Questions and Answers of Principles Financial Accounting

Ruchika Labs Ltd. purchases a machine costing Rs. 210 lacs and factory building for Rs. 9 lacs on 1st April 2006. Assume that the company does not own any other depreciable asset. Work out the first
Continue with the case of Shiva Industries Ltd. as above. In the beginning of the 6th year, a valuer appraises the machine to be worth Rs. 97.50 lakh with an estimated residual value of Rs.
Continuing with the case of Shiva Industries Ltd., now assume that the company sold the revalued machine in the beginning of the 8th year for Rs. 13, 50,000. Determine the profit/loss on disposal
This case is in continuation to the case of Oil and Natural Gas Corporation Ltd. as illustrated in the last chapter. Now refer further to the extracts from annual report 2005-06 of the company
Having understood the contents of this chapter, you, as the manager of Section B comprising 50 students of MBA 1st year course, are required to form groups of five students each. Include yourself in
Shiva Industries Ltd. purchased a machine. The details are as under. Determine the cost of the machine. Details Invoice Price Amount (*) Amount (?) List Price 75,00,000 Less: Trade Discount 1,50,000
Dr. Kapil Seth’s Imaging Centre Ltd. part exchanged its old X-ray machine with a new one from Rajneesh Medical Equipments Ltd.Net book value of the old X-ray machine was ₹4,68,345. However the
Shikha Entertainment Ltd. purchased some fixed assets for a consolidated price. The details are as under. Details of the market values of these assets as appraised by a valuer are also given.
Bhaskar Foods Ltd. acquires a machine whose total cost comes to ₹270 lacs. The company received a grant of ₹24 lacs from the central government against the machine. Determine its book value under
Dhruv Udhyog Ltd. has established a new project. Details of fixed assets and expenditure incurred during the construction of the project are given hereunder. Determine the cost of each asset at the
Refer to the extracts from annual report 2005-06 of the Whirlpool of India Limited regarding its fixed assets, related significant accounting policies and profit/loss on disposal thereof as
Refer to the extracts from annual report 2005-06 of the Oil and Natural Gas Corporation Ltd. regarding valuation of its oil and gas producing properties as per the successful efforts method of
Aman Sachdeva promotes, Aman Home Products, his proprietary firm, on April 1, 20CY. The following are the details of the transactions entered into by the firm during the month of
Ashish Agrawal forms a proprietary firm Surya Medical Equipments on 1 April, 20CY. The firm intends to engage in the business of sophisticated personal care equipments. The following are the details
Shahrukh Khanna promotes Shahrukh Khanna and Sons, his proprietary firm, to start business of trading in mobile phones on 1st April 2006. He hires a showroom at D-15, South Ext., New Delhi @ ` 12,000
Gaurav Lal and Kanika Raj, both MBAs from the renowned FSM School of Management and having worked in the industry in various capacities for over ten years, called it a day and decided to be on their
Moving further, classify the business transactions of Aman Home Products as recorded in the journal prepared in the previous chapter and post them in to the ledger of the firm.
Moving further, summarize the business transactions of Aman Home Products as classified in the ledger prepared in Ex.1 above in the form of a trial balance.Ex.1Moving further, classify the business
Moving further, classify the business transactions of Surya Medical Equipments as recorded in the journal in the previous chapter and post them in to the ledger of the firm.
Moving further, summarize the business transactions of Surya Medical Equipments as classified in the ledger prepared in Ex. 3 above in the form of a trial balance.Ex. 3Moving further, classify the
Having recorded the transactions of Shahrukh Khanna and Sons in the Journal in the previous chapter, now:1. Classify them through ledger accounts, and 2. Briefly interpret each ledger account.
After having classified the transactions of Shahrukh Khanna and Sons, now, summarize them in a Trial Balance.
Having recorded the transactions of Kanika and Gaurav Management Consultants in the Journal in the previous chapter, now:1. Classify them through ledger accounts, and 2. Briefly interpret each ledger
After having classified the transactions of Kanika and Gaurav Management Consultants, now, summarize them in a Trial Balance.
Monik Varma promotes Monik Traders, his proprietary firm, to start a business of trading in Product A on 1 April 20CY. He hires an office at C-12, Sikka Complex, Preet Vihar, Delhi–110092 @₹3,000
Refer to the case of AMAN HOME PRODUCTS given in the exercises in the last chapter. Aman now wants to know as to where his firm stands after one month of running. Help him. Towards this purpose
Refer to the case of SURYA MEDICAL EQUIPMENTS given in the exercises in the last chapter. Ashish Agrawal now wants to know as to where his firm stands after one month of running. Help him. Towards
Refer to the case of Shahrukh Khanna and Sons given in the exercises in the last chapter. Shahrukh Khanna now wants to know as to where his firm stands after one month of running. Help him. Towards
Refer to the case of Kanika and Gaurav Management Consultants given in the exercises in the last chapter. Gaurav and Kanika now want to know as to where their firm stands after one month of running.
Refer to the case of Monik Traders given in the exercises of the last chapter. Monik Varma now wants to know as to where his firm stands after one month of running of the business. Help him. Towards
The following is the trial balance of Sanjay Industries Ltd. as on 31st March 2006.Further information1. Outstanding rent amounted to ₹7,200 while outstanding salaries ₹8,100 at the end of the
The following is the trial balance of Sangeeta Udhyog Ltd. as on 31st March 2006.Further information 1. The authorised share capital of the company consists of 4,00,000 equity shares of ` 10 each.2.
The accountant of Pushpa Engineering Company Ltd. has prepared the following trial balance of the company as on 31st March, 2006.Further information 1. Authorised equity share capital of the company
Following trial balance as at 31st March 2006 has been prepared from the account books of Mahesh Foods Ltd.Further information1. The authorized capital of the company is 3 lac equity shares of ` 10
The trial balance of Hindustan Textiles Ltd. as at 31st March 2006 is as presented hereunder.Further information1. The authorized capital of the company is 30 lakh equity shares of ₹10 each of
Refer to the exercise on preparation and brief analysis of financial statements of Sanjay Industries Ltd. as given in the last chapter.Now convert the financial statements in to vertical format. Use
Refer to the exercise on preparation and brief analysis of financial statements of Sangeeta Udhuog Ltd. as given in the last chapter.Now convert the financial statements in to vertical format. Take
Gupta Health Products Pvt. Ltd. has been promoted by Richa Gupta and her associates on April 1, 20CY. The company enters into the following transactions of purchase during the month. It maintains a
Innovative Bathing Solutions Ltd. has been promoted by Rita Goel and her associates on April 1, 20CY. The company enters into the following transactions of sale during the month. It has been advised
The organisation maintains a three-column cash book. It submits the details of following cash/bank transactions for the month of May 20CY. Please record them in the three column cash book. Date
Continue with ex.3 and record the relevant transactions in the two-column cash book.Ex.3The organisation maintains a three-column cash book. It submits the details of following cash/bank transactions
Continue with ex.3 and record the relevant transactions in the simple cash book.Ex.3The organisation maintains a three-column cash book. It submits the details of following cash/bank transactions for
Continue with ex.3 and record the relevant transactions in the bank book.Ex.3The organisation maintains a three-column cash book. It submits the details of following cash/bank transactions for the
Mr. G.C. Gupta, the erstwhile Marketing Director of Hindustan Industrial Corporation Ltd., has recently taken over as the Managing Director of the company. He is an engineer by qualification and a
Having understood the contents of this chapter, you, as the manager of Section A comprising 50 students of MBA 1st year course, are required to form groups of five students each. Include yourself in
Recall Exercise 1 of Chapter 4. The MD, Mr. G.C. Gupta, having understood the gist of the conceptual framework of financial statements, is now interested in the understanding of GAAPs, because of
Discusses the current and future uses of blockchain to process transactions and store data. Research the use of blockchain and find a noncryptocurrency company that is currently using it. Also
Buyers negotiate purchase contracts with suppliers. What type of shipping terms should a buyer attempt to negotiate to minimize transportation costs?
(a) Compute net sales, gross profit, and the gross margin ratio for each of the four separate companies.(b) Which company has the best gross margin ratio? Sales .... Sales discounts... Sales returns
Use the following information for Palmer Co. to compute inventory turnover for Year 3 and Year 2, and its days’ sales in inventory at December 31, Year 3 and Year 2. From Year 2 to Year 3, did
Wiset Company completes these transactions during April of the current year (the terms of all its credit sales are 2/10, n/30).Apr. 2 Purchased $14,300 of merchandise on credit from Noth Company,
Acorn Industries completes these transactions during July of the current year (the terms of all its credit sales are 2/10, n/30).July 1 Purchased $6,500 of merchandise on credit from Teton Company,
The April transactions of Wiset Company are described in Problem 7-2A.In Problem 7-2Wiset Company completes these transactions during April of the current year (the terms of all its credit sales are
Piere Imports uses the perpetual system in accounting for merchandise inventory and had the following transactions during the month of October. Prepare entries to record these transactions assuming
The following financial statement information is from five separate companies.Required1. Answer the following questions about Company V.a. What is the amount of equity at the beginning of the year?b.
For the following transactions of Spade Company,(1) Prepare general journal entries(2) Post entries to T-accounts and calculate the ending balance of each T-account. Use the following accounts: Cash;
Posting errors are identified in the following table. In column(1) Enter the amount of the difference between the two trial balance columns (debit and credit) due to the error. In column(2) Identify
Prepare journal entries to record the following merchandising transactions of Lowe’s, which uses the perpetual inventory system and the gross method.Aug. 1 Purchased merchandise from Aron Company
Official Brands’s general ledger and supplementary records at the end of its current period reveal the following.Required1. Each member of the team is to assume responsibility for computing one of
The following unadjusted trial balance is prepared at fiscal year-end for Foster Products Company. Foster Products Company uses a perpetual inventory system. It categorizes the following accounts as
Prepare journal entries to record each of the following sales transactions of EcoMart Merchandising. EcoMart uses a perpetual inventory system and the gross method. Oct. 1 Sold merchandise for
Identify whether each description best applies to a periodic or a perpetual inventory system.a. Updates the inventory account only at period-end.b. Requires an adjusting entry to record inventory
Ming Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for April. (For specific identification, units sold consist of 20 units from beginning
A car dealer acquires a used car for $14,000, with terms FOB shipping point. Compute total inventory costs assigned to the used car if additional costs include the following. $250 for
Comparative figures for Apple and Google follow.Required1. Compute inventory turnover for each company for the most recent two years shown.2. Compute days’ sales in inventory for each company for
Aloha Company uses a perpetual inventory system. It entered into the following calendar-year purchases and sales transactions. (For specific identification, units sold consist of 80 units from
Key figures for Samsung follow.Required1. For the most recent two years, compute Samsung’s(a) Inventory turnover(b) Days’ sales in inventory.2. Is the change in Samsung’s inventory turnover
QP Corp. sold 4,000 units of its product at $50 per unit during the year and incurred operating expenses of $5 per unit in selling the units. It began the year with 700 units in inventory and made
The records of Alaska Company provide the following information for the year ended December 31.Required1. Use the retail inventory method to estimate the company’s year-end inventory at cost.2. A
This Comprehensive Problem requires account balances from the April month-end, which are available in Connect or in the Working Papers. Assume it is Monday, May 1, the first business day of the
Peachtree Company uses a sales journal, purchases journal, cash receipts journal, cash payments journal, and general journal. Prepare a purchases journal like the one in Exhibit 7.9. Journalize the
A company that records credit purchases in a purchases journal and records purchases returns in a general journal made the following errors. Enter A, B, or C indicating when each error should be
Key comparative figures for Apple and Google follow.Required1. Compute days’ sales uncollected (rounded to one decimal) for the current year and the prior year for(a) Apple(b) Google.2. Which
Nakashima Gallery had the following petty cash transactions in February of the current year. Nakashima uses the perpetual system to account for merchandise inventory.Feb. 2 Wrote a $400 check to
At the end of May, the sales journal of Mountain View appears as follows.Mountain View also recorded an allowance (price reduction) given to Anna Page with the following entry.Required1. Open an
Kiona Co. set up a petty cash fund for payments of small amounts. The following transactions involving the petty cash fund occurred in May (the last month of the company’s fiscal year).May 1
Santana Rey receives the March bank statement for Business Solutions on April 11, 2022. The March 31 bank statement shows an ending cash balance of $67,566. The general ledger Cash account, No. 101,
Following are five separate cases involving internal control issues.a. Chi Han receives all incoming customer cash receipts for her employer and posts the customer payments to their respective
The following information is available to reconcile Branch Company’s book balance of cash with its bank statement cash balance as of July 31.a. On July 31, the company’s Cash account has a
Blues Music Center had the following petty cash transactions in March of the current year. Blues uses the perpetual system to account for merchandise inventory.Mar. 5 Wrote a $250 check to establish
Refer to the information reported about Gazelle Corporation in Problem 16-3B.In Prob 16-3BGazelle Corporation’s current-year income statement, comparative balance sheets, and additional information
Chavez Company most recently reconciled its bank statement and book balances of cash on August 31 and it reported two checks outstanding, No. 5888 for $1,028 and No. 5893 for $494. Check No. 5893 was
Using the information in Exercise 8-12, prepare any necessary journal entries that Del Gato Clinic must record as a result of preparing the bank reconciliation.Data from Exercise 8-12Del Gato
The following information is available to reconcile Severino Co.’s book balance of cash with its bank statement cash balance as of December 31.a. The December 31 cash balance according to the
Shamara Systems most recently reconciled its bank balance on April 30 and reported two checks outstanding at that time, No. 1771 for $781 and No. 1780 for $1,425.90. Check No. 1780 was still
Determine whether each procedure described below is an internal control strength or weakness.1. The same employee is in charge of recordkeeping and depositing cash receipts.2. All large payments are
Waupaca Company establishes a $350 petty cash fund on September 9. On September 30, the fund shows $104 in cash along with receipts for the following expenditures: transportation-in, $40; postage
For a through g, indicate whether its amount(1) Affects the bank or book side of a bank reconciliation,(2) Is an addition or a subtraction in a bank reconciliation,(3) Requires a journal entry. a.
Prepare a table with the following headings for a monthly bank reconciliation dated September 30. Indicate whether each item should be added to or subtracted from the book or bank balance and whether
Palmona Co. establishes a $200 petty cash fund on January 1. On January 8, the fund shows $38 in cash along with receipts for the following expenditures: postage, $74; transportation-in, $29;
Prepare journal entries to record transactions for Vitalo Company.Nov. 1 Accepted a $6,000, 180-day, 8% note from Kelly White in granting a time extension on her past-due account receivable.Dec. 31
Rizio Co. purchases a machine for $12,500, terms 2∕10, n∕60, FOB shipping point. Rizio paid within the discount period and took the $250 discount. Transportation costs of $360 were paid by Rizio.
Refer to Apple’s financial statements in Appendix A to answer the following.1. What percent of the original cost of Apple’s Property, Plant and Equipment account remains to be depreciated as
On January 1, Manning Co. purchases and installs a new machine costing $324,000 with a five-year life and an estimated $30,000 salvage value. Management estimates the machine will produce 1,470,000
On February 19 of the current year, Quartzite Co. pays $5,400,000 for land estimated to contain 4 million tons of recoverable ore. It installs and pays for machinery costing $400,000 on March 21. The
Nagy Company makes a lump-sum purchase of several assets on January 1 at a total cash price of $1,800,000. The estimated market values of the purchased assets are building, $890,000; land, $427,200;
On July 23 of the current year, Dakota Mining Co. pays $4,715,000 for land estimated to contain 5,125,000 tons of recoverable ore. It installs and pays for machinery costing $410,000 on July 25. The
On January 1 of this year, Diaz Boutique pays $105,000 to modernize its store. Improvements include new floors, ceilings, wiring, and wall coverings. These improvements are estimated to yield
At December 31, Folgeys Coffee Company reports the following results for its calendar year.Its year-end unadjusted trial balance includes the following items.1. Prepare the adjusting entry to record
Nichole Mustard and Credit Karma are introduced in the chapter’s opening feature. Assume that they are considering two options. Plan A. The company would begin selling access to a premium

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