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Page 2

CHAIRPERSON
Dr. (Mrs) R. AMUTHA

Reader in Commerce
Justice Basheer Ahmed Sayeed College for Women

Chennai - 600 018.

REVIEWERS

Dr. K. GOVINDARAJAN Dr. M. SHANMUGAM
Reader in Commerce Reader in Commerce
Annamalai University SIVET College
Annamalai Nagar - 608002. Gowrivakkam,Chennai-601302.

Mrs. R. AKTHAR BEGUM
S.G. Lecturer in Commerce
Quaide-Millet Govt. College for Women
Anna Salai, Chennai - 600002.

AUTHORS

Thiru G. RADHAKRISHNAN Thiru S. S. KUMARAN
S.G. Lecturer in Commerce Co-ordinator, Planning Unit
SIVET College (Budget & Accounts)
Gowrivakkam, Chennai - 601302. Education for All Project

College Road, Chennai-600006.

Thiru N. MOORTHY Mrs. N. RAMA
P.G. Asst. (Special Grade) P.G. Assistant
Govt. Higher Secondary School Lady Andal Venkatasubba Rao
Nayakanpettai - 631601 Matriculation Hr. Sec. School
Kancheepuram District. Chetpet, Chennai - 600031.

PREFACE

The book on Accountancy has been written strictly in accordance
with the new syllabus framed by the Government of Tamil Nadu.

As curriculum renewal is a continuous process, Accountancy
curriculum has undergone various types of changes from time to time in
accordance with the changing needs of the society. The present effort
of reframing and updating the curriculum in Accountancy at the Higher
Secondary level is an exercise based on the feed back from the users.

This prescribed text book serves as a foundation for the basic
principles of Accountancy. By introducing the subject at the higher
secondary level, great care has been taken to emphasize on minute
details to enable the students to grasp the concepts with ease. The
vocabulary and terminology used in the text book is in accordance with
the comprehension and maturity level of the students.

This text would serve as a foot stool while they pursue their higher
studies. Since the text carries practical methods of maintaining accounts
the students could use this for their career.

Along with examples relating to the immediate environment of the
students innovative learning methods like charts, diagrams and tables
have been presented to simplify conceptualized learning.

As mentioned earlier, this text serves as a foundation course which
is coupled with sample questions and examples. These questions and
examples serve for a better understanding of the subject. Questions
for examinations need not be restricted to the exercises alone.

Chairperson

' Government of Tamilnadu
First Edition - 2004

Price : Rs.

This book has been prepared by the Directorate of School Education
on behalf of the Govt. of Tamilnadu.

This book has been printed on 60 G.S.M. paper

Printed by Offset at : iii

Page 79

Solution:
Cash Book

of Mr. Kumaran
Dr. Cr.

Date Particulars
R. L. Amount

Date Particulars
V. L. Amount

N. F. Rs. N. F. Rs.

2004 2004

Jan 1 To Capital A/c 1,000 Jan 3 By Purchases

4 To Sales A/c 1,700 A/c 500

5 To Siva A/c 200 12 ,, Balan A/c 150

28 To Commission A/c 75 14 ,, Furniture A/c 200

20 ,, Electric
charges A/c 225

24 ,, Salaries A/c 250

31 ,, Balance c/d 1,650

2,975 2,975
2004

Feb 1 To Balance b/d 1,650

Note : The transaction dated January 15th will not be recorded in the
cash book as it is a credit transaction.

7.3.2 Double Column Cash Book

The most common double column cash books are
i. Cash book with discount and cash columns
ii. Cash book with cash and bank columns.

i. Cash Book with discount and cash columns

On either side of the single column cash book, another column is
added to record discount allowed and discount received. The format
is given below.

Format
Double Column Cash Book

(Cash book with Discount and Cash Column )
Debit ...................................... Credit

Date
Parti- R. L. Dis- Amount

Date
Parti- V. L. Dis- Amount

culars N. F. count Rs. -culars N. F. count Rs.
Allowed Received

Rs. Rs.

It should be noted that in the double column cash book, cash
column is balanced like any other ledger account. But the discount column
on each side is merely totalled. The total of the discount column on the
debit side shows the total discount allowed to customers and is debited
to Discount Allowed Account. The total of the discount column on the
credit side shows total discount received and is credited to Discount
Received Account.

Illustration 2: Prepare a Double Column Cash Book from the
following transactions of Mr.Gopalan:

Rs.
2004

Jan. 1 Cash in hand 4,000
6 Cash Purchases 2,000

10 Wages paid 40
11 Cash Sales 6,000
12 Cash received from Suresh and 1,980

allowed him discount 20
19 Cash paid to Meena 2,470

and discount received 30
27 Cash paid to Radha 400
28 Purchased goods for cash 2,070

145144

Page 80

ii. Cash Book with Cash and Bank Columns

When bank transactions are more in number, it is advisable to
open a cash book by providing a separate column on either side of the
cash book to record the bank transactions therein.

In such case, it is not necessary to open a separate Bank Account
in the Ledger because the two columns in the cash book serve the
purpose of Cash Account and Bank Account respectively. It is a
combination of Cash Account and Bank Account. The format of this
cash book is given below.

Double Column Cash Book
Debit Side (Cash book with Cash and Bank Columns) Credit Side

Date
Parti- R. L. Cash Bank

Date
Parti- V. L. Cash Bank

culars N. F. Rs. Rs. -culars N. F. Rs. Rs.

There are two amount columns on debit side one for cash receipts
and the other for bank deposits (i.e., payment made into Bank Account).
Similarly there are two amount columns on the credit side, one for
payments in cash and the other for payments by cheques respectively.

Contra Entry

When an entry affect both cash and bank accounts it is called a
contra entry. Contra in Latin means opposite. In contra entries both
the debit and credit aspects of a transaction are recorded in the cash
book itself.

147146

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Page 158

12. The following balances were extracted from the books of
Mr.Chandran on 31.3.2001.

Particulars Debit Credit

Rs. Rs.

Capital 1,41,000
Buildings 80,000
Machinery 70,000
Furniture 15,000
Stock 50,000
Power 10,000
Wages 70,000
Carriage 8,000
Rent and rates 17,000
Salaries 35,000
Bank Charges 1,000
Income tax 2,000
Bad debts 5,000
Commission received 9,000
Purchases 1,50,000
Sales 3,40,000
Bills receivable 20,000
Bank overdraft 50,000
Cash in hand 2,000
Purchase returns 10,000
Sales returns 15,000

5,50,000 5,50,000

The closing stock was valued at Rs.60,000. You are required to
prepare final accounts for the year ended 31st March 2001.

[Answer : Gross profit Rs.1,07,000, Net profit Rs.58,000,
Balance sheet Rs.2,47,000]

13. The following balances are extracted from the books of
Mr.Ramasamy on 31.12.2001. Prepare final accounts

Particulars Debit Particulars Credit

Rs. Rs.

Stock on 1.1.2001 17,000Sales 60,000

Manufacturing wages 10,000 Creditors 20,000

Factory rent 2,000 Bills payable 10,000

Factory lighting 3,000 Capital 43,000

Purchase 30,000

Carriage 3,000

Salary 2,000

Office rent 2,000

Printing & stationery 1,000

Bad debts 1,000

Land 10,000

Buildings 20,000

Plant & machinery 15,000

Furniture 5,000

Depreciation 2,000

Debtors 5,000

Cash in hand 5,000

1,33,000 1,33,000

Closing stock was valued at Rs.19,000.

[Answer : Gross profit Rs. 14,000, Net profit Rs.6,000,
Balance sheet Rs.79,000]

303302

Page 159

14. Prepare Trading and Profit and Loss Account and Balance Sheet
of Mr.Venkat as on 31st March 2000.

Particulars
Debit Credit

Rs. Rs.

Venkat Capital 35,000
Free hold premises 45,000
Goodwill 20,000
Machinery and plant 17,000
Opening stock 18,000
Bills receivable and payable 4,000 6,000
Sundry debtors and creditors 16,000 24,000
Purchases and sales 80,000 1,50,000
Returns 1,000 2,000
Carriage outwards 500
Freight, duty etc 1,200
Manufacturing wages 22,800
Factory expenses 6,000
Salaries 24,000
Commission 2,500
Discount 9,000
Stationery and printing 4,500
Trading expenses 1,800
Cash in hand 700
Suspense A/c 39,000

2,65,000 2,65,000

Closing stock was valued at Rs.70,000.

[Answer : Gross profit Rs.93,000, Net profit Rs.68,700,
Balance sheet Rs.1,72,700]

305304

15. From the following balances extracted from the books of
Mrs.Mala, prepare final accounts for the year ending 31st March
2003. Closing stock as on 31.03.2003 was Rs.72,500.

Particulars
Debit Credit

Rs. Rs.

Mrs.Mala’s Capital 95,000
Plant & Machinery 37,000
Repairs to Machinery 9,150
Wages 42,000
Salaries 6,000
Income tax 750
Cash and bank balances 3,000
Land and building 1,11,750
Purchases 1,80,000
Purchase Returns 3,000
Sales 3,75,000
Interest 2,250
Bills receivable 15,000
Bills payable 4,500
Commission (Cr) 6,000
Debtors 52,500
Creditors 40,650
Opening Stock as on 1.4.2003 55,500
Drawings 12,000
Suspense account 2,750

5,26,900 5,26,900

[Answers : Gross profit Rs.1,73,000; Net profit Rs.1,61,600; Balance
sheet Total Rs. 2,91,750]

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