l.4iQ4SSm (a5O\A<:m5 m /3gP3TTm(a5O83^CUT\m ( m"^: m ,3L<\m m$3YI<^CT?m m m&=em*VB_4Jm*V4; m&=em =KBD m m S;D4m (AUT< m m 1<6\E`<m m f _4iQ4SS 9VQm R3EMm m ]4K=] _4hQ4SS 9VQ +<?: m '>8<m m m2=]_m)bSH47Dm 4@B m&=em =KBD m m S;D4m <c<LUW<:m5km .4Sm)ZDS_]m S;D4 m)d_ m#_; m m!Q m%DK=m-_VS= m&4_FVS4Km D@Be4j m*VB_4Jm*V4;m 0DNK4@=m*VB4; m D]__ m B4HH4[m 4[j4S4 m S;D4m R3Gm m ]4K=] _4SXZDS_] 9VQ C\8L3CP<Ym : 2AC 27C" 6C ,C+ C70C :0# C 22026C02C0+#66#0,6C#,C7"#6C19 (# 7#0, C ,C61#7 C0 C7"#6 C 22026C+ AC 2 1C#, C -AC+#67 & C 2202C02C 6 2 1 , AC,07 C+ AC C 209 "7C70C092C,07# C <"# "C6" )(C C7 & ,C 2 C0 C#,C7" C, @7C #7#0, C 7C#6C,07# C7" 7C, #7" 2C7" C19 )#6" 2C,02C7" C 97"02C02C6 )( 2C?((C C2 610,6# ( C 2C ,AC + C02C(066C0 C 7#0,C70C ,AC0, C0 C ,AC'#, C#,C ,AC+ ,, 2 C7" 2 0+ C 7C#6C69 67 C7" 7C70C :0# C ,AC 09 7C7" C2 2C6"09* C 2066 " &C )(C 7" C 76 C ( =C , C 0,7 ,76C 0 C7" C 19 )# 7#0,C ?7"C 03#!. (C 0: 5+ ,7C 19 )# 7#0,C 02C ,07# 7#0,6 C 0C1 27C0 C7"#6C 00&C+ AC C2 120 9 C02C 01# C#,C ,AC 2+C02C AC ,AC + ,6C 2 1"# C ( 720,# C02C+ " ,# ( C$. (9 #, C1"070 01B, C2 02 #, C7 1#, C02C#, 2+ 7#0,C2 74 : (C 6A67 +6 C 02C 2 120 9 C 0,C ,AC #6 C 7 1 C 1 2 2 7 C + # C 02C 07" 2C #, 2+ 7#0,C 6702 C ;# C 7 C>#7"097C8 C=2#77 ,C1 2+#66#0,C0 C7" C19 )#6" 26 C 2 "C0 C7"#6C 0, #7#0,C#6C(# ( C 2C( (C 7#0, C ((C #6197 6C 2 C69 % 7C70C ("#C%92#6 # 7#0,C0/A C
MODULE-WISE MARKS DISTRIBUTION S. No.
Module Name
Chapter Name
2017
2018
2019
J
J
D
J
D
D
D
J
D
1.
Accounting Fundamentals
1.1 - 1.7
10 10 13
8
10 13
2.
2021 2022
2023
Average
5
18
23
26
13.6
1.8Adjustments and Rectification
8
9
16 10 14
9
8
7
23
6
11
2.1Accounting for Bills of Exchange
10
2
4
3
1
1
9
6
1
9
4.6
2.2Accounting for Consignment
5
6
8
2
4
6
-
1
1
-
3.3
2.3Accounting for Joint Venture
1
1
-
2
1
1
10
1
1
2
2
Preparation 3.1of Financial Preparation Statements of of Financial Commercial Statements of Organizations, Commercial Not-for-Profit Organizations Organizations 3.2and from Preparation Incomplete of Financial records Statements of Not-for- Profit Organizations
-
1
2
2
16 16
6
1
11
6
6.1
3
17 17 15
8
8
14
15
2
6
10.5
2
8
1
16
15
14
11.9
Accounting for Special Transactions
3.3Preparation of Financial Statements from Incomplete records
20 15 20
I-5
8
TAXMANN®
3.
D
I-6
MODULE-WISE MARKS DISTRIBUTION
S. No.
Module Name
4.
2017
2018
2019
J
J
J
Average
D
J
D
Partnership Accounting
18 20 15 21 23 22
2
18
18
18
17.5
5.
Lease Accounting
-
-
-
-
-
-
-
-
5
7
1.2
6.
Branch and Departmental Accounts
6.1Branch Accounts
10
1
6
-
9
-
11
15
6
9
6.7
Departmental Accounts
6.2Departmental Accounts
3
8
1
9
1
8
14
-
-
-
4.4
Insurance 7.1Claim for Loss Insurance of Stock and Claim for Loss Loss of profit of Stock
7
11
5
-
7
8
11
-
9
7
6.5
7.2Insurance Claim for Loss of Profit
-
-
-
12
2
-
11
-
-
-
2.5
9
8
7
6
10
-
15
15
3
2
7.5
17 12 13 13
8
10
13
15
12
16
12.9
Hire Purchase & Instalment Sale Transactions
9.
Accounting Standards
D
2023
D
8.
D
2021 2022
D
7.
TAXMANN®
Chapter Name
PREVIOUS EXAMS TREND ANALYSIS
Que. No.
Compulsory
Chapter Name
Dec. 2023 [Syllabus 2022]
1
Yes
Financial Statements of Not-forProfit Organizations
6
Theory & Practical
Branch Accounts
2
Practical
Hire Purchase & Instalment Sale Transactions
2
Theory
Adjustments and Rectification
6
Practical
Bills of Exchange
2
Practical
Joint venture
2
Theory
Accounting Standards
2
Theory
Financial Statements of Commercial Organizations
6
Theory & Practical
Accounting Fundamentals
2
Theory
2(a)
Accounting Fundamentals
7
Practical
2(b)
Accounting Fundamentals
7
Practical
3(a)
Bills of Exchange
7
Practical
3(b)
Lease Accounting
7
Practical
4
Financial Statements from Incomplete records
14
Practical
5
Partnership Accounting
14
Practical
6(a)
Branch Accounts
7
Practical
6(b)
Insurance Claim for Loss of Stock
7
Practical
7(a)
Accounting Standards
7
Theory
7(b)
Accounting Standards
7
Theory
8(a)
Partnership Accounting
4
Practical
8(b)
Accounting Fundamentals
5
Theory
8(c)
Accounting Fundamentals
5
Theory
I-7
Marks Category
TAXMANN®
Year
I-8
PREVIOUS EXAMS TREND ANALYSIS
Year
Que. No.
Compulsory
Chapter Name
July 2023 [Syllabus 2022]
1(a)
Yes
Accounting Fundamentals
3
Theory
Accounting Standards
1
Theory
Bills of Exchange
1
Theory
Adjustments and Rectification
1
Theory
Financial Statements of Commercial Organizations
1
Theory
Lease Accounting
1
Theory
Financial Statements of Not-forProfit Organizations
1
Practical
Partnership Accounting
1
Practical
Consignment
1
Theory
Joint Venture
1
Theory
TAXMANN®
1(b)
Accounting Fundamentals
3
Theory
Adjustments and Rectification
2
Theory
Branch Accounts
1
Theory
Insurance Claim for Loss of Stock
1
Theory
Accounting Fundamentals
2
Theory
Financial Statements of Commercial Organizations
2
Theory
Lease Accounting
1
Theory
Branch Accounts
1
Theory
Accounting Fundamentals
3
Theory
Branch Accounts
1
Theory
Adjustments and Rectification
1
Theory
Accounting Standards
1
Theory
2(b)
Financial Statements of Commercial Organizations
6
Practical
2(c)
Financial Statements of Commercial Organizations
3
Practical
3(a)
Adjustments and Rectification
8
Practical
3(b)
Accounting Standards
7
Practical
4
Financial Statements from Incomplete records
15
Practical
5(a)
Accounting Fundamentals
4
Theory
5(b)
Lease Accounting
3
Theory
1(c)
2(a)
Yes
Marks Category
Yes
I-9
PREVIOUS EXAMS TREND ANALYSIS
Year
Compulsory
Chapter Name
Marks Category
5(c)
Branch Accounts
3
Theory
5(d)
Adjustments and Rectification
5
Practical
6(a)
Adjustments and Rectification
4
Theory
6(b)
Adjustments and Rectification
3
Practical
6(c)
Insurance Claim for Loss of Stock
8
Practical
7
Partnership Accounting
15
Practical
8(a)
Accounting Fundamentals
3
Theory
8(b)
Hire Purchase & Instalment Sale Transactions
3
Practical
8(c)
Accounting Standards
3
Theory
8(d)
Accounting Fundamentals
4
Theory
8(e)
Partnership Accounting
2
Practical
Accounting Fundamentals
6
Theory
Financial Statements of Not-forProfit Organizations
4
Theory & Practical
Departmental Accounts
2
Practical
Hire Purchase & Instalment Sale Transactions
4
Theory & Practical
Adjustments and Rectification
4
Theory & Practical
Bills of Exchange
2
Theory
Consignment
2
Theory
Accounting Standards
4
Theory & Practical
Insurance Claim for Loss of Stock
2
Theory
2(a)
Accounting Fundamentals
7
Practical
2(b)
Adjustments and Rectification
7
Practical
3(a)
Consignment
7
Practical
3(b)
Hire Purchase & Instalment Sale Transactions
7
Practical
4
Financial Statements of Not-forProfit Organizations
14
Practical
5
Partnership Accounting
14
Practical
6(a)
Branch Accounts
7
Practical
1
Yes
TAXMANN®
MTP Dec. 2023 [Syllabus 2022]
Que. No.
I-10
PREVIOUS EXAMS TREND ANALYSIS
TAXMANN®
Year
Que. No.
Compulsory
Chapter Name
Marks Category
6(b)
Insurance Claim for Loss of Stock
7
Practical
7(a)
Accounting Standards
7
Practical
7(b)
Accounting Standards
7
Practical
8(a)
Accounting Fundamentals
5
Theory
8(b)
Adjustments and Rectification
5
Practical
8(c)
Partnership Accounting
4
Theory
MODULE-WISE COMPARISON WITH STUDY MATERIAL S. No.
Module Name
Chapter
CMA Module No.
1
Accounting Fundamentals
1.1 - 1.7
1
2
Accounting for Special Transactions
1.8 - Adjustments and Rectification 2.1 - Accounting for Bills of Exchange
2
2.2 - Accounting for Consignment 2.3 - Accounting for Joint Venture Preparation of Financial Statements of Commercial Organizations, Not-for-Profit Organizations and from Incomplete records
3.1 - Preparation of Financial Statements of Commercial Organizations
3
3.2 - Preparation of Financial Statements of Not-for-Profit Organizations 3.3 - Preparation of Financial Statements from Incomplete records
4
Partnership Accounting
4
5
Lease Accounting
6
Branch and Departmental Accounts
6.1 - Branch Accounts
Departmental Accounts
6.2 - Departmental Accounts
Insurance Claim for Loss of Stock and Loss of profit
7.1 - Insurance Claim for Loss of Stock
7
5 6
7
7.2 - Insurance Claim for Loss of Profit 8
Hire Purchase & Instalment Sale Transactions
8
9
Accounting Standards
9
I-11
TAXMANN®
3
CONTENTS PAGE
Module-wise Marks Distribution
I-5
Previous Exams Trend Analysis
I-7
Module-wise Comparison with Study Material
I-11
MODULE 1 1.1
ACCOUNTING FUNDAMENTALS
ACCOUNTING FOR SPECIAL TRANSACTIONS
2.1
MODULE 3 PREPARATION OF FINAL ACCOUNTS OF COMMERCIAL ORGANISATIONS, NOT-FOR-PROFIT ORGANISATIONS AND FROM INCOMPLETE RECORDS
3.1
MODULE 4 4.1
PARTNERSHIP ACCOUNTING
MODULE 5 5.1
LEASE ACCOUNTING
MODULE 6 BRANCH AND DEPARTMENTAL ACCOUNTS
6.1
MODULE 7 INSURANCE CLAIM FOR LOSS OF STOCK AND LOSS OF PROFIT
7.1
MODULE 8 HIRE PURCHASE AND INSTALMENT SALE TRANSACTIONS I-13
8.1
TAXMANN®
MODULE 2
CONTENTS
I-14 PAGE
MODULE 9 ACCOUNTING STANDARDS
TAXMANN®
Module-wise Solved Paper : December 2023 (Suggested Answers)
9.1 P.1
2
ACCOUNTING FOR SPECIAL TRANSACTIONS
M O D U L E
CHAPTER 2.1 ACCOUNTING FOR BILLS OF EXCHANGE A Quick Review IMPORTANT DEFINITIONS According to section 13(1) of the Negotiable Instrument Act, 1881, “A negotiable instrument means a promissory note or bill of exchange or cheque, payable either to order or to the bearer”
OTHER IMPORTANT CONCEPTS
Essential Elements of Bills of Exchange 1. It must be in writing and may be in any language and in any form 2. It must be drawn on a particular date 3. There are three parties to a Bill of Exchange – Drawer/Maker, Drawee and Payee 4. It must be signed by the Drawer/Maker 5. It must contain an unconditional and imperative order to pay 6. The order to pay must be directed to a certain person 7. The order must be to pay a certain sum of money only 8. It must be accompanied with proper stamp as per the requirement of the law
Parties to Bills of Exchange A bill of exchange transaction often includes the following three parties: Drawer: Drawer is the party that issues a Bill of Exchange - Creditor, Lender or Seller. He is the maker of the bill and his signature is necessary. 2.1
TAXMANN®
According to Section 5 of the Negotiable Instrument Act, 1881, ‘A bill of exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.’
2.2
MODULE 2 : ACCOUNTING FOR SPECIAL TRANSACTIONS
Drawee: Drawee is the party to which the order to pay is sent – Debtor, Lendee or Purchaser. The drawee becomes the acceptor of the bill when he/she/it has written the acceptance on the bill of exchange. Payee: Payee or the beneficiary is the party to which the bill of exchange is payable – May be Drawer or Other Party.
Classification of Bills of Exchange Documentary Bill: In this, the bill of exchange is supported by the relevant documents that confirm the genuineness of sale or transaction that took place between the seller and buyer. Demand Bill: This bill is payable when it demanded. The bill does not have a fixed date of payment, therefore, the bill has to be cleared whenever presented. Usance Bill: It is a time-bound bill which means the payment has to be made within the given time period and time. Inland Bill: An Inland bill is payable only in one country and not in any other foreign country. This bill is opposite to the foreign bill.
TAXMANN®
Clean Bill: This bill does not have any proof of a document, so the interest is comparatively higher than the other bills. Foreign Bill: A bill that can be paid outside India is termed as a foreign bill. Two examples of a foreign bill are an export bill and import bill. Accommodation Bill: A bill that is sponsored, drawn, accepted without any condition is known as an accommodation bill. Trade Bill: This kind of bill is specially related only to trade. Supply Bill: The bill that is withdrawn by the supplier or contractor from the government department is known as the supply bill.
Difference between Trade Bill and Accommodation Bill Basis of Difference
Trade Bill
Accommodation Bill
Objectives
These bills are drawn to facil- These bills are drawn to help itate the trade transactions of someone in need of financial sale purchases of goods. assistance.
Consideration
There is a definite consideration These bills are drawn without for which the bill is accepted. consideration.
Extension Trade bills are a form of credit These bills are not a form of of credit extension. credit extension. Proceeds
When trade bills are discounted, When these bills are discounted, the proceeds remain with the the Proceeds may be shared by holder two parties in an agreed ratio.
Recovery
If trade bills are dishonoured, In case of dishonour of these the amount may be recovered bills, the drawer cannot file a easily through the court. suit against the drawee.
2.3
MODULE 2 : ACCOUNTING FOR SPECIAL TRANSACTIONS
PAST EXAMINATION QUESTIONS OBJECTIVE QUESTIONS Q1. Anup draws a bill for ` 4,000 on Binup. Binup accepts it and returns it to Anup. Anup endorses it over to Zitun. Zitun endorses it in favour of Chinu. On due date, the bill was honoured. Pass Journal Entries in the book of Chinu. [Dec. 2015, 2 Marks] Ans. In the Books of Chinu Journal Entries Particulars Bills Receivable A/c
Debit Credit (` ) (` ) Dr.
4,000 4,000
Dr.
4,000
To Bills Receivable A/c
4,000
(Being the amount realized at maturity)
Q2. On 1st April, 2015 Aloke accepted a bill for ` 5,000 for 3 months drawn by Kuntal. Kuntal endorses the bill in favour of Chinu. At maturity, the bill was dishonoured. Pass the Journal Entries in the Books of Kuntal [Dec. 2015, 2 Marks] Ans. In the books of Kuntal Date
Particulars
2015
B i l l s R e - Dr. ceivable A/c
April,1 To Aloke A/c (Being a bill drawn on Aloke)
Chinu A/c
Dr.
Debit Credit (` ) (` ) 5,000 5,000
To Bills Receivable A/c (Being the bills previously drawn on Aloke new endorsed in favour of Chinu) July, 4 Aloke A/c
Dr.
To Chinu A/c
5,000 5,000
(Being the bill dishonoured at maturity)
Q3. Retiring a bill under rebate means payment of the bill before due date. (True/False) [Dec. 2016 1 Mark]
(Being the receipt of bill from Zitun) Bank A/c
Particulars
Ans. True Q 4. A bill of exchange drown on 12th April, 2017 for four months, the date of maturity will be ___________. [June 2017, 1 Mark] Ans. 14th August, 2017 Q5. The Accommodation bill is drawn (a) To finance actual purchase or sale of goods (b) To facilitate trade transmission. (c) When both parties are in need of funds
Debit Credit (` ) (` )
(d) None of the above [Dec. 2017 1 Mark]
5,000
Ans. (c) When both parties are in need of funds 5,000
Q6. Match the items in Column I with the most appropriate items in Column II. State the item no. only
TAXMANN®
To Zitun A/c
Date
2.4
MODULE 2 : ACCOUNTING FOR SPECIAL TRANSACTIONS
Item Column I Item
Column II
(i)
(A)
Insurance Claims
(B)
Bills of Exchange
Noting Charges
Q11. _____________ can be made payable to the bearer.
Ans. Bills Receivable Q12. A Bill of Exchange cannot be (a) Endorsed
[Dec. 2017, 1 Mark] Ans. (B) Bills of Exchange
(b) Crossed
Q7. Shiva draws a bill on Sanat on 25th October, 2018 for 90 days, the maturity date of the bill will be
(c) None of these
(a) 27th January, 2019
(d) Accepted
[Dec. 2021, 1 Mark]
Ans. (b) Crossed Q13. Bills payable honoured during the year, will be debited to
(b) 26th January, 2019 (c) 25th January, 2019
(a) None of these.
(d) 28th January, 2019 [Dec. 2018, 1 Mark]
TAXMANN®
[Dec. 2019, 1 Mark]
(b) Creditors account
Ans. (c) 25th January, 2019
(c) Bills payable account
Q8. A promissory note can be made payable to the bearer. [Dec. 2018, 1 Mark]
[Dec. 2021, 1 Mark]
Ans. False Q9. If Ram’s acceptance which was endorsed by us in favour of Saleem is dishonoured, then the amount will be debited in our books to (a) Saleem (b) Ram (c) Bills Receivable Account (d) None of the above [June 2019, 1 Mark] Ans. (b) Ram
(d) Cash account Ans. (c) Bills payable account Q14. X draws a bill on Y. Y accepts the same. Can Y endorse the bill to Z? [Dec. 2021, 1 Mark] Ans. No, Y cannot endorse the bill to Z because Y is drawee only. X, the drawer can do so. Q15. A Bill of ` 10,000 is renewed. The drawee pays ` 3,000 as part payment amount of interest charged is ` 200. The value of new bill is ` _______ [Dec. 2022, 1 Mark]
Q10. Match the items in Column I with the most appropriate items in Column II. State the item no. only
Ans. ` 7,200
Item Column I Item
Column II
(a) Payment and maturity date
(i)
(A)
Bills Payable
(b) Drawing and payment of bill
(B)
Bills Receivable
(d) None of the above
Endorsement
[Dec. 2019, 1 Mark] Ans. (b) Bills Receivable
Q16. Rebate is calculated for the period between date of
(c) Drawing and maturity date
[July 2023, 1 Mark]
Ans. (a) Payment and maturity date
MODULE 2 : ACCOUNTING FOR SPECIAL TRANSACTIONS
Q17. Match the items in Column I with the most appropriate items in Column II. State the item no. only
2.5
Item Column I Item
Column II
(i)
(A)
Consignment
(B)
Bills Receivable
Protesting
[July 2023, 1 Mark] Ans. (B) Bills Receivable
THEORY QUESTIONS Q1. Write as short note on Accommodation Bill.
[June 2016, 5 Marks]
Ans. (i) An accommodation Bill is a bill of exchange signed by a party as drawer, drawee, endorser to accommodate another party whose credit is not strong enough to enable him to borrow on his single name.
(iii) What actually happens in the case of an accommodation bill is that one party draws the bill and the other party accepts it. Then, the drawing party gets it discounted from the bank and receives ready cash of which he is in need. (iv) The money received is either wholly utilized by the drawer, or by both, the drawee and the acceptor. (v) Before the due date approaches, the required sum of money is sent to the acceptor in order to make him able to honour the bill and the bill is honoured on the due date. Thus, although there is no legal liability, there exists a strong moral understanding between the parties concerned. Q2. Write a short note on Features of a Bill of Exchange. [Dec. 2022, 5 Marks] Ans. As per Section 5 of the Negotiable Instruments Act, a bill of exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person, to pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument. The essential of bill of exchange are as: (i) There are three parties the ‘Maker’ is termed as the ‘Drawer’ in Bill of Exchange. He is the creditor. The person liable to pay the money is called the ‘Drawee’. The person entitled to get the money is termed as the ‘Payee’. It should be noted that drawer himself can also be the payee. It must be drawn on a specific person (ii) The bill drawer being the creditor, orders the drawee to pay a certain of sum money.
TAXMANN®
(ii) It is drawn for the purpose, of arranging temporary finance. Therefore, an Accommodation Bill is a bill of exchange which has been drawn, on and accepted by a reputable party or the purpose of giving value to the bill so that it can be discounted.
2.6
MODULE 2 : ACCOUNTING FOR SPECIAL TRANSACTIONS
(iii) A Time Bill of Exchange can be made payable to the bearer. (iv) It is an instrument in writing and unconditional (v) It must be in writing, dated, stamped and signed by Drawer (vi) It must be payable in demand or after a definite period of time, and for a certain amount of money.
NUMERICAL PROBLEMS
TAXMANN®
Q1. On 20th July, 2012, Sohan drew a bill for ` 50,000 on Mohan for the period of four months and Mohan accepted it. It was for mutual accommodation of both to the extent of 2/3rd and 1/3rd on 23rd July, 2012, Sohan discounted the bill with the Bank @ 12% per annum and remitted one-third of proceeds to Mohan. On 18th November, 2012 Mohan drew another bill for ` 71,000 on Sohan to provide funds to meet the first bill, for the period of three months, which was accepted by Sohan. On 21st November, 2012, Mohan discounted it with Bank @ 12% per annum. With this amount, the first bill was met out and ` 12,580 was remitted to Sohan. On 1st February, 2013, Sohan became insolvent and Mohan received a dividend of 60 paise in a rupee in full settlement on 15th February, 2013. Give journal entries to record the above transactions in the books of Sohan and prepare Sohan’s account in the ledger of Mohan. [Dec. 2013, 10 Marks] Ans. Journal Entries in the books of Sohan Date 20.07.2012
Particulars Bills Receivable A/c
Debit ` Dr.
Credit `
50,000
To Mohan A/c
50,000
(B/R Acceptance received) 23.07.2012
Bank A/c
Dr.
48,000
Discount A/c
Dr.
2,000
Dr.
16,667
50,000
To Bills Receivable A/c (B/R discounted @ 12% per annum) 23.07.2012
Mohan A/c To Bank/Cash A/c
16,000
To Discount A/c
667
(Remittance sent to Mohan & 1/3 of discount debited) 18.11.2012
Mohan A/c To Bills Payable A/c (Bill of Mohan accepted)
Dr.
71,000 71,000
2.7
MODULE 2 : ACCOUNTING FOR SPECIAL TRANSACTIONS
Date 23.11.2012
Particulars
Debit `
Cash A/c
Dr.
12,580
Discount A/c
Dr.
1,420
To Mohan
Credit `
14,000
(Amount received from Mohan & 2/3 discount charged by him) 01.02.2013
Bills Payable A/c
Dr.
71,000
To Mohan
71,000
(B/P dishonoured) 15.02.2013
Mohan A/c
Dr.
47,333
To Cash A/c
28,400
To Deficiency A/c
18,933
(Payment of 60 paise in a rupee made to mohan for the amount due)
Books of Mohan Sohan’s Account Particulars
`
Date
Particulars
`
20.07.12
To B/P A/c
50,000
23.7.12
By Cash A/c
23.11.12
To Cash A/c
12,580
23.7.12
By Discount A/c
16,000
23.11.12
To Discount A/c
1,420
18.11.12
By B/R A/c
71,000
01.02.13
To B/R A/c
71,000
15.2.13
By Cash A/c
28,400
15.2.13
By Bad Debts
18,933
1,35,000
667
1,35,000
Working Notes: Calculation of distribution of discount: 1st Bill
2nd Bill
Proceeds (`)
Discount (`)
Proceeds (`)
Discount (`)
Sohan (2/3)
32,000
1,333
45,913
1,420
Mohan (1/3)
16,000
667
22,957
710
Total
48,000
2,000
68,870
2,130
Q2. Big owes Fast ` 12,000 for which the former accepts a three months’ bill drawn by the latter. Fast immediately discounts the bill with his banker, Strong Bank, at 12% p.a. On the due date the bill is dishonoured and Strong Bank pays ` 40 as noting charges. Big pays ` 2,360 including interest of ` 400 and gives another bill at three months’ for the balance. Fast endorses the bill to his creditor Thin in full settlement of his debt for ` 10,200. Thin discounts the bill with banker Strong Bank who charges ` 80 as discount. Before maturity Big becomes bankrupt and first and final dividend of 20 paise in a ` is realized from his estate.
TAXMANN®
Date
2.8
MODULE 2 : ACCOUNTING FOR SPECIAL TRANSACTIONS
Show the journal entries in the books of Thin and Strong Bank and the ledger account of Big in the books of Fast. [June 2014, 6 Marks] Ans. In the books of Thin Journal Date
Particulars
Debit (`)
Bills Receivable A/c
Dr.
10,080
Discount Allowed A/c
Dr.
120
Bank A/c
Dr.
10,000
Discount A/c
Dr.
80
Credit (`) 10,200
To Fast A/c (Being Endorsed bill received from Fast in full settlement)
To Bills Receivable A/c
10,080
(Being Bill discounted by the bank) TAXMANN®
Fast A/c
Dr.
10,200
To, Bank A/c
10,080
To Discount Allowed A/c
120
(Being Bills dishonoured at maturity)
In the books of Strong Bank Journal Date
Particulars Bills Discounted A/c
Debit (` ) Dr.
Credit (` )
12,000
To Fast’s Current A/c
11,640
To Discount A/c
360
(Being Bill discounted which is due for 3 months) Noting Charges A/c
Dr.
40
To Cash A/c
40
(Being Noting charges incurred for dishonour of bill) Fast’s Current A/c
Dr.
12,040
To Bills Discounted A/c
12,000
To Noting Charges A/c
40
(Being Bill dishonoured, noting charges being ` 40)
MODULE 2 : ACCOUNTING FOR SPECIAL TRANSACTIONS
Date
Particulars
Debit (` )
Bill Discounted A/c
Dr.
2.9 Credit (` )
10,080
To Thin’s Current A/c
10,000
To Discount A/c
80
(Being Bill discounted which is due for 3 months) Thin’s Current A/c
Dr.
10,080
To Bills Discounted A/c
10,080
(Being Bill dishonoured at maturity)
In the books of Fast Big’s Account Date
Amount (`)
To Balance b/d
12,000
By Bills Receivable A/c
12,000
To Strong Bank A/c
12,040
By Cash A/c
2,360
To Interest A/c
400
By Bills Receivable A/c
10,080
To Thin A/c
10,080
By Cash A/c (20%)
2,016
By Bad Debt A/c
8,064
34,520
Date
Particulars
Amount (`)
Amount (`)
10,080 34,520
Q3. Babai sold goods to Kachari for ` 90,000 on 1st April, 2014 for which the later accepted three bills of ` 30,000 each due respectively in 1,2 and 3 months. The first bill is retained by Babai and is duly met. The second bill was discounted (discount being ` 600) and is met in due course. The third bill is also discounted (discount being ` 900) and is dishonoured, the Noting charges being ` 150. New arrangements were duly made whereby Kachari pays Cash ` 10,150 and accepted a new bill due in 2 months for the balance of the amount with interest at 15% p.a. The bill is retained, on due date the same is dishonoured, noting charges being ` 180. Kachari declared insolvent on 15th Sept. 2014 and 35 paise in a rupee were received from his estate. Required: Pass Journal entries in the Books of Babai. [June 2015, 8 Marks]
TAXMANN®
Particulars
2.10
MODULE 2 : ACCOUNTING FOR SPECIAL TRANSACTIONS
Ans. In the Books of Babai Date
Particulars
2014
Bills receivable A/c
April 1
To Kachari A/c
Debit `
Credit `
Dr. 90,000 90,000
(Acceptance received for 3 bills for ` 30,000 each payable at one, two and three months after date respectively) April 1
Bank A/c
Dr. 29,400
Discount on Bills Receivable A/c
Dr.
600
To Bills receivable A/c
30,000
(Second bill discounted) April 1
Bank A/c
Dr. 29,100
Discount on Bills Receivable A/c
Dr.
900
To Bills receivable A/c
30,000
TAXMANN®
(Third bill discounted) May 4
Bank A/c / Cash A/c
Dr. 30,000
To Bills receivable A/c
30,000
(Payment of first bill received) July 4
Kachari A/c
Dr. 30,150
To Bank A/c
30,150
(Third bill dishonoured and noting charges paid by Bank) July 4
Cash A/c
Dr. 10,150
To Kachari A/c
10,150
(Cash received from Kachari under new arrangement) July 4
Kachari A/c
Dr.
500
To Interest A/c (20,000 × 15% × 2/12)
500
(Interest charged on renewal of bill) July 4
Bills receivable A/c
Dr. 20,500
To Kachari A/c
20,500
(Acceptance received for new bill) Sept.7
Kachari A/c To Bills receivable A/c To Cash A/c (noting charges) (Bill dishonoured by Kachari and noting charges paid)
Dr. 20,680 20,500 180
2.11
MODULE 2 : ACCOUNTING FOR SPECIAL TRANSACTIONS
Date Sept.15
Particulars
Debit `
Cash A/c (20,680 × 0.35)
Dr.
Bad debts A/c
Dr. 13,442
Credit `
7,238
To Kachari A/c
20,680
(35 paise in a rupee received on the insolvency of Kachari)
Q4. On 1st January, 2015 Vinod drew and Pramod accepted a bill at three months for ` 2,000. On 4th January, 2015 Vinod discounted the bill with his bank at 15% p.a. and remitted half the proceeds to Pramod. On 1st February, 2015 Pramod drew and Vinod accepted a bill at four months for ` 1,500. On 4th February, 2015 Pramod discounted the bill at 15% p.a., with his bank and remitted half the proceeds to Vinod. They agreed to share the discount equally.
Note: Days of grace for discount purpose may be ignored. Required: (i) Give Journal Entries, and (ii) Prepare Pramod’s Account— in the books of Vinod. [Dec. 2015, 8 Marks] Ans. In the books of Vinod Journal Entries Date
Particulars
01.01.2015 Bills Receivable A/c
Debit ` Dr.
Credit `
2,000
To Pramod A/c
2,000
(B/R Acceptance received) 04.01.2015 Bank A/c Discount A/c
Dr.
1,925
Dr.
75
To Bills Receivable A/c
2,000
(B/R discounted @ 15% per annum) 04.01.2015 Pramod A/c
Dr.
1,000
To Bank/Cash A/c
962.50
To Discount A/c
37.50
(Remittance sent to Pramod & 1/2 of discount debited)
TAXMANN®
At maturity Vinod met his acceptance, but Pramod dishonoured his and Vinod had to pay the bill. Vinod drew and Pramod accepted a new bill at three months for the original bill plus interest at 18% p.a. On 1st July, 2015 Pramod became insolvent and only 50 paise in the rupee was received from him.
2.12
MODULE 2 : ACCOUNTING FOR SPECIAL TRANSACTIONS
Date
Particulars
Debit `
01.02.2015 Pramod A/c
Dr.
Credit `
1,500
To Bills Payable A/c
1,500
(Bill of Pramod accepted) 04.02.2015 Cash A/c
Dr. 712.50
Discount A/c
Dr.
37.50
To Pramod
750
(Amount received from Pramod & 1/2 discount charged by him) 04.04.2015 Pramod A/c
Dr.
2,000
To Bank
2,000
(B/P dishonoured) 04.04.2015 Pramod A/c
Dr.
90
To Interest A/c
90
TAXMANN®
(Being interest charged for 3 months) 04.04.2015 Bills Receivable A/c
Dr.
2,090
To Pramod A/c
2,090
(Being new bill drawn on Pramod for 3 months) 04.06.2015 Bills Payable A/c
Dr.
1,500
To Bank A/c
1,500
(Being Bill honoured at maturity) 01.07.2015 Pramod A/c
Dr.
2,090
To Bills Receivable A/c
2,090
(Being the bill dishonoured on Pramod’s insolvency) 01.07.2015 Bank A/c Bad Debts A/c
Dr.
920
Dr.
920
To Pramod A/c
1,840
(Payment of 50% received from Pramod for the amount due)
Pramod’s Account Date
Particulars
`
Date
Particulars
`
04.01.15
To Bank/ Cash A/c
962.50
01.01.15
By Bills Receivable A/c
2,000
04.01.15
To Discount A/c
37.50
04.02.15
By Cash A/c
712.50
01.02.15
To Bills Payable A/c
1,500
04.02.15
By Discount A/c
37.50
2.13
MODULE 2 : ACCOUNTING FOR SPECIAL TRANSACTIONS
`
Date
Particulars
`
04.04.15
Date
To Bank A/c
Particulars
2,000
04.04.15
By Bills Receivable A/c
2,090
04.04.15
To Interest A/c
90
01.07.15
By Bad Debts A/c
920
01.07.15
To Bills Receivable A/c
2,090
01.07.15
By Bank A/c
920
6,680
6,680
Q5. Gouru and Gyani were friends and in need of funds. On 1st April, 2015 Gouru drew a bill for ` 2,00,000 for three months on Gyani. On 4.4.2015 Gouru got the bill discounted at 15% per annum and remitted half of the proceeds to Gyani. On the due date Gyani could not meet the bill, instead Gouru accepted Gyani’s bill for ` 1, 20,000 on 4th July, 2015 for two months. This was discounted by Gyani at 15% per annum and out this ` 19,500 was paid to Gouru after deducting ` 500 discounting charges. Due to financial crisis, Gouru became insolvent and the bill drawn on him was dishonoured and his estate paid 40%. Note: Days of grace for discount purposes may be ignored. Required: (ii) Prepare Gyani’s Account – in the books of Gouru. [Dec. 2015, 8 Marks] Ans. In the books of Gouru Journal Entries Date
Particulars
01.04.2015
Bills Receivable A/c To Gyani A/c (B/R Acceptance received) Bank A/c Discount A/c To Bills Receivable A/c (B/R discounted @ 15% per annum) Gyani A/c To Bank A/c To Discount A/c (Remittance sent to Gyani & 1/2 of discount debited) Gyani A/c To Bills Payable A/c
04.04.2015
04.04.2015
04.07.2015
(Bill of Gyani accepted)
Debit ` Dr.
Credit `
2,00,000 2,00,000
Dr. Dr.
1,92,500 7,500 2,00,000
Dr.
1,00,000 96,250 3,750
Dr.
1,20,000 1,20,000
TAXMANN®
(i) Give Journal Entries and
2.14
MODULE 2 : ACCOUNTING FOR SPECIAL TRANSACTIONS
Date
Particulars
04.07.2015
Debit `
Bank A/c
Dr.
Credit `
19,500
Discount A/c
500
To Gyani A/c
2,00,000
(Amount received from Gyani & discount charged by him) 07.09.2015
Bills Payable A/c
Dr.
1,20,000
To Gyani
1,20,000
(B/P dishonoured) 07.09.2015
Gyani A/c
Dr.
1,20,000
To Bank A/c
48,000
To Deficiency A/c
72,000
(Being 40% payments made to Gyani and unpaid balance transferred to Deficiency A/c) TAXMANN®
Gyani’s Account Date
Particulars
`
Date
Particulars
`
96,250
01.04.15
By Bills Receivable A/c
2,00,000
04.04.15
To Bank A/c
04.04.15
To Discount A/c
3,750
04.07.15
By Bank A/c
04.07.15
To Bills Payable A/c
1,20,000
04.07.15
By Discount A/c
07.09.15
To Bank A/c
48,000
07.09.15
By Bills Payable A/c
07.09.15
To Deficiency A/c
72,000 3,40,000
19,500 500 1,20,000
3,40,000
Q6. Vishan for mutual accommodation of Tithan and himself drew upon the latter a three months bill for ` 24,000 on 1st July, 2015, which was duly accepted. Vishan discounted the bill at 6% p.a. on 4th July, 2015 and remitted ½ of the proceeds to Tithan. On 1st August, 2015, Tithan drew and Vishan accepted a bill at 3 months for ` 9,600. On 4th August, 2015, Tithan discounted the bill at 6% p.a. and remitted half the proceeds to Vishan. At maturity Vishan met his acceptance, but Tithan failed to meet his and Vishan had to take up. Vishan drew and Tithan accepted a new bill at two months on 4th November, 2015, for the amount due to Vishan plus ` 200 as interest. On 1st January, 2016, Tithan became insolvent and a first and final dividend of 40 paise in the rupee was received from his estate on 31st March, 2016. Note: Days of grace for discounting purposes may be ignored.
Financial Accounting (FA) | CRACKER AUTHOR PUBLISHER DATE OF PUBLICATION EDITION ISBN NO NO. OF PAGES BINDING TYPE
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