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Page No 22.100:

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 22.100:

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 22.101:

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 22.102:

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 22.103:

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 22.104:

Question 28:

Following are balances from the trial balance of Ritesh Traders as at 31st March 2019:
 

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 2019 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, 2019
Dr.   Cr.
Particulars  Amount (₹) Particulars Amount (₹)
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, 2019
Dr.   Cr.
Particulars  Amount (₹) Particulars Amount (₹)
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, 2019
Liabilities  Amount (₹) Assets  Amount (₹)
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 22.105:

Question 29:

Prepare Trading and Profit and Loss Account and Balance Sheet from the following Trial Balance and information as on 31st March, 2019:
 

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, 2018 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, 2019.
(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, 2019
Dr.   Cr.
Particulars  Amount (₹) Particulars Amount (₹)
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, 2019
Dr.   Cr.
Particulars  Amount (₹) Particulars Amount (₹)
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, 2019
Liabilities  Amount (₹) Assets  Amount (₹)
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 22.106:

Question 30:

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 22.106:

Question 31:

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 22.107:

Question 32:

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: Calculation of Provision for Discount on Debtors


WN4: Calculation of Outstanding Rent
Rent is paid @ Rs 1,000 per month
Annual Rent = 1,000 × 12 = Rs 12,000
Rent Already Paid = Rs 10,000
Therefore, Outstanding Rent = Rs 2,000

WN5: Calculation of Prepaid Insurance



Page No 22.108:

Question 33:

From the following balances extracted from the books of Sharma, prepare the Trading and Profit & Loss Account for the year ended 31st March 2019 and Balance Sheet as at that date after taking into consideration the adjustments given below:

Trial Balance
as at 31st March, 2019
Particulars Dr.
(₹)
Cr.
(₹)
Drawing and Capital 7,500 50,000
Purchases and Sales 72,100 95,000
Returns 1,300 2,700
Sundry Debtors and Creditors 18,200 35,750
Stock (1.04.2018) 19,800 -
Bad Debts 3,000 -
Bill Receivable and Payable 12,000 23,000
Cash in Hand 300 -
Office Expenses 6,210 -
Sales Van 15,000 -
Sales Van Expenses 1,400 -
Discount - 2,910
Rent and Taxes 10,700 -
Telephone Charges 1,050 -
Postage 950 -
Furniture 5,000 -
Printing and Stationery 2,750 -
Commission 8,400 -
Carriage Inwards 3,200 -
Salaries and Wages 20,500  
     
  2,09,360 2,09,360
     

Adjustments:
(i) Closing Stock was valued at ₹ 61,700.
(ii) Depreciate Furniture and Machinery @10% p.a. and Sale Van @20% p.a.
(iii) Outstanding Rent amounted to ₹ 900.
(iv) Bad Debts ₹ 200.
(v) Make a provision for Doubtful Debts @5% on Debtors.
(vi) Charge one-fourth of salaries and wages to the Trading Account.
(vii) A new machinery was purchased on credit and installed on 31st December 2018 costing ₹ 15,000. No entry for the same has yet been passed in the books.

Answer:

Financial Statements of Sharma
Trading Account 
for the year ended March 31, 2019
Dr.   Cr.
Particulars 
Amount (₹)
Particulars
Amount
(₹)
Opening Stock
19,800
Sales
95,000
 
Purchases
72,100
 
Less: Return Inwards
1,300
93,700
Less: Return Outwards
2,700
69,400
Closing Stock
61,700
Salaries & Wages (1/4th)
5,125
 
 
Carriage Inwards
3,200
 
 
Gross Profit (Balancing Figure)
57,875
 
 
 
1,55,400
 
1,55,400
       
 
Profit and Loss Account
for the year ended March 31, 2019
Dr.  
Cr.
Particulars 
Amount
(₹)
Particulars
Amount
(₹)
Depreciation: (WN1)
 
Gross Profit
57,875
Machinery
375
 
Discount Received
2,910
Furniture
500
 
 
 
Sales Van
3,000
3,875
 
 
Bad Debts
3,000
 
 
 
  Add: Further Bad Debts
200
 
 
 
  Add: New Provision (WN2)
900
4,100
 
 
Office Expenses
6,210
   
Telephone Charges
1,050
   
Rent and Taxes
10,700
     
Add: Outstanding
900
11,600
   
Postage & Telegram
950
   
Printing & Stationery
2,750
   
Salaries & Wages (3/4th)
15,375
   
Commission
8,400
   
Sales Van Expenses
1,400
   
Net Profit (Balancing Figure)
5,075
   
 
60,785
 
60,785
       
 
Balance Sheet 
as on March 31, 2019
Liabilities 
Amount
(₹)
Assets 
Amount
(₹)
Capital
50,000
 
Fixed Assets
 
Add: Net Profit
5,075
 
Furniture
5,000
 
Less: Drawings
7,500
47,575
  Less: Depreciation
500
4,500
 
 
Machinery
15,000
 
Current Liabilities    Less: Depreciation
375
14,625
Creditors for Machinery
15,000
 Sales Van
15,000
 
Sundry Creditors
35,750
  Less: Depreciation
3,000
12,000
Outstanding Rent
900
 
 
Bills Payable
23,000
Current Assets
 
 
 
Closing Stock
61,700
 
 
Bills Receivable
12,000
 
 
Cash in Hand
300
 
 
Sundry Debtors
18,200
 
 
 
  Less: Further Bad Debts
200
 
 
 
Less: Provision for Doubtful Debts
900
17,100
       
 
1,22,225
  1,22,225
       

Working Notes:
WN1: Calculation of Amount of Depreciation

Depreciationon Furniture=5,000×10100=Rs 500Depreciation on Sales Van=15,000×20100=Rs 3,000Depreciationon Machinery=15,000×10100×312=Rs 375


WN2: Calculation of Provision for Doubtful Debts
Provision for Doubtful Debts=Sundry DebtorsFurther Bad Debts×Rate100=18,200200×5100=Rs 900



Page No 22.109:

Question 34:

Prepare a trading and profit & loss account of M/s Green Club Ltd. for the year and a Balance Sheet as at that date from the following figures taken from their trial balance:

Debit Balances (₹) Credit Balances (₹)
Opening Stock 1,25,000 Sales 2,50,000
Purchases 35,000 Purchase Return 6,000
Return inward 25,000 Creditors 55,000
Postage 600 Capital 50,000
Salary 12,300 Discount received 1,000
Wages 3,000 Provision for bad debts 4,500
Rent and rates 1,000 Commission received 5,400
Packing and transport         500    
General expenses 400    
Insurance 4,000    
Debtors 50,000    
Cash in hand 20,000    
Closing Stock 40,000    
Machinery 20,000    
Lighting 5,000    
Discount 3,500    
Bad debts 3,500    
Investments 23,100    
  3,71,900   3,71,900
       

Adjustments:-
(i) Depreciation charged on Machinery @ 5% p.a.
(ii) Further Bad-debts ₹ 1,500, provision for discount on debtors @ 5% and provision for Doubtful Debts on debtors @ 6%.
(iii) Wages prepaid ₹ 1,000.
(iv) Interest on investments @ 5% p.a.

Answer:

Financial Statements of M/s Green Club Ltd.
Trading Account 
for the year ended …
Dr.
 
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Opening Stock
1,25,000
Sales
2,50,000
 
Purchases
35,000
    Less: Return Inwards
25,000
2,25,000
Less: Return Outwards
6,000
29,000
 
Wages 
3,000
     
 Less: Prepaid
1,000
2,000
   
Gross Profit (Balancing Figure)
69,000
   
 
2,25,000
 
2,25,000
       

Profit and Loss Account 
for the year ended …
Dr.
 
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Depreciation on Machinery (WN1)
1,000
Gross Profit
69,000
Discount Allowed
3,500
Commission Received
5,400
Provision for Discount on Debtors (WN3)
2,280
Discount Received
1,000
Old Bad Debts
3,500
  Accrued Interest on Investment (WN4)
1,155
  Add: Further Bad Debts
1,500
     
  Add: New Provision (WN2)
2,910
     
  Less: Old Provision
4,500
3,410
   
Salaries
12,300
   
Lighting
5,000
   
Postage and Telegram
600
   
Rent and Rates
1,000
   
Packing and Transport
500
   
General  Expenses
400
   
Insurance
4,000
   
Net Profit (Balancing Figure)
42,565
   
 
76,555
 
76,555
       

Balance Sheet 
as on …
Liabilities 
Amount
(Rs)
Assets 
Amount
(Rs)
Capital
50,000
  Fixed Assets  
Add: Net Profit
42,565
  Machinery
20,000
 
Less: Drawings
92,565
  Less: Depreciation
1,000
19,000
    Investments
23,100
Current Liabilities      
Creditors
55,000
Current Assets  
    Closing Stock
40,000
    Prepaid Wages
1,000
    Accrued Interest on Investment
1,155
    Debtors
50,000
 
   
Less: Further Bad Debts
1,500
 
   
Less: New Provision for Bad Debts
2,910
 
   
Less: Provision for      Discount on Debtors
2,280
43,310
    Cash in Hand
20,000
 
1,47,565
 
1,47,565
       


Working Notes:
WN1: Calculation of Amount of Depreciation

WN2: Calculation of Provision for Doubtful Debts


WN3: Calculation of Provision for Discount on Debtors

WN4: Calculation of Accrued Interest on Investment



Page No 22.110:

Question 35:

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
Depreciationon Plant=60,000×10100=Rs 6,000Depreciationon Furniture=15,000×20100+ 5,000×20100×612= Rs 3,500

WN2: Calculation of Provision for Doubtful Debts

Provision for Doubtful Debts=Sundry DebtorsFurther Bad Debts ×Rate100=1,00,0000×5100=Rs 5,000

WN3: Calculation of Provision for Discount on Debtors
Provision for Discounton Debtors=Sundry DebtorsFurther Bad DebtsProvision for Bad Debts ×Rate100=1,00,00005,000×2100=Rs 1,900

WN4: Calculation of Accrued Interest on Investments
InterestonInvestments=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, Salariesand 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 22.111:

Question 36:

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 â‚¹ 800 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 10,000 -
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 DebtorsFurther Bad Debts)×Rate100=(73,800800)×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=Rs750

WN4: Calculation of Manager’s Commission

Profit before Manager's Commission=Rs 56,700 (1,16,15059,450)Manager's Commission=56,700×5105= Rs 2,700



Page No 22.112:

Question 37:

Prepare Trading and Profit & 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= Rs2,400

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 22.112:

Question 38:

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, 2019 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 1-4-2018 15,000 Miscellaneous Income 3,060
Stock on 31-3-2019 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, 2019
Dr.   Cr.
Particulars  Amount (₹) Particulars Amount (₹)
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, 2019
Dr.   Cr.
Particulars  Amount
(₹)
Particulars Amount (₹)
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, 2019
Liabilities  Amount (₹) Assets  Amount (₹)
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 22.113:

Question 39:

From the following Trial Balance of Sh. Parveen Kumar, prepare Trading and Profit & Loss Account for the year ending 31st March, 2019 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 of Premises sublet, for the year to 30th Sep., 2019
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, 2019, but no entry was passed to this effect.
(2) Insurance Premium include ₹ 1,200 paid on 1st October, 2018 to run for one year from Oct. 1, 2018 to Sept. 30, 2019.
(3) Loan from Mr. Naresh was taken on 1st July, 2018. 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, 2018.
(7) Charge 10% p.a. depreciation on Furniture and write off 15thof patents.

Answer:

Financial Statement of Sh. Parveen Kumar
Trading Account 
for the year ended March 31, 2019
Dr.   Cr.
Particulars  Amount (₹) Particulars Amount (₹)
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, 2019
Dr.   Cr.
Particulars  Amount (₹) Particulars Amount (₹)
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, 2019
Liabilities  Amount (₹) Assets  Amount (₹)
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 = Rs1,600Depreciation on Furniture=15,000×10100= Rs1,500

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+12,000600)×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 22.114:

Question 40:

The following Trial Balance was extraced from the books of Mr. Gupta as at 31st March, 2019:
 

Dr. Balances (₹) Cr. Balances (₹)
Stock on 1-4-2018 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, 2018.
(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 â‚¹ 90,000 on 31st March, 2019.
Prepare Trading and Profit & Loss Account for the year ended 31st March, 2019 and a Balance Sheet as at that date.

Answer:

Financial Statements of Mr. Gupta
Trading Account 
for the year ended March 31, 2019
Dr.   Cr.
Particulars  Amount
(₹)
Particulars Amount (₹)
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, 2019
Dr.   Cr.
Particulars  Amount (₹) Particulars Amount (₹)
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, 2019
Liabilities  Amount (₹) Assets  Amount (₹)
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 1,500Outstanding Interest on Loan=Rs 1,000

WN2: Calculation of Provision for Doubtful Debts

Provision for Doubtful Debts=(Sundry DebtorsFurther Bad Debts)×Rate100=(1,42,0002,000)×5100=Rs 7,000 

WN3: Calculation of Provision for Discount on Debtors

Provision for Discount on Debtors=(Sundry DebtorsFurther Bad DebtsProvision for Bad Debts) ×Rate100=(1,42,0002,0007,000)×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 22.115:

Question 41:

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

Depreciationon Premises=2,00,000×5100 = Rs10,000Depreciationon Furniture=40,000×20100= Rs8,000Depreciationon Packing Machinery=60,000×10100 = Rs6,000Depreciationon Tools=Rs3,000(15,000 12,000)

WN2: Calculation of Provision for Discount on Debtors

Provision for Discount on Debtors=(Sundry DebtorsFurther Bad DebtsProvision for Bad Debts)×Rate100=(1,31,5001,5000)×2.5100=Rs 3,250

WN3: Calculation of Accrued Interest

Accrued Interest=10,000×12100 ×512= Rs500        



Page No 22.116:

Question 42:

The following balances were extracted from the books of Mr. Din Dayal as at 31st March, 2019:
 

Particulars ₹ Particulars ₹
Stock at the beginning 41,000 Purchases 2,20,000
Rent 9,600 Sales 2,80,000
Salary 20,000 Returns (Dr.) 6,000
Bad-Debts 400 Returns (Cr.) 2,000
Provision for Doubtful Debts 3,000 Carriage Inward 3,500
Travelling Expenses 1,400 Carriage Outward 500
Insurance Premium 1,800 Capital 1,75,000
Proprietor's Withdrawals 4,000 Loan (Cr.) 20,000
Telephone Charges 7,300 Debtors 40,000
Printing and Advertising 5,000 Creditors 27,000
Commission (Cr.) 6,000 Investments 5,000
Rent from Sublet 4,800 Interest on Investments 600
Land and Building 1,40,000    
Furniture 10,000    
Cash 2,900    

Prepare Trading and Profit & Loss Account for the year and a Balance Sheet as at 31st March, 2019, after taking into account the following:
(1) Stock was valued at ₹ 75,000 on 31st March, 2019. You are informed that a fire occurred on 28th March, 2019 in the godown and stock of the value of ₹ 10,000 was destroyed. Insurance Company admitted a claim of 75%.
(2) One-third of the commission received is in respect of work to be done next year.
(3) Create a provision of 5% for Doubtful Debts.
(4) 50% of Printing and Advertising is to be carried forward as a charge in the following year.
(5) ₹ 900 is due for interest on loan.
(6) Provide for Manager's Commission at 10% on Net Profit before charging such commission.

Answer:

Financial Statements of Mr. Din Dayal
Trading Account 
for the year ended March 31, 2019
Dr.   Cr.
Particulars  Amount (₹) Particulars Amount (₹)
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, 2019
Dr.   Cr.
Particulars  Amount (₹) Particulars Amount (₹)
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, 2019
Liabilities  Amount (₹) Assets  Amount (₹)
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 27,000 Closing Stock 75,000
Outstanding Interest on Loan 900 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
    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=(40,0000)×5100=Rs 2,000
 
WN2: Calculation of Manager’s Commission

Profit before Manager's Commission=Rs 60,000(1,06,90046,900)Manager's Commission=60,000×10100= Rs 6,000

Page No 22.116:

Question 43:

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

  Dr Bal.
(₹)
  Cr Bal.
(₹)
Stock (1-4-2016) 16,800 Capital 78,000
Sales Returns 8,000 Sales 3,09,000
Purchases 2,43,000 Returns Outward 5,700
Freight-in 8,600 Trade Creditors 4,800
Rent and Taxes 5,700 10% Bank Loan (1-7-2016) 24,000
Salaries 9,300 Income from Investment 3,600
Trade debtors 24,000 Discount Received 2,250
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= Rs2,700
 
WN2: Calculation of Outstanding Interest on Bank Loan

Interest on Loan=24,000×10100×912= Rs1,800Interest  Already Paid = Rs 1,000Outstanding Interest = Rs 800 
 
WN3: Calculation of Manager’s Commission

Profit before Manager's Commission=Rs1,800(50,15048,350)Manager's Commission=1,800×10100= Rs180 



Page No 22.81:

Question 1:

The following are the balances extracted from the books of Raghunath Ji as on 31st March, 2019. 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
   

Adjustments:-
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, 2019
Dr.
 
Cr.
Particulars  Amount (₹) Particulars Amount (₹)
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, 2019
Dr.
 
Cr.
Particulars  Amount
(₹)
Particulars Amount (₹)
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, 2019
Liabilities 
Amount
(₹)
Assets 
Amount
(₹)
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

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



Page No 22.82:

Question 2:

From the following Trial Balance prepare Trading and Profit & Loss Account for the year ended 31st March, 2019 and Balance Sheet as at that date:-

  Dr.
(₹)
Cr.
(₹)
Stock 1st April, 2018 22,300  
Purchases and Purchases 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
   

Adjustments:-
1. Stock at 31st March 2019 is ₹ 70,000.
2. Write off 5% Depreciation on Freehold Premises and 20% on office furniture.
3. Commission earned but not received ₹ 500.
4. Interest earned but not received ₹ 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, 2019
Dr.
 
Cr.
Particulars  Amount (₹) Particulars Amount (₹)
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, 2019
Dr.
 
Cr.
Particulars  Amount (₹) Particulars Amount (₹)
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, 2019
Liabilities 
Amount
(₹)
Assets 
Amount
(₹)
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

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

WN2: Calculation of Interest on Capital

Intereston Capital=1,50,000×6100=9,000



Page No 22.83:

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 22.84:

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 next 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
 
 
 
 
 
Balance Sheet 
as on March 31, 2017
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

Depreciationon Furniture=600×10100=60

Page No 22.84:

Question 5:

From the following Trial Balance extracted from the books of A, prepare Trading and Profit & Loss Account for the year ending 31st March, 2019 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, 2018 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, 2019 was ₹ 3,250.
(ii) Depreciate Building at 5% and Furniture at 10%. Loose 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, 2019
Dr.
 
Cr.
Particulars 
Amount
(₹)
Particulars
Amount
(₹)
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, 2019
Dr.
 
Cr.
Particulars 
Amount
(₹)
Particulars
Amount
(₹)
Depreciation: (WN1)
 
Gross Profit
9,690
Building
375
 
Commission Received
375
Furniture
64
 
 
 
Loose Tools
1,250
1,689
 
 
Salaries
3,300
 
 
 
  Add: Outstanding
300
3,600
 
 
Taxes & Insurance
1,250
 
 
 
  Add: Outstanding Taxes
120
 
 
 
Less: Prepaid Insurance
100
1,270
 
 
Old Bad Debts
125
 
 
 
   Add: Further Bad Debts
100
 
 
 
   Add: New Provision (WN2)
185
 
 
 
   Less: Old Provision
200
210
 
 
Stationery
450
 
 
 
  Less: Drawings (1/2)
225
225
 
 
Interest
118
 
 
General Expenses
782
 
 
Net Profit (Balancing Figure)
2,171
 
 
 
10,065
 
10,065
 
 
 
 
 
Balance Sheet 
as on March 31, 2019
Liabilities 
Amount
(₹)
Assets 
Amount
(₹)
Capital
12,500
 
Fixed Assets
 
  Add: Net Profit
2,171
 
Building
7,500
 
  Less: Drawings (1/2 of Stationery)
225
14,446
  Less: Depreciation
375
7,125
 
 
Furniture
640
 
Current Liabilities
 
  Less: Depreciation
64
576
Creditors
2,500
Loose tools
6,250
 
Outstanding Salaries
300
  Less: Depreciation
1,250
5,000
Outstanding Taxes
120
 
 
Bank Overdraft
2,850
Current Assets
 
 
 
Closing Stock
3,250
 
 
Prepaid Insurance
100
 
 
Debtors
3,800
 
 
 
  Less: Further Bad Debts
100
 
 
 
  Less: Provision for Bad Debts
185
3,515
 
 
Cash in Hand
650
 
20,216
 
20,216
 
 
 
 

Working Notes:

WN1: Calculation of Depreciation

Depreciationon Buildings=7,500×5100=375Depreciationon Furniture=640×10100=64Depreciationon Patents=6,2505,000=1,250

WN2: Calculation of Provision for Doubtful Debts

Provision for Doubtful Debts=(Sundry DebtorsFurther Bad Debts)×Rate100=(3,800100)×5100=185



Page No 22.85:

Question 6:

From the following figures prepare the Trading and Profit and Loss Account for the year ended 31st March, 2019 and the Balance Sheet as at that date:-
 

Particulars (₹) Particulars (₹)
Stock (1st April, 2018) 75,000 Sundry Debtors 82,000
Purchases 8,00,000 Loan from X 10,000
Sales 12,00,000 Interest on X Loan 1,500
Motor Car 1,50,000 Furniture 20,000
Car Expenses 42,000 Land and Building 2,00,000
Rent 5,500 Capital 2,50,000
Salaries 35,200 Sundry Creditors 91,300
Bad Debts 1,500 Returns Inward 7,500
Provision for bad debts 8,100 Returns Outward 6,000
Commission (Cr.) 4,600 Cash in hand 16,400
Wages 1,25,000    
Insurance 8,400    

Adjustments:-
(i) Commission include ₹ 1,600 being commission received in advance.
(ii) Write off ₹ 2,000 as further Bad-debts and maintain Bad-debts provision at 5% on debtors.
(iii) Expenses paid in advance are: Wages ₹ 5,000 and Insurance ₹ 1,200.
(iv) Rent and Salaries have been paid for 11 months.
(v) Loan from X has been taken at 18% p.a. interest.
(vi) Depreciate furniture by 15% p.a. and Motor Car by 20% p.a.
(vii) Closing Stock was valued at ₹ 60,000.

Answer:

Trading Account 
for the year ended March 31, 2019
Dr.
 
Cr.
Particulars 
Amount
(₹)
Particulars
Amount
(₹)
Opening Stock
75,000
Sales
12,00,000
 
Purchases
8,00,000
 
  Less: Return Inwards
7,500
11,92,500
  Less: Return Outwards
6,000
7,94,000
Closing Stock
60,000
Wages 
1,25,000
 
 
 
   Less: Prepaid
5,000
1,20,000
 
 
Gross Profit (Balancing Figure)
2,63,500
 
 
 
12,52,500
 
12,52,500
 
 
 
 
 
Profit and Loss Account 
for the year ended March 31, 2019
Dr.
 
Cr.
Particulars 
Amount
(₹)
Particulars
Amount
(₹)
Depreciation: (WN1)
 
Gross Profit
2,63,500
Furniture
3,000
 
Commission
4,600
 
Motor Car
30,000
33,000
  Less: Comm. received in advance
1,600
3,000
Salaries
35,200
 
Old Provision for Doubtful Debts
8,100
 
  Add: Outstanding (WN2)
3,200
38,400
  Less: New Provision (WN3)
4,000
4,100
Rent
5,500
 
 
 
  Add: Outstanding            Taxes (WN2)
500
6,000
 
 
Insurance
8,400
 
 
 
  Less: Prepaid
1,200
7,200
 
 
Interest on Loan
1,500
 
 
 
  Add: Outstanding (WN2)
300
1,800
 
 
Old Bad Debts
1,500
 
 
 
  Add: Further Bad Debts
2,000
3,500
 
 
Car Expenses
42,000
 
 
Net Profit (Balancing Figure)
1,38,700
 
 
 
 
 
 
 
2,70,600
 
2,70,600
 
 
 
 
   
Balance Sheet 
as on March 31, 2019
Liabilities 
Amount
(₹)
Assets 
Amount
(₹)
Capital
2,50,000
 
Fixed Assets
 
  Add : Net Profit
1,38,700
3,88,700
Land & Building
2,00,000
Loan from X
10,000
 
Furniture
20,000
 
  Add: Outstanding Interest on Loan
300
10,300
  Less: Depreciation
3,000
17,000
 
 
Motor Car
1,50,000
 
Current Liabilities
 
  Less: Depreciation
30,000
1,20,000
Creditors
91,300
 
 
Outstanding Salaries
3,200
Current Assets
 
Outstanding Rent
500
Closing Stock
60,000
Commission received in advance
1,600
Prepaid Insurance
1,200
 
 
Prepaid Wages
5,000
 
 
Debtors
82,000
 
 
 
  Less: Further Bad Debts
2,000
 
 
 
  Less: Provision for Bad Debts
4,000
76,000
 
 
Cash in Hand
16,400
 
4,95,600
 
4,95,600
 
 
 
 

Working Notes:

WN1: Calculation of Depreciation

Depreciationon Furniture=20,000×15100=3,000Depreciationon Motor Car=1,50,000×20100=30,000

WN2: Calculation of Outstanding Expenses 

1.Salaries for 11 months=35,200Salary for 1 month=35,20011×1=3,200=Salary Outstanding

2.Rent for 11 months=5,500Rent for 1 month=5,50011×1=500=Rent Outstanding

3.Interest on Loan=10,000 ×18100=1,800Interest paid=1,500 Interest Outstanding=300(1,8001,500)

WN3: Calculation of Provision for Doubtful Debts

Provision for Doubtful Debts=Sundry DebtorsFurther Bad Debts×Rate100=82,0002,000×5100=4,000



Page No 22.86:

Question 7:

Extract of a Trial Balance as at March 31, 2017 is as follows:
 

Sundry Debtors ₹ 1,02,000
Bad Debts ₹ 1,400
Provision for doubtful debts ₹ 3,400

Additional information:
A debtor of ₹ 2,000 could not be recovered. It is decided to maintain Provision for Doubtful Debtors @ 5% on Debtors and Provision for Discount at @ 2%.
How these adjustments will be shown in Financial Statements?

Answer:

Extract of Profit and Loss Account 
for the year ended March 31, 2017
Dr.
 
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Old Bad Debts
1,400
 
 
 
  Add: Further Bad Debts
2,000
 
 
 
  Add: New Provision
5,000
 
 
 
  Less: Old Provision
3,400
5,000
 
 
Provision for Discount on Debtors
1,900
 
 
 
 
 
 

 

Extract of Balance Sheet 
as on March 31, 2017
Liabilities 
Amount
(Rs)
Assets 
Amount
(Rs)
 
 
Current Assets
 
 
 
Debtors
1,02,000
 
 
 
  Less: Further Bad Debts
2,000
 
 
 
  Less: Provision for Doubtful Debts
5,000
 
 
 
 Less: Provision for Discount on Debtors
1,900
93,100
 
 
 
 
 
 
 
 


Working Notes:

WN1: Calculation of Provision for Doubtful Debts



WN2: Calculation of Provision for Discount on Debtors

Page No 22.86:

Question 8:

Prepare a Trading and Profit & Loss account for the year ending March 31, 2018, from the balances extracted of M/s Rahul Sons. Also prepare a balance sheet as at that date.

Debit Balances ₹ Credit Balances ₹
Stock 50,000 Sales 1,80,000
Wages 3,000 Purchase return 2,000
Salary 8,000 Discount received 500
Purchases 1,75,000 Provision for bad debts           2,500
Sales Return 3,000 Capital 2,90,000
S. Debtors 82,000 Bills Payable 22,000
Discount allowed 1,000 Commission received 4,000
Insurance 3,200 Rent 6,000
Rent, rates and taxes              4,300 Loan 34,800
Fixtures and fittings 20,000 Output CGST 15,000
Trade Expenses 1,500 Output SGST 15,000
Bad debts 2,000    
Drawings 32,000    
Repair and renewals 1,600    
Travelling expenses 4,200    
Postage 500    
Legal fees 500    
Bills Receivable 50,000    
Building 1,10,000    
Input CGST 10,000    
Input SGST 10,000    
  5,71,800   5,71,800
     

Adjustments :-
(i) Commission received in advance ₹ 1,000.
(ii) Rent receivable ₹ 2,000, subject to levy of CGST and SGST @ 9% each.
(iii) Salary outstanding ₹ 1,000 and insurance prepaid ₹ 800.
(iv) Further Bad-debts ₹ 1,000 and provision for Bad-debts @ 5% on debtors and provision for discount on debtors @ 2%.
(v) Closing Stock ₹ 32,000.
(vi) Depreciation on Building @ 6% p.a.

Answer:

Financial Statement of M/s Rahul Sons
Trading Account 
for the year ended March 31, 2018
Dr.
 
Cr.
Particulars 
Amount
(₹)
Particulars
Amount
(₹)
Opening Stock
50,000
Sales
1,80,000
 
Purchases
1,75,000
 
  Less: Sales Return
3,000
1,77,000
  Less: Purchases Return
2,000
1,73,000
Closing Stock
32,000
Wages 
3,000
Gross Loss (Balancing Figure)
17,000
 
 
 
 
 
2,26,000
 
2,36,000
 
 
 
 
Profit and Loss Account 
for the year ended March 31, 2018
Dr.
 
Cr.
Particulars 
Amount
(₹)
Particulars
Amount
(₹)
Gross Loss
17,000
Commission
4,000
 
Depreciation on Building (WN1)
6,600
  Less: Unearned
1,000
3,000
Salaries
8,000
 
Rent received
6,000
 
  Add: Outstanding
1,000
9,000
  Add: Accrued
2,000
8,000
Insurance
3,200
 
Discount Received
500
  Less: Prepaid
800
2,400
Net Loss (Balancing Figure)
43,189
Old Bad Debts
2,000
 
 
 
  Add: New Bad Debts
1,000
 
 
 
  Add: New Provision (WN2)
4,050
 
 
 
  Less: Old Provision
2,500
4,550
 
 
Provision for Discount on Debtors
1,539
 
 
Discount Allowed
1,000
 
 
Rent, Rates and Taxes
4,300
 
 
Trade Expenses
1,500
 
 
Repairs & Renewable
1,600
 
 
Travelling Expenses
4,200
 
 
Postage
300
 
 
Telegram Expenses
200
 
 
Legal Fees
500
 
 
 
54,689
 
54,689
 
 
 
 
   
Balance Sheet 
as on March 31, 2018
Liabilities 
Amount
(₹)
Assets 
Amount
(₹)
Capital
2,90,000
 
Fixed Assets
 
  Less: Net Loss
43,189
 
Building
1,10,000
 
  Less: Drawings
32,000
2,14,811
  Less: Depreciation
6,600
1,03,400
Loan
34,800
Fixture and Fittings
20,000
Current Liabilities
 
Current Assets
 
Bills Payable
22,000
Closing Stock
32,000
Outstanding Salaries
1,000
Prepaid Insurance
800
Commission received in advance
1,000
Bills Receivable
50,000
Output CGST                 15,180
 
Debtors
82,000
 
(15,000+180*)
5,180
  Less: Bad Debts
1,000
 
 Less: Input CGST          10,000
 
  Less: Provision for Bad Debts
4,050
 
Output CGST                 15,180
(15,000+180*)
 
  Less: Provision for Discount on Debtors
1,539
75,41
Less: Input CGST          10,000
5,180
Accrued Rent*
2,360
   
2,83,971
 
2,83,971
 
 
 
 

Working Notes:

WN1: Calculation of Depreciation

Depreciationon Building=1,10,000×6100=6,600


WN2: Calculation of Provision for Doubtful Debts

Provision for Doubtful Debts=DebtorsFurther Bad Debts×Rate100=82,0001,000×5100=4,050


WN3: Calculation of Provision for Discount on Debtors

Provision for Discounton Debtors=DebtorsFurther Bad DebtsProvision for Doubtful Debts×Rate100=82,0001,0004,050×2100=1,539


*WN4: Adjustment Entry for Accrued Rent
 
Journal
Date
Particulars
L.F.
Debit
Amount
(₹)
Credit
Amount
(₹)
2018
 
 
 
 
 
Mar. 31
Accrued Rent A/c Dr.  
2,360
 
 
  To Rent A/c    
 
2,000
 
  To Output CGST A/c    
 
180
 
  To Output SGST A/c    
 
180
  (Rent receivable plus 9% intra-state GST for the period)        
                                                    

 



Page No 22.87:

Question 9:

From the following balances, prepare Final Accounts of Mr. Bal Gopal :-

 
Particulars ₹ Particulars ₹
Life Insurance Premium (self) 500 Capital                                   40,000
Stock (1-4-2017) 7,500 Plant and Machinery 12,500
Returns Inward 1,000 Purchases 36,000
Furniture 4,600 Sundry Debtors 10,500
Freehold Property 10,000 Coal, Gas and Water 1,000
Carriage Inwards 400 Carriage outwards 100
Advertising 200 Sales 60,000
Sundry Creditors 4,850 Discount (Dr.) 400
Returns outwards 500 Rent for Premises Sublet 500
Commission (Cr.) 600 Trade Expenses 8,650
Lighting 250 Stationery 2,000
Loan from bank 5,000 Interest Charged by Bank 450
Wages & Salaries 7,500 Cash 2,900
    Input IGST 5,000

Adjustments :-
(i) Stock on 31st March, 2018 was ₹ 10,000 and stationery unused at the end was ₹ 400.
(ii) Rent of Premises Sublet received in advance ₹ 100.
(iii) Provision for Doubtful Debts is to be created @ 10% on Debtors.
(iv) Provision for discount on Debtors is to be created @ 2%.
(v) Stock of the Value of ₹ 4,000 was destroyed by fire on 25th March, 2018. Stock was purchased paying IGST @ 12%. A Claim of ₹ 3,000 has been admitted by Insurance Co.
(vi) Bank Loan has been taken at 12% p.a. interest.

Answer:

Trading Account 
for the year ended March 31, 2018
Dr.
 
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Opening Stock
7,500
Sales
60,000
 
Purchases
36,000
 
  Less: Return Inwards
1,000
59,000
  Less: Return Outwards
500
 
Closing Stock
10,000
  Less: Goods Destroyed by Fire
4,000
31,500
 
 
Carriage Inward
400
 
 
Wages & Salaries
7,500
 
 
Coal, Gas and Water
1,000
 
 
Gross Profit (Balancing Figure)
21,100
 
 
 
69,000
 
69,000
 
 
 
 
 
Profit and Loss Account 
for the year ended March 31, 2018
Dr.
 
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Discount Allowed
400
Gross Profit
21,100
Stationery
2,000
 
 Rent for premises
500
 
  Less: Closing Stock
400
1,600
  Less: Rent received in advance
100
400
Interest
450
 
Commission received
600
  Add: Outstanding Interest (WN1)
150
600
 
 
Provision for Doubtful Debts (WN2)
1,050
 
 
Provision for Discount on Debtors (WN3)
189
 
 
Loss by Fire* (WN4)
4,480
 
 
 
  Less: Ins. Claim admitted
3,000
1,480
 
 
Advertisement
200
 
 
Trade Expenses
8,650
 
 
Carriage Outwards
100
 
 
Lighting
250
 
 
Net Profit (Balancing Figure)
7,581
 
 
 
 
 
 
 
22,100
 
22,100
       
 
Balance Sheet 
as on March 31, 2018
Liabilities 
Amount (Rs)
Assets 
Amount
(Rs)
Capital
40,000
 
Fixed Assets
 
  Add: Net Profit
7,581
 
Furniture
4,600
  Less: Drawings (LIC)
500
47,081
Freehold  Property
10,000
 
 
Plant and Machinery
12,500
Current Liabilities
 
Current Assets
 
Creditors
4,850
Closing Stock
10,000
Bank Loan
5,000
Insurance Company
3,000
Rent received in advance
100
Stock of Stationery
400
Outstanding Interest on Bank   Input IGST(5,000-480*) 4,520
Loan
150
Debtors
10,500
 
      Less: Provision for Bad Debts
1,050
 
 
 
  Less: Provision for Discount
189
9,261
 
 
Cash in Hand
2,900
 
57,181
 
57,181
 
 
 
 

Working Notes:

WN1: Calculation of Outstanding Interest on Bank Loan

Interest on Bank Loan=5,000×12100=600Interest charged by Bank=450Outstanding Interest=Rs150 (600450)


WN2: Calculation of Provision for Doubtful Debts

Provision for Doubt ful Debts=Sundry Debtors ×Rate100=10,500×10100=Rs 1,050

WN3: Calculation of Provision for Discount on Debtors

Provision for Discounton Debtors=Sundry DebtorsProvision for Bad Debts×Rate100=10,5001,050×2100=Rs189
  

*WN4: Adjustment Entry for goods destroyed by fire

 
 
Journal
Date
Particulars
L.F.
Debit
Amount
(₹)
Credit
Amount
(₹)
2018
 
 
 
 
 
Mar. 25
Loss by fire A/c Dr.  
4,480
 
 
  To Purchases A/c    
 
4,000
 
  To Input IGST A/c    
 
480
  (Goods lost in fire and effect of 12% IGST reversed)        
                                                    

 



Page No 22.88:

Question 10(A):

From the following balances, prepare Trading, Profit and Loss A/c and a Balance Sheet as at 31st March 2018:-

 
Particulars ₹ Particulars ₹
Stock (1st April 2017) 20,000 Goodwill 16,000
Purchases 2,92,000 Furniture and Fittings 58,000
Fuel and Power 34,000 Repair Charges 2,900
Capital 1,60,000 Bank 18,000
Sales 5,90,000 Salaries 1,10,000
Rent 10,000 General Expenses 18,000
Returns Inwards 16,000 Debtors 2,30,000
Cash Discount allowed 15,000 Creditors 1,35,000
Cash Discount received 19,000 Output CGST 5,000
Drawings 58,100 Output SGST 5,000
    Input CGST 8,000
    Input SGST 8,000

Take the following adjustments into account:
(a) General expenses include ₹ 5,000 chargeable to Furniture purchased on 1st October 2017.
(b) Create a provision of 5% on debtors for Bad and Doubtful Debts after treating ₹ 30,000 as a Bad-debt.
(c) Depreciation on Furniture and Fittings for the year is to be at the rate of 10% per annum.
(d) Closing Stock was ₹ 40,000, but there was a loss by fire on 20th March to the extent of ₹ 8,000. Insurance Company admitted the claim in full.
(e) (I) Goods costing ₹ 2,500 were used by the proprietor.
     (II) Goods costing ₹ 1,500 were distributed as free samples.
Goods were purchased paying CGST and SGST @ 6% each.

Answer:

Trading Account 
for the year ended March 31, 2018
Dr.
 
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Opening Stock
20,000
Sales
5,90,000
 
Purchases
2,92,000
 
  Less: Return Inwards
16,000
5,74,000
  Less: Goods Destroyed by Fire
8,000
 
Closing Stock
40,000
  Less: Drawings
2,500
 
 
 
  Less: Advertisement
1,500
2,80,000
 
 
Fuel and Power
34,000
 
 
Gross Profit (Balancing Figure)
2,80,000
 
 
 
6,14,000
 
6,14,000
 
 
 
 
 
Profit and Loss Account 
for the year ended March 31, 2018
Dr.
 
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Depreciation on Furniture (WN1)
6,050
Gross Profit
2,80,000
General Expenses
18,000
 
Discount Received
19,000
  Less: Furniture
5,000
13,000
 
 
 Rent
 
10,000
 
 
  Further Bad Debts
30,000
 
 
 
  Add: New Provision (WN3)
10,000
40,000
 
 
Discount Allowed
15,000
 
 
Repair Charges
2,900
 
 
Advertisement (Free Samples)
1,680
 
 
Salaries
1,10,000
 
 
Net Profit (Balancing Figure)
1,00,370
 
 
 
 
 
 
 
2,99,000
 
2,99,000
 
 
 
 
 
Balance Sheet 
as on March 31, 2018
Liabilities 
Amount
(Rs)
Assets 
Amount
(Rs)
Capital
1,60,000
 
Fixed Assets
 
  Add : Net Profit
1,00,370
 
Furniture & Fittings
58,000
 
  Less: Drawings (58,100 +2,800*)
60,900
1,99,470
  Add: Additions
5,000
 
 
 
  Less: Depreciation
6,050
56,950
 
 
Goodwill
16,000
Current Liabilities
 
Current Assets
 
Creditors
1,35,000
Closing Stock
40,000
    Insurance company( 8,000+12% GST)
8,960
    Input CGST(8,000-240-480)           7,280               
    Less: Output CGST                          5,000 2,280
    Input CGST(8,000-240-480)            7,280       
    Less: Output CGST                          5,000 2,280
 
 
Cash at Bank
18,000
 
 
Debtors
2,30,000
 
 
 
  Less: Bad Debts
30,000
 
 
 
  Less: Provision for Bad Debts
10,000
1,90,000
 
 
 
 
 
3,34,470
 
3,34,470
 
 
 
 

Working Notes:

WN1: Calculation of Depreciation

Furniture of Rs 5,000 was purchased on Oct 01, 2013

Depreciationon Furniture=58,000×10100+5,000×10100×612=5,800+250=Rs 6,050

WN2: Calculation of Outstanding Rent

Amount of Rent Outstanding=10,000×210=Rs 2,000

WN3: Calculation of Provision for Doubtful Debts  

Provision for Doubtful Debts=(Sundry DebtorsFurther Bad Debts)×Rate100=(2,30,00030,000)×5100=Rs10,000

Page No 22.88:

Question 10(B):

From the following particulars taken out from the books of Subhash General Store, prepare Trading and Profit & Loss Account for the year ended 31st March, 2017 and Balance Sheet as at the date:-

Particulars ₹ Particulars ₹
Plant & Machinery on 1-4-2016 80,000 Rent 12,000
Plant & Machinery Purchased on 1-7-2016 20,000 Insurance Premium paid from 1-1-2017 to 31-12-2017 1,200
Sundry Debtors 1,20,000 Cash at Bank 5,400
Creditors 32,000 Wages 20,400
Furniture 5,000 Advertising 4,800
Motor Car 70,000 Carriage Inwards 10,200
Purchases 1,60,000 Carriage Outwards 2,000
Sales 2,80,000 Fuel and Power 15,700
Sales Returns 15,000 Manoj's Capital 3,50,000
Salaries 36,000 Manoj's Drawings 12,000
Opening Stock 60,000 Brokerage 700
Motor Car Expenses 6,000 Donation 5,100
Stationery 500    

The following information is relevant:-
1. Closing Stock ₹ 55,000. Stock valued at ₹ 10,000 was destroyed by fire on 18th March, 2017 but the Insurance Company admitted a claim of ₹ 6,800 only which was received in April, 2017.
2. Stationery for ₹ 150 was consumed by the Proprietor.
3. Goods costing ₹ 1,200 were given away as charity.
4. A new Signboard costing ₹ 1,500 is included in Advertising.
5. Rent is to be allocated 2/3rd to Factory and 1/3rd to Office.
6. Depreciate machinery by 10% and Motor Car by 20%.

Answer:

Financial Statements of Subhash General Store 
Trading Account
for the year ended March 31, 2017
Dr.
 
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Opening Stock
60,000
Sales
2,80,000
 
Purchases
1,60,000
 
  Less: Sales Return
15,000
2,65,000
  Less: Goods Destroyed by Fire
10,000
 
Closing Stock
55,000
  Less: Charity
1,200
1,48,800
 
 
Carriage Inwards
10,200
 
 
Rent (2/3rd)
8,000
 
 
Wages
20,400
 
 
Fuel & Power
15,700
 
 
Gross Profit (Balancing Figure)
56,900
 
 
 
3,20,000
 
3,20,000
 
 
 
 
     
Profit and Loss Account 
for the year ended March 31, 2017
Dr.
 
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Charity
1,200
Gross Profit
56,900
Stationery
500
 
Net Loss (Balancing Figure)
28,750
  Less: Drawings
150
350
 
 
Advertisement
4,800
 
 
 
  Less: Sign Board
1,500
3,300
 
 
Depreciation: (WN1)
 
 
 
Machinery
9,500
 
 
 
Motor Car
14,000
23,500
 
 
Salaries
36,000
 
 
Loss by Fire
10,000
 
 
 
  Less: Ins. Claim admitted
6,800
3,200
 
 
Rent (1/3rd)
4,000
 
 
Insurance
1,200
 
 
 
  Less: Prepaid (WN2)
900
300
 
 
Motor Car Expenses
6,000
 
 
Brokerage
700
 
 
Carriage Outwards
2,000
 
 
Donation
5,100
 
 
 
85,650
 
85,650
 
 
 
 
   
Balance Sheet 
as on March 31, 2017
Liabilities 
Amount
(Rs)
Assets 
Amount
(Rs)
Capital
3,50,000
 
Fixed Assets
 
  Less: Net Loss
28,750
 
Furniture
5,000
  Less: Drawings (12,000 + 150)
12,150
3,09,100
Machinery
80,000
 
 
 
  Add: Addition
20,000
 
Current Liabilities
 
  Less: Depreciation
9,500
90,500
Creditors
32,000
Motor Car
70,000
 
 
 
  Less: Depreciation
14,000
56,000
 
 
Current Assets
 
 
 
Closing Stock
55,000
 
 
Insurance company
6,800
 
 
Prepaid Insurance
900
 
 
Debtors
1,20,000
 
 
Sign Board
1,500
 
 
Cash at Bank
5,400
 
3,41,100
 
3,41,100
 
 
 
 

Working Notes:

WN1: Calculation of Depreciation

Depreciationon Plant & Machinery=80,000×10100+20,000×10100×912=Rs 9,500Depreciationon Motor Car=70,000×20100=14,000

WN2: Calculation of Prepaid Insurance

Prepaid Insurance=1,200×912=Rs 900



Page No 22.89:

Question 11:

Give journal entries for the following adjustments in final accounts:
(i) Salaries ₹ 5,000 are outstanding.
(ii) Insurance amounting to ₹ 2,000 is paid in advance.
(iii) ₹ 4,000 for rent have been received in advance.
(iv) Commission earned but not received ₹ 1,000.
(v) Interest on capital ₹ 1,500.
(vi) Interest on Drawings ₹ 300.
(vii) Write off ₹ 2,000 as further bad-debts.
(viii) Closing Stock ₹ 3,000.

Answer:

Journal
Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
1.
Salary A/c Dr.  
5,000
 
 
  To Outstanding Salary A/c    
 
5,000
 
(Salary outstanding, now adjusted)    
 
 
 
     
 
 
2.
Prepaid Insurance A/c Dr.  
2,000
 
 
  To Insurance A/c    
 
2,000
 
(Insurance pre-paid, now adjusted)    
 
 
 
     
 
 
3.
Rent  A/c Dr.  
4,000
 
 
  To Rent Received in Advance A/c    
 
4,000
 
(Advance rent received, now adjusted)    
 
 
 
     
 
 
4.
Accrued Commission A/c Dr.  
1,000
 
 
  To Commission A/c    
 
1,000
 
(Commission receivable, now adjusted)    
 
 
 
     
 
 
5.
Interest on Capital  A/c Dr.  
500
 
 
  To Capital  A/c    
 
500
 
(Interest on capital, now allowed)    
 
 
 
     
 
 
6.
Drawings  A/c Dr.  
300
 
 
  To Interest on Drawings A/c    
 
300
 
(Interest on drawings charged)    
 
 
 
     
 
 
7.
Bad Debts A/c Dr.  
2,000
 
 
  To Debtors A/c    
 
2,000
 
(Bad debts written off)    
 
 
 
     
 
 
8.
Closing Stock  A/c Dr.  
3,000
 
 
  To Trading A/c    
 
3,000
 
(Closing Stock transferred to Trading Account)    
 
 
 
   
 
 



Page No 22.90:

Question 12:

Give Journal Entries for the following adjustments in final accounts:
1. Extract of Trial Balance as on 31st March, 2019

Particulars Debit (₹) Credit (₹)
Sundry debtors 6,60,000  
Bad debts 15,000  
Provision for doubtful debts   40,000
Additional Information:
(a) Additional Bad Debts ₹ 20,000.
(b) Maintain the provision for doubtful debts @ 5% on debtors.

2. Goods costing â‚¹ 20,000 were distributed among staff members as free of cost. These goods were purchased paying IGST @ 12%.
3. Two month's rent @ ₹ 15,000 per month is outstanding. Rent is subject to levy of 12% IGST.
4. Included in general expenses is annual Insurance Premium of ₹ 10,000 paid for the year ending 30th June, 2019. IGST is levied @ 12%.
5. Accrued commission ₹ 5,000. IGST is levied @ 12%.

Answer:

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

1.

Bad debts A/c

Dr.

 

20,000

 

 

  To Debtors A/c

 

 

 

20,000

 

(further bad debts)

 

 

 

 

 

 

 

 

 

 

 

Provision for Bad debts A/c

Dr.

 

35,000

 

 

  To Bad Debts A/c

 

 

 

35,000

 

(bad debts adjusted against provision)

 

 

 

 

 

 

 

 

 

 

 

Profit and Loss A/c

Dr.

 

27,000

 

 

  To Provision for Bad debts A/c

 

 

 

27,000

 

(net amount charged to P/L A/c)

 

 

 

 

 

 

 

 

 

 

2.

Staff welfare expenses A/c

Dr.

 

22,440

 

 

  To Purchases A/c

 

 

 

20,000

 

  To Input IGST A/c

 

 

 

2,400

 

(goods distributed to staff as free samples)

 

 

 

 

 

 

 

 

 

 

3.

Rent A/c

Dr.

 

30,000

 

 

Input IGST A/c

Dr.

 

3,600

 

 

  To outstanding rent A/c

 

 

 

33,600

 

(outstanding rent)

 

 

 

 

 

 

 

 

 

 

4.

Prepaid insurance A/c

Dr.

 

10,000

 

 

  To Insurance A/c

 

 

 

10,000

 

(insurance premium paid in advance)

 

 

 

 

 

 

 

 

 

 

5.

Accrued Commission A/c

Dr.

 

5,600

 

 

  To Commission A/c

 

 

 

5,000

 

  To Output IGST A/c

 

 

 

600

 

(commission earned but not received)

 

 

 

 

Working note: Calculation of bad debts to be transferred to Statement of Profit and Loss:

Particulars
Amount
(₹)
Bad debts
15,000
  Add: further bad debts
20,000
 Add: New provision of bad debts
32,000
 Less: Old provision of bad debts
(40,000)
Bad debts transferred to Statement of Profit and Loss
27,000
Where,
 
New provision = (6,60,000 – 20,000) × 5% 32,000

Page No 22.90:

Question 13:

Give journal entries for the following adjustments in final accounts assuming CGST and SGST @ 9% each:
(i) Closing Stock ₹ 80,000.
(ii) Outstanding salaries ₹ 21,000.
(iii) Insurance premium amounting to ₹ 15,000 is paid in advance.
(iv) ₹ 9,000 received for rent related to the next accounting period.
(v) Commission accrued but not received during the accounting year ₹ 1,500.
(vi) Write off ₹ 500 as further bad debts.
(vii) Goods costing ₹ 8,000 destroyed by fire and insurance company admitted a claim for ₹ 5,000 only.
(viii) Goods costing ₹ 10,000 (Market value ₹ 11,000) were taken by proprietor for personal use.

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

 

 

 

 

 

 

(i)

Closing Stock A/c

Dr.

 

80,000

 

 

  To Trading A/c

 

 

 

80,000

 

(Transfer of Closing Stock to Trading A/c)

 

 

 

 

 

 

 

 

 

 

(ii)

Salary A/c

Dr.

 

21,000

 

 

  To Outstanding Salary A/c

 

 

 

21,000

 

(Outstanding salaries)

 

 

 

 

 

 

 

 

 

 

(iii)

Prepaid Insurance A/c

Dr.

 

15,000

 

 

  To Insurance A/c

 

 

 

15,000

 

(Insurance premium paid in advance)

 

 

 

 

 

 

 

 

 

 

(iv)

Rent A/c

Dr.

 

9,000

 

 

  To Rent Received in Advance A/c

 

 

 

9,000

 

(Rent received in advance)

 

 

 

 

 

 

 

 

 

 

(v)

Accrued Commission A/c

Dr.

 

1,770

 

 

  To Commission A/c

 

 

 

1,500

 

  To Output CGST A/c

 

 

 

135

 

  To Output SGST A/c

 

 

 

135

 

(Commission accrued but not received)

 

 

 

 

 

 

 

 

 

 

(vi)

Bad Debts A/c

Dr.

 

500

 

 

  To Debtors A/c

 

 

 

500

 

(Write off further bad debts)

 

 

 

 

 

 

 

 

 

 

(vii)

Loss by Fire A/c

Dr.

 

9,440

 

 

  To Purchases A/c

 

 

 

8,000

 

  To Input CGST A/c

 

 

 

720

 

  To Input SGST A/c

 

 

 

720

 

(Loss of goods by fire)

 

 

 

 

 

 

 

 

 

 

 

Insurance Company A/c

Dr.

 

5,000

 

 

Profit & Loss A/c

 

 

4,440

 

 

  To Loss by Fire A/c

 

 

 

9,440

 

(Insurance company admitted claim)

 

 

 

 

 

 

 

 

 

 

(viii)

Drawings A/c

Dr.

 

11,800

 

 

  To Purchases A/c

 

 

 

10,000

 

  To Input CGST A/c

 

 

 

900

 

  To Input SGST A/c

 

 

 

900

 

(Goods withdrawn by proprietor for personal use)

 

 

 

 



Page No 22.91:

Question 14:

Following is the Trial Balance of Mr. Gautam as at 31st March, 2017:
 

Dr. Balances (₹) Cr. Balances (₹)
Goodwill 30,000 Purchase Returns 2,650
Land & Buildings 60,000 Capital A/c 2,03,000
Plant & Machinery 40,000 Bills Payable 13,800
Loose Tools 3,000 Sundry Creditors 30,000
Bills Receivable 2,000 Sales 1,15,000
Stock 1st April, 2016 40,000    
Purchases 51,000    
Wages 20,000    
Carriage Inwards 1,200    
Coal & Gas 5,600    
Salaries 4,000    
Rent 2,700    
Discount allowed 1,500    
Cash at Bank 25,000    
Cash in hand 1,400    
Sundry Debtors 45,000    
Repairs 1,800    
Printing & Stationery 600    
Bad-debts 1,200    
Advertisements 3,500    
Furniture and Fixtures 1,200    
General Expenses 250    
Investments 5,000    
Drawings 15,000    
Carriage Outwards 1,500    
Sales Returns 2,000    
  3,64,450   3,64,450
     

You are required to prepare Final Accounts after taking into account the following adjustments:
(a) Closing Stock on 31st March, 2017 was ₹ 60,000.
(b) Depreciate Plant and Machinery at 5%, Loose Tools at 15% and Furniture and fixtures at 5%.
(c) Provide 212% for  discount on Sundry Debtors and also provide 5% for Bad and Doubtful Debts on Sundry Debtors.
(d) Only three quarter's rent has been paid, the last quarter's rent being outstanding.
(e) Interest earned but not received ₹ 600.
(f) Write off 14th of Advertisement expenses.

Answer:

Financial Statements of Mr. Gautam
Trading Account 
for the year ended March 31, 2017
Dr.
 
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Opening Stock
40,000
Sales
1,15,000
 
Purchases
51,000
 
  Less: Sales Return
2,000
1,13,000
  Less: Purchases Return
2,650
48,350
Closing Stock
60,000
Wages 
20,000
 
 
Carriage Inwards
1,200
 
 
Coal and Gas
5,600
 
 
Gross Profit (Balancing Figure)
57,850
 
 
 
1,73,000
 
1,73,000
 
 
 
 
 
Profit and Loss Account
for the year ended March 31, 2017
Dr.   Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Depreciation: (WN1)   Gross Profit 57,850
Plant & Machinery 2,000   Accrued Interest 600
Loose Tools 450      
Furniture 60 2,510    
Rent 2,700      
  Add: Outstanding Rent (WN2) 900 3,600    
Bad Debts 1,200      
  Add: New Provision (WN3) 2,250 3,450    
Discount Allowed 1,500    
Provision for Discount on Debtors (WN4) 1,069    
Advertisement Expenses written-off 875    
Salaries 4,000    
Repairs 1,800    
Printing & Stationery 600    
General Expenses 250    
Carriage Outwards 1,500    
Net Profit (Balancing Figure) 37,296    
       
  58,450   58,450
       
 
Balance Sheet 
as on March 31, 2017
Liabilities 
Amount
(Rs)
Assets 
Amount
(Rs)
Capital
2,03,000
 
Fixed Assets
 
  Add : Net Profit
37,296
 
Plant & Machinery
40,000
 
  Less: Drawings
15,000
2,25,296
  Less: Depreciation
2,000
38,000
 
 
Loose Tools
3,000
 
Current Liabilities
 
  Less: Depreciation
450
2,550
Creditors
30,000
Furniture & Fixtures
1,200
 
Bills Payable
13,800
  Less: Depreciation
60
1,140
Outstanding Rent
900
Investments
5,000
 
 
Land & Building
60,000
 
 
Goodwill
30,000
 
 
Current Assets
 
 
 
Closing Stock
60,000
 
 
Accrued Interest
600
 
 
Advertisement Expenditure
2,625
 
 
Bills Receivable
2,000
 
 
Cash at Bank
25,000
 
 
Debtors
45,000
 
 
 
  Less: Provision for Bad Debts
2,250
 
 
 
  Less: Provision for Discount
1,069
41,681
 
 
Cash in Hand
1,400
 
2,69,996
 
2,69,996
 
 
 
 

Working Notes:

WN1: Calculation of Depreciation

Depreciationon Plant & Machinery=40,000×5100=Rs 2,000Depreciationon Furniture & Fixtures=1,200×5100=Rs 60Depreciationon Loose Tools=3,000×15100=Rs 450

WN2: Calculation of Outstanding Rent

Rent paid for 3 quarters=2,700Rent per quarter=2,7003=Rs 900=Outstanding Rent

WN3: Calculation of Provision for Doubtful Debts

Provision for Doubtful Debts=Sundry Debtors×Rate100=45,000×5100=Rs 2,250

WN4: Calculation of Provision for Discount on Debtors

Provision for Discounton Debtors=Sundry DebtorsProvision for Bad Debts×Rate100=45,0002,250×2.5100=Rs1,068.75 or 1,069



Page No 22.92:

Question 15:

From the following Trial Balance, extracted from the books of Raga Ltd., prepare a Profit and Loss Account for the year ended 31st March, 2019 and a Balance Sheet as at that date:

Debit Balances (₹) Credit Balances (₹)
Drawings Account 20,000 Sales 2,20,000
Land & Building 12,000 Capital 1,01,110
Plant and Machinery 40,000 Discount 1,260
Carriage Inward 100 Commission 5,230
Wages 500 Bills Payable 1,28,870
Salary 2,000 Purchase Return 10,000
Sales Return 200    
Bank charges 200    
Coal, gas and water 1,200    
Purchases 1,50,000    
Trade Expenses 3,800    
Stock (Opening) 76,800    
Cash at Bank 50,000    
Rates and Taxes 870    
Bills Receivable 24,500    
Sundry Debtors 54,300    
Cash in hand 30,000    
  4,66,470   4,66,470
     

The additional informations are as under:
(i) Closing stock was valued at the end of the year at ₹ 20,000.
(ii) Depreciation on Plant and Machinery charged at 5% and on Land and Building at 10%.
(iii) Make a provision for discount on debtors at 3%.
(iv) Make a provision at 5% on debtors for Bad-debts.
(v) Salary outstanding was ₹ 100 and Wages prepaid were ₹ 40.
(vi) The manager is entitled to a Commission of 5% on Net Profit after charging such Commission.

Answer:

Financial Statements of Raga Ltd.
Trading Account 
for the year ended March 31, 2019
Dr.
 
Cr.
Particulars 
Amount
(₹)
Particulars
Amount
(₹)
Opening Stock
76,800
Sales
2,20,000
 
Purchases
1,50,000
 
  Less: Sales Return
200
2,19,800
  Less: Purchases Return
10,000
1,40,000
Closing Stock
20,000
Wages 
500
 
 
 
  Less: Prepaid
40
460
 
 
Carriage Inward
100
 
 
Coal, Gas and Water
1,200
 
 
Gross Profit (Balancing Figure)
21,240
 
 
 
2,39,800
 
2,39,800
 
 
 
 

 

Profit and Loss Account 
for the year ended March 31, 2019
 
Dr.
 
Cr.
 
Particulars 
Amount
(₹)
Particulars
Amount
(₹)
 
Depreciation: (WN1)
 
Gross Profit
21,240
 
Plant & Machinery
2,000
 
Discount Received
1,260
 
Land & Building
1,200
3,200
Apprentice Premium
5,230
 
Salaries
2,000
 
 
 
 
  Add: Outstanding
100
2,100
 
 
 
Provision for Doubtful Debts (WN2)
2,715
 
 
 
Provision for Discount on Debtors (WN3)
1,548
 
 
 
Bank Charges
200
 
 
 
Trade Expenses
3,800
 
 
 
Rates & Taxes
870
 
 
 
Outstanding Manager’s Commission (WN4)
633
 
 
 
Net Profit (Balancing Figure)
12,644
 
 
 
 
 
 
 
 
 
27,730
 
27,730
 
 
 
 
 
 
 
 
Balance Sheet 
as on March 31, 2019
Liabilities 
Amount
(₹)
Assets 
Amount
(₹)
Capital
1,01,110
 
Fixed Assets
 
  Add: Net Profit
12,664
 
Plant & Machinery
40,000
 
  Less: Drawings
20,000
93,774
  Less: Depreciation
2,000
38,000
 
 
Land & Building
12,000
 
Current Liabilities
 
  Less: Depreciation
1,200
10,800
Outstanding Manager’s Commission
633
 
 
Bills Payable
1,28,870
Current Assets
 
Outstanding Salaries
100
Closing Stock
20,000
 
 
Prepaid Wages
40
 
 
Bills Receivable
24,500
 
 
Cash at Bank
50,000
 
 
Debtors
54,300
 
 
 
  Less: Provision for Bad Debts
2,715
 
 
 
  Less: Provision for Discount
1,548
50,037
 
 
Cash in Hand
30,000
 
2,23,377
 
2,23,377
 
 
 
 


Working Notes:

WN1: Calculation of Amount of Depreciation


WN2: Calculation of Provision for Doubtful Debts

WN3: Calculation of Provision for Discount on Debtors

WN4: Calculation of Manager’s Commission



Page No 22.93:

Question 16:

The following balances were extracted from the books of Shri Krishan Kumar as at 31st March, 2017:

  Dr.
(₹)
Cr.
(₹)
Capital   24,500
Drawings 2,000  
General Expenses 2,500  
Buildings 11,000  
Machinery 9,340  
Stock (1-4-2016) 16,200  
Power 2,240  
Taxes and Insurance 1,315  
Wages 7,200  
Sundry Debtors 6,280  
Sundry Creditors   2,500
Charity 105  
Bad-debts 550  
Bank Overdraft   11,180
Sales   65,360
Purchases 47,000  
Scooter 2,000  
Scooter Expenses 500  
Bad-debts Provision   900
Commission   1,320
Trade Expenses 1,280  
Bills Payable   3,850
Cash 100  
  1,09,610 1,09,610
   

Adjustments:-
(i) Stock on 31st March, 2017 was valued at ₹ 23,500.
(ii) 15th of general expenses and taxes & insurance to be charged to factory and the balance to the office.
(iii) Write off a further Bad-debts of ₹ 160 and maintain the provision for Bad-debts at 5% on Debtors.
(iv) Depreciate Machinery at 10% and Scooter by ₹ 240.
(v) Provide ₹ 700 for outstanding interest on Bank Overdraft.
(vi) Prepaid Insurance is to the extent of ₹ 50.
(vii) Provide for Manager's Commission at 10% on the Net Profit after charging such Commission.
Prepare final accounts for the year ended 31st March, 2017 after giving effect to the above adjustments.

Answer:

Financial Statements of Shri Krishan Kumar
Trading Account 
for the year ended March 31, 2017
Dr.
 
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Opening Stock
16,200
Sales
65,360
Purchases
47,000
Closing Stock
23,500
Wages
7,200
 
 
General Expenses (1/5th)
500
 
 
Taxes and Insurance (1/5th)
253
 
 
Power
2,240
 
 
Gross Profit (Balancing Figure)
15,467
 
 
 
88,860
 
88,860
 
 
 
 
 
Profit and Loss Account
for the year ended March 31, 2017
 
Dr.   Cr.  
Particulars  Amount
(Rs)
Particulars Amount
(Rs)
 
Depreciation: (WN1)   Gross Profit 15,467  
Machinery 934   Commission Received 1,320  
Scooter 240 1,174      
Old Bad Debts 550        
  Add: Further Bad Debts 160        
  Add: New Provision (WN2) 306        
  Less: Old Provision 900 116      
Outstanding Interest on Bank Overdraft 700      
Taxes & Insurance 1,315        
  Less: Pre-paid 50        
  Less: T/f to Trading A/c 253 1,012      
General Expenses 2,500        
 Less: T/f to Trading A/c 500 2,000      
Charity 105      
Scooter Expenses 500      
Trade Expenses 1,280      
Outstanding Manager’s Commission (WN3) 900      
Net Profit (Balancing Figure) 9,000      
         
  16,787   16,787  
         

Balance Sheet
as on March 31, 2017
Liabilities  Amount (Rs) Assets  Amount (Rs)
Capital 24,500   Fixed Assets  
  Add: Net Profit 9,000   Machinery 9,340  
  Less: Drawings 2,000 31,500   Less: Depreciation 934 8,406
    Scooter 2,000  
Current Liabilities     Less: Depreciation 240 1,760
Creditors 2,500 Building 11,000
Outstanding Manager’s Commission 900    
Bills Payable 3,850 Current Assets  
Outstanding Interest on Bank Overdraft 700 Closing Stock 23,500
Bank Overdraft 11,180 Prepaid Insurance 50
    Debtors 6,280  
      Less: Bad Debts 160  
      Less: Provision for Bad Debts 306 5,814
    Cash in Hand 100
  50,630   50,630
       

Working Notes:

WN1: Calculation of Amount of Depreciation

Depreciationon Machinery=9,340×10100=Rs 934

WN2: Calculation of Provision for Doubtful Debts

Provision for Doubtful Debts=Sundry DebtorsFurther BadDebts×Rate100=6,280160×5100=Rs 306

WN3: Calculation of Manager’s Commission

Profit before Manager's Commission=Rs 9,900 16,7876,887Manager's Commission=9,900×10110=Rs 900



Page No 22.94:

Question 17(A):

On 31st March, 2017 the following Trial Balance was extracted from the books of Sh. Ghanshyam Das:-

  Dr.
(₹)
Cr.
(₹)
Capital Account   2,00,000
Debtors and Creditors 40,000 25,000
Loan on Mortgage   30,000
Interest on Loan 2,250  
Discount   1,800
Stock on 1st April, 2016 20,000  
Motor Vehicle 50,000  
Cash at Bank 4,450  
Investments 16,000  
Wages 18,000  
Land and Building 2,80,000  
Bad-Debts 1,500  
Purchases and Sales 2,50,000 4,80,000
Purchases and Sales Returns 12,000 10,000
Carriage Outward 8,000  
Carriage Inward 6,500  
Salaries 7,200  
Outstanding Salaries   600
Rates, Taxes and Insurance 15,000  
Advertising 5,000  
General Expenses 6,400  
Bills Receivable and Payable 7,500 5,400
Prepaid Insurance 3,000  
  7,52,800 7,52,800
   

Prepare Trading and Profit & Loss Account for the year ended 31st March, 2017 and Balance Sheet as at that date, after making adjustments for the following matters:
1. Depreciate Land and Building at 2.5% and Motor Vehicles at 20%.
2. Interest on Loan at 15% p.a. is unpaid for six months.
3. Ghanshyam Das withdrew ₹ 2,000 for his private use. This amount was included in general expenses.
4. Interest on Investments is receivable for full year @ 10%.
5. Provide for Manager's Commission at 10% on Net Profit after charging such commission.
6. Stock in hand on 31st March, 2017 was valued at ₹ 25,000 (Realisable value ₹ 22,000).

Answer:

Financial Statement of Sh. Ghanshyam Das
Trading Account 
for the year ended March 31, 2017
Dr.
 
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Opening Stock
20,000
Sales
4,80,000
 
Purchases
2,50,000
 
  Less: Sales Return
12,000
4,68,000
  Less: Purchases Return
10,000
2,40,000
Closing Stock
22,000
Wages
18,000
 
 
Carriage Inwards
6,500
 
 
Gross Profit (Balancing Figure)
2,05,500
 
 
 
4,90,000
 
4,90,000
 
 
 
 
 
Profit and Loss Account 
for the year ended March 31, 2017
Dr.   Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Depreciation: (WN1)
 
Gross Profit
2,05,500
Land & Building
7,000
 
Accrued Interest on Investment
1,600
Motor Vehicle
10,000
17,000
Discount Received
1,800
Interest on Loan
2,250
 
 
 
  Add: Outstanding (WN2)
2,250
4,500
 
 
General Expenses
6,400
 
 
 
  Less: Drawings
2,000
4,400
 
 
Bad Debts
1,500
 
 
Carriage Outwards
8,000
 
 
Salaries
7,200
 
 
Rates, Taxes and Insurance
15,000
 
 
Advertisement
5,000
 
 
Outstanding Manager’s Commission (WN3)
13,300
 
 
Net Profit (Balancing Figure)
1,33,000
 
 
 
 
 
 
 
2,08,900
 
2,08,900
 
 
 
 
 
Balance Sheet 
as on March 31, 2017
Liabilities 
Amount
(Rs)
Assets 
Amount
(Rs)
Capital
2,00,000
 
Fixed Assets
 
  Add: Net Profit
1,33,000
 
Land & Building
2,80,000
 
  Less: Drawings
2,000
3,31,000
  Less: Depreciation
7,000
2,73,000
 
 
Motor Vehicle
50,000
 
Current Liabilities
 
 Less: Depreciation 
10,000
40,000
Creditors
25,000
Investments
16,000
Outstanding Manager’s Commission
13,300
Current Assets
 
Outstanding Salaries
600
Closing Stock
22,000
Bills Payable
5,400
Bills Receivable
7,500
Loan on Mortgage
30,000
  Debtors
40,000
Outstanding Interest on Loan
2,250
32,250
Prepaid Insurance
3,000
 
 
Accrued Interest on Investment 1,600
 
 
Cash at Bank
4,450
  4,07,550  
4,07,550
 
 
 
 

Working Notes:

WN1: Calculation of Amount of Depreciation

Depreciationon Land & Building=2,80,000×2.5100=Rs 7,000Depreciationon Motor Vehicle=50,000×20100=Rs 10,000

WN2: Calculation of Outstanding Interest on Loan

Outstanding Interest=30,000×15100×612=Rs 2,250

WN3: Calculation of Manager’s Commission

Profit before Manager's Commission=Rs 1,46,300 2,08,90062,600Manager's Commission=1,46,300×10110=Rs 13,300



Page No 22.95:

Question 17(B):

Prepare Trading and Profit and Loss Account and Balance Sheet as at 31st March, 2017 from the following Balances of Mr. Sardari Lal :
 

Particulars (₹) Particulars (₹)
Capital Account 41,000 Drawings 5,000
Creditors – Trade 30,000 Purchases 1,71,000
Creditors – Expenses 6,800 Carriage inwards 1,500
Rent Received 600 Wages 23,000
Purchases Returns 4,000 Power 9,000
Sales 2,89,600 Rent and Insurance 19,900
Bad-Debts Provision on 1st April, 2016 600 Salaries 34,400
Advertising Development 8,000 Discount Received 1,800
Goodwill 5,000 General Charges 8,600
Plant and Machinery 20,000 Sales Returns 600
Traveller's Samples 2,700 Traveller's Commission                2,890
Stock on 1-4-2016 32,000 Traveller's Salaries 9,100
Debtors 14,600 Discount Allowed 5,000
Cash at Bank 2,000    
Cash in hand 110    

Adjustments:- The Closing stock was ₹ 23,000 but there has been a loss by fire on 20th March, 2017, to the extent of ₹ 20,000, not covered by insurance. Depreciate Plant and Machinery by 10% and Traveller's Samples by 3313%. Increase the Bad-debts Provision to ₹ 2,000. Write 20% off Advertising Development Account. Annual premium on insurance expiring 1st June, 2017 was ₹ 1,200. Provide for Manager's commission @ 5% on Net Profits after charging such Commission.

Answer:

Financial Statements of Mr. Sardari Lal
Trading Account 
for the year ended March 31, 2017
Dr.
 
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Opening Stock
32,000
Sales
2,89,600
 
Purchases
1,71,000
 
  Less: Sales Return
600
2,89,000
  Less: Purchases Return
4,000
 
Closing Stock
23,000
  Less: Goods Destroyed by Fire
20,000
1,47,000
 
 
Power
9,000
 
 
Carriage Inwards
1,500
 
 
Wages
23,000
 
 
Gross Profit (Balancing Figure)
99,500
 
 
 
3,12,000
 
3,12,000
 
 
 
 
 
Profit and Loss Account 
for the year ended March 31, 2017
Dr.  
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Depreciation: (WN1)
 
Gross Profit
99,500
Traveler’s Sample
900
 
Rent Received
600
Plant & Machinery
2,000
2,900
Discount Received
1,800
Rent & Insurance
19,900
 
Net Loss (Balancing Figure)
3,690
  Less: Prepaid (WN2)
200
19,700
 
 
New Provision
2,000
 
 
 
  Less: Old Provision
600
1,400
 
 
Traveler’s Commission
2,890
   
Traveler’s Salaries
9,100
   
Salaries
34,400
   
Discount Allowed
5,000
   
Loss by Fire
20,000
   
Advertisement Development Expenditure written-off (WN3)
1,600
   
General Charges
8,600
   
       
 
1,05,590
 
1,05,590
       
 
Balance Sheet
as on March 31, 2017
Liabilities 
Amount
(Rs)
Assets 
Amount
(Rs)
Capital
41,000
  Fixed Assets  
  Less: Net Loss
3,690
  Plant & Machinery
20,000
 
  Less: Drawings
5,000
32,310
  Less: Depreciation
2,000
18,000
    Traveler’s Samples
2,700
 
Current Liabilities     Less: Depreciation
900
1,800
Creditors- Expenses
6,800
Goodwill
5,000
Creditors- Trade
30,000
Current Assets  
    Closing Stock 23,000
    Advertisement Development
6,400
    Prepaid Insurance
200
    Cash in Hand
110
    Debtors
14,600
 
      Less: Provision for Doubtful Debts
2,000
12,600
 
 
Cash at Bank
2,000
 
69,110
 
69,110
 
 
 
 


Working Notes:

WN1: Calculation of Amount of Depreciation

WN2: Calculation of Prepaid Insurance


WN3: Calculation of Advertisement Expenditure Written-off

WN4: Calculation of Manager’s Commission

Manager will not be entitled to any commission because there is a net loss.



Page No 22.96:

Question 18:

State with reasons whether the following are capital or revenue expenditures:
(i) A new machine is purchased for ₹ 60,000, ₹ 800 were spent on its carriage and ₹ 1,500 were paid as wages for its installation.
(ii) A sum of ₹ 40,000 was spent on painting the new factory.
(iii) ₹ 6,000 were paid for annual insurance premium.
(iv) ₹ 20,000 were spent on repairs before using a second hand generator purchased recently.
(v) ₹ 5,000 were spent on the repair of a machinery.
(vi) ₹ 50,000 were spent for airconditioning of the office of the manager.

Answer:

1. Capital Expenditure
Reason: When a fixed asset is purchased, then all the expenses up to the date at which the asset is put to use are capitalised. So, expenses incurred on carriage and installation of new machinery will be considered as capital expenditure.
2. Capital Expenditure
Reason: Whitewashing (or painting) expenses incurred on the building will increase the revenue generating capacity of the building, thus, it will be capitalised and treated as capital expenditure.
3. Revenue Expenditure
Reason: Annual insurance premium is a recurring expenditure to carry on day-to-day business activities. Thus, it is a revenue expense.
4. Capital Expenditure
Reason: Expenditure incurred once in many years to increase the working capacity and revenue generating capacity of the asset, and then it is termed as capital expenditure. Thus, repairs made to the second hand machinery (purchased recently) are a one-time expense and thus, will be capitalised and treated as capital expenditure.
5. Revenue Expenditure
Reason: The amount spent on repairs of machinery is a recurring expenditure and helps in increasing the working capacity of the machinery but does not add value to it. Thus, it is a revenue expense.
6. Capital Expenditure
Reason: Expenditure incurred once in many years to increase the working capacity and revenue generating capacity of the asset, and then it is termed as capital expenditure. Thus, amount spent for air conditioning of the manager’s will increase the value of the asset and thus, it is a capital expenditure.



Page No 22.97:

Question 19:

From the following Trial Balance of Mr. Alok, prepare Trading and Profit & Loss Account for the year ending 31st March, 2019, and a Balance Sheet as at that date:-
 

Dr. Balances (₹) Cr. Balances (₹)
Drawings 5,275 Capital 59,700
Bills Receivable 4,750 Loan at 8% p.a. (on.1.4.2018)             10,000
Machinery 14,400 Commission Received 2,820
Debtors (including X for dishonoured Bill of ₹ 1,000) 30,000 Creditors 29,815
Wages 20,485 Sales 1,78,215
Returns Inward 2,390    
Purchases 1,28,295    
Rent 2,810    
Stock (1.4.2018) 44,840    
Salaries 5,500    
Travelling Expenses 945    
Insurance 200    
Cash 9,750    
Repairs 1,685    
Interest on Loan 500    
Discount Allowed 2,435    
Bad-Debts 1,810    
Furniture 4,480    
  2,80,550   2,80,550
       

The following adjustments are to be made:
(i) Stock in the shop on 31st March, 2019 was ₹ 64,480.
(ii) Half the amount of X's Bill is irrecoverable.
(iii) Create a provision of 5% on other debtors.
(iv) Wages include ₹ 600 for erection of new Machinery.
(v) Depreciate Machinery by 5% and Furniture by 10%.
(vi) Commission includes ₹ 300 being Commission received in advance.

Answer:

Financial Statement of Mr. Alok
Trading Account 
for the year ended March 31, 2019
Dr.  
Cr.
Particulars 
Amount
(₹)
Particulars
Amount
(₹)
Opening Stock
44,840
Sales
1,78,215
 
Purchases
1,28,295
  Less: Return Inwards
2,390
1,75,825
Wages
20,485
 
Closing Stock
64,480
  Less: Erection Charges of
New Machinery
600
19,885
 
 
Gross Profit (Balancing Figure)
47,285
 
 
 
2,40,305
 
2,40,305
       
 
Profit and Loss Account 
for the year ended March 31, 2019
Dr.  
Cr.
Particulars 
Amount
(₹)
Particulars
Amount
(₹)
Depreciation: (WN1)
 
Gross Profit
47,285
Machinery
750
 
Commission
2,820
 
Furniture
448
1,198
  Less: Comm. Received in advance
300
2,520
Old Bad Debts
1,810
 
 
 
  Add: Further Bad Debts
500
 
 
 
  Add: New Provision (WN2)
1,450
3,760
 
 
Rent
2,810
   
Interest on Loan
500
     
  Add: Outstanding (WN3)
300
800
   
Salaries
5,500
   
Travelling Expenses
945
   
Insurance
200
   
Repairs
1,685
   
Discount Allowed
2,435
   
Net Profit (Balancing Figure)
30,472
   
 
49,805
 
49,805
       
 
Balance Sheet 
as on March 31, 2019
Liabilities 
Amount
(₹)
Assets 
Amount
(₹)
Capital
59,700
 
Fixed Assets
 
Add: Net Profit
30,472
 
Machinery
14,400
 
Less: Drawings
5,275
84,897
  Add: Erection charges
600
 
8% Loan
10,000
Less: Depreciation
750
14,250
 
 
 Furniture
4,480
 
Current Liabilities
 
  Less: Depreciation
448
4,032
Creditors
29,815
 
 
Outstanding Interest
300
Current Assets
 
Commission received in advance
300
Closing Stock
64,480
 
 
Bills Receivables
4,750
 
 
Debtors
30,000
 
 
 
  Less: Bad Debts
500
 
 
 
  Less: Provision for        Doubtful Debts
1,450
28,050
    Cash in Hand
9,750
 
1,25,312
 
1,25,312
       

Working Notes:

WN1: Calculation of Amount of Depreciation
Depreciationon Machinery=(14,400+600)×5100=Rs750Depreciationon Furniture=4,480×10100=Rs 448

WN
2:
Calculation of Provision for Doubtful Debts
Provision for Doubtful Debts=Sundry DebtorsFurther Bad DebtsAmount recoverable from X*×Rate100=30,000500500×5100=Rs1,450
*Provisionis to be maintained on Debtors other than X


WN3:
Calculation of Outstanding Interest on Loan
Intereston Loan=10,000 × 8100=Rs 800Interest on Loan already Paid = 300Outstanding Interest on Loan = Rs 300
 

Page No 22.97:

Question 20:

Extracts of Trial Balance as at 31st March, 2017:

  Dr.
(₹)
Cr.
(₹)
Sundry Debtors (including Dewan for dishonoured bill of ₹ 20,000) 4,80,000
Provision for Doubtful Debts 24,000
Bad Debts 10,000

Adjustments:
(i) 34th of Dewan's bill is irrecoverable.
(ii) Create a provision of 6% on Sundry Debtors.
Show the effect on Profit and Loss Account and Balance Sheet.

Answer:

Profit and Loss Account 
for the year ended March 31, 2017
Dr.  
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Old Bad Debts
10,000
 
 
 
  Add: Further Bad Debts
15,000
 
 
 
  Add: New Provision
27,600
 
 
 
  Less: Old Provision
24,000
28,600
 
 
       
       
 
Balance Sheet 
as on March 31, 2017
Liabilities 
Amount
(Rs)
Assets 
Amount
(Rs)
 
 
Current Assets
 
 
 
Debtors
4,80,000
 
 
 
  Less: Bad Debts
15,000
 
 
 
  Less: Provision for Doubtful Debts
27,600
4,37,400
       
       

Working Note:

WN1: Calculation of Provision for Doubtful Debts
Provision for Doubtful Debts=Sundry DebtorsFurther Bad DebtsAmt. recoverable from Dewan*×Rate100=4,80,00015,0005,000×6100=Rs 27,600*Provision is to be maintained on Debtors other than Dewan



Page No 22.98:

Question 21:

From the following Trial Balance extracted from the books of S. Sujan Singh, prepare a Trading and Profit & Loss Account for the year ended 31st March, 2016 and a Balance Sheet as at that date:

  Dr.
(₹)
Cr.
(₹)
Capital Account   90,000
Drawings Account 6,480  
Land and Buildings 25,000  
Plant & Machinery 14,270  
Furniture & Fixtures 1,250  
Carriage (Inwards) 4,370  
Wages 21,470  
Salaries 4,670  
Bad-Debts Provision (as on 1st April, 2015)   2,470
Sales   91,230
Sales Returns 1,760  
Bank Charges 140  
Coal, Gas and Water 720  
Rates & Taxes 840  
Discount Account (Balance)   120
Purchases 42,160  
Purchases Returns   8,460
Bills Receivable 1,270  
Trade Expenses 1,990  
Sundry Debtors 37,800  
Sundry Creditors   12,170
Stock (1st April, 2015) 26,420  
Miscellaneous Receipt   500
Fire Insurance 490  
Cash at Bank 13,000  
Cash in Hand 850  
  2,04,950 2,04,950
   

Adjustments:-
1. Carry forward the following unexpired amounts:-
(i) Fire Insurance ₹ 125
(ii) Rates and Taxes ₹ 240
2. Transfer to Building Account ₹ 3,000 from purchases and ₹ 2,000 from wages, representing cost of material and labour spent on additions to Building made during the year.
3. Charge Depreciation on Land and Buildings at 2.5% and on Plant & Machinery at 10%.
4. Make a Provision of 5% on Sundry Debtors for Bad-debts.
5. Charge 5% Interest on Capital but not on Drawings.
6. The value of Stock as on 31st March, 2016 was ₹ 29,390.

Answer:

Financial Statements of S. Sujan Singh

Trading Account 

for the year ended March 31, 2016

Dr.

 

Cr.

Particulars 

Amount

(Rs)

Particulars

Amount

(Rs)

Opening Stock

26,420

Sales

91,230

 

Purchases

42,160

 

  Less: Sales Return

1,760

89,470

  Less: Purchases Return

8,460

 

Closing Stock

29,390

  Less: t/f to Building

3,000

30,700

 

 

Wages

21,470

 

 

 

    Less: t/f to Building

2,000

19,470

 

 

Carriage

4,370

 

 

Coal, Gas and Water

720

 

 

Gross Profit (Balancing Figure)

37,180

 

 

 

1,18,860

 

1,18,860

 

 

 

 

               

Profit and Loss Account 

for the year ended March 31, 2016

Dr.

 

Cr.

Particulars 

Amount

(Rs)

Particulars

Amount

(Rs)

Depreciation: (WN1)

 

Gross Profit

37,180

Plant & Machinery

1,427

 

Miscellaneous Receipts

500

Land & Building

750

2,177

Discount

120

Fire Insurance

490

 

Old Provision

2,470

 

  Less: Unexpired

125

365

Less: New Provision (WN2)

1,890

580

Interest on Capital

4,500

   

Rates & Taxes

840

 

 

 

  Less: Unexpired

240

600

 

 

Salaries

4,670

 

 

Trade Expenses

1,990

 

 

Bank Charges

140

 

 

Net Profit (Balancing Figure)

23,938

 

 

 

38,380

 

37,980

 

 

 

 


Balance Sheet 
as on March 31, 2016
Liabilities 
Amount
(Rs)
Assets 
Amount
(Rs)
Capital
90,000
  Fixed Assets  
Add: Interest on Capital
4,500
  Land & Building (25,000 + 3,000 + 2,000)
30,000
 
Add: Net Profit
23,938
    Less: Depreciation
750
29,250
  Less: Drawings
6,480
1,11,958
Plant & Machinery
14,270
 
      Less: Depreciation
1,427
12,843
Current Liabilities   Furniture & Fixtures
1,250
Creditors
12,170
   
 
 
Current Assets  
    Closing Stock
29,390
    Unexpired Fire Insurance
125
    Unexpired Rates & Taxes
240
    Bills Receivables
1,270
    Cash at Bank
13,000
    Debtors
37,800
 
      Less: Provision for Doubtful Debts
1,890
35,910
    Cash in Hand
850
 
1,24,128
 
1,24,128
       


Working Notes:
WN1: Calculation of Amount of Depreciation

Depreciationon Land & Buildings=30,000×2.5100=Rs 750Depreciationon Plant & Machinery=14,270×10100=Rs 1,427

WN2: Calculation of Provision for Doubtful Debts
Provision for Doubtful Debts=Sundry DebtorsFurther Bad Debts×Rate100=37,8000×5100=Rs 1,890



Page No 22.99:

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, 2019 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 (1-4-2018) 70,000    
Stock (31-3-2019) 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, 2018 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 2019 are outstanding.
4. Goods worth ₹ 15,000 were sold and despatched 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, 2019
Dr.  
Cr.
Particulars 
Amount
(₹)
Particulars
Amount
(₹)
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, 2019

Dr.

 

Cr.

Particulars 

Amount

(₹)

Particulars

Amount

(₹)

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, 2019
Liabilities 
Amount
(₹)
Assets 
Amount
(₹)
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



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