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Question
From the following balances extracted from the book of M/s Manju Chawla on March 31, 2017. You are requested to prepare the trading and profit and loss account and a balance sheet as on this date.
|
Account Title |
Amount |
Amount |
|
Opening stock |
10,000 |
|
|
Purchases and Sales |
40,000 |
80,000 |
|
Returns |
200 |
600 |
|
Wages |
6,000 |
|
|
Dock and cleaning charges |
4,000 |
|
|
Lighting |
500 |
|
|
Misc. Income |
6,000 |
|
|
Rent |
2,000 |
|
|
Capital |
40,000 |
|
|
Drawings |
2,000 |
|
|
Debtors and Creditors |
6,000 |
7,000 |
|
Cash |
3,000 |
|
|
Investment |
6,000 |
|
|
Patent |
4,000 |
|
|
Land and Machinery |
43,000 |
|
|
Donations and Charity |
600 |
|
|
Sales tax collected |
1,000 |
|
|
Furniture |
11,300 |
|
|
1,36,600 |
1,36,600 |
Closing stock was Rs 2,000.
(a) Interest on drawings @ 7% and interest on capital @ 5%.
(b) Land and Machinery is depreciated at 5%.
(c) Interest on investment @ 6%.
(d) Unexpired rent Rs 100.
(e) Charge 5% depreciation on furniture.
Solution
|
Trading Account |
||||||||
|
Dr. |
Cr. |
|||||||
|
Particulars |
Amount |
Particulars |
Amount |
|||||
|
Opening Stock |
10,000 |
Sales |
80,000 |
|||||
|
Purchases |
40,000 |
Less: Sales Return |
200 |
79,800 |
||||
|
Less: Purchases Return |
600 |
39,400 |
Closing Stock |
2,000 |
||||
|
Wages |
6,000 |
|||||||
|
Dock and Cleaning Charges |
4,000 |
|||||||
|
Gross Profit |
22,400 |
|||||||
|
81,800 |
81,800 |
|||||||
|
Profit and Loss Account |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
Amount |
Particulars |
|
Amount |
|
Lighting |
500 |
Gross Profit |
22,400 |
|
|
Donations and Charity |
600 |
Miscellaneous Income |
6,000 |
|
|
Interest on Capital |
2,000 |
Rent |
2,000 |
|
|
Depreciation on Furniture |
565 |
Less: Unexpried |
100 |
1,900 |
|
Depreciation on Land |
2,150 |
Interest on Drawings |
140 |
|
|
Net Profit |
24,985 |
Interest on Investment |
|
360 |
|
30,800 |
30,800 |
|||
|
Balance Sheet |
||||||||
|
Liabilities |
Amount |
Assets |
Amount |
|||||
|
Capital |
40,000 |
Debtors |
6,000 |
|||||
|
Add: Interest on Capital |
2,000 |
Cash |
3,000 |
|||||
|
Add: Net Profit |
24,985 |
Investment |
6,000 |
|||||
|
Less: Drawings |
2,000 |
Add: Interest on |
360 |
6,360 |
||||
|
Less: Interest on Drawings |
140 |
64,845 |
Patent |
4,000 |
||||
|
Creditors |
7,000 |
Land and Machinery |
43,000 |
|||||
|
Sales Tax Collected |
1,000 |
Less: Depreciation |
2,150 |
40,850 |
||||
| Unexpired rent | 100 |
Furniture |
11,300 |
|||||
|
Less: Depreciation |
565 |
10,735 |
||||||
|
Closing Stock |
2,000 |
|||||||
|
72,945 |
72,945 |
|||||||
Note:
In the NCERT textbook, the answer provided for question number 11 is different from the solution.
However, the answer should be
Gross profit = Rs 22,400 instead of Rs 21,900
Net profit = Rs 24,985 instead of Rs 25,185
Total of Balance Sheet = Rs 72,945 instead of Rs 71,185
APPEARS IN
RELATED QUESTIONS
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What are adjusting entries? Why are they necessary for preparing final accounts?
Prepare a trading and profit and loss account for the year ending December 31, 2017. from the balances extracted of M/s Rahul Sons. Also prepare a balance sheet at the end of the year.
| Account Title | Amount ₹ |
Account Title | Amount ₹ |
| Stock | 50,000 | Sales | 1,80,000 |
| Wages | 3,000 | Purchases return | 2,000 |
| Salary | 8,000 | Discount received | 500 |
| Purchases | 1,75,000 | Provision for doubtful debts | 2,500 |
| Sales return | 3,000 | Capital | 3,00,000 |
| Sundry 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 | ||
| Trade expenses | 1,500 | ||
| Bad debts | 2,000 | ||
| Drawings | 32,000 | ||
| Repair and | 1,600 | ||
| renewals | |||
| Travelling | 4,200 | ||
| expenses | |||
| Postage | 300 | ||
| Telegram | 200 | ||
| expenses | |||
| Legal fees | 500 | ||
| Bills receivable | 50,000 | ||
| Building | 1,10,000 | ||
| 5,51,800 | 5,51,800 |
Adjustments
1. Commission received in advance ₹ 1,000.
2. Rent receivable ₹ 2,000.
3. Salary outstanding ₹ 1,000 and insurance prepaid ₹ 800.
4. Further bad debts ₹ 1,000 and provision for doubtful debts @ 5% on debtors and discount on debtors @ 2%.
5. Closing stock ₹ 32,000.
6. Depreciation on building @ 6% p.a.
Prepare a trading and profit and loss account of M/s Green Club Ltd. for the year ending March 31, 2017. from the following figures taken from his trial balance:
| Account Title | Amount ₹ |
Account Title | Amount ₹ |
| Opening stock | 35,000 | Sales | 2,50,000 |
| Purchases | 1,25,000 | Purchase return | 6,000 |
| Return inwards | 25,000 | Creditors | 10,000 |
| Postage and Telegram | 600 | Bills payable | 20,000 |
| Salary | 12,300 | Discount | 1,000 |
| Wages | 3,000 | Provision for bad debts | 4,500 |
| Rent and Rates | 1,000 | Interest received | 5,400 |
| Packing and Transport | 500 | Capital | 75,000 |
| General expense | 400 | ||
| Insurance | 4,000 | ||
| Debtors | 50,000 | ||
| Cash in hand | 20,000 | ||
| Cash at bank | 40,000 | ||
| Machinery | 20,000 | ||
| Lighting and Heating |
5,000 | ||
| Discount | 3,500 | ||
| Bad debts | 3,500 | ||
| Investment | 23,100 | ||
| 3,71,900 | 3,71,900 |
Adjustments:
- Depreciation charged on machinery @ 5% p.a.
- Further bad debts ₹ 1,500, discount on debtors @ 5% and make a provision on debtors @ 6%.
- Wages prepaid ₹ 1,000.
- Interest on investment @ 5% p.a.
- Closing stock ₹ 10,000.
The following balances has been extracted from the trial of M/s Runway Shine Ltd. Prepare a trading and profit and loss account and a balance sheet as on March 31, 2017.
| Account Title | Amount ₹ |
Account Title | Amount ₹ |
| Purchases | 1,50,000 | Sales | 2,50,000 |
| Opening stock | 50,000 | Return outwards | 4,500 |
| Return inwards | 2,000 | Interest received | 3,500 |
| Carriage inwards | 4,500 | Discount received | 400 |
| Cash in hand | 77,800 | Creditors | 1,25,000 |
| Cash at bank | 60,800 | Bill payable | 6,040 |
| Wages | 2,400 | Capital | 1,00,000 |
| Printing and | 4,500 | ||
| Stationery | |||
| Discount | 400 | ||
| Bad debts | 1,500 | ||
| Insurance | 2,500 | ||
| Investment | 32,000 | ||
| Debtors | 53,000 | ||
| Bills receivable | 20,000 | ||
| Postage and | 400 | ||
| Telegraph | |||
| Commission | 200 | ||
| Interest | 1,000 | ||
| Repair | 440 | ||
| Lighting Charges | 500 | ||
| Telephone | 100 | ||
| charges | |||
| Carriage outward | 400 | ||
| Motor car | 25,000 | ||
| 4,89,440 | 4,89,440 |
Adjustments
1. Further bad debts ₹ 1,000. Discount on debtors ₹ 500 and make a provision on debtors @ 5%.
2. Interest received on investment @ 5%.
3. Wages and interest outstanding ₹ 100 and ₹ 200 respectively.
4. Depreciation charged on motor car @ 5% p.a.
5. Closing Stock ₹ 32,500.
From the following Trial Balance you are required to prepare trading and profit and loss account for the year ending March 31, 2017 and Balance Sheet on that date.
|
Particulars |
Amount |
Particulars |
Amount |
| Opening stock | 25,000 | Sales | 7,00,000 |
| Furniture | 16,000 | Creditors | 72,500 |
| Purchases | 5,55,300 | Bank Overdraft | 50,000 |
| Carriage Inwards | 4,700 | Provision for bad and doubtful debts | 2,100 |
| Bad debts | 1,800 | Discount | 500 |
| Wages | 52,000 | Capital | 2,00,000 |
| Debtors | 80,000 | Purchases Return | 20,000 |
| Sales Return | 15,000 | ||
| Rent | 24,000 | ||
| Miscellaneous Expenses | 3,400 | ||
| Salaries | 68,000 | ||
| Cash | 8,900 | ||
| Drawings | 14,000 | ||
| Buildings | 1,60,000 | ||
| Advertising | 10,000 | ||
| Interest on Bank Overdraft | 7,000 | ||
| 10,45,100 | 10,45,100 |
Adjustments:
1. Closing stock valued at ₹ 36,000.
2. Private purchases amounting to ₹ 5,000 debited to purchases account.
3. Provision for doubtful debts @ 5% on debtors.
4. Sign board costing ₹ 4,000 includes in advertising.
5. Depreciate furniture by 10%.
Following balances have been extracted from the trial balance of M/s Keshav Electronics Ltd. You are required to prepare the trading and profit and loss account and a balance sheet as on March 31, 2017.
|
Account Title |
Amount |
Account Title |
Amount |
|
Opening stock |
2,26,000 |
Sales |
6,80,000 |
|
Purchases |
4,40,000 |
Return outwards |
15,000 |
|
Drawings |
75,000 |
Creditors |
50,000 |
|
Buildings |
1,00,000 |
Bills payable |
63,700 |
|
Motor van |
30,000 |
Interest received |
20,000 |
|
Freight inwards |
3,400 |
Capital |
3,50,000 |
|
Sales return |
10,000 |
||
|
Trade expense |
3,300 |
||
|
Heat and Power |
8,000 |
||
|
Salary and Wages |
5,000 |
||
|
Legal expense |
3,000 |
||
|
Postage and Telegram |
1,000 |
||
|
Bad debts |
6,500 |
||
|
Cash in hand |
79,000 |
||
|
Cash at bank |
98,000 |
||
|
Sundry debtors |
25,000 |
||
|
Investments |
40,000 |
||
|
Insurance |
3,500 |
||
|
Machinery |
22,000 |
||
|
11,78,700 |
11,78,700 |
The following additional information is available :
1. Stock on December 31, 2017 was ₹ 30,000.
2. Depreciation is to be charged on building at 5% and motor van at 10%.
3. Provision for doubtful debts is to be maintained at 5% on Sundry Debtors.
4. Unexpired insurance was ₹ 600.
5. The Manager is entitled to a commission @ 5% on net profit before charging such commission.
From the following balances extracted from the books of Raga Ltd. Prepare a trading and profit and loss account for the year ended March 31, 20117 and a balance sheet as on that date.
|
Account Title |
Amount |
Account Title |
Amount |
|
Drawings |
20,000 |
Sales |
2,20,000 |
|
Land and Buildings |
12,000 |
Capital |
1,01,110 |
|
Plant and Machinery |
40,000 |
Discount |
1,260 |
|
Carriage inwards |
100 |
Apprentice premium |
5,230 |
|
Wages |
500 |
Bills payable |
1,28,870 |
|
Salary |
2,000 |
Purchases 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 information is as under:
1. Closing stock was valued at the end of the year Rs, 20,000.
2. Depreciation on plant and machinery charged at 5% and land and building at 10%.
3. Discount on debtors at 3%.
4. Make a provision at 5% on debtors for doubtful debts.
5. Salary outstanding was Rs 100 and Wages prepaid was Rs 40.
6. The manager is entitled a commission of 5% on net profit after charging such commission.
From the following balances of M/s Jyoti Exports, prepare trading and profit and loss account for the year ended March 31, 2017 and balance sheet as on this date.
|
Account Title |
Debit |
Account Title |
Credit |
|
Sundry debtors |
9,600 |
Sundry creditors |
2,500 |
|
Opening stock |
22,800 |
Sales |
72,670 |
|
Purchases |
34,800 |
Purchases returns |
2,430 |
|
Carriage inwards |
450 |
Bills payable |
15,600 |
|
Wages |
1,770 |
Capital |
42,000 |
|
Office rent |
820 |
||
|
Insurance |
1,440 |
||
|
Factory rent |
390 |
||
|
Cleaning charges |
940 |
||
|
Salary |
1,590 |
||
|
Building |
24,000 |
||
|
Plant and Machinery |
3,600 |
||
|
Cash in hand |
2,160 |
||
|
Gas and Water |
240 |
||
|
Octroi |
60 |
||
|
Furniture |
20,540 |
||
|
Patents |
10,000 |
||
|
1,35,200 |
1,35,200 |
Closing stock Rs 10,000.
1. To provision for doubtful debts is to be maintained at 5 per cent on sundry debtors.
2. Wages amounting to Rs 500 and salary amounting to Rs 350 are outstanding.
3. Factory rent prepaid Rs 100.
4. Depreciation charged on Plant and Machinery @ 5% and Building @ 10%.
5. Outstanding insurance Rs 100.
The following balances have been extracted from the books of M/s Green House for the year ended March 31, 2017, prepare trading and profit and loss account and balance sheet as on this date.
|
Account Title |
Amount |
Account Title |
Amount |
|
Purchases |
80,000 |
Capital |
2,10,000 |
|
Bank balance |
11,000 |
Bills payable |
6,500 |
|
Wages |
34,000 |
Sales |
2,00,000 |
|
Debtors |
70,300 |
Creditors |
50,000 |
|
Cash in hand |
1,200 |
Return outwards |
4,000 |
|
Legal expenses |
4,000 |
||
|
Building |
60,000 |
||
|
Machinery |
120,000 |
||
|
Bills receivable |
7,000 |
||
|
Office expenses |
3,000 |
||
|
Opening stock |
45,000 |
||
|
Gas and fuel |
2,700 |
||
|
Freight and Carriage |
3,500 |
||
|
Factory lighting |
5,000 |
||
|
Office furniture |
5,000 |
||
|
Patent right |
18,800 |
||
|
4,70,500 |
4,70,500 |
Adjustments :
(a) Machinery is depreciated at 10% and buildings depreciated at 6%.
(b) Interest on capital @ 4%.
(c) Outstanding wages Rs 50.
(d) Closing stock Rs 50,000
The following balances were extracted from the books of M/s Panchsheel Garments on March 31, 2017.
|
Account Title |
Debit |
Account Title |
Credit |
| Opening stock | 16,000 |
Sales |
1,12,000 |
|
Purchases |
67,600 | Return outwards | 3,200 |
| Return Inwards | 4,600 |
Discount |
1,400 |
| Carriage inwards | 1,400 |
Bank overdraft |
10,000 |
| General expenses | 2,400 |
Commission |
1,800 |
|
Insurance |
4,000 |
Creditors |
16,000 |
| Scooter expenses | 200 |
Capital |
50,000 |
|
Salary |
8,800 |
||
| Cash in hand | 4,000 | ||
|
Scooter |
8,000 | ||
|
Furniture |
5,200 | ||
|
Buildings |
65,000 | ||
|
Debtors |
6,000 | ||
|
Wages |
1,200 | ||
| 1,94,400 |
1,94,400 |
Prepare the trading and profit and loss account for the year ended March 31, 2017 and a balance sheet as on that date.
(a) Unexpired insurance ₹ 1,000.
(b) Salary due but not paid ₹ 1,800.
(c) Wages outstanding ₹ 200.
(d) Interest on capital 5%.
(e) Scooter is depreciated @ 5%.
(f) Furniture is depreciated ₹ @ 10%.
(g) Closing stock was ₹ 15,000.
Prepare the trading and profit and loss account and balance sheet of M/s Control Device India on March 31, 2017 from the following balance as on that date.
|
Account Title |
Debit |
Credit |
|
Drawings and Capital |
19,530 |
67,500 |
|
Purchase and Sales |
45,000 |
1,12,500 |
|
Salary and Commission |
25,470 |
1,575 |
|
Carriage |
2,700 |
|
|
Plant and Machinery |
27,000 |
|
|
Furniture |
6,750 |
|
|
Opening stock |
42,300 |
|
|
Insurance premium |
2,700 |
|
|
Interest |
7,425 |
|
|
Bank overdraft |
24,660 |
|
|
Rent and Taxes |
2,160 |
|
|
Wages |
11,215 |
|
|
Returns |
2,385 |
1,440 |
|
Carriage outwards |
1,485 |
|
|
Debtors and Creditors |
36,000 |
58,500 |
|
General expenses |
6,975 |
|
|
Octroi |
530 |
|
|
Investment |
41,400 |
|
|
2,73,600 |
2,73,600 |
Closing stock was valued Rs 20,000.
(a) Interest on capital @ 10%.
(b) Interest on drawings @ 5%.
(c) Wages outstanding Rs 50.
(d) Outstanding salary Rs 20.
(e) Provide a depreciation @ 5% on plant and machinery.
(f) Make a 5% provision on debtors.
Prepare the bad debts account, provision for account, profit and loss account and balance sheet from the following information as on March 31, 2017
|
Rs |
|
|
Debtors |
80,000 |
|
Bad debts |
2,000 |
|
Provision for doubtful |
5,000 |
Adjustments:
Bad Debts Rs 500 Provision on Debtors @ 3%.
