,000
(Profit)
5 Rs. 40,000
(Profit)
6 Rs. 60,000
(Profit)
You are asked to calculate the amount of Goodwill of the firm. (Ans. 78,000)
12. The capital of a partnership firm is Rs. 4,00,000 and the profit for the last 4 years are
Rs. 32,500, Rs. 36,000 ; 35,000 and Rs. 39,000. The reasonable return on the capital
employed is 12%. Calculate the value of Goodwill under Super Profit Method. (Ans.
Goodwill = Zero).
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Accounts revision of Depreciation.
1. M/s Jalaram Mill, Mulund, showed a debit balance of Rs. 32,000 to the Machinery A/c on
1st April, 2001(Original cost of the Machinery was Rs. 40,000). On 1st October, 2001 the
Mill bought additional Machinery for Rs. 15,000 and spent Rs. 1,000 for its installation.
One more machinery costing Rs. 20,000 was purchased on 31 st March, 2003.
Depreciation is charged on 31st March, every year at 10% p.a. under the Diminishing
Balanced Method. On 31st March, 2004, the machinery which was purchased on 1st
October, 2001 was sold for Rs. 12000. Prepare Machinery A/c and Depreciation A/c for
the years 2001 – 2001, 2002 – 2003 and 2003 – 2004. (February, 2008)
2. On 1st April, 2004 Saikripa enterprises purchased two computers of Rs. 40,000 each. On
1st October, 2004 they purchased one more computer for Rs. 40,000. On 1st October,
2006 they sold one of the computer, which was purchased on 1st April, 2004 for Rs.
18,780. Depreciation on computers was provided @10% p.a. on diminishing balance
method and the financial year closes on 31st March every year. Prepare Computer
account and depreciation account for the years 2004-05, 2005-06 and 2006-07.
(September 2008)
3. Swift Internationals purchased furniture of Rs. 48,000 on 1st April, 2001. On 1st October,
2001 additional furniture of Rs. 32,000 was purchased. On 1st October 2003 a part of
furniture for which original cost was Rs. 8,000 as purchased on 1-4-2001 was sold for Rs.
4,000. On the same date new furniture was purchased for Rs. 16,000. Show furniture
account and depreciation account for 3 years 2001 – 2002, 2002 – 2003 and 2003 – 2004
assuming that:Financial year closes on 31st March every year. Depreciation is charged at
15% p.a. on fixed instalment basis.
4. On 1 – 1 – 1992 M/s Modern Traders purchased furniture for Rs. 15,000. On 1 – 7 – 1992
additional furniture was purchased for Rs. 8,000. On 30 – 6 – 1993 the furniture
purchased on 1 – 1 – 1992 was sold for Rs. 10,000 and on 1 – 7 – 1993 new furniture was
purchased for Rs. 12,000. The firm charged depreciation at 10% p.a. under the reducing
balance method. Prepare furniture account and deprecation account for the years 1992,
1993, 1994 assuming that the accounting year of the firm is calendar year.
5. Mona Trading Company of Amravati purchased machinery for Rs. 65,000 on 1st January,
1992 and immediately spent Rs. 5,000 on its fixation and erection. In the same year on
1st July, additional machinery costing Rs. 30,000 was purchased. On 1st July 1994 the
machinery purchased on 1st January, 1992 became obsolete and was sold for Rs. 51,000.
On 1-10-94 a new machine was also purchased for Rs. 41,000. Depreciation was
provided annually on 31st December at the rate of 12% Per annum on fixed instalment
method. Prepare Machinery account and depreciation account from 1992 – 1994.
6. On 1st July, 1992, Ajanta Traders, Pune, acquired a building for Rs. 8,00,000. On 1st April,
1993, an extension was made to the above building by spending Rs. 4,00,000. On 1st
October 1994, half of the building was sold through a broker for Rs. 5,60,000 and
brokerage at 2% of the selling price was paid. Depreciation is charged on 31st March
every year at 10% p.a. under the Diminishing Balance Method. Prepare the Building
Account and the Depreciation account for three years.
7. On 1-1-2002 Champaklal & Sons purchased furniture for Rs. 15000. On 1-7-2002
additional furniture was purchased for Rs. 8000. On 30-6-2003 the furniture purchased
on 1-1-2002 was skid for Rs. 12,000. The firm charges depreciation @ 10% p.a. under the
reducing balance method. Prepare Furniture account, for the years 2002, 2003, 2004
assuming that accounting year of the firm is calendar year and depreciation account for
the year ending 31 – 12 - 2003.
8. Saishree Ltd. Purchased a Machine worth Rs. 1,00,000 on 1st April, 2000. On 1st April
2001, the company purchased additional machine for Rs. 20,000. On 1st Oct 2002, the
company sold the machine purchased on 1st April, 2001 for Rs. 16,000. Company writes
off depreciation at the rate of 10% p.a. on reducing balance system. The Accounts being
closed on 31st March every year. Show Machinery account and Depreciation account for 3
years. i.e. 2000 – 01, 20010 – 02 & 2002 – 03.
9. On 1st July, 2000. Raj traders, Baroda, purchased a flat for its office for Rs. 10,00,000. On
1st April, 2001 adjacent flat purchased for Rs. 16,00,000. On 1st October, 2002 half of the
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Accounts revision of Depreciation.
total office premises were sold through a broker for Rs. 25,00,000, brokerage @ 2% of
the selling price was paid. Depreciation is charged on 31st March every year @ 10% p.a.
under Reducing Balance Method. Prepare Premises account for three years.
10. Wadhwa Trading company purchased furniture on 1-1-2004 for Rs. 1,50,000. On 1-7-2004
additional furniture was purchased for Rs. 80,000. On 1-7-2005 furniture purchased on 1-
1-2004 was sold for Rs. 1,00,000 & new furniture of Rs. 1,20,000 was purchased on the
same date. Depreciation is charged at 10
% p.a. on Reducing Balance Method. Prepare Furniture account and Depreciation account
for three years ending 31st December, 2004, 2005, 2006.
OMTEX - CLASSES
Accounts revision of Depreciation.
Drawer : Abhijit Patil, Vikram nagar, Patna.
Drawee – Tejas Kapare, Kothrud, Pune.
Payee – Amey Patki, Nagpur.
Amount, Rs. 7500
Period, 60 days
Term – After sight
Date of Bill Drawn – 1st June 2006
Date of Acceptance – 11th June 2006
Accepted bill for Rs. 7000 only.

Drawer: Yamini Gupta, Sarvapriya Vihar, Delhi

Drawee – Kamini Sharma, Raj baug, Agra.
Period – 100 days.
Date of Bill – 1st January, 2007
Amount – Rs. 10,500/-
Date of Acceptance – 3rd January, 2007

Drawer : Vilas Patil, 20, M.G. Road, Pune.

Drawee: Vikas Pawar, 31, S.V. Road, Nashik
Payee: Viraj Potade, 41, A.B. Road, Sholapur,
Period, 3 months
Amount Rs. 7500
Date of Bill, 1st January, 2007
Date of Acceptance : - 3rd January, 2007

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

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.

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.

Drawer : Namdev Tukaram, Paithan.

Drawee : Nivruti Sopan, Dehu.
Payee : Vitthal Pandurang, Pandharpur.
Amount : Rs. 5,111
Period : 3 months
Date of Bill : 17th August, 1995
Date if Acceptance : 20th August, 1995