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Page No 20.100:

Question 31:

Question

Answer:

Trading Account 
for the year ended March 31, 2012
Dr.   Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Opening Stock 67,000 Sales 2,60,000  
Purchases 1,20,000  
Less: Return Inwards 
3,000 2,57,000
Less: Advertisement
4,000 1,16,000 Closing Stock 80,000
Manufacturing Wages 40,000      
Less: New Machinery
10,000 30,000    
Gross Profit (Balancing Figure) 1,24,000    
  3,37,000   3,37,000
       
 
Profit and Loss Account
for the year ended March 31, 2012
Dr.   Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Depreciation: (WN1)   Gross Profit 1,24,000
Plant & Machinery
38,500   Commission Received            6,000  
Fixture & Fittings
2,400 40,900
Add: Accrued
1,000 7,000
Rent 28,000      
Less: Prepaid (WN2)
4,000 24,000    
Bad Debts 4,000      
Add: Further Bad Debts
2,000      
Add: New Provision (WN3)
2,800 8,800    
Outstanding Interest on Loan (WN4) 400    
Insurance 2,600      
Less: Prepaid (WN5)
500 2,100    
Advertisement 4,000    
Salaries & Wages 24,000    
Repairs & Renewals 1,600    
Interest & Discount 4,400    
Net Profit (Balancing Figure) 20,800    
  1,31,000   1,31,000
       
 
Balance Sheet 
as on March 31, 2012
Liabilities  Amount (Rs) Assets  Amount (Rs)
Capital 5,00,000   Fixed Assets  
Add: Net Profit
20,800   Plant & Machinery 3,80,000  
Less: Drawings
36,000 4,84,800
Add: New Machinery
10,000  
12% Loan 20,000
Less: Depreciation
38,500 3,51,500
    Fixture & Fittings 12,000  
Current Liabilities  
Less: Depreciation
2,400 9,600
Sundry Creditors 30,000    
Outstanding Salaries & Wages                    2,000 Current Assets  
Outstanding Interest on Loan 400 Closing Stock 80,000
Bank Overdraft 15,000 Accrued Commission 1,000
    Prepaid Insurance 500
    Prepaid Rent 4,000
    Cash in Hand 46,600
    Sundry Debtors 58,000  
   
Less: Further Bad Debts
2,000  
   
Less: Provision for Doubtful Debts
2,800 53,200
    Bills Receivable 5,800
  5,52,200   5,52,200
       

Working Notes:

WN1: Calculation of Amount of Depreciation

Depreciation  on  Plant  & Machinery =3,80,000 × 10100 + 10,000 × 10100 × 612 = Rs  38,500Depreciation  on  Fixtures  &  Fittings=12,000 × 20100 = Rs 2,400

WN2: Calculation of Prepaid Rent

Rent paid for 14 months = Rs 28,000Prepaid  Rent= 28,000× 214=Rs 4,000

WN3: Calculation of Provision for Doubtful Debts

Provision  for  Doubtful  Debts=(Sundry  Debtors   Further  Bad  Debts )  × Rate100=(58,000  2,000) × 5100= Rs  2,800

WN4: Calculation of Interest on Loan

Interest  on  Loan  Outstanding= 20,000 × 12100× 212= Rs 400

WN5: Calculation of Prepaid Insurance

Prepaid  Insurance= 1,000 × 612= Rs 500



Page No 20.101:

Question 32:

From the following Trial Balance extracted from the books of Mr. Karuna Sagar, prepare a Trading and Profit & Loss A/c for the year ended 31st March, 2014 and a Balance Sheet as at that date:
 

Dr. Balances () Cr. Balances ()
Purchases 3,30,000 Sales 5,30,000
Rent Paid 7,480 Returns 8,000
Wages 33,000 Trade Creditors 37,000
Salaries 30,800 Discount 3,000
Power 5,400 Capital 2,00,000
Stock on 1-4-2013 15,000 Miscellaneous Income 3,060
Stock on 31-3-2014 36,000    
Charity 500    
Debtors 53,000    
Furniture 8,000    
Motor Car 2,00,000    
Motor Car Expenses 18,000    
Insurance 3,600    
Unexpired Insurance 600    
Drawings 5,000    
Cash Balance 34,680    
       
  7,81,060   7,81,060
       

Informations:-
(i) Goods Costing ₹ 2,000 were taken away by the proprietor for his personal use and goods costing ₹ 1,500 were given away as charity.
(ii) Expenses for wages, rent and salaries are uniform throughout the year and those for March have not been paid.
(iii) Provide 10% depreciation on Furniture and 20% on Motor Car.
(iv) Provide for Manager's Commission at 10% on Net Profit after charging such Commission.

Answer:

Financial Statements of Mr. Karuna
Trading Account 
for the year ended March 31, 2014
Dr.   Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Opening Stock 15,000 Sales                                            5,30,000
Purchases 3,30,000      
Less: Drawings
2,000      
Less: Charity
1,500      
Less: Return Outwards
8,000 3,18,500    
Wages 33,000      
Add: Outstanding (WN2)
3,000 36,000    
Power 5,400    
Gross Profit (Balancing Figure) 1,55,100    
  5,30,000   5,30,000
       
 
Profit and Loss Account 
for the year ended March 31, 2014
Dr.   Cr.
Particulars  Amount
(Rs)
Particulars Amount (Rs)
Depreciation: (WN1)   Gross Profit 1,55,100
Furniture
800   Discount 3,000
Motor Car
40,000 40,800 Miscellaneous Income                           3,060
Rent 7,480      
Add: Outstanding (WN2)
680 8,160    
Salaries 30,800      
Add: Outstanding (WN2)
2,800 33,600    
Charity (1,500 + 500) 2,000    
Motor Car Expenses 18,000    
Insurance 3,600    
Outstanding Manager’s Commission (WN3) 5,000    
Net Profit (Balancing Figure) 50,000    
       
  1,61,160   1,61,160
       
 
Balance Sheet 
as on March 31, 2014
Liabilities  Amount (Rs) Assets  Amount (Rs)
Capital 2,00,000   Fixed Assets  
Add: Net Profit
50,000   Furniture 8,000  
Less: Drawings (5,000 + 2,000)
7,000 2,43,000
Less: Depreciation
800 7,200
    Motor Car 2,00,000  
Current Liabilities  
Less: Depreciation
40,000 1,60,000
Trade Creditors 37,000    
Outstanding Manager’s Commission 5,000 Current Assets  
Outstanding Salaries 2,800 Closing Stock 36,000
Outstanding Rent 680 Debtors 53,000
Outstanding Wages 3,000 Unexpired Insurance                              600
    Cash in Hand 34,680
       
  2,91,480   2,91,480
       

Working Notes:

WN1: Calculation of Amount of Depreciation

Depreciation  on  Furniture =8,000  × 10100 = Rs  800Depreciation  on  Motor  Car=2,00,000  × 20100 =Rs  40,000

WN2: Calculation of Outstanding Expenses

Outstanding  Rent = 7,480 × 111= Rs  680Outstanding  Wages =  33,000 × 111= Rs  3,000Outstanding  Salaries =  30,800 × 111 = Rs  2,800

WN3: Calculation of Manager’s Commission

Profit  before  Manager's  Commission= Rs  55,000  (1,61,160   1,06,160 ) Manager's  Commission  = 55,000 × 10110= Rs  5,000

Page No 20.101:

Question 33:

From the following Trial Balance of Sh. Parveen Kumar, prepare Trading and Profit & Loss Account for the year ending 31st March, 2014 and a Balance Sheet as at that date:
 

Dr. Balances () Cr. Balances ()
Stock at Commencement 40,000 Sales 5,10,000
Purchases 3,20,000 Loan from Mr. Naresh @ 15% p.a. 40,000
Returns Inward 7,000 Returns Outwards 8,000
Sundry Debtors 80,000 Bank 24,200
Cash 9,400 Provision for Doubtful Debts 2,500
Manufacturing Expenses                  44,000 Discount 1,800
Trade Expenses 7,200 Rent to Premises sublet, for the year to 30th Sep., 2014
4,000
Carriage 3,500 Capital 1,20,000
Salaries and Wages 15,800 Sundry Creditors 47,000
Postage 1,500    
Stationery 800    
Freight Inwards 4,300    
Land and Building 2,00,000    
Patents 8,000    
Furniture 10,000    
Insurance Premium 6,000    
  7,57,500   7,57,500
       

Informations:-
(1) Closing Stock was valued at ₹ 60,000. You are informed that goods valued ₹ 12,000 were sold and despactched on 29th March, 2014, but no entry was passed to this effect.
2. Insurance Premium include ₹ 1,200 paid on 1st October, 2013 to run for one year from Oct. 1, 2013 to Sept. 30, 2014.
(3) Loan from Mr. Naresh was taken on 1st July, 2013. Interest has not been paid so far.
(4) Create provision for Doubtful Debts at 5% on Sundry Debtors after writing off ₹ 600 as Bad-debts during the year.
(5) A bill of ₹ 3,200 for advertisement in newspaper remained unpaid at the end of the year.
(6) Purchases include Furniture costing ₹ 5,000 purchased on 1st April, 2013.
(7) Charge 10% p.a. depreciation on Furniture and write off 15th of patents.

Answer:

Financial Statement of Sh. Parveen Kumar
Trading Account 
for the year ended March 31, 2014
Dr.   Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Opening Stock 40,000 Sales 5,10,000  
Purchases 3,20,000  
Add: Unrecorded
12,000  
Less: Return Outwards
8,000  
Less: Return Inwards  
7,000 5,15,000
Less: Furniture
5,000 3,07,000 Closing Stock 60,000
Manufacturing Expenses 44,000    
Carriage Inward 3,500    
Freight Inwards 4,300    
Gross Profit (Balancing Figure) 1,76,200    
  5,75,000   5,75,000
       
 
Profit and Loss Account 
for the year ended March 31, 2014
Dr.   Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Depreciation: (WN1)   Gross Profit 1,76,200
Furniture
1,500   Rent of Premises sublet 4,000  
Patents
1,600 3,100
Less: Unearned (WN5)           
2,000 2,000
Insurance Premium 6,000   Discount 1,800
Less: Prepaid (WN2)
600 5,400    
Further Bad Debts 600      
 Add: New Provision (WN3)
4,570      
 Less: Old Provision
2,500 2,670    
Outstanding Interest on Naresh’s Loan (WN4) 4,500    
Outstanding Advertisement Bill 3,200    
Trade Expenses 7,200    
Salaries & Wages 15,800    
Postage & Telegrams 1,500    
Stationery 800    
Net Profit (Balancing Figure) 1,35,830    
  1,80,000   1,80,000
       
 
Balance Sheet 
as on March 31, 2014
Liabilities  Amount (Rs) Assets  Amount (Rs)
Capital 1,20,000   Fixed Assets  
Add: Net Profit
1,35,830 2,55,830 Patents 8,000  
Loan from Naresh 40,000
Less: Depreciation
1,600 6,400
    Furniture (10,000 + 5,000) 15,000  
Current Liabilities  
Less: Depreciation
1,500 13,500
Creditors 47,000 Land & Building 2,00,000
Outstanding Advertisement Bill                      3,200    
Unearned Rent 2,000 Current Assets  
Bank Overdraft 24,200 Closing Stock 60,000
Outstanding Interest on Loan 4,500 Prepaid Insurance Premium 600
    Debtors 80,000  
   
Add: Unrecorded
12,000  
   
Less: Bad Debts
600  
   
Less: Provision for Doubtful Debts
4,570 86,830
    Cash in Hand 9,400
  3,76,730   3,76,730
       

Working Notes:

WN1: Calculation of Amount of Depreciation

Depreciation  on  Patents =8,000 × 15 = Rs 1,600Depreciation  on  Furniture=15,000 × 10100= Rs 1,500

WN2: Calculation of Prepaid Insurance

Prepaid  Insurance= 1,200 × 612= Rs  600

WN3: Calculation of Provision for Doubtful Debts

Provision  for  Doubtful  Debts=(Sundry  Debtors + Unrecorded  Sales  Further  Bad  Debts )  × Rate100=(80,000 + 12,000 600) × 5100=Rs  4,570

WN4: Calculation of Outstanding Interest on Loan

Outstanding  Interest= 40,000 × 15100× 912=Rs  4,500
 
WN5: Calculation of Rent Received in Advance

Rent  Received  in  Advance= 4,000 × 612= Rs  2,000



Page No 20.102:

Question 34:

The following Trial Balance was extraced from the books of Mr. Gupta as at 31st March, 2014:
 

Dr. Balances () Cr. Balances ()
Stock on 1-4-2013 65,000 Capital 2,50,000
Purchases 7,10,000 Rent Received 3,900
Wages 22,000 Loan from Mr. Yadav @ 15% p.a. 20,000
Trade Expenses 5,000 Sales 9,50,000
Freight and Dock Charges 8,000 Discount 600
Travelling Expenses 3,800 Outstanding Wages 2,000
Lighting and Heating (Factory) 7,200 Trade Expenses accrued but not paid 500
Stores Consumed 2,000 Sundry Creditors 80,000
Rent Paid 16,500    
Establishment Charges 18,000    
Interest on Mr. Yadav's Loan 1,500    
Sundry Debtors 1,42,000    
Cash 6,000    
Fixed Assets 3,00,000    

Adjustments:-
(i) Goods costing ₹ 20,000 were purchased and included into stock but no entry was passed to record the purchase.
(ii) Loan from Mr. Yadav was taken on 1st June, 2013.
(iii) Sundry Debtors include an amount of ₹ 2,000 due from a customer who has become insolvent and nothing is recoverable from his estate.
(iv) Create a provision of 5% for Doubtful Debts and 2% for discount on Debtors.
(v) Three months lighting and heating bill due but not paid ₹ 3,000.
(vi) Rent is paid for 11 months but is received for 13 months.
(vii) Stock amounted to ₹ 90,000 on 31st March, 2014.
Prepare Trading and Profit & Loss Account for the year ended 31st March, 2014 and a Balance Sheet as at that date.

Answer:

Financial Statements of Mr. Gupta
Trading Account 
for the year ended March 31, 2014
Dr.   Cr.
Particulars  Amount
(Rs)
Particulars Amount (Rs)
Opening Stock 65,000 Sales 9,50,000
Purchases 7,10,000   Closing Stock                                90,000
Add: Unrecorded  
20,000 7,30,000    
Wages 22,000    
Store Consumed 2,000    
Lighting & Heating 7,200      
  Add: Outstanding
3,000 10,200    
Freight & Dock Charges 8,000    
Gross Profit (Balancing Figure)       2,02,800    
       
  10,40,000   10,40,000
       
 
Profit and Loss Account
for the year ended March 31, 2014
Dr.   Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Interest on Loan 1,500   Gross Profit 2,02,800
Add: Outstanding (WN1)
1,000 2,500 Rent Received 3,900  
Further Bad Debts 2,000  
Less: Rent received in Advance (WN4)
300 3,600
Add: New Provision (WN2)
7,000 9,000 Discount 600
Trade Expenses 5,000    
Provision for Discount on Debtors WN3)           2,660    
Rent 16,500      
Add: Outstanding (WN5)
1,500 18,000    
Travelling Expenses 3,800    
Establishment Expenses 18,000    
Net Profit (Balancing Figure) 1,48,040    
  2,07,000   2,07,000
       
 
Balance Sheet 
as on March 31, 2014
Liabilities  Amount (Rs) Assets  Amount (Rs)
Capital 2,50,000   Fixed Assets  
Add: Net Profit
1,48,040 3,98,040 Fixed Assets 3,00,000
Loan from Mr. Yadav 20,000    
Current Liabilities   Current Assets  
Sundry Creditors 80,000   Closing Stock 90,000
Add: Unrecorded
20,000 1,00,000 Cash in Hand 6,000
Outstanding Wages 2,000 Sundry Debtors    
Outstanding Trade Expenses 500
Less: Further Bad  Debts
2,000  
Outstanding Lighting & Heating                          3,000
Less: Provision for  Doubtful Debts
7,000  
Outstanding Rent 1,500
Less: Provision for Discount on Debtors
2,660 1,30,340
Outstanding Interest on Loan 1,000    
Rent received in advance 300    
       
  5,26,340   5,26,340
       

Working Notes:    

WN1: Calculation of Outstanding Interest on Loan

Interest  on  Loan= 20,000 × 15100 × 1012= Rs  2,500Interest  Already  Paid = Rs  1,500 Outstanding  Interest  on  Loan = Rs  1,000

WN2: Calculation of Provision for Doubtful Debts

Provision  for  Doubtful  Debts =(Sundry  Debtors Further  Bad  Debts ) × Rate100=(1,42,000 2,000) × 5100=Rs  7,000 

WN3: Calculation of Provision for Discount on Debtors

Provision  for  Discount  on  Debtors=(Sundry  Debtors Further  Bad  Debts Provision  for  Bad  Debts)  × Rate100=(1,42,000 2,000 7,000) × 2100= Rs  2,660 



WN4: Calculation of Advance Rent Received

Advance  Rent= 3,900 × 113=Rs  300 
 
WN5: Calculation of Outstanding Rent

Out standing  Rent= 16,500 × 111= Rs  1,500 



Page No 20.103:

Question 35:

Question

Answer:

Financial Statements of Mr. Tarun Ghosh
Trading Account 
for the year ended March 31, 2012
Dr.   Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Opening Stock 38,000 Sales 15,40,000  
Purchases 12,60,000  
Less: Sale on Approval Basis
10,000 15,30,000
Less: Return Outwards
15,000 12,45,000 Closing Stock 50,000  
Wages 20,000
Add: Sale on Approval Basis
8,000 58,000
Gross Profit (Balancing Figure) 2,85,000    
  15,88,000   15,88,000
       
 
Profit and Loss Account 
for the year ended March 31, 2012
Dr.   Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Provision for Discount on Debtors       3,000 Gross Profit 2,85,000
Bad and Doubtful Debts                1,500 Accrued Interest on Loan              500
Depreciation:   Interest on Drawings 3,000
Business Premises 10,000      
Tools 3,000      
Packing Machinery 6,000      
Furniture 8,000 27,000    
Interest on Capital 24,000    
Wages 1,600    
Salaries 54,000    
Rent 58,400    
Net Profit (Balancing Figure) 1,19,000    
  2,88,500   2,88,500
       
 
Balance Sheet 
as on March 31, 2012
Liabilities  Amount (Rs) Assets  Amount (Rs)
Capital 3,00,000   Fixed Assets  
Add: Interest on Capital               
24,000   Business Premises 2,00,000  
Add: Net Profit
1,19,000  
Less: Depreciation
10,000 1,90,000
Less: Drawings
60,000   Furniture & Fixtures 40,000  
Less: Interest on Drawings
3,000 3,80,000
Less: Depreciation
8,000 32,000
Secured Loan 20,000 Packing Machinery 60,000  
   
Less: Depreciation
6,000 54,000
Current Liabilities   Tools 15,000  
Sundry Creditors 40,000
Less: Depreciation
3,000 12,000
Bills Payable 12,000 Loan to Ram Narain 10,000
Bank Overdraft 33,000    
    Current Assets  
    Closing Stock (50,000 + 8,000) 58,000
    Bills Receivable 4,100
    Accrued Interest on Loan 500
    Sundry Debtors 1,31,500  
   
Less: Sale on Approval Basis
10,000  
   
Less: Bad & Doubtful Debts
1,500  
   
Less: Provision for Discount on Debtors
3,000 1,17,000
    Cash in Hand 7,400
  4,85,000   4,85,000
       

Working Notes:    

WN1: Calculation of Amount of Depreciation

Depreciation on  Premises = 2,00,000 × 5100 = Rs 10,000Depreciation on  Furniture=40,000 × 20100= Rs 8,000Depreciation on  Packing  Machinery = 60,000 × 10100 = Rs 6,000Depreciation on  Tools= Rs 3,000 (15,000 12,000)

WN2: Calculation of Provision for Discount on Debtors

Provision  for  Discount  on  Debtors=(Sundry  Debtors Further  Bad  Debts Provision  for  Bad  Debts) × Rate100=(1,31,500 1,500 0) × 2.5100=Rs 3,250

WN3: Calculation of Accrued Interest

Accrued  Interest= 10,000 × 12100 × 512= Rs 500        



Page No 20.104:

Question 36:

Question

Answer:

Financial Statements of Mr. Din Dayal
Trading Account 
for the year ended March 31, 2014
Dr.   Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Opening Stock 41,000 Sales 2,80,000  
Purchases 2,20,000  
Less: Return Inwards
6,000 2,74,000
Less: Return Outwards
2,000   Closing Stock 75,000
Less: Goods Lost by Fire
10,000 2,08,000    
Carriage Inwards 3,500    
Gross Profit (Balancing Figure) 96,500    
  3,49,000   3,49,000
       

Profit and Loss Account 
for the year ended March 31, 2014
Dr.   Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Loss by Fire 10,000   Gross Profit 96,500
Less: Insurance Claim
7,500 2,500 Commission 6,000  
Printing & Advertisement (1/2) 2,500
Less: Unearned
2,000 4,000
Outstanding Interest on Loan 900 Interest on Investments 600
Insurance Premium 1,800 Rent from Sublet 4,800
Carriage Outwards 500 Old Provision 3,000  
Telephone 7,300
Less: New Provision for Doubtful
Debts (WN1)
2,000 1,000
Bad Debts 400    
Rent 9,600    
Salary 20,000    
Travelling Expenses 1,400    
Outstanding Manager’s Commission (WN2) 6,000    
Net Profit (Balancing Figure) 54,000    
       
  1,06,900   1,06,900
       
 
Balance Sheet 
as on March 31, 2014
Liabilities  Amount (Rs) Assets  Amount (Rs)
Capital 1,75,000   Fixed Assets  
Add: Net Profit
54,000   Investments 5,000
Less: Drawings
4,000 2,25,000 Land & Building 1,40,000
Loan 20,000 Furniture 10,000
       
Current Liabilities   Current Assets  
Creditors 24,000 Closing Stock 75,000
Sales Tax Collected 3,000 Insurance Company 7,500
Unearned Commission 2,000 Debtors 40,000  
Outstanding Manager’s Commission               6,000
Less: Provision for Doubtful Debts
2,000 38,000
Outstanding Interest on Loan 900 Cash in Hand 2,900
    Unexpired Printing & Advertisement 2,500
       
  2,80,900   2,80,900
       

Working Notes:    

WN1: Calculation of Provision for Doubtful Debts

Provision  for  Doubtful  Debts=(Sundry  Debtors   Further  Bad  Debts )  × Rate100=(40,000 0) × 5100=Rs  2,000
 
WN2: Calculation of Manager’s Commission

Profit  before  Manager's  Commission= Rs  60,000 (1,06,900 46,900 ) Manager's  Commission =60,000 × 10100= Rs  6,000

Page No 20.104:

Question 37:

Question

Answer:

Financial Statements of M/s Raj & Bros.
Trading Account 
for the year ended March 31, 2009
Dr.   Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Opening Stock 16,800 Sales
3,09,000
 
Purchases 2,43,000  
Less: Return Inwards
8,000
3,01,000
Less: Return Outwards
5,700 2,37,300 Closing Stock 6,000
Freight Inward 8,600    
Gross Profit (Balancing Figure)         44,300    
  3,07,000   3,07,000
       
 
Profit and Loss Account 
for the year ended March 31, 2009
Dr.   Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Depreciation on Plant (WN1) 2,700 Gross Profit 44,300
Salaries 9,300 Income on Investments                        3,600
Rates and Taxes 5,700   Discount Received 2,250
Add: Outstanding
5,000 10,700    
Interest on Loan 1,000      
Add: Outstanding (WN2)
800 1,800    
Printing & Advertisement 14,600    
Discount 1,340    
General Expenses 3,610    
Audit Fees 500    
Insurance 800    
Travelling Expenses 3,000    
Outstanding Manager’s Commission (WN3) 180    
Net Profit (Balancing Figure) 1,620    
  50,150   50,150
       
 
Balance Sheet 
as on March 31, 2009
Liabilities  Amount (Rs) Assets  Amount (Rs)
Capital 78,000   Fixed Assets  
Add: Net Profit
1,620   Plant & Machinery 30,000  
Less: Drawings
10,000 69,620
Less: Depreciation
2,700 27,300
10% Bank Loan 24,000 Furniture 3,800
    Investments 25,000
       
Current Liabilities   Current Assets  
Trade Creditors 4,800 Closing Stock 6,000
Outstanding Rent 5,000 Cash at Bank 18,300
Outstanding Interest 800 Trade Debtors 24,000
Outstanding Manager’s Commission 180    
       
  1,04,400   1,04,400
       

Working Notes:    

WN1: Calculation of Amount of Depreciation

Depreciation  on  Machinery =18,000 × 10100 + 12,000 × 10100 × 912 = Rs 2,700
 
WN2: Calculation of Outstanding Interest on Bank Loan

Interest  on  Loan = 24,000 × 10100 × 912 = Rs 1,800Interest  Already Paid = Rs 1,000Outstanding Interest = Rs 800 
 
WN3: Calculation of Manager’s Commission

Profit  before  Manager's  Commission= Rs 1,800 (50,150 48,350 ) Manager's  Commission =1,800 × 10100= Rs 180 



Page No 20.105:

Question 38:

Question

Answer:

Financial Statement of Ritesh Traders
Trading Account 
for the year ended March 31, 2008
Dr.   Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Opening Stock 5,620 Sales 3,74,800
Purchases 1,54,200 Closing Stock 19,000
Wages 1,26,000      
Less: Wrong inclusion
4,800 1,21,200    
Carriage Inward 900    
Freight on Purchase 700    
Duty on Import of Goods 4,200    
Gross Profit (Balancing Figure)       1,06,980    
  3,93,800   3,93,800
       
 
Profit and Loss Account 
for the year ended March 31, 2008
Dr.   Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Depreciation:   Gross Profit 1,06,980
Land & Building 50,000   Interest on Securities 6,400
Plant & Machinery 18,680 68,680 Discount Received 420
Insurance 2,800      
Less: Prepaid
700 2,100    
Old Bad Debts      
Add: New Bad Debts
2,000      
Add: New Provision
690      
Less: Old Provision
2,690    
Postage 500    
Trade Expenses 1,000    
Salaries 8,000    
Repairs to Machinery 1,400    
Discount Allowed 1,500    
Net Profit (Balancing Figure) 27,930    
  1,13,800   1,13,800
       
 
Balance Sheet
as on March 31, 2008
Liabilities  Amount (Rs) Assets  Amount (Rs)
Capital 13,47,600   Fixed Assets  
Add : Net Profit
27,930   Plant & Machinery 1,82,000  
Less: Drawings
5,600 13,69,930
Add: Wages
4,800  
   
Less: Dep.
18,680 1,68,120
    Land & Building 10,00,000  
   
Less: Dep.
50,000 9,50,000
       
Current Liabilities                       Current Assets                          
Creditors 40,000 Closing Stock 19,000
Bills Payable 4,000 Securities 6,00,000
X’s Loan 18,600 Prepaid Insurance 700
Bank Overdraft 3,40,000 Bills Receivable 7,000
Loan 11,000 Debtors 15,800  
   
Less: Bad debts
2,000  
   
Less: Provision
690 13,110
    Cash in Hand 25,600
  17,83,530   17,83,530
       

Working Note
  
WN1: Calculation of Depreciation

Depreciation on  Machinery =1,86,800 × 10100 = Rs 18,680Depreciation on  Building =10,00,000 × 5100 = Rs 50,000
 
WN2: Calculation of Provision for Doubtful Debts

Provision for  Doubtful  Debts=(Sundry  Debtors Further  Bad  Debts )  × Rate100=(15,800 2,000) × 5100=Rs  690



Page No 20.106:

Question 39:

Prepare Trading and Profit and Loss Account and Balance Sheet from the following Trial Balance and information as on 31st March, 2013:
 

Name of Account Debit
()
Credit
()
Drawings and Capital 15,000 3,25,000
Plant and Machinery 2,00,000
Motor Vehicle 1,50,000
Return Inward and Outward 25,000 37,000
Stock on 1st April, 2012 82,000
Purchases and Sales 4,40,000 6,75,000
Carriage Inward 6,000
Trade Expenses 2,500
Bad Debts 4,250
Provision for Doubtful Debts 6,000
Commission 4,000
Rent, Rates & Taxes 12,000
Salaries and Wages 24,000
Debtors and Creditors 70,000 55,000
Fuel and Water 4,750
Cash in Hand 16,500
Cash at Bank 50,000
     
Total 11,02,000 11,02,000
     

Adjustments:-
(i) Closing Stock was valued at ₹ 1,12,500.
(ii) Commission include ₹ 1,200 being commission received in advance.
(iii) Salaries and wages is outstanding for the month of Feb. & March, 2013.
(iv) Depreciate Plant & Machinery by 15% and Motor Vehicle by 20%.
(v) Write off ₹ 500 as further Bad Debts and maintain provision for doubtful debts at 1% on debtors.

Answer:

Trading Account 
for the year ended March 31, 2013
Dr.   Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Opening Stock 82,000 Sales 6,75,000  
Purchases 4,40,000  
Less: Return Inwards
25,000 6,50,000
Less: Return Outwards
37,000 4,03,000 Closing Stock 1,12,500
Carriage Inward 6,000    
Fuel and Water 4,750    
Gross Profit (Balancing Figure) 2,66,750    
  7,62,500   7,62,500
       
 
Profit and Loss Account 
for the year ended March 31, 2013
Dr.   Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Depreciation:   Gross Profit 2,66,750
Plant & Machinery 30,000   Commission 4,000  
Motor Vehicle 30,000 60,000
Less: Unearned
1,200 2,800
Salaries & Wages 24,000   Provision for Doubtful Debts                    
Add: Outstanding
4,800 28,800 (Old Provision - New Provision) 5,305
Old Bad Debts 4,250      
 Add: Further Bad Debts 500 4,750    
Trade Expenses 2,500    
Rent, Rates and Taxes 12,000    
Net Profit (Balancing Figure)                1,66,805    
  2,74,855   2,74,855
       
 
Balance Sheet 
as on March 31, 2013
Liabilities  Amount (Rs) Assets  Amount (Rs)
Capital 3,25,000   Fixed Assets  
Add : Net Profit
1,66,805   Plant & Machinery 2,00,000  
Less: Drawings
15,000 4,76,805
Less: Dep.
30,000 1,70,000
    Motor Vehicle 1,50,000  
   
Less: Dep.
30,000 1,20,000
       
Current Liabilities   Current Assets  
Creditors 55,000 Closing Stock 1,12,500
Outstanding Salaries and Wages                   4,800 Debtors 70,000  
Unearned Commission 1,200
Less: Bad Debts
500  
   
Less: Provision for Bad Debts
695 68,805
    Cash in Hand 16,500
    Cash at Bank 50,000
  5,37,805   5,37,805
       

Working Note:
 
WN1: Calculation of Amount of Depreciation

Depreciation  on  Machinery =2,00,000 × 15100 =Rs  30,000Depreciation  on  Motor  Vehicle =1,50,000 × 20100 =Rs  30,000
 
WN2: Calculation of Provision for Doubtful Debts

Provision  for  Doubtful  Debts=(Sundry  Debtors  -Further  Bad  Debts ) × Rate100= (70,000 500) × 1100=Rs  695
 
WN3: Calculation of Outstanding Salaries and Wages

Salaries and Wages paid for 10 months = 24,000Salaries and Wages outstanding for 2 months =24,000 × 210 = Rs 4,800



Page No 20.75:

Question 1:

Question

Answer:

Financial Statements of Raghunath Ji
Trading Account 
for the year ended March 31, 2012
Dr.
 
Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Opening Stock
12,000
Sales
86,000
 
Purchases
40,000
    Less: Sales Return 
6,000
80,000
  Less: Purchases Return
4,000
36,000
Closing Stock
16,000
Carriage
700
   
Wages
10,000
     
  Add: Outstanding
2,000
12,000
   
Gross Profit (Balancing Figure)
35,300
   
 
96,000
 
96,000
 
 
 
 
 
Profit and Loss Account 
for the year ended March 31, 2012
Dr.
 
Cr.
Particulars  Amount
(Rs)
Particulars Amount (Rs)
Depreciation: (WN)   Gross Profit
35,300
 Machinery
2,000
  Discount
400
 Building
2,500
4,500
Interest
800
Salaries
2,400
     
  Add: Outstanding
1,200
3,600
   
Insurance
800
     
  Less: Prepaid
200
600
   
Rent & Taxes
1,800
     
  Add: Outstanding
1,000
2,800
   
Office Expenses
1,200
   
Travelling Expenses
400
   
Commission
400
   
Net Profit (Balancing Figure)
23,000
 
 
 
36,500
 
36,500
 
 
 
 
 
Balance Sheet 
as on March 31, 2012
Liabilities 
Amount
(Rs)
Assets 
Amount
(Rs)
Capital
62,000
  Fixed Assets  
Add: Net Profit
23,000
85,000
 Machinery
20,000
 
      Less: Depreciation
2,000
18,000
Current Liabilities   Building
50,000
 
Creditors
10,800
  Less: Depreciation
2,500
47,500
Outstanding Wages
2,000
   
Outstanding Salaries
1,200
Current Assets  
Outstanding Rent
1,000
Closing Stock
16,000
    Prepaid Insurance
200
    Debtors
16,000
 
 
Cash in Hand
2,300
 
1,00,000
 
1,00,000
 
 
 
 

Working Note:

Calculation of Depreciation

Depreciation on  Building = 50,000 × 5100=2,500Depreciation on  Machinery = 20,000× 10100=2,000

Page No 20.75:

Question 2:

Question

Answer:

Trading Account 
for the year ended March 31, 2012
Dr.
 
Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Opening Stock
22,300
Sales
3,17,400
 
Purchases
2,30,000
    Less: Sales Return
6,400
3,11,000
  Less: Purchases Return 
5,200
2,24,800
Closing Stock
70,000
Wages
30,200
   
Gross Profit (Balancing Figure)
1,03,700
   
 
3,81,000
 
3,81,000
 
 
 
 
 
Profit and Loss Account 
for the year ended March 31, 2012
Dr.
 
Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Depreciation: (WN1)   Gross Profit
1,03,700
 Freehold Premises
5,000
  Interest on Drawings
500
 Furniture
1,800
6,800
Commission
2,700
 
Interest on Capital (WN2)
9,000
  Add: Accrued
500
3,200
Incidental Trade Expenses
11,200
Rent
2,600
 
Insurance
1,850
  Less: Rent received in advance
200
2,400
Audit Fees
800
Interest
1,400
 
Salaries
15,200
  Add: Accrued
600
2,000
Discount Allowed
7,500
Discount Received
4,200
Net Profit (Balancing Figure)
63,650
 
 
 
1,16,000
 
1,16,000
 
 
 
 
 
Balance Sheet 
as on March 31, 2012
Liabilities 
Amount
(Rs)
Assets 
Amount
(Rs)
Capital
1,50,000
  Fixed Assets  
  Add: Interest on Capital
9,000
  Freehold Premises
1,00,000
 
  Add: Net Profit
63,650
    Less: Depreciation
5,000
95,000
  Less: Drawings
12,000
  Office Furniture
9,000
 
  Less: Interest on Drawings
500
    Less: Depreciation
1,800
7,200
  Less: Income Tax
3,600
2,06,550
Investments
8,000
       
Current Liabilities   Current Assets  
Creditors
24,830
Closing Stock
70,000
Rent received in advance
200
Accrued Interest
600
    Accrued Commission
500
    Debtors
32,400
    Bills Receivable
5,200
    Cash at Bank
7,600
 
 
Cash in Hand
5,080
 
2,31,580
 
2,31,580
 
 
 
 

Working Notes:

WN1: Calculation of Depreciation

Depreciation on  Freehold  Premises =1,00,000 × 5100=5,000Depreciation  on  Office  Furniture = 9,000× 20100=1,800

WN2: Calculation of Interest on Capital

Interest on  Capital =1,50,000 × 6100=9,000



Page No 20.76:

Question 3:

Question

Answer:

Trading Account 
for the year ended March 31, 2012
Dr.
 
Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Opening Stock
6,800
Sales
1,10,000
 
Purchases
66,000
  Less: Return Inwards
8,000
1,02,000
Less: Return Outwards
1,500
  Closing Stock
7,000
Less: Drawings
4,000
60,500
   
Carriage Inward
3,000
   
Gross Profit (Balancing Figure)
38,700
   
 
1,09,000
 
1,09,000
 
 
 
 
 
Profit and Loss Account 
for the year ended March 31, 2012
Dr.
 
Cr.
Particulars  Amount (Rs) Particulars Amount
(Rs)
Depreciation: (WN1)   Gross Profit
38,700
Land & Building
300
  Discount received
500
Motor Vehicle
2,000
2,300
Rent received
300
Salary
9,000
     
  Add: Outstanding
200
9,200
   
Rent & Insurance
3,000
     
  Less: Pre-paid
200
2,800
   
Old Bad Debts
500
     
  Add: New Bad Debts
     
  Add: New Provision (WN2)
1,000
     
  Less: Old Provision
700
800
   
Interest on Bank Loan
300
   
Carriage Outward
2,500
   
Advertisement
3,500
   
General Expenses
3,400
   
Net Profit (Balancing Figure)
14,700
 
 
 
39,500
 
39,500
 
 
 
 

 

Balance Sheet 
as on March 31, 2012
Liabilities 
Amount
(Rs)
Assets 
Amount
(Rs)
Capital
30,000
  Fixed Assets  
  Add: Net Profit
14,700
  Land & Buildings
12,000
 
  Less: Drawings (5,000 + 4,000)
9,000
35,700
  Less: Depreciation
300
11,700
    Motor Vehicles
10,000
 
Current Liabilities     Less: Depreciation
2,000
8,000
Creditors
10,000
   
Outstanding Salaries
200
Current Assets  
Bank Loan
9,500
Closing Stock
7,000
Bills Payable
2,000
Prepaid Insurance
200
    Debtors
20,000
 
      Less: Provision for Bad Debts
1,000
19,000
    Bills Receivables
6,000
    Cash at Bank
3,500
 
 
Cash in Hand
2,000
 
57,400
 
57,400
 
 
 
 


Working Notes:

WN1: Calculation of Depreciation



WN2: Calculation of Provision for Doubtful Debts

 



Page No 20.77:

Question 4:

Question

Answer:

Trading Account 
for the year ended March 31, 2005
Dr.
 
Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Opening Stock
3,000
Sales
15,000
 
Purchases
12,000
  Less: Return Inwards
1,000
14,000
Less: Return Outwards
2,000
10,000
Closing Stock
4,500
Gross Profit (Balancing Figure)
5,500
   
 
18,500
 
18,500
 
 
 
 
 
Profit and Loss Account 
for the year ended March 31, 2005
Dr.
 
Cr.
Particulars  Amount
(Rs)
Particulars Amount (Rs)
Depreciation on Furniture (WN)
60
Gross Profit
5,500
Establishment Charges
2,200
Commission received
500
 
Outstanding Salaries
100
  Less: Comm. received in advance
100
400
Taxes & Insurance
500
  Accrued Interest on Deposits
210
  Add: Outstanding Taxes
200
     
  Less: Prepaid Insurance
50
650
   
Old Bad Debts
500
     
  Add: New Bad Debts

     
  Add: New Provision
1,000
     
  Less: Old Provision
700
800
   
Outstanding Interest on Bank Overdraft
300
   
Net Profit (Balancing Figure)
2,000
 
 
 
6,110
 
6,110
 
 
 
 
 
Balance Sheet 
as on March 31, 2005
Liabilities 
Amount
(Rs)
Assets 
Amount
(Rs)
Capital
10,000
  Fixed Assets  
Add: Net Profit
2,000
  Furniture
600
 
Less: Drawings
1,400
10,600
  Less: Depreciation
60
540
       
Current Liabilities   Current Assets  
Creditors
2,000
Closing Stock
4,500
Outstanding Salaries
100
Prepaid Insurance
50
Outstanding Taxes
200
Debtors
5,000
 
Bills Payable
2,500
  Less: Provision for Bad Debts
1,000
4,000
Bank Overdraft
2,000
Bills Receivables
3,000
Commission received in advance
100
Deposits
4,000
 
Outstanding Interest on Bank Overdraft
300
Add: Accrued Interest
210
4,210
 
 
Cash in Hand
1,500
 
17,800
 
17,800
 
 
 
 

Working Note:

Calculation of Depreciation

Depreciation on  Furniture =600 × 10100=60



Page No 20.78:

Question 5:

The following are the balances of Messrs Gupta & Co. as at 31st March, 2009:-
 

Particulars (₹) Particulars (₹)
Cash in Hand 540 Patents 7,500
Cash at Bank 2,630 Salaries 25,000
Purchases 40,675 General Expenses 22,790
Returns Inwards 680 Insurance 600
Wages 8,480 Drawings 5,245
Fuel & Power 4,730 Sundry Debtors 14,500
Bad-debts 210 Sales 98,440
Bad-debts Provision 340 Returns Outwards 500
Carriage on Sales 3,200 Capital 92,000
Carriage on Purchases 2,040 S. Creditors 6,300
Stock (1.4.2008) 5,760 Rent Cr. 9,000
Building 32,000    
Freehold Land 10,000    
Machinery 20,000    

Prepare Trading and Profit & Loss A/c and a Balance Sheet as at 31st March, 2009 after taking into account the following adjustments:-
(i) Stock on hand as on 31st March, 2009 is ₹ 6,800.
(ii) Machinery is to be depreciated at 10% and Patents at 20%.
(iii) Salaries for the month of March, 2009 amounting to ₹ 1,500 were unpaid.
(iv) Insurance includes a premium of ₹ 170 on a policy expiring on 30th September, 2009.
(v) Write off ₹ 500 as Bad-debts and create a provision for Doubtful Debts at 5% on Sundry Debtors.
(vi) Rent Receivable ₹ 1,000.

Answer:

Financial Statements of Messrs Gupta & Co.
Trading Account
for the year ended March 31, 2009
Dr.
 
Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Opening Stock
5,760
Sales
98,440
 
Purchases
40,675
    Less: Return Inwards
680
97,760
  Less: Return Outwards
500
40,175
Closing Stock
6,800
Carriage on Purchases
2,040
   
Wages
8,480
   
Fuel & Power
4,730
   
Gross Profit (Balancing Figure)
43,375
   
 
1,04,560
 
1,04,560
 
 
 
 
 
Profit and Loss Account 
for the year ended March 31, 2009
Dr.
 
Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Depreciation: (WN1)   Gross Profit
43,375
Machinery
2,000
  Rent received
9,000
 
Patents
1,500
3,500
  Add: Accrued
1,000
10,000
Salaries
25,000
  Net Loss (Balancing Figure)
4,200
  Add: Outstanding
1,500
26,500
   
Insurance
600
     
  Less: Prepaid (WN2)
85
515
   
Old Bad Debts
210
     
  Add: Further Bad Debts
500
     
  Add: New Provision (WN3)
700
     
  Less: Old Provision
340
1,070
   
Carriage on Sales
3,200
   
General Expenses
22,790
   
 
 
 
 
 
57,575
 
57,575
 
 
 
 
 
Balance Sheet 
as on March 31, 2009
Liabilities 
Amount
(Rs)
Assets 
Amount
(Rs)
Capital
92,000
  Fixed Assets  
  Less: Net Loss
4,200
  Machinery
20,000
 
  Less: Drawings
5,245
82,555
  Less: Depreciation
2,000
18,000
    Patents
7,500
 
Current Liabilities     Less: Depreciation
1,500
6,000
Creditors
6,300
Building
32,000
Outstanding Salaries
1,500
Freehold Land
10,000
       
    Current Assets  
    Closing Stock
6,800
    Prepaid Insurance
85
    Sundry Debtors
14,500
 
      Less: Further Bad Debts
500
 
      Less: New Provision for Bad Debts
700
13,300
    Accrued Rent
1,000
    Cash at Bank
2,630
 
 
Cash in Hand
540
 
90,355
 
90,355
 
 
 
 

Working Notes:

WN1: Calculation of Depreciation

Depreciation on  Machinery =20,000 × 10100=2,000Depreciation on  Patents = 7,500× 20100=1,500

WN2: Calculation of Pre-paid Insurance

If a policy is expiring on 30 September, 2009, it means insurance is pre-paid for the period 31 March 2009 – 30 September 2009 = 6 months

Pre-paid  Insurance =170 × 612=85

WN3: Calculation of Provision for Doubtful Debts

Provision  for  Doubtful  Debts=(Sundry  Debtors Further  Bad Debts )  × Rate100=(14,500 500) × 5100=700



Page No 20.79:

Question 6:

From the following Trial Balance extracted from the books of A, prepare Trading and Profit & Loss Account for the year ending 31st March, 2008 and a Balance Sheet as at that date:-

  Dr.
(₹)
Cr.
(₹)
Furniture 640  
Loose Tools 6,250  
Buildings 7,500  
Capital Account   12,500
Bad-debts 125  
Provision for Bad-debts   200
Sundry Debtors and Creditors 3,800 2,500
Stock on 1st April, 2007 3,460  
Purchases and Sales 5,475 15,450
Bank Overdraft   2,850
Sales Return and Purchases Return 200 125
Stationery 450  
Interest Account 118  
Commission   375
Cash in hand 650  
Taxes and Insurance 1,250  
General Expenses 782  
Salaries 3,300  
  34,000 34,000
   

The following adjustments are to be made:
(i) Stock in hand on 31st March, 2008 was ₹ 3,250.
(ii) Depreciate Building at 5% and Furniture at 10%. Loss Tools are revalued at ₹ 5,000 at the end of the year.
(iii) Salaries ₹ 300 and taxes ₹ 120 are outstanding.
(iv) Insurance amounting to ₹ 100 is prepaid.
(v) Write off a further ₹ 100 as Bad-Debts and provision for Doubtful Debts is to be made equal to 5% on Sundry Debtors.
(vi) Half of the stationery was used by the proprietor for his personal purposes.

Answer:

Financial Statement of A
Trading Account 
for the year ended March 31, 2008
Dr.
 
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Opening Stock
3,460
Sales
15,450
 
Purchases
5,475
 
  Less: Sales Return
200
15,250
  Less: Purchases Return
125
5,350
Closing Stock
3,250
Gross Profit (Balancing Figure)
9,690
 
 
 
18,500
 
18,500
 
 
 
 
 
Profit and Loss Account 
for the year ended March 31, 2008
Dr.
 
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Depreciation: (WN1)
 
Gross Profit
9,690
Building
375
 
Commission Received
375
Furniture