Accountancy Dk Goel 2019 for Class 11 Commerce Accountancy Chapter 15

Question 23:

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


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

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

Answer:

Financial Statements of Modern Traders
Trading Account for the year ended March 31, 2017
Dr.					Cr.
Particulars	Amount (Rs)	Particulars		Amount (Rs)
Opening Stock	15,000	Sales	1,20,000
Purchases	82,000	Less: Sale on Approval Basis	7,200	1,12,800
Freight Inwards	2,000	Closing Stock	15,000
Wages	1,300	Add: Sale on Approval Basis	6,000	21,000
Gross Profit (Balancing Figure)	33,500
	1,33,800			1,33,800

Profit and Loss Account for the year ended March 31, 2017
Dr.					Cr.
Particulars		Amount (Rs)	Particulars	Amount (Rs)
Depreciation: (WN1)			Gross Profit	33,500
Plant & Machinery	4,000		Discount Received	400
Furniture	250	4,250	Rent Revenue	1,200
Bad Debts	400
Add: New Provision (WN2)	670
Less: Old Provision	800	270
Carriage Outwards		500
Insurance	700
Less: Prepaid	100	600
Rent, Rates & Taxes		4,600
Printing & Stationery		800
Postage & Telegram		800
Salaries		20,000
Net Profit (Balancing Figure)		3,280
		35,100		35,100

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

		1,06,280					1,06,280

Working Notes:

WN1: Calculation of Amount of Depreciation

\begin{array}{l} Depreciation on Machinery = 40, 000 \times \frac{10}{100} = Rs 4, 000 \\ Depreciation on Furniture = 5, 000 \times \frac{5}{100} = Rs 250 \end{array}

WN2: Calculation of Provision for Doubtful Debts

$\begin{array}{ccl} Provision for Doubtful Debts & = & (Sundry Debtors - Sale on Approval Basis) \times \frac{Rate}{100} \\ = & (20, 600 - 7, 200) \times \frac{5}{100} = Rs 670 \end{array}$

Question 24:

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

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

	7,06,000	7,06,000

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

Answer:

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

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

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

		2,50,260				2,50,260

Working Notes:

WN1: Calculation of Amount of Depreciation
$\begin{array}{l} Depreciation on Machinery = 1, 00, 000 \times \frac{5}{100} = Rs 5, 000 \\ Depreciation on Furniture = 12, 000 \times \frac{6}{100} = Rs 720 \\ Depreciation on Loose Tools = Rs 4, 000 (20, 000 - 16, 000) \end{array}$

WN2: Calculation of Provision for Discount on Debtors
$Provision for Discount on Debtors = 56, 000 \times \frac{2}{100} = Rs 1, 120$

WN3: Calculation of Accrued Interest on Investment
$Interest on Investment = 6, 000 \times \frac{10}{100} = Rs 600$
Interest on Loan already received = Rs 300
So, Accured Interest = Rs 300

Question 25:

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

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

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

Answer:

Trading Account for the year ended March 31, 2018
Dr.				Cr.
Particulars		Amount (₹)	Particulars	Amount (₹)
Opening Stock		50,000	Sales	12,50,000
Purchases	5,30,000		Closing Stock	60,000
Less: Advance against Order	(10,000)	5,20,000
Wages	2,15,000
Add: Included in General Expenses	20,000
Less: Construction of Shed	(50,000)
Less: Wages on Machinery	(10,000)	1,75,000
Gross Profit		5,65,000
		13,10,000		13,10,000

Profit & Loss Account for the year ended March 31, 2018
Dr.					Cr.
Particulars			Amount (₹)	Particulars	Amount (₹)
Cash Discount			16,000	Gross Profit	5,65,000
General Expenses	45,000
Less: Wages	(20,000)		25,000
Stationery			6,000
Trade Charges			25,000
Rent			44,000
Charity			5,000
Advertisement Expenses			10,000
Carriage on Sales			12,000
Depreciation on:
Furniture		15,000
Building		1,50,000
Plant & Machinery		1,62,000	3,27,000
Net Profit			95,000
			5,65,000		5,65,000

Balance Sheet as on March 31, 2018
Dr.					Cr.
Liabilities		Amount (₹)	Assets		Amount (₹)
Creditors		1,36,000	Furniture	1,00,000
Outstanding Trade Charges		5,000	Less: Depreciation	15,000	85,000
Outstanding Rent		4,000	Plant & Machinery	6,00,000
Bank Overdraft		45,000	Add: Additions	2,10,000
Capital	20,00,000		Less: Depreciation	1,62,000	6,48,000
Less: Drawings	40,000		Unexpired Advertisement Expenses		20,000
Add: Net Profit	95,000	20,55,000	Building	14,50,000
Creditors for Machinery		2,00,000	Add: Additions	50,000
			Less: Depreciation	1,50,000	13,50,000
			Cash in Hand		22,000
			Closing Stock		60,000
			Debtors		2,20,000
			Advance against Purchases		10,000
			Bills Receivable		30,000
		24,45,000			24,45,000

Question 26:

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

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

Additional Information :
(a) Stock on 31st March 2016 is ₹ 20,600.
(b) Depreciate machinery @ 10% p.a.
(c) Make a Provision @ 5% for Doubtful Debts.
(d) Provide

2 \frac{1}{2} %

for discount on sundry debtors.
(e) Rent and Rates include security deposit of ₹ 400.
(f) Insurance prepaid ₹ 120.

Answer:

Trading Account for the year ended March 31, 2016
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Opening Stock	8,000	Sales	2,20,000
Purchases	1,26,000	Closing Stock	20,600
Stores Consumed	6,050
Productive Wages	56,500
Carriage	3,050
Gross Profit	41,000
	2,40,600		2,40,600

Profit & Loss Account for the year ended March 31, 2016
Dr.				Cr.
Particulars		Amount (₹)	Particulars	Amount (₹)
Salaries		16,000	Gross Profit	41,000
Rent & Rates	5,200
Less: Security Deposit	(400)	4,800
Insurance	1,320
Less: Prepaid	120	1,200
General Expenses		2,600
Bad Debts	1,020
Add: Provision for DD	2,200	3,220
Provision for Discount on Debtors		1,045
Depreciation on Machinery		5,200
Net Profit		6,935
		41,000		41,000

Balance Sheet as on March 31, 2016
Dr.						Cr.
Liabilities		Amount (₹)	Assets			Amount (₹)
Creditors		20,000	Machinery		52,000
Capital	1,45,600		Less: Depreciation		5,200	46,800
Add: Net Profit	6,935	1,52,535	Building			67,000
Secured Loan		15,000	Cash in Hand			1,930
			Closing Stock			20,600
			Debtors	44,000
			Less: Provision for DD	2,200
			Less: Provision for Discount	1,045		40,755
			Furniture			3,350
			Prepaid Insurance			120
			Security Deposit			400
			Bank			6,580
		1,87,535				1,87,535

Question 27:

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

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

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

Answer:

Trading Account for the year ended March 31, 2016
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Opening Stock	22,000	Sales	1,34,500
Purchases	1,18,870	Closing Stock	12,450
Gross Profit	6,080
	1,46,950		1,46,950

Profit & Loss Account for the year ended March 31, 2016
Dr.				Cr.
Particulars		Amount (₹)	Particulars	Amount (₹)
Salaries		2,225	Gross Profit	6,080
Trade Expenses	1,075		Net Loss	4,275
Add: Outstanding	150	1,225
Rent	900
Add: Outstanding	85	985
Carriage Outwards		400
Bad Debts	400
Add: Provision for DD	1,580	1,980
Discount		1,100
Depreciation on Machinery		1,750
Depreciation on Premises		690
		10,355		10,355

Balance Sheet as on March 31, 2016
Dr.						Cr.
Liabilities		Amount (₹)	Assets			Amount (₹)
Sundry Creditors		10,650	Plant &Machinery		17,500
Capital	79,500		Less: Depreciation		1,750	15,750
Less: Net Loss	4,275	75,225	Cash in Hand			35
Bills Payable		7,500	Closing Stock			12,450
Rent Outstanding		85	Premises		34,500
Trade Expenses Outstanding		150	Less: Depreciation		690	33,810
			Debtors	32,000
			Less: Further Bad Debts	400
			Less: Provision for DD	1,580		30,020
			Cash at Bank			1,545
		93,610				93,610

Question 28:

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

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

Prepare Trading and Profit & Loss Account for the year ended 31st March 2019 and Balance Sheet as at that date after taking into account the following adjustments :
(i) Closing Stock was valued at ₹ 19,000.
(ii) Depreciation to be provided on Land and Building @ 5% p.a. and on Plant & Machinery @ 10% p.a.
(iii) Write off ₹ 2,000 as Bad debt.
(iv) Insurance was prepaid ₹ 700.
(v) Create provision for doubtful debts @ 5% on debtors.
(vi) Wages include ₹ 4,800 for installation of a new machinery.

Answer:

Financial Statement of Ritesh Traders
Trading Account for the year ended March 31, 2019
Dr.					Cr.
Particulars		Amount (₹)	Particulars	Amount (₹)
Opening Stock		5,620	Sales	3,74,800
Purchases		1,54,200	Closing Stock	19,000
Wages	1,26,000
Less: Wrong inclusion	4,800	1,21,200
Carriage Inward		900
Freight on Purchase		4,900
Gross Profit (Balancing Figure)		1,06,980
		3,93,800		3,93,800

Profit and Loss Account for the year ended March 31, 2019
Dr.					Cr.
Particulars		Amount (₹)	Particulars	Amount (₹)
Depreciation:			Gross Profit	1,06,980
Land & Building	50,000		Interest on Securities	6,400
Plant & Machinery	18,680	68,680	Discount Received	420
Insurance	2,800
Less: Prepaid	700	2,100
Old Bad Debts	–
Add: New Bad Debts	2,000
Add: New Provision	690
Less: Old Provision	–	2,690
Postage		500
Trade Expenses		1,000
Salaries		8,000
Repairs to Machinery		1,400
Discount Allowed		1,500
Net Profit (Balancing Figure)		27,930
		1,13,800		1,13,800

**Balance Sheet**
*as on March 31, 2019*
Liabilities		Amount (₹)	Assets			Amount (₹)
Capital	13,47,600		Fixed Assets
Add : Net Profit	27,930		Plant & Machinery	1,82,000
Less: Drawings	5,600	13,69,930	Add: Wages	4,800
			Less: Dep.	18,680		1,68,120
			Land & Building	10,00,000
			Less: Dep.	50,000		9,50,000

Current Liabilities			Current Assets
Creditors		40,000	Closing Stock			19,000
Bills Payable		4,000	Securities			6,00,000
X’s Loan		18,600	Prepaid Insurance			700
Bank Overdraft		3,40,000	Bills Receivable			7,000
Loan		11,000	Debtors		15,800
			Less: Bad debts		2,000
			Less: Provision		690	13,110
			Cash in Hand			25,600
		17,83,530				17,83,530

Working Note:

WN1: Calculation of Depreciation

\begin{array}{l} Depreciation on Machinery = 1, 86, 800 \times \frac{10}{100} = Rs 18, 680 \\ Depreciation on Building = 10, 00, 000 \times \frac{5}{100} = Rs 50, 000 \end{array}

WN2: Calculation of Provision for Doubtful Debts

\begin{array}{ccl} Provision for Doubtful Debts & = & (Sundry Debtors - Further Bad Debts) \times \frac{Rate}{100} \\ = & (15, 800 - 2, 000) \times \frac{5}{100} = Rs 690 \begin{array}{l}  \end{array} \end{array}

Question 29:

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

Name of Account	Debit (₹)	Credit (₹)
Drawings and Capital	15,000	3,25,000
Plant and Machinery	2,00,000	–
Motor Vehicle	1,50,000	–
Return Inward and Outward	25,000	37,000
Stock on 1st April, 2018	82,000	–
Purchases and Sales	4,40,000	6,75,000
Carriage Inward	6,000	–
Trade Expenses	2,500	–
Bad Debts	4,250	–
Provision for Doubtful Debts	–	6,000
Commission	–	4,000
Rent, Rates & Taxes	12,000	–
Salaries and Wages	24,000	–
Debtors and Creditors	70,000	55,000
Fuel and Water	4,750	–
Cash in Hand	16,500	–
Cash at Bank	50,000	–

Total	11,02,000	11,02,000

Adjustments:
(i) Closing Stock was valued at ₹ 1,12,500.
(ii) Commission include ₹ 1,200 being commission received in advance.
(iii) Salaries and wages is outstanding for the month of Feb. & March, 2019.
(iv) Depreciate Plant & Machinery by 15% and Motor Vehicle by 20%.
(v) Write off ₹ 500 as further Bad Debts and maintain provision for doubtful debts at 1% on debtors.

Answer:

Trading Account for the year ended March 31, 2019
Dr.						Cr.
Particulars		Amount (₹)	Particulars		Amount (₹)
Opening Stock		82,000	Sales	6,75,000
Purchases	4,40,000		Less: Return Inwards	25,000	6,50,000
Less: Return Outwards	37,000	4,03,000	Closing Stock		1,12,500
Carriage Inward		6,000
Fuel and Water		4,750
Gross Profit (Balancing Figure)		2,66,750
		7,62,500			7,62,500

Profit and Loss Account for the year ended March 31, 2019
Dr.						Cr.
Particulars		Amount (₹)	Particulars		Amount (₹)
Depreciation:			Gross Profit		2,66,750
Plant & Machinery	30,000		Commission	4,000
Motor Vehicle	30,000	60,000	Less: Unearned	1,200	2,800
Salaries & Wages	24,000		Provision for Doubtful Debts
Add: Outstanding	4,800	28,800	(Old Provision - New Provision)		5,305
Old Bad Debts	4,250
Add: Further Bad Debts	500	4,750
Trade Expenses		2,500
Rent, Rates and Taxes		12,000
Net Profit (Balancing Figure)		1,66,805
		2,74,855			2,74,855

Balance Sheet as on March 31, 2019
Liabilities		Amount (₹)	Assets			Amount (₹)
Capital	3,25,000		Fixed Assets
Add : Net Profit	1,66,805		Plant & Machinery	2,00,000
Less: Drawings	15,000	4,76,805	Less: Dep.	30,000		1,70,000
			Motor Vehicle	1,50,000
			Less: Dep.	30,000		1,20,000

Current Liabilities			Current Assets
Creditors		55,000	Closing Stock			1,12,500
Outstanding Salaries and Wages		4,800	Debtors		70,000
Unearned Commission		1,200	Less: Bad Debts		500
			Less: Provision for Bad Debts		695	68,805
			Cash in Hand			16,500
			Cash at Bank			50,000
		5,37,805				5,37,805

Working Note:

WN1: Calculation of Amount of Depreciation

\begin{array}{l} Depreciation on Machinery = 2, 00, 000 \times \frac{15}{100} = Rs 30, 000 \\ Depreciation on Motor Vehicle = 1, 50, 000 \times \frac{20}{100} = Rs 30, 000 \end{array}

WN2: Calculation of Provision for Doubtful Debts

\begin{array}{ccl} Provision for Doubtful Debts & = & (Sundry Debtors - Further Bad Debts) \times \frac{Rate}{100} \\ = & (70, 000 - 500) \times \frac{1}{100} = Rs 695 \end{array}

WN3: Calculation of Outstanding Salaries and Wages

\begin{array}{l} Salaries and Wages paid for 10 months = 24,000 \\ Salaries and Wages outstanding for 2 months =24,000 × \frac{2}{10} = Rs 4,800 \end{array}

Question 30:

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

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

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

Answer:

Financial Statements of Shri R. Lal
Trading Account for the year ended March31, 2017
Dr.						Cr.
Particulars		Amount (Rs)	Particulars		Amount (Rs)
Opening Stock		11,460	Sales	1,40,370
Purchases	80,000		Less: Return Inwards	4,240	1,36,130
Less: Return Outwards	2,820	77,180	Closing Stock		14,290
Carriage Inwards		2,310
Wages		6,280
Gross Profit (Balancing Figure)		53,190
		1,50,420			1,50,420

Profit and Loss Account for the year ended March 31, 2017
Dr.							Cr.
Particulars			Amount (Rs)	Particulars		Amount (Rs)
Depreciation: (WN1)				Gross Profit		53,190
Building		625		Rent	2,100
Furniture		175		Add: Accrued	200	2,300
Additions to Building		140	940	Discount		190
Salary & Commission		9,870
Add: Outstanding Salaries		570	10,440
Bad Debts		1,400
Add: Further Bad Debts		570
Add: New Provision (WN2)		3,690
Less: Old Provision		3,240	2,420
Interest on Capital			5,000
Rates & Insurance	1,300
Less: Unexpired	240		1,060
Railway Freight on Sales			16,940
Office Expenses			1,340
Printing & Stationery			660
Postage & Telegram			820
Net Profit (Balancing Figure)			16,060
			55,680			55,680

Balance Sheet as on March 31, 2017
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital	1,00,000		Fixed Assets
Add: Interest on Capital	5,000		Building	25,000
Add: Net Profit	16,060		Less: Depreciation	625	24,375
Less: Drawings	17,600	1,03,460	Additions to Building	7,000
			Less: Depreciation	140	6,860
Current Liabilities			Office Furniture	3,500
Sundry Creditors		18,920	Less: Depreciation	175	3,325
Outstanding Salaries		570
			Current Assets
			Closing Stock		14,290
			Bills Receivable		1,240
			Accrued Rent		200
			Unexpired Insurance		240
			Cash in Hand		2,210
			Sundry Debtors	62,070
			Less: Further Bad Debts	570
			Less: Provision for Discount on Debtors	3,690	57,810
			Cash at Bank		12,400

		1,22,950			1,22,950

Working Notes

WN1: Calculation of Amount of Depreciation

WN2: Calculation of Provision for Doubtful Debts

Question 31:

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

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

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

Answer:

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

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

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

		13,89,500				13,89,500

Working Notes

WN1: Calculation of Amount of Depreciation
$\begin{array}{l} Depreciation on Building = 3, 00, 000 \times \frac{5}{100} = Rs 15, 000 \\ Depreciation on Furniture = 80, 000 \times \frac{8}{100} = Rs 8, 000 \end{array}$

WN2: Calculation of Provision for Doubtful Debts

$\begin{array}{ccl} Provision for Doubtful Debts & = & (Sundry Debtors - Further Bad Debts) \times \frac{Rate}{100} \\ = & (2, 50, 000 - 0) \times \frac{5}{100} = Rs 12, 500 \end{array}$

Question 32:

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

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

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

Answer:

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

Profit and Loss Account

for the year ended March 31, 2016

Dr.

Cr.

Particulars

Amount

(Rs)

Particulars

Amount

(Rs)

Depreciation: (WN1)

Gross Profit

1,08,300

Furniture

1,725

Commission Received

2,400

Sales Van

15,000

16,725

Interest on Drawings

1,500

Repairs

2,300

Discount Received

3,800

Add: Outstanding

200

2,500

Old Bad Debts

2,400

Add: Further Bad Debts

2,000

Add: New Provision (WN2)

3,900

Less: Old Provision

3,000

5,300

Discount Allowed

2,600

Provision for Discount on Debtors (WN3)

1,482

Rent

10,000

Add: Outstanding (WN4)

2,000

12,000

Insurance

3,600

Less: Prepaid (WN5)

2,700

900

Interest on Capital

16,000

Carriage on Sales

1,200

Salaries

25,000

Sales Van Expenses

6,000

Net Profit (Balancing Figure)

26,293

1,16,000

Balance Sheet as on March 31, 2016
Liabilities		Amount (Rs)	Assets			Amount (Rs)
Capital	2,00,000		Fixed Assets
Add: Interest on Capital	16,000		Furniture		10,000
Add: Net Profit	26,293		Add: Additions		6,000
Less: Drawings	30,000		Less: Depreciation		1,725	14,275
Less: Interest on Drawings	1,500	2,10,793	Sales Van		75,000
			Less: Depreciation		15,000	60,000

Current Liabilities			Current Assets
Sundry Creditors		43,000	Closing Stock			46,000
Outstanding Salaries		5,000	Bills Receivable			12,100
Outstanding Repairs		200	Bank of Tokyo			32,800
Outstanding Rent		2,000	Prepaid Insurance			2,700
Bills Payable		4,300	Cash in Hand			24,800
			Sundry Debtors	80,000
			Less: Bad debts	2,000
			Less: Provision for Doubtful Debts	3,900
			Less: Provision for Discount on Debtors	1,482		72,618

		2,65,293				2,65,293

Working Notes:

WN1: Calculation of Amount of Depreciation

WN2: Calculation of Provision for Bad Debts

WN3: Calculation of Provision for Discount on Debtors

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

WN5: Calculation of Prepaid Insurance

Question 33:

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

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

	2,09,360	2,09,360

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

Answer:

Financial Statements of Sharma
Trading Account for the year ended March 31, 2019
Dr.						Cr.
Particulars		Amount (₹)	Particulars		Amount (₹)
Opening Stock		19,800	Sales	95,000
Purchases	72,100		Less: Return Inwards	1,300	93,700
Less: Return Outwards	2,700	69,400	Closing Stock		61,700
Salaries & Wages (1/4^th)		5,125
Carriage Inwards		3,200
Gross Profit (Balancing Figure)		57,875
		1,55,400			1,55,400

Profit and Loss Account for the year ended March 31, 2019
Dr.						Cr.
Particulars			Amount (₹)	Particulars	Amount (₹)
Depreciation: (WN1)				Gross Profit	57,875
Machinery		375		Discount Received	2,910
Furniture		500
Sales Van		3,000	3,875
Bad Debts		3,000
Add: Further Bad Debts		200
Add: New Provision (WN2)		900	4,100
Office Expenses			6,210
Telephone Charges			1,050
Rent and Taxes	10,700
Add: Outstanding	900		11,600
Postage & Telegram			950
Printing & Stationery			2,750
Salaries & Wages (3/4^th)			15,375
Commission			8,400
Sales Van Expenses			1,400
Net Profit (Balancing Figure)			5,075
			60,785		60,785

Balance Sheet as on March 31, 2019
Liabilities		Amount (₹)	Assets			Amount (₹)
Capital	50,000		Fixed Assets
Add: Net Profit	5,075		Furniture		5,000
Less: Drawings	7,500	47,575	Less: Depreciation		500	4,500
			Machinery		15,000
Current Liabilities			Less: Depreciation		375	14,625
Creditors for Machinery		15,000	Sales Van		15,000
Sundry Creditors		35,750	Less: Depreciation		3,000	12,000
Outstanding Rent		900
Bills Payable		23,000	Current Assets
			Closing Stock			61,700
			Bills Receivable			12,000
			Cash in Hand			300
			Sundry Debtors	18,200
			Less: Further Bad Debts	200
			Less: Provision for Doubtful Debts	900		17,100

		1,22,225				1,22,225

Working Notes:
WN1: Calculation of Amount of Depreciation

$\begin{array}{l} Depreciation on Furniture = 5, 000 \times \frac{10}{100} = Rs 500 \\ Depreciation on Sales Van = 15, 000 \times \frac{20}{100} = Rs 3, 000 \\ Depreciation on Machinery = 15, 000 \times \frac{10}{100} \times \frac{3}{12} = Rs 375 \end{array}$

WN2: Calculation of Provision for Doubtful Debts

\begin{array}{ccl} Provision for Doubtful Debts & = & (Sundry Debtors - Further Bad Debts) \times \frac{Rate}{100} \\ = & (18, 200 - 200) \times \frac{5}{100} = Rs 900 \end{array}

Question 34:

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

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

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

Answer:

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

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

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

Working Notes:
WN1: Calculation of Amount of Depreciation

WN2: Calculation of Provision for Doubtful Debts

WN3: Calculation of Provision for Discount on Debtors

WN4: Calculation of Accrued Interest on Investment

Question 35:

Below is given the Trial Balance of Mr. Ram as at 31st December, 2015. You are required to prepare Trading and Profit & Loss Account and Balance Sheet as at that date.

Dr. Balances	(₹)	Cr. Balances	(₹)
Opening Stock	42,000	Sales	4,10,000
Purchases	2,00,000	Sundry Creditors	20,000
Plant	60,000	Purchases Return	8,000
Salary	33,000	Commission	7,500
Wages	44,000	Bank	24,000
Discount	2,000	Capital	1,50,000
Rent	27,500	Interest on Investments	700
Furniture (Including Furniture of ₹ 5,000 purchased on 1st July, 2015)	20,000	Special Rebate	800
Carriage in	5,800
Carriage out	3,200
Sundry Debtors	1,00,000
Office Expenses	6,600
Cash in hand	5,400
Investments at 14% p.a.	10,000
Insurance (Paid to 30th April, 2016)	1,500
Stock on 31st December, 2015	60,000
	6,21,000		6,21,000

Adjustments:-
1. Create a provision for Doubtful Debts @ 5% on Debtors and 2% for discount on Debtors.
2. Provide up-to-date interest on Investments.
3. Expenses for rent, wages, salaries and office expenses are uniform throughout the year and those for December, 2015 have not been paid.
4. Depreciate Plant by 10% p.a. and Furniture by 20% p.a.
5. Unearned Commission ₹ 1,500.

Answer:

Financial Statements of Mr. Ram
Trading Account for the year ended December 31, 2015
Dr.						Cr.
Particulars			Amount (Rs)	Particulars	Amount (Rs)
Opening Stock			42,000	Sales	4,10,000
Purchases		2,00,000
Less: Purchases Return		8,000	1,92,000
Carriage Inwards			5,800
Wages	44,000
Add: Outstanding (WN6)	4,000		48,000
Gross Profit (Balancing Figure)			1,22,200
			4,10,000		4,10,000

Profit and Loss Account for the year ended December 31, 2015
Dr.							Cr.
Particulars		Amount (Rs)	Particulars			Amount (Rs)
Depreciation: (WN1)			Gross Profit			1,22,200
Plant	6,000		Commission	7,500
Furniture	3,500	9,500	Less: Unearned	1,500		6,000
Rent	27,500		Interest on Investment		700
Add: Outstanding (WN6)	2,500	30,000	Add: Accrued (WN4)		700	1,400
Provision for Doubtful Debts (WN2)		5,000	Special Rebate			800
Provision for Discount on Debtors (WN3)		1,900
Carriage Outwards		3,200
Insurance	1,500
Less: Prepaid (WN5)	500	1,000
Salaries	33,000
Add: Outstanding (WN6)	3,000	36,000
Office Expenses	6,600
Add: Outstanding (WN6)	600	7,200
Discount		2,000
Net Profit (Balancing Figure)		34,600

		1,30,400				1,30,400

Balance Sheet as on December 31, 2015
Liabilities		Amount (Rs)	Assets			Amount (Rs)
Capital	1,50,000		Fixed Assets
Add: Net Profit	34,600	1,84,600	Plant		60,000
			Less: Depreciation		6,000	54,000
Current Liabilities			Furniture		20,000
Sundry Creditors		20,000	Less: Depreciation		3,500	16,500
Outstanding Wages		4,000	14% Investments			10,000
Outstanding Rent		2,500
Outstanding Salaries		3,000	Current Assets
Outstanding Office Expenses		600	Closing Stock			60,000
Unearned Commission		1,500	Accrued Interest on Investments			700
Bank Overdraft		24,000	Prepaid Insurance			500
			Cash in Hand			5,400
			Sundry Debtors	1,00,000
			Less: Provision for Doubtful Debts	5,000
			Less: Provision for Discount on Debtors	1,900		93,100

		2,40,200				2,40,200

Working Notes:

WN1: Calculation of Amount of Depreciation

\begin{array}{l} Depreciation on Plant = 60, 000 \times \frac{10}{100} = Rs 6, 000 \\ Depreciation on Furniture = 15, 000 \times \frac{20}{100} + 5, 000 \times \frac{20}{100} \times \frac{6}{12} = Rs 3, 500 \end{array}

WN2: Calculation of Provision for Doubtful Debts

\begin{array}{lll} Provision for Doubtful Debts & = & (Sundry Debtors - Further Bad Debts) \times \frac{Rate}{100} \\ = & (1, 00, 000 - 0) \times \frac{5}{100} = Rs 5, 000 \end{array}

WN3: Calculation of Provision for Discount on Debtors

\begin{array}{lll} Provision for Discount on Debtors & = & (Sundry Debtors - Further Bad Debts - Provision for Bad Debts) \times \frac{Rate}{100} \\ = & (1, 00, 000 - 0 - 5, 000) \times \frac{2}{100} = Rs 1, 900 \end{array}

WN4: Calculation of Accrued Interest on Investments

\begin{array}{l} Interest on Investments = 14, 000 \times \frac{10}{100} = Rs 1, 400 \\ Interest Already Received = Rs 700 \\ ∴ Accrued Interest on Investments = Rs 700 \end{array}

WN5: Calculation of Prepaid Insurance
$Prepaid Insurance = 1, 500 \times \frac{4}{12} = Rs 500$

WN6: Calculation of Outstanding Expenses
$\begin{array}{l} Rent, Wages, Salaries and Office Expenses have been paid for 11 months . \\ Outstanding Expense will be : \\ Outstanding Rent = 27, 500 \times \frac{1}{11} = Rs 2, 500 \\ Outstanding Wages = 44, 000 \times \frac{1}{11} = Rs 4, 000 \\ Outstanding Salary = 33, 000 \times \frac{1}{11} = Rs 3, 000 \\ Outstanding Office Expenses = 6, 600 \times \frac{1}{11} = Rs 600 \end{array}$

Question 36:

On 31st March, 2017 the following Trial Balance of Sh. Ajay Oswal was taken out. Prepare Trading and Profit & Loss Account for the year and Balance Sheet at that date after making the following adjustments:-
(i) Stock on 31st March, 2017 was valued ₹ 26,000.
(ii) General Manager is entitled to a Commission of 5% on Net Profits after charging such Commission.
(iii) ₹ 2,000 paid for Salary & Wages have been included in Sundry Debtors.
(iv) Increase Bad-debts by ₹ 800 and create provision for Doubtful Debts at 10%.
(v) General Expenses include insurance premium paid up to 30th June, 2017 @ ₹ 3,000 per annum.
(vi) ₹ 600 out of the Advertisement Expenses are to be carried forward to the next year.
(vii) Charge one-fourth of 'Salaries and Wages' to Trading A/c.
(viii) Accrued Income ₹ 2,500.

	Dr. (₹)	Cr. (₹)
Capital		3,00,000
Income Tax	8,000	-
Stock on 1-4-2016	16,000	-
Return Inwards	5,600	-
Carriage Inwards	8,200	-
Deposit with PNB	15,000	-
Return Outwards	-	4,100
Carriage Outwards	3,700	-
Loan to Mr. Malik @ 18% p.a. given on 1-7-2016	10,000	-
Interest on the above	-	900
Rent	13,000	-
Outstanding Rent	-	1,000
Purchases	1,48,000	-
Debtors	75,800	-
Goodwill	25,000	-
Land and Buildings	2,00,000	-
Furniture	15,000	-
Salaries & Wages	38,000	-
Creditors	-	26,200
Advertisement Expenses	3,000	-
Provision for Doubtful Debts	-	3,500
Bad-Debts	2,000
Patents and Patterns	6,000
Cash in hand	8,900
Sales	-	2,70,000
General Expenses	4,500	-

	6,05,700	6,05,700

Answer:

Financial Statements of Sh. Ajay Oswal
Trading Account for the year ended March 31, 2017
Dr.						Cr.
Particulars		Amount (Rs)	Particulars		Amount (Rs)
Opening Stock		16,000	Sales	2,70,000
Purchases	1,48,000		Less: Return Inwards	5,600	2,64,400
Less: Return Outwards	4,100	1,43,900	Closing Stock		26,000
Salaries & Wages (1/4^thof 40,000)		10,000
Carriage Inwards		8,200
Gross Profit (Balancing Figure)		1,12,300
		2,90,400			2,90,400

Profit and Loss Account for the year ended March 31, 2017
Dr.							Cr.
Particulars			Amount (Rs)	Particulars		Amount (Rs)
Salaries & Wages	38,000			Gross Profit		1,12,300
Add: Omitted	2,000			Accrued Income		2,500
Less: T/f to Trading	10,000		30,000	Interest	900
Bad Debts	2,000			Add: Accrued (WN2)	450	1,350
Add: Further Bad Debts	800
Add: New Provision (WN1)	7,300
Less: Old Provision	3,500		6,600
Carriage Outwards			3,700
Advertisement		3,000
Less: Prepaid		600	2,400
General Expenses		4,500
Less: Prepaid Insurance (WN3)		750	3,750
Rent			13,000
Outstanding Manager’s Commission (WN4)			2,700
Net Profit (Balancing Figure)			54,000

			1,16,150			1,16,150

Balance Sheet as on March 31, 2017
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital	3,00,000		Fixed Assets
Add: Net Profit	54,000		Goodwill		25,000
Less: Drawings (Income Tax)	8,000	3,46,000	Land & Building		2,00,000
			Furniture		15,000
Current Liabilities			Patents & Patterns		6,000
Creditors		26,200	Loan to Mr. Malik		10,000
Outstanding Manager’s Commission		2,700
Outstanding Rent		1,000	Current Assets
			Closing Stock		26,000
			Prepaid Insurance		750
			Prepaid Advertisement		600
			Accrued Income		2,500
			Accrued Interest		450
			Deposit with PNB		15,000
			Debtors	75,800
			Less: Wrongly Included	2,000
			Less: Bad Debts	800
			Less: Provision for Bad Debts	7,300	65,700
			Cash in Hand		8,900
		3,75,900			3,75,900

Working Notes:

WN1: Calculation of Provision for Doubtful Debts
$\begin{array}{cll} Provision for Doubtful Debts & = & (Sundry Debtors - Further Bad Debts) \times \frac{Rate}{100} \\ = & (73, 800 - 800) \times \frac{10}{100} = Rs 7, 300 \end{array}$

WN2: Calculation of Accrued Interest on Loan to Malik

\begin{array}{l} Interest = 10, 000 \times \frac{18}{100} \times \frac{9}{12} = Rs 1, 350 \\ Interest Already Received = Rs 900 \\ ∴ Accrued Interest = Rs 450 \end{array}

WN3: Calculation of Pre-paid Insurance

\begin{array}{l} Annual Insurance Premium = 3, 000 \\ Premium for the period 01 April 2012 - 30 June 2012 = 3, 000 \times \frac{3}{12} = Rs 750 \end{array}

WN4: Calculation of Manager’s Commission

\begin{array}{l} Profit before Manager' s Commission = Rs 56, 700 (1, 16, 150 - 59, 450) \\ Manager' s Commission = 56, 700 \times \frac{5}{105} = Rs 2, 700 \end{array}

Question 37:

Prepare Trading and Profit & Loss Account and Balance Sheet as at 31st March, 2017, from the following balances:

Particulars	(₹)	Particulars	(₹)
Capital A/c	5,00,000	Stock on 1.4.2016	67,000
Drawings A/c	36,000	Salaries & Wages	24,000
Bills Receivable	5,800	Outstanding Salaries and Wages	2,000
Plant & Machinery	3,80,000	Insurance (including premium of ₹ 1,000 per annum paid upto 30-9-2017)	2,600
Sundry Debtors	58,000	Cash	46,600
Loan A/c (Cr.) at 12% p.a.	20,000	Bank Overdraft	15,000
Manufacturing Wages	40,000	Repairs & Renewals	1,600
Returns Inwards	3,000	Interest & Discount (Dr.)	4,400
Purchases	1,20,000	Bad-Debts	4,000
Sales	2,60,000	Sundry Creditors	30,000
Rent	28,000	Fixtures & fittings	12,000
Commission Received	6,000

Adjustments:-
1. Stock on hand on 31st March, 2017 was ₹ 80,000.
2. Further Bad-debts written off ₹ 2,000 and Create a provision of 5% of Sundry Debtors.
3. Rent has been paid up to 31st May, 2017.
4. Manufacturing wages include ₹ 10,000 of a new Machinery purchased on 1st October, 2016.
5. Depreciate Plant and Machinery by 10% p.a. and Fixtures and Fittings by 20% p.a.
6. Commission earned but not received ₹ 1,000.
7. Interest on Loan for the last two months is not paid.
8. Goods worth ₹ 4,000 were distributed as free samples.

Answer:

Trading Account for the year ended March 31, 2017
Dr.							Cr.
Particulars			Amount (Rs)	Particulars		Amount (Rs)
Opening Stock			67,000	Sales	2,60,000
Purchases		1,20,000		Less: Return Inwards	3,000	2,57,000
Less: Advertisement		4,000	1,16,000	Closing Stock		80,000
Manufacturing Wages	40,000
Less: New Machinery	10,000		30,000
Gross Profit (Balancing Figure)			1,24,000
			3,37,000			3,37,000

Profit and Loss Account for the year ended March 31, 2017
Dr.						Cr.
Particulars		Amount (Rs)	Particulars		Amount (Rs)
Depreciation: (WN1)			Gross Profit		1,24,000
Plant & Machinery	38,500		Commission Received	6,000
Fixture & Fittings	2,400	40,900	Add: Accrued	1,000	7,000
Rent	28,000
Less: Prepaid (WN2)	4,000	24,000
Bad Debts	4,000
Add: Further Bad Debts	2,000
Add: New Provision (WN3)	2,800	8,800
Outstanding Interest on Loan (WN4)		400
Insurance	2,600
Less: Prepaid (WN5)	500	2,100
Advertisement		4,000
Salaries & Wages		24,000
Repairs & Renewals		1,600
Interest & Discount		4,400
Net Profit (Balancing Figure)		20,800
		1,31,000			1,31,000

Balance Sheet as on March 31, 2017
Liabilities		Amount (Rs)	Assets			Amount (Rs)
Capital	5,00,000		Fixed Assets
Add: Net Profit	20,800		Plant & Machinery	3,80,000
Less: Drawings	36,000	4,84,800	Add: New Machinery	10,000
12% Loan		20,000	Less: Depreciation	38,500		3,51,500
			Fixture & Fittings	12,000
Current Liabilities			Less: Depreciation	2,400		9,600
Sundry Creditors		30,000
Outstanding Salaries & Wages		2,000	Current Assets
Outstanding Interest on Loan		400	Closing Stock			80,000
Bank Overdraft		15,000	Accrued Commission			1,000
			Prepaid Insurance			500
			Prepaid Rent			4,000
			Cash in Hand			46,600
			Sundry Debtors		58,000
			Less: Further Bad Debts		2,000
			Less: Provision for Doubtful Debts		2,800	53,200
			Bills Receivable			5,800
		5,52,200				5,52,200

Working Notes:

WN1: Calculation of Amount of Depreciation

\begin{array}{l} Depreciation on Plant & Machinery = 3, 80, 000 \times \frac{10}{100} + 10, 000 \times \frac{10}{100} \times \frac{6}{12} = Rs 38, 500 \\ Depreciation on Fixtures & Fittings = 12, 000 \times \frac{20}{100} = Rs 2, 400 \end{array}

WN2: Calculation of Prepaid Rent

\begin{array}{l} Rent paid for 14 months = Rs 28,000 \\ Prepaid Rent = 28, 000 \times \frac{2}{14} = Rs 4, 000 \end{array}

WN3: Calculation of Provision for Doubtful Debts

\begin{array}{ccl} Provision for Doubtful Debts & = & (Sundry Debtors - Further Bad Debts) \times \frac{Rate}{100} \\ = & (58, 000 - 2, 000) \times \frac{5}{100} = Rs 2, 800 \end{array}

WN4: Calculation of Interest on Loan

Interest on Loan Outstanding = 20, 000 \times \frac{12}{100} \times \frac{2}{12} = Rs 400

WN5: Calculation of Prepaid Insurance

Prepaid Insurance = 1, 000 \times \frac{6}{12} = Rs 500

Question 38:

From the following Trial Balance extracted from the books of Mr. Karuna Sagar, prepare a Trading and Profit & Loss A/c for the year ended 31st March, 2019 and a Balance Sheet as at that date:

Dr. Balances	(₹)	Cr. Balances	(₹)
Purchases	3,30,000	Sales	5,30,000
Rent Paid	7,480	Returns	8,000
Wages	33,000	Trade Creditors	37,000
Salaries	30,800	Discount	3,000
Power	5,400	Capital	2,00,000
Stock on 1-4-2018	15,000	Miscellaneous Income	3,060
Stock on 31-3-2019	36,000
Charity	500
Debtors	53,000
Furniture	8,000
Motor Car	2,00,000
Motor Car Expenses	18,000
Insurance	3,600
Unexpired Insurance	600
Drawings	5,000
Cash Balance	34,680

	7,81,060		7,81,060

Informations:-
(i) Goods Costing ₹ 2,000 were taken away by the proprietor for his personal use and goods costing ₹ 1,500 were given away as charity.
(ii) Expenses for wages, rent and salaries are uniform throughout the year and those for March have not been paid.
(iii) Provide 10% depreciation on Furniture and 20% on Motor Car.
(iv) Provide for Manager's Commission at 10% on Net Profit after charging such Commission.

Answer:

Financial Statements of Mr. Karuna
Trading Account for the year ended March 31, 2019
Dr.						Cr.
Particulars			Amount (₹)	Particulars	Amount (₹)
Opening Stock			15,000	Sales	5,30,000
Purchases		3,30,000
Less: Drawings		2,000
Less: Charity		1,500
Less: Return Outwards		8,000	3,18,500
Wages	33,000
Add: Outstanding (WN2)	3,000		36,000
Power			5,400
Gross Profit (Balancing Figure)			1,55,100
			5,30,000		5,30,000

Profit and Loss Account for the year ended March 31, 2019
Dr.					Cr.
Particulars		Amount (₹)	Particulars	Amount (₹)
Depreciation: (WN1)			Gross Profit	1,55,100
Furniture	800		Discount	3,000
Motor Car	40,000	40,800	Miscellaneous Income	3,060
Rent	7,480
Add: Outstanding (WN2)	680	8,160
Salaries	30,800
Add: Outstanding (WN2)	2,800	33,600
Charity (1,500 + 500)		2,000
Motor Car Expenses		18,000
Insurance		3,600
Outstanding Manager’s Commission (WN3)		5,000
Net Profit (Balancing Figure)		50,000

		1,61,160		1,61,160

Balance Sheet as on March 31, 2019
Liabilities		Amount (₹)	Assets		Amount (₹)
Capital	2,00,000		Fixed Assets
Add: Net Profit	50,000		Furniture	8,000
Less: Drawings (5,000 + 2,000)	7,000	2,43,000	Less: Depreciation	800	7,200
			Motor Car	2,00,000
Current Liabilities			Less: Depreciation	40,000	1,60,000
Trade Creditors		37,000
Outstanding Manager’s Commission		5,000	Current Assets
Outstanding Salaries		2,800	Closing Stock		36,000
Outstanding Rent		680	Debtors		53,000
Outstanding Wages		3,000	Unexpired Insurance		600
			Cash in Hand		34,680

		2,91,480			2,91,480

Working Notes:

WN1: Calculation of Amount of Depreciation

\begin{array}{l} Depreciation on Furniture = 8, 000 \times \frac{10}{100} = Rs 800 \\ Depreciation on Motor Car = 2, 00, 000 \times \frac{20}{100} = Rs 40, 000 \end{array}

WN2: Calculation of Outstanding Expenses

\begin{array}{l} Outstanding Rent = 7, 480 \times \frac{1}{11} = Rs 680 \\ Outstanding Wages = 33, 000 \times \frac{1}{11} = Rs 3, 000 \\ Outstanding Salaries = 30, 800 \times \frac{1}{11} = Rs 2, 800 \end{array}

WN3: Calculation of Manager’s Commission

\begin{array}{l} Profit before Manager' s Commission = Rs 55, 000 (1, 61, 160 - 1, 06, 160) \\ Manager' s Commission = 55, 000 \times \frac{10}{110} = Rs 5, 000 \end{array}

Question 39:

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

Dr. Balances	(₹)	Cr. Balances	(₹)
Stock at Commencement	40,000	Sales	5,10,000
Purchases	3,20,000	Loan from Mr. Naresh @ 15% p.a.	40,000
Returns Inward	7,000	Returns Outwards	8,000
Sundry Debtors	80,000	Bank	24,200
Cash	9,400	Provision for Doubtful Debts	2,500
Manufacturing Expenses	44,000	Discount	1,800
Trade Expenses	7,200	Rent of Premises sublet, for the year to 30th Sep., 2019	4,000
Carriage	3,500	Capital	1,20,000
Salaries and Wages	15,800	Sundry Creditors	47,000
Postage	1,500
Stationery	800
Freight Inwards	4,300
Land and Building	2,00,000
Patents	8,000
Furniture	10,000
Insurance Premium	6,000
	7,57,500		7,57,500

Informations:-
(1) Closing Stock was valued at ₹ 60,000. You are informed that goods valued ₹ 12,000 were sold and despactched on 29th March, 2019, but no entry was passed to this effect.
(2) Insurance Premium include ₹ 1,200 paid on 1st October, 2018 to run for one year from Oct. 1, 2018 to Sept. 30, 2019.
(3) Loan from Mr. Naresh was taken on 1st July, 2018. Interest has not been paid so far.
(4) Create provision for Doubtful Debts at 5% on Sundry Debtors after writing off ₹ 600 as Bad-debts during the year.
(5) A bill of ₹ 3,200 for advertisement in newspaper remained unpaid at the end of the year.
(6) Purchases include Furniture costing ₹ 5,000 purchased on 1st April, 2018.
(7) Charge 10% p.a. depreciation on Furniture and write off

\frac{1}{5} th

of patents.

Answer:

Financial Statement of Sh. Parveen Kumar
Trading Account for the year ended March 31, 2019
Dr.						Cr.
Particulars		Amount (₹)	Particulars		Amount (₹)
Opening Stock		40,000	Sales	5,10,000
Purchases	3,20,000		Add: Unrecorded	12,000
Less: Return Outwards	8,000		Less: Return Inwards	7,000	5,15,000
Less: Furniture	5,000	3,07,000	Closing Stock		60,000
Manufacturing Expenses		44,000
Carriage Inward		3,500
Freight Inwards		4,300
Gross Profit (Balancing Figure)		1,76,200
		5,75,000			5,75,000

Profit and Loss Account for the year ended March 31, 2019
Dr.						Cr.
Particulars		Amount (₹)	Particulars		Amount (₹)
Depreciation: (WN1)			Gross Profit		1,76,200
Furniture	1,500		Rent of Premises sublet	4,000
Patents	1,600	3,100	Less: Unearned (WN5)	2,000	2,000
Insurance Premium	6,000		Discount		1,800
Less: Prepaid (WN2)	600	5,400
Further Bad Debts	600
Add: New Provision (WN3)	4,570
Less: Old Provision	2,500	2,670
Outstanding Interest on Naresh’s Loan (WN4)		4,500
Outstanding Advertisement Bill		3,200
Trade Expenses		7,200
Salaries & Wages		15,800
Postage & Telegrams		1,500
Stationery		800
Net Profit (Balancing Figure)		1,35,830
		1,80,000			1,80,000

Balance Sheet as on March 31, 2019
Liabilities		Amount (₹)	Assets		Amount (₹)
Capital	1,20,000		Fixed Assets
Add: Net Profit	1,35,830	2,55,830	Patents	8,000
Loan from Naresh		40,000	Less: Depreciation	1,600	6,400
			Furniture (10,000 + 5,000)	15,000
Current Liabilities			Less: Depreciation	1,500	13,500
Creditors		47,000	Land & Building		2,00,000
Outstanding Advertisement Bill		3,200
Unearned Rent		2,000	Current Assets
Bank Overdraft		24,200	Closing Stock		60,000
Outstanding Interest on Loan		4,500	Prepaid Insurance Premium		600
			Debtors	80,000
			Add: Unrecorded	12,000
			Less: Bad Debts	600
			Less: Provision for Doubtful Debts	4,570	86,830
			Cash in Hand		9,400
		3,76,730			3,76,730

Working Notes:

WN1: Calculation of Amount of Depreciation

\begin{array}{l} Depreciation on Patents = 8, 000 \times \frac{1}{5} = Rs 1, 600 \\ Depreciation on Furniture = 15, 000 \times \frac{10}{100} = Rs 1, 500 \end{array}

WN2: Calculation of Prepaid Insurance

Prepaid Insurance = 1, 200 \times \frac{6}{12} = Rs 600

WN3: Calculation of Provision for Doubtful Debts

\begin{array}{ccl} Provision for Doubtful Debts & = & (Sundry Debtors + Unrecorded Sales - Further Bad Debts) \times \frac{Rate}{100} \\ = & (80, 000 + 12, 000 - 600) \times \frac{5}{100} = Rs 4, 570 \end{array}

WN4: Calculation of Outstanding Interest on Loan

Outstanding Interest = 40, 000 \times \frac{15}{100} \times \frac{9}{12} = Rs 4, 500

WN5: Calculation of Rent Received in Advance

Rent Received in Advance = 4, 000 \times \frac{6}{12} = Rs 2, 000

Question 40:

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

Dr. Balances	(₹)	Cr. Balances	(₹)
Stock on 1-4-2018	65,000	Capital	2,50,000
Purchases	7,10,000	Rent Received	3,900
Wages	22,000	Loan from Mr. Yadav @ 15% p.a.	20,000
Trade Expenses	5,000	Sales	9,50,000
Freight and Dock Charges	8,000	Discount	600
Travelling Expenses	3,800	Outstanding Wages	2,000
Lighting and Heating (Factory)	7,200	Trade Expenses accrued but not paid	500
Stores Consumed	2,000	Sundry Creditors	80,000
Rent Paid	16,500
Establishment Charges	18,000
Interest on Mr. Yadav's Loan	1,500
Sundry Debtors	1,42,000
Cash	6,000
Fixed Assets	3,00,000

Adjustments:-
(i) Goods costing ₹ 20,000 were purchased and included into stock but no entry was passed to record the purchase.
(ii) Loan from Mr. Yadav was taken on 1st June, 2018.
(iii) Sundry Debtors include an amount of ₹ 2,000 due from a customer who has become insolvent and nothing is recoverable from his estate.
(iv) Create a provision of 5% for Doubtful Debts and 2% for discount on Debtors.
(v) Three months lighting and heating bill due but not paid ₹ 3,000.
(vi) Rent is paid for 11 months but is received for 13 months.
(vii) Stock amounted to ₹ 90,000 on 31st March, 2019.
Prepare Trading and Profit & Loss Account for the year ended 31st March, 2019 and a Balance Sheet as at that date.

Answer:

Financial Statements of Mr. Gupta
Trading Account for the year ended March 31, 2019
Dr.						Cr.
Particulars			Amount (₹)	Particulars	Amount (₹)
Opening Stock			65,000	Sales	9,50,000
Purchases	7,10,000			Closing Stock	90,000
Add: Unrecorded	20,000		7,30,000
Wages			22,000
Store Consumed			2,000
Lighting & Heating		7,200
Add: Outstanding		3,000	10,200
Freight & Dock Charges			8,000
Gross Profit (Balancing Figure)			2,02,800

			10,40,000		10,40,000

Profit and Loss Account for the year ended March 31, 2019
Dr.						Cr.
Particulars		Amount (₹)	Particulars		Amount (₹)
Interest on Loan	1,500		Gross Profit		2,02,800
Add: Outstanding (WN1)	1,000	2,500	Rent Received	3,900
Further Bad Debts	2,000		Less: Rent received in Advance (WN4)	300	3,600
Add: New Provision (WN2)	7,000	9,000	Discount		600
Trade Expenses		5,000
Provision for Discount on Debtors WN3)		2,660
Rent	16,500
Add: Outstanding (WN5)	1,500	18,000
Travelling Expenses		3,800
Establishment Expenses		18,000
Net Profit (Balancing Figure)		1,48,040
		2,07,000			2,07,000

Balance Sheet as on March 31, 2019
Liabilities		Amount (₹)	Assets		Amount (₹)
Capital	2,50,000		Fixed Assets
Add: Net Profit	1,48,040	3,98,040	Fixed Assets		3,00,000
Loan from Mr. Yadav		20,000
Current Liabilities			Current Assets
Sundry Creditors	80,000		Closing Stock		90,000
Add: Unrecorded	20,000	1,00,000	Cash in Hand		6,000
Outstanding Wages		2,000	Sundry Debtors
Outstanding Trade Expenses		500	Less: Further Bad Debts	2,000
Outstanding Lighting & Heating		3,000	Less: Provision for Doubtful Debts	7,000
Outstanding Rent		1,500	Less: Provision for Discount on Debtors	2,660	1,30,340
Outstanding Interest on Loan		1,000
Rent received in advance		300

		5,26,340			5,26,340

Working Notes:

WN1: Calculation of Outstanding Interest on Loan

\begin{array}{l} Interest on Loan = 20, 000 \times \frac{15}{100} \times \frac{10}{12} = Rs 2, 500 \\ Interest Already Paid = Rs 1, 500 \\ ∴ Outstanding Interest on Loan = Rs 1, 000 \end{array}

WN2: Calculation of Provision for Doubtful Debts

\begin{array}{ccl} Provision for Doubtful Debts & = & (S undry Debtors - Further Bad Debts) \times \frac{Rate}{100} \\ = & (1, 42, 000 - 2, 000) \times \frac{5}{100} = Rs 7, 000 \end{array}

WN3: Calculation of Provision for Discount on Debtors

$\begin{array}{ccl} Provision for Discount on Debtors & = & (Sundry Debtors - Further Bad Debts - Provision for Bad Debts) \times \frac{Rate}{100} \\ = & (1, 42, 000 - 2, 000 - 7, 000) \times \frac{2}{100} = Rs 2, 660 \end{array}$

WN4: Calculation of Advance Rent Received

Advance Rent = 3, 900 \times \frac{1}{13} = Rs 300

WN5: Calculation of Outstanding Rent

Out standing Rent = 16, 500 \times \frac{1}{11} = Rs 1, 500

Question 41:

From the following Trial Balance of Mr. Tarun Ghosh, prepare Trading and Profit and Loss A/c for the year ending 31st March, 2017 and a Balance Sheet as at that date:

Dr. Balances	(₹)	Cr. Balances	(₹)
Opening Stock	38,000	Capital	3,00,000
Purchases	12,60,000	Secured Loan	20,000
Wages: Factory Office	20,000 1,600	Sales	15,40,000
Salary	54,000	Sundry Creditors	40,000
Business Premises	2,00,000	Returns Outwards	15,000
Furniture and Fixtures	40,000	Bills Payable	12,000
Packing Machinery	60,000	Bank	33,000
Tools	15,000
Rent	58,400
Loan to Mr. Ram Narain on 1st November, 2016 @ 12% p.a.	10,000
Sundry Debtors	1,31,500
Cash in Hand	7,400
Drawings	60,000
Bills Receivable	4,100
	19,60,000		19,60,000

Adjustments:-
(i) Closing Stock amounted to ₹ 50,000.
(ii) Goods costing ₹ 8,000 were sent to a customer on sale or return basis for ₹ 10,000 on 30th March, 2017 and had been recorded in the books as actual sales.
(iii) Allow 8% interest on Capital and charge ₹ 3,000 as interest on drawings.
(iv) Depreciate: Business premises by 5%; Furniture and Fixtures by 20% and Packing Machinery by 10%. Tools are to be revalued at ₹ 12,000.
(v)

2 \frac{1}{2} %

for discounts is to be provided on Debtors.
(vi) ₹ 1,500 is to be provided for Bad and Doubtful Debts.

Answer:

Financial Statements of Mr. Tarun Ghosh
Trading Account for the year ended March 31, 2017
Dr.						Cr.
Particulars		Amount (Rs)	Particulars		Amount (Rs)
Opening Stock		38,000	Sales	15,40,000
Purchases	12,60,000		Less: Sale on Approval Basis	10,000	15,30,000
Less: Return Outwards	15,000	12,45,000	Closing Stock	50,000
Wages		20,000	Add: Sale on Approval Basis	8,000	58,000
Gross Profit (Balancing Figure)		2,85,000
		15,88,000			15,88,000

Profit and Loss Account for the year ended March 31, 2017
Dr.					Cr.
Particulars		Amount (Rs)	Particulars	Amount (Rs)
Provision for Discount on Debtors		3,000	Gross Profit	2,85,000
Bad and Doubtful Debts		1,500	Accrued Interest on Loan	500
Depreciation:			Interest on Drawings	3,000
Business Premises	10,000
Tools	3,000
Packing Machinery	6,000
Furniture	8,000	27,000
Interest on Capital		24,000
Wages		1,600
Salaries		54,000
Rent		58,400
Net Profit (Balancing Figure)		1,19,000
		2,88,500		2,88,500

Balance Sheet as on March 31, 2017
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital	3,00,000		Fixed Assets
Add: Interest on Capital	24,000		Business Premises	2,00,000
Add: Net Profit	1,19,000		Less: Depreciation	10,000	1,90,000
Less: Drawings	60,000		Furniture & Fixtures	40,000
Less: Interest on Drawings	3,000	3,80,000	Less: Depreciation	8,000	32,000
Secured Loan		20,000	Packing Machinery	60,000
			Less: Depreciation	6,000	54,000
Current Liabilities			Tools	15,000
Sundry Creditors		40,000	Less: Depreciation	3,000	12,000
Bills Payable		12,000	Loan to Ram Narain		10,000
Bank Overdraft		33,000
			Current Assets
			Closing Stock (50,000 + 8,000)		58,000
			Bills Receivable		4,100
			Accrued Interest on Loan		500
			Sundry Debtors	1,31,500
			Less: Sale on Approval Basis	10,000
			Less: Bad & Doubtful Debts	1,500
			Less: Provision for Discount on Debtors	3,000	1,17,000
			Cash in Hand		7,400
		4,85,000			4,85,000

Working Notes:

WN1: Calculation of Amount of Depreciation

\begin{array}{l} Depreciation on Premises = 2, 00, 000 \times \frac{5}{100} = Rs 10, 000 \\ Depreciation on Furniture = 40, 000 \times \frac{20}{100} = Rs 8, 000 \\ Depreciation on Packing Machinery = 60, 000 \times \frac{10}{100} = Rs 6, 000 \\ Depreciation on Tools = Rs 3, 000 (15, 000 - 12, 000) \end{array}

WN2: Calculation of Provision for Discount on Debtors

\begin{array}{ccl} Provision for Discount on Debtors & = & (Sundry Debtors - Further Bad Debts - Provision for Bad Debts) \times \frac{Rate}{100} \\ = & (1, 31, 500 - 1, 500 - 0) \times \frac{2.5}{100} = R s 3, 250 \end{array}

WN3: Calculation of Accrued Interest

\begin{array}{l} Accrued Interest = 10, 000 \times \frac{12}{100} \times \frac{5}{12} = Rs 500 \end{array}

Question 42:

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

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

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

Answer:

Financial Statements of Mr. Din Dayal
Trading Account for the year ended March 31, 2019
Dr.						Cr.
Particulars		Amount (₹)	Particulars		Amount (₹)
Opening Stock		41,000	Sales	2,80,000
Purchases	2,20,000		Less: Return Inwards	6,000	2,74,000
Less: Return Outwards	2,000		Closing Stock		75,000
Less: Goods Lost by Fire	10,000	2,08,000
Carriage Inwards		3,500
Gross Profit (Balancing Figure)		96,500
		3,49,000			3,49,000

Profit and Loss Account for the year ended March 31, 2019
Dr.						Cr.
Particulars		Amount (₹)	Particulars			Amount (₹)
Loss by Fire	10,000		Gross Profit			96,500
Less: Insurance Claim	7,500	2,500	Commission	6,000
Printing & Advertisement (1/2)		2,500	Less: Unearned	2,000		4,000
Outstanding Interest on Loan		900	Interest on Investments			600
Insurance Premium		1,800	Rent from Sublet			4,800
Carriage Outwards		500	Old Provision		3,000
Telephone		7,300	Less: New Provision for Doubtful Debts (WN1)		2,000	1,000
Bad Debts		400
Rent		9,600
Salary		20,000
Travelling Expenses		1,400
Outstanding Manager’s Commission (WN2)		6,000
Net Profit (Balancing Figure)		54,000

		1,06,900				1,06,900

Balance Sheet as on March 31, 2019
Liabilities		Amount (₹)	Assets		Amount (₹)
Capital	1,75,000		Fixed Assets
Add: Net Profit	54,000		Investments		5,000
Less: Drawings	4,000	2,25,000	Land & Building		1,40,000
Loan		20,000	Furniture		10,000

Current Liabilities			Current Assets
Creditors		27,000	Closing Stock		75,000
Outstanding Interest on Loan		900	Insurance Company		7,500
Unearned Commission		2,000	Debtors	40,000
Outstanding Manager’s Commission		6,000	Less: Provision for Doubtful Debts	2,000	38,000
			Cash in Hand		2,900
			Unexpired Printing & Advertisement		2,500

		2,80,900			2,80,900

Working Notes:

WN1: Calculation of Provision for Doubtful Debts

\begin{array}{ccl} \begin{matrix} Provision for Doubtful Debts \end{matrix} & = & (S undry Debtors - Further Bad Debts) \times \frac{Rate}{100} \\ = & (40, 000 - 0) \times \frac{5}{100} = Rs 2, 000 \end{array}

WN2: Calculation of Manager’s Commission

\begin{array}{l} Profit before Manager' s Commission = Rs 60, 000 (1, 06, 900 - 46, 900) \\ Manager' s Commission = 60, 000 \times \frac{10}{100} = Rs 6, 000 \end{array}

Question 43:

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

	Dr Bal. (₹)		Cr Bal. (₹)
Stock (1-4-2016)	16,800	Capital	78,000
Sales Returns	8,000	Sales	3,09,000
Purchases	2,43,000	Returns Outward	5,700
Freight-in	8,600	Trade Creditors	4,800
Rent and Taxes	5,700	10% Bank Loan (1-7-2016)	24,000
Salaries	9,300	Income from Investment	3,600
Trade debtors	24,000	Discount Received	2,250
Bank interest	1,000
Printing and Advertising	14,600
Cash at bank	18,300
Discount Allowed	1,340
Investment	25,000
Furniture	3,800
General Expenses	3,610
Audit Fees	500
Insurance	800
Travelling Expenses	3,000
Plant & Machinery	30,000
Drawings	10,000
	4,27,350		4,27,350

Additional Information:-
(i) Depreciation on Plant and Machinery @ 10% p.a., a Machine has been purchased on July 01, 2016 for ₹ 12,000.
(ii) The manager is entitled to a commission of 10% of the net profit before charging such commission.
(iii) Closing stock in trade is valued at ₹ 6,000 (cost); ₹ 6,200 (Market Price).
(iv) Rent outstanding ₹ 5,000.

Answer:

Financial Statements of M/s Raj & Bros.
Trading Account for the year ended March 31, 2017
Dr.						Cr.
Particulars		Amount (Rs)	Particulars		Amount (Rs)
Opening Stock		16,800	Sales	3,09,000
Purchases	2,43,000		Less: Return Inwards	8,000	3,01,000
Less: Return Outwards	5,700	2,37,300	Closing Stock		6,000
Freight Inward		8,600
Gross Profit (Balancing Figure)		44,300
		3,07,000			3,07,000

Profit and Loss Account for the year ended March 31, 2017
Dr.					Cr.
Particulars		Amount (Rs)	Particulars	Amount (Rs)
Depreciation on Plant (WN1)		2,700	Gross Profit	44,300
Salaries		9,300	Income on Investments	3,600
Rates and Taxes	5,700		Discount Received	2,250
Add: Outstanding	5,000	10,700
Interest on Loan	1,000
Add: Outstanding (WN2)	800	1,800
Printing & Advertisement		14,600
Discount		1,340
General Expenses		3,610
Audit Fees		500
Insurance		800
Travelling Expenses		3,000
Outstanding Manager’s Commission (WN3)		180
Net Profit (Balancing Figure)		1,620
		50,150		50,150

Balance Sheet as on March 31, 2017
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital	78,000		Fixed Assets
Add: Net Profit	1,620		Plant & Machinery	30,000
Less: Drawings	10,000	69,620	Less: Depreciation	2,700	27,300
10% Bank Loan		24,000	Furniture		3,800
			Investments		25,000

Current Liabilities			Current Assets
Trade Creditors		4,800	Closing Stock		6,000
Outstanding Rent		5,000	Cash at Bank		18,300
Outstanding Interest		800	Trade Debtors		24,000
Outstanding Manager’s Commission		180

		1,04,400			1,04,400

Working Notes:

WN1: Calculation of Amount of Depreciation

Depreciation on Machinery = 18, 000 \times \frac{10}{100} + 12, 000 \times \frac{10}{100} \times \frac{9}{12} = Rs 2, 700

WN2: Calculation of Outstanding Interest on Bank Loan

\begin{array}{l} Interest on Loan = 24, 000 \times \frac{10}{100} \times \frac{9}{12} = Rs 1, 800 \\ Interest  Already Paid = Rs 1,000 \\ Outstanding Interest = Rs 800 \end{array}

WN3: Calculation of Manager’s Commission

\begin{array}{l} Profit before Manager' s Commission = Rs 1, 800 (50, 150 - 48, 350) \\ Manager' s Commission = 1, 800 \times \frac{10}{100} = Rs 180 \end{array}

Question 1:

The following are the balances extracted from the books of Raghunath Ji as on 31st March, 2019. From these balances, prepare his Trading and Profit & Loss Account and Balance Sheet as at that date:

	Dr. (₹)	Cr. (₹)
Opening Stock	12,000
Purchases	40,000
Sales		86,000
Discount		400
Sales Return	6,000
Buildings	50,000
Debtors	16,000
Salaries	2,400
Office Expenses	1,200
Wages	10,000
Purchase Return		4,000
Interest		800
Travelling Expenses	400
Fire Insurance Premium	800
Machinery	20,000
Carriage on Purchases	700
Commission	400
Cash in hand	2,300
Rent and Taxes	1,800
Capital		62,000
Creditors		10,800
	1,64,000	1,64,000

Adjustments:-
1. Closing Stock was valued at ₹ 16,000.
2. Wages ₹ 2,000 and salaries ₹ 1,200 are outstanding.
3. Rent for two months at the rate of ₹ 500 per month is outstanding.
4. Depreciate Buildings by 5% and machinery by 10%.
5. Prepaid Insurance ₹ 200.

Answer:

Financial Statements of Raghunath Ji
Trading Account for the year ended March 31, 2019
Dr.						Cr.
Particulars		Amount (₹)	Particulars		Amount (₹)
Opening Stock		12,000	Sales	86,000
Purchases	40,000		Less: Sales Return	6,000	80,000
Less: Purchases Return	4,000	36,000	Closing Stock		16,000
Carriage		700
Wages	10,000
Add: Outstanding	2,000	12,000
Gross Profit (Balancing Figure)		35,300
		96,000			96,000

Profit and Loss Account for the year ended March 31, 2019
Dr.					Cr.
Particulars		Amount (₹)	Particulars	Amount (₹)
Depreciation: (WN)			Gross Profit	35,300
Machinery	2,000		Discount	400
Building	2,500	4,500	Interest	800
Salaries	2,400
Add: Outstanding	1,200	3,600
Insurance	800
Less: Prepaid	200	600
Rent & Taxes	1,800
Add: Outstanding	1,000	2,800
Office Expenses		1,200
Travelling Expenses		400
Commission		400
Net Profit (Balancing Figure)		23,000
		36,500		36,500

Balance Sheet as on March 31, 2019
Liabilities		Amount (₹)	Assets		Amount (₹)
Capital	62,000		Fixed Assets
Add: Net Profit	23,000	85,000	Machinery	20,000
			Less: Depreciation	2,000	18,000
Current Liabilities			Building	50,000
Creditors		10,800	Less: Depreciation	2,500	47,500
Outstanding Wages		2,000
Outstanding Salaries		1,200	Current Assets
Outstanding Rent		1,000	Closing Stock		16,000
			Prepaid Insurance		200
			Debtors		16,000
			Cash in Hand		2,300
		1,00,000			1,00,000

Working Note:

Calculation of Depreciation

\begin{array}{l} Depreciation on Building = 50, 000 \times \frac{5}{100} = 2, 500 \\ Depreciation on Machinery = 20, 000 \times \frac{10}{100} = 2, 000 \end{array}

Question 2:

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

	Dr. (₹)	Cr. (₹)
Stock 1st April, 2018	22,300
Purchases and Purchases Return	2,30,000	5,200
Freehold Premises	1,00,000
Incidental Trade Exp.	11,200
Insurance	1,850
Audit Fees	800
Commission Received		2,700
Interest		1,400
Debtors and Creditors	32,400	24,830
Wages	30,200
Salaries	15,200
Capital		1,50,000
Drawings	12,000
Income-Tax	3,600
Investments	8,000
Discount allowed & received	7,500	4,200
Sales Return & Sales	6,400	3,17,400
B/R	5,200
Office Furniture	9,000
Rent		2,600
Cash in hand	5,080
Bank Balance	7,600
	5,08,330	5,08,330

Adjustments:-
1. Stock at 31st March 2019 is ₹ 70,000.
2. Write off 5% Depreciation on Freehold Premises and 20% on office furniture.
3. Commission earned but not received ₹ 500.
4. Interest earned but not received ₹ 600.
5. ₹ 200 for rent have been received in advance.
6. Charge interest on Capital @ 6% and ₹ 500 on Drawings.

Answer:

Trading Account for the year ended March 31, 2019
Dr.						Cr.
Particulars		Amount (₹)	Particulars		Amount (₹)
Opening Stock		22,300	Sales	3,17,400
Purchases	2,30,000		Less: Sales Return	6,400	3,11,000
Less: Purchases Return	5,200	2,24,800	Closing Stock		70,000
Wages		30,200
Gross Profit (Balancing Figure)		1,03,700
		3,81,000			3,81,000

Profit and Loss Account for the year ended March 31, 2019
Dr.						Cr.
Particulars		Amount (₹)	Particulars		Amount (₹)
Depreciation: (WN1)			Gross Profit		1,03,700
Freehold Premises	5,000		Interest on Drawings		500
Furniture	1,800	6,800	Commission	2,700
Interest on Capital (WN2)		9,000	Add: Accrued	500	3,200
Incidental Trade Expenses		11,200	Rent	2,600
Insurance		1,850	Less: Rent received in advance	200	2,400
Audit Fees		800	Interest	1,400
Salaries		15,200	Add: Accrued	600	2,000
Discount Allowed		7,500	Discount Received		4,200
Net Profit (Balancing Figure)		63,650
		1,16,000			1,16,000

Balance Sheet as on March 31, 2019
Liabilities		Amount (₹)	Assets		Amount (₹)
Capital	1,50,000		Fixed Assets
Add: Interest on Capital	9,000		Freehold Premises	1,00,000
Add: Net Profit	63,650		Less: Depreciation	5,000	95,000
Less: Drawings	12,000		Office Furniture	9,000
Less: Interest on Drawings	500		Less: Depreciation	1,800	7,200
Less: Income Tax	3,600	2,06,550	Investments		8,000

Current Liabilities			Current Assets
Creditors		24,830	Closing Stock		70,000
Rent received in advance		200	Accrued Interest		600
			Accrued Commission		500
			Debtors		32,400
			Bills Receivable		5,200
			Cash at Bank		7,600
			Cash in Hand		5,080
		2,31,580			2,31,580

Working Notes:

WN1: Calculation of Depreciation

\begin{array}{l} Depreciation on Freehold Premises = 1, 00, 000 \times \frac{5}{100} = 5, 000 \\ Depreciation on Office Furniture = 9, 000 \times \frac{20}{100} = 1, 800 \end{array}

WN2: Calculation of Interest on Capital

Interest on Capital = 1, 50, 000 \times \frac{6}{100} = 9, 000

Question 3:

On 31st March, 2017 the following Trial Balance was extracted from the books of Mohan:-

	Dr. (₹)	Cr. (₹)
Capital		30,000
Drawings	5,000
Debtors and Creditors	20,000	10,000
Bank Loan		9,500
Interest on Loan	300
Cash	2,000
Provision for Bad-Debts		700
Stock 1-4-2016	6,800
Motor Vehicles	10,000
Bank	3,500
Land and Buildings	12,000
Bad-Debts	500
Purchases and Sales	66,000	1,10,000
Returns	8,000	1,500
Carriage Outward	2,500
Carriage Inward	3,000
Salaries	9,000
Rent and Insurance	3,000
Advertising	3,500
Discount		500
General Expenses	3,400
B/R and B/P	6,000	2,000
Rent received		300
	1,64,500	1,64,500

Prepare Trading and Profit & Loss Account for the year ended 31st March, 2017 and Balance Sheet as at that date after taking into account the following:-
(a) Private purchases amounting to ₹ 4,000 have been debited to Purchases Account.
(b) Depreciate Land and Buildings at

2 \frac{1}{2} %

and Motor Vehicles at 20%.
(c) Salaries outstanding ₹ 200.
(d) Prepaid Insurance ₹ 200.
(e) Provision for Doubtful Debts is to be maintained at 5% on Debtors.
(f) Stock on 31st March, 2017 was valued at ₹ 7,000.

Answer:

Trading Account for the year ended March 31, 2017
Dr.						Cr.
Particulars		Amount (Rs)	Particulars		Amount (Rs)
Opening Stock		6,800	Sales	1,10,000
Purchases	66,000		Less: Return Inwards	8,000	1,02,000
Less: Return Outwards	1,500		Closing Stock		7,000
Less: Drawings	4,000	60,500
Carriage Inward		3,000
Gross Profit (Balancing Figure)		38,700
		1,09,000			1,09,000

Profit and Loss Account for the year ended March 31, 2017
Dr.					Cr.
Particulars		Amount (Rs)	Particulars	Amount (Rs)
Depreciation: (WN1)			Gross Profit	38,700
Land & Building	300		Discount received	500
Motor Vehicle	2,000	2,300	Rent received	300
Salary	9,000
Add: Outstanding	200	9,200
Rent & Insurance	3,000
Less: Pre-paid	200	2,800
Old Bad Debts	500
Add: New Bad Debts	–
Add: New Provision (WN2)	1,000
Less: Old Provision	700	800
Interest on Bank Loan		300
Carriage Outward		2,500
Advertisement		3,500
General Expenses		3,400
Net Profit (Balancing Figure)		14,700
		39,500		39,500

Balance Sheet as on March 31, 2017
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital	30,000		Fixed Assets
Add: Net Profit	14,700		Land & Buildings	12,000
Less: Drawings (5,000 + 4,000)	9,000	35,700	Less: Depreciation	300	11,700
			Motor Vehicles	10,000
Current Liabilities			Less: Depreciation	2,000	8,000
Creditors		10,000
Outstanding Salaries		200	Current Assets
Bank Loan		9,500	Closing Stock		7,000
Bills Payable		2,000	Prepaid Insurance		200
			Debtors	20,000
			Less: Provision for Bad Debts	1,000	19,000
			Bills Receivables		6,000
			Cash at Bank		3,500
			Cash in Hand		2,000
		57,400			57,400

Working Notes:

WN1: Calculation of Depreciation

WN2: Calculation of Provision for Doubtful Debts

Question 4:

Prepare Trading and Profit & Loss Account for the year ended 31st March, 2017 and Balance Sheet as at that date from the following Trial Balance:-

	Dr. (₹)	Cr. (₹)
Capital		10,000
Cash	1,500
Bank Overdraft		2,000
Purchases and Sales	12,000	15,000
Returns	1,000	2,000
Establishment Expenses	2,200
Taxes and Insurance	500
Bad-debts and Bad-debt Provision	500	700
Debtors and Creditors	5,000	2,000
Commission		500
Deposits	4,000
Opening Stock	3,000
Drawings	1,400
Furniture	600
B/R and B/P	3,000	2,500
	34,700	34,700

Adjustments:-
1. Salaries ₹ 100 and taxes ₹ 200 are outstanding but insurance ₹ 50 is prepaid.
2. Commission ₹ 100 is received in advance for next year.
3. Interest ₹ 210 is to be received on Deposits and Interest on Bank overdraft ₹ 300 is to be paid.
4. Bad-debts provision is to be maintained at ₹ 1,000 on Debtors.
5. Depreciate furniture by 10%.
6. Stock on 31st March, 2017 was valued at ₹ 4,500.

Answer:

Trading Account for the year ended March 31, 2017
Dr.						Cr.
Particulars		Amount (Rs)	Particulars		Amount (Rs)
Opening Stock		3,000	Sales	15,000
Purchases	12,000		Less: Return Inwards	1,000	14,000
Less: Return Outwards	2,000	10,000	Closing Stock		4,500
Gross Profit (Balancing Figure)		5,500
		18,500			18,500

Profit and Loss Account for the year ended March 31, 2017
Dr.						Cr.
Particulars		Amount (Rs)	Particulars		Amount (Rs)
Depreciation on Furniture (WN)		60	Gross Profit		5,500
Establishment Charges		2,200	Commission received	500
Outstanding Salaries		100	Less: Comm. received in advance	100	400
Taxes & Insurance	500		Accrued Interest on Deposits		210
Add: Outstanding Taxes	200
Less: Prepaid Insurance	50	650
Old Bad Debts	500
Add: New Bad Debts	–
Add: New Provision	1,000
Less: Old Provision	700	800
Outstanding Interest on Bank Overdraft		300
Net Profit (Balancing Figure)		2,000
		6,110			6,110

Balance Sheet as on March 31, 2017
Liabilities		Amount (Rs)	Assets			Amount (Rs)
Capital	10,000		Fixed Assets
Add: Net Profit	2,000		Furniture	600
Less: Drawings	1,400	10,600	Less: Depreciation	60		540

Current Liabilities			Current Assets
Creditors		2,000	Closing Stock			4,500
Outstanding Salaries		100	Prepaid Insurance			50
Outstanding Taxes		200	Debtors	5,000
Bills Payable		2,500	Less: Provision for Bad Debts	1,000		4,000
Bank Overdraft		2,000	Bills Receivables			3,000
Commission received in advance		100	Deposits		4,000
Outstanding Interest on Bank Overdraft		300	Add: Accrued Interest		210	4,210
			Cash in Hand			1,500
		17,800				17,800

Working Note:

Calculation of Depreciation

Depreciation on Furniture = 600 \times \frac{10}{100} = 60

Question 5:

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

	Dr. (₹)	Cr. (₹)
Furniture	640
Loose Tools	6,250
Buildings	7,500
Capital Account		12,500
Bad-debts	125
Provision for Bad-debts		200
Sundry Debtors and Creditors	3,800	2,500
Stock on 1st April, 2018	3,460
Purchases and Sales	5,475	15,450
Bank Overdraft		2,850
Sales Return and Purchases Return	200	125
Stationery	450
Interest Account	118
Commission		375
Cash in hand	650
Taxes and Insurance	1,250
General Expenses	782
Salaries	3,300
	34,000	34,000

The following adjustments are to be made:
(i) Stock in hand on 31st March, 2019 was ₹ 3,250.
(ii) Depreciate Building at 5% and Furniture at 10%. Loose Tools are revalued at ₹ 5,000 at the end of the year.
(iii) Salaries ₹ 300 and taxes ₹ 120 are outstanding.
(iv) Insurance amounting to ₹ 100 is prepaid.
(v) Write off a further ₹ 100 as Bad-Debts and provision for Doubtful Debts is to be made equal to 5% on Sundry Debtors.
(vi) Half of the stationery was used by the proprietor for his personal purposes.

Answer:

Financial Statement of A
Trading Account for the year ended March 31, 2019
Dr.						Cr.
Particulars		Amount (₹)	Particulars		Amount (₹)
Opening Stock		3,460	Sales	15,450
Purchases	5,475		Less: Sales Return	200	15,250
Less: Purchases Return	125	5,350	Closing Stock		3,250
Gross Profit (Balancing Figure)		9,690
		18,500			18,500

Profit and Loss Account for the year ended March 31, 2019
Dr.					Cr.
Particulars		Amount (₹)	Particulars	Amount (₹)
Depreciation: (WN1)			Gross Profit	9,690
Building	375		Commission Received	375
Furniture	64
Loose Tools	1,250	1,689
Salaries	3,300
Add: Outstanding	300	3,600
Taxes & Insurance	1,250
Add: Outstanding Taxes	120
Less: Prepaid Insurance	100	1,270
Old Bad Debts	125
Add: Further Bad Debts	100
Add: New Provision (WN2)	185
Less: Old Provision	200	210
Stationery	450
Less: Drawings (1/2)	225	225
Interest		118
General Expenses		782
Net Profit (Balancing Figure)		2,171
		10,065		10,065

Balance Sheet as on March 31, 2019
Liabilities		Amount (₹)	Assets			Amount (₹)
Capital	12,500		Fixed Assets
Add: Net Profit	2,171		Building	7,500
Less: Drawings (1/2 of Stationery)	225	14,446	Less: Depreciation	375		7,125
			Furniture	640
Current Liabilities			Less: Depreciation	64		576
Creditors		2,500	Loose tools	6,250
Outstanding Salaries		300	Less: Depreciation	1,250		5,000
Outstanding Taxes		120
Bank Overdraft		2,850	Current Assets
			Closing Stock			3,250
			Prepaid Insurance			100
			Debtors		3,800
			Less: Further Bad Debts		100
			Less: Provision for Bad Debts		185	3,515
			Cash in Hand			650
		20,216				20,216

Working Notes:

WN1: Calculation of Depreciation

\begin{array}{l} Depreciation on Buildings = 7, 500 \times \frac{5}{100} = 375 \\ Depreciation on Furniture = 640 \times \frac{10}{100} = 64 \\ Depreciation on Patents = 6, 250 - 5, 000 = 1, 250 \end{array}

WN2: Calculation of Provision for Doubtful Debts

$\begin{array}{ccl} Provision for Doubtful Debts & = & (Sundry Debtors - Further Bad Debts) \times \frac{Rate}{100} \\ = & (3, 800 - 100) \times \frac{5}{100} = 185 \end{array}$

Question 6:

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

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

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

Answer:

Trading Account for the year ended March 31, 2019
Dr.						Cr.
Particulars		Amount (₹)	Particulars		Amount (₹)
Opening Stock		75,000	Sales	12,00,000
Purchases	8,00,000		Less: Return Inwards	7,500	11,92,500
Less: Return Outwards	6,000	7,94,000	Closing Stock		60,000
Wages	1,25,000
Less: Prepaid	5,000	1,20,000
Gross Profit (Balancing Figure)		2,63,500
		12,52,500			12,52,500

Profit and Loss Account for the year ended March 31, 2019
Dr.						Cr.
Particulars		Amount (₹)	Particulars		Amount (₹)
Depreciation: (WN1)			Gross Profit		2,63,500
Furniture	3,000		Commission	4,600
Motor Car	30,000	33,000	Less: Comm. received in advance	1,600	3,000
Salaries	35,200		Old Provision for Doubtful Debts	8,100
Add: Outstanding (WN2)	3,200	38,400	Less: New Provision (WN3)	4,000	4,100
Rent	5,500
Add: Outstanding Taxes (WN2)	500	6,000
Insurance	8,400
Less: Prepaid	1,200	7,200
Interest on Loan	1,500
Add: Outstanding (WN2)	300	1,800
Old Bad Debts	1,500
Add: Further Bad Debts	2,000	3,500
Car Expenses		42,000
Net Profit (Balancing Figure)		1,38,700

		2,70,600			2,70,600

Balance Sheet as on March 31, 2019
Liabilities		Amount (₹)	Assets			Amount (₹)
Capital	2,50,000		Fixed Assets
Add : Net Profit	1,38,700	3,88,700	Land & Building			2,00,000
Loan from X	10,000		Furniture	20,000
Add: Outstanding Interest on Loan	300	10,300	Less: Depreciation	3,000		17,000
			Motor Car	1,50,000
Current Liabilities			Less: Depreciation	30,000		1,20,000
Creditors		91,300
Outstanding Salaries		3,200	Current Assets
Outstanding Rent		500	Closing Stock			60,000
Commission received in advance		1,600	Prepaid Insurance			1,200
			Prepaid Wages			5,000
			Debtors		82,000
			Less: Further Bad Debts		2,000
			Less: Provision for Bad Debts		4,000	76,000
			Cash in Hand			16,400
		4,95,600				4,95,600

Working Notes:

WN1: Calculation of Depreciation

\begin{array}{l} Depreciation on Furniture = 20, 000 \times \frac{15}{100} = 3, 000 \\ Depreciation on Motor Car = 1, 50, 000 \times \frac{20}{100} = 30, 000 \end{array}

WN2: Calculation of Outstanding Expenses

\begin{array}{cl} 1 . & Salaries for 11 months = 35, 200 \\ Salary for 1 month = \frac{35, 200}{11} \times 1 = 3, 200 = Salary Outstanding \end{array}

\begin{array}{cl} 2 . & Rent for 1 1 months = 5, 500 \\ Rent for 1 month = \frac{5, 500}{11} \times 1 = 500 = Rent Outstanding \end{array}

\begin{array}{cl} 3 . & Interest on Loan = 10, 000 \times \frac{18}{100} = 1, 800 \\ Interest paid = 1, 500 \\ ∴ Interest Outstanding = 300 (1, 800 - 1, 500) \end{array}

WN3: Calculation of Provision for Doubtful Debts

\begin{array}{lll} Provision for Doubtful Debts & = & (S u n d r y D e b t o r s - F u r t h e r B a d D e b t s) \times \frac{Rate}{100} \\ = & (82, 000 - 2, 000) \times \frac{5}{100} = 4, 000 \end{array}

Question 7:

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

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

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

Answer:

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

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

Working Notes:

WN1: Calculation of Provision for Doubtful Debts

WN2: Calculation of Provision for Discount on Debtors

Question 8:

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

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

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

Answer:

Financial Statement of M/s Rahul Sons
Trading Account for the year ended March 31, 2018
Dr.						Cr.
Particulars		Amount (₹)	Particulars		Amount (₹)
Opening Stock		50,000	Sales	1,80,000
Purchases	1,75,000		Less: Sales Return	3,000	1,77,000
Less: Purchases Return	2,000	1,73,000	Closing Stock		32,000
Wages		3,000	Gross Loss (Balancing Figure)		17,000

		2,26,000			2,36,000

Profit and Loss Account for the year ended March 31, 2018
Dr.						Cr.
Particulars		Amount (₹)	Particulars		Amount (₹)
Gross Loss		17,000	Commission	4,000
Depreciation on Building (WN1)		6,600	Less: Unearned	1,000	3,000
Salaries	8,000		Rent received	6,000
Add: Outstanding	1,000	9,000	Add: Accrued	2,000	8,000
Insurance	3,200		Discount Received		500
Less: Prepaid	800	2,400	Net Loss (Balancing Figure)		43,189
Old Bad Debts	2,000
Add: New Bad Debts	1,000
Add: New Provision (WN2)	4,050
Less: Old Provision	2,500	4,550
Provision for Discount on Debtors		1,539
Discount Allowed		1,000
Rent, Rates and Taxes		4,300
Trade Expenses		1,500
Repairs & Renewable		1,600
Travelling Expenses		4,200
Postage		300
Telegram Expenses		200
Legal Fees		500
		54,689			54,689

Balance Sheet as on March 31, 2018
Liabilities		Amount (₹)	Assets			Amount (₹)
Capital	2,90,000		Fixed Assets
Less: Net Loss	43,189		Building	1,10,000
Less: Drawings	32,000	2,14,811	Less: Depreciation	6,600		1,03,400
Loan		34,800	Fixture and Fittings			20,000
Current Liabilities			Current Assets
Bills Payable		22,000	Closing Stock			32,000
Outstanding Salaries		1,000	Prepaid Insurance			800
Commission received in advance		1,000	Bills Receivable			50,000
Output CGST 15,180			Debtors		82,000
(15,000+180*)		5,180	Less: Bad Debts		1,000
Less: Input CGST 10,000			Less: Provision for Bad Debts		4,050
Output CGST 15,180 (15,000+180*)			Less: Provision for Discount on Debtors		1,539	75,41
Less: Input CGST 10,000		5,180	Accrued Rent*			2,360
		2,83,971				2,83,971

Working Notes:

WN1: Calculation of Depreciation

$Depreciation on Building = 1, 10, 000 \times \frac{6}{100} = 6, 600$

WN2: Calculation of Provision for Doubtful Debts

$\begin{array}{ccl} Provision for Doubtful Debts & = & (Debtors - Further Bad Debts) \times \frac{Rate}{100} \\ = & (82, 000 - 1, 000) \times \frac{5}{100} = 4, 050 \end{array}$

WN3: Calculation of Provision for Discount on Debtors

$\begin{array}{ccl} Provision for Discount on Debtors & = & (Debtors - Further Bad Debts - Provision for Doubtful Debts) \times \frac{Rate}{100} \\ = & (82, 000 - 1, 000 - 4, 050) \times \frac{2}{100} = 1, 539 \end{array}$

*WN4: Adjustment Entry for Accrued Rent

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

Question 9:

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


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

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

Answer:

Trading Account for the year ended March 31, 2018
Dr.						Cr.
Particulars		Amount (Rs)	Particulars		Amount (Rs)
Opening Stock		7,500	Sales	60,000
Purchases	36,000		Less: Return Inwards	1,000	59,000
Less: Return Outwards	500		Closing Stock		10,000
Less: Goods Destroyed by Fire	4,000	31,500
Carriage Inward		400
Wages & Salaries		7,500
Coal, Gas and Water		1,000
Gross Profit (Balancing Figure)		21,100
		69,000			69,000

Profit and Loss Account for the year ended March 31, 2018
Dr.						Cr.
Particulars		Amount (Rs)	Particulars		Amount (Rs)
Discount Allowed		400	Gross Profit		21,100
Stationery	2,000		Rent for premises	500
Less: Closing Stock	400	1,600	Less: Rent received in advance	100	400
Interest	450		Commission received		600
Add: Outstanding Interest (WN1)	150	600
Provision for Doubtful Debts (WN2)		1,050
Provision for Discount on Debtors (WN3)		189
Loss by Fire* (WN4)	4,480
Less: Ins. Claim admitted	3,000	1,480
Advertisement		200
Trade Expenses		8,650
Carriage Outwards		100
Lighting		250
Net Profit (Balancing Figure)		7,581

		22,100			22,100

Balance Sheet as on March 31, 2018
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital	40,000		Fixed Assets
Add: Net Profit	7,581		Furniture		4,600
Less: Drawings (LIC)	500	47,081	Freehold Property		10,000
			Plant and Machinery		12,500
Current Liabilities			Current Assets
Creditors		4,850	Closing Stock		10,000
Bank Loan		5,000	Insurance Company		3,000
Rent received in advance		100	Stock of Stationery		400
Outstanding Interest on Bank			Input IGST(5,000-480*)		4,520
Loan		150	Debtors	10,500
			Less: Provision for Bad Debts	1,050
			Less: Provision for Discount	189	9,261
			Cash in Hand		2,900
		57,181			57,181

Working Notes:

WN1: Calculation of Outstanding Interest on Bank Loan

\begin{array}{l} Interest on Bank Loan = 5, 000 \times \frac{12}{100} = 600 \\ Interest charged by Bank = 450 \\ ∴ Outstanding Interest = Rs 150 (600 - 450) \end{array}

WN2: Calculation of Provision for Doubtful Debts

\begin{array}{lll} Provision for Doubt ful Debts & = & Sundry Debtors \times \frac{Rate}{100} \\ = & 10, 500 \times \frac{10}{100} = Rs 1, 050 \end{array}

WN3: Calculation of Provision for Discount on Debtors

$\begin{array}{ccl} Provision for Discount on Debtors & = & (Sundry Debtors - Provision for Bad Debts) \times \frac{Rate}{100} \\ = & (10, 500 - 1, 050) \times \frac{2}{100} = Rs 189 \end{array}$

*WN4: Adjustment Entry for goods destroyed by fire

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

Question 10(A):

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


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

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

Answer:

Trading Account for the year ended March 31, 2018
Dr.						Cr.
Particulars		Amount (Rs)	Particulars		Amount (Rs)
Opening Stock		20,000	Sales	5,90,000
Purchases	2,92,000		Less: Return Inwards	16,000	5,74,000
Less: Goods Destroyed by Fire	8,000		Closing Stock		40,000
Less: Drawings	2,500
Less: Advertisement	1,500	2,80,000
Fuel and Power		34,000
Gross Profit (Balancing Figure)		2,80,000
		6,14,000			6,14,000

Profit and Loss Account for the year ended March 31, 2018
Dr.					Cr.
Particulars		Amount (Rs)	Particulars	Amount (Rs)
Depreciation on Furniture (WN1)		6,050	Gross Profit	2,80,000
General Expenses	18,000		Discount Received	19,000
Less: Furniture	5,000	13,000
Rent		10,000
Further Bad Debts	30,000
Add: New Provision (WN3)	10,000	40,000
Discount Allowed		15,000
Repair Charges		2,900
Advertisement (Free Samples)		1,680
Salaries		1,10,000
Net Profit (Balancing Figure)		1,00,370

		2,99,000		2,99,000

Balance Sheet as on March 31, 2018
Liabilities		Amount (Rs)	Assets			Amount (Rs)
Capital	1,60,000		Fixed Assets
Add : Net Profit	1,00,370		Furniture & Fittings		58,000
Less: Drawings (58,100 +2,800*)	60,900	1,99,470	Add: Additions		5,000
			Less: Depreciation		6,050	56,950
			Goodwill			16,000
Current Liabilities			Current Assets
Creditors		1,35,000	Closing Stock			40,000
			Insurance company( 8,000+12% GST)			8,960
			Input CGST(8,000-240-480) 7,280
			Less: Output CGST 5,000			2,280
			Input CGST(8,000-240-480) 7,280
			Less: Output CGST 5,000			2,280
			Cash at Bank			18,000
			Debtors	2,30,000
			Less: Bad Debts	30,000
			Less: Provision for Bad Debts	10,000		1,90,000

		3,34,470				3,34,470

Working Notes:

WN1: Calculation of Depreciation

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

\begin{array}{ccl} Depreciation on Furniture & = & 58, 000 \times \frac{10}{100} + 5, 000 \times \frac{10}{100} \times \frac{6}{12} \\ = & 5, 800 + 250 = Rs 6, 050 \end{array}

WN2: Calculation of Outstanding Rent

Amount of Rent Outstanding = 10, 000 \times \frac{2}{10} = Rs 2, 000

WN3: Calculation of Provision for Doubtful Debts

\begin{array}{lll} Provision for Doubtful Debts & = & (Sundry Debtors - Further Bad Debts) \times \frac{Rate}{100} \\ = & (2, 30, 000 - 30, 000) \times \frac{5}{100} = R s 10, 000 \end{array}

Question 10(B):

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

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

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

Answer:

Financial Statements of Subhash General Store
Trading Account for the year ended March 31, 2017
Dr.						Cr.
Particulars		Amount (Rs)	Particulars		Amount (Rs)
Opening Stock		60,000	Sales	2,80,000
Purchases	1,60,000		Less: Sales Return	15,000	2,65,000
Less: Goods Destroyed by Fire	10,000		Closing Stock		55,000
Less: Charity	1,200	1,48,800
Carriage Inwards		10,200
Rent (2/3^rd)		8,000
Wages		20,400
Fuel & Power		15,700
Gross Profit (Balancing Figure)		56,900
		3,20,000			3,20,000

Profit and Loss Account for the year ended March 31, 2017
Dr.					Cr.
Particulars		Amount (Rs)	Particulars	Amount (Rs)
Charity		1,200	Gross Profit	56,900
Stationery	500		Net Loss (Balancing Figure)	28,750
Less: Drawings	150	350
Advertisement	4,800
Less: Sign Board	1,500	3,300
Depreciation: (WN1)
Machinery	9,500
Motor Car	14,000	23,500
Salaries		36,000
Loss by Fire	10,000
Less: Ins. Claim admitted	6,800	3,200
Rent (1/3^rd)		4,000
Insurance	1,200
Less: Prepaid (WN2)	900	300
Motor Car Expenses		6,000
Brokerage		700
Carriage Outwards		2,000
Donation		5,100
		85,650		85,650

Balance Sheet as on March 31, 2017
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital	3,50,000		Fixed Assets
Less: Net Loss	28,750		Furniture		5,000
Less: Drawings (12,000 + 150)	12,150	3,09,100	Machinery	80,000
			Add: Addition	20,000
Current Liabilities			Less: Depreciation	9,500	90,500
Creditors		32,000	Motor Car	70,000
			Less: Depreciation	14,000	56,000
			Current Assets
			Closing Stock		55,000
			Insurance company		6,800
			Prepaid Insurance		900
			Debtors		1,20,000
			Sign Board		1,500
			Cash at Bank		5,400
		3,41,100			3,41,100

Working Notes:

WN1: Calculation of Depreciation

\begin{array}{l} Depreciation on Plant & Machinery = 80, 000 \times \frac{10}{100} + 20, 000 \times \frac{10}{100} \times \frac{9}{12} = Rs 9, 500 \\ Depreciation on Motor Car = 70, 000 \times \frac{20}{100} = 14, 000 \end{array}

WN2: Calculation of Prepaid Insurance

Prepaid Insurance = 1, 200 \times \frac{9}{12} = Rs 900

Question 11:

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

Answer:

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
1.	Salary A/c	Dr.		5,000
	To Outstanding Salary A/c				5,000
	(Salary outstanding, now adjusted)

2.	Prepaid Insurance A/c	Dr.		2,000
	To Insurance A/c				2,000
	(Insurance pre-paid, now adjusted)

3.	Rent A/c	Dr.		4,000
	To Rent Received in Advance A/c				4,000
	(Advance rent received, now adjusted)

4.	Accrued Commission A/c	Dr.		1,000
	To Commission A/c				1,000
	(Commission receivable, now adjusted)

5.	Interest on Capital A/c	Dr.		500
	To Capital A/c				500
	(Interest on capital, now allowed)

6.	Drawings A/c	Dr.		300
	To Interest on Drawings A/c				300
	(Interest on drawings charged)

7.	Bad Debts A/c	Dr.		2,000
	To Debtors A/c				2,000
	(Bad debts written off)

8.	Closing Stock A/c	Dr.		3,000
	To Trading A/c				3,000
	(Closing Stock transferred to Trading Account)

Question 12:

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

Particulars	Debit (₹)	Credit (₹)
Sundry debtors	6,60,000
Bad debts	15,000
Provision for doubtful debts		40,000

Additional Information:
(a) Additional Bad Debts ₹ 20,000.
(b) Maintain the provision for doubtful debts @ 5% on debtors.

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

Answer:

Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
1.	Bad debts A/c	Dr.		20,000
	To Debtors A/c				20,000
	(further bad debts)

	Provision for Bad debts A/c	Dr.		35,000
	To Bad Debts A/c				35,000
	(bad debts adjusted against provision)

	Profit and Loss A/c	Dr.		27,000
	To Provision for Bad debts A/c				27,000
	(net amount charged to P/L A/c)

2.	Staff welfare expenses A/c	Dr.		22,440
	To Purchases A/c				20,000
	To Input IGST A/c				2,400
	(goods distributed to staff as free samples)

3.	Rent A/c	Dr.		30,000
	Input IGST A/c	Dr.		3,600
	To outstanding rent A/c				33,600
	(outstanding rent)

4.	Prepaid insurance A/c	Dr.		10,000
	To Insurance A/c				10,000
	(insurance premium paid in advance)

5.	Accrued Commission A/c	Dr.		5,600
	To Commission A/c				5,000
	To Output IGST A/c				600
	(commission earned but not received)

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

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

Question 13:

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

Answer:

Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)

(i)	Closing Stock A/c	Dr.		80,000
	To Trading A/c				80,000
	(Transfer of Closing Stock to Trading A/c)

(ii)	Salary A/c	Dr.		21,000
	To Outstanding Salary A/c				21,000
	(Outstanding salaries)

(iii)	Prepaid Insurance A/c	Dr.		15,000
	To Insurance A/c				15,000
	(Insurance premium paid in advance)

(iv)	Rent A/c	Dr.		9,000
	To Rent Received in Advance A/c				9,000
	(Rent received in advance)

(v)	Accrued Commission A/c	Dr.		1,770
	To Commission A/c				1,500
	To Output CGST A/c				135
	To Output SGST A/c				135
	(Commission accrued but not received)

(vi)	Bad Debts A/c	Dr.		500
	To Debtors A/c				500
	(Write off further bad debts)

(vii)	Loss by Fire A/c	Dr.		9,440
	To Purchases A/c				8,000
	To Input CGST A/c				720
	To Input SGST A/c				720
	(Loss of goods by fire)

	Insurance Company A/c	Dr.		5,000
	Profit & Loss A/c			4,440
	To Loss by Fire A/c				9,440
	(Insurance company admitted claim)

(viii)	Drawings A/c	Dr.		11,800
	To Purchases A/c				10,000
	To Input CGST A/c				900
	To Input SGST A/c				900
	(Goods withdrawn by proprietor for personal use)

Question 14:

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

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

You are required to prepare Final Accounts after taking into account the following adjustments:
(a) Closing Stock on 31st March, 2017 was ₹ 60,000.
(b) Depreciate Plant and Machinery at 5%, Loose Tools at 15% and Furniture and fixtures at 5%.
(c) Provide

2 \frac{1}{2} %

for discount on Sundry Debtors and also provide 5% for Bad and Doubtful Debts on Sundry Debtors.
(d) Only three quarter's rent has been paid, the last quarter's rent being outstanding.
(e) Interest earned but not received ₹ 600.
(f) Write off

\frac{1}{4} th

of Advertisement expenses.

Answer:

Financial Statements of Mr. Gautam
Trading Account for the year ended March 31, 2017
Dr.						Cr.
Particulars		Amount (Rs)	Particulars		Amount (Rs)
Opening Stock		40,000	Sales	1,15,000
Purchases	51,000		Less: Sales Return	2,000	1,13,000
Less: Purchases Return	2,650	48,350	Closing Stock		60,000
Wages		20,000
Carriage Inwards		1,200
Coal and Gas		5,600
Gross Profit (Balancing Figure)		57,850
		1,73,000			1,73,000

Profit and Loss Account for the year ended March 31, 2017
Dr.					Cr.
Particulars		Amount (Rs)	Particulars	Amount (Rs)
Depreciation: (WN1)			Gross Profit	57,850
Plant & Machinery	2,000		Accrued Interest	600
Loose Tools	450
Furniture	60	2,510
Rent	2,700
Add: Outstanding Rent (WN2)	900	3,600
Bad Debts	1,200
Add: New Provision (WN3)	2,250	3,450
Discount Allowed		1,500
Provision for Discount on Debtors (WN4)		1,069
Advertisement Expenses written-off		875
Salaries		4,000
Repairs		1,800
Printing & Stationery		600
General Expenses		250
Carriage Outwards		1,500
Net Profit (Balancing Figure)		37,296

		58,450		58,450

Balance Sheet as on March 31, 2017
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital	2,03,000		Fixed Assets
Add : Net Profit	37,296		Plant & Machinery	40,000
Less: Drawings	15,000	2,25,296	Less: Depreciation	2,000	38,000
			Loose Tools	3,000
Current Liabilities			Less: Depreciation	450	2,550
Creditors		30,000	Furniture & Fixtures	1,200
Bills Payable		13,800	Less: Depreciation	60	1,140
Outstanding Rent		900	Investments		5,000
			Land & Building		60,000
			Goodwill		30,000
			Current Assets
			Closing Stock		60,000
			Accrued Interest		600
			Advertisement Expenditure		2,625
			Bills Receivable		2,000
			Cash at Bank		25,000
			Debtors	45,000
			Less: Provision for Bad Debts	2,250
			Less: Provision for Discount	1,069	41,681
			Cash in Hand		1,400
		2,69,996			2,69,996

Working Notes:

WN1: Calculation of Depreciation

\begin{array}{l} Depreciation on Plant & Machinery = 40, 000 \times \frac{5}{100} = Rs 2, 000 \\ Depreciation on Furniture & Fixtures = 1, 200 \times \frac{5}{100} = Rs 60 \\ Depreciation on Loose Tools = 3, 000 \times \frac{15}{100} = Rs 450 \end{array}

WN2: Calculation of Outstanding Rent

\begin{array}{l} Rent paid for 3 quarters = 2, 700 \\ Rent per quarter = \frac{2, 700}{3} = Rs 900 = Outstanding Rent \end{array}

WN3: Calculation of Provision for Doubtful Debts

\begin{array}{ccl} Provision for Doubtful Debts & = & Sundry Debtors \times \frac{Rate}{100} \\ = & 45, 000 \times \frac{5}{100} = Rs 2, 250 \end{array}

WN4: Calculation of Provision for Discount on Debtors

$\begin{array}{ccl} Provision for Discount on Debtors & = & (Sundry Debtors - Provision for Bad Debts) \times \frac{Rate}{100} \\ = & (45, 000 - 2, 250) \times \frac{2.5}{100} = Rs 1, 068.75 or 1, 069 \end{array}$

Question 15:

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

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

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

Answer:

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

Profit and Loss Account for the year ended March 31, 2019
Dr.											Cr.
Particulars			Amount (₹)		Particulars				Amount (₹)
Depreciation: (WN1)					Gross Profit				21,240
Plant & Machinery	2,000				Discount Received				1,260
Land & Building	1,200		3,200		Apprentice Premium				5,230
Salaries	2,000
Add: Outstanding	100		2,100
Provision for Doubtful Debts (WN2)			2,715
Provision for Discount on Debtors (WN3)			1,548
Bank Charges			200
Trade Expenses			3,800
Rates & Taxes			870
Outstanding Manager’s Commission (WN4)			633
Net Profit (Balancing Figure)			12,644

			27,730						27,730


Balance Sheet as on March 31, 2019
Liabilities				Amount (₹)		Assets				Amount (₹)
Capital		1,01,110				Fixed Assets
Add: Net Profit		12,664				Plant & Machinery		40,000
Less: Drawings		20,000		93,774		Less: Depreciation		2,000		38,000
						Land & Building		12,000
Current Liabilities						Less: Depreciation		1,200		10,800
Outstanding Manager’s Commission				633
Bills Payable				1,28,870		Current Assets
Outstanding Salaries				100		Closing Stock				20,000
						Prepaid Wages				40
						Bills Receivable				24,500
						Cash at Bank				50,000
						Debtors	54,300
						Less: Provision for Bad Debts	2,715
						Less: Provision for Discount	1,548			50,037
						Cash in Hand				30,000
				2,23,377						2,23,377

Working Notes:

WN1: Calculation of Amount of Depreciation

WN2: Calculation of Provision for Doubtful Debts

WN3: Calculation of Provision for Discount on Debtors

WN4: Calculation of Manager’s Commission

Question 16:

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

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

Adjustments:-
(i) Stock on 31st March, 2017 was valued at ₹ 23,500.
(ii)

\frac{1}{5} th

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

Answer:

Financial Statements of Shri Krishan Kumar
Trading Account for the year ended March 31, 2017
Dr.				Cr.
Particulars	Amount (Rs)	Particulars	Amount (Rs)
Opening Stock	16,200	Sales	65,360
Purchases	47,000	Closing Stock	23,500
Wages	7,200
General Expenses (1/5^th)	500
Taxes and Insurance (1/5^th)	253
Power	2,240
Gross Profit (Balancing Figure)	15,467
	88,860		88,860

Profit and Loss Account for the year ended March 31, 2017
Dr.											Cr.
Particulars			Amount (Rs)		Particulars				Amount (Rs)
Depreciation: (WN1)					Gross Profit				15,467
Machinery	934				Commission Received				1,320
Scooter	240		1,174
Old Bad Debts	550
Add: Further Bad Debts	160
Add: New Provision (WN2)	306
Less: Old Provision	900		116
Outstanding Interest on Bank Overdraft			700
Taxes & Insurance	1,315
Less: Pre-paid	50
Less: T/f to Trading A/c	253		1,012
General Expenses	2,500
Less: T/f to Trading A/c	500		2,000
Charity			105
Scooter Expenses			500
Trade Expenses			1,280
Outstanding Manager’s Commission (WN3)			900
Net Profit (Balancing Figure)			9,000

			16,787						16,787

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

Working Notes:

WN1: Calculation of Amount of Depreciation

Depreciation on Machinery = 9, 340 \times \frac{10}{100} = Rs 934

WN2: Calculation of Provision for Doubtful Debts

\begin{array}{ccl} Provision for Doubtful Debts & = & (Sundry Debtors - Further Bad Debts) \times \frac{Rate}{100} \\ = & (6, 280 - 160) \times \frac{5}{100} = Rs 306 \end{array}

WN3: Calculation of Manager’s Commission

$\begin{array}{l} Profit before Manager' s Commission = Rs 9, 900 (16, 787 - 6, 887) \\ Manager' s Commission = 9, 900 \times \frac{10}{110} = Rs 900 \end{array}$

Question 17(A):

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

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

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

Answer:

Financial Statement of Sh. Ghanshyam Das
Trading Account for the year ended March 31, 2017
Dr.						Cr.
Particulars		Amount (Rs)	Particulars		Amount (Rs)
Opening Stock		20,000	Sales	4,80,000
Purchases	2,50,000		Less: Sales Return	12,000	4,68,000
Less: Purchases Return	10,000	2,40,000	Closing Stock		22,000
Wages		18,000
Carriage Inwards		6,500
Gross Profit (Balancing Figure)		2,05,500
		4,90,000			4,90,000

Profit and Loss Account for the year ended March 31, 2017
Dr.					Cr.
Particulars		Amount (Rs)	Particulars	Amount (Rs)
Depreciation: (WN1)			Gross Profit	2,05,500
Land & Building	7,000		Accrued Interest on Investment	1,600
Motor Vehicle	10,000	17,000	Discount Received	1,800
Interest on Loan	2,250
Add: Outstanding (WN2)	2,250	4,500
General Expenses	6,400
Less: Drawings	2,000	4,400
Bad Debts		1,500
Carriage Outwards		8,000
Salaries		7,200
Rates, Taxes and Insurance		15,000
Advertisement		5,000
Outstanding Manager’s Commission (WN3)		13,300
Net Profit (Balancing Figure)		1,33,000

		2,08,900		2,08,900

Balance Sheet as on March 31, 2017
Liabilities			Amount (Rs)	Assets		Amount (Rs)
Capital	2,00,000			Fixed Assets
Add: Net Profit	1,33,000			Land & Building	2,80,000
Less: Drawings	2,000		3,31,000	Less: Depreciation	7,000	2,73,000
				Motor Vehicle	50,000
Current Liabilities				Less: Depreciation	10,000	40,000
Creditors			25,000	Investments		16,000
Outstanding Manager’s Commission			13,300	Current Assets
Outstanding Salaries			600	Closing Stock		22,000
Bills Payable			5,400	Bills Receivable		7,500
Loan on Mortgage		30,000		Debtors		40,000
Outstanding Interest on Loan		2,250	32,250	Prepaid Insurance		3,000
				Accrued Interest on Investment		1,600
				Cash at Bank		4,450
			4,07,550			4,07,550

Working Notes:

WN1: Calculation of Amount of Depreciation

\begin{array}{l} Depreciation on Land & Building = 2, 80, 000 \times \frac{2.5}{100} = Rs 7, 000 \\ Depreciation on Motor Vehicle = 50, 000 \times \frac{20}{100} = Rs 10, 000 \end{array}

WN2: Calculation of Outstanding Interest on Loan

Outstanding Interest = 30, 000 \times \frac{15}{100} \times \frac{6}{12} = Rs 2, 250

WN3: Calculation of Manager’s Commission

\begin{array}{l} Profit before Manager' s Commission = Rs 1, 46, 300 (2, 08, 900 - 62, 600) \\ Manager' s Commission = 1, 46, 300 \times \frac{10}{110} = Rs 13, 300 \end{array}

Question 17(B):

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

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

Adjustments:- The Closing stock was ₹ 23,000 but there has been a loss by fire on 20th March, 2017, to the extent of ₹ 20,000, not covered by insurance. Depreciate Plant and Machinery by 10% and Traveller's Samples by

33 \frac{1}{3} %

. Increase the Bad-debts Provision to ₹ 2,000. Write 20% off Advertising Development Account. Annual premium on insurance expiring 1st June, 2017 was ₹ 1,200. Provide for Manager's commission @ 5% on Net Profits after charging such Commission.

Answer:

Financial Statements of Mr. Sardari Lal
Trading Account for the year ended March 31, 2017
Dr.						Cr.
Particulars		Amount (Rs)	Particulars		Amount (Rs)
Opening Stock		32,000	Sales	2,89,600
Purchases	1,71,000		Less: Sales Return	600	2,89,000
Less: Purchases Return	4,000		Closing Stock		23,000
Less: Goods Destroyed by Fire	20,000	1,47,000
Power		9,000
Carriage Inwards		1,500
Wages		23,000
Gross Profit (Balancing Figure)		99,500
		3,12,000			3,12,000

Profit and Loss Account for the year ended March 31, 2017
Dr.					Cr.
Particulars		Amount (Rs)	Particulars	Amount (Rs)
Depreciation: (WN1)			Gross Profit	99,500
Traveler’s Sample	900		Rent Received	600
Plant & Machinery	2,000	2,900	Discount Received	1,800
Rent & Insurance	19,900		Net Loss (Balancing Figure)	3,690
Less: Prepaid (WN2)	200	19,700
New Provision	2,000
Less: Old Provision	600	1,400
Traveler’s Commission		2,890
Traveler’s Salaries		9,100
Salaries		34,400
Discount Allowed		5,000
Loss by Fire		20,000
Advertisement Development Expenditure written-off (WN3)		1,600
General Charges		8,600

		1,05,590		1,05,590

Balance Sheet as on March 31, 2017
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital	41,000		Fixed Assets
Less: Net Loss	3,690		Plant & Machinery	20,000
Less: Drawings	5,000	32,310	Less: Depreciation	2,000	18,000
			Traveler’s Samples	2,700
Current Liabilities			Less: Depreciation	900	1,800
Creditors- Expenses		6,800	Goodwill		5,000
Creditors- Trade		30,000	Current Assets
			Closing Stock		23,000
			Advertisement Development		6,400
			Prepaid Insurance		200
			Cash in Hand		110
			Debtors	14,600
			Less: Provision for Doubtful Debts	2,000	12,600
			Cash at Bank		2,000
		69,110			69,110

Working Notes:

WN1: Calculation of Amount of Depreciation

WN2: Calculation of Prepaid Insurance

WN3: Calculation of Advertisement Expenditure Written-off

WN4: Calculation of Manager’s Commission

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

Question 18:

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

Answer:

1. Capital Expenditure
Reason: When a fixed asset is purchased, then all the expenses up to the date at which the asset is put to use are capitalised. So, expenses incurred on carriage and installation of new machinery will be considered as capital expenditure.

2. Capital Expenditure
Reason: Whitewashing (or painting) expenses incurred on the building will increase the revenue generating capacity of the building, thus, it will be capitalised and treated as capital expenditure.

3. Revenue Expenditure
Reason: Annual insurance premium is a recurring expenditure to carry on day-to-day business activities. Thus, it is a revenue expense.

4. Capital Expenditure
Reason: Expenditure incurred once in many years to increase the working capacity and revenue generating capacity of the asset, and then it is termed as capital expenditure. Thus, repairs made to the second hand machinery (purchased recently) are a one-time expense and thus, will be capitalised and treated as capital expenditure.

5. Revenue Expenditure
Reason: The amount spent on repairs of machinery is a recurring expenditure and helps in increasing the working capacity of the machinery but does not add value to it. Thus, it is a revenue expense.

6. Capital Expenditure
Reason: Expenditure incurred once in many years to increase the working capacity and revenue generating capacity of the asset, and then it is termed as capital expenditure. Thus, amount spent for air conditioning of the manager’s will increase the value of the asset and thus, it is a capital expenditure.

Question 19:

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

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

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

Answer:

Financial Statement of Mr. Alok
Trading Account for the year ended March 31, 2019
Dr.						Cr.
Particulars		Amount (₹)	Particulars		Amount (₹)
Opening Stock		44,840	Sales	1,78,215
Purchases		1,28,295	Less: Return Inwards	2,390	1,75,825
Wages	20,485		Closing Stock		64,480
Less: Erection Charges of New Machinery	600	19,885
Gross Profit (Balancing Figure)		47,285
		2,40,305			2,40,305

Profit and Loss Account for the year ended March 31, 2019
Dr.							Cr.
Particulars			Amount (₹)	Particulars		Amount (₹)
Depreciation: (WN1)				Gross Profit		47,285
Machinery	750			Commission	2,820
Furniture	448		1,198	Less: Comm. Received in advance	300	2,520
Old Bad Debts	1,810
Add: Further Bad Debts	500
Add: New Provision (WN2)	1,450		3,760
Rent			2,810
Interest on Loan		500
Add: Outstanding (WN3)		300	800
Salaries			5,500
Travelling Expenses			945
Insurance			200
Repairs			1,685
Discount Allowed			2,435
Net Profit (Balancing Figure)			30,472
			49,805			49,805

Balance Sheet as on March 31, 2019
Liabilities		Amount (₹)	Assets			Amount (₹)
Capital	59,700		Fixed Assets
Add: Net Profit	30,472		Machinery		14,400
Less: Drawings	5,275	84,897	Add: Erection charges		600
8% Loan		10,000	Less: Depreciation		750	14,250
			Furniture		4,480
Current Liabilities			Less: Depreciation		448	4,032
Creditors		29,815
Outstanding Interest		300	Current Assets
Commission received in advance		300	Closing Stock			64,480
			Bills Receivables			4,750
			Debtors	30,000
			Less: Bad Debts	500
			Less: Provision for Doubtful Debts	1,450		28,050
			Cash in Hand			9,750
		1,25,312				1,25,312

Working Notes:

WN1: Calculation of Amount of Depreciation
$\begin{array}{l} Depreciation on Machinery = (14, 400 + 600) \times \frac{5}{100} = Rs 750 \\ Depreciation on Furniture = 4, 480 \times \frac{10}{100} = Rs 448 \end{array}$

WN2: Calculation of Provision for Doubtful Debts
$\begin{array}{ccl} Provision for Doubtful Debts & = & (Sundry Debtors - Further Bad Debts - Amount recoverable from X *) \times \frac{Rate}{100} \\ = & (30, 000 - 500 - 500) \times \frac{5}{100} = Rs 1, 450 \end{array}$
$* Provision is to be maintained on Debtors other than X$

WN3: Calculation of Outstanding Interest on Loan
$\begin{array}{l} Interest on Loan = 10, 000 \times \frac{8}{100} = Rs 800 \\ Interest on Loan already Paid = 300 \\ ∴ Outstanding Interest on Loan = Rs 300 \end{array}$

Question 20:

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

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

Adjustments:
(i)

\frac{3}{4} th

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

Answer:

Profit and Loss Account for the year ended March 31, 2017
Dr.					Cr.
Particulars		Amount (Rs)	Particulars	Amount (Rs)
Old Bad Debts	10,000
Add: Further Bad Debts	15,000
Add: New Provision	27,600
Less: Old Provision	24,000	28,600

Balance Sheet as on March 31, 2017
Liabilities	Amount (Rs)	Assets		Amount (Rs)
		Current Assets
		Debtors	4,80,000
		Less: Bad Debts	15,000
		Less: Provision for Doubtful Debts	27,600	4,37,400

Working Note:

WN1: Calculation of Provision for Doubtful Debts

\begin{array}{ccl} Provision for Doubtful Debts & = & (Sundry Debtors - Further Bad Debts - Amt . recoverable from Dewan *) \times \frac{Rate}{100} \\ = & (4, 80, 000 - 15, 000 - 5, 000) \times \frac{6}{100} = Rs 27, 600 \end{array} * Provision is to be maintained on Debtors other than Dewan

Question 21:

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

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

Adjustments:-
1. Carry forward the following unexpired amounts:-

(i) Fire Insurance	₹ 125
(ii) Rates and Taxes	₹ 240

2. Transfer to Building Account ₹ 3,000 from purchases and ₹ 2,000 from wages, representing cost of material and labour spent on additions to Building made during the year.
3. Charge Depreciation on Land and Buildings at 2.5% and on Plant & Machinery at 10%.
4. Make a Provision of 5% on Sundry Debtors for Bad-debts.
5. Charge 5% Interest on Capital but not on Drawings.
6. The value of Stock as on 31st March, 2016 was ₹ 29,390.

Answer:

Financial Statements of S. Sujan Singh
Trading Account for the year ended March 31, 2016
Dr.						Cr.
Particulars		Amount (Rs)	Particulars		Amount (Rs)
Opening Stock		26,420	Sales	91,230
Purchases	42,160		Less: Sales Return	1,760	89,470
Less: Purchases Return	8,460		Closing Stock		29,390
Less: t/f to Building	3,000	30,700
Wages	21,470
Less: t/f to Building	2,000	19,470
Carriage		4,370
Coal, Gas and Water		720
Gross Profit (Balancing Figure)		37,180
		1,18,860			1,18,860

Profit and Loss Account for the year ended March 31, 2016
Dr.						Cr.
Particulars		Amount (Rs)	Particulars		Amount (Rs)
Depreciation: (WN1)			Gross Profit		37,180
Plant & Machinery	1,427		Miscellaneous Receipts		500
Land & Building	750	2,177	Discount		120
Fire Insurance	490		Old Provision	2,470
Less: Unexpired	125	365	Less: New Provision (WN2)	1,890	580
Interest on Capital		4,500
Rates & Taxes	840
Less: Unexpired	240	600
Salaries		4,670
Trade Expenses		1,990
Bank Charges		140
Net Profit (Balancing Figure)		23,938
		38,380			37,980

Balance Sheet

as on March 31, 2016

Liabilities

Amount

(Rs)

Assets

Amount

(Rs)

Capital

90,000

Fixed Assets

Add: Interest on Capital

4,500

Land & Building (25,000 + 3,000 + 2,000)

30,000

Add: Net Profit

23,938

Less: Depreciation

750

29,250

Less: Drawings

6,480

1,11,958

Plant & Machinery

14,270

Less: Depreciation

1,427

12,843

Current Liabilities

Furniture & Fixtures

1,250

Creditors

12,170

Current Assets

Closing Stock

29,390

Unexpired Fire Insurance

125

Unexpired Rates & Taxes

240

Bills Receivables

1,270

Cash at Bank

13,000

Debtors

37,800

Less: Provision for Doubtful Debts

1,890

35,910

Cash in Hand

850

1,24,128

Working Notes:
WN1: Calculation of Amount of Depreciation

$\begin{array}{l} Depreciation on Land & Buildings = 30, 000 \times \frac{2.5}{100} = Rs 750 \\ Depreciation on Plant & Machinery = 14, 270 \times \frac{10}{100} = Rs 1, 427 \end{array}$

WN2: Calculation of Provision for Doubtful Debts
$\begin{array}{ccl} Provision for Doubtful Debts & = & (Sundry Debtors - Further Bad Debts) \times \frac{Rate}{100} \\ = & (37, 800 - 0) \times \frac{5}{100} = Rs 1, 890 \end{array}$

Question 22:

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

Dr. Balances	(₹)	Cr. Balances	(₹)
Drawings	1,20,000	Capital	16,00,000
Plant and Machinery	12,00,000	Creditors	2,60,000
Horses and Carts	2,60,000	Sales	8,20,000
Debtors	3,40,000	Bills Payable	2,21,200
Purchases	2,00,000	Interest on Ram's Loan	1,800
Wages	80,000	Rent Received	12,000
Cash at Bank	2,60,000
Salaries	80,000
Repairs	5,000
Stock (1-4-2018)	70,000
Stock (31-3-2019)	92,000
Rent	45,000
Manufacturing expenses	15,000
Bad-Debts	50,000
Carriage	15,000
Income Tax	20,000
Life Insurance Premium	30,000
Loan to Ram at 12% p.a.	20,000
Insurance	12,000
Insurance Prepaid	1,000
	29,15,000		29,15,000

Adjustments:-
1. Plant and Machinery includes a new machinery purchased on 1st October, 2018 for ₹ 2,00,000.
2. Depreciate Plant and Machinery by 10% p.a. and Horses and Carts by 20% p.a.
3. Salaries for the month of February and March 2019 are outstanding.
4. Goods worth ₹ 15,000 were sold and despatched on 27th March but no entry was passed to this effect.
5. Make a provision for Doubtful Debts at 5% on Debtors.

Answer:

Financial Statement of Sh. Pawan Kumar
Trading Account for the year ended March 31, 2019
Dr.					Cr.
Particulars	Amount (₹)	Particulars		Amount (₹)
Opening Stock	70,000	Sales	8,20,000
Purchases	2,00,000	Add: Unrecorded Sales	15,000	8,35,000
Carriage	15,000
Wages	80,000
Manufacturing Expenses	15,000
Gross Profit (Balancing Figure)	4,55,000

	8,35,000			8,35,000

Profit and Loss Account for the year ended March 31, 2019
Dr.							Cr.
Particulars			Amount (₹)	Particulars		Amount (₹)
Depreciation: (WN1)				Gross Profit		4,55,000
Plant & Machinery	1,10,000			Rent Received		12,000
Horse & Carts	52,000		1,62,000	Interest on Ram’s Loan	1,800
Old Bad Debts	50,000			Add: Accrued Interest (WN4)	600	2,400
Add: New Provision (WN2)	17,750		67,750
Insurance			12,000
Salaries		80,000
Add: Outstanding (WN3)		16,000	96,000
Repairs			5,000
Rent			45,000
Net Profit (Balancing Figure)			81,650
			4,69,400			4,69,400

Balance Sheet as on March 31, 2019
Liabilities		Amount (₹)	Assets		Amount (₹)
Capital	16,00,000		Fixed Assets
Add : Net Profit	81,650		Plant & Machinery	12,00,000
Less: Drawings (incl. LIP and Income Tax)	1,70,000	15,11,650	Less: Depreciation	1,10,000	10,90,000
			Horses & Carts	2,60,000
Current Liabilities			Less: Depreciation	52,000	2,08,000
Creditors		2,60,000
Outstanding Salaries		16,000	Current Assets
Bills Payable		2,21,200	Closing Stock		92,000
			Prepaid Insurance		1,000
			Accrued Interest		600
			Ram’s Loan		20,000
			Cash at Bank		2,60,000
			Debtors	3,40,000
			Add: Unrecorded	15,000
			Less: Provision for Doubtful Debts	17,750	3,37,250

		20,08,850			20,08,850

Working Notes:

WN1: Calculation of Amount of Depreciation

\begin{array}{l} Depreciation on Plant & Machinery = 10, 00, 000 \times \frac{10}{100} + 2, 00, 000 \times \frac{10}{100} \times \frac{6}{12} = Rs 1, 10, 000 \\ Depreciation on Horse & Carts = 2, 60, 000 \times \frac{20}{100} = Rs 52, 000 \end{array}

WN2: Calculation of Provision for Doubtful Debts

\begin{array}{ccl} Provision for Doubtful Debts & = & (Sundry Debtors + Unrecorded Sales) \times \frac{Rate}{100} \\ = & (3, 40, 000 + 15, 000) \times \frac{5}{100} = Rs 17, 750 \end{array}

WN3: Calculation of Outstanding Expenses

$\begin{array}{l} Salaries for 10 months = 80, 000 \\ Salary for 2 months = \frac{80, 000}{10} \times 2 = Rs 16, 000 \end{array}$

WN4: Calculation of Accrued Interest on Ram’s Loan

\begin{array}{l} Interest on Loan = 20, 000 \times \frac{12}{100} = Rs 2, 400 \\ Interest on Loan already received = Rs 1, 800 \\ So, Accrued Interest = Rs 600 \end{array}

Accountancy Dk Goel 2019 for Class 11 Commerce Accountancy Chapter 15 - Financial Statements With Adjustments

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