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Page No 20.100:

Question 32:

Below is given the Trial Balance of Mr. Ram as at 31st December, 2015. You are required to prepare Trading and Profit & Loss Account and Balance Sheet as at that date.

Dr. Balances () Cr. Balances ()
Opening Stock 42,000 Sales 4,10,000
Purchases 2,00,000 Sundry Creditors 20,000
Plant 60,000 Purchases Return 8,000
Salary 33,000 Commission 7,500
Wages 44,000 Bank 24,000
Discount 2,000 Capital 1,50,000
Rent 27,500 Interest on Investments            700
Furniture (Including Furniture of 
₹ 5,000 purchased on 1st July, 2015)

20,000
Special Rebate 800
Carriage in 5,800    
Carriage out 3,200    
Sundry Debtors 1,00,000    
Office Expenses 6,600    
Cash in hand 5,400    
Investments at 14% p.a. 10,000    
Insurance (Paid to 30th April, 2016) 1,500    
Stock on 31st December, 2015 60,000    
  6,21,000   6,21,000
       

Adjustments:-
1. Create a provision for Doubtful Debts @ 5% on Debtors and 2% for discount on Debtors.
2. Provide up-to-date interest on Investments.
3. Expenses for rent, wages, salaries and office expenses are uniform throughout the year and those for December, 2015 have not been paid.
4. Depreciate Plant by 10% p.a. and Furniture by 20% p.a.
5. Unearned Commission ₹ 1,500.

Answer:

Financial Statements of Mr. Ram
Trading Account 
for the year ended December 31, 2015
Dr.
 
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Opening Stock
42,000
Sales
4,10,000
Purchases
2,00,000
     
Less: Purchases Return
8,000
1,92,000
   
Carriage Inwards
5,800
   
Wages
44,000
     
  Add: Outstanding (WN6)
4,000
48,000
   
Gross Profit (Balancing Figure)
1,22,200
   
 
4,10,000
 
4,10,000
       

Profit and Loss Account 
for the year ended December 31, 2015
Dr.
 
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Depreciation: (WN1)   Gross Profit
1,22,200
Plant
6,000
  Commission
7,500
 
Furniture
3,500
9,500
  Less: Unearned
1,500
6,000
Rent
27,500
  Interest on Investment
700
 
  Add: Outstanding (WN6)
2,500
30,000
  Add: Accrued (WN4)
700
1,400
Provision for Doubtful Debts (WN2)
5,000
Special Rebate
800
Provision for Discount on Debtors (WN3)
1,900
   
Carriage Outwards
3,200
   
Insurance
1,500
     
Less: Prepaid (WN5)
500
1,000
   
Salaries
33,000
     
   Add: Outstanding (WN6)
3,000
36,000
   
Office Expenses
6,600
     
Add: Outstanding (WN6)
600
7,200
   
Discount
2,000
   
Net Profit (Balancing Figure)
34,600
   
       
 
1,30,400
 
1,30,400
       

Balance Sheet 
as on December 31, 2015
Liabilities 
Amount
(Rs)
Assets 
Amount
(Rs)
Capital
1,50,000
  Fixed Assets  
Add: Net Profit
34,600
1,84,600
Plant
60,000
 
      Less: Depreciation
6,000
54,000
Current Liabilities   Furniture
20,000
 
Sundry Creditors
20,000
  Less: Depreciation
3,500
16,500
Outstanding Wages
4,000
14% Investments
10,000
Outstanding Rent
2,500
   
Outstanding Salaries
3,000
Current Assets  
Outstanding Office Expenses
600
Closing Stock
60,000
Unearned Commission
1,500
Accrued Interest on Investments
700
Bank Overdraft
24,000
Prepaid Insurance
500
    Cash in Hand
5,400
    Sundry Debtors
1,00,000
 
   
Less: Provision for Doubtful Debts
5,000
 
      Less: Provision for Discount on Debtors
1,900
93,100
       
 
2,40,200
 
2,40,200
       

Working Notes:

WN1: Calculation of Amount of Depreciation
Depreciation on  Plant =60,000 × 10100=Rs  6,000Depreciation on  Furniture=15,000 × 20100+ 5,000 × 20100 × 612 = Rs  3,500

WN2: Calculation of Provision for Doubtful Debts

Provision  for  Doubtful  Debts =Sundry  Debtors Further  Bad  Debts  × Rate100=1,00,000 0 × 5100=Rs 5,000

WN3: Calculation of Provision for Discount on Debtors
Provision  for  Discount on  Debtors =Sundry  Debtors Further  Bad  Debts Provision  for  Bad  Debts  × Rate100=1,00,000 0 5,000 × 2100=Rs 1,900

WN4: Calculation of Accrued Interest on Investments
Interest on Investments = 14,000 × 10100= Rs 1,400Interest  Already  Received = Rs  700   Accrued  Interest  on  Investments = Rs  700

WN5: Calculation of Prepaid Insurance
Prepaid  Insurance= 1,500 × 412=Rs  500


WN6: Calculation of Outstanding Expenses
Rent,  Wages,  Salaries and  Office  Expenses  have  been  paid  for  11  months.Outstanding  Expense  will  be:Outstanding  Rent= 27,500 × 111=Rs  2,500Outstanding  Wages= 44,000 × 111=Rs  4,000Outstanding  Salary= 33,000 × 111=Rs  3,000Outstanding  Office  Expenses= 6,600 × 111=Rs  600



Page No 20.101:

Question 33:

On 31st March, 2017 the following Trial Balance of Sh. Ajay Oswal was taken out. Prepare Trading and Profit & Loss Account for the year and Balance Sheet at that date after making the following adjustments:-
(i) Stock on 31st March, 2017 was valued ₹ 26,000.
(ii) General Manager is entitled to a Commission of 5% on Net Profits after charging such Commission.
(iii) ₹ 2,000 paid for Salary & Wages have been included in Sundry Debtors.
(iv) Increase Bad-debts by ₹ 800 and create provision for Doubtful Debts at 10%.
(v) General Expenses include insurance premium paid up to 30th June, 2017 @ ₹ 3,000 per annum.
(vi) ₹ 600 out of the Advertisement Expenses are to be carried forward to the next year.
(vii) Charge one-fourth of 'Salaries and Wages' to Trading A/c.
(viii) Accrued Income ₹ 2,500.
 

  Dr.
()
Cr.
()
Capital   3,00,000
Income Tax 8,000 -
Stock on 1-4-2016 16,000 -
Return Inwards 5,600 -
Carriage Inwards 8,200 -
Deposit with PNB 15,000 -
Return Outwards - 4,100
Carriage Outwards 3,700 -
Loan to Mr. Malik @ 18% p.a. given on 1-7-2016 1,000 -
Interest on the above - 900
Rent 13,000 -
Outstanding Rent - 1,000
Purchases 1,48,000 -
Debtors 75,800 -
Goodwill 25,000 -
Land and Buildings 2,00,000 -
Furniture 15,000 -
Salaries & Wages 38,000 -
Creditors - 26,200
Advertisement Expenses 3,000 -
Provision for Doubtful Debts - 3,500
Bad-Debts 2,000  
Patents and Patterns 6,000  
Cash in hand 8,900  
Sales - 2,70,000
General Expenses 4,500 -
     
  6,05,700 6,05,700
     

Answer:

Financial Statements of Sh. Ajay Oswal
Trading Account 
for the year ended March 31, 2017
Dr.
 
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Opening Stock
16,000
Sales
2,70,000
 
Purchases
1,48,000
    Less: Return Inwards
5,600
2,64,400
Less: Return Outwards
4,100
1,43,900
Closing Stock
26,000
Salaries & Wages (1/4th of 40,000)
10,000
   
Carriage Inwards
8,200
   
Gross Profit (Balancing Figure)
1,12,300
   
 
2,90,400
 
2,90,400
       
 
Profit and Loss Account 
for the year ended March 31, 2017
Dr.
 
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Salaries & Wages
38,000
  Gross Profit
1,12,300
  Add: Omitted
2,000
  Accrued Income
2,500
  Less: T/f to Trading
10,000
30,000
Interest
900
 
Bad Debts
2,000
    Add: Accrued (WN2)
450
1,350
  Add: Further Bad Debts
800
     
  Add: New Provision (WN1)
7,300
     
  Less: Old Provision
3,500
6,600
   
Carriage Outwards
3,700
   
Advertisement
3,000
     
Less: Prepaid
600
2,400
   
General Expenses
4,500
     
Less: Prepaid Insurance (WN3)
750
3,750
   
Rent
13,000
   
Outstanding Manager’s Commission (WN4)
2,700
   
Net Profit (Balancing Figure)
54,000
   
       
 
1,16,150
 
1,16,150
       

Balance Sheet 
as on March 31, 2017
Liabilities 
Amount
(Rs)
Assets 
Amount
(Rs)
Capital
3,00,000
  Fixed Assets  
Add: Net Profit
54,000
  Goodwill
25,000
Less: Drawings (Income Tax)
8,000
3,46,000
Land & Building
2,00,000
    Furniture
15,000
Current Liabilities   Patents & Patterns
6,000
Creditors
26,200
Loan to Mr. Malik
10,000
Outstanding Manager’s Commission
2,700
   
Outstanding Rent
1,000
Current Assets  
    Closing Stock
26,000
    Prepaid Insurance
750
    Prepaid Advertisement
600
    Accrued Income
2,500
    Accrued Interest
450
    Deposit with PNB
15,000
    Debtors
75,800
 
   
Less: Wrongly Included
2,000
 
   
Less: Bad Debts
800
 
   
Less: Provision for Bad Debts
7,300
65,700
    Cash in Hand
8,900
 
3,75,900
 
3,75,900
       

Working Notes:

WN1: Calculation of Provision for Doubtful Debts
Provision  for  Doubtful  Debts=(Sundry  Debtors Further  Bad  Debts ) × Rate100=(73,800 800) × 10100=Rs  7,300

WN
2
: Calculation of Accrued Interest on Loan to Malik

Interest= 10,000 × 18100× 912=Rs 1,350Interest Already Received = Rs 900 Accrued Interest=Rs 450

WN3: Calculation of Pre-paid Insurance

Annual  Insurance  Premium = 3,000Premium  for  the  period  01  April  2012 - 30  June  2012 = 3,000 × 312=Rs 750

WN4: Calculation of Manager’s Commission

Profit  before  Manager's  Commission= Rs  56,700  (1,16,150 59,450 ) Manager's  Commission =56,700 × 5105= Rs  2,700



Page No 20.102:

Question 34:

Prepare Trading and Profit and Loss Account and Balance Sheet as at 31st March, 2017, from the following balances:
 

Particulars () Particulars ()
Capital A/c 5,00,000 Stock on 1.4.2016 67,000
Drawings A/c 36,000 Salaries & Wages 24,000
Bills Receivable 5,800 Outstanding Salaries and Wages 2,000
Plant & Machinery 3,80,000 Insurance (including premium of 1,000 per annum paid upto 30-9-2017)
2,600
Sundry Debtors 58,000 Cash 46,600
Loan A/c (Cr.) at 12% p.a.       20,000 Bank Overdraft 15,000
Manufacturing Wages 40,000 Repairs & Renewals 1,600
Returns Inwards 3,000 Interest & Discount (Dr.) 4,400
Purchases 1,20,000 Bad-Debts 4,000
Sales 2,60,000 Sundry Creditors 30,000
Rent 28,000 Fixtures & fittings 12,000
Commission Received 6,000    
       

Adjustments:-
1. Stock on hand on 31st March, 2017 was ₹ 80,000.
2. Further Bad-debts written off ₹ 2,000 and Create a provision of 5% of Sundry Debtors.
3. Rent has been paid up to 31st May, 2017.
4. Manufacturing wages include ₹ 10,000 of a new Machinery purchased on 1st October, 2016.
5. Depreciate Plant and Machinery by 10% p.a. and Fixtures and Fittings by 20% p.a.
6. Commission earned but not received ₹ 1,000.
7. Interest on Loan for the last two months is not paid.
8. Goods worth ₹ 4,000 were distributed as free samples.

Answer:

Trading Account 
for the year ended March 31, 2017
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, 2017
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, 2017
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 20.103:

Question 35:

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 20.103:

Question 36:

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 20.104:

Question 37:

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 20.105:

Question 38:

From the following Trial Balance of Mr. Tarun Ghosh, prepare Trading and Profit and Loss A/c for the year ending 31st March, 2017 and a Balance Sheet as at that date:
 

Dr. Balances () Cr. Balances ()
Opening Stock 38,000 Capital 3,00,000
Purchases 12,60,000 Secured Loan 20,000
Wages: Factory
  Office
20,000
1,600
Sales 15,40,000
Salary 54,000 Sundry Creditors                 40,000
Business Premises 2,00,000 Returns Outwards 15,000
Furniture and Fixtures 40,000 Bills Payable 12,000
Packing Machinery 60,000 Bank 33,000
Tools 15,000    
Rent 58,400    
Loan to Mr. Ram Narain on 1st
November, 2016 @ 12% p.a.

10,000
   
Sundry Debtors 1,31,500    
Cash in Hand 7,400    
Drawings 60,000    
Bills Receivable 4,100    
  19,60,000   19,60,000
       

Adjustments:-
(i) Closing Stock amounted to ₹ 50,000.
(ii) Goods costing ₹ 8,000 were sent to a customer on sale or return basis for ₹ 10,000 on 30th March, 2017 and had been recorded in the books as actual sales.
(iii) Allow 8% interest on Capital and charge ₹ 3,000 as interest on drawings.
(iv) Depreciate: Business premises by 5%; Furniture and Fixtures by 20% and Packing Machinery by 10%. Tools are to be revalued at ₹ 12,000.
(v) 212% for discounts is to be provided on Debtors.
(vi) ₹ 1,500 is to be provided for Bad and Doubtful Debts.

Answer:

Financial Statements of Mr. Tarun Ghosh
Trading Account 
for the year ended March 31, 2017
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, 2017
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, 2017
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 20.106:

Question 39:

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 20.107:

Question 40:

From the following information prepare financial Statements of M/s Raj & Bros, for the year ending March 31, 2017.
 

  Debit Balances
()
  Credit Balances
()
Stock (1-4-2016) 16,800 Returns Outward 5,700
Sales Returns 8,000 Trade Creditors 4,800
Purchases 2,43,000 10% Bank Loan (1-7-2016) 24,000
Freight-in 8,600 Income from Investment 3,600
Rent and Taxes 5,700 Discount Received 2,250
Salaries 9,300    
Trade debtors 24,000    
Bank interest 1,000    
Printing and Advertising 14,600    
Cash at bank 18,300    
Discount Allowed 1,340    
Investment 25,000    
Furniture 3,800    
General Expenses 3,610    
Audit Fees 500    
Insurance 800    
Travelling Expenses 3,000    
Plant & Machinery 30,000    
Drawings 10,000    
  4,27,350   4,27,350
       

Additional Information:-
(i) Depreciation on Plant and Machinery @ 10% p.a., a Machine has been purchased on July 01, 2016 for ₹ 12,000.
(ii) The manager is entitled to a commission of 10% of the net profit before charging such commission.
(iii) Closing stock in trade is valued at ₹ 6,000 (cost); ₹ 6,200 (Market Price).
(iv) Rent outstanding ₹ 5,000.

Answer:

Financial Statements of M/s Raj & Bros.
Trading Account 
for the year ended March 31, 2017
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, 2017
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, 2017
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 20.75:

Question 1:

The following are the balances extracted from the books of Raghunath Ji as on 31st March, 2017. From these balances, prepare his Trading and Profit & Loss Account and Balance Sheet as at that date:

  Dr.
(₹)
Cr.
(₹)
Opening Stock 12,000  
Purchases 40,000  
Sales   86,000
Discount   400
Sales Return 6,000  
Buildings 50,000  
Debtors 16,000  
Salaries 2,400  
Office Expenses 1,200  
Wages 10,000  
Purchase Return   4,000
Interest   800
Travelling Expenses 400  
Fire Insurance Premium 800  
Machinery 20,000  
Carriage on Purchases 700  
Commission 400  
Cash in hand 2,300  
Rent and Taxes 1,800  
Capital   62,000
Creditors   10,800
  1,64,000 1,64,000
   

Adjustment:-
1. Closing Stock was valued at ₹ 16,000.
2. Wages ₹ 2,000 and salaries ₹ 1,200 are outstanding.
3. Rent for two months at the rate of ₹ 500 per month is outstanding.
4. Depreciate Buildings by 5% and machinery by 10%.
5. Prepaid Insurance ₹ 200.

Answer:

Financial Statements of Raghunath Ji
Trading Account 
for the year ended March 31, 2017
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, 2017
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, 2017
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:

From the following Trial Balance prepare Trading and Profit & Loss Account for the year ended 31st March, 2017 and Balance Sheet as at that date:-

  Dr.
(₹)
Cr.
(₹)
Stock 1st April, 2016 22,300  
Purchases and Purchase Return 2,30,000 5,200
Freehold Premises 1,00,000  
Incidental Trade Exp. 11,200  
Insurance 1,850  
Audit Fees 800  
Commission Received   2,700
Interest   1,400
Debtors and Creditors 32,400 24,830
Wages 30,200  
Salaries 15,200  
Capital   1,50,000
Drawings 12,000  
Income-Tax 3,600  
Investments 8,000  
Discount allowed & received 7,500 4,200
Sales Return & Sales 6,400 3,17,400
B/R 5,200  
Office Furniture 9,000  
Rent   2,600
Cash in hand 5,080  
Bank Balance 7,600  
  5,08,330 5,08,330
   

Adjustment:-
1. Stock at 31st March 2017 is ₹ 70,000.
2. Write of 5% Depreciation on Freehold Premises and 20% on office furniture.
3. Commission earned but not received ₹ 500.
4. Interest earned ₹ 600.
5. ₹ 200 for rent have been received in advance.
6. Charge interest on Capital @ 6% and ₹ 500 on Drawings.

Answer:

Trading Account 
for the year ended March 31, 2017
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, 2017
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, 2017
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:

On 31st March, 2017 the following Trial Balance was extracted from the books of Mohan:-

  Dr.
(₹)
Cr.
(₹)
Capital   30,000
Drawings 5,000  
Debtors and Creditors 20,000 10,000
Bank Loan   9,500
Interest on Loan 300  
Cash 2,000  
Provision for Bad-Debts   700
Stock 1-4-2016 6,800  
Motor Vehicles 10,000  
Bank 3,500  
Land and Buildings 12,000  
Bad-Debts 500  
Purchases and Sales 66,000 1,10,000
Returns 8,000 1,500
Carriage Outward 2,500  
Carriage Inward 3,000  
Salaries 9,000  
Rent and Insurance 3,000  
Advertising 3,500  
Discount   500
General Expenses 3,400  
B/R and B/P 6,000 2,000
Rent received   300
  1,64,500 1,64,500
   

Prepare Trading and Profit & Loss Account for the year ended 31st March, 2017 and Balance Sheet as at that date after taking into account the following:-
(a) Private purchases amounting to ₹ 4,000 have been debited to Purchases Account.
(b) Depreciate Land and Buildings at 212% and Motor Vehicles at 20%.
(c) Salaries outstanding ₹ 200.
(d) Prepaid Insurance ₹ 200.
(e) Provision for Doubtful Debts is to be maintained at 5% on Debtors.
(f) Stock on 31st March, 2017 was valued at ₹ 7,000.

Answer:

Trading Account 
for the year ended March 31, 2017
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, 2017
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, 2017
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:

Prepare Trading and Profit & Loss Account for the year ended 31st March, 2017 and Balance Sheet as at that date from the following Trial Balance:-

  Dr.
(₹)
Cr.
(₹)
Capital   10,000
Cash 1,500  
Bank Overdraft   2,000
Purchases and Sales 12,000 15,000
Returns 1,000 2,000
Establishment Expenses 2,200  
Taxes and Insurance 500  
Bad-debts and Bad-debt Provision 500 700
Debtors and Creditors 5,000 2,000
Commission   500
Deposits 4,000  
Opening Stock 3,000  
Drawings 1,400  
Furniture 600  
B/R and B/P 3,000 2,500
  34,700 34,700
   

Adjustments:-
1. Salaries ₹ 100 and taxes ₹ 200 are outstanding but insurance ₹ 50 is prepaid.
2. Commission ₹ 100 is received in advance for nex year.
3. Interest ₹ 210 is to be received on Deposits and Interest on Bank overdraft ₹ 300 is to be paid.
4. Bad-debts provision is to be maintained at ₹ 1,000 on Debtors.
5. Depreciate furniture by 10%.
6. Stock on 31st March, 2017 was valued at ₹ 4,500.

Answer:

Trading Account 
for the year ended March 31, 2017
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, 2017
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