Extra Practice Problems

Twenty-four full-length problems, none of them from your faculty sheets — written in the same shapes so you can test yourself on questions you have not already seen worked. Every one is solved in full.

Set 1 — Journal entries

Twelve problems. Attempt each fully before opening.

P1Mixed · 12 transactions

Q. Journalise in the books of Kiran Traders: 1 Apr commenced business with cash ₹2,00,000 and furniture ₹40,000 · 3 Apr opened a bank account with ₹1,50,000 · 5 Apr bought goods from Nandini ₹60,000 · 7 Apr sold goods for cash ₹35,000 · 9 Apr paid wages ₹8,000 · 11 Apr bought a printer for office use ₹18,000 by cheque · 14 Apr sold goods to Prakash ₹45,000 · 17 Apr paid Nandini by cheque ₹60,000 · 20 Apr received ₹44,000 from Prakash in full settlement · 23 Apr paid electricity ₹2,300 in cash · 26 Apr Kiran took ₹5,000 cash and goods worth ₹3,000 for home · 30 Apr bank charged ₹350.

Solution

Date	Entry	Dr ₹	Cr ₹	Reasoning
1 Apr	Cash A/c Dr. Furniture A/c Dr. To Capital A/c	2,00,000 40,000	2,40,000	Compound. Capital may be introduced as an asset.
3 Apr	Bank A/c Dr. To Cash A/c	1,50,000	1,50,000	Contra. Your own money between your own accounts.
5 Apr	Purchases A/c Dr. To Nandini's A/c	60,000	60,000	Supplier named, no mode → credit purchase.
7 Apr	Cash A/c Dr. To Sales A/c	35,000	35,000	"For cash", no party → cash sale.
9 Apr	Wages A/c Dr. To Cash A/c	8,000	8,000	Service rendered → nominal expense.
11 Apr	Printer A/c Dr. To Bank A/c	18,000	18,000	Not Purchases — a fixed asset. Cheque → Bank.
14 Apr	Prakash's A/c Dr. To Sales A/c	45,000	45,000	Customer named, no cash → credit sale.
17 Apr	Nandini's A/c Dr. To Bank A/c	60,000	60,000	Settles the 5 Apr liability in full; her account closes at nil.
20 Apr	Cash A/c Dr. Discount Allowed A/c Dr. To Prakash's A/c	44,000 1,000	45,000	"In full settlement" → cash discount. Prakash credited with the full ₹45,000.
23 Apr	Electricity A/c Dr. To Cash A/c	2,300	2,300	Nominal expense.
26 Apr	Drawings A/c Dr. To Cash A/c To Purchases A/c	8,000	5,000 3,000	Two different credits. Cash drawings credit Cash; goods drawings credit Purchases, at cost.
30 Apr	Bank Charges A/c Dr. To Bank A/c	350	350	The bank deducted it. No cash anywhere.

Closing balances, if askedCash: 2,00,000 − 1,50,000 + 35,000 − 8,000 + 44,000 − 2,300 − 5,000 = ₹1,13,700
Bank: 1,50,000 − 18,000 − 60,000 − 350 = ₹71,650

P2Discounts stacked

Q. Journalise: (a) bought goods of list price ₹80,000 from Verma at 12.5% trade discount, on credit · (b) returned goods of list price ₹8,000 to Verma · (c) paid Verma the balance by cheque, receiving 2% cash discount.

Solution

Why this stepWhat to write

Trade discount comes off the list price and is never recorded.

\(80{,}000 - 12.5\% = \)₹70,000
Purchases A/c Dr. 70,000 / To Verma 70,000

The return carries the same trade discount.

\(8{,}000 - 12.5\% = \)₹7,000
Verma's A/c Dr. 7,000 / To Purchase Returns 7,000

Balance owing, then the cash discount on that balance — not on the list price.

Balance \(= 70{,}000 - 7{,}000 = ₹63{,}000\)
Cash discount \(= 63{,}000 \times 2\% = ₹1{,}260\)
Cheque \(= ₹61{,}740\)

Verma's account is debited with its full book value to close it.

Verma's A/c Dr. 63,000
To Bank A/c 61,740
To Discount Received A/c 1,260

The trapComputing the 2% on ₹80,000 or on ₹70,000. Cash discount always applies to the amount actually outstanding at the moment of payment — here ₹63,000, after both the trade discount and the return.

P3Goods out, five ways

Q. A stationery wholesaler records: (a) goods costing ₹4,000 taken home by the owner · (b) goods costing ₹6,000 destroyed by flood, insurer admits ₹4,500 · (c) goods costing ₹900 given as samples to a school · (d) goods costing ₹2,500 donated to a charity · (e) goods costing ₹12,000 sold for ₹15,000 cash. Journalise all five.

Solution

	Entry	Why
(a)	Drawings A/c Dr. 4,000 To Purchases A/c 4,000	Owner took it. At cost.
(b)	Insurance Claim A/c Dr. 4,500 Loss by Flood A/c Dr. 1,500 To Purchases A/c 6,000	The admitted claim is a receivable — an asset. Only the unrecovered ₹1,500 is a loss.
(c)	Advertisement A/c Dr. 900 To Purchases A/c 900	Samples are a marketing expense.
(d)	Charity A/c Dr. 2,500 To Purchases A/c 2,500	A nominal expense.
(e)	Cash A/c Dr. 15,000 To Sales A/c 15,000	The odd one out. A genuine sale is recorded at selling price, and credits Sales, not Purchases. The ₹12,000 cost is never mentioned in the entry.

The point of including (e)Four entries credit Purchases at cost; the fifth credits Sales at selling price. The difference is whether a customer paid. If yes, it is revenue and the profit falls out automatically at year end. If no, you are simply removing goods you had recorded as bought.

P4Opening entry

Q. On 1 April 2026 the books of Deepa show: Cash ₹12,000; Bank ₹95,000; Stock ₹1,40,000; Machinery ₹3,00,000; Debtors ₹68,000; Bills Receivable ₹22,000; Creditors ₹1,25,000; Bills Payable ₹30,000; Bank Loan ₹1,50,000. Pass the opening entry.

Solution

Total the assets.

\(12{,}000 + 95{,}000 + 1{,}40{,}000 + 3{,}00{,}000 + 68{,}000 + 22{,}000 = \)₹6,37,000

Total the outside liabilities.

\(1{,}25{,}000 + 30{,}000 + 1{,}50{,}000 = \)₹3,05,000

Capital is the balancing figure.

\(6{,}37{,}000 - 3{,}05{,}000 = \)₹3,32,000

1 April 2026 · Opening journal entry

Cash A/c	Dr.	12,000
Bank A/c	Dr.	95,000
Stock A/c	Dr.	1,40,000
Machinery A/c	Dr.	3,00,000
Debtors A/c	Dr.	68,000
Bills Receivable A/c	Dr.	22,000
To Creditors A/c			1,25,000
To Bills Payable A/c			30,000
To Bank Loan A/c			1,50,000
To Capital A/c (balancing figure)			3,32,000

(Being the opening balances of assets and liabilities brought forward, capital being the balancing figure)

₹6,37,000 = ₹6,37,000. Assets debited, liabilities and capital credited. Write "balancing figure" against capital.

P5Insolvency and recovery

Q. Journalise: (a) sold goods to Farhan ₹36,000 on credit · (b) Farhan becomes insolvent; only 40 paise in a rupee is realised · (c) two years later, ₹5,000 of the amount written off on Farhan is unexpectedly received · (d) Meena, who owes ₹18,000, pays ₹17,550 in full settlement by cheque.

Solution

	Entry	Working
(a)	Farhan's A/c Dr. 36,000 To Sales A/c 36,000	Credit sale.
(b)	Cash A/c Dr. 14,400 Bad Debts A/c Dr. 21,600 To Farhan's A/c 36,000	40 paise in a rupee = 40%. \(36{,}000 \times 0.40 = 14{,}400\) \(36{,}000 - 14{,}400 = 21{,}600\)
(c)	Cash A/c Dr. 5,000 To Bad Debts Recovered A/c 5,000	Not Farhan's A/c — closed two years ago. A fresh income of this year.
(d)	Bank A/c Dr. 17,550 Discount Allowed A/c Dr. 450 To Meena's A/c 18,000	\(18{,}000 - 17{,}550 = 450\). Cheque → Bank.

Compare (b) and (d)Structurally identical — cash plus a second debit, closing the debtor at full value. The only difference is the name of the second debit: Bad Debts when you had no choice, Discount Allowed when you chose to forgo it for early payment.

P6Advance or expense?

Q. Journalise: (a) paid ₹24,000 as a year's rent in advance on 1 January, books closing 31 March · (b) paid ₹6,000 salary for March · (c) paid ₹15,000 to Sunil, an interior designer, as an advance · (d) Sunil completes the work and bills ₹19,000 · (e) commission of ₹8,000 received for work already done · (f) ₹10,000 received from Roy as an advance for consultancy not yet performed.

Solution

	Entry	Why
(a)	Rent A/c Dr. 24,000 To Cash A/c 24,000 then at year end: Prepaid Rent A/c Dr. 18,000 To Rent A/c 18,000	Paid for 12 months; only 3 months (Jan–Mar) belong to this year. The other 9 months' ₹18,000 is a prepaid expense — an asset. Accrual + Matching.
(b)	Salaries A/c Dr. 6,000 To Cash A/c 6,000	Service rendered, period matches. A straightforward expense.
(c)	Sunil's A/c Dr. 15,000 To Cash A/c 15,000	Not Repairs. No service yet; recoverable if he fails to deliver → he is a debtor.
(d)	Repairs / Renovation A/c Dr. 19,000 To Sunil's A/c 19,000	Now the expense is recognised. Sunil's account swings from ₹15,000 Dr to ₹4,000 Cr — he is now a creditor.
(e)	Cash A/c Dr. 8,000 To Commission A/c 8,000	Earned → credit the income.
(f)	Cash A/c Dr. 10,000 To Roy's A/c 10,000	Not earned → refundable → credit the person. Roy is a creditor.

The single principle behind all sixMoney that changes hands BEFORE the service is a balance-sheet item; AFTER the service it is a P&L item. (a) is the same idea applied to time rather than to a person: nine months of rent belong to next year, so ₹18,000 sits on the balance sheet as Prepaid Rent.

Set 2 — Ledger and trial balance

P7Post and balance

Q. Post to the ledger and balance the Cash and Ravi's accounts: 1 May started with cash ₹50,000 · 4 May bought goods for cash ₹12,000 · 8 May sold goods to Ravi on credit ₹20,000 · 12 May paid rent ₹4,000 cash · 18 May Ravi returned goods ₹3,000 · 25 May Ravi paid ₹16,700 in full settlement · 28 May paid salaries ₹9,000 cash.

Solution

Cash Account

Dr.		Cr.
May 1 To Capital A/c	50,000	May 4 By Purchases A/c	12,000
May 25 To Ravi's A/c	16,700	May 12 By Rent A/c	4,000
		May 28 By Salaries A/c	9,000
		May 31 By Balance c/d	41,700
	66,700		66,700
Jun 1 To Balance b/d	41,700

Ravi's Account

Dr.		Cr.
May 8 To Sales A/c	20,000	May 18 By Sales Returns A/c	3,000
		May 25 By Cash A/c	16,700
		May 25 By Discount Allowed A/c	300
	20,000		20,000

Reading Ravi's accountHe owed ₹20,000. He returned ₹3,000 of goods, leaving ₹17,000. He paid ₹16,700 "in full settlement", so the remaining ₹300 is Discount Allowed. Three credits, one debit, and the account closes at nil — no balancing figure needed.

The common error: computing the discount as ₹20,000 − ₹16,700 = ₹3,300. The return came first; the discount applies to what was actually outstanding at the moment of payment.

P8Prepare a trial balance

Q. Prepare a trial balance as at 31 March 2026 from: Capital ₹2,60,000; Drawings ₹18,000; Opening Stock ₹45,000; Purchases ₹3,10,000; Sales ₹4,60,000; Returns Inward ₹6,000; Returns Outward ₹9,000; Carriage Inward ₹7,500; Carriage Outward ₹4,200; Wages ₹38,000; Salaries ₹52,000; Rent ₹24,000; Insurance ₹6,800; Bad Debts ₹3,500; Discount Allowed ₹2,700; Discount Received ₹4,100; Sundry Debtors ₹96,000; Sundry Creditors ₹74,000; Furniture ₹60,000; Machinery ₹1,40,000; Cash in hand ₹8,400; Cash at Bank ₹36,000; Bank Overdraft ₹41,000; Commission Received ₹10,000.

Solution

Ledger Account	Dr. ₹	Cr. ₹	Note
Capital		2,60,000
Drawings	18,000		Dr — reduces capital
Opening Stock	45,000
Purchases	3,10,000
Sales		4,60,000
Returns Inward	6,000		Dr — reduces Sales
Returns Outward		9,000	Cr — reduces Purchases
Carriage Inward	7,500		Both carriages
Carriage Outward	4,200		are Dr
Wages	38,000
Salaries	52,000
Rent	24,000
Insurance	6,800
Bad Debts	3,500		A loss
Discount Allowed	2,700		Expense
Discount Received		4,100	Income
Sundry Debtors	96,000
Sundry Creditors		74,000
Furniture	60,000
Machinery	1,40,000
Cash in hand	8,400
Cash at Bank	36,000		Asset
Bank Overdraft		41,000	Cr — a liability
Commission Received		10,000	"Received" → income
Grand Total	8,58,100	8,58,100	Tallied ✓

Note the deliberate trioCash at Bank ₹36,000 (Dr) and Bank Overdraft ₹41,000 (Cr) coexist — a firm can have a current account in credit at one bank and an overdraft at another. Do not net them off. And Discount Allowed and Discount Received appear together, in opposite columns, for the same reason.

P9Find the error

Q. A trial balance totals ₹8,42,000 (Dr) and ₹8,56,400 (Cr). Investigation shows one item has been placed in the wrong column. (a) What is that item worth and which column should it be in? (b) Separately, if the difference had instead been ₹4,500 with nothing misplaced, what two causes would you check first?

Solution

A misplaced item is wrong twice — absent from where it belongs, present where it does not. The gap is double its value.

Difference \(= 8{,}56{,}400 - 8{,}42{,}000 = ₹14{,}400\)

Halve it. The credit column is heavy, so a credit-column item belongs in the debit column.

Item \(= 14{,}400 \div 2 = \)₹7,200, currently in the credit column, belongs in the debit column.
Likely candidates: Drawings, Returns Inward, or a Carriage — the three items most often mis-sided.

(b) A difference of ₹4,500 with nothing misplaced 1. An omitted item. If a balance was simply left out of the list, the difference equals that balance — so look for a ₹4,500 account.

2. Transposed digits. ₹4,500 is divisible by 9 (4,500 ÷ 9 = 500), and any difference divisible by 9 is a classic sign of transposition — ₹5,400 written as ₹900, or ₹9,000 written as ₹4,500. Divisibility by 9 is the fastest diagnostic in accounting: it catches every digit-swap error.

Set 3 — Depreciation

Build the grid before computing anything.

P10SLM · two machines · one sold

Q. Mehra Ltd, books closing 31 March, bought machinery for ₹4,00,000 on 1 April 2022 and additional machinery for ₹1,50,000 on 1 October 2023. On 31 December 2024 the machine bought in 2023 was sold for ₹1,10,000. Depreciation is 12% p.a. on the original cost. Compute the depreciation for 2022-23 to 2024-25 and the profit or loss on the sale.

Solution

Machine	Cost	Full-year dep.	2022-23	2023-24	2024-25
A · 1 Apr 2022	₹4,00,000	₹48,000	12 mo	12 mo	12 mo
B · 1 Oct 2023, sold 31 Dec 2024	₹1,50,000	₹18,000	—	6 mo	9 mo Apr–Dec

Why this stepWhat to write

Machine A: bought on the first day of the year, SLM, so a constant charge.

\(4{,}00{,}000 \times 12\% = \)₹48,000 each year

Machine B, 2023-24: bought 1 Oct → 6 months.

\(1{,}50{,}000 \times 12\% \times \tfrac{6}{12} = \)₹9,000

Machine B, 2024-25: sold 31 Dec → Apr to Dec = 9 months.

\(1{,}50{,}000 \times 12\% \times \tfrac{9}{12} = \)₹13,500

Annual totals.

2022-23: ₹48,000
2023-24: 48,000 + 9,000 = ₹57,000
2024-25: 48,000 + 13,500 = ₹61,500

Accumulated depreciation on B, to the date of sale.

\(9{,}000 + 13{,}500 = ₹22{,}500\)

WDV on the day it left.

\(1{,}50{,}000 - 22{,}500 = \)₹1,27,500

Against proceeds of ₹1,10,000.

\(1{,}10{,}000 - 1{,}27{,}500 = \)LOSS ₹17,500 → P&L debit

CheckIf you got a loss of ₹4,000, you forgot the ₹13,500 for Apr–Dec 2024. If you got ₹8,500, you charged B a full year in 2023-24. Both errors come from skipping the month grid.

P11WDV · three years, one addition

Q. Ashok & Sons bought a machine on 1 July 2022 for ₹2,40,000, spending a further ₹20,000 on installation. On 1 January 2024 a second machine was bought for ₹1,00,000. Depreciation is 20% p.a. on the diminishing balance; books close 31 March. Compute the depreciation for 2022-23, 2023-24 and 2024-25, and the book value at 31 March 2025.

Solution

Why this stepWhat to write

Installation is capitalised. Depreciate on the total.

Cost of A \(= 2{,}40{,}000 + 20{,}000 = \)₹2,60,000

2022-23: A bought 1 Jul → 9 months.

\(2{,}60{,}000 \times 20\% \times \tfrac{9}{12} = \)₹39,000
BV of A = ₹2,21,000

2023-24: A full year on its new base; B bought 1 Jan → 3 months.

A: \(2{,}21{,}000 \times 20\% = ₹44{,}200\) → BV ₹1,76,800
B: \(1{,}00{,}000 \times 20\% \times \tfrac{3}{12} = ₹5{,}000\) → BV ₹95,000
Total: ₹49,200

2024-25: both full years, each on its own opening balance.

A: \(1{,}76{,}800 \times 20\% = ₹35{,}360\) → BV ₹1,41,440
B: \(95{,}000 \times 20\% = ₹19{,}000\) → BV ₹76,000
Total: ₹54,360

Closing book value.

\(1{,}41{,}440 + 76{,}000 = \)₹2,17,440

The two things to watch1. Machine A's charge falls every year — ₹39,000, ₹44,200, ₹35,360. The rise in year 2 is not an error; year 1 was only nine months. Compare years 2 and 3 to see the true decline.

2. Each machine keeps its own running balance. Do not merge them into a single pot and apply 20% to the total — you would then depreciate machine B for periods it was not owned.

P12Fractional sale · SLM

Q. Nadkarni Industries bought machinery for ₹6,00,000 on 1 April 2021, depreciating at 10% on original cost, books closing 31 March. On 30 November 2023 one-third of the machinery was sold for ₹1,30,000 and on the same day a replacement costing ₹2,40,000 was installed. Compute the depreciation for 2023-24 and the profit or loss on the sale.

Solution

Why this stepWhat to write

Under SLM take the fraction of the original cost.

Cost of the third sold \(= 6{,}00{,}000 \div 3 = \)₹2,00,000
Cost retained \(= \)₹4,00,000

The third sold: owned 1 Apr 2021 → 30 Nov 2023. That is two full years plus 8 months (Apr–Nov 2023).

Full-year charge \(= 2{,}00{,}000 \times 10\% = ₹20{,}000\)
2021-22: ₹20,000 · 2022-23: ₹20,000
2023-24: \(20{,}000 \times \tfrac{8}{12} = \)₹13,333.33
Accumulated \(= ₹53{,}333.33\)

The two-thirds retained: a full year.

\(4{,}00{,}000 \times 10\% = \)₹40,000

The replacement: installed 30 Nov → Dec to Mar = 4 months.

\(2{,}40{,}000 \times 10\% \times \tfrac{4}{12} = \)₹8,000

Total for 2023-24.

\(13{,}333.33 + 40{,}000 + 8{,}000 = \)₹61,333.33

WDV of the third sold, against proceeds.

\(2{,}00{,}000 - 53{,}333.33 = ₹1{,}46{,}666.67\)
\(1{,}30{,}000 - 1{,}46{,}666.67 = \)LOSS ₹16,666.67

SLM vs WDV on a fractional saleUnder SLM you take the fraction of the original cost, because each portion has been depreciated on its own unchanging base. Under WDV you take the fraction of the current book value, because the whole asset has been written down together. Same idea, different base — and mixing them is the most common error in this question type.

P13Theory · compare and advise

Q. A firm buys a machine for ₹10,00,000, life 10 years, no scrap value. Compute depreciation for years 1, 2 and 3 under SLM at 10% and WDV at 10%. Which would the firm's tax adviser recommend and why? Which would make year-1 profits look better?

Solution

Year	SLM dep.	SLM closing BV	WDV dep.	WDV closing BV
1	1,00,000	9,00,000	1,00,000	9,00,000
2	1,00,000	8,00,000	90,000	8,10,000
3	1,00,000	7,00,000	81,000	7,29,000
3-year total	3,00,000		2,71,000

The tax adviser recommends WDVTwo reasons, and the second is the decisive one:
1. WDV is the method recognised by the Indian income-tax authorities; SLM is not. Using SLM in the books would mean maintaining a separate computation for tax.
2. WDV front-loads the charge, deferring tax into later years — worth money in present-value terms even though the total written off is identical over the asset's life.

Which makes year-1 profits look better?Neither — year 1 is identical at ₹1,00,000 under both. That is the part of the question worth noticing. The methods only diverge from year 2, where SLM charges ₹1,00,000 against WDV's ₹90,000 — so SLM makes year 2 and 3 profits look worse, and WDV makes them look better.

The honest caveat: over the asset's full life the total charge is the same under both. Method choice moves profit between years; it never creates or destroys it. And neither method sets aside cash for replacement — only a Sinking Fund does that.

◆ Where to go when these feel easy

Go back to the faculty problems on the Solve Anything pages and do them with the solutions closed. Those are the questions your faculty wrote, and their shapes are the best available evidence of what the Class Test will look like. Then read Quick Revision and Formats & Rules once each, and stop.