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FINANCIAL STATEMENTS WITH ADJUSTMENT

Adjustment entry is the entry that is required to be passed after ledger scrutiny reveals some transactions that are not yet passed in the journal. Such entries of course are not yet reflected in trial balance.

Adjustments that are required to be passed :

  • Closing Stock.
  • Outstanding Expenses.
  • Prepaid Expenses.
  • Accrued Income.
  • Income Received in Advance.
  • Bad Debit
  • Provision for Doubtful Debts.
  • Provision for Discount on Debtors.
  • Manager’s Commission on Profit.
  • Abnormal loss of stock.
  • Goods taken for personal use.
  • Goods distributed on free samples.

Adjustments 1 to 6

  Adjustment Journal entry for Adjustment Trading/P & C Treatment Balance Sheet Treatment
1. Closing stock A + Closing Stock A/c

R + To Trading A/c

Shown on credit side of Trading A/c Current Asset
2. Outstanding Expenses E + Relevant Expense A/c

Tooutstanding

L + Expenses A/c

+ in the relevant expense in trading or pass & L A/c Current liability
3. Prepaid at expenses A + Prepaid expenses

E – To relevant expense A/c

– from the relevant expense in trading or P & L A/c Current Liability
4. Accrued A + Accrued Income to Relevant

R + To Relevant Income

+in the Relevant income in P 7 L Current Asset
5. Income Received in Advanced R – Relevant income A/c

L + To advance Income

– from the relevant income in P &lal Current Liability
6. Depreciation E + Depreciation in advance to asset A/c

A – To Asset relevant

Expense in P 7 C A/c separately From the relevant asset

Questions Based on the Above Adjustment

Q.1    The following are the balances extracted from the books of ReghunathJi as on 31st March, 2012. From these balances, prepare his Trading and Profit 7 Loss Account and Balance Sheet as at that date :

Particulars Dr. (`) Cr. (`)
Opening Stock

Purchases

Sales

Discount

Sales Return

Buildings

Debtors

Salaries

Office Expenses

Wages

Purchase Return

Interest

Travelling Expenses

Fire Insurance Premium

Machinery

Carriage on Purchases

Commission

Cash in hand

Rent and Taxes

Capital

Creditors

12,000

40,000

 

 

6,000

50,000

16,000

2,400

1,200

10,000

 

 

400

800

20,000

700

400

2,300

1,800

 

 

1,64,000

 

 

86,000

400

 

 

 

 

 

 

4,000

800

 

 

 

 

 

 

 

62,000

10,800

1,64,000

          Adjustment :-

  1. Closing Stock was valued a`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 Building by 5% and machinery by 10%.
  5. Prepaid Insurance `200.

 

 

  1. Following Trial Balance has been extracted from the books of M/s Ram Prasad & Sons on 31st March, 2014.
Debit Balances (`) Credit Balances (`)
Machinery

Cash at Bank

Cash in Hand

Wages

Purchases

Stock on 1st April, 2013

Sundry Debtors

Bills Receivable

Rent

Commission

General Expenses

Salaries

 

4,000

1,000

500

1,000

8,000

6,000

4,400

2,900

450

250

800

500

29,800

Capital

Sales

Sundry Creditors

Interest Received

 

9,000

16,000

4,500

300

 

 

 

 

 

 

 

 

29,800

Adjustments :

(i)       Outstanding Salary `450.

(ii)      Depreciate Machinery at 10%.

(iii)     Wages outstanding amounted to `50.

(iv)     Rent prepaid amounted to `100.

(v)      Stock on 31st March, 2014 amounted to `8,000.

Prepare Trading and Profit and Loss Account for the year ended 31st March,

2014 and Balance Sheet as at the least date of the year.

DKG

  1. From the following Trial Balance of PQ Associates, prepare Trading and Profit & Loss Account for the year ended 31st March, 2012 and a Balance Sheet as at that date:-
Dr. Balance (`) Cr. Balance (`)
Opening Stock

Purchases

Sales Return

Carriage Inwards

Carriage Outwards

Wages

Salaries

Plant & Machinery

Furniture

Sundry Debtors

Bills Receivable

Cash in Hand

Travelling Expenses

Lighting (Factory)

Rent and Taxes

General Expenses

Insurance

Drawings

20,000

80,000

6,000

3,600

800

42,000

27,500

90,000

8,000

52,000

2,500

6,300

3,700

1,400

7,200

10,500

1,500

18,000

3,81,000

Sales

Purchase Return

Discount

Sundry Creditors

Bills Payable

Capital

2,70,00

4,000

5,200

25,00

1,800

75,000

 

 

 

 

 

 

 

 

 

 

 

 

3,81,000

 

  1. You are asked to prepare Trading and Profit and Loss Account and Balance Sheet for the year ended 31st March, 2014 of Dev Morarji from the following information :
Debit Balances (`) Credit Balances (`)
Stock 1-4-2013

Purchases

Carriage Inward

Carriage Outwards

Wages

Motive Power, Heating and Lighting

Printing and Stationery

Sundry Debtors

Furniture and Fixtures

Investments

Freehold Premises

Travelling Expenses

Office Expenses

Interest paid on Loan

Bills Receivable

Legal Charges

Plant and Machinery

Tools

21,000

21,650

250

600

6,000

1,600

2,660

28,100

2,000

4,000

10,000

400

650

200

1,800

1,900

25,000

5,000

Sales

Reserve

Loan

Discount Received

Sundry Creditors

Capital

 

48,590

500

38,000

580

2,430

42,710

 

 

 

 

 

 

 

Depreciate Furniture and Fixtures @ 5%, Plant and Machinery @ 10%. Tools were valued on 31st March, 2014 at `4,500. Stock on 31stMarch, 2014 was
`18,000.

  Adjustment Journal entry for Adjustment Trading/P & C Treatment Balance Sheet Treatment
7. Bad Debts Bad Debts A/c                    Dr

To Debtors A/c

Debit side of P & C A/c as separate item Deducted from debtors on assets side
8. Provision for Doubt Debts (New) Profit and Loss A/c             Dr + in the Bad Debts in P & L A/c

Profit and Loss Account will be reflected as under :

Profit and Loss A/c with imaginary fights

 

Deduct from debtors on assets side
9. Provision for discount on debtors Profit and Loss A/c             Dr

To Provision for

Discount on Debtors

Debitside of P 7 C A/c as a separate item If existing provision is > 24,000 then it should be reflected on the credit side. Say existing provision is 31,000 Deducted from debtors
10. To Bad Debts 10,000

(As appearing in Trial balance)

Add ; Further bad Debts 6,000

(As in the adjustment) if any Add: provision for Bad debts 8,000 (Given in the adjustment) 24,000

Less : Provision for

Bad Debts existing

As given in Trial Balance  (11,000)

  By Bad debts provision 31,000 existing

Less :

i) Bad debts (10,000)

ii) Further bad debts (6,000)

iii) provision for bad debts 7,000

 
  1. From the following extracts of the trial balance, show presentation in the final accounts and also pass journal entries in each case separately.
Name of Ac Dr. (`) Cr. (`)
Case 1 : Sundry Debtors, Bad Debts

 

(i) Additional information

B, a debtor has become insolvent and nothing is recoverable against ` 6000 due from him.

(ii) Create 5% Provision for Doubtful Debts

2,06,000

4,500

 

 

 

Case 1 A (Practice)

Name of A/c Dr. (`) Cr. (`)
Sundry Debtors

Bad Debts

62,000

7,000

 

Additional Information :

  1. i) Additional bad debts `12,000.
  2. ii) Create a provision of 15% on debtors.

Case 2 A

Name of A/c Dr. (`) Cr. (`)
Sundry Debtors

Provision for Doubtful Debts

Bad Debts

3,21,000

 

26,000

15,000

Additional Information :

  1. i) Additional bad debts `12,000.
  2. ii) Create a provision of 8% on doubt debts.

Case 2 A (Practice)

Name of A/c Dr. (`) Cr. (`)
Sundry Debtors

Provision for Doubtful Debts

Bad Debts

5,07,000

 

15,000

12,000

Additional Information :

  1. i) Write of `7,000 as bad debts.
  2. ii) Provision for Bad Debts is to be maintained @ 5%

Case 3 A (Practice)

Name of A/c Dr. (`) Cr. (`)
Bad Debts

Sundry Debtors (including dishonored bill of
` 5,000) received from school)

Provision for Doubtful Debts

15,000

 

1,05,000

 

 

18,000

Additional Information:

  1. i) Half of Santosh’s Bill is irrecoverable.
  2. ii) Create a provision of 5% on debtors.

Case 3 A (Practice)

Name of A/c Dr. (`) Cr. (`)
Sundry Debtors

Bad Debtors

Provision for Doubtful Debt

3,12,000

 

4,500

 

3,600

Additional Information :

  1. i) Additional bad debts `7,000.
  2. ii) Create a provision for discount on debtors @ 2%.

iii) Provision for doubtful debts is to be increased to `5,000.

Case 4 A (Practice)

Name of A/c Dr. (`) Cr. (`)
Sundry Debtors

Provision for Doubtful Debts

Provision for Discount on Debtors

Bad Debtors

Discount

4,17,000

 

4,600

1,500

 

13,000

Additional Bad Debtors

  1. i) Additional Bad Debtors `11,000.
  2. ii) Additional discount allowed to debtors `4,000.

iii) Maintain a provision for bad debtors @ 5%

  1. iv) Mountain a provision for discount @ 2% on debtors.
  2. From the following Trial Balance of M/s. Shardha& Sons as on 31st March, 2014, prepare Trading and Profit and Loss Account and Balance Sheet:
Particulars Dr. (`) Cr. (`)
Capital

Drawings

Sales

Purchases

Stock 1-4-2013

Returns Outward

Carriage Inwards

Wages

Power

Machinery

Furniture

Rent

Salary

Insurance

8% Bank Loan

Debtors

Creditors

Cash in Hand

 

 

18,000

 

82,600

 

 

1,200

4,000

6,000

50,000

14,000

22,000

15,000

3,600

 

20,000

 

1,500

2,80,500

80,000

 

1,55,000

 

42,000

1600

 

 

 

 

 

 

 

 

25,000

 

18,900

 

2,80,500

          Adjustments :

(i)       Closing Stock `64,000.

(ii)      Wages outstanding `2,400.

(iii)     Bad Debts ` 600

(iv)     Provision for Bad and Doubtful Debts to be 5%.

(v)      Rent is paid for 11 months.

(vi)     Insurance premium is paid per annum, ended 31st May, 2014.

(vii)    Loan from the bank was taken on 1st October, 2013.

(viii)   Provide Depreciation on machinery @ 10% and on Furniture @ 5%.

DKG

  1. The following are the balances of Messrs Gupta & Co. as at 31st March, 2009 :-
Dr. Balance (`) Cr. Balance (`)
Cash in Hand

Cash at Bank

Purchases

Return Inwards

Wages

Fuel & Power

Bad-debts

Bed-debts Provision

Carriage on Sales

Carriage on Purchases

Stock (1.1.2008)

Building

Freehold land

Machinery

5,400

26,300

4,67,500

6,800

84,480

47,300

2,100

3,400

32,000

20,400

57,600

3,22,000

1,00,000

2,00,000

Patents

Salaries

General Expenses

Insurance

Drawings

Sundry Debtors

Sales

Returns Outwards

Capital

S. Creditors

Rent Cr.

75,000

2,50,000

2,27,900

6,000

52,245

1,40,000

9,84,440

5,000

9,20,000

63,000

90,000

 

 

 

3,81,000

 

Prepare Trading and Profit & Loss A/c and a Balance Sheet as at 31st March, 2009 after taking into account the following adjustments : –

(i)       Stock on land as on 31st March, 2009 is `6,800.

(ii)      Machinery is to be depreciated at 10% and Patents at 20%

(iii)     Salaries for the month of March, 2009 amounting to `1,500 were unpaid.

(iv)     Insurance includes a premium of 170 on a policy expiring on 30th September, 2009.

(v)      Write off 500 as Bad-debts and create a provision for Doubtful Debts at 5% on Sundry Debtors.

(vi)     Rent Receivable 1,000.

  1. Prepare Trading and Profit & Loss Account for the year ended 31st March, 2005 and Balance Sheet as at that date from the following Trial Balance : –
  Dr. (`) Cr. (`)
Capital

Cash

Bank Overdraft

Purchases and Sales

Returns

Establishment Expenses

Taxes and Insurance

Bad-debts and Bad-debts Provision

Debtors and Creditors

Commission

Deposits

Opening Stock

Drawings

Furniture

B/R and B/P

 

15,000

 

1,20,000

10,000

22,000

5,000

5,000

50,000

 

40,000

30,000

14,400

6,000

30,000

3,47,000

1,00,000

 

20,000

1,15,000

20,000

 

 

7,000

20,000

5,000

 

 

 

 

25,000

3,47,000

 

(i)       Salaries `100 and taxes `200 are outstanding but insurance `50 is        prepaid.

(ii)      Commission `100 is received in advance for next year.

(iii)     Interest `210 is to be received on Deposits and Interest on Bank overdraft `300 is to be paid.

(iv)     Bad-debts provision is to be maintained at `1,000 on Debtors.

(v)      Depreciate furniture by 10%.

(vi)     Stock on 31stMarch, 2005 was value date `4,500.

 

  1. From the following Trial Balance extracted from the books of A, prepare Trading and Profit & Loss Account for the year ending 31st March, 2008 and a Balance Sheet as at that date :
  Dr. (`) Cr. (`)
Furniture

Loose Tools

Buildings

Capital Account

Bad-debts

Provision for Bad-debts

Sundry Debtors and Creditors

Stock on 1st April, 2007

Purchases and Sales

Bank Overdraft

Sales Return and Purchases Return

Stationery

Interest Account

Commission

Cash in hand

Taxes and Insurance

General Expenses

Salaries

 

15,000

 

1,20,000

10,000

22,000

5,000

5,000

50,000

 

40,000

30,000

14,400

6,000

30,000

3,47,000

1,00,000

 

20,000

1,15,000

20,000

 

 

7,000

20,000

5,000

 

 

 

 

25,000

3,47,000

(i)       Salaries `100 and taxes `200 are outstanding but insurance `50 is        prepaid.

(ii)      Commission `100 is received in advance for next year.

(iii)     Interest `210 is to be received on Deposits and Interest on Bank overdraft `300 is to be paid.

(iv)     Bad-debts provision is to be maintained at `1,000 on Debtors.

(v)      Depreciate furniture by 10%.

(vi)     Stock on 31stMarch, 2005 was value date `4,500.

 

Adjustments 7 to 9

  Adjustment Journal entry for Adjustment Trading/P & C Treatment Balance Sheet Treatment
7. Bad Debts Bad debts A/c        Dr Debit side of P PPC A/c as a separation Deducted from debtors on assets side
8. Provision for doubtful debts (new) Profit and loss A/c Dr

To Provision for Doubtful

In the bad debts in P & L A/c Deduct from debtors on assets side

 

9. Provision for discount on debtors Profit and loss A/c Dr

To Provision for Discount on debtors

Debit side of P & C A/c as a separate from

Profit and loss account will be reflected as under :

Profit and loss A/c with imagination

Deducted from debtors
  To Bad debts

As appearing in trial balance

Add : further bad debts

(as in the adjustment) if any

Add : provision for bad debts (given in the adjustment) Less : Provision for Bad debts existing If existing provision is > 24,000 then it should be reflected on the credit side. Say existing provision is 31,000.

     

 

  1. The Net Profit of a business after debiting all expenses but before charging any commission for the year ended 31st March 2014 is `55,000. Calculate commission payable to Manager if he is entitled to a commission of 10% on profits;
  2. a) before charging any commission.
  3. b) after charging such commission.

 

  1. From the following particulars, prepare profit and loss A/c for the year ended 31st March 2014.

          (i)       Gross Profit `50,000

(ii)      Administration expenses `16,000.

(iii)     Selling and distribution Expenses :`12,000.

(iv)     Non-operating Expenses `7,000.

(v)      Non-operating incomes :`5,000.

Adjustment : Manager is entitled to commission of

  1. i) 20% on profits before charging such commission.
  2. ii) 20% on profit after charging such commission.
  3. Prepare Trading and Profit and Loss Account for the year ended 31st March, 2014 and Balance Sheet as at 31st March, 2014 from the following particulars.
Particulars Dr. (`) Cr. (`)
Capital

Cash in Hand

Bank overdraft @ 5% (1st April, 2013)

Purchases and Sales

Returns

Establishment Charges

Taxes and Insurance

Bad Debts Reserve

Bad Debts

Sundry Debtors and Creditors

Commission

Investments

Stock on 1st April, 2013

Drawings

Furniture

Bills Receivable and Bills Payable

Collected Sales Tax

 

1,500

 

12,000

1,000

2,500

500

 

500

5,000

 

4,000

3,000

1,400

600

3,000

 

35,000

10,000

 

2,000

15,000

2,000

 

 

1,000

 

1,850

500

 

 

 

 

2,500

150

35,000

You are further required to take into consideration the following information :

(i)       Salary `100 and Taxes `400 are outstanding but Insurance`50 prepaid.

(ii)      Commission amounted to `100 has been received in advance for work to be done the next year.

(iii)     Interest accrued on investments `210.

(iv)     Bad Debts Reserve is to be maintained at `1,000.

(v)      Depreciation on Furniture is to be charged at 10%.

(vi)     Stock on 31stMarch, 2014 was valued at `4,500.

(vii)    A fire occurred on 25th March, 2014 in the godown and stock of the value of `1,000 was destroyed. It was fully insured and the insurance company admitted the claim in full.

 

  1. The following Trial Balance was extracted from the books of Mr. Bhakta as at
    31st March, 2014.
Dr. Balance (`) Cr. Balance (`)
Stock on 1-4-2014

Purchases

Wages

Trade Expenses

Freight and Dock Charges

Travelling Expenses

Lighting and Heating ( Factory)

Stores Consumed

Rent Paid

Establishment Charges

Interest on Mr. Yadav’s Loan

Sundry Debtors

Cash

Fixed Assets

65,000

7,10,000

22,000

5,000

8,000

3,800

7,200

2,000

16,500

18,000

1,500

1,42,000

6,000

3,00,000

Capital

Rent Received

Loan from

Mr. Sahil @ 15% p.a.

Sales

Discount

Outstanding  Wages

Trade Expenses accrued but not paid

Sundry Creditors

 

2, 50,000

3,900

20,000

 

9,50,000

600

2,000

500

80,000

 

 

 

 

Adjustments : –

(i)       Goods costing `20,000 were purchased and included into stock but no entry was passed to record the purchase.

(ii)      Loan from Mr. Yadav was taken on 1st June, 2013.

(iii)     Sundry Debtors include an amount of `2,000 due from a customer who has become insolvent and nothing is recoverable from his estate.

(iv)     Create a provision of 5% for Doubtful Debts and 2% for discount on Debtors.

(v)      Three months lighting and heating bill due but not paid `3,000.

(vi)     Rent is paid for 11 months but is received for 13 months.

(vii)    Stock amounted to `90,000 on 31st March, 2014.

Prepare Trading and Profit and Loss Account for the year ended 31st March, 2014 and a Balance Sheet as that date.

  1. The following balances were extracted from the books of Mr. DKG as at
    31st March, 2014.
Dr. Balance (`) Cr. Balance (`)
Stock at the beginning

Rent

Salary

Bad-Debts

Provision for Doubtful Debts

Travelling Expenses

Insurance Premium

Proprietor’s Withdrawls

Telephone Charges

Printing and Advertising

Commission (Cr.)

Rent from Sublet

Land and Building

Furniture

Cash

41,000

9,000

20,000

400

3,000

1,400

1,800

4,000

7,300

5,000

6,000

4,800

1,40,000

10,000

2,900

Purchases

Sales

Returns (Dr.)

Returns (Cr.)

Carriage Inward

Carriage Outward

Capital

Loan (Cr.)

Sales Tax Collected

Debtors

Creditors

Investments

Interest on Investments

 

2,20,000

2,80,000

6,000

2,000

3,500

500

1,75,000

20,000

3,000

40,000

24,000

5,000

600

 

 

 

Prepare Trading and Profit & Loss Account for the year and a Balance Sheet as at 31st March, 2014, after taking into account the following :

(i)       Stock was`75,000 on 31st March, 2014. You are informed that a fire occurred on 28th March, 2014 in the godown and stock of the value of `10,000 was destroyed. Insurance Company admitted a claim of 75%.

(ii)      One-third of the commission received is in respect of work to be done next year.

(iii)     Create a provision of 5% for Doubtful Debts.

(iv)     50% of Printing and Advertising is to be carried forward as a charge in the following year.

(v)      `900is due for interest on loan.

(vi)     Provide for Manager’s Commission at 10% on Net Profit before charging such commission.

  1. From the following Trial Balance of Sh. Sushil, prepare Trading and Profit & Loss Account for the year ending 31st March, 2014 and a Balance Sheet as at that date :
Dr. Balance (`) Cr. Balance (`)
Stock at Commencement

Purchases

Returns Inward

Sundry Debtors

Cash

Manufacturing Expenses

Trade Expenses

Carriage

Salaries and Wages

Postage and Telegrams

Stationery

Freight Inwards

Land and Building

Patents

Furniture

Insurance Premium

40,000

3,20,000

7,000

80,000

9,400

44,000

7,200

3,500

15,800

1,500

800

4,300

2,00,000

8,000

10,000

6,000

7,57,500

Sales

Loan from Mr. Naresh @ 15% p.a.

Return Outward

Bank

Provision for Doubt Debts

Discount

Rent of Premises sublet, for the

year to 30th Sept., 2014

Capital

Sundry Creditors

 

5,10,000

40,000

8,000

24,000

2,500

1,800

 

4,000

1,20,000

47,000

 

 

 

 

 

 

7,57,500

Information :

(i)       Closing Stock was valued at `60,000. You are informed that goods valued `12,000 were sold and dispatched on 29th March, 2014, but no entry was passed to this effect.

(ii)      Insurance Premium include`1,200 paid on 1st October, 2013 to run for one year from October 1, 2013 to Sept. 30, 2014.

(iii)     Loan from Mr. Naresh was taken on 1st July, 2013. Interest has not been paid so far.

(iv)     Create provision for Doubtful Debts at 5% on Sundry Debtors after writing off `600 as Bad-debts during the year.

(v)      A bill of `3,200 for advertisement in newspaper remained unpaid at the end of the year.

(vi)     Purchases include Furniture costing `5,000 purchased on 1st April, 2013.

(vii)    Charge 10% p.a. depreciation on Furniture and write off  of patents.

  1. From the following Trial Balance, prepare Trading and Profit & Loss Account for the year ended 31st March, 2012 and a Balance Sheet after making the adjustments given as on the date.
Dr. Balance Dr. (`) Cr. (`)
Sundry Debtors

Stock (1st April, 2011)

Cash in hand

Cash at Bank

Plant and Machinery

Sundry Creditors

Commission

Trade Expenses

Sales

Sales Returns

Salaries

Carriage Outwards

Rent

Insurance Premium

Bills Payable

Purchases

Purchase Returns

Discount

Business Premises

Capital

32,000

22,000

35

1,545

17,500

 

 

1,050

 

5,500

2,225

400

2,100

4,000

 

1,20,000

 

1,100

34,500

 

2,43,980

 

 

 

 

 

10,650

5,200

 

1,40,000

 

 

 

 

 

7,500

 

 

 

 

79,500

2,43,980

Information :

The stock on 31st March, 2012 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 per cent is to be provided for doubtful debts. Provide 2% for discount on Debtors. Depreciate Plant and Machinery by 10% and Business Premises by 2%.

8(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, 2012 and Balance Sheet as on that date :

Dr. Balance (`) Cr. Balance (`)
Plant & Machinery on 1-4-2011

Plant & Machinery Purchased on 1-7-2011

Sundry Debtors

Creditors

Furniture

Motor Car

Purchases

Sales

Sales Returns

Salaries

Opening Stock

Motor car Expenses

Stationery

 

80,000

20,000

1,20,000

32,000

5,000

70,000

1,60,000

2,80,000

15,000

36,000

60,000

6,000

500

 

Rent

Insurance Premium paid

from 1-1-12 to 31-12-12

Cash at Bank

Wages

Octroi

Advertising

Carriage Inwards

Carriage Outwards

Fuel and Power

Manoj’s Capital

Manoj’s Drawings

Brokerage

Donation

12,000

 

1,200

5,400

20,000

400

4,800

10,200

2,000

15,700

3,50,000

12,000

700

51,00

The following information is relevant :

(i)       Closing Stock `55,000. Stock valued at `10,000 was destroyed by fire on 18th March, 2012 but the Insurance Company admitted a claim of `6,800 only which was received in April, 2012.

(ii)      Stationery for `150 was consumed by the Proprietor.

(iii)     Goods costing `1,200 were given away as charity.

(iv)     A new Signboard cost `1,500 is included in Advertising.

(v)      Rent is to be allocated 2/3rd to Factory and 1/3rd to Office.

(vi)     Depreciate machinery by 10% and Motor Car by 20%

(vii)    Motor Car is used partly for business and partly for private purposes, therefore, one half of Car expenses including Car Depreciation is to be charged to proprietor’s account.

 

 

11.(A) On 31st March, 2012 the following Trial Balance was extracted from the books of Sh. Ghanshyam Das

Dr. Balance Dr. (`) Cr. (`)
Capital Account

Debtors and Creditors

Loan on Mortgage

Interest on Loan

Discount

Stock on 1st April, 2011

Motor Vehicle

Cash at Bank

Investments

Wages

Land and Building

Bad Debts

Purchases and Sales

Purchases and Sales Returns

Carriage Outward

Carriage Inward

Salaries

Outstanding Salaries

Rates, Taxes and Insurance

Advertising

General Expenses

Bills Receivable and Payable

Prepaid Insurance

 

40,000

 

2,250

 

20,000

50,000

4,450

16,000

18,000

2,80,000

1,500

2,50,000

12,000

8,000

6,500

7,200

 

15,000

5,000

6,400

7,500

3,000

7,52,800

2,00,000

25,000

30,000

 

1,800

 

 

 

 

 

 

 

4,80,000

10,000

 

 

 

600

 

 

 

5,400

 

7,52,800

          Prepare Trading and Profit & Loss Account for the year ended 31st March, 2012 and Balance Sheet as on that date, after making adjustments for the following matters :

(i)       Depreciate Land and Building at 2.5% and Motor Vehicles at 20%.

(ii)      Interest on Loan at 15% p.a. is unpaid for six months.

(iii)     Ghanshyam Das withdrew `2,000 for his private use. This amount was included in general expenses.

(iv)     Interest on Investments is receivable for full year @ 10%.

(v)      Provide for Manager’s Commission at 10% on net profit after charging such commission.

(vi)     Stock in hand on 31stMarch, 2012 was valued at `25,000 (Realisable Value `22,000).

  1. From the following trial balance and information, prepare Trading and Profit and Loss Account of Mr. Rishabh for the year ended 31st March, 2002 and a Balance Sheet as on that date :
Particulars Dr. (`) Cr. (`)
Capital

Drawings

Land and Buildings

Plant and Machinery

Furniture

Sales

Returns Outward

Debtors

Loan from Gajanand on 1-7-2001 @ 6% p.a.

Purchases

Returns Inward

Carriage

Sundry Expenses

Printing and Stationery

Insurance Expenses

Provision for Doubtful Debts.

Bad Debts.

Stock of General Goods on 1-4-2001

Salaries and Wages

Creditors

Trade Expenses

Cash at Bank

Cash in Hand

 

 

12,000

90,000

20,000

5,000

 

 

18,400

 

80,000

5,000

10,000

600

500

1,000

 

400

21,300

18,500

 

800

12,600

1,280

2,97,380

1,00,000

 

 

 

 

1,50,000

4,000

 

30,000

 

 

 

 

 

 

1,380

 

 

 

12,000

 

 

 

2,97,380

          Information :

(i)       Stock of General goods on 31.3.2002 valued at `27,300.

(ii)      Fire occurred on 23rd March, 2002 and `10,000 worth of general goods were destroyed. The Insurance Company accepted claim for `6,000 only and paid the claim money on 20th April, 2002.

(iii)     Bad Debts amounting to `400 are to be written off. Provision for Bad and Doubtful debts is to be made at 5% and for discount at 2% debtors.

(iv)     Received `6,000 worth of goods on 27th March, 2002 but the invoice of purchase was not recorded in Purchase Book.

(v)      Rishabh took away goods worth `2,000 for personal use but no record was made thereof.

(vi)     Charge depreciation at 2% on Land and Buildings, 20% on Plant and Machinery, and 5% on Furniture.

(vii)    Insurance prepaid amounts to `20.

  1. 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 on that date :
Particulars Dr. (`) Cr. (`)
Stock on 1st April, 2009

Purchases and Sales

Returns

Capital Account

Drawings

Land and Buildings

Furniture and fittings

Trade Debtors and Trade Creditors

Cash in Hand

Investments

Interest

Commission

Direct Expenses

Postage, Stationery and Telephone

Fire Insurance Premium

Salaries

Bank Overdraft

625

903

22

45

300

80

250

35

100

75

25

20

90

2,570

1,372

13

300

450

5

30

400

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)     Salaries `10,00 for March, 2010 and bank overdraft interest estimated at `20,000 are yet to be recorded as outstanding charges.

(iv)     Depreciation is to be provided on land and buildings @ 5% per annum and on furniture and fittings @ 10% per annum.

(v)      Make a provision for doubtful debts @ 5% of trade debtors.

 

 

  1. Prepare Trading and Profit & Loss Account and Balance Sheet as on 31st March, 2012, from the following balances :
  (`)   (`)
Capital A/c

Drawings A/c

Bills Receivable

Plant & Machinery

Sundry Debtors

Loan A/c (Cr.) at 12% p.a.

Manufacturing Wages

Returns Inward

Purchases

Sales

Rent

Commission Received

 

5,00,000

36,000

5,800

3,80,000

58,000

20,000

40,000

3,000

1,20,000

2,60,000

28,000

6,000

Stock on 1-4-2011

Salaries & Wages

Outstanding Salaries and Wages

Insurance (including premium of

` 1,000 per annum paid upto

30-9-2012)

Cash

Bank Overdraft

Repairs & Renewals

Interest & Discount (Dr.)

Bad-Debts

Sundry Creditors

Fixtures & fittings

67,000

24,000

2,000

 

 

2,600

46,600

15,000

1,600

4,400

4,000

30,000

12,000

Adjustments :

(i)       Stock on hand on 31stMarch, 2012 was `80,000.

(ii)      Further Bad-debts written off `2,000 and Create a provision of 5% on Sundry Debtors.

(iii)     Rent has been paid up to 31st May, 2012.

(iv)     Manufacturing wages include `10,000 of a new Machinery purchased on 1st October, 2011.

(v)      Depreciate Plant and Machinery by 10% p.a. and Fixtures and Fittings by 20% p.a.

(vi)     Commission earned but not received `1,000.

(vii)    Interest on Loan for the last two months is not paid.

(viii)   Goods worth `4,000 were distributed as free samples.

 

 

  1. From the following Trial Balance and information, prepare Trading and Profit & Loss Account of Mr. Rishabh for the year ended 31st March, 2007 and a Balance Sheet as on that date.
Particulars Dr. (`) Cr. (`)
Capital

Drawings

Land and Buildings

Plant and Machinery

Furniture

Sales

Return Outward

Debtors

Loan from Gajanand on 1-7-2006 @ 6% p.a.

Purchases

Returns Inward

Carriage

Sundry Expenses

Printing and Stationery

Insurance Expenses

Provision for bad and Doubtful Debts.

Provision for discount on debtors

Bad Debts.

Opening Stock on 1-4-2006

Salaries and Wages

Creditors

Trade Expenses

Cash at Bank

Cash in Hand

 

12,000

90,000

20,000

5,000

 

 

18,400

 

80,000

5,000

10,000

600

500

1,000

 

 

400

21,300

18,500

 

800

4,600

1,280

2,89,380

1,00,000

 

 

 

 

1,40,000

6,000

 

30,000

 

 

 

 

 

 

1,000

380

 

 

 

12,000

 

 

 

2,89,380

          Additional Information :

(i)       Value of closing stock on 31-3-2007 was `27,300.

(ii)      Fire occurred on 23rd March, 2007 and `10,000 worth of general goods were destroyed. The insurance company accepted claim for `6,000 only and paid the claim money on 10th April, 2007.

(iii)     Bad debts amounting to `400 are to be written off.Provisions for bad and doubtful debts is to be made at 5% and for discount at 2% on debtors. Make a provision of 2% on creditors for discount.

(iv)     Received `6,000 worth of goods on 27th March, 2007 but the Invoice of purchases was not recorded in Purchase Book.

(v)      Rishabh took away goods worth `2,000 for personal use but no record was made thereof.

(vi)     Charge depreciation at 2% on land and building, 20% on plant and machinery and 5% on furniture.

(vii)    Insurance prepaid amounts to `200.

  1. The following is the Trial Balance of a trader as on 31-3-2009.
Particulars Dr. (`) Cr. (`)
Cash in hand

Land and Building

Plant and Machinery

Debtors and Creditors

Stock 1-4-2008

15% Investment 1-4-2008

Purchases and Sales

Bills Receivable ad Bills Payable

Wages

Salaries

Rent and Rates

Drawings

Carriage Outward

Custom Duty on Purchase

Customs duty payable

Fire Insurance Premium

Advertisement

Provision for bad debt.

Bad Debts.

Interest

Furniture

Capital

8,000

40,000

20,000

25,000

10,000

20,000

95,000

15,000

8,000

16,000

15,000

5,000

6,000

16,000

 

15,000

20,000

 

6,000

 

20,000

 

3,60,000

 

 

 

60,000

 

 

1,90,000

21,000

 

 

 

 

 

 

25,000

 

 

2,000

 

2,000

 

60,000

3,60,000

          Additional Information :

(i)       Stock on 31stMarch, 2009 was valued at `60,000.

(ii)      Bill receivable includes a bill of `4,000 which has become bad.

(iii)     Sale also includes sale of furniture on 1-4-2008 for `10,000 (Book value
` 12,000)

(iv)     Wages include `6,000 spent on erection of machine on 1-4-2008.

(v)      Depreciate machinery 10% furniture by 20%.

(vi)     Appreciate building by 10%.

(vii)    Interest includes `200 received from a debtor for late payment and balance for investments.

(viii)   Bad debts recovered `500 were taken as receipt from debtors.

Prepare Trading and Profit and Loss Account for the year ending 31-3-2009 and a Balance Sheet as on that date.

 

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