3405 24654 Textbooksolution PDF

Question:1
Following are the balances extracted from the books of Manish Gupta on 31st March, 2018:
Capital 1,90,000 Cash at Bank 26,000

Drawing 7,000 Salaries 8,000
Plant and 1,20,000 Repairs 1,900
Machinery
Delivery 26,000 Stock on 1st April, 16,000
Vehicle 2017
Sundry 36,000 Rent 4,500
Debtors
Sundry 26,000 Manufacturing 1,500
Creditors Expenses
Purchases 20,000 Bills Payable 23,500
Sales 42,000 Bad Debts 5,000
Wages 8,000 Carriage 1,600
Prepare Trading and Profit and Loss Account and Balance Sheet as at 31st March, 2018 after following adjustments are made:
i
Closing Stock was 16,000.
ii
Depreciate Plant and Machinery @ 10% and Delivery Vehicle @ 15%.
iii
Unpaid Rent amounted to 500.
Solution:
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Opening stock 16,000 Sales 42,000
Purchases 20,000 Closing Stock 16,000
Wages 8,000
Manufacturing Expenses 1,500
Carriage 1,600
Gross Profit (Balance Figure) 10,900
58,000 58,000
Profit and Loss Account

Dr. Cr.
Amount Amount
Rs Rs
Salaries 8,000 Gross Profit 10,900
Repairs 1,900 Net Loss (Balancing Figure) 24,900
Rent 4,500
Add: Unpaid Rent 500 5,000
Bad Debts 5,000
Depreciation on:
Plant and machinery 12,000
Delivery Vehicle 3,900 15,900
35,800 35,800
Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
Rs Rs
Capital 1,90,000 Fixed Assets
Less: Drawings 7, 000 Plant and 1,20,000
Machinery
Less: Net Loss 24, 900 Less:10% 12, 000 1,08,000
Deprecation
1,58,100 Delivery Vehicle 26,000
Less:15% 3, 900 22,100
Depreciation
Current Liabilities
Sundry Creditors 26,000 Current Assets
Bills Payable 23,500 Closing Stock 16,000
Unpaid Rent 500 Sundry Debtors 36,000
Cash at Bank 26,000
2,08,100 2,08,100
Question:2
Prepare Trading and Profit and Loss Account and Balance Sheet from the following balances relating to the year ended 31st March, 2018:
Capital 1,00,000 Wages 50,000

Creditors 12,000 Bank 10,000
Returns 5,000 Repairs 500
Outward
Sales 1,64,000 Stock on 1st April, 20,000
2017
Bills 5,000 Rent 4,000
Payable
Plant and 40,000 Manufacturing 8,000
Machinery Expenses
Sundry 24,000 Trade Expenses 7,000
Debtors
Drawing 10,000 Bad Debts 2,000
Purchases 1,05,000 Carriage 1,500
Returns 3,000 Fuel and Power 1,000
Inward
Additional Information:
i
Closing Stock was valued at 14,500.
ii
Depreciate Plant and Machinery by 4,000.
iii
Write off Bad Debts 5,000.
iv
A sum of 400 is due for repairs.
Solution:
Trading Account
Dr. Cr.
Amount Amount
Rs Rs
Opening stock 20,000 Sales 1,64,000
Purchases 1,05,000 Less: Return Inwards 3, 000 1,61,000
Less: Return out words 5, 000 1,00,000 Closing Stock 14,500
Wages 50,000 Gross Loss (Balancing Figure) 5,000
Manufacturing Expenses 8,000
Carriage 1,500
Fuel and Power 1,000
1,80,500 1,80,500

Dr. Cr.
Amount Amount
Rs Rs
Gross Loss 5,000
Repairs 500
Add: outstanding 400 900
Rent 4,000
Miscellaneous Expenses 7,000
Bad Debts 2,000 Net Loss (Balancing Figure) 27,900
Add: Additional bad debts 5,000 7,000
Depreciation on Plant and 4,000
Machinery
27,900 27,900
Balance Sheet
Amount Amount
Liabilities Assets
Rs Rs
Less: Drawings 10, 000 Plant and Machinery 40,000
Less: Net Loss 27, 900 62,100 Less: Depreciation 4, 000 36,000
Current Liabilities Current Assets
Creditors 12,000 Closing Stock 14,500
Bills Payable 5,000 Sundry Debtors 24,000
Outstanding Repairs 400 Less: Further Bad 5, 000 19,000
Debts
Bank 10,000
79,500 79,500
Question:3
Following Trial Balance has been extracted from the books of M/s. Ram Prasad & Sons on 31st March, 2018:
Dr. Cr.
Machinery 4,00,000 Capital 9,00,000

Cash at 1,00,000 Sales 16,00,000
Bank
Cash in 50,000 Sundry 4,50,000
Hand Creditors
Wages 1,00,000 Interest 30,000
Received
Purchases 8,00,000
Stock on 1st 6,00,000
April, 2017
Sundry 4,40,000
Debtors
Bills 2,90,000
Receivable
Rent 45,000
Commission 25,000
General 80,000
Expenses
Salaries 50,000
29,80,000 29,80,000
i
Outstanding salaries were 45,000.
ii
Depreciate Machinery at 10%.
iii
Wages outstanding were 5,000.
iv
Rent prepaid 10,000.
v
Provide for interest on capital 5% per annum.
vi
Stock on 31st March, 2018 8,00,000.
Prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at that date.
Solution:
Financial Statement of M/s. Ram Prasad & Sons
Trading Account
Dr. Cr.
Amount Amount
Rs Rs
Opening Stock 6,00,000 Sales 16,00,000
Purchases 8,00,000 Closing Stock 8,00,000
Wages 1,00,000
Add: Outstanding Wages 5,000 1,05,000
Gross Profit (Balancing Figure) 8,95,000
24,00,000 24,00,000

Dr. Cr.
Particulars Amount Particulars Amount
Rs Rs
Rent 45,000 Gross Profit 8,95,000

Less: Prepaid 10, 000 35,000 Interest Received 30,000
Rent
Commission 25,000
General Expenses 80,000
Salaries 50,000
Add: 45,000 95,000
Outstanding
Salaries
Depreciation on 40,000
Machinery
Net Profit (Balancing 6,50,000
Figure)
9,25,000 9,25,000
Balance Sheet
Amount Amount
Liabilities Assets
Rs Rs
Add: Net Profit 6,50,000 15,50,000 Machinery 4,00,000
Current Liabilities Less: 10%
Depreciation 40, 000 3,60,000
Sundry Creditors 4,50,000 Current Assets
Outstanding Salary 45,000 Closing Stock 8,00,000
Outstanding Wages 5,000 Sundry Debtors 4,40,000
Bills Receivable 2,90,000
Prepaid Rent 10,000
Cash at Bank 1,00,000
Cash in Hand 50,000
20,50,000 20,50,000
Question:4
From the following Trial Balance of M/s. Shradha & Sons as on 31st March, 2018, prepare Trading and Profit and Loss Account and Balance Sheet.
Dr. Cr.
Heads of Accounts Balance Balance
Capital ................................................................................ … 80,000

Drawings ................................................................................ 18,000 …
Sales ................................................................................ … 1,55,000
Purchases ................................................................................ 82,600 …
Stock 1stApril, 2017 ................................................................................ 42,000 …
Returns Outward ................................................................................ … 1,600
Carriage Inwards ................................................................................ 1,200 …
Wages ................................................................................ 4,000 …
Power ................................................................................ 6,000 …
Machinery ................................................................................ 50,000 …
Furniture ................................................................................ 14,000 …
Rent ................................................................................ 22,000 …
Salary ................................................................................ 15,000 …
Insurance ................................................................................ 3,600 …
8% Bank Loan ................................................................................ … 25,000
Debtors ................................................................................ 20,600 …
Creditors ................................................................................ … 18,900
Cash in Hand ................................................................................ 1,500 …
Total 2,80,500 2,80,500
Adjustments:
i
Closing Stock 64,000.
ii
Wages outstanding 2,400.
iii
Bad Debts 600.
iv
Provision for Doubtful Debts to be 5%.
v
Rent is paid for 11 months.
vi
Insurance premium is paid per annum, ended 31st May, 2018.
vii
Loan from the bank was taken on 1st October, 2017.
viii
Provide Depreciation on machinery @ 10% and on Furniture @ 5%.
Solution:
Financial statement of M/s. Shradha & Sons
Trading Account
Dr. Cr.
Amount Amount
Rs Rs
Opening Stock 42,000 Sales 1,55,000
Purchases 82,600
Less: Return 1, 600 81,000
Outwards
Carriages Inwards 1,200 Closing Stock 64,000
Wages 4,000
Add: Outstanding 2,400 6,400
Wages
Power 6,000
Gross Profit (Balancing Figure) 82,400
2,19,000 2,19,000
***

Dr. Cr.
Amount Amount
Rs Rs
Rent 22,000 Gross Profit 82,400
Add: Outstanding for One 2,000 24,000
month 22, 000/11
Salary 15,000
Insurance 3,600
Less: Prepaid 2 month 600 3,000
3, 600 × 2/12
Outstanding Interest on Bank Loan

1,000
25, 000 × 8
Bad Debts 600
Add: Provision for Doubtful 1,000 1,600
Debts
Depreciation on:
Machinery 5,000
Furniture 700 5,700
Net Profit (Balancing Figure) 32,100
82,400 82,400
Balance Sheet
Amount Amount
Liabilities Assets
Rs Rs
Capital 80,000 Fixed Assets
Add: Net Profit 32,100 Machinery 50,000
Less: Drawings 18, 000 94,100 Less: 10% 500 45,000
Depreciation
8% Bank Loan 25,000 Furniture 14,000
Add: Outstanding 1,000 26,000 Less: 5% 700 13,300
Interest Deprecation
Creditors 18,900 Closing Stock 64,000
Wages Outstanding 2,400 Debtors 20,600
Rent Outstanding 2,000 Less: Bad Debts 600
Less: 5% Provision
1, 000 19,000
for doubtful Debts
Prepaid Insurance 600
Cash in hand 1,500
1,43,400 1,43,400
Question:5
Trial Balance of a business as at 31st March, 2018 is given below:
Dr. Cr.
Stock on 1st April, 2017 25,000 Sales 2,27,800

Furniture 8,000 Commission 500
Plant and Machinery 1,50,000 Returns Outward 1,000
Debtors 30.000 Creditors 40,000
Wages 12,000 Capital 1,50,000
Salaries 20,000
Bad Debts 1,000
Purchases 1,20,000
Electricity Charges 1,200
Telephone Charges 2,400
Postage Expenses 1,800
Returns Inward 900
Insurance Premium 1,500
Cash in Hand 2,500
Cash at Bank 40,000
4,19,300 4,19,300
Prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at that date after taking into account the following adjustments:
i
Closing Stock was valued at 7,000.
ii
Outstanding liabilities for wages were 600 and salaries 1,400.
iii
Depreciation is to be provided @ 5% p.a. on all fixed assets.
iv
Included in Plant and Machinery is a machine purchased for 10,000 on 1st October, 2017.
v
Insurance premium paid in advance 200.
Solution:
Trading Account
Dr. Cr.
Amount Amount

Purchases 1,20,000 Less: Returns 900 2,26,900
Less: Returns 1,000 1,19,000 Closing Stock 7,000
Wages 12,000
Add: Outstanding Wages 600 12,600
Gross Profit 77,300
2,33,900 2,33,900
Profit & Loss Account

Dr. Cr.
Amount Amount
Bad Debts 1,000 Gross Profit 77,300

Insurance Premium 1,500 Commission 500
Less: Prepaid 200 1,300
Salaries 20,000
Add: Outstanding Salaries 1,400 21,400
Postage Expenses 1,800
Depreciation on:
Furniture 400
Plant & Machinery 7,250 7,650
Net Profit 38,050
77,800 77,800
Balance Sheet
Dr. Cr.
Amount Amount
Liabilities Assets
Creditors 40,000 Furniture 8,000

Outstanding Wages 600 Less: Depreciation 400 7,600
Outstanding Salaries 1,400 Plant & Machinery 1,50,000
Capital 1,50,000 Less: Depreciation 7,250 1,42,750
Add: Net Profit 38,050 1,88,050 Cash at Bank 40,000
Cash in Hand 2,500
Closing Stock 7,000
Debtors 30,000
2,30,050 2,30,050
Question:6
Following are the balances extracted from the books of Narain Lal on 31st March, 2018:
Amount Amount
Narain Lal's Capital 3,00,000 Sales 15,00,000

Narain Lal's 20,000
50,000 Sales Return
Drawings
Furniture and 16,000
26,000 Discount Dr.
Fittings
Bank Overdraft 42,000 Discounts Cr. 20,000
Creditors 1,38,000 Insurance 20,000
Business Premises 2,00,000 General Expenses 40,000
Stock on 1st April, 90,000
2,20,000 Salaries
2017
Debtors 1,80,000 Commission Dr. 22,000
Rent from Tenants 10,000 Carriage on Purchases 18,000
Purchases 11,00,000 Bad Debts Written off 8,000
i
Closing Stock as on 31st March, 2018 was 2,00,600.
ii
Depreciate: Business Premises by 3,000 and Furniture and Fittings by 2,500.
iii
Make a provision of 5% on debtors for doubtful debts.
iv
Carry forward 2,000 for unexpired insurance.
v
Outstanding salary was 15,000.
Prepare Trading and Profit and Loss Account for the year and Balance Sheet as at that date.
Solution:
Trading Account
Dr. Cr.
Amount Amount

Purchases 11,00,000 Less: Returns 20,000 14,80,000
Carriage on Purchases 18,000 Closing Stock 2,00,600
Gross Profit 3,42,600
16,80,600 16,80,600

Dr. Cr.
Amount Amount
Commission 22,000 Gross Profit 3,42,600

Insurance Premium 20,000 Discount 20,000
Less: Prepaid 2,000 18,000 Rent from Tenants 10,000
Salaries 90,000
Add: Outstanding Salaries 15,000 1,05,000
Bad Debts Written Off 8,000
Provision for Doubtful Debts 9,000
Discount 16,000
Depreciation on:
Furniture 2,500
Business Premises 3,000 5,500
Net Profit 1,49,100
3,72,600 3,72,600
Balance Sheet
Dr. Cr.
Amount Amount
Liabilities Assets
Bank Overdraft 42,000 Furniture & Fittings 26,000

Creditors 1,38,000 Less: Depreciation 2,500 23,500
Outstanding Salaries 15,000 Business Premises 2,00,000
Less: Drawings 50,000 Debtors 1,80,000
Add: Net Profit 1,49,100 3,99,100 Less: Provision 9,000 1,71,000
Closing Stock 2,00,600
Prepaid Insurance 2,000
5,94,100 5,94,100
Question:7
Following balances are taken from the books of Mr. Niranjan. You are required to prepare Trading and Profit and Loss Account and Balance Sheet for the year ended 31st March, 2018:
Capital 1,20,000 Drawings 21,000
Opening 45,000 Plant and 24,000
Stock Machinery
Furniture 1,500 Purchases 2,95,000
Sales 4,35,000 Insurances 1,500
Purchases 4,000 Sales Return 7,000
Return
Rent 5,000 Trade Expenses 2,000
Salaries 24,000 Wages 40,000
Bad Debts 1,000 6% Investments 50,000
Sundry 40,000 Sundry Creditors 19,000
Debtors
Bills Payable 800 Cash 12,200
Advertisement 6,000 Miscellaneous 1,200
Expenses Receipts
Patents 4,800
Adjustments:
i
ii
Depreciate Machinery by 10% and Furniture by 20%.
iii
Wages 5,000 and salaries 2,000 are outstanding.
iv
Write off 5,000 as further Bad Debts and create 5% Provision for Doubtful Debts.
v
Investments were made on 1st July, 2017 and no interest has been received so far.
Solution:
Financial statements of Mr. Niranjan
Trading Account
Dr. Cr.
Amount Amount

Purchases 2,95,000 Less: Sales 7, 000 4,28,000
Return
Less: Purchases 4, 000 2,91,000 Closing Stock 75,000
Return
Wages 40,000
wages
5,03,000 5,03,000

Dr. Cr.
Amount Amount

Salaries 24,000
Salaries
Bad Debts 1,000 Interest Accrued on Investment
Add: Further Bad 5,000 50, 000 × 6 2,250
Debts
Add: Provision for 1,750 7,750 Miscellaneous Receipts 1,200
Doubtful Debts
Advertisement expenses 6,000
Provision for discount on 665
debtors
Insurances 1,500
Trade Expenses 2,000
Depreciation on:
Machinery 2,400
Furniture 300 2,700
1,25,450 1,25,450
Balance Sheet
Amount Amount
Liabilities Assets

Less: Drawings 21, 000 Patents 4,800
Add: Net Profit 73,835 1,72,835 Plant and Machinery 24,000
Current Liabilities Less: 10% Depreciation 2, 400 21,600
Sundry Creditors 19,000 Furniture 1,500
Wages Outstanding 5,000 Less: 20% Depreciation 300 1,200
Salaries Outstanding 2,000 6% Investment 50,000
Bills Payable 800 Add: Accrued Interest 2,250 52,250
Current Assets
Closing Stock 75,000
Debtors 40,000
Less: Further Bad 5, 000
Debts
Less: Provision for
1, 750
Doubtful Debts
33,250
Less: Provision for 665 32,585
Discount
Cash 12,200
1,99,635 1,99,635
Question:8
From the following Trial Balance of Mahesh, prepare his Final Accounts for the year ended 31st March, 2018:
TRIAL BALANCE
as on 31st March, 2018
Debit Credit
Heads of Accounts Balances Balances
Purchases ................................................................................ 2,50,000 …

Sales ................................................................................ … 5,00,000
Returns Inward ................................................................................ 12,000 ...
Returns Outward ................................................................................ … 10,000
Carriage ................................................................................ 8,000 …
Wages ................................................................................ 60,000 …
Trade Expenses ................................................................................ 2,000 …
Insurance ................................................................................ 1,200 …
Repairs ................................................................................ 8,000 …
Debtors ................................................................................ 1,15,000 …
Creditors ................................................................................ … 1,00,000
Printing and ................................................................................ 6,000 …

Stationery
Advertisement ................................................................................ 15,000 …
Bills Receivable ................................................................................ 4,000 …
Bills Payable ................................................................................ … 2,000
Opening Stock ................................................................................ 30,000 …
Cash in Hand ................................................................................ 12,000 …
Interest on Bank ................................................................................ 2,800 …
Loan
Machinery ................................................................................ 2,80,000 …
Furniture ................................................................................ 34,000 …
Drawings ................................................................................ 20,000 …
Commission ................................................................................ … 1,000
12% Bank Loan ................................................................................ … 30,000
Capital ................................................................................ … 2,40,000
Rent Received ................................................................................ … 5,000
Cash at Bank ................................................................................ 28,000 …
Total 8,88,000 8,88,000
i
Closing Stock on 31st March, 2018 was 21,000.
ii
Rent of 1,200 has been received in advance.
iii
Outstanding liability for trade expenses 12,000.
iv
Commission earned during the year but not received was 2,100.
v
Goods costing 2,000 were taken by the proprietor for his personal use but no entry has been passed in the books of account.
Solution:
Financial Statement of Shri O.P. Yadav
Trading Account
Dr. Cr.
Amount Amount
Rs Rs
Opening stock 30,000
Purchases Sales 5,00,000
2,50,000
Less: Drawings 2, 000 Less: Return 12, 000 4,88,000
Inwards
Less: Return Outwards 10, 000 2,38,000 Closing Stock 21,000
Carriage 8,000
Wages 60,000
5,09,000 5,09,000

Dr. Cr.
Amount Amount
Particulars Rs Particulars Rs
Trade expenses 2,000 Gross Profit 1,73,000
Add: Outstanding Trade 12,000 14,000 Commission 1,000
Expenses
Insurance 1,200 Add: Accrued 2,100 3,100
Commission
Repairs 8,000 Rent Received 5,000
Advertisement 15,000 Less: Advance Rent 1,200 3,800
Interest on Bank Loan 2,800
Add: Interest Outstanding 800 3,600
Printing and Stationary 6,000
Net Profit (Balancing Figure) 1,32,100
1,79,900 1,79,900
Balance Sheet
Amount Amount
Liabilities Assets
Rs Rs
Less: Drawings 22, 000 Machinery 2,80,000
Add: Net Profit 1,32,100 3,50,100 Furniture 34,000
10% Loan from Bank 30,000 Current Assets
Add: Outstanding Interest 800 30,800 Closing Stock 21,000
Current Liabilities Debtors 1,15,000
Creditors 1,00,000 Bills Receivable 4,000
Bills Payable 2,000 Cash at Bank 28,000
Advance Rent 1,200 Cash in Hand 12,000
Outstanding Trade Expenses 12,000 Commission Accrued 2,100
4,96,100 4,96,100
Working Notes:
Calculation of Outstanding Interest on Loan
Interest on loan 30, 000 × 12 3,600
Less: Interest Paid 2, 800
Interest Outstanding on 800
Loan
Question:9
Following balances were extracted from the books of Vijay Kumar on 31st March, 2018:
Capital 2,45,000 Loan 78,800
Drawings 20,000 Sales 6,53,600
General 47,400 Purchases 4,70,000
Expenses
Building 1,10,000 Motor Car 20,000
Machinery 93,400 Provision for 9,000
Doubtful Debts
Stock on 1,62,000 Commission Cr. 13,200
1st April,
2017
Insurance 13,150 Car Expenses 18,000
Wages 72,000 Bills Payable 38,500
Debtors 62,800 Cash 800
Creditors 25,000 Bank Overdraft 33,000
Bad Debts 5,500 Charity 1,050
Prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at that date after giving effect to the following adjustments:
a
Stock as on 31st March, 2018 was valued at 2,30,000.
b
Write off further 1,800 as Bad Debts and maintain the Provision for Doubtful Debts at 5%.
c
Depreciate Machinery at 10%.
d
Provide 7,000 as outstanding interest on loan.
Solution:
Financial Statement of Vijay Kumar
Trading Account
Dr. Cr.
Amount Amount
Rs Rs
Wages 72,000
8,83,600 8,83,600

Dr. Cr.
Amount Amount
Rs Rs
Taxes and Insurance 13,150 Gross Profit 1,79,600
Bad Debts 5,500 Commission 13,200
Add: Further Bad Debts 1,800
Add: Provision for Doubtful 3,050
Debts
10,350
Less: Exiting Provision 9,000 1,350
Car Expenses 18,000
Charity 1,050
Depreciation on Machinery 9,340
Outstanding Interest on Loan 7,000
1,92,800 1,92,800
Balance Sheet
Liabilities Amount Assets Amount
Rs Rs

Add: Net Profit 95,510 Building 1,10,000
Less: Drawings 20, 000 3,20,510 Machinery 93,400
Loan 78,800 Less:10% Depreciation 9,340 84,060
Add: Outstanding 7,000 85,800 Motor Car 20,000
Interest
Creditors 25,000 Closing Stock 2,30,000
Bills Payable 38,500 Debtors 62,800
Bank Overdraft 33,000 Less: Bad Debts 1, 800
Less: 5% Provision for
3, 050 57,950
Doubtful Debts
Cash 800
5,02,810 5,02,810
Question:10
Following Trial Balance has been extracted from the books of Shri Sunder Lal on 31st March, 2018:
Debit Credit
Particulars Balances Balances
Cash in Hand and at Bank .............................................................. 77,400 …

Capital .............................................................. … 30,00,000
Drawings .............................................................. 1,26,000 ...
Bills Receivable .............................................................. 37,200 …
Land and Building .............................................................. 6,51,600 …
Furniture .............................................................. 1,02,400 …
Wages .............................................................. 9,37,700 …
Discount Allowed .............................................................. 79,200 …
Discount Received .............................................................. … 59,700
6% Loan .............................................................. … 3,00,000
Bank Charges .............................................................. 2,100 …
Bad Debts .............................................................. 27,600 …
Sundry Debtors .............................................................. 13,15,500 …
Office Salaries .............................................................. 1,28,400 …
Purchases .............................................................. 39,81,600 …
Stock on 1st April, 2017 .............................................................. 12,04,500 …
Sales Return .............................................................. 37,500 …
Carriage Inwards .............................................................. 1,03,600 …
General Expenses .............................................................. 1,53,600 …
Plant and Machinery .............................................................. 4,32,800 …
Rent .............................................................. 72,600 …
Purchases Return .............................................................. … 29,100
Sales .............................................................. … 56,30,100
Insurance .............................................................. 14,100 …
Provision for Doubtful Debts .............................................................. … 93,000
Sundry Creditors .............................................................. … 3,73,500
Total 94,85,400 94,85,400
Closing Stock on 31st March, 2018 was 12,74,000. You are required to prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at that
date after making the following adjustments:
a
Depreciate Plant and Machinery @ 10% and Furniture @ 5%.
b
Provision for Doubtful Debts to be maintained at 1,50,000.
c
Insurance includes annual premium of 7,200 on a policy which will expire on 30th September, 2018.
d
Purchases include a computer costing 60,000 purchased on 1st July, 2017 and is subject to depreciation @ 10% p.a.
Solution:
Financial Statements of Shri Sunder Lal
Trading Account
Dr. Cr.
Amount Amount

Less: Returns 29, 100 Closing Stock 12,74,100
Less: Computer 60, 000 38,92,500
Wages 9,37,700
Carriage Inwards 1,03,600
68,66,700 68,66,700

Dr. Cr.
Amount Amount
Office Salaries 1,28,400 Gross Profit 7,28,400

General Expenses 1,53,600 Discount 59,700
Received
Bank Charges 2,100
Discount Allowed 79,200
Depreciation on:
Plant and Machinery 43,280
Furniture 5,120
( )
10 9 4,500 52,900
Computer 60, 000 × 100 × 12
Rent and Rates 72,600

Bad Debts 27,600
Add: Provision for Doubtful 1,50,000
Debts
Less: Existing Provision 93, 000 84,600
Insurance 14,100
Less: Prepaid Insurance 3, 600 10,500
7, 200 × 6/12
7,88,100 7,88,100
Balance Sheet
Amount Amount
Liabilities Assets
Sundry Creditors 3,73,500 Cash in Hand and Bank 77,400

6% Loan 3,00,000 Bills Receivable 37,200
Add: 18,000 3,18,000 Sundry Debtors 13,15,500
Outstanding
interest
3, 00, 000 × 6 Less: Provision of Doubtful
1, 50, 000 11,65,500
Debts
Capital 30,00,000 Plant and Machinery 4,32,800
Less: Drawings 1, 26, 000 Less: 10% Depreciation 43, 280 3,89,520
Add: Net Profit 1,86,200 30,60,200 Furniture 1,02,400
Less: 5% Depreciation 5, 120 97,280
Land and Building 6,51,600
Computer
60,000 55,500
Less:10% Depreciation for 9 months
4, 500
37,51,700 37,51,700
Note:Net Profit as per computation should be 1,86,200 but as per Text Book it is 1,82,600.
Question:11
Sanjiv Sondhi started business on 1st April, 2017 with a capital of 3,00,000. Following Trial Balance was drawn up from his books at t he end of the year:
Heads of
Heads of Accounts
Accounts
Drawings 45,000 Capital 4,00,000
Plant and 80,000 Sales 16,00,000
Fixtures
Purchases 11,60,000 Sundry Creditors 1,20,000
Carriage Inwards 20,000 Bills Payable 90,000
Returns Inward 40,000
Wages 80,000
Salaries 1,00,000
Printing and 8,000
Stationery
Advertisement 12,000
Trade Charges 6,000
Rent and Taxes 14,000
Sundry Debtors 2,50,000
Bills Receivable 50,000
Investments 1,50,000
Discount 5,000
Cash in Hand 30,000
22,10,000 22,10,000
Value of Stock as on 31st March, 2018 was 2,60,000. You are required to prepare his Trading and Profit and Loss Account for the year ended 31st March 2018 and Balance Sheet as at
that date after taking the following facts into account:
a
Plant and Fixtures are to be depreciated by 10%.
b
Salaries outstanding on 31st March, 2018 amounted to 35,000.
c
Accrued Interest on investment amounted to 7,500.
d
5,000 are Bad Debts and a Provision for Doubtful Debts is to be created at 5% of the balance of debtors.
Solution:
Financial Statement of Sanjiv Sondhi
Trading Account
Dr. Cr.
Amount Amount
Rs Rs
Purchase 11,60,000 Sales 16,00,000
Carriage Inwards 20,000 Less: Return 40, 000 15,60,000
Inwards
Wages 80,000 Closing Stock 2,60,000
Gross Profit (Balancing 5,60,000
Figure)
18,20,000 18,20,000

Dr. Cr.
Amount Amount
Rs Rs
Depreciation on Plant and Fixture 8,000 Gross Profit 5,60,000
Accrued Interest on
Salaries 1,00,000 7,500
Investment
Add: Outstanding 35,000 1,35,000
Printing and Stationery 8,000
Trade Charges 6,000
Bad Debts 5,000
Add: Provision for
Doubtful Debts 12,250 17,250
Discount 5,000
5,67,500 5,67,500
Balance Sheet
as on the year ended March 31, 2018
Amount Amount
Liabilities Assets
Rs Rs
Capital 4,00,000 Plant and Fixtures 80,000
Less: Drawings 45, 000 Less: 10% 8, 000 72,000
Depreciation
Add: Net Profit 3,62,250 7,17,250 Investment 1,50,000
Sundry Creditors 1,20,000 Add: Accrued 7,500 1,57,500
Interest
Bills Payable 90,000 Closing Stock 2,60,000
Salaries 35,000 Sundry Debtors 2,50,000
Outstanding
Less: Bad Debts 5, 000
2,45,000
Less: 5% Provision
for Doubtful Debts 12, 250 2,32,750
Cash in Hand 30,000
9,62,250 9,62,250
Question:12
Following Trial Balance were extracted from the books of Ram as on 31st March, 2018:
Debit Balances
Debit Balances
Contd.
Drawings 70,000 Cash at Bank 1,24,000
Purchases 8,22,100 Cash in Hand 22,100
Sales Return 18,200 Office Furniture 35,000
Stock on 1st April, 2017 1,14,600 Bad Debts 10,000
Salaries 1,61,500 Carriage Outwards 32,400
Wages 85,600 Sundry Debtors 3,89,700
Leasehold Premises 2,50,000 Credit Balances
Rent, Rates and 69,400 Capital 9,00,000
Insurance
Carriage Inwards 23,100 Purchases Return 42,400
Office Expenses 95,200 Sales 14,98,400
Plant and Machinery 2,40,000 Provision for Doubtful Debts (1st 42,400
April, 2017)
Light and Water Factory 79,500 Discount 1,800
Bills Receivable 12,400 Sundry Creditors 1,69,800
Prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at that date after taking into account the following:
a
Depreciation is to be written off as follows: Leasehold premises 5%. Plant and Machinery 10%.
b
Write off 5,000 as further Bad Debts and make a Provision for Doubtful Debts equal to 5,000.
c
Wages amounted to 5,700 have become due but have not been paid.
d
Wages include 10,000 incurred on installation of new machine. Machine was installed on 1st April, 2017.
e
The value of stock on 31st March, 2018 was 1,49,200.
f
Unexpired premium amount to 6,800 is to be carried forward to the next year.
Solution:
Financial Statement of Ram
Trading Account
Dr. Cr.
Amount Amount

Purchase 8,22,100 Less: Sales 18, 200 14,80,200
Return
Less: Purchases 42, 400 7,79,700 Closing Stock 1,49,200

Return
Wages 85,600
Less: Machinery 10, 000
A/c
Wages
Carriage Inwards 23,100
Light and Water 79,500
Gross Profit (Balance Figure) 5,51,200
16,29,400 16,29,400

Dr. Cr.
Amount Amount
Depreciation on: Gross Profit 5,51,200

Leasehold Premises 12,500 Discount 1,800
Plant and Machinery 25,000 37,500
Bad Debts 10,000
Add: Further Bad 5,000
Debts
Add: Provision for 50,000
Doubtful Debts
65,000
Less: Existing 42, 400 22,600
Provision
Rent, Rates and 69,400
Insurance
Less: Prepaid 6, 800 62,600
Insurance
Salaries 1,61,500
Office Expenses 95,200
Carriage Outwards 32,400
5,53,000 5,53,000
Balance Sheet
Amount Amount
Liabilities Assets
Capital 90,0000 Fixed Assets

Less: 7, 0000 Leasehold Premises 2,50,000
Drawings
Add: Net 14,1200 9,71,200 Less: 5% Depreciation 12, 500 2,37,500
Profit
Current Liabilities Plant and Machinery 2,50,000
Sundry Creditors 1,69,800 Less: 10% Depreciation 25, 000 2,25,000
Wages Outstanding 5,700 Office Furniture 35,000
Current Assets
Sundry Debtors 38,970
Less: Bad Debts 500
Less: Provision for Doubtful 5,000 3,34,700
Debts
Cash in Hand 22,100
11,46,700 11,46,700
Note: Wages for installation of machinery reduces the value of wages and increase the value of machinery.
Question:13
From the following Trial Balance of M/s Arjun and Sons as on 31st March, 2018, prepare Trading and Profit and Loss Account and Balance Sheet:
Debit Credit
Drawings ................................................................................ 1,80,000 …

Capital ................................................................................ … 8,00,000
Purchases ................................................................................ 8,26,000 ...
Sales ................................................................................ … 15,50,000
Opening Stock ................................................................................ 4,20,000 …
Returns Outward ................................................................................ … 16,000
Carriage Inwards ................................................................................ 12,000 …
Wages ................................................................................ 40,000 …
Power ................................................................................ 60,000 …
Machinery ................................................................................ 5,00,000 …
Furniture ................................................................................ 1,40,000 …
Rent ................................................................................ 2,20,000 …
Salary ................................................................................ 1,50,000 …
Insurance ................................................................................ 36,000 …
8% Bank Loan ................................................................................ … 2,50,000
Debtors ................................................................................ 2,06,000 …
Creditors ................................................................................ … 1,89,000
Cash in Hand ................................................................................ 15,000 …
Total 28,05,000 28,05,000
Adjustments:
i
Closing Stock 6,40,000.
ii
Wages Outstanding 24,000.
iii
Bad Debts 6,000 and Provision for Bad and Doubtful Debts to 5% on Debtors.
iv
Rent is paid for 11 months.
v
Loan from bank was taken on 1st October, 2017.
vi
Provide Depreciation on Machinery @ 10% p.a.
vii
Provide Manager’s Commission at 10% on net profit after charging such commission.
Solution:
Financial Statements of M/s Arjun and Sons
Trading Account
Dr. Cr.
Amount Amount
Rs Rs
Less: Return 16, 000 8,10,000
Outwards
Wages 40,000
Add: 24,000 64,000
Outstanding
Power 60,000
Gross Profit (Balancing 8,24,000
Figure)
21,90,000 21,90,000

Dr. Cr.
Amount Amount
Rs Rs
Depreciation on Machinery 50,000 Gross Profit 8,24,000
Rent 2,20,000
Add: Outstanding Rent 20,000 2,40,000
Salary 1,50,000
Insurance 36,000
Interest on Bank Loan (for 6 Months) 10,000
Bad Debts 6,000
Add: Provision for Doubtful 10,000 16,000
Debts
Manger’s Commission 29,273
8,24,000 8,24,000
Balance Sheet
Amount Amount
Liabilities Assets
Rs Rs
Less: Drawings 1, 90, 000 Machinery 5,00,000
Add: Net Profit 2,92,727 9,02,727 Less: 10% 50, 000 4,50,000
Depreciation
8% Bank Loan 2,50,000 Furniture 1,40,000
Add: Interest Outstanding 10,000 2,60,000 Current Assets
Current Liabilities Closing Stock 6,40,000
Creditors 1,89,000 Debtors 2,06,000
Wages Outstanding 24,000 Less: Bad Debts 6, 000
Rent Outstanding 20,000 2,00,000
Manger’s Commission Payable 29,273 Less: 5% Provision for
10, 000 1,90,000
Doubtful Debts
Cash in Hand 15,000
14,35,000 14,35,000
Working Notes:
WN1 Calculation of Interest on Loan
Bank Loan = Rs 2,50,000

8 6
Interest on Loan (from Oct. 01 to Mar. 31) = 2, 50, 000 × 100 × 12 = Rs 10, 000
WN2 Calculation of Manager’s Commission

10 10
Manager's Commission = Profit before charging Commission × 100+Rate Profit before charging Commission = 8, 24, 000 -5, 02, 000 = 3, 22, 000Manager's Commission = 3, 22, 000 × 100+10 = Rs
Question:14
From the following Trial Balance and other information prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at that date:
Dr. Cr.
Particulars
Sundry Debtors ................................................................................ 3,20,000 …

Stock on 1st April, 2017 ................................................................................ 2,20,000 …
Cash in Hand ................................................................................ 350 …
Cash at Bank ................................................................................ 15,450 …
Plant and Machinery ................................................................................ 1,75,000 …
Sundry Creditors ................................................................................ … 1,06,500
General Expenses ................................................................................ 10,750 …
Sales ................................................................................ … 13,45,000
Salaries ................................................................................ 22,250 …
Carriage Outwards ................................................................................ 4,000 …
Rent ................................................................................ 9,000 …
Bills Payable ................................................................................ … 75,000
Purchases ................................................................................ 11,88,700 …
Discounts ................................................................................ 11,000 …
Premises ................................................................................ 3,45,000 …
Capital on 1st April 2017 ................................................................................ … 7,95,000
Total 23,21,500 23,21,500
Stock on 31st March, 2018 was 1,24,500. Rent was unpaid to the extent of 850 and 1,500 were outstanding for General Expenses; 4,000 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 by 10% and Business Premises by 2%.
Manager is entitled to a commission of 5% on net profit after charging his commission.
Solution:
Financial Statement
Trading Account
Dr. Cr.
Amount Amount
Rs Rs
Gross Profit (Balancing 60,800
Figure)
14,69,500 14,69,500

Dr. Cr.
Amount Amount
Rs Rs
Rent 9,000 Gross Profit 60,800
Add: Outstanding Rent 850 9,850 Net Loss (Balancing Figure) 42,750
Add: Outstanding General 1,500 12,250
Expenses
Bad Debts 4,000
Add: Provision for Debts 15,800 19,800
Depreciation on
Business Premises 6,900 24,400
Salaries 22,250
Discount 11,000
1,03,550 1,03,550
Balance Sheet
Amount Amount
Liabilities Assets
Rs Rs
Less: Net Loss 42, 750 7,52,250 Plant and Machinery 1,75,000
Current Liabilities Less: 10% Depreciation 17, 500 1,57,500
Sundry Creditors 1,06,500 Premises 3,45,000
Bills Payable 75,000 Less: 2% Depreciation 6, 900 3,38,100
Rent Outstanding 850 Current Assets
General Expenses Outstanding 1,500 Closing Stock 1,24,500
Less: Bad Debts 4, 000
3,16,000
Less: 5% Provision for
15, 80 3,00,200
Doubtful Debts
Cash at Bank 15,450
Cash in Hand 350
9,36,100 9,36,100
Note: In the question, Manager Commission is given as 5% on Net Profit after charging commission. But, during the year the firm had a Net Loss of Rs 42,750, therefore, manager
commission is not payable.
Question:15
Following is the Trial Balance of Mr. Bharat on 31st March, 2018.
Dr. Cr.
Particulars
Capital 40,000
Office Furniture and Fittings 2,600
Stock on 1st April, 2017 48,000
Accrued Commission 12,000

Cash in Hand 400
Cash at Bank 6,500
Wages 1,50,000
Salaries 14,000
Purchases 2,13,500
Sales 4,80,000
Bills Payable 5,600
Sundry Creditors 52,000
Drawings 7,000
Returns Outward 5,500
Rent 6,000
Factory Lighting and Heating 800
Insurance 6,300
Bad Debts 2,500
Discount 6,500 3,700
Total 5,89,300 5,89,300
Following adjustments are to be made:

a
Stock on 31st March, 2018 52,000.
b
Three months' factory lighting and heating due but not paid 300.
c
5% depreciation to be written off on furniture.
d
Write off further Bad Debts 700.
e
Provision for Doubtful Debts to be increased to 3,000 and Provision of Discount on Debtors @ 2% to be made.
f
During the year, machinery was purchased for 20,000 but it was debtied to the Purchases Account.
You are required to prepare Trading Account, Profit and Loss Account and Balance Sheet.
Solution:
Trading Account
Dr. Cr.
Amount Amount

Less: Machinery 20,000 Closing Stock 52,000
Less: Returns 5,500 1,88,000
Factory Lighting & Heating 800
Add: Outstanding 300 1,100
Wages 1,50,000
5,22,700 5,22,700

Dr. Cr.
Amount Amount
Depreciation on Furniture 130 Gross 1,35,600

Profit
Discount 6,500 Discount 3,700
Rent 6,000
Bad Debts 2,500
Add: Further Bad Debts 700
Add: Provision for 500
Doubtful Debts
Add: Provision for 840 4540
Discount on Debtors
Salaries 14,000
Net Profit 1,00,830
1,39,300 1,39,300
Balance Sheet
Dr. Cr.
Amount Amount
Liabilities Assets
Bills Payable 5,600 Furniture & Fixtures 2,600

Creditors 52,000 Less: Depreciation 130 2,470
Factory, Lighting & Heating O/s 300 Debtors 45,700
Capital 40,000 Less: Further Bad Debts 700
Less: Drawings 7,000 Less: Provision for DD 3,000
Add: Net Profit 1,00,830 1,33,830 Less: Provision for Discount 840 41,160
Plant & Machinery 50,000
Add: Machinery 20,000 70,000
Cash in Hand 400
Cash at Bank 6,500
1,91,730 1,91,730
Question:16
From the following Trial Balance, prepare Trading Account, Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at the date:
Debit Balances Credit Balances

Purchases 3,00,000 Sales 4,79,760
Drawings 3,500 Purchases Return 12,200
Plant and Machinery 1,23,000 Capital 5,90,000
Motor Vehicles 1,76,000 Creditors 11,870
Building 3,80,000 Bank Loan 33,700
Stock in Trade 1.4.2017 8,400
Sales Return 1,800
Wages 2,800
Carriage Inwards 890
Carriage Outwards 300
Salaries 12,000
Insurance and Taxes 31,200
Printing and Stationery Expenses 1,350
Cash in Hand 3,000
11,27,530 11,27,530
Following adjustments are to be considered:

i
ii
Printing and Stationery expenses due 58,650.
iii
Outstanding liabilities for salaries 12,000
iv
An old machine value at 12,000 BookValueofwhichwas 2, 000
was given in exchange for a new machine purchased on 1st April, 2017. The machine given in exchange was not recorded in the books. Cheque issued for new machine purchased was
accounted in the books of account.
v
Depreciation @ 10% p.a. is to be provided on all fixed assets except building.
Solution:
Trading Account
Dr. Cr.
Amount Amount
Rs Rs
Purchases 3,00,000 Less: Sales Return 1, 800 4,77,960
Less: Purchases 12, 200 2,87,800 Closing Stock 15,270
Return
Wages 2,800
Carriage Inwards 890
4,93,230 4,93,230
Dr. Cr.
Amount Amount
Rs Rs
Carriage Outwards 300 Gross Profit 1,93,340
Telephone Charges 3,290 Profit on exchange of 10,000
Machinery
Salaries 12,000
Insurance and Taxes 31,200
Printing and Stationery
Expenses 1,350
Depreciation on
Motor Vehicles 17,600 30,900

2,03,340 2,03,340
Balance Sheet
Amount Amount
Liabilities Assets
Rs Rs
Less: Drawings 3, 500 Plant and Machinery 1,33,000
Add: Net Profit 53,650 6,31,150 Less: 10% Depreciation 13, 300 1,19,700
Bank Loan 33,700 Motor Vehicles 1,76,000
Creditors 11,870 Building 3,80,000
Outstanding Printing and 58,650 Current Assets
Stationery
Outstanding Salaries 12,000 Sundry Debtors 80,000
Cash in Hand 3,000
7,56,370 7,56,370
Question:17
Following balances were extracted from the books of Modern Traders on 31st March, 2018:
Capital 8,50,000 Sundry Creditors 90,000

Drawings 50,000 Sales 12,00,000
Plant and Machinery 4,00,000 Postage and Telegrams 8,000
Accumulated 90,000 Bad Debts 4,000
Depreciation
Stock on 1st April, 1,50,000 Provision for Doubtful 8,000
2017 Debts
Purchases 8,20,000 Discounts recevied 4,000
Sundry Debtors 2,06,000 Rent Revenue 12,000
Furniture 50,000 Insurance 7,000
Freight Inwards 20,000 Salaries 2,00,000
Carriage Outwards 5,000 Wages 13,000
Rent, Rates and 46,000 Cash in Hand 62,000
Taxes
Printing and 8,000 Cash at Bank 2,55,000
Stationery
General Reserve 50,000
Prepare Final Accounts for the year ended 31st March, 2018 after taking into account the following:
a
Stock on 31st March, 2018 was valued at 1,50,000.
b
Outstanding Wages 5,000.
c
Provision for Doubtful Debts is to be maintaind at 5% of the Sundry Debtors.
d
Prepaid Insurance was 1,000.
e
An advance paid by the proprietor from his personal bank account of 50,000 for purchase of a machine on 1st April, 2017 was not recorded in the books. Plant and Machinery was not
debited in the books by the amount paid from firm.
f
Provide Depreciation on Plant and Machinery @ 10% on cost and on Furniture @ 5%.
Solution:
Financial Statement of Modern Traders
Trading Account
Dr. Cr.
Amount Amount
Rs Rs
Freight Inwards 20,000
Wages 13,000
Wages
13,50,000 13,50,000

Dr. Cr.
Amount Amount
Rs Rs
Postage and Telegrams 8,000 Gross Profit 3,42,000
Bad Debts 4,000 Discount Received 4,000
Add: Provision for Doubtful 10,300 Rent Revenue 12,000
Debts
Rent, Rates and Taxes 46,000
Insurance 7,000
Salaries 2,00,000
Depreciation on:
Machinery 45,000
Furniture 2,500 47,500
3,58,000 3,58,000
Balance Sheet
Amount Amount
Liabilities Assets
Rs Rs
Less: Accumulated
Less: Drawings 50, 000 Depreciation 3,15,000
1, 35, 000
90, 000 + 45, 000
Add: Net Profit 31,200 8,81,200 Furniture 50,000
Reserve Fund 50,000 Less: 5% Depreciation 2, 500 47,500
Sundry Creditors 90,000 Closing Stock 1,50,000
Wages Outstanding 5,000 Sundry Debtors 2,06,000
Less: Provision for Doubtful 10, 300 1,95,700
Debts
Cash in Hand 62,000
10,26,200 10,26,200
Note: Advance paid by proprietor for Plant and Machinery out of his personal bank account will increase the Capital A/c and Plant & Machinery A/c balance by Rs 50,000. And also
increase in the amount of depreciation by Rs 5,000.
Question:18
From the following Trial Balance of Shubdo Banerjee, prepare final accounts for the year ended in 31st March, 2018 and Balance Sheet as at that date:
Dr. Cr.
Land and Building 50,000

Purchases Adjusted 2,10,000
Stock 31stMarch, 2018 45,000
Wages 45,300
Salaries 39,000
Discount allowed 750
Discount received 1,200
Bad Debts 1,200
Sales 3,85,000
Capital Account 1,15,000
Chatterji's Loan A/c (taken 25,000
on 1st Oct., 2017 @ 18% p.a.
Insurance 1,500
Commission 1,500
Furniture and Fixtures 20,000
Cash at Bank 16,000
Office Equipments 12,000
Bills Payable 12,350
Expenses Payable 3,300
Total 5,70,850 5,70,850
The following adjustments be taken care of:

i
Depreciate Land and Building @ 6%, Plant and Machinery @ 10%, Office equipments @ 20% and Furniture and Fixtures @ 15%
ii
Calculate Provision for Doubtful Debts at 2% on Debtors.
iii
Insurance premium includes 250 paid in advance.
iv
Provide salary to Banerjee 15,000 p.a.
v
Outstanding Salaries 11,500.
vi
10% of the final profit is to be transferred to General Reserve.
Solution:
Trading Account
Dr. Cr.
Amount Amount
Purchases Adjusted 2,10,000 Sales 3,85,000

Less: Returns 2,500 2,07,500 Less: Returns 1,500 3,83,500
Wages 45,300
3,83,500 3,83,500

Dr. Cr.
Amount Amount
Carriage Outwards 2,000 Gross Profit 1,29,500

Salaries 39,000 Commission 1,500
Add: 11,500 Discount 1,200
Outstanding
Add: Payable to 15,000 65,500
Proprietor
Insurance 1,500
Premium
Discount 750
Outstanding Interest on 2,250
Loan
Bad Debts 1,200
Add: Provision 800 2,000
for Doubtful Debts
Depreciation on:
Furniture & 3,000
Fixtures
Land & Building 3,000
Office Equipment 2,400
Plant & 5,000 13,400
Machinery
General Reserve 2,965
Net Profit 26,685
1,32,200 1,32,200
Balance Sheet
Dr. Cr.
Amount Amount
Liabilities Assets
Bills Payable 12,350 Furniture & Fixtures 20,000

Creditors 25,000 Less: Depreciation 3,000 17,000
Expenses Payable 3,300 Land & Building 50,000
Capital 1,15,000 Less: Depreciation 3,000 47,000
Add: Salary Payable 15,000 Debtors 40,000
Add: Net Profit 26,685 1,56,685 Less: Provision 800 39,200
Chatterji’s Loan 25,000 Plant & Machinery 50,000
Add: Outstanding Interest 2,250 27,250 Less: Depreciation 5,000 45,000
General Reserve 2,965 Office Equipment 12,000
Outstanding Salaries 11,500 Less: Depreciation 2,400 9,600
Cash at Bank 16,000
2,39,050 2,39,050
Question:19
Following is the Trial Balance as on 31st March, 2018. Prepare Trading and Profit and Loss Account and Balance Sheet:
Dr. Cr.
Particulars

Sales 2,20,000
Purchases 1,26,000
Productive Wages 56,500
Salaries 16,000
Stores Consumed 6,050
Carriage 3,050
Rent 5,200
Insurance 1,320
Machinery 52,000
Building 67,000
Capital Less Drawings 1,45,600
Secured Loan 16,000
Furniture 3,350
Cash in Hand 1,930
Bad Debts 1,020
Bank 6,580
Input CGST 3,000
Input SGST 3,000
Output CGST 2,500
Output SGST 2,500
Total 4,06,600 4,06,600
Stock on 31st March, 2018, 20,600.

You are to make adjustments in respect of the following:
a
Depreciate Machinery at 10% p.a.
b
Make a provision @ 5% for Doubtful Debts.
c
1
Provide discount on debtors @ 22

%.
d
Rent includes Rent deposit of 400.
e Insurance Prepaid 120.
Solution:
Trading Account
Dr. Cr.
Amount Amount

Purchases 1,26,000 Closing Stock 20,600
Carriage 3,050
Productive Wages 56,500
Stores Consumed 6,050
Gross Profit 41,000
2,40,600 2,40,600

Dr. Cr.
Amount Amount
Salaries 16,000 Gross Profit 41,000

Rent 5,200
Less: Deposit 400 4,800
Bad Debts 1,020
Add: Provision for Doubtful Debts 2,200
Add: Provision for Discount 1,045 4,265
Net Profit 6,935
1,32,200 1,32,200
Balance Sheet
Dr. Cr.
Amount Amount
Liabilities Assets
Creditors 20,000 Bank 6,580

Secured Loan 16,000 Building 67,000
Capital 1,45,600 Closing Stock 20,600
Add: Net Profit 6,935 1,52,535 Cash in Hand 1,930
Debtors 44,000
Less: Provision for DD 2,200
Less: Provision for Discount 1,045 40,755
Machinery 52,000
Less: Depreciation 5,200 46,800
Furniture 3,350
Rent Deposit 400
Input CGST 500
Input SGST 500
1,88,535 1,88,535
Question:20
Following is the Trial Balance obtained from the books of Mr. Vishwanath on 31st March, 2018:
Dr. Cr.
Heads of Accounts
Computers ............................................................ 37,000 …

Plant and Machinery ............................................................ 1,60,000 …
Motor Van ............................................................ 2,20,000 …
Cash in Hand ............................................................ 6,330 …
Cash at Bank ............................................................ 50,000 …
Stock on 1st April, 2017 ............................................................ 8,100 …
Debtors ............................................................ 65,300 …
Creditors ............................................................ … 29,500
Purchases ............................................................ 2,74,685 …
Sales ............................................................ … 5,21,870
Returns Inwards ............................................................ 2,300 …
Returns Outwards ............................................................ … 2,100
Rent ............................................................ 6,700 …
Salaries ............................................................ 35,000 …
Bank Loan taken on 1st April, 2017 @ 10% p.a ............................................................ … 2,00,000
Carriage Outwards ............................................................ 3,100 …
Wages ............................................................ 54,755 …
Interest ............................................................ 10,000 …
Electric Charges ............................................................ 4,200 …
General Expenses ............................................................ 24,000 …
Capital ............................................................ … 2,10,000
Input IGST ............................................................ 10,000 …
Output CGST ............................................................ … 4,000
Output SGST ............................................................ … 4,000
Total 9,71,470 9,71,470
You are required to prepare Mr. Vishwanath’s Trading and Profit and Loss Account for the year ended 31st March, 2018 and his Balance Sheet as at that date after taking into account the
following adjustments:
a
Stock on 31st March, 2018 was 15,600.
b
Depreciate Motor Van and Plant and Machinery by 10% p.a. and Computers @ 20% p.a.
c
Create Provision for Doubtful Debts @ 5%
d
General Expenses include 2,000 paid of wages.
Solution:
Financial Statements for Mr. G. Vishwanath
Trading Account
Dr. Cr.
Amount Amount

Wages 54,755
Add: General Expenses 2,000 56,755
5,35,170 5,35,170

Dr. Cr.
Amount Amount

Salaries 35,000
Interest on Loan 10,000
Add: Interest 10,000 20,000
Outstanding
Less: Wages 2, 000 22,000
Depreciation on
Motor Van 22,000
Computer 7,400 45,400
1,97,730 1,97,730
Balance Sheet
Amount Amount
Liabilities Assets

Add: Net Profit 58,065 2,68,065 Plant and Machinery 1,60,000
Bank Loan 2,00,000 Less: 10% Depreciation 16, 000 1,44,000
Add: Interest Outstanding 10,000 2,10,000 Motor Van 2,20,000
Creditors 29,500 Computer 37,000
Current Assets
Debtors 65,300
Less: Provision for Doubtful 3, 265 62,035
Debts
Cash at Bank 50,000
Cash in Hand 6,330
GST Receivable InputIGST 2,000
5,07,565 5,07,565
Working Notes:
1Calculation of Interest Outstanding on Loan
Amount of Bank Loan = 2,00,000
Interest on Loan 2, 00, 000 × 10 20,000
Less: Interest Paid 10, 000
Interest Outstanding 10,000
2
GST Set off
GST Payable/
Receivable=Output CGST+Output SGST-Input IGST
=4,000+4,000-10,000=
2, 000
Question:21
Followingt Trial Balance has been extracted from the books of Santosh on 31st March, 2018:
Debit Credit
Particulars balances balances
Drawings 20,000
Plant and Machinery 10,00,000
Furniture and Fixtures 1,20,000
Capital A/c 19,60,000
Sales 46,80,000
Loose Tools 2,00,000
Goodwill 1,00,000
Opening Stock 2,00,000
Discount 60,000
Purchases 21,20,000
Wages 10,00,000
Sundry Creditors 2,40,000
Salaries 4,16,000
General Expenses 7,20,000
Rent 1,44,000
Postage 40,000
Output IGST 1,00,000
Output CGST 50,000
Output SGST 50,000
Shri B. Barua 20,000
Cash and Bank Balances 1,40,000
Input IGST 1,10,000
Input CGST 45,000
Input SGST 45,500
Total 72,00,000 72,00,000
Following additional information is available:

a
Stock on 31st March, 2018 was 3,08,000.
b
Depreciation is to be charged on Plant and Machinery at 5% and Furniture and Fixtures at 6%. Loose Tools are revalued at 1,60,000.
c
Provision for Doubtful Debts is to be maintained at 5% on Sundry Debtors.
d
Remuneration of 20,000 paid to Shri B. Barua, a temporary employee, stands debited to his personal account and it is to be corrected.
e Unexpired insurance was 4,000.
You are to prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at that date.
Solution:
Trading Account
Dr. Cr.
Amount Amount

Less: Returns 40,000 20,80,000 Closing Stock 3,08,000
Wages 10,00,000
16,80,600 16,80,600

Dr. Cr.
Amount Amount
General Expenses 7,20,000 Gross Profit 15,08,000

Salaries 4,16,000 Discount 60,000
Add: Outstanding 20,000 4,36,000 Unexpired Insurance 4,000
Salaries
Postage 40,000
Rent 1,44,000
Depreciation on:
Furniture & Fixtures 7,200
Loose Tools 40,000 97,200
Net Profit 1,26,800
15,72,000 15,72,000
Balance Sheet
Dr. Cr.
Amount Amount
Liabilities Assets
Creditors 2,40,000 Furniture & Fixtures 1,20,000

Less: Drawings 20,000 Plant & Machinery 10,00,000
Add: Net Profit 1,26,800 20,66,800 Less: Depreciation 50,000 9,50,000
Debtors 5,60,000
Less: Provision 28,000 5,32,000
Cash & Bank Balances 1,40,000
Goodwill 1,00,000
Loose Tools 1,60,000
23,06,800 23,06,800
Question:22
Prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at that date from the following Traial Balance:
Dr. Cr.
Particulars
Capital ................................................................................ … 1,00,000

Cash ................................................................................ 15,000 …
Bank Loan ................................................................................ … 20,000
Purchases ................................................................................ 1,20,000 …
Sales ................................................................................ … 1,50,000
Sales Return ................................................................................ 10,000 …
Purchases Return ................................................................................ … 20,000
Establishment Expenses ................................................................................ 22,000 …
Taxes and Insurance ................................................................................ 5,000 ...
Bad Debts ................................................................................ 5,000 …
Provision for Doubtful Debts ................................................................................ … 7,000
Debtors ................................................................................ 50,000 …
Creditors ................................................................................ … 20,000
Commission ................................................................................ … 5,000
Deposits ................................................................................ 40,000 …
Opening Stock ................................................................................ 30,000 …
Drawings ................................................................................ 14,000 …
Furniture ................................................................................ 6,000 …
Bills Receivable ................................................................................ 32,000 …
Bills Payable ................................................................................ … 25,000
Input CGST ................................................................................ 10,000 ...
Input SGST ................................................................................ 10,000 …
Output CGST ................................................................................ … 8,000
Output SGST ................................................................................ … 8,000
Output IGST ................................................................................ … 6,000
Total 3,69,000 3,69,000
Adjustments:
i
Salaries 1,000 and Taxes 2,000 are outstanding but Insurance 500 is prepaid.
ii
Commission 1,000 received in advance for the next year.
iii
Interest 2,100 is to be received on Deposits and Interest and Bank Loan 3,000 is to be paid.
iv
Provision for Doubtful Debts to be maintained at 10,000.
v
Depreciate Furniture by 10%.
vi
Stock on 31st March, 2018 is 45,000
vii
A fire occurred on 1st April, 2018 destroying goods costing 10,000. These goods were purchased paying CGST and SGST @ 6% each.
Solution:
Financial Statements
Trading Account
Dr. Cr.
Amount Amount

Purchases 1,20,000 Less: 10, 000 1,40,000
Return
Less: Return 20, 000 1,00,000 Closing Stock 45,000
Gross Profit (Balancing 55,000
Figure)
1,85,000 1,85,000

Dr. Cr.
Amount Amount
Taxes and Insurance 5,000 Gross Profit 55,000

Add: Outstanding 4,000 Commission 5,000
Taxes
Less: Prepaid 500 8,500 Less: Advance 1, 000 4,000
Insurance Commission
Salary Outstanding 1,000 Interest Accrued on Investment 2,100
Bad Debts 5,000
Add: Bad Debts 10,000
Reserve
Less: Existing 10, 000 5,000
Reserve
Depreciation on Furniture 600
Establishment Charges 25,000
71,100 61,100
Balance Sheet
Amount Amount
Liabilities Assets
Capital 1,00,000 Investments Deposits 40,000

Less: Drawings 14, 000 Add: Accrued Interest 2,100 42,100
Bank Loan 20,000 Less: 10% Depreciation 600 5,400
Add: Interest Outstanding 3,000 23,000 Sundry Debtors 50,000
Sundry Creditors 20,000 Less: Provision for Doubtful 40,000
10, 000
Debts
Advance Commission 1,000 Bills Receivable 32,000
Bills Payable 25,000 Prepaid Insurance 500
Salary Outstanding 1,000 Closing Stock 45,000
Taxes Outstanding 2,000 Cash in Hand 15,000
GST Payable WN2 2,000
1,80,000 1,80,000
Working Notes:
1
Loss of stock by fire has ocurred on 1st April, 2018. Hence, it will not affect the BalanceSheet dated 31st March, 2018.
2
GST Set off
First:CGST Payable/
Receivable=Output CGST-Input CGST=8,000-10,000=
2, 000
Second:SGST Payable/
Receivable=Output SGST-Input SGST=8,000-10,000=
2, 000
Third:IGST Payable/
Receivable=Output IGST-Input CGST-Input SGST=6,000-2,000-2,000=2,000
Final:GST Payable=Output IGST=2,000
Question:23
The Trial Balance of M/s. Taj & Co. as on 31st March, 2018 was as follows:
Dr. Cr.
Ledger Accounts
Purchases 1,62,505
Sales 2,52,400
Bills Payable 3,950
Opening Stock 26,725
Wages 23,137
Salaries 5,575
Furniture 7,250
Postage 4,226
Power and Fuel 1,350
Bad Debts 525
Loan to Suraj @ 10% p.a.
3,000
1stDecember, 2017
Cash in Hand and at Bank 10,000
Trade Expenses Accrued but not Paid 700
Drawings 4,452
Capital 12,000
Outstanding Wages 2,000
Input CGST 5,000
Input SGST 5,000
Output CGST 4,000
Output SGST 4,000
Total 3,14,776 3,14,776
Prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet after considering the following information:
i
Depreciation on Furniture @ 10% to be charged.
ii
Sundry Debtors include 500 due from a customer who has become insolvent.
iii
Provision for Doubtful Debts @ 5% on Sundry Debtors is to be maintained.
iv
Goods costing 1,500, purchased paying CGST and SGST @ 9% each, were destroyed by fire and insurance company admitted a claim for 1,000.
v Stock on 31st March, 2018 was 12,550.
Solution:
Trading Account
Dr. Cr.
Amount Amount
Opening 26,725 Sales 2,52,400

Stock
Purchases 1,62,505 Loss by Fire 1,500
Power & Fuel 1,350 Closing Stock 12,550
Wages 23,137
Gross Profit 52,733
2,66,450 2,66,450

Dr. Cr.
Amount Amount
Depreciation on Furniture 725 Gross Profit 52,733

Loss by Fire 770 Old Provision for DD 5,200
Bad Debts 525 Less: Provision for DD 2,485 2,715
Add: Further Bad Debts 500 1,025 Interest Receivable 100
Postage 4,226
Salaries 5,575
Net Profit 37,396
55,548 55,548
Balance Sheet
Dr. Cr.
Amount Amount
Liabilities Assets
Creditors 30,526 Furniture & Fixtures 7,250

Capital 12,000 Less: Depreciation 725 6,525
Less: 4,452 Loan to Suraj 3,000
Drawings
Add: Net Profit 37,396 44,944 Add: Interest Receivable 100 3,100
Bills Payable 3,950 Debtors 50,200
Outstanding Wages 2,000 Less: Further Bad Debts 500
Trade Expenses 700 Less: Provision 2,485 47,215
Accrued
Cash in Hand & at Bank 10,000
Insurance Claim 1,000
Input CGST 865
Input SGST 865
82,120 82,120
Question:24
From the following Trial Balance of Mr. Gaurav and additional information given, prepare Trading and Profit and Loss Account for the year ended 31st March,2018 and Balance Sheet as
at 31st March, 2018:
Dr. Cr.
Particulars
Opening Stock 62,500

Capital 4,66,000
Debtors 75,000
Creditors 43,750
Purchases 5,00,000
Sales 8,75,000
Carriage 10,000
Wages and Salaries 10,000
Commission 16,750
Machinery 1,38,750
Furniture 25,000
Bad Debts Recovered 8,000
Insurance 21,250
10% Bank Load 50,000
Bank 24,500
Drawings 62,500
Input CGST 15,000
Input SGST 15,000
Input IGST 10,000
Output CGST 19,000
Output SGST 19,000
Total 15,31,250 15,31,250
Adjustments:
i
Value of the Closing Stock as on 31st March, 2018 is 50,000.
ii
Wages and Salaries outstanding are 12,500 and Insurance prepaid is 5,000.
iii
Depreciate Machinery and Furniture @ 10% and 15% p.a. respectively. Machinery included a machine which was purchased for 38,500 on 30th September, 2017.
iv
Goods costing 10,000 were taken by the proprietor for his personal use but no entry has been made in the books of account. These goods were purchased paying IGST @ 18%.
Solution:
Trading Account
Dr. Cr.
Amount Amount

Purchases 5,00,000 Closing Stock 50,000
Less: Drawings 10,000 4,90,000
Carriage 10,000
Wages & Salaries 31,250
9,25,000 9,25,000

Dr. Cr.
Amount Amount
Insurance 21,250 Gross Profit 3,18,750

Less: Prepaid 5,000 16,250 Bad Debts Recovered 8,000
Interest on Loan 3,000 Commission 16,750
Add: Outstanding Interest 2,000 5,000
Depreciation on:
Furniture 3,750
Machinery 11,950 15,700
Net Profit 3,06,550
3,43,500 3,43,500
Balance Sheet
Dr. Cr.
Amount Amount
Liabilities Assets
Creditors 43,750 Machinery 1,38,750

Less: Drawings 74,300 Furniture 25,000
Add: Net Profit 3,06,550 6,98,250 Less: Depreciation 3,750 21,250
Bills Payable 33,750 Bank 24,500
Outstanding Wages & Salaries 12,500 Bills Receivable 37,500
10% Bank Loan 50,000 Closing Stock 50,000
Add: Outstanding Interest 2,000 52,000 Debtors 75,000
Input IGST 200
Land & Building 5,00,000
8,40,250 8,40,250
Question:25
Following is the Trial Balance of Shri Bansi Lal as on 31st March, 2018. You are required to prepare Final Accounts:
Dr. Cr.
Particulars
Sundry Creditors ................................................................................ … 63,000

Sundry Debtors ................................................................................ 1,45,000 …
Capital A/c ................................................................................ … 7,10,000
Drawings ................................................................................ 52,450 …
Insurance ................................................................................ 6,000 …
General Expenses ................................................................................ 30,000 …
Salaries ................................................................................ 1,50,000 …
Patents ................................................................................ 75,000 …
Machinery ................................................................................ 2,00,000 …
Freehold Land ................................................................................ 1,00,000 …
Building ................................................................................ 3,00,000 …
Stock on 1st April, 2017 ................................................................................ 57,600 …
Carriage on Purchases ................................................................................ 20,400 …
Carriage on Sales ................................................................................ 32,000 …
Fuel and Power ................................................................................ 47,300 …
Wages ................................................................................ 1,04,800 …
Returns Outward ................................................................................ … 5,000
Returns Inward ................................................................................ 6,800 …
Sales ................................................................................ … 9,87,800
Purchases ................................................................................ 4,06,750 …
Cash at Bank ................................................................................ 30,300 …
Cash in Hand ................................................................................ 5,400 …
Input CGST ................................................................................ 20,000 …
Input SGST ................................................................................ 20,000 …
Output CGST ................................................................................ … 22,000
Output SGST ................................................................................ … 22,000
Total 18,09,800 18,09,800
Following adjustments are to be made:

a
Stock on 31st March, 2018 was valued at 68,000.
b
Provision for Doubtful Debts is to be created to the extent of 5% on Debtors.
c
Depreciate Machinery by 10% and Patents by 20%.
d
Wages include a sum of 20,000 spent on the erection of a cycle shed for employees and customers.
e
Salaries for the month of March, 2018 amounted to 15,000 were unpaid.
f
Insurance includes a premium of 1,700 on a policy expiring on 30th September, 2018.
Solution:
Financial Statements of Shri Bansi Lal
Trading Account
Dr. Cr.
Amount Amount

Carriage on Purchases 20,400
Wages 1,04,800
Less: Building 20, 000 84,800
10,49,000 10,49,000

Dr. Cr.
Amount Amount
Carriage on Sales 32,000 Gross 4,37,150

Profit
Amortisation of Patents 15,000
Insurance 6,000
Less: Prepaid Insurance
1, 700 × 6/12 850 5,150
Salaries 1,50,000
Add: Unpaid Salaries 15,000 1,65,000
4,37,150 4,37,150
Balance Sheet
Amount Amount
Liabilities Assets
Capital 7,10,000 Patents 75,000

Less: Drawings 52, 450 Less: 20% Amortisation 15, 000 60,000
Add: Net Profit 1,62,750 8,20,300 Machinery 2,00,000
Sundry Creditors 63,000 Less: 10% Depreciation 20, 000 1,80,000
Salaries Outstanding 15,000 Freehold Land 1,00,000
GST Payable WN2 4,000
Less: Provision for Doubtful
7, 250 1,37,750
Debts
Building 3,00,000
Add: Wages 20,000 3,20,000
Cash in Hand 5,400
Cash at Bank 30,300
9,02,300 9,02,300
Working Notes:
1
20,000 is reduced from Wages and added in Building since such amount is a Capital Expenditure.
2
GST Set Off:
CGST Payable/Receivable
=Output CGST-Input CGST=22,000-20,000=2,000
SGST Payable/Receivable
=Output SGST-Input SGST=22,000-20,000=2,000
Total GST Payable=CGST Payable+SGST Payable=2,000+2,000= 4,000
Question:26
From the following Trial Balance of M/s. Ram Lal and Sons, prepare Trading, Profit and Loss Account for the year ending 31st March, 2018 and a Balance Sheet as on that date:
Dr. Cr.
Heads of Accounts
Drawings 15,000
Capital 3,50,000
Plant and Machinery 2,05,000
Debtors 50,000
Creditors 28,000
Discount Received 6,000
Commission 15,000
Furniture 55,000
Wages 50,000
Salaries 45,000
Purchases 2,60,000
Sales 4,00,000
Carriage 5,000
Land and Building 98,000
Cash in Hand 8,000
Cash at Bank 20,000
10% Bank Loan as on 1st April,
2017 1,50,000
Input CGST 9,000
Input SGST 9,000
Output IGST 15,000
Total 9,69,000 9,69,000
Adjustments:
i
The cost of stock on 31st March, 2018 was 37,000. However, its market value was 35,000.
ii
Wages outstanding were 6,000 and salaries outstanding were 5,000 on 31st March, 2018.
iii
1
Depreciate Land and Building @ 22
%, Plant and Machinery @ 10% p.a. and Furniture @ 15 p.a.
iv
Purchase includes purchase of machinery for 10,000 on 1st October, 2017.
v
Debtors include bad debts of 2,000. Maintain a provision for doubtful debts @ 10% on Debtors.
Solution:
Trading Account
Dr. Cr.
Amount Amount

Less: Machinery 10,000 Closing Stock 35,000
Less: Returns 7,000 2,43,000
Carriage 5,000
Wages 50,000
Gross Profit 53,000
4,27,000 4,27,000

Dr. Cr.
Amount Amount
Interest on Bank 12,000 Gross Profit

Loan 53,000
Add: Outstanding 3,000 15,000 Discount Received 6,000
Salaries 45,000 Old Provision for DD 13,000
Add: Outstanding 5,000 50,000 Less: Provision for DD 4,800 8,200
Advertisement 15,000 Net Loss 81,500
Commission 15,000
Further Bad Debts 2,000
Depreciation on:
Land & Building 2,450
1,48,700 1,48,700
Balance Sheet
Dr. Cr.
Amount Amount
Liabilities Assets
Creditors 28,000 Plant 2,05,000

&Machinery
Wages Outstanding 6,000 Add: 10,000
Purchases
Capital 3,50,000 Less: 21,000 1,94,000
Depreciation
Less: Drawings 15,000 Furniture 55,000
Less: Net Loss 81,500 2,53,500 Less: 8,250 46,750
Depreciation
Outstanding Salaries 5,000 Debtors 50,000
Bank Loan 1,50,000 Less: FBD 2,000
Add: Outstanding Interest 3,000 1,53,000 Less: 4,800 43,200
Provision
Cash at Bank 20,000
Land 98,000
&Building
Less: 2,450 95,550
Depreciation
Input SGST 3,000
Cash in Hand 8,000
4,45,500 4,45,500
Question:27
Following is the Trial Balance of Mr. S. Kapur on 31st March, 2018:
Dr. Cr.
Particulars
Cash in Hand 10,800

Purchases 8,13,500
Sales 19,75,600
Wages 2,09,600
Carriage on
40,800
Purchases
Stock on 1st April,
1,15,200
2017
Building 6,00,000
Computer 2,00,000
Machinery 4,00,000
Salaries 3,00,000
Patents 1,50,000
Advertisement
60,000
Expenses
Insurance 12,000
Capital 16,00,000
Drawings 1,04,900
Sundry Creditors 1,31,000
Input CGST 7,500
Input SGST 7,500
Output IGST 10,000
Total 37,26,600 37,26,600
Taking into account the following adjustments, prepare Trading and Profit and Loss Account and Balance Sheet:
a
Stock in Hand on 31st March, 2018 is 1,36,000.
b
Machinery is to be depreciated @ 10% and patents @ 20%.
c
Salaries for the month of March, 2018 amounting to 30,000 were unpaid.
d
Insurance includes a premium of 1,700 for the year ending 31st March, 2019.
e
Wages include a sum of 40,000 spent on constructing a scooter shed for employees and customers.
f
Provision for Doubtful Debts is to be created to the extent of 5% on Sundry Debtors.
Solution:
Trading Account
Dr. Cr.
Amount Amount

Less: Returns 10,000 8,03,500 Closing Stock 1,36,000
Fuel & Power 94,600
Wages 2,09,600
Less: Scooter Shed 40,000 1,69,600
20,98,000 20,98,000

Dr. Cr.
Amount Amount

Less: Prepaid 1,700 10,300
Salaries 3,00,000
Add: 30,000 3,30,000
Outstanding
Advertisement Expenses 60,000
Provision for DD 14,500
Depreciation on:
Machinery 40,000
Patents 30,000 70,000
Net Profit 3,25,500
8,74,300 8,74,300
Balance Sheet
Dr. Cr.
Amount Amount
Liabilities Assets
Creditors 1,31,000 Machinery 4,00,000

Less: 1,04,900 Patents 1,50,000
Drawings
Add: 3,25,500 18,20,600 Less: Depreciation 30,000 1,20,000
NetProfit
Outstanding Salaries 30,000 Debtors 2,90,000
Less: Provision 14,500 2,75,500
Input SGST 5,000
Building 6,00,000
Add: Scooter Shed 40,000 6,40,000
Computer 2,00,000
Cash in Hand 10,800
19,81,600 19,81,600
Question:28
Following is the Trial Balance of Shri Paras on 31st March, 2018:
Dr. Cr.
Sundry Debtors 1,45,000 Sundry Creditors 63,000

Drawings 52,450 Capital A/c 7,10,000
Insurancne 6,000 Returns Outward 5,000
Rent 10,000 Sales 10,00,000
General Expenses 20,000 Output CGST 20,000
Salaries 1,50,000 Output SGST 20,000
Patents and Patterns 75,000
Machinery 2,00,000
Freehold Land 1,00,000
Building 3,00,000
Stock 1stApril, 2017 57,600
Cash at Bank 26,300
Freight on Purchases 20,400
Carriage on Sales 32,000
Wages 1,04,800
Purchases 4,06,750
Cash in Hand 5,400
Input IGST 40,000
18,18,000 18,18,000
Following adjustments are made:

a
Stock on 31st March, 2018 was valued at 68,000.
b
Provision for Doubtful Debts is to be made to the extent of 5% on Sundry Debtors.
c
Depreciate Machinery by 10%, Patents 20% and Building 5%.
d
Wages include a sum of 20,000 spent on constructiion of a cycle shed.
e
Salaries for the months of February and March, 2018 were not paid.
f
Insurance includes a premium of 1,700 on a policy expiring on 30th September, 2018.
g
General Manager is entitled to a commission of 10% on the net profit after charging his commission.
You are required to prepare Final Accounts after giving effects to the adjustments.
Solution:
Financial Statements of Shri Paras
Trading Account
Dr. Cr.
Amount Amount

Wages 1,04,800
Less: Building 20, 000 84,800
10,49,000 10,49,000

Dr. Cr.
Amount Amount

Less: Prepaid Insurance 5,150
1, 700 × 1/2 850

Salaries 1,50,000
Add: Salaries Outstanding
1, 50, 000 × 2/10 30,000 1,80,000
Depreciation on:
Machinery 20,000
Patents 15,000
Building 16,000 51,000
Carriage on Sales 32,000
Provision for Bad and Doubtful Debts 7,250
Manager’s Commission 11,977
4,37,150 4,37,150
Balance Sheet
Amount Amount
Liabilities Assets
Capital 7,10,000
Add: Net Profit 1,19,773 Freehold Land 1,00,000
Less: Drawings 52, 450 7,77,323 Building 3,00,000
Sundry Creditors 63,000 Add: Wages 20,000
Salaries Outstanding 30,000 3,20,000
Manager’s Commission Payable 11,977 Less: 5% Depreciation 16, 000 3,04,000
Patents 75,000
Machinery 2,00,000
Less: 10% Depreciation 20, 000 1,80,000
Less: Provision for Doubtful Debts 7, 250 1,37,750
Cash at Bank 26,300
Cash in Hand 5,400
8,82,300 8,82,300
Working Notes:
1 Calculation of Manager’s Commission:
2
GST Set Off:
GST Payable/Receivable
=Output CGST+Output SGST-Input IGST=20,000+20,000-40,000=Nil
Hence, there will be no effect of GST on the Balance Sheet.
Question:29
Following is the Trial Balance of Atam Prakash as on 31st March, 2018:
Dr. Cr.
Capital A/c ................................................................................ … 8,00,000

Drawings A/c ................................................................................ 60,000 …
Stock on 1st April, 2017 ................................................................................ 4,50,000 …
Purchases ................................................................................ 26,00,000 …
Sales ................................................................................ … 31,00,000
Furniture ................................................................................ 1,00,000 …
Sundry Debtors ................................................................................ 4,00,000 …
Freight and Octroi ................................................................................ 46,000 …
Trade Expenses ................................................................................ 5,000 …
Salaries ................................................................................ 55,000 …
Rent ................................................................................ 24,000 …
Advertisement Expenses ................................................................................ 50,000 …
Insurance Premium ................................................................................ 4,000 …
Commission ................................................................................ … 13,000
Discount ................................................................................ 2,000 …
Bad Debts ................................................................................ 16,000 …
Provision for Doubtful Debts ................................................................................ … 9,000
Creditors ................................................................................ … 2,00,000
Cash in Hand ................................................................................ 52,000 …
Bank ................................................................................ 58,000 …
Land and Building ................................................................................ 2,00,000 …
Total 41,22,000 41,22,000
Adjustments:
i
Stock on 31st March, 2018 was valued at 5,30,000.
ii
Salaries have been paid so far for 11 months only.
iii
Unexpired insurance is 1,000
iv
Commission earned but not yet received amounting to 1,220 plus IGST @ 12% is to be recorded in books of account.
v
Provision for Doubtful Debts is to be bought up 3% of Sundry Debtors.
vi
Manager is to be allowed a commission of 10% on net profits after charging such commission.
vii
Furniture is depreciated @ 10% p.a.
viii
Only one-fourth of advertisement expenses are to be written off.
Prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as on that date.
Solution:
Financial Statement of Atam Prakash
Trading Account
Dr. Cr.
Amount Amount

Freight and Octori 46,000
(Balancing Figure)
36,30,000 36,30,000
***
Dr. Cr.
Amount Amount
Trade Expenses 5,000 Gross Profit 5,34,000

Salaries 55,000 Commission 13,000
Add: Outstanding Salaries 5,000 60,000 Add: Accrued Commission 1,220 14,220
55, 000 × 1/11

Rent 24,000
( )
1 12,500
Advertising Expenses 50, 000 × 4

Discount 2,000
Bad Debts 16,000
Add: Provision for Doubtful Debts 12,000
28,000
Depreciation on furniture 10,000
Manager’s Commission 37,520
5,48,220 5,48,220
Balance Sheet
Amount Amount
Liabilities Assets
Capital 8,00,000 Furniture 1,00,000

Less: Drawings WN2 60, 000 Less: 10% Depreciation 10, 000 90,000
Add: Net Profit 3,75,200 11,15,200 Sundry Debtors 4,00,000
Creditors 2,00,000 Less: Provision for Doubtful Debts 12, 000 3,88,000
Manager’s Commission Payable 37,520 Land and Building 2,00,000
Salaries Outstanding 5,000 Closing Stock 5,30,000
GST Payable OutputIGST 146 Bank 58,000
Cash in Hand 52,000
( )
3 37,500
Advertisement Expenses 50, 000 × 4 146
GST Receivable
13,57,866 13,57,866
Working Notes:
WN1:
WN2: Advance for Furniture is for furniture of proprietor's residence. Therefore, it will transferred to drawings.
WN3: IGST on commission has not been received being accrued commission. Hence, GST of 146 has been taken as GST payable and second as GST receivable.
Question:30
Following balances were extracted from the books of Modern Traders on 31st March, 2018:
Captial 8,50,000 Sales 12,00,000
Drawings 50,000 Postage and Telegrams 8,000
Plant and Machinery 4,00,000 Bad Debts 4,000
Accumulated 90,000 Provision for Doubtful 8,000
Depreciation Debts
Stock on 1st April, 1,50,000 Discount Received 4,000
2017
Purchases 8,20,000 Rent Revenue 12,000
Sundry Debtors 2,06,000 Insurance 7,000
Furniture 50,000 Salaries 2,00,000
Freight Inwards 20,000 Wages 13,000
Carriage Outwards 5,000 Cash in Hand 62,000
Rent, Rates and 46,000 Cash at Bank 2,55,000
Taxes
Printing and 8,000 General Reserve 50,000
Stationery
Sundry Creditors 95,000 Input IGST 20,000
Input CGST 15,000 Output IGST 45,000
Input SGST 15,000
Prepare Profit and Loss Account for the year ended 31st March, 2018 and the Balance Sheet as at that date giving effect to the following:
a
Closing Stock was 1,50,000.
b
Wages Outstanding were 5,000.
c
Provision for Doubtful Debts is to be maintained at 5% of Sundry Debtors.
d
Depreciate Plant and Machinery by 10% and Furniture by 5% on Straight Line Method.
e
Sundry Creditors include 10,000 due to Nayak who is also included in Sundry Debtors at 15,000.
f
New furniture for 12,000 was purchased on 1st April, 2017. Old furniture valued at 2,000 was exchanged and balance was paid by cheque. Purchase of furniture was recorded at the
net value of furniture, i.e., 10,000. The firm had purchased this furniture paying IGST @ 18%.
g
A fire occurred on 27th March, 2018 destroying stock costing 10,000, which were purchased paying CGST and SGST @ 9% each. Insurance company conveyed acceptance of claim of
7,500 on 10th April, 2018. Final accounts were prepared on 1st July, 2018.
Solution:
Financial Statement of Modern Traders
Trading Account
Dr. Cr.
Amount Amount
Rs Rs
Freight Inwards 20,000
Wages 13,000
Wages
13,50,000 13,50,000
Dr. Cr.
Amount Amount
Rs Rs
Postage and Telegrams 8,000 Gross Profit 3,42,000
Bad Debts 4,000 Discount Received 4,000
Add: Provision for Doubtful Debts 10,300 Rent Revenue 12,000
Rent, Rates and Taxes 46,000
Insurance 7,000
Salaries 2,00,000
Depreciation on:
Machinery 45,000
3,58,000 3,58,000
Balance Sheet
Amount Amount
Liabilities Assets
Rs Rs
Less: Accumulated Depreciation
Less: Drawings 50, 000
90, 000 + 45, 000 1, 35, 000 3,15,000
Reserve Fund 50,000 Less: 5% Depreciation 2, 500 47,500
Sundry Creditors 90,000 Closing Stock 1,50,000
Wages Outstanding 5,000 Sundry Debtors 2,06,000
Less: Provision for Doubtful Debts 10, 300 1,95,700
Cash in Hand 62,000
10,26,200 10,26,200
Note: Advance paid by proprietor for Plant and Machinery out of his personal bank account will increase the Capital A/c and Plant & Machinery A/c balance by Rs 50,000. And also
increase in the amount of depreciation by Rs 5,000.
Question:31
On 31st March, 2018 the following Trial Balance was extracted from the books of Mohan:
Debit Credit
Capital 3,00,000
Debtors 2,00,000
Creditors 1,00,000
Loan 95,000
Cash 20,000
Motor Vehicles 1,00,000
Bank 35,000
Bad Debts 5,000
Purchases 6,60,000
Sales 11,00,000
Purchases Return 15,000
Sales Return 80,000
Salaries 90,000
Rent and Insurance 30,000
Advertising 35,000
Discount Received 5,000
Rent Received 3,000
Total 16,45,000 16,45,000
Prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at that date after taking into account the following:
a
Stock as at 31st March, 2018 was valued at 70,000.
b All debtors are considered good for recovery.
c Depreciate Motor Vehicles by 20%.
d Bank intimation of customer's cheque of 10,000 being dishonoured is not recorded in the books.
e Travelling expenses of 5,000 paid to sales person was wrongly debited to his Personal Account and was included in debtors.
f Amount of 6,000 received from Ronit was credited to his account and was included in creditors. This amount was written off as bad debt in earlier years.
g
Drawings included an amount of 2,000 being amount drawn in cash. It was used by Mohan for Purchase of stationery used in business.
Solution:
Trading Account
Dr. Cr.
Particulars Amount Particulars Amount

Less: Returns 15,000 6,45,000 Closing Stock 70,000
10,90,000 10,90,000

Dr. Cr.
Amount Amount
Advertising 35,000 Gross Profit 3,47,000

Bad Debts 5,000 Bad-Debts Recovered 6,000
Carriage Outwards 25,000 Discount Received 5,000
Depreciation on Motor Vehicles 20,000 Provision for Doubtful Debts 7,000
General Expenses 34,000 Rent Received 3,000
Stationery 2,000
Salaries 90,000
Rent & Insurance 30,000
Travelling Expenses 5,000
Net Profit 1,19,000
3,68,000 3,68,000
Balance Sheet
Dr. Cr.
Amount Amount
Liabilities Assets
Creditors 1, 00, 000– 6, 000 94,000 Cash at Bank 35, 000– 10, 000 25,000
Capital 3,00,000 Cash in Hand 20,000
Less: Drawings 48,000 Motor Vehicles 1,00,000
Add: Net Profit 1,19,000 11,15,200 Less: Depreciation 20,000 80,000
Loan 95,000 Debtors 2,00,000
Bills Payable 20,000 Less: Travelling Expenses 5,000
Add: Dishonour 10,000 2,05,000
Land & Building 1,20,000
Proc es s ing math: 100%
5,80,000 5,80,000
Contrib
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Question:1

Capital 1,90,000 Cash at Bank 26,000

Profit and Loss Account

Capital 1,00,000 Wages 50,000

Profit and Loss Account

Machinery 4,00,000 Capital 9,00,000

Profit and Loss Account

Rent 45,000 Gross Profit 8,95,000

Capital ................................................................................ … 80,000

Profit and Loss Account

Outstanding Interest on Bank Loan

Stock on 1st April, 2017 25,000 Sales 2,27,800

Opening Stock 25,000 Sales 2,27,800

Profit & Loss Account

Bad Debts 1,000 Gross Profit 77,300

Creditors 40,000 Furniture 8,000

Narain Lal's Capital 3,00,000 Sales 15,00,000

Opening Stock 2,20,000 Sales 15,00,000

Profit & Loss Account

Commission 22,000 Gross Profit 3,42,600

Bank Overdraft 42,000 Furniture & Fittings 26,000

Opening Stock 45,000 Sales 4,35,000

Profit and Loss Account

Rent 5,000 Gross Profit 1,22,000

Capital 1,20,000 Fixed Assets

Purchases ................................................................................ 2,50,000 …

Printing and ................................................................................ 6,000 …

Profit and Loss Account

Profit and Loss Account

Capital 2,45,000 Fixed Assets

Cash in Hand and at Bank .............................................................. 77,400 …

Opening Stock 12,04,500 Sales 56,30,100

Profit and Loss Account

Office Salaries 1,28,400 Gross Profit 7,28,400

Rent and Rates 72,600

Sundry Creditors 3,73,500 Cash in Hand and Bank 77,400

Profit and Loss Account

Opening Stock 1,14,600 Sales 14,98,400

Less: Purchases 42, 400 7,79,700 Closing Stock 1,49,200

Profit and Loss Account

Depreciation on: Gross Profit 5,51,200

Capital 90,0000 Fixed Assets

Drawings ................................................................................ 1,80,000 …

Profit and Loss Account

WN1 Calculation of Interest on Loan

Bank Loan = Rs 2,50,000

WN2 Calculation of Manager’s Commission

Sundry Debtors ................................................................................ 3,20,000 …

Profit and Loss Account

Accrued Commission 12,000

Following adjustments are to be made:

Opening Stock 48,000 Sales 4,80,000

Profit & Loss Account

Depreciation on Furniture 130 Gross 1,35,600

Bills Payable 5,600 Furniture & Fixtures 2,600

Debit Balances Credit Balances

Following adjustments are to be considered:

Net Profit (Balancing Figure) 53,650