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11th Accountancy - Final Accounts of Sole Proprietors - II Book Back Questions

Published on: 07/09/2019

Final Accounts of Sole Proprietors - II

Download Tamil Nadu 11th Standard Accountancy question papers, model tests, one-mark questions, important questions, and public exam papers in PDF format. Free study materials and answer keys for TN State Board students.

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Std: 11th Standard - Accountancy

chapter: - Model Question paper

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Questions:

Generic 3

3 x 3 = 9

Explain the accounting treatment of bad debts, provision for doubtful debts and provision for discount on debtors.

Give the adjusting entries for interest on capital and interest on drawings.

Pass adjusting entries for the following on 31st March, 2018.
(i) Charge interest on drawings at Rs. 50
(ii) Write off bad debts by Rs. 500
(iii) Depreciate furniture by Rs. 1,000

Generic 5

2 x 5 = 10

Abstracts from trial balance as on 31st December 2016 are as follows:

Particulars	Debit Rs.	Credit Rs.
Bad debts written off	1,800
Discount allowed	600
Sundry debtors	20,000
Provision for bad and doubtful debts		1,500
Provision for discount on debtors		500

A provision for doubtful debts @ 5% and a provision for discount @ 2% on sundry debtors are to be maintained by the trader. Show how these items would appear in the final accounts.

From the following particulars, prepare the balance sheet of Madhu, for the year ended 31^st March, 2018.

Particulars	Rs	Particulars	Rs
Capital	2,00,000	Sundry creditors	40,000
Drawings	40,000	Bills payable	20,000
Cash in hand	15,000	Goodwill	60,000
Loan from bank	40,000	Sundry debtors	80,000
Bank overdraft	20,000	Land and building	50,000
Investments	20,000	Vehicles	80,000
Bills receivable	10,000	Cash at bank	25,000

The following adjustments were made at the time of preparing final accounts:
(a) Outstanding liabilities: Salaries Rs. 10,000; Wages Rs. 20,000; Interest on Bank overdraft Rs. 3,000 and Interest on bank loan Rs. 6,000
(b) Provide interest on capital @ 10% p.a.
(c) Bad debts amounted to Rs. 10,000 and make a provision for bad debts @ 10% on sundry debtors.
(d) Closing stock amounted to Rs. 1,20,000
(e) Depreciate vehicles @ 10% p.a.
Net profit for the year amounted to Rs. 96,000 after considering all the above adjustments.

Multiple Choice Question

5 x 1 = 5

If there is no existing provision for doubtful debts, provision created for doubtful debts is ______.

(a)

Debited to bad debts account

(b)

Debited to sundry debtors account

(c)

Credited to bad debts account

(d)

Debited to profit and loss account

Accrued interest on investment will be shown______.

(a)

On the credit side of profit and loss account

(b)

On the assets side of balance sheet

(c)

Both (a) and (b)

(d)

None of these

Closing stock is valued at ______.

(a)

Cost price

(b)

Market price

(c)

Cost price or market price whichever is higher

(d)

Cost price or net realisable value whichever is lower

Net profit is ______.

(a)

Debited to capital account

(b)

Credited to capital account

(c)

Debited to drawings account

(d)

Credited to drawings account

10.

A prepayment of insurance premium will appear in ______.

(a)

The trading account on the debit side

(b)

The profit and loss account on the credit side

(c)

The balance sheet on the assets side

(d)

The balance sheet on the liabilities side

Generic 2

3 x 2 = 6

11.

What are accrued incomes?

12.

What is prepaid expense?

13.

What is outstanding expense?

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Answers Key:

Generic 3

3 x 3 = 9

Bad debts
(i) Debts which cannot be recovered or become irrecoverable are called bad debts.
(ii) It is a loss for the business and should be adjusted against profit
Provision for doubtful debts:
In addition to the actual bad debts, a business unit may estimated at the end of the accounting period that certain debts are doubtful, i.e., the amount to be received from debtors mayor may not be received.
Provision for discount on debtors:
(i) Cash discount is allowed by the suppliers to customers for prompt settlement of cash.
(ii) A provision created on sundry debtors for allowing such discount is called provision for discount on debtors.

**Interest on capital**
Particulars		Debit Rs	Credit Rs
Iriterest on capital A/c	Dr	xxxxxx
To Capital A/c			xxxxxx
(Interest on capital due)

**Interest on drawings**
Particulars		Debit Rs	Credit Rs
capital A/c	Dr	xxxxxx
To Interest on drawings A/c			xxxxxx
(Interest on drawings)

Adjusting entry
Date	Particulars	Debit Rs	Credit Rs
2018	Capital A/c Dr.	50
March 31	To Interest on drawings A/c		50
	(Interest on drawings provided)
March 31	Bad debts A/c Dr .	500
	To Sundry debtors A/c		500
	(Bad debts written off)
March 31	Depreciation A/c Dr.	1,000
	To Furniture A/c		1,000
	(Depreciation provided on furniture)

Generic 5

2 x 5 = 10

Working note:
Particulars	Rs.
Sundry debtors	20,000
Less: Provision for bad and doubtful debts (closing) (20,000 x 5/100)	1,000
	19,000
Less: Provision for discount on debtors (19,000 x 2/100)	380
	18,620

Dr. Profit and loss account for the year ended 31st December 2016 Cr.
Particulars	Rs.	Rs.
To Provision for bad and doubtful debts (closing)	1,000
Add: Bad debts	1,800
	2,800
Less: Provision for bad and doubtful debts (opening)	1,500	1,300
To Provision for discount (closing)	380
Add: Discount allowed	600
	980
Less: Provision for discount (opening)	500	480

Balance Sheet as on 31st December 2016
Assets	Rs.	Rs.
Sundry debtors	20,000
Less: Provision for bad and doubtful debts	1,000
	19,000
Less: Provision for discount on debtors	380	18,620

In the books of Madhu Balance Sheet as on 31^st March, 2018
Particulars	Rs.	Rs.	Particulars	Rs.	Rs.
Capital	2,00,000		Goodwill		60,000
Add: Net profit	96,000		Land and Building		50,000
Add: Interest on capital	20,000		Vehicles	80,000
	3,16,000		Less: Depreciation	8,000	72,000
Less: Drawings	40,000	2,76,000	Investments		20,000
Loan from bank	40,000		Stock-in-tracle		1,20,000
Add: Interest outstanding	6,000	46,000	Sundry debtors	80,000
Bills payable		20,000	Less: Bad debts	10,000
Sundry creditors		40,000		70,000
Bank overdraft	20,000
Add: Interest outstanding	3,000	23,000	Less: Provision for bad and doubtful debts	7,000	63,000
Outstanding liabilities:
Salaries	10,000		Bills receivable		10,000
Wages	20,000	30,000	Cash at bank		25,000
			Cash in hand		15,000
		4,35,000			4,35,000

Multiple Choice Question

5 x 1 = 5

(d)
Debited to profit and loss account

(d)
Cost price or net realisable value whichever is lower

(b)
Credited to capital account

10.

Generic 2

3 x 2 = 6

11.

(i) The income which has been earned during the current accounting year but not received till the end of that accounting year is called as accrued income.
(ii) It generally happens in case of amount to be received on account of commission, interest, dividend, etc

12.

(i) Prepaid expenses refer to amount paid in the current accounting year for the benefit or services to be received in the next accounting year.
(ii) They are also called as unexpired expenses. Prepaid expense account is a representative personal account.

13.

(i) Expenses like wages, salaries, rent, etc. which have been incurred in the accounting period but not paid at the end of the accounting year are called outstanding expenses.
(ii) Outstanding expense account is a representative personal account.