Accounts Test No 2

1. Answer the following questions.

1. Reputation of a firm expressed in terms of money. 
2. Payment of bill of exchange before its due date at rebate.
3. The person on whom the bill of exchange is drawn.
4. Normal Rate of Return x Capital employed.
5. Who is an endorsee?
6. A person who accepts the bill.
7. A person who endorses the bill.
8. What is foreign bill?
9. What is inland bill?
10. What is noting charges?
11. Define goodwill.

2.  Drawer                             :               Elavarasi, 35, Lakhani Apartment, Ulhasnagar

      Drawee                            :               Elavarasan, 23, Prasad Bhawan, Thane (East)

      Payee                               :               Subita Ambarnath

      Period                              :               90 days

      Amount                           :               Rs. 9,755

      Date of Bill                     :               15^th March, 1995

     Accepted on                     :               20^th March, 1995   

3. Vijay and Azim carrying on a business in partnership for last 5 years. Goodwill of the firm is to be valued at 3 years purchases of the average profits of last 5 years. The profits and losses for the last 5 years were:

1996-97 1997-98 1998-99 1999-2000 2000-01

(Profit) Rs. 32,000 (Profit) Rs. 30,000 (Loss) Rs. 16,000 (Profit) Rs. 14,000 (Profit) Rs. 20,000

You are required to calculate the value of goodwill of the firm.

4.       Calculate the value of goodwill of the firm from the following information:

            i.      Total capital employed in the business Rs. 4,00,000.

          ii.      Net profits of the firm or the past three years were Rs. 53,800, Rs. 45,350, Rs. 56,250.

        iii.      Normal rate of return at 10%.

Goodwill is to be valued at three years purchase of super profit.

5.       Premlal sold goods to Sunderlal worth Rs. 10,000/- and Sunderlal accepted the bill for Rs. 10,000/- at 3 months drawn by Premlal. Premlal Discounted the bill with his bank @ 6 % p.a. on due date the bill was dishonoured and Sunderlal requested Premlal to accept Rs. 4,000 immediately and draw upon him a new bill for the remaining amount at 3months together with an interest at 10% p.a. Premlal agreed and the second bill was duly honoured. Give the Journal entries in the books of Premlal.   

6.       Mukund owes (be obligated) Prakash Rs. 4000 for which Prakash draws a bill for 2 months on 1^st February, 1989. Mukund accepts it and returns it to Prakash. On 4^th March, 1989, Mukund approaches Prakash and request him to accept Rs. 1000 in cash and draw a fresh bill for 3 months for the balance plus interest @ 10% p.a. Prakash accepts the request and draw a bill accordingly which is accepted by Mukund. On 1^st June 1989 Mukund retired his acceptance under discount of Rs. 30/-. Pass journal entries in the books of Prakash and prepare Prakash account in the ledger of Mukund.

1. Answer the following questions.

1. What is honour of the bill?
2. What is dishonour of the bill?
3. What do you mean by hundies?
4. What is bill of exchange?
5. How many parties are there in bill of exchange? 
6. Who has to ultimately bear the noting charges?
7. Who accepts the bill?
8. Payment of bill of exchange before its due date at rebate.
9. The person on whom the bill of exchange is drawn.
10. Normal Rate of Return x Capital employed.
11. Who is an endorsee?

2.       Drawer                        :               Soundariya, Neelam Bhawan, Kalyan              

      Drawee                            :               Sugandi, Dastur Nagar, Amaravati

      Payee                               :               Umesh Narigrekar, Deogad

      Period                              :               90 days

     Amount                            :               Rs. 7,555

     Date of bill                       :               15^th March 1995

     Accepted on                     :               20^th March 1995

3.       M/s XYZ partnership firm earned net profit during the last four years were Rs, 7,000. Rs, 13,000. Rs, 12,000 and Rs, 8,000. The capital investment made in the firm was Rs, 50,000. N.R.R on capital is 15%. The remuneration of the partners during the period is Rs, 500 p.a. Good will is valued at 2 Yrs purchase of Average super profit of the above mentioned years.

4.       The profits of the firm for the last five years are 2002 Rs. 20,000; 2003 Rs. 16,000; 2004 Rs. 24,000; 2005 Rs. 8000; 2006 Rs. 12,000. Calculate the goodwill of the firm.

5.       On 1^st March, Ramchandra sold goods to Raman worth Rs. 8,000/- and Raman accepted the Bill for Rs. 8,000/- at 3 months drawn by Ramchandra. Ramchandra discounted the bill with his bank @ 6% p.a. On due date the bill was dishonoured and Raman requested Ramchandra to accept Rs. 4,000/- immediately and draw upon him a new bill for the remaining amount at 3 months together with an interest at 10% p.a. Ramchandra agreed. The second Bill was duly honoured. Give Journal entries in the books of Ramchandra.

6.       Ameet draws a bill for Rs. 7500 on Tushar for four months. Ameet discounts the bill with the bank at 8%p.a. On the due date Tushar requested Ameet to accept Rs. 4,700 (including Rs. 200 for interest) and to draw a bill for the balance of three months. Ameet agrees this proposal. Before the due date of the new bill Tushar retires the bill for Rs. 2960. Pass the journal entries in the books of Tushar and open Tushar’s account in the books of Ameet.