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Page No 22.100:

Question 22:

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

Dr. Balances (₹) Cr. Balances (₹)
Drawings 1,20,000 Capital 16,00,000
Plant and Machinery 12,00,000 Creditors 2,60,000
Horses and Carts 2,60,000 Sales 8,20,000
Debtors 3,40,000 Bills Payable 2,21,200
Purchases 2,00,000 Interest on Ram's Loan 1,800
Wages 80,000 Rent Received 12,000
Cash at Bank 2,60,000    
Salaries 80,000    
 Repairs 5,000    
Stock (1-4-2013) 7,000    
Stock (31-3-2014) 92,000    
Rent 45,000    
Manufacturing expenses    15,000    
Bad-Debts 50,000    
Carriage 15,000    
Income Tax 20,000    
Life Insurance Premium 30,000    
Loan to Ram at 12% p.a. 20,000    
Insurance 12,000    
Insurance Prepaid 1,000    
  29,15,000   29,15,000
       

Adjustments:-
1. Plant and Machinery includes a new machinery purchased on 1st October, 2013 for ₹ 2,00,000.
2. Depreciate Plant and Machinery by 10% p.a. and Horses and Carts by 20% p.a.
3. Salaries for the month of February and March 2014 are outstanding.
4. Goods worth ₹ 15,000 were sold and dispatched on 27th March but no entry was passed to this effect.
5. Make a provision for Doubtful Debts at 5% on Debtors.

Answer:

Financial Statement of Sh. Pawan Kumar
Trading Account 
for the year ended March 31, 2014
Dr.  
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Opening Stock
70,000
Sales
8,20,000
 
Purchases
2,00,000
Add: Unrecorded Sales
15,000
8,35,000
Carriage
15,000
   
Wages
80,000
   
Manufacturing Expenses
15,000
   
Gross Profit (Balancing Figure)
4,55,000
   
       
 
8,35,000
 
8,35,000
       


Profit and Loss Account 

for the year ended March 31, 2014

Dr.

 

Cr.

Particulars 

Amount

(Rs)

Particulars

Amount

(Rs)

Depreciation: (WN1)

 

Gross Profit

4,55,000

Plant & Machinery

1,10,000

 

Rent Received

12,000 

Horse & Carts

52,000

1,62,000

Interest on Ram’s Loan

1,800 

 

Old Bad Debts

50,000

 

Add: Accrued Interest (WN4)

600

 2,400

Add: New Provision (WN2)

17,750

67,750

 

 

Insurance

12,000

 

 

Salaries

80,000

 

 

 

Add: Outstanding (WN3)

16,000

96,000

 

 

Repairs

5,000

 

 

Rent

45,000

 

 

Net Profit (Balancing Figure)

81,650

 

 

 

4,69,400

 

4,69,400

 

 

 

 


Balance Sheet 
as on March 31, 2014
Liabilities 
Amount
(Rs)
Assets 
Amount
(Rs)
Capital
16,00,000
  Fixed Assets  
Add : Net Profit
81,650
  Plant & Machinery
12,00,000
 
Less: Drawings (incl. LIP and Income Tax)
1,70,000
15,11,650
Less: Depreciation
1,10,000
10,90,000
    Horses & Carts
2,60,000
 
Current Liabilities  
Less: Depreciation
52,000
2,08,000
Creditors
2,60,000
   
Outstanding Salaries 16,000 Current Assets  
Bills Payable
2,21,200
Closing Stock
92,000
 
 
Prepaid Insurance
1,000
    Accrued Interest
600
    Ram’s Loan
20,000
    Cash at Bank
2,60,000
    Debtors
3,40,000
 
   
Add: Unrecorded
15,000
 
   
Less: Provision for Doubtful Debts
17,750
3,37,250
       
 
20,08,850
 
20,08,850
       

Working Notes:

WN1: Calculation of Amount of Depreciation
Depreciationon Plant & Machinery=10,00,000×10100+ 2,00,000×10100×612=Rs1,10,000Depreciationon Horse &Carts=2,60,000×20100=Rs 52,000

WN2: Calculation of Provision for Doubtful Debts
Provision for Doubtful Debts=Sundry Debtors+Unrecorded Sales×Rate100=3,40,000+15,000×5100=Rs17,750

WN3: Calculation of Outstanding Expenses

Salaries for 10 months = 80,000Salary for 2 months=80,00010×2=Rs16,000


WN4: Calculation of Accrued Interest on Ram’s Loan
Interest on Loan=20,000×12100 = Rs 2,400Interest on Loan already received = Rs 1,800So, Accrued Interest = Rs 600



Page No 22.101:

Question 23:

The following balances were extracted from the books of Modern Traders as at 31st March, 2017:-

   
Particulars 
(₹)
Particulars
(₹)
Capital Account 85,000 Printing and Stationery   800
Drawings Account 5,000 Sundry Creditors   23,000
Plant and Machinery 40,000 Sales   1,20,000
Stock on 1-4-2016 15,000 Postage   800
Purchases 82,000 Bad-Debts   400
Sundry Debtors 20,600 Provision for Doubtful Debts   800
Furniture 5,000 Discount received   400
Freight Inward 2,000 Rent Revenue   1,200
Carriage Outward 500 Insurance   700
Rent, Rates and Taxes                 4,600 Salaries   20,000
    Wages   1,300
    Cash in Hand   6,200
    Cash at Bank 25,500

Prepare Final Accounts for the year ended 31st March, 2017 after taking into account the following:
(i) Stock on 31st March, 2017 was valued at ₹ 15,000.
(ii) Goods costing ₹ 6,000 were sent to a customer on "Sale on Return basis" for ₹ 7,200 on 26th March, 2017 and had been recorded in the books as actual sales.
(iii) Provision for Doubtful Debts is to be maintained at 5% of the Debtors.
(iv) Prepaid Insurance was ₹ 100.
(v) Provide Depreciation on Plant and Machinery @ 10% and on Furniture @ 5%.

Answer:

Financial Statements of Modern Traders
Trading Account 
for the year ended March 31, 2017
Dr.  
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Opening Stock
15,000
Sales
1,20,000
 
Purchases
82,000
Less: Sale on Approval Basis
7,200
1,12,800
Freight Inwards
2,000
Closing Stock
15,000
 
Wages
1,300
Add: Sale on Approval Basis
6,000
21,000
Gross Profit (Balancing Figure)
33,500
   
 
1,33,800
 
1,33,800
       
             
Profit and Loss Account 
for the year ended March 31, 2017
Dr.  
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Depreciation: (WN1)   Gross Profit
33,500
Plant & Machinery
4,000
  Discount Received
400
Furniture
250
4,250
Rent Revenue
1,200
Bad Debts
400
     
Add: New Provision (WN2)
670
     
Less: Old Provision
800
270
   
Carriage Outwards
500
   
Insurance
700
     
Less: Prepaid
100
600
   
Rent, Rates & Taxes
4,600
   
Printing & Stationery
800
   
Postage & Telegram
800
   
Salaries
20,000
   
Net Profit (Balancing Figure)
3,280
   
 
35,100
 
35,100
       

Balance Sheet 
as on March 31, 2017
Liabilities 
Amount
(Rs)
Assets 
Amount
(Rs)
Capital
85,000
  Fixed Assets  
Add: Net Profit
3,280
  Plant &  Machinery
40,000
 
Less: Drawings
5,000
83,280
Less: Depreciation
4,000
36,000
    Furniture
5,000
 
Current Liabilities  
Less: Depreciation
250
4,750
Creditors
23,000
   
    Current Assets  
    Closing Stock
15,000
 
      Add: Sale on Approval Basis
6,000
21,000
    Prepaid Insurance
100
    Cash in Hand
6,200
    Cash at Bank
25,500
    Debtors
20,600
 
   
Less: Sale on Approval Basis
7,200
 
   
Less: Provision for Doubtful Debts
670
12,730
       
 
1,06,280
 
1,06,280
       

Working Notes:

WN1: Calculation of Amount of Depreciation

Depreciationon Machinery=40,000×10100=Rs 4,000Depreciationon Furniture=5,000×5100=Rs 250

WN2: Calculation of Provision for Doubtful Debts

Provision for Doubtful Debts=(Sundry DebtorsSaleon Approval Basis)×Rate100=20,6007,200×5100=Rs 670

Page No 22.101:

Question 24:

The following Trial Balance has been extracted from the books of Shri Santosh Kumar as at 31st March, 2017:-
 

  Dr.
(₹)
Cr.
(₹)
Plant and Machinery 1,00,000  
Furniture 12,000  
Capital Account   1,91,000
Household Expenses 16,000  
Sales   4,68,000
Loose Tools 20,000  
Goodwill 10,000  
Opening Stock (1-4-2016) 20,000  
Returns Outward   4,000
Discount   6,000
Purchases 2,12,000  
Returns Inwards 8,000  
Wages 1,00,000  
Salaries 60,000  
Outstanding Salaries   5,000
Investments at 10% p.a. 6,000  
Interest on Investments   300
Sundry Creditors   24,000
Miscellaneous Receipts   2,000
Carriage Inwards 12,000  
General Expenses and Insurance 39,000  
Advertisement Expenses 15,000  
Postage 4,000  
Sundry Debtors 56,000  
B. Barua 2,000  
Cash Balance 14,000  
Bank   3,200
Suspense Account   2,500
     
  7,06,000 7,06,000
     

The following additional information is available:-
(I) Stock on 31st March, 2017 was ₹ 30,800.
(II) Depreciation is to be charged on Plant and Machinery at 5% and Furniture at 6%. Loose Tools are revalued at ₹ 16,000.
(III) Create a provision of 2% for Discount on Debtors.
(IV) Salary of ₹ 2,000 paid to Shri B. Barua, a temporary employee, stands debited to his personal account and it is to be corrected.
(V) Write off 1/5th of advertisement expenses.
You are to prepare Trading and Profit & Loss Account for the year ended 31st March, 2017 and a Balance Sheet as at that date.

Answer:

Financial Statements of Shri Santosh Kumar
Trading Account 
for the year ended March 31, 2017
Dr.  
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Opening Stock
20,000
Sales
4,68,000
 
Purchases
2,12,000
 
Less: Return Inwards
8,000
4,60,000
  Less: Return Outwards
4,000
2,08,000
Closing Stock
30,800
Carriage Inwards
12,000
   
Wages
1,00,000
   
Gross Profit (Balancing Figure)
1,50,800
   
 
4,90,800
 
4,90,800
       

Profit and Loss Account 
for the year ended March 31, 2017
Dr.  
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Depreciation: (WN1)   Gross Profit
1,50,800
Plant & Machinery
5,000
  Discount
6,000
Furniture
720
  Miscellaneous Receipts
2,000
Loose Tools
4,000
9,720
Interest on Investment
300
 
Salaries
60,000
 
Add: Accrued (WN3)
300
600
Add: Salary to B.Barua
2,000
62,000
   
Advertisement Expenses written-off
3,000
   
Provision for Discount on Debtors (WN2)
1,120
   
General Expenses & Insurance
39,000
   
Postage & Telegram
4,000
   
Net Profit (Balancing Figure)
40,560
   
 
1,59,400
 
1,59,400
       

Balance Sheet 
as on March 31, 2017
Liabilities 
Amount
(Rs)
Assets 
Amount
(Rs)
Capital
1,91,000
  Fixed Assets  
Add: Net Profit
40,560
  Plant &  Machinery
1,00,000
 
Less: Drawings
16,000
2,15,560
Less: Depreciation
5,000
95,000
    Furniture
12,000
 
Current Liabilities  
Less: Depreciation
720
11,280
Creditors
24,000
Loose Tools
20,000
 
Bank Overdraft
3,200
Less: Depreciation
4,000
16,000
Outstanding Salaries
5,000
10% Investment
6,000
Suspense Account
2,500
Current Assets  
    Goodwill
10,000
    Closing Stock
30,800
    Advertisement Expenditure
12,000
    Accrued Interest on Investments
300
    Cash in Hand
14,000
    Debtors
56,000
 
   
Less: Provision for Discount on Debtors
1,120
54,880
       
 
2,50,260
 
2,50,260
       

Working Notes:

WN1: Calculation of Amount of Depreciation
Depreciation on Machinery=1,00,000×5100= Rs 5,000Depreciationon Furniture=12,000×6100= Rs 720Depreciationon Loose Tools=Rs 4,000 20,000 16,000

WN2: Calculation of Provision for Discount on Debtors
Provision for Discounton Debtors=56,000×2100=Rs 1,120

WN3: Calculation of Accrued Interest on Investment
Interest on Investment=6,000×10100=Rs 600
Interest on Loan already received = Rs 300
So, Accured Interest = Rs 300
 



Page No 22.102:

Question 25:

From the following Trial Balance of Sh. Swamy Narain, prepare Trading and Profit & Loss Account for the year ended 31st March 2018 and a Balance Sheet as at that date :

Dr. Balances ₹ Cr. Balances ₹
Opening Stock 50,000 Capital 20,00,000
Purchases 5,30,000 Sales 12,50,000
General Expenses 45,000 Sundry Creditors 1,36,000
Stationery 6,000 Trade Charges due but not paid 5,000
Wages 2,15,000 Outstanding Rent 4,000
Trade Charges 25,000 Bank Balance 45,000
Rent 44,000    
Charity 5,000    
Advertisement Expenses           30,000    
Carriage on Sales 12,000    
Bills Receivables 30,000    
Sundry Debtors 2,20,000    
Cash Discount 16,000    
Cash in Hand 22,000    
Furniture 1,00,000    
Advance for Furniture 40,000    
Plant & Machinery 6,00,000    
Building 14,50,000    
  34,40,000   34,40,000
     

Adjustments:
(i) Stock on 31 March, 2018 was valued at ₹ 60,000.
(ii) A new machine was installed during the year costing ₹ 2,00,000 but it was not recorded in the books. Wages paid for its installation ₹ 10,000 have been debited to Wages Account.
(iii) An advance of ₹ 10,000 given alongwith purchase order was wrongly recorded in purchases.
(iv) General expenses include ₹ 20,000 paid for Wages.
(v) Wages include a sum of ₹ 50,000 spent on the erection of a Scooter Stand for employees.
(vi) Advance for Furniture is for furniture at proprietor's residence.
(vii) Depreciate Furniture at 15%, Plant & Machinery at 20% and Building at 10%.
(viii) Carry forward 2/3 of Advertisement Expenses as unexpired.
(ix) A B/R of ₹ 20,000 was discounted with bank on 15 Nov. 2017, but not yet matured.

Answer:

Trading Account

for the year ended March 31, 2018

Dr.

 

 

Cr.

Particulars

Amount

(₹)

Particulars

Amount

(₹)

Opening Stock

50,000

Sales

12,50,000

Purchases

5,30,000

 

Closing Stock

60,000

  Less: Advance against Order

(10,000)

5,20,000

 

 

Wages

2,15,000

 

 

 

  Add: Included in General Expenses

20,000

 

 

 

  Less: Construction of Shed

(50,000)

 

 

 

  Less: Wages on Machinery

(10,000)

1,75,000

 

 

Gross Profit

5,65,000

 

 

 

13,10,000

 

13,10,000

 

 

 

 

 

Profit & Loss Account

for the year ended March 31, 2018

Dr.

 

 

Cr.

Particulars

Amount

(₹)

Particulars

Amount

(₹)

Cash Discount

16,000

Gross Profit

5,65,000

General Expenses

45,000

 

 

 

  Less: Wages

(20,000)

25,000

 

 

Stationery

6,000

 

 

Trade Charges

25,000

 

 

Rent

44,000

 

 

Charity

5,000

 

 

Advertisement Expenses

10,000

 

 

Carriage on Sales

12,000

 

 

Depreciation on:

 

 

 

Furniture

15,000

 

 

 

Building

1,50,000

 

 

 

Plant & Machinery

1,62,000

3,27,000

 

 

Net Profit

95,000

 

 

 

5,65,000

 

5,65,000

 

 

 

 

 

Balance Sheet

as on March 31, 2018

Dr.

 

 

Cr.

Liabilities

Amount

(₹)

Assets

Amount

(₹)

Creditors

1,36,000

Furniture

1,00,000

 

Outstanding Trade Charges

5,000

  Less: Depreciation

15,000

85,000

Outstanding Rent

4,000

Plant & Machinery

6,00,000

 

Bank Overdraft

45,000

  Add: Additions

2,10,000

 

Capital

20,00,000

 

  Less: Depreciation

1,62,000

6,48,000

  Less: Drawings

40,000

 

Unexpired Advertisement Expenses

20,000

  Add: Net Profit

95,000

20,55,000

Building

14,50,000

 

Creditors for Machinery

2,00,000

  Add: Additions

50,000

 

 

 

  Less: Depreciation

1,50,000

13,50,000

 

 

Cash in Hand

22,000

 

 

Closing Stock

60,000

 

 

Debtors

2,20,000

 

 

Advance against Purchases

10,000

 

 

Bills Receivable

30,000

 

24,45,000

                

24,45,000

 

 

 

 



Page No 22.103:

Question 26:

Following is the Trial Balance as on 31st March 2016. Prepare Trading and Profit and Loss Account and Balance Sheet :-

Particulars Debit
(₹)
Credit
(₹)
Stock (1st April 2015) 8,000  
Sales   2,20,000
Purchases 1,26,000  
Productive Wages 56,500  
Salaries 16,000  
Stores Consumed 6,050  
Carriage 3,050  
Rent and Rates 5,200  
Insurance 1,320  
Machinery 52,000  
Building 67,000  
Capital less Drawings   1,45,600
Sundry Debtors 44,000  
Sundry Creditors   20,000
Secured Loan   15,000
Furniture 3,350  
General Expenses 2,600  
Cash in hand 1,930  
Bad Debts 1,020  
Bank 6,580  
Total 4,00,600 4,00,600
   

Additional Information :
(a) Stock on 31st March 2016 is ₹ 20,600.
(b) Depreciate machinery @ 10% p.a.
(c) Make a Provision @ 5% for Doubtful Debts.
(d) Provide 212% for discount on sundry debtors.
(e) Rent and Rates include security deposit of ₹ 400.
(f) Insurance prepaid ₹ 120.

Answer:

Trading Account

for the year ended March 31, 2016

Dr.

 

 

Cr.

Particulars

Amount

(₹)

Particulars

Amount

(₹)

Opening Stock

8,000

Sales

2,20,000

Purchases

1,26,000

Closing Stock

20,600

Stores Consumed

6,050

 

 

Productive Wages

56,500

 

 

Carriage

3,050

 

 

Gross Profit

41,000

 

 

 

2,40,600

 

2,40,600

 

 

 

 

 

Profit & Loss Account

for the year ended March 31, 2016

Dr.

 

 

Cr.

Particulars

Amount

(₹)

Particulars

Amount

(₹)

Salaries

16,000

Gross Profit

41,000

Rent & Rates

5,200

 

 

 

  Less: Security Deposit

(400)

4,800

 

 

Insurance

1,320

 

 

 

  Less: Prepaid

120

1,200

 

 

General Expenses

2,600

 

 

Bad Debts

1,020

 

 

 

  Add: Provision for DD

2,200

3,220

 

 

Provision for Discount on Debtors

1,045

 

 

Depreciation on Machinery

5,200

 

 

Net Profit

6,935

 

 

 

41,000

 

41,000

 

 

 

 

 

Balance Sheet

as on March 31, 2016

Dr.

 

 

Cr.

Liabilities

Amount

(₹)

Assets

Amount

(₹)

Creditors

20,000

Machinery

52,000

 

Capital

1,45,600

 

  Less: Depreciation

5,200

46,800

  Add: Net Profit

6,935

1,52,535

Building

67,000

Secured Loan

15,000

Cash in Hand

1,930

 

 

Closing Stock

20,600

 

 

Debtors

44,000

 

 

 

  Less: Provision for DD

2,200

 

 

 

  Less: Provision for Discount

1,045

40,755

 

 

Furniture

3,350

 

 

Prepaid Insurance

120

 

 

Security Deposit

400

 

 

Bank

6,580

 

1,87,535

                

1,87,535

 

 

 

 



Page No 22.104:

Question 27:

From the following Trial Balance and other information prepare Trading and Profit and Loss Account for the year ended 31st March 2016 and Balance Sheet as at that date.

Heads of Accounts Debit
(₹)
Credit
(₹)
Sundry Debtors 32,000  
Stock (1st April 2015) 22,000  
Cash in hand 35  
Cash at bank 1,545  
Plant and Machinery 17,500  
Sundry Creditors   10,650
Trade Expenses 1,075  
Sales   1,34,500
Salaries 2,225  
Carriage Outwards 400  
Rent 900  
Bills Payable   7,500
Purchases 1,18,870  
Discounts 1,100  
Premises 34,500  
Capital (1st April 2015)   79,500
Total 2,32,150 2,32,150
   

Additional Information:
Stock on 31st March 2016 was ₹ 12,450. Rent was unpaid to the extent of ₹ 85 and ₹ 150 were outstanding for Trade Expenses. ₹ 400 are to be written off as bad debts out of the above debtors, and 5% is to be provided for doubtful debts. Depreciate plant and machinery 10% and premises by 2%. Manager is entitled a commission of 5% on net profit after charging his commission.

Answer:

Trading Account

for the year ended March 31, 2016

Dr.

 

 

Cr.

Particulars

Amount

(₹)

Particulars

Amount

(₹)

Opening Stock

22,000

Sales

1,34,500

Purchases

1,18,870

Closing Stock

12,450

Gross Profit

6,080

 

 

 

1,46,950

 

1,46,950

 

 

 

 

 

Profit & Loss Account

for the year ended March 31, 2016

Dr.

 

 

Cr.

Particulars

Amount

(₹)

Particulars

Amount

(₹)

Salaries

2,225

Gross Profit

6,080

Trade Expenses

1,075

 

Net Loss

4,275

  Add: Outstanding

150

1,225

 

 

Rent

900

 

 

 

  Add: Outstanding

85

985

 

 

Carriage Outwards

400

 

 

Bad Debts

400

 

 

 

  Add: Provision for DD

1,580

1,980

 

 

Discount

1,100

 

 

Depreciation on Machinery

1,750

 

 

Depreciation on Premises

690

 

 

 

10,355

 

10,355

 

 

 

 

 

Balance Sheet

as on March 31, 2016

Dr.

 

 

Cr.

Liabilities

Amount

(₹)

Assets

Amount

(₹)

Sundry Creditors

10,650

Plant &Machinery

17,500

 

Capital

79,500

 

  Less: Depreciation

1,750

15,750

  Less: Net Loss

4,275

75,225

Cash in Hand

35

Bills Payable

7,500

Closing Stock

12,450

Rent Outstanding

85

Premises

34,500

 

Trade Expenses Outstanding

150

  Less: Depreciation

690

33,810

 

 

Debtors

32,000

 

 

 

  Less: Further Bad Debts

400

 

 

 

  Less: Provision for DD

1,580

30,020

 

 

Cash at Bank

1,545

 

93,610

                

93,610

 

 

 

 



Page No 22.105:

Question 28:

The following is the Trial Balance of Pankaj as on 31st March, 2015:
 

Name of Account Debit
(₹)
Credit
(₹)
Wages 10,000  
Capital 43,000
Machinery 50,000
Vehicles 10,000
Sales return/Purchase return 2,000 1,000
Stock 10,000
Purchase & Sale 36,000 70,000
Repair 2,000
Rent 1,000 -
Provision for doubtful debts 700
Bad debts 2,400
Loan from Bank 15,000
Interest on Loan 800
Cash in Hand 16,000
Debtors & Creditors 12,000 15,300
Commission received   7,200
     
  1,52,200 1,52,200
     

Adjustment:-
(i) Closing stock was valued at ₹ 12,000.
(ii) Wages have been paid for 10 months.
(iii) Write off ₹ 500 as further bad debts and provide 5% provision for doubtful debts.
(iv) Outstanding interest on loan ₹ 700.
(v) Depreciate machinery @ 5%
(b) Does question depict any value?

Answer:

(a)

Financial Statement of….

Trading Account 

for the year ended 31 March,2015

Dr.

 

Cr.

Particulars 

Amount

(Rs)

Particulars

Amount

(Rs)

Opening Stock

10,000

Sales

70,000

 

Purchases

36,000

 

Less: Return Inwards

2,000

68,000

Less: Return Outwards

1,000

35,000

Closing Stock

12,000

Wages

10,000

 

 

 

  Add: Outstanding Wages

2,000

12,000

 

 

Gross Profit (Balancing Figure)         

23,000

 

 

 

80,000

 

80,000

 

 

 

 


Profit and Loss Account 
for the year ended March 31,2015
Dr.
 

Cr.

Particulars 

Amount

(Rs)

Particulars

Amount

(Rs)

Interest on Loan

800

 

Gross Profit

23,000

   Add: Outstanding

700

1,500

Commission Received                       

7,200

Depreciation on Machinery

2,500

 

 

Old Bad Debts                 

2,400

 

 

 

   Add: New Bad Debts      

500

 

 

 

   Add: New Provision for Bad Debts

575

 

 

 

   Less: Old Provision for Bad Debts

700

2,775

 

 

Repair

2,000

 

 

Rent

1,000

 

 

Net Profit (Balancing Figure)

20,425

 

 

 

 

 

 

 

30,200

 

30,200

 

 

 

 

 
Balance Sheet 
as on March 31, 2015

Liabilities 

Amount

(Rs)

Assets 

Amount

(Rs)

Capital

43,000

 

Fixed Assets

 

Add: Net Profit

20,425

63,425

Machinery                          

50,000

 

Loan from Bank

15,000

  Less: Depreciation               

2,500

47,500

Current Liabilities

 

Vehicles

10,000

Creditors

15,300

Current Assets

 

Outstanding Wages 

2,000

Closing Stock

12,000

Outstanding Interest on Loan                             

700

Debtors                             

12,000

 

 

 

   Less: New Bad Debts              

500

 

 

 

   Less: New Provision for Bad Debts

575

10,925

 

 

Cash in Hand

16,000

 

96,425

 

96,425

 

 

 

 


(b) Values Involved:

(i) Matching principle has been adopted (outstanding wages and depreciation)
(ii) Prudence principle has been adopted (provision for bad and doubtful debts)



Page No 22.106:

Question 29:

Following are balances from the trial balance of Ritesh Traders as at 31st March 2008:
 

Particulars ₹ Particulars ₹
Opening Stock 5,620 Interest on Securities 6,400
Purchases 1,54,200 Land and Building 10,00,000
Sales 3,74,800 Securities 6,00,000
Wages 1,26,000 Cash in Hand 25,600
Carriage Inward 900 Bank Overdraft 3,40,000
Freight on Purchase 4,900 Discount Allowed 1,500
Salaries 8,000 Discount Received 420
Insurance 2,800 Bill Payable 4,000
Repair to Machinery 1,400 Loan (Cr.) 11,000
Drawings 5,600 Bills Receivable 7,000
Customer's A/c 15,800 Capital Account 13,47,600
Postage 500 Suppliers A/c 40,000
Trade Expenses 1,000 X's Loan (Cr.) 18,600
    Plant and Machinery 1,82,000

Prepare Trading and Profit & Loss Account for the year ended 31st March 2008 and Balance Sheet as at that date after taking into account the following adjustments :
(i) Closing Stock was valued at ₹  19,000.
(ii) Depreciation to be provided on Land and Building @ 5% p.a. and on Plant & Machinery @ 10% p.a.
(iii) Write off ₹ 2,000 as Bad debt.
(iv) Insurance was prepaid ₹ 700.
(v) Create provision for doubtful debts @ 5% on debtors.
(vi) Wages include ₹ 4,800 for installation of a new machinery.

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 4,900    
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

Depreciationon Machinery=1,86,800×10100= Rs18,680Depreciationon Building=10,00,000×5100= Rs50,000
 
WN2: Calculation of Provision for Doubtful Debts

Provisionfor Doubtful Debts=(Sundry DebtorsFurther Bad Debts) ×Rate100=(15,8002,000)×5100=Rs 690



Page No 22.107:

Question 30:

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=(70,000500)×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 22.107:

Question 31:

The following balances were taken from the books of Shri R. Lal as at 31st March, 2017.
 

Particulars (₹) Particulars (₹)
Capital 1,00,000 Rent (Cr.) 2,100
Drawing 17,600 Railway Freight on sales 16,940
Purchases 80,000 Carriage Inwards 2,310
Sales 1,40,370 Office Expenses 1,340
Purchase Returns 2,820 Printing & Stationery 660
Stock on 1.4.2016 11,460 Postage 820
Bad Debts 1,400 Sundry Debtors 62,070
Bad Debts Provision on 1.4.2016 3,240 Sundry Creditors 18,920
Rates & Insurance 1,300 Cash at Bank 12,400
Discount (Cr.) 190 Cash in Hand 2,210
Bills Receivable 1,240 Office Furniture 3,500
Sales Returns 4,240 Salaries & Commission 9,870
Wages 6,280 Addition to Building 7,000
Building 25,000    

Prepare Trading and Profit & Loss A/c and a Balance Sheet as at 31st March, 2017, after keeping in view the following adjustments:
(i) Depreciate old Building at 2 1/2% and addition to Building at 2% and Office Furniture at 5%.
(ii) Write off further Bad-debts ₹ 570.
(iii) Increase the Bad-debts Provision to 6% of Debtors.
(iv) On 31st March, 2017 ₹ 570 are outstanding for salary.
(v) Rent receivable ₹ 200 on 31st March, 2017.
(vi) Interest on capital at 5% to be charged.
(vii) Unexpired Insurance ₹ 240.
(viii) Stock was valued at ₹ 14,290 on 31st March, 2017.

Answer:

Financial Statements of Shri R. Lal
Trading Account 
for the year ended March31, 2017
Dr.
 
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Opening Stock
11,460
Sales
1,40,370
 
Purchases
80,000
    Less: Return Inwards
4,240
1,36,130
  Less: Return Outwards
2,820
77,180
Closing Stock
14,290
Carriage Inwards
2,310
   
Wages
6,280
   
Gross Profit (Balancing Figure)
53,190
   
 
1,50,420
 
1,50,420
       
 
Profit and Loss Account 
for the year ended March 31, 2017
Dr.
 
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Depreciation: (WN1)   Gross Profit
53,190
Building
625
  Rent
2,100
 
Furniture
175
    Add: Accrued
200
2,300
Additions to Building
140
940
Discount
190
Salary & Commission
9,870
     
  Add: Outstanding Salaries
570
10,440
   
Bad Debts
1,400
     
  Add: Further Bad Debts
570
     
  Add: New Provision (WN2)
3,690
     
  Less: Old Provision
3,240
2,420
   
Interest on Capital
5,000
   
Rates & Insurance
1,300
     
  Less: Unexpired
240
1,060
   
Railway Freight on Sales
16,940
   
Office Expenses
1,340
   
Printing & Stationery
660
   
Postage & Telegram
820
   
Net Profit (Balancing Figure)
16,060
   
 
55,680
 
55,680
       
 
Balance Sheet 
as on March 31, 2017
Liabilities 
Amount
(Rs)
Assets 
Amount
(Rs)
Capital
1,00,000
  Fixed Assets  
  Add: Interest on Capital
5,000
  Building
25,000
 
  Add: Net Profit
16,060
    Less: Depreciation
625
24,375
  Less: Drawings
17,600
1,03,460
Additions to Building
7,000
 
      Less: Depreciation
140
6,860
Current Liabilities   Office Furniture
3,500
 
Sundry Creditors
18,920
  Less: Depreciation
175
3,325
Outstanding Salaries
570
   
    Current Assets  
    Closing Stock
14,290
    Bills Receivable
1,240
    Accrued Rent
200
    Unexpired Insurance
240
    Cash in Hand
2,210
    Sundry Debtors
62,070
 
      Less: Further Bad Debts
570
 
      Less: Provision for Discount on Debtors
3,690
57,810
    Cash at Bank
12,400
       
 
1,22,950
 
1,22,950
       


Working Notes

WN1: Calculation of Amount of Depreciation


WN2: Calculation of Provision for Doubtful Debts



Page No 22.108:

Question 32:

From the following balances extracted from the books of Karan and the additional information, prepare the trading and profit and loss account for the year ended 31st March, 2010 and also show the balance sheet as at that date:
 

  Debit Balance
(₹'000)
Credit
Balance
(₹'000)
Stock on 1st April, 2009 625
Purchases and Sales 903 1,372
Returns 22 13
Capital Account 300
Drawings 45
Land and Buildings 300
Furniture and Fittings 80
Trade Debtors and Trade Creditors 250 450
Cash in hand 35
Investments 100
Interest 5
Commission 30
Direct Expenses 75
Postage, Stationery and Telephone 25
Fire Insurance Premium 20
Salaries 90
Bank Overdraft 400
  2,570 2,570
     

Additional Information:
(i) Closing stock on 31st March, 2010 is valued at ₹ 6,50,000. Goods worth ₹ 5,000 are reported to have been taken away by the proprietor for his personal use at home during the year.
(ii) Interest on investments ₹ 5,000 is yet to be received while ₹ 10,000 of the commission received is yet to be earned.
(iii) ₹ 5,000 of the fire insurance premium paid is in respect of the quarter ending 30th June, 2010.
(iv) Salaries ₹ 10,000 for March, 2010 and bank overdraft interest estimated at ₹ 20,000 are yet to be recorded as outstanding charges.
(v) Depreciation is to be provided on land and buildings @ 5% per annum and on furniture and fittings @ 10% per annum.
(vi) Make a provision for doubtful debts @ 5% of trade debtors.

Answer:

Financial Statements of Karan
Trading Account 
for the year ended March 31, 2010
Dr.
 
Cr.
Particulars 
Amount
Particulars
Amount
(Rs)
Opening Stock
6,25,000
Sales
13,72,000
 
Purchases
9,03,000
    Less: Return Inwards
22,000
13,50,000
  Less: Return Outwards
13,000
  Closing Stock
6,50,000
  Less: Goods taken for personal use
5,000
8,85,000
   
Direct Expenses
75,000
   
Gross Profit (Balancing Figure)
4,15,000
   
 
20,00,000
 
20,00,000
 
 
 
 

Profit and Loss Account 
for the year ended March 31, 2010
Dr.
 
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Depreciation: (WN1)   Gross Profit
4,15,000
Building
15,000
  Interest on Invest.
5,000
 
Furniture
8,000
23,000
  Add: Accrued
5,000
10,000
Fire Insurance Premium
20,000
  Commission
30,000
 
  Less: Prepaid
5,000
15,000
  Less: Unearned
10,000
20,000
Provision for Doubtful Debts (WN2)
12,500
   
Outstanding Interest on Bank Overdraft
20,000
 
 
Salaries
90,000
 
 
 
  Add: Outstanding
10,000
1,00,000
 
 
Postage, Stationery & Telephone
25,000
 
 
Net Profit (Balancing Figure)
2,49,500
 
 
 
4,45,000
 
4,45,000
 
 
 
 

Balance Sheet 
as on March 31, 2010
Liabilities 
Amount
(Rs)
Assets 
Amount
(Rs)
Capital
3,00,000
  Fixed Assets  
  Add: Net Profit
2,49,500
  Land & Building
3,00,000
 
  Less: Drawings       (45,000 + 5,000)
50,000
4,99,500
  Less: Depreciation
15,000
2,85,000
    Furniture
80,000
 
Current Liabilities     Less: Depreciation
8,000
72,000
Trade Creditors
4,50,000
Investment
1,00,000
Outstanding Salaries
10,000
   
Outstanding Interest on Bank Overdraft
20,000
Current Assets  
Bank Overdraft
4,00,000
Closing Stock
6,50,000
Unearned Commission
10,000
Accrued Interest
5,000
    Prepaid Insurance
5,000
    Cash in Hand 35,000
    Trade Debtors
2,50,000
 
      Less: Provision for Discount on Debtors
12,500
2,37,500
 
 
 
 
 
13,89,500
  13,89,500
 
 
 
 

Working Notes

WN1: Calculation of Amount of Depreciation
Depreciationon Building=3,00,000×5100= Rs 15,000Depreciationon Furniture=80,000×8100= Rs 8,000


WN2: Calculation of Provision for Doubtful Debts

Provision for Doubtful Debts=Sundry DebtorsFurther Bad Debts×Rate100=2,50,0000×5100=Rs 12,500



Page No 22.109:

Question 33:

The following is the trial balance of Mr. Amar Chand as at 31st March, 2016:-
 

  Dr.
(₹)
Cr.
(₹)
Stock on 1st April, 2015 62,000 -
Purchases and Sales 3,15,000 4,48,000
Returns 3,700 2,500
Sundry Debtors and Creditors 80,000 43,000
Bills Receivable and Payable 12,100 4,300
Drawings and Capital 30,000 2,00,000
Cash in Hand 24,800 -
Balance with Bank of Tokyo 32,800 -
Discount 2,600 3,800
Carriage on Purchases 7,500 -
Carriage on Sales 1,200 -
Bad-Debts 2,400 -
Bad-Debts Provision - 3,000
Furniture on 1st April, 2015 10,000 -
New Furniture purchased on 1st January, 2016 6,000 -
Rent 10,000 -
Salaries 25,000 -
Commission - 2,400
Repairs 2,300 -
Insurance (Annual Premium paid on 1st Jan., 2016) 3,600 -
Salaries Outstanding - 5,000
Sales Van 75,000  
Sales Van Expenses 6,000  
  7,12,000 7,12,000
     

Taking into account the following adjustments, prepare Trading and Profit & Loss Account and the Balance Sheet as at 31st March, 2016:-
1. Stock on 31st March, 2016 was valued at ₹ 46,000.
2. Depreciate Furniture at 15% p.a. and Sales Van at 20% p.a.
3. A sum of ₹ 200 is due for repairs.
4. Write off ₹ 2,000 as further bad-debts and create a provision for doubtful debts @ 5% on Debtors. Also provide 2% for discount on Debtors.
5. Rent is paid at the rate of ₹ 1,000 per month.
6. Allow 8% interest on Capital and charge ₹ 1,500 as interest on Drawings.

Answer:

Financial Statements of Mr. Amar Chand
Trading Account  for the year ended March 31, 2016
Dr.
 
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Opening Stock
62,000
Sales
4,48,000
 
Purchases
3,15,000
 
Less: Return Inwards
3,700
4,44,300
  Less: Return Outwards
2,500
3,12,500
Closing Stock
46,000
Carriage on Purchases
7,500
   
Gross Profit (Balancing Figure)
1,08,300
   
 
4,90,300
  4,90,300
       

Profit and Loss Account 
for the year ended March 31, 2016
Dr.
 
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Depreciation: (WN1)
 
Gross Profit
1,08,300
Furniture
1,725
 
Commission Received
2,400
Sales Van
15,000
16,725
Interest on Drawings
1,500
Repairs
2,300
 
Discount Received
3,800
  Add: Outstanding
200
2,500
 
 
Old Bad Debts
2,400
 
 
 
  Add: Further Bad Debts
2,000
 
 
 
  Add: New Provision (WN2)
3,900
 
 
 
  Less: Old Provision
3,000
5,300
 
 
Discount Allowed
2,600
   
Provision for Discount on Debtors (WN3)
1,482
   
Rent
10,000
     
  Add: Outstanding (WN4)
2,000
12,000
   
Insurance
3,600
     
  Less: Prepaid (WN5)
2,700
900
   
Interest on Capital
16,000
   
Carriage on Sales
1,200
   
Salaries
25,000
   
Sales Van Expenses
6,000
   
Net Profit (Balancing Figure)
26,293
   
 
1,16,000
 
1,16,000
       
 
Balance Sheet 
as on March 31, 2016
Liabilities 
Amount
(Rs)
Assets 
Amount
(Rs)
Capital
2,00,000
 
Fixed Assets
 
Add: Interest on Capital
16,000
 
Furniture
10,000
 
Add: Net Profit
26,293
 
  Add: Additions
6,000
 
  Less: Drawings
30,000
 
  Less: Depreciation
1,725
14,275
  Less: Interest on Drawings
1,500
2,10,793
Sales Van
75,000
 
 
 
  Less: Depreciation
15,000
60,000
 
 
 
 
Current Liabilities
 
Current Assets
 
Sundry Creditors
43,000
Closing Stock
46,000
Outstanding Salaries
5,000
Bills Receivable
12,100
Outstanding Repairs
200
Bank of Tokyo
32,800
Outstanding Rent
2,000
Prepaid Insurance
2,700
Bills Payable
4,300
Cash in Hand
24,800
 
 
Sundry Debtors
80,000
 
 
 
  Less: Bad debts
2,000
 
 
 
    Less: Provision for Doubtful Debts 3,900  
 
 
  Less: Provision for Discount on Debtors
1,482
72,618
       
 
2,65,293
 
2,65,293
       


Working Notes:

WN1: Calculation of Amount of Depreciation

WN2: Calculation of Provision for Bad Debts

WN3