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Past papers/ Adv Accounting/ November 2014
Paper 17 Qs
Suggested Answers · November 2014

CA Inter Adv Accounting

This page contains all 17 questions from the CA Inter Advanced Accounting Suggested Answers for the November 2014 attempt cycle, sourced from VSI Jaipur.

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Q.1(a) 05 marks medium Plant depreciation, WDV method ⚡ Try this Q →
In the books of Optic Fiber Ltd., plant and machinery stood at ₹5,32,000 on 1.4.2013. However on scrutiny it was found that machinery worth ₹1,20,000 was included in the purchases on 1.6.2013. On 30.6.2013 the company disposed a machine having book value of ₹1,89,000 on 1.4.2013 at ₹1,75,000 in part exchange of a new machine costing ₹2,56,000. The company charges depreciation @ 20% WDV on plant and machinery. Calculate: (i) Depreciation to be charged to P/L (ii) Book value of Plant and Machinery A/c as on 31.3.2014 (iii) Loss on exchange of machinery.
CTTP

Worked Solution

✓ Verified

Plant & Machinery — WDV Method (Year ending 31.3.2014)

Key Figures Identified:
- Opening WDV on 1.4.2013: ₹5,32,000 (includes disposed machine WDV ₹1,89,000)
- Remaining existing machinery WDV: ₹5,32,000 − ₹1,89,000 = ₹3,43,000
- New purchase on 1.6.2013: ₹1,20,000 (held for 10 months)
- Machine disposed on 30.6.2013: WDV ₹1,89,000 as on 1.4.2013 (held for 3 months)
- New machine acquired via part exchange on 30.6.2013: ₹2,56,000 (held for 9 months)

(i) Depreciation charged to Profit & Loss A/c:

AssetWDV / CostRatePeriodDepreciation (₹)
Existing machinery (excl. disposed)₹3,43,00020%12 months68,600
New purchase (1.6.2013)₹1,20,00020%10 months20,000
New machine from part exchange (30.6.2013)₹2,56,00020%9 months38,400
Disposed machine (1.4.2013 to 30.6.2013)₹1,89,00020%3 months9,450
Total Depreciation1,36,450

Depreciation charged to P&L = ₹1,36,450

(ii) Book Value of Plant & Machinery as on 31.3.2014:

The closing WDV is built up from individual asset WDVs:
- Existing machinery: ₹3,43,000 − ₹68,600 = ₹2,74,400
- New purchase (1.6.2013): ₹1,20,000 − ₹20,000 = ₹1,00,000
- New machine (part exchange): ₹2,56,000 − ₹38,400 = ₹2,17,600

Closing Book Value = ₹2,74,400 + ₹1,00,000 + ₹2,17,600 = ₹5,92,000

(iii) Loss on Exchange of Machinery:

WDV of disposed machine as on 1.4.2013: ₹1,89,000
Less: Depreciation for 3 months (Apr–Jun 2013): ₹9,450
WDV at date of disposal (30.6.2013): ₹1,79,550
Less: Part exchange value realised: ₹1,75,000

Loss on Exchange = ₹4,550

Note: The new machine is recorded at its full cost of ₹2,56,000. Cash actually paid = ₹2,56,000 − ₹1,75,000 = ₹81,000.

PLAN

Write it like this

Time target 9 min

1The skeleton

- Start by separating the opening WDV — split ₹5,32,000 into 'remaining' (₹3,43,000) and 'disposed' (₹1,89,000) in the very first line; examiners award a step mark here before you even touch depreciation.
- Build a single depreciation table with four rows — existing machinery, new purchase, part-exchange machine, and disposed machine each get their own row with WDV/cost, rate, period (months/12), and figure; this format is what gets you part marks even if one number is wrong.
- Explicitly state the holding period in months for each asset — write '10 months' or '9 months' next to each row; the examiner cannot award the time-apportionment mark if it's only implied in your arithmetic.
- For part (iii), show WDV at date of disposal as a separate step — compute WDV on 30.6.2013 (after 3-month depreciation) before comparing with exchange value; skipping this step collapses two marks into one line and you lose the process mark.
- End each part with a boxed/underlined single-line answer — write 'Depreciation charged to P&L = ₹1,36,450' on its own line; examiners marking 200 scripts pick up the answer line first, then verify working.

2Examiner-rewarded phrases

“depreciation has been charged on pro-rata basis for the period of use during the year”“the machine disposed of has been depreciated up to the date of disposal”“the new machine acquired on part exchange is recorded at its invoice cost of ₹2,56,000”

3Common trap

Don't fall for this

The killer mistake here is charging full-year depreciation on the disposed machine instead of stopping at 30.6.2013 (3 months) — and then separately forgetting to depreciate it at all for that short period, so the WDV at disposal date is wrong and your loss figure is off by ₹9,450. Both errors exist in the wild; the second one is sneakier.

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Q.1(b) 05 marks medium Revenue recognition AS 9, accruals concept ⚡ Try this Q →
Sarita Publications publishes a monthly magazine on the 15th of every month. It sells advertising space in the magazine to advertisers on the terms of 80% sale value payable in advance, and the balance within 30 days of the release of the publication. The sale of space for the March 2014 issue was made in February 2014. The magazine was published on its scheduled date. It received ₹2,40,000 on 10.3.2014 and ₹60,000 on 10.4.2014 for the March 2014 issue. Discuss in the context of AS 9 the amount of revenue to be recognized and the treatment of the amount received from advertisers for the year ending 31.3.2014. What will be the treatment if the publication is delayed till 2.4.2014?
CTTP

Worked Solution

✓ Verified

Relevant Standard: AS 9 — Revenue Recognition (issued by ICAI)

Core Principle under AS 9 for Advertising Revenue:
AS 9 states that revenue from advertising commissions and sale of advertising space is recognised when the related advertisement or commercial appears before the public, i.e., when the publication is released. The receipt of advance payment does not by itself constitute revenue recognition; the critical event is the publication of the advertisement.

Situation 1: Magazine published on scheduled date (15th March 2014)

The magazine for the March 2014 issue was published on 15.3.2014, which falls within the year ending 31.3.2014. Since the advertisement has appeared before the public within this accounting year, the performance obligation is fully discharged as on 15.3.2014.

Accordingly, the full revenue of ₹3,00,000 (₹2,40,000 + ₹60,000) is to be recognised in the year ending 31.3.2014.

Treatment of individual receipts:

- ₹2,40,000 received on 10.3.2014 (before publication): At the time of receipt, this amount represents an advance from advertisers and is a liability (deferred/unearned revenue). Once the magazine is published on 15.3.2014, it is transferred to revenue.
- ₹60,000 receivable, actually received on 10.4.2014: As at 31.3.2014, this amount has been earned (performance stands complete on 15.3.2014) but not yet received. It must be recognised as accrued revenue (debtor) in the books as at 31.3.2014 in accordance with the accruals concept under the Framework and AS 9.

Thus, the Profit & Loss Account for the year ending 31.3.2014 must reflect revenue of ₹3,00,000 from the March 2014 issue.

Situation 2: Publication delayed to 2nd April 2014

If the magazine is published on 2.4.2014, the advertisement has not appeared before the public as on 31.3.2014. The critical event (publication) occurs in the next accounting year (FY 2014-15).

Consequently, no revenue can be recognised for the March 2014 issue in the year ending 31.3.2014, notwithstanding the receipt of ₹2,40,000 on 10.3.2014.

The ₹2,40,000 already received must be shown as "Advance received from Advertisers" under Current Liabilities in the Balance Sheet as at 31.3.2014. It represents an obligation yet to be performed.

Revenue of ₹3,00,000 will be recognised in FY 2014-15 when the magazine is published on 2.4.2014, and the remaining ₹60,000 will be receivable at that point.

Summary:

ScenarioRevenue in FY 2013-14Treatment of ₹2,40,000 (as at 31.3.2014)Accrued Debtor
Published 15.3.2014₹3,00,000Part of revenue (₹2,40,000 earned)₹60,000
Published 2.4.2014NilAdvance (Liability)Nil
AS 9 — Revenue Recognition (ICAI)Framework for Preparation and Presentation of Financial Statements (Accrual Basis)
PLAN

Write it like this

Time target 9 min

1The skeleton

- Lead with the critical event rule under AS 9 — write 'revenue from sale of advertising space is recognised when the related advertisement appears before the public' in line 1, because examiners look for this trigger phrase before reading anything else.
- Split your answer into two clearly labelled situations — 'Situation 1: Published 15.3.2014' and 'Situation 2: Published 2.4.2014' — this signals you've read the full question and forces the examiner to tick both halves.
- Name the accounting treatment of ₹2,40,000 explicitly — call it 'Advance received from Advertisers (liability)' before publication and then show it flipping to revenue after publication; the reclassification is the marks-earning move, not just saying 'it's advance'.
- Write the accruals concept link for the ₹60,000 — say 'as per the accruals concept, revenue is recognised when earned, not when received; accordingly ₹60,000 is recognised as accrued revenue/debtor as at 31.3.2014' — linking concept name to treatment is what separates a 4-mark answer from a 3-mark one.
- End with a two-row summary table — one row per situation, columns: Revenue recognised / Treatment of advance / Debtor; examiners reward structure and it protects you if your prose is thin.

2Examiner-rewarded phrases

“revenue from sale of advertising space is recognised when the related advertisement or commercial appears before the public”“the amount received in advance shall be treated as a liability (advance from advertisers) until the performance is complete”“in accordance with the accruals concept, the amount earned but not yet received shall be recognised as accrued revenue”

3Common trap

Don't fall for this

Most students correctly handle Situation 1 but then say 'no revenue in Situation 2 because cash not received' — that's the wrong reason; the real reason is the critical event (publication) hasn't occurred yet, and mixing up cash basis logic with AS 9's performance-trigger will cost you 1-2 marks even if your final number is right.

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Q.1(c) 05 marks medium Inventory costing, normal and abnormal wastage AS 2 ⚡ Try this Q →
Capital Cables Ltd., has a normal wastage of 4% in the production process. During the year 2013-14 the company used 12,000 MT of raw material costing ₹150 per MT. At the end of the year 630 MT of wastage was in stock. The accountant wants to know how this wastage is to be treated in the books. Explain in the context of AS 2 the treatment of normal loss and abnormal loss and also find out the amount of abnormal loss if any.
CTTP

Worked Solution

✓ Verified

Treatment of Normal and Abnormal Wastage under AS 2 (Valuation of Inventories)

AS 2 requires that the cost of inventories should comprise all costs of purchase, costs of conversion, and other costs incurred in bringing the inventories to their present location and condition.

Normal Loss/Wastage: Under AS 2, normal wastage is an inherent and unavoidable loss in the production process. The cost of normal wastage is absorbed into the cost of good output — it does not appear as a separate item but instead increases the cost per unit of net output. Normal wastage is thus included in the cost of inventories.

Abnormal Loss/Wastage: Abnormal wastage is over and above the normal expected loss. AS 2 requires that abnormal wastage is not included in the cost of inventories but is instead written off to the Profit & Loss Account in the period in which it occurs. It represents an inefficiency and should not inflate inventory values.

Calculation of Normal and Abnormal Wastage:

Raw material input = 12,000 MT; Normal wastage rate = 4%

Normal wastage = 4% × 12,000 = 480 MT

Actual (total) wastage found = 630 MT

Abnormal wastage = 630 − 480 = 150 MT

Computation of Cost of Abnormal Loss:

Total cost of raw material = 12,000 MT × ₹150 = ₹18,00,000

Under AS 2, the cost of normal wastage is spread over the net expected output:

Expected net output = 12,000 − 480 = 11,520 MT

Effective cost per MT (after absorbing normal wastage) = ₹18,00,000 ÷ 11,520 = ₹156.25 per MT

Abnormal loss (in ₹) = 150 MT × ₹156.25 = ₹23,437.50

This amount of ₹23,437.50 should be debited to the Profit & Loss Account and should not be included in the valuation of closing inventory or the cost of production.

AS 2 - Valuation of Inventories (ICAI)
PLAN

Write it like this

Time target 9 min

1The skeleton

- Lead with the AS 2 rule for normal wastage in one line — state that normal loss is absorbed into cost of good output, so examiners see you know the standard before you touch the numbers.
- Then state the AS 2 rule for abnormal wastage in one line — write off to P&L, not included in inventory cost; this two-rule opener earns you the theory marks even if your calculation goes wrong.
- Set up a clean calculation block: Input → Normal wastage (4%) → Actual wastage → Abnormal wastage — label each figure with MT so the examiner can tick-mark without reading sentences.
- Compute effective cost per MT by dividing total material cost by expected net output — this is the step most students skip, and it's where the mark sits; 12,000 MT cost spread over 11,520 MT gives ₹156.25.
- Multiply abnormal MT × effective cost per MT and explicitly state the P&L treatment — closing with 'debited to Profit & Loss Account' mirrors ICAI's own language and locks the last mark.

2Examiner-rewarded phrases

“abnormal wastage shall not be included in the cost of inventories and shall be recognised as an expense in the period in which it is incurred”“the cost of normal wastage is absorbed into the cost of net output”“as per AS 2 (Valuation of Inventories), costs of conversion include a systematic allocation of fixed and variable production overheads after excluding abnormal amounts of wasted materials”

3Common trap

Don't fall for this

Watch out — most students compute abnormal loss at ₹150 per MT (the raw purchase price) instead of ₹156.25 per MT (cost after absorbing normal wastage). That's wrong under AS 2 and you'll drop 1-2 marks on the final figure even if your theory is perfect.

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Q.1(d) 05 marks medium Investment re-classification, AS 13 ⚡ Try this Q →
Blue-chip Equity Investments Ltd., wants to re-classify its investments in accordance with AS 13. (i) Long term investments in Company A, costing ₹8.5 lakhs are to be re-classified as current. The company had reduced the value of these investments to ₹6.5 lakhs to recognize a permanent decline in value. The fair value on date of transfer is ₹6.8 lakhs. (ii) Long term investments in Company B, costing ₹7 lakhs are to be re-classified as current. The fair value on date of transfer is ₹8 lakhs and book value is ₹7 lakhs. (iii) Current investment in Company C, costing ₹10 lakhs are to be re-classified as long term as the company wants to retain them. The market value on date of transfer is ₹12 lakhs. (iv) Current investment in Company D, costing ₹15 lakhs are to be re-classified as long term. The market value on date of transfer is ₹14 lakhs. Pass necessary journal entries and explain the accounting treatment.
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Q.2 16 marks very hard Non-profit organization accounting, Receipts & Payments, Bal ⚡ Try this Q →
The following information relates to Country Sports Club for the year ended 31.3.2014. You are required to prepare the Receipts and Payments Account for the year ended 31.3.2014 and Balance Sheet as on that date. [Income: Subscriptions ₹8,40,000; Receipts for annual sports ₹3,25,000 (less expenses ₹2,75,000 = ₹50,000 net); Entrance fees ₹1,80,000; Interest on 10% government bond ₹12,000; Rent on hire of club ground ₹84,000; Profit on sale of sports material ₹10,500; Sale of old newspaper ₹3,500. Expenditure: Salaries ₹3,36,000; Repairs and maintenance ₹88,000; Ground upkeep ₹1,66,500; Electricity charges ₹82,600; Sports material used ₹1,48,000; Printing and stationery ₹42,200; Groundsman wages ₹80,000; Depreciation ₹1,36,000; Prizes distributed (net) ₹4,000; Surplus carried to capital fund ₹96,700.] Additional information includes balances of fixed assets, stock, investments, subscriptions, debtors, creditors, and other items as provided.
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Q.3(a) 06 marks medium Cash flow statement preparation ⚡ Try this Q →
Prepare Cash flow for Gamma Ltd., for the year ending 31.3.2014 from the following information: (1) Sales for the year amounted to ₹135 crores out of which 60% was cash sales. (2) Purchases for the year amounted to ₹55 crores out of which credit purchase was 80%. (3) Administrative and selling expenses amounted to ₹18 crores and salary paid amounted to ₹22 crores. (4) The company redeemed debentures of ₹20 crores at a premium of 10%. Debenture holders were issued equity shares of ₹15 crores towards redemption and the balance was paid in cash. Debenture interest paid during the year was ₹1.5 crores. (5) Dividend paid during the year amounted to ₹10 crores. Dividend distribution tax @ 17% was also paid. (6) Investment costing ₹12 crores were sold at a profit of ₹2.4 crores. (7) ₹8 crores was paid towards income tax during the year. (8) A new plant costing ₹21 crores was purchased in part exchange of an old plant. The book value of the old plant was ₹12 crores but the vendor took over the old plant at a value of ₹10 crores only. The balance was paid in cash to the vendor. [Additional: Debtors ₹50 crores (1.4.2013), ₹45 crores (31.3.2014); Creditors ₹21 crores (1.4.2013), ₹23 crores (31.3.2014); Bank ₹6 crores (1.4.2013)]
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Q.3(b) 10 marks hard Balance sheet preparation, Schedule VI Companies Act ⚡ Try this Q →
From the following particulars furnished by Elegant Ltd., prepare the Balance Sheet as on 31st March 2014 as required by part I, revised Schedule VI of the Companies Act. [Given: Equity Share Capital ₹50,00,000 (₹100 each); Call in Arrears ₹5,000; Land & Building ₹27,50,000; Plant & Machinery ₹26,25,000; Furniture ₹2,50,000; General Reserve ₹10,50,000; Loan from State Financial Corporation ₹7,50,000; Raw Materials ₹2,50,000; Finished Goods ₹10,00,000; Provision for Taxation ₹3,40,000; Sundry Debtors ₹10,00,000; Advances ₹2,13,500; Proposed Dividend ₹3,00,000; Profit & Loss Account ₹5,00,000; Cash in Hand ₹1,50,000; Cash at Bank ₹12,35,000; Preliminary expenses ₹66,500; Unsecured Loan ₹6,05,000; Sundry Creditors ₹10,00,000.] Additional information: Preliminary expenses included ₹25,000 audit fees and ₹3,500 out of pocket expenses; 10,000 equity shares issued for non-cash consideration; Debtors of ₹2,60,000 due for more than 6 months; Cost of assets: Building ₹30,00,000, Plant & Machinery ₹35,00,000, Furniture ₹3,12,500; SFC Loan includes ₹37,500 interest accrued but not due, secured by plant hypothecation; Bank balance includes ₹10,000 with non-scheduled bank.
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Q.4(a) 12 marks very hard Internal reconstruction, capital reduction, journal entries ⚡ Try this Q →
The Balance Sheet of Vaibhav Ltd. as on 31st March 2014 is as follows: [Liabilities: Equity Shares (₹100 each) ₹2,00,00,000; 6% Cumulative Preference Shares (₹100 each) ₹1,00,00,000; 5% Debentures (₹100 each) ₹80,00,000; Sundry Creditors ₹1,00,00,000; Provision for taxation ₹2,00,000; P&L Nc ₹12,00,000. Assets: Fixed Assets ₹2,50,00,000; Investments (Market Value ₹19,00,000) ₹20,00,000; Current Assets ₹2,00,00,000.] A scheme of Internal Reconstruction is sanctioned with the following adjustments: (i) All existing equity shares are reduced to ₹40 each. (ii) All preference shares are reduced to ₹60 each. (iii) Debenture interest rate increased to 6%; debenture holders exchange debentures of ₹100 each for fresh debentures of ₹70 each. (iv) Fixed assets written down by 20%. (v) Current assets revalued at ₹90,00,000. (vi) Investments brought to market value. (vii) A creditor owed ₹40,00,000 forgoes 40% of claim and is allotted 60,000 equity shares of ₹40 each in full settlement. (viii) Taxation liability settled at ₹3,00,000. (ix) Debit balance of Profit & Loss A/c to be written off. Pass journal entries and show the Balance Sheet after giving effect to the above adjustments.
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Q.4(b) 04 marks medium Creditors ledger adjustment account ⚡ Try this Q →
From the following particulars, prepare the Creditors' Ledger Adjustment Account as would appear in the General Ledger of Mr. Sathish for the month of March 2014: [1 March: Purchase from Mr. Akash ₹7,500; 3 March: Paid ₹3,000 after adjusting the initial advance in full to Mr. Akash; 10 March: Paid ₹2,500 to Mr. Dev towards purchases made in February in full; 12 March: Paid advance to Mr. Giridhar ₹6,000; 14 March: Purchased goods from Mr. Akash ₹6,200; 20 March: Returned goods worth ₹1,000 to Mr. Akash; 24 March: Settled the balance due to Mr. Akash at a discount of 5%; 26 March: Goods purchased from Mr. Giridhar against the advance paid already; 29 March: Purchased from Mr. Nathan ₹3,500; 30 March: Goods returned to Mr. Prem ₹1,200 (originally purchased for cash in February 2014)].
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Q.5(a) 08 marks hard Insurance claim calculation, stock valuation ⚡ Try this Q →
A fire occurred in the premises of M/s Kailash & Co. on 30th September 2013. From the following particulars relating to the period from 1st April 2013 to 30th September 2013, you are required to ascertain the amount of claim to be filed with the Insurance Company for the loss of stock. The company has taken an Insurance policy for ₹75,000 which is subject to average clause. The value of goods salvaged was estimated at ₹27,000. The average rate of Gross Profit was 20% throughout the period. [Given: Opening Stock not specified; Purchases made ₹2,40,000; Wages paid (including ₹5,000 for machine installation); Goods taken by proprietor (sale value); Cost of goods sent to consignee on 20th September 2013, lying unsold with them; Free samples distributed - Cost.]
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Q.5(b) 08 marks hard Investment account, bonus shares, rights issue ⚡ Try this Q →
On 1st April 2014, Hasan has 20,000 equity shares of Vayu Ltd., at book value of ₹20 per share (face value ₹10 each). He provides the following information: (i) On 10th June 2014, he purchased another 5,000 shares in Vayu Ltd., @ ₹15 per share. (ii) On 1st August 2014, Vayu Ltd., issued one bonus share for every five shares held by the shareholders. (iii) On 31st August 2014, the directors of Vayu Ltd., announced a rights issue which entitle the shareholders to subscribe two shares for every six shares held @ ₹15 per share. The shareholders can transfer their rights in full or in part. Hasan sold 1/4th of his right shares holding to Harsh for a consideration of ₹3 per share and subscribed the rest on 31st October 2014. Prepare Investment Account in the books of Hasan as on 31st October 2014.
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Q.6 16 marks very hard Partnership retirement, goodwill, capital accounts ⚡ Try this Q →
Anuj, Ayush and Piyush are in partnership sharing profits and losses in the ratio 2:2:1. Their Balance Sheet as on 31.3.2014 is as follows: [Capital accounts: Anuj ₹3,75,000 (total ₹7,87,000); Ayush ₹2,80,000; Piyush ₹2,25,000 (total ₹8,80,000); General Reserve ₹1,88,000; Creditors ₹2,16,000; Current assets: Stock ₹1,03,000, Debtors ₹1,56,000, Bank FD ₹2,25,000, Bank balance ₹13,000.] Anuj decided to retire with effect from 1.4.2014. The remaining partners agreed to share profits and losses equally in future. The following adjustments were agreed upon: (i) Goodwill valued at 1 year purchase of average profits of preceding 3 years. Average profits: 31.3.2014 ₹3,30,000 (draft); 31.3.2013 ₹2,32,000; 31.3.2012 ₹2,20,000. Partners decided not to raise goodwill account. (ii) Assets revalued: Plant depreciated 10%; Creditors omitted ₹10,000; Stock write-off ₹6,000; Provision for doubtful debts @ 5% of debtors; Interest accrued on FD ₹9,000 omitted. Adjustments made from draft profit before goodwill calculation. (iii) Anuj to take over bank FD including interest accrued; balance to remain as 8% p.a. loan. (iv) Ayush and Piyush to bring cash to make capital proportionate and maintain bank balance of ₹1,50,000. Prepare: (1) Capital accounts of partners as on 1.4.2014 giving effect to adjustments. (2) Balance Sheet as on 1.4.2014 after Anuj's retirement.
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Q.7(a) 05 marks medium Asset capitalization AS 10, repairs vs. capital expenditure ⚡ Try this Q →
From the following information state the amount to be capitalized as per AS 10. Give the explanations for your answers: ₹5 lakhs as routine repairs and ₹1 lakh on partial replacement of a part of a machine. ₹10 lakhs on replacement of part of a machinery which will improve the efficiency of a machine.
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Q.7(b) 04 marks medium Accounting information systems ⚡ Try this Q →
What are the advantages of customized accounting software?
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Q.7(c) 04 marks medium Hire purchase vs. installment purchase ⚡ Try this Q →
What are the differences between Hire Purchase and Installment System?
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Q.7(d) 04 marks medium Current account by product method, interest calculation ⚡ Try this Q →
From the following particulars prepare a current account, as sent by Mr. Ram to Mr. Siva as on 31st October 2014 by means of product method charging interest @ 5% p.a.: [1st July: Balance due from Siva ₹750; 15th August: Sold goods to Siva ₹1,250; 20th August: Goods returned by Siva ₹200; 22nd August: Siva paid by cheque ₹800; 15th October: Received cash from Siva ₹500.]
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Q.7(e) 04 marks medium Average due date, interest calculation ⚡ Try this Q →
Kishanlal has made the following sales to Babulal. He allows a credit period of 10 days beyond which he charges interest @ 12% per annum. [Sales dates and amounts: 20-05-14 ₹12,000; 18-07-14 ₹19,000; 02-08-14 ₹16,500; 28-08-14 ₹9,500; 09-09-14 ₹15,500; 22-09-14 ₹13,500.] Babulal wants to settle his accounts on 30-9-2014. Calculate the interest payable by him using Average Due Date (ADD). If Babulal wants to save interest of ₹588, how many days before 30.9.2014 does he have to make payment? Also find the payment date in this case.
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