Commerce Accountancy · Economics

Journal Entries and Depreciation

596 Questions

Journal entries and depreciation are core accountancy topics involving the systematic recording of financial transactions and the calculation of asset value reduction over time. Students must solve problems related to bad debts, provision calculations, and error rectification. These questions are essential for candidates appearing in commerce and accounting competitive exams.

Bad debts provisionAsset depreciation calculationPurchase return errorsTrial balance rectificationDebenture issuance

Journal Entries and Depreciation Questions

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

Debtors appeared in balance sheet at Rs. $18,525$ after making following adjustment.
Bad debt written off Rs. $400$.
Provision for discount on debtors @ $2.5\%$.
Provision for bad debt @ $5\%$.
Debtors as per trial balance $=$?

  1. Rs. $20,400$
  2. Rs. $16,788$
  3. Rs. $20,432$
  4. Rs. $18,573$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Let X be the debtors before adjustments. After bad debt: X - 400. After bad debt provision (5%): (X - 400) * 0.95. After discount provision (2.5%): (X - 400) * 0.95 * 0.975 = 18,525. (X - 400) * 0.92625 = 18,525. X - 400 = 20,000. X = 20,400.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

Extract of trial balance of Mr.Z is as follows.

Particulars Dr. Rs. Cr. Rs.
Debtors $24,000$ -
Provisions for bad debts - $400$

Included amongst the debtors is Rs. $3,000$ due to Ram and included among the creditors Rs. $1,000$ due to him.
Provision for bad debts to created at @ $5\%$ and for discount @ $2\%$. Debtors will be shown at balance at.

  1. Rs. $21,413$
  2. Rs. $21,885$
  3. Rs. $22,344$
  4. Rs. $22,148$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Debtors = 24,000 - 1,000 (mutual set-off) = 23,000. Provision for bad debts = 5% of 23,000 = 1,150. Net = 23,000 - 1,150 = 21,850. Provision for discount = 2% of 21,850 = 437. Final = 21,850 - 437 = 21,413.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

From the following details find out the closing capital that will be appear in balance sheet on $31-12-2015$.

Particulars Rs.
Capital on $1-1-2015$ $14,00,000$
Drawings $5,000$
Repair $2,000$
Net profit before manager commission $6,62,900$
Debtors $1,50,000$

Provision for bad debts @ $6\%$.
The manager is entitled commission of $5\%$ of net profit after charging his commission.

  1. Rs. $20,26,333$
  2. Rs. $20,15,857$
  3. Rs. $20,14,305$
  4. Rs. $20,24,755$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The closing capital is calculated as Opening Capital + Net Profit (after commission) - Drawings. The net profit after commission is calculated by dividing the profit before commission by (1 + rate/100), which is 6,62,900 / 1.05 = 6,31,333. Adding this to the opening capital (14,00,000) and subtracting drawings (5,000) results in 20,26,333.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

Debtors as appearing in Trial Balance are f $25,000$. Provision for doubtful debts is to be provided @ $5\%$ and $2\%$ of amount is to be provided for discount. What is the amount of debtors to be shown in balance sheet?

  1. f$23,750$
  2. f$23,250$
  3. f$23,275$
  4. f$1,750$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

First, subtract the provision for bad debts (5% of 25,000 = 1,250), leaving 23,750. Then, calculate the discount on the remaining amount (2% of 23,750 = 475). Subtracting this gives 23,275.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

T Ltd. has issued 14% debentures of Rs.20,00,000 at a discount of 10% in April, 2013 and the company pays interest half yearly on June 30, and December 31, every year. On March 31, 2014 the amount shown as interest accrued but not due in the balance sheet will be________.

  1. Rs. 1,40,000

  2. Rs. 2,10,000

  3. Rs. 2,80,000

  4. Rs. 70,000
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Interest is paid half-yearly on June 30 and December 31. From January 1 to March 31, there are 3 months of accrued interest. Interest = 20,00,000 * 14% * (3/12) = 70,000.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

X limited is in the business of trading. It is to received Rs.$7,000$ from Vinod and to pay Rs.$8,000$ to Vinod. Similarly, it is to pay Rs.$8,000$ to Sudhir and to receive Rs.$9,000$ from Sudhir. Except above but after all the adjustment, the books of X Limited show the debtors balance at Rs.$72,000$ (Dr.) and creditors balance at Rs.$39,000(Cr.)$. The correct value of debtors and creditors to be shown in balance sheet would be___________.

  1. Debtors (Rs.$72,000$), Creditors (Rs.$39,000$)
  2. Debtors (Rs.$88,000$), Creditors (Rs.$55,000$)
  3. Debtors (Rs.$80,000$), Creditors (Rs.$47,000$)
  4. Debtors (Rs.$79,000$), Creditors (Rs.$46,000$)
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

As per question,

Calculation of debtors

It implies Rs 7,000 from Vinod + Rs 9,000 from Sudhir + debtors balance at Rs.72,000 (Dr.) = Rs 88000

 

Calculation of creditors

It implies pay Rs.8,000 to Vinod + pay Rs.8,000 to Sudhir + creditors balance at Rs.39,000(Cr.) = Rs 55,000

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

Sundry Debtors on $31^{st}$ March $2006$ are Rs. $55,200$ Further Bad debts are Rs. $200$:
Provision for doubtful debts are to be made on debtors $@ 5\%$ and also provision of discount on debtors $@ 2\%$ the amount of provision of discount on debtors will be __________.

  1. Rs. $1,045$
  2. Rs. $2,750$
  3. Rs. $1,100$
  4. Rs. $2,760$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Net debtors = 55,200 - 200 (bad debts) = 55,000. Provision for doubtful debts = 5% of 55,000 = 2,750. Debtors after provision = 55,000 - 2,750 = 52,250. Provision for discount = 2% of 52,250 = 1,045.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

From the following details,_______will be charged to profit and loss A/c as bad debts during the current year.
Provisions for bad debts A/c at the beginning of the year Rs.24,000
Actual bad debts during the year Rs.20,000
Closing balance of Debtors. Rs.80,000
Provision for bad debts to be made @5% of total debtors.

  1. Nil

  2. Rs. 4,250

  3. Rs.2,690

  4. Rs.3,200
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The total provision required is 5% of 80,000 = 4,000. Since the existing provision is 24,000 and actual bad debts were 20,000, the remaining provision is 4,000. No additional charge is needed.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

If own debenture of Rs. 1, 000 is purchased for Rs. 975 from the market by the company, the difference of Rs. 25 will be assumed?

  1. Profit on redemption of debenture

  2. Loss on redemption of debenture

  3. Goodwill

  4. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

When a company buys its own debentures from the market at a price lower than their face value, the difference represents a gain or profit on the redemption of the debt.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

The following entry appears in the bools of Vikas Ltd 

BankA/c 1,90,000
Loss on issue of Debenture A/c 26,000
To 9% Debentures A/c 2,00,000
To Premium on Redemption of Debentures A/c 16,000
Debentures have been issued at a discount of 

  1. 10%

  2. 7%

  3. 6%

  4. 5%
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The face value is 2,00,000. The cash received is 1,90,000. The difference is 10,000. However, the loss on issue is 26,000, which includes the 16,000 premium on redemption. Thus, the discount is 26,000 - 16,000 = 10,000. 10,000 / 2,00,000 = 5%.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

On 1st April, 2013, Y Ltd. Issued 1000, 12% debentures of Rs. 100 each at a discount of 6%. These debentures are redeemable in five equal annual instalments at the end of each year. What is the amount of discount to be written off in the first year i.e.

  1. Rs. 2000

  2. Rs. 1800

  3. Rs. 1200

  4. Rs. 600
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Total discount = 1000 * 100 * 0.06 = 6000. Since they are redeemed in 5 equal annual installments, the discount is written off proportionally. 6000 / 5 = 1200 per year.

Multiple choice book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

In case of an issue of a debenture of Rs$100$ at Rs$100$ but redeemable at Rs$106$, Rs$6$ is to be:

  1. Debited to Debenture Redemption Premium Account

  2. Credited to Loss on Issue of Debentures Account

  3. Debited to Loss on Issue of Debentures Account

  4. Debited to Discount on Issue of Debentures Account
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When debentures are issued at par but redeemable at a premium, the premium payable on redemption is treated as a loss on issue. This loss is debited to the Loss on Issue of Debentures Account.

Multiple choice book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

V Kare Ltd. issued R. 1,00,000, $7%$ debentures at $5\%$ discount redeemable after 10 years at premium of $5\%$.T he journal entry is:

  1. Bank Account Discount on Debentures accountDebentures 95,000 5,000 1,00,000
  2. Bank Account Discount on Debentures accountDebentures 1,00,000 5,000 1,05,000
  3. Bank Account Discount on Debentures accountDebenturesPremium of redemption of debentures 1,00,000 5,000 1,00,000 5,000
  4. Bank Account Loss on the issue of debenturesDebenturesPremium of redemption of debentures 95,000 10,000 1,00,000 5,000
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The loss on issue includes both the discount on issue (5%) and the premium on redemption (5%), totaling 10%. The entry debits Bank for 95,000, Loss on Issue for 10,000, and credits Debentures for 100,000 and Premium on Redemption for 5,000.

Multiple choice book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

Bikano Industries Ltd. purchased a plant for Rs. 100,000 payable Rs. 37,000 in cash and balance by issue of 11% debentures of Rs. 100 each at a discount of 10%. The vendor will be issued ______.

  1. 630 debentures of Rs. 100 each

  2. 700 debentures of Rs. 100 each

  3. 770 debentures of Rs. 100 each

  4. 600 debentures of Rs. 100 each
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Total price is 100,000. Cash paid is 37,000. Balance to be paid in debentures is 63,000. Issue price per debenture is 100 - 10% = 90. Number of debentures = 63,000 / 90 = 700.

Multiple choice book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

W Ltd. issued $40,000$, $8\%$ debentures of Rs. $10$ each at par, which are redeemable after $5$ years at a premium of $20\%$. The amount of loss on redemption of debentures to be written off every year will be.

  1. Rs. $80,000$
  2. Rs. $20,000$
  3. Rs. $8,000$
  4. Rs. $16,000$
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The total loss on redemption is 20% of 40,000 * 10 = 80,000. Since the debentures are redeemed after 5 years, the annual loss to be written off is 80,000 / 5 = 16,000.