Finance And Accounts Essay

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Question 1- Analyze the following transaction under traditional approach. 18.1.2011 Received a cheque from a customer, Sanjay at 5 p.m. Rs.20,000 19.1.2011 Paid Ramu by cheque Rs.1,50,000 20.1.2011 Paid salary Rs. 30,000 20.1.2011 Paid rent by cheque Rs. 8,000 21.1.2011 Goods withdrawn for personal use Rs. 5,000 25.1.2011 Paid an advance to suppliers of goods Rs. 1,00,000 26.1.2011 Received an advance from customers Rs. 3,00,000 31.1.2011 Paid interest on loan Rs. 5,000 31.1.2011 Paid instalment of loan Rs. 25,000 31.1.2011 Interest allowed by bank Rs. 8,000 Analysis of transaction –with accounts involved-nature of account-affects and debit/credit Solution: Date Accounts Involved Nature of Account Affects Debit/credit…show more content…
Instead of crediting the discount received account, it has been wrongly debited. To rectify this error, we need to credit discount received account to the extent of Rs.2500 (Rs.1250+ Rs.1250). In the same context, discount allowed (which is an expense) should be debited, instead it is credited. To rectify the error, we need to debit discount allowed to the extent of Rs.1700 (850 +850). The difference between discount received and discount allowed account is transferred to suspense account. Dr SUSPENSE ACCOUNT Cr Particulars Amount Particulars Amount Rs. Rs. To Sales account 1,200 By Sales 255 To Discount received a/c 800 By Salary 18 To Longford 450 By Balance c/d 2,204 To Returns Inwards a/c 27 Total 2,477 Total 2,477 Question 3- From the given trial balance drafts an Adjusted Trial Balance. Trial Balance as on 31.03.2011 Adjustments: 1. Charge depreciation at 10% on Buildings and Furniture and fittings. 2. Write off further bad debts 1000 3. Taxes and Insurance prepaid 2000 4. Outstanding salaries 5000 5. Commission received in advance1000 Preparation of ledger accounts Preparation of trial balance Solution: Ledger Account Furniture and Fittings Account Dr Cr Particulars Rs. Particulars Rs. To bal b/d 10000 By Depreciation By bal c/d 1000 9000 Total 10000 Total 10000 To bal b/d 9000 Buildings
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