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Trial balance of Anuj did not agree. It showed an excess credit of Rs. 6,000. He put the difference to suspense account. He discovered the following errors. Rectify the errors.
1. Cash received from Ravish Rs. 8,000 posted to his account as Rs. 6,000.
a. Debit Ravish’s account with Rs. 2,000, Credit the suspense account with Rs. 2,000
b. Credit Ravish’s account with Rs. 2,000, Debit the suspense account with Rs. 2,000
c. Credit Ravish’s account with Rs. 6,000, Debit the suspense account with Rs. 6,000
d. Debit Ravish’s account with Rs. 6,000, Credit the suspense account with Rs. 6,000
Ans - b
Cash received from Ravish was posted (credited) to his account as Rs. 6,000 instead of Rs. 8,000, the rectification entry would be
Credit Ravish’s account with the difference i.e. Rs. 8,000 – Rs. 6,000 = Rs. 2,000
Debit the suspense account with the difference i.e. Rs. 8,000 – Rs. 6,000 = Rs. 2,000
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2. Returns inwards book overcast by Rs. 1,000.
a. Debit the Returns Inwards A/c with Rs. 2,000, Credit the suspense account with Rs. 2,000
b. Credit the Returns Inwards A/c with Rs. 2,000, Debit the suspense account with Rs. 2,000
c. Credit the Returns Inwards A/c with Rs. 1,000, Debit the suspense account with Rs. 1,000
d. Debit the Returns Inwards A/c with Rs. 1,000, Credit the suspense account with Rs. 1,000
Ans - c
Returns inwards book overcast by Rs. 1,000, the rectification entry would be
Credit the Returns Inwards A/c with Rs. 1,000
Debit the suspense account with Rs. 1,000
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3. Total of sales book Rs. 10,000 was not posted to Sales account.
a. Credit sales account with Rs. 5,000, Credit the suspense account with Rs. 5,000
b. Credit sales account with Rs. 10,000, Credit the suspense account with Rs. 10,000
c. Credit sales account with Rs. 10,000, Debit the suspense account with Rs. 10,000
d. Debit sales account with Rs. 5,000, Debit the suspense account with Rs. 5,000
Ans - c
Total of sales book was not posted to the sales book, the rectification entry would be
Credit sales account with Rs. 10,000
Debit the suspense account with Rs. 10,000
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4. Credit purchases from Nanak Rs. 7,000 were recorded in sales Book. However, Nanak’s account was correctly credited. (i) Debit the sales account with Rs. 7,000, (ii) Debit the purchases account with Rs. 7,000, (iii) Credit the suspense account with Rs. 14,000
a. Only (i) and (ii)
b. Only (i) and (iii)
c. Only (ii) and (iii)
d. (i), (ii) and (iii)
Ans - d
Credit purchases from Nanam were wrongly recorded in sales book, the rectification entry would be
Debit the sales account to rectify the wrong credit of Rs. 7,000
Debit the purchases account with Rs. 7,000
Credit the suspense account with the total i.e. Rs. 7,000 + Rs. 7,000 = Rs. 14,000
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5. Machinery purchased for Rs. 10,000 was posted to purchases account as Rs. 5,000. Rectify the errors and prepare suspense account. (i) Debit the machinery account with Rs. 10,000, (ii) Credit the purchases account with Rs. 5,000, (iii) Creit the suspense account with Rs. 5,000
a. Only (i) and (ii)
b. Only (i) and (iii)
c. Only (ii) and (iii)
d. (i), (ii) and (iii)
Ans - d
Machinery purchased was posted to purchases account as Rs. 5,000 instead of Rs. 10,000, the rectification entry would be
Debit the machinery account with Rs. 10,000
Credit the purchases account with Rs. 5,000 to rectify the wrong debit
Creit the suspense account with the difference i.e. Rs. 10,000 – Rs. 5,000 = 5,000
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Thirty years ago, X bought 10 acres of land for Rs. 1,000 per acre in what is now downtown Houston. If this land grew in value at an annual interest rate of 8 percent, what is it worth today?
a. Rs. 1,00,630
b. Rs. 1,80,630
c. Rs. 1,00,900
d. Rs. 1,01,630
Ans - a
Solution:
FV30 = 10 (Rs. 1,000) (FVIF8%,30)
= Rs. 10,000 (10.063)
= Rs. 1,00,630
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How many years will it take for Rs. 1,97,000 to grow to be Rs. 5,54,000 if it is invested in an account with a quoted annual interest rate of 8% with monthly compounding of interest?
a. 11.47 years
b. 11.97 years
c. 12.47 years
d. 12.97 years
Ans - d
Solution:
i = 0.666667 (8% annually divided by 12 comp. periods per year)
PV = -197000
FV = 554000
solve for n (answer on calculator = 155.61)
Since the interest rate was entered as a monthly rate, the answer for n is in months.
The number of years equals the number of months divided by twelve.
Number of years = (155.61)/12 = 12.97 years
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What will a deposit of Rs. 4,500 at 12% compounded monthly be worth at the end of 10 years?
a. Rs. 14,351.80
b. Rs. 14,851.80
c. Rs. 13,997.40
d. Rs. 14,304.80
Ans - b
Solution:
FV = PV [FVIFi,n]
FV = Rs. 4,500 [FVIF1%,120]
= Rs. 4,500 (3.3004)
= Rs. 14,851.80
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