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 31^st 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.

 

 

4. Following Trial Balance has been extracted from the books of M/s Ram Prasad & Sons on 31^st 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 31^st March, 2014 amounted to `8,000.

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

 

3. You are asked to prepare Trading and Profit and Loss Account and Balance Sheet for the year ended 31^st 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 31^st March, 2014 at `4,500. Stock on 31<sup>st</sup>March, 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

3. 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 31^st 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 31^st May, 2014.

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

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

DKG

4. The following are the balances of Messrs Gupta & Co. as at 31^st 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 31^st March, 2009 after taking into account the following adjustments : –

(i)       Stock on land as on 31^st 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 30^th 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.

3. Prepare Trading and Profit & Loss Account for the year ended 31^st 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 31^stMarch, 2005 was value date `4,500.

 

6. From the following Trial Balance extracted from the books of A, prepare Trading and Profit & Loss Account for the year ending 31^st 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 31^stMarch, 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.

 

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

 

6. From the following particulars, prepare profit and loss A/c for the year ended 31^st 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 31^st March, 2014 and Balance Sheet as at 31^st 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 31^stMarch, 2014 was valued at `4,500.

(vii)    A fire occurred on 25^th 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.

 

37. The following Trial Balance was extracted from the books of Mr. Bhakta as at
    31^st 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 1^st 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 31^st March, 2014.

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

39. The following balances were extracted from the books of Mr. DKG as at
    31^st 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 31^st March, 2014, after taking into account the following :

(i)       Stock was`75,000 on 31<sup>st</sup> March, 2014. You are informed that a fire occurred on 28<sup>th</sup> 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.

36. From the following Trial Balance of Sh. Sushil, prepare Trading and Profit & Loss Account for the year ending 31^st 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 29^th March, 2014, but no entry was passed to this effect.

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

(iii)     Loan from Mr. Naresh was taken on 1^st 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 1^st April, 2013.

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

6. From the following Trial Balance, prepare Trading and Profit & Loss Account for the year ended 31^st 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 31^st 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 31^st 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 18^th 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 2/3^rd to Factory and 1/3^rd 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 31^st 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 31^st 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 31^stMarch, 2012 was valued at `25,000 (Realisable Value `22,000).

17. From the following trial balance and information, prepare Trading and Profit and Loss Account of Mr. Rishabh for the year ended 31^st 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 23^rd 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 20^th 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 27^th 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.

24. 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 31^st 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 31^st 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.

 

 

27. Prepare Trading and Profit & Loss Account and Balance Sheet as on 31^st 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 31^stMarch, 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 31^st May, 2012.

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

 

 

8. From the following Trial Balance and information, prepare Trading and Profit & Loss Account of Mr. Rishabh for the year ended 31^st 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 23^rd 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 10^th 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 27^th 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.

12. 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 31^stMarch, 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.