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NCERT · Class 11 · Accountancy

Chapter 10: Financial Statements – 2

Practice each question, then open the answer or worked solution.

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Numerical Question for NCERT Accountancy Solutions Class 11 Chapter 10

15 questions
Q1Written answer

Prepare a trading and profit and loss account for the year ending December 31, 2017, from the balances extracted from M/s Rahul Sons. Also, prepare a balance sheet at the end of the year.

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Worked solution
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 renewals 1,600
Travelling expenses 4,200
Postage 300
Telegram expenses 200
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.

The solution is given below:

Books of M/s. Rahul Sons

Trading Account for the Year Ending December 31, 2017
Dr. Cr.
Particulars Amount

₹

 Particulars Amount

₹
Opening Stock 50,000 Sales 1,80,000
Purchases 1,75,000 Less: Sales Returns 3,000 1,77,000
Less: Purchase Returns 2,000 1,73,000 Closing Stock 32,000
Wages 3,000 Gross Loss 17,000
2,26,000 2,26,000
Profit and Loss Account for the Year Ending December 31, 2017
Dr. Cr.
Particulars Amount

₹

 Particulars Amount

₹
Gross Loss 17,000 Discount Received 500
Salary 8,000 Commission Received 4,000
Add: Outstanding Salary 1,000 9,000 Less: Advance Commission 1,000 3,000
Discount Allowed 1,000
Insurance 3,200 Rent 6,000
Less: Insurance Prepaid 800 2,400 Add: Rent Receivable 2,000 8,000
Rent Rates and Taxes 4,300
Trade Expenses 1,500 Net Loss 43,189
Bad Debts 2,000
Add: Further Bad Debts 1,000
Add: New Provision 4,050
Less: Old Provision 2,500 4,550
Discount on Debtors 1,539
Postage 300
Telegram Expenses 200
Depreciation on Building 6,600
Repair and Renewals 1,600
Travelling Expenses 4,200
Legal Fees 500
54,689 54,689
Balance Sheet for the Year Ending December 31, 2017
Liabilities Amount

₹

 Assets Amount

₹
Capital 3,00,000 Debtors 82,000
Less: Net Loss 43,189 Less: Further Bad Debts 1,000
Less: Drawings 32,000 2,24,811 Less: New Provision 4,050
Bills Payable 22,000 Less: Discount on Debtors (on ₹ 76,950) 1,539 75,411
Loan 34,800 B/R 50,000
Advance Commission 1,000 Buildings 1,10,000
Outstanding Salary 1,000 Less: 6% Depreciation 6,600 1,03,400
Rent Receivable 2,000
Prepaid Insurance 800
Closing Stock 32,000
Furniture and Fittings 20,000
2,83,611 2,83,611
Q2Written answer

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 their 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

1. Depreciation charged on machinery @ 5% p.a.

2. Further, bad debts ₹ 1,500, discount on debtors @ 5% and make a provision on debtors @ 6%.

3. Wages prepaid ₹ 1,000.

4. Interest on investment @ 5% p.a.

5. Closing stock 10,000.

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Worked solution

The solution is given below:

Dr. Cr.
Particulars Amount

₹

 Particulars Amount

₹
Opening Stock 35,000 Sales 2,50,000
Purchases 1,25,000 Less: Sales Returns (25,000) 2,25,000
Less: Purchase Returns (6,000) 1,19,000 Closing Stock 10,000
Wages 3,000
Less: Prepaid Wages (1,000) 2,000
Gross Profit 79,000
2,35,000 2,35,000
Profit and Loss Account for the Year Ending March 31, 2017
Dr. Cr.
Particulars Amount

₹

 Particulars Amount

₹
Bad Debts 3,500 Gross Profit 79,000
Add: Further Bad Debts 1,500 Interest on Accrued Investment 1,155
Add: New Provision 2,910 Discount 1,000
Less: Old Provision 4,500 3,410 Interest Received 5,400
Discount on Debtors 2,280
Postage and Telegram 600
Salary 12,300
Rent and Rates 1,000
Packing and Transport 500
General Expenses 400
Insurance 4,000
Discount 3,500
Depreciation on Machinery 1,000
Lighting and Heating 5,000
Net Profit 52,565
86,555 86,555
Balance Sheet

as on March 31, 2017
Liabilities Amount

₹

 Assets Amount

₹
Creditors 10,000 Cash in Hand 20,000
Bills Payable 20,000 Cash at Bank 40,000
Capital 75,000
Add: Net Profit 52,565 1,27,565 Debtors 50,000
Less: Further Bad Debts 1,500
Less New Provision 2,910
Less: Discount on Debtors 2,280 43,310
Investment 23,100
Add: Interest on Investment 1,155 24,255
Machinery 20,000
Less: Depreciation 1,000 19,000
Prepaid Wages 1,000
Closing Stock 10,000
1,57,565 1,57,565
Q3Written answer

The following balances have been extracted from the trial of M/s Runway Shine Ltd. Prepare the trading and profit and loss accounts 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 stationery 4,500
Discount 400
Bad debts 1,500
Insurance 2,500
Investment 32,000
Debtors 53,000
Bills receivable 20,000
Postage and telegraph 400
Commission 200
Interest 1,000
Repair 440
Lighting charges 500
Telephone charges 100
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.

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The solution is given below:

Trading Account
Dr. Cr.
Particulars Amount

₹

 Particulars Amount

₹
Opening Stock 50,000 Sales 2,50,000
Purchases 1,50,000 Less: Return Inwards 2,000 2,48,000
Less: Return Outwards 4,500 1,45,500 Closing Stock 32,500
Carriage Inwards 4,500
Wages 2,400
Add: Outstanding Wages 100 2,500
Gross Profit 78,000
2,80,500 2,80,500
Profit and Loss Account
Dr. Cr.
Particulars Amount

₹

 Particulars Amount

₹
Carriage Outward 400 Gross Profit 78,000
Printing and Stationery 4,500 Interest Received 3,500
Discount 400 Discount Received 400
Bad Debts 1,500 Interest Received on Investment 1,600
Add: Further Bad Debts 1,000
Add: New Provision 2,600 5,100
Discount on Debtors 500
Insurance 2,500
Postage and Telegraph 400
Commission 200
Interest 1,000
Add: Outstanding Interest 200 1,200
Repair 440
Lighting Charges 500
Telephone Charges 100
Depreciation on Motor Car 1,250
Net Profit 66,010
83,500 83,500
Balance Sheet
Liabilities Amount

₹

 Assets Amount

₹
Creditors 1,25,000 Cash in Hand 77,800
Add: Interest Received 1,600 79,400
Bills Payable 6,040 Cash at Bank 60,800
Capital 1,00,000 Investment 32,000
Add: Net Profit 66,010 1,66,010 Debtors 53,000
Less: Further Bad Debts 1,000
Outstanding Interest 100 Less: New Provision 2,600
Outstanding Wages 200 Less: Discount on Debtors 500 48,900
Motor Car 25,000
Less: Depreciation 1,250 23,750
Bills Receivable 20,000
Closing Stock 32,500
2,97,350 2,97,350
Q4Written answer

The following balances have been extracted from the trial of M/s Haryana Chemical Ltd. You are required to prepare the trading and profit and loss accounts and balance sheet as on March 31, 2017, from the given information.

Account Title Amount

₹

 Account Title Amount

₹
Opening stock 50,000 Sales 3,50,000
Purchases 1,25,500 Purchases return 2,500
Sales return 2,000 Creditors 25,000
Cash in hand 21,200 Rent 5,000
Cash at bank 12,000 Interest 2,000
Carriage 100 Bills payable 1,71,700
Freehold land 3,20,000 Capital 3,00,000
Patents 1,20,000    
General expenses 2,000    
Sundry debtors 32,500    
Building 86,000    
Machinery 34,500    
Insurance 12,400    
Drawings 10,000    
Motor vehicle 10,500    
Bad debts 2,000    
Light and water 1,200    
Trade expenses 2,000    
Power 3,900    
Salary and wages 5,400    
Loan a 15% (01.09.2017) 3,000    
  8,56,200   8,56,200

Adjustments

1. Closing stock was valued at the end of the year at ₹ 40,000.

2. Salary amounting ₹ 500 and trade expense of ₹ 300 are due.

3. Depreciation charged on building and machinery are @ 4% and @ 5%, respectively.

4. Make a provision of 5% on sundry debtors.

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The solution is given below:

Trading Account
Dr. Cr.
Particulars Amount

₹

 Particulars Amount

₹
Opening Stock 50,000 Sales 3,50,000
Purchases 1,25,500 Less: Return 2,000 3,48,000
Less: Return Outwards 2,500 1,23,000 Closing Stock 40,000
Carriage 100
Power 3,900
Gross Profit 2,11,000
3,88,000 3,88,000
Profit and Loss Account
Dr. Cr.
Particulars Amount

₹

 Particulars Amount

₹
General Expenses 2,000 Gross Profit 2,11,000
Insurance 12,400 Rent 5,000
Bad Debts 2,000 Interest 2,000
Add: Provision for Bad Debts 1,625 3,625 Accrued Interest on Loan 150
Light and Water 1,200
Trade Expenses 2,000
Add: Outstanding Trade Expenses 300 2,300
Salary and Wages 5,400
Add: Outstanding Salary 500 5,900
Depreciation on Building 3,440
Depreciation on Machinery 1,725
Net Profit 1,85,560
2,18,150 2,18,150
Balance Sheet
Liabilities Amount

₹

 Assets Amount

₹
Capital 3,00,000 Cash in Hand 21,200
Add: Net Profit 1,85,560 Cash at Bank 12,000
Less: Drawings 10,000 4,75,560 Freehold Land 3,20,000
Creditors 25,000 Patents 1,20,000
Bills Payable 1,71,700 Sundry Debtors 32,500
Outstanding Trade Expenses 300 Less: Provision for Bad Debts 1,625 30,875
Outstanding Salary 500
Building 86,000
Less: Depreciation 3,440 82,560
Machinery 34,500
Less: Depreciation 1,725 32,775
Motor Vehicle 10,500
Loan 3,000
Add: Interest on Loan 150 3,150
Closing Stock 40,000
6,73,060 6,73,060

Working Note

The loan given bears an interest of 15% p.a., and the interest is unpaid from 01-9-2017 to 31-12-2017. Thus, interest for the loan is outstanding for four months. It is calculated as follows:

Interest on loan = 3000 × 15 × 4 = ₹ 150
100 12
Q5Written answer

From the following information, prepare the trading and profit and loss accounts of M/s Indian sports house for the year ending March 31, 2017.

Account Title Amount

₹

 Account Title Amount

₹
Drawings 20,000 Capital 2,00,000
Sundry debtors 80,000 Return outwards 2,000
Bad debts 1,000 Bank overdraft 12,000
Trade expenses 2,400 Provision for bad debts 4,000
Printing and stationery 2,000 Sundry creditors 60,000
Rent Rates and taxes 5,000 Bills payable 15,400
Freight 4,000 Sales 2,76,000
Return inwards 7,000
Opening stock 25,000
Purchases 1,80,000
Furniture and fixture 20,000
Plant and machinery 1,00,000
Bills receivable 14,000
Wages 10,000
Cash in hand 6,000
Discount allowed 2,000
Investments 40,000
Motor car 51,000
5,69,400 5,69,400

Adjustments

1. Closing stock was ₹ 45,000.

2. Provision for doubtful debts is to be maintained @ 2% on debtors.

3. Depreciation charged on: furniture and fixture @ 5%, plant and Machinery @ 6% and motor car @ 10%.

4. A Machine of ₹ 30,000 was purchased on October 01, 2016.

5. The manager is entitled to a commission of 10% of the net profit after charging such a commission.

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The solution is given below:

Trading Account
Dr. Cr.
Particulars Amount

₹

 Particulars Amount

₹
Opening Stock 25,000 Sales 2,76,000
Purchases 1,80,000 Less: Return Inwards 7,000 2,69,000
Less: Return Outwards 2,000 1,78,000 Closing Stock 45,000
Wages 10,000
Freight 4,000
  Gross Profit 97,000
3,14,000 3,14,000
Profit and Loss Account
Dr. Cr.
Particulars Amount

₹

 Particulars Amount

₹
Trade Expenses 2,400 Gross Profit 97,000
Printing and Stationery 2,000 Old Provision for Bad Debts 4,000
Rent Rates and Taxes 5,000 Less: Bad Debts 1,000
Discount Allowed 2,000 Less: New Provision 1,600 1,400
Depreciation on Motor Car 5,100
Depreciation on Furniture and Fixtures 1,000
*Depreciation on P & M of ₹ 70,000 4,200
**Depreciation on P & M of ₹ 30,000 900
Net Profit Before Manager’s Commission 75,800
1,02,400 1,02,400
Manager’s Commission 6,891
Net Profit After Commission 68,909 Balance b/d 75,800
75,800 75,800
Balance Sheet
Liabilities Amount

₹

 Assets Amount

₹
Capital 2,00,000 Cash in Hand 6,000
Add: Net Profit 68,909 Sundry Debtors 80,000
Less: Drawings 20,000 2,48,909 Less: New Provision 1,600 78,400
O/S Manager’s Commission 6,891 Furniture and Fixtures 20,000
Bank Overdraft 12,000 Less: Depreciation 1,000 19,000
Creditors 60,000
Bills Payable 15,400 Plant and Machinery 1,00,000
Less: Depreciation 1* 4,200
Less: Depreciation 2** 900 94,900
Bills Receivable 14,000
Investments 40,000
Motor Car 51000
Less: Depreciation 5100 45,900
Closing Stock 45,000
3,43,200 3,43,200

Working Notes

1. Manager’s Commission

= Net profit before commission × 10
110
= 75,800 × 10
110
= ₹ 6,891

2. Out of the machinery of ₹ 1,00,000, ₹ 30,000 worth of machinery was purchased on 1st October 2016. Therefore, the depreciation on this machinery will be for 6 months at 6% p.a.

*Depreciation on machinery (30,000) = 30,000 × 6 × 6 = ₹ 900
12 100
**The rest of the machinery of ₹ 70,000 will bear depreciation at 6% p.a.
Depreciation on machinery (70,000) = 70,000 × 6 = ₹ 900
12

 

Q6Written answer

Prepare the trading and profit and loss account and a balance sheet of M/s Shine Ltd. from the following particulars.

Account Title Amount

₹

 Account Title Amount

₹
Sundry debtors 1,00,000 Bills payable 85,550
Bad debts 3,000 Sundry creditors 25,000
Trade expenses 2,500 Provision for bad debts 1,500
Printing and stationery 5,000 Return outwards 4,500
Rent, rates and taxes 3,450 Capital 2,50,000
Freight 2,250 Discount received 3,500
Sales return 6,000 Interest received 11,260
Motor car 25,000 Sales 1,00,000
Opening stock 75,550
Furniture and fixture 15,500
Purchases 75,000
Drawings 13,560
Investments 65,500
Cash in hand 36,000
Cash in bank 53,000
4,81,310 4,81,310

Adjustments

1. Closing stock was valued ₹ 35,000.

2. Depreciation charged on furniture and fixture @ 5%.

3. Further bad debts ₹ 1,000. Make a provision for bad debts @ 5% on sundry debtors.

4. Depreciation charged on motor car @ 10%.

5. Interest on drawing @ 6%.

6. Rent, rates and taxes were outstanding for ₹ 200.

7. Discount on debtors 2%.

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The solution is given below:

Trading Account
Dr. Cr.
Particulars Amount

₹

 Particulars Amount

₹
Opening Stock 75,550 Sales 1,00,000
Purchases 75,000 Less: Sales Inwards 6,000 94,000
Less: Return Outwards 4,500 70,500 Closing Stock 35,000
Freight      2,250
Gross Loss 19,300
1,48,300 1,48,300
Profit and Loss Account
Dr. Cr.
Particulars Amount

₹

 Particulars Amount

₹
Gross Loss 19,300 Discount 3,500
Bad Debts 3,000 Interest Received 11,260
Add: Further Bad Debts 1,000 Interest on Drawings 814
Add: New Provision 4,950 Net Loss 27,482
Less: Old Provision 1,500 7,450
Discount on Debtors 1,881
Trade Expenses 2,500
Printing and Stationery 5,000
Rent, Rates and Taxes 3,450
Add: O/S Rent, Rates and Taxes 200 3,650
Depreciation on Furniture 775
Depreciation on Motor Car 2,500
43,056 43,056
Balance Sheet
Liabilities Amount

₹

 Assets Amount

₹
Bills Payable 85,550 Sundry Debtors 100,000
Sundry Creditors 25,000 Less: Further Debts 1,000
Capital 2,50,000 Less: New Provision 4,950
Less: Net Loss 27,482 Less: Discount on Debtors 1,881 92,169
Less: Drawings 13,560
Less: Interest on Drawings 814 Motor Car 25,000
2,08,144 Less: Depreciation 2,500 22,500
Outstanding Rent, Rates and Taxes 200 Furniture and Fixtures 15,500
Less: Depreciation 775 14,725
Investments 65,500
Cash in Hand 36,000
Cash in Bank 53,000
Closing Stock 35,000
3,18,894 3,18,894

.

Q7Written answer

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 accounts 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 the building at 5% and the 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.

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The solution is given below:

Trading Account
Dr. Cr.
Particulars Amount

₹

 Particulars Amount

₹
Opening Stock 2,26,000 Sales 6,80,000
Purchases 4,40,000 Less: Sales Return 10,000 6,70,000
Less: Returns Outwards 15,000 4,25,000 Closing Stock 30,000
Freight Inwards 3,400
Heat and Power 8,000
Gross Profit 37,600
7,00,000 7,00,000
Profit and Loss Account
Dr. Cr.
Particulars Amount

₹

 Particulars Amount

₹
Trade Expenses 3,300 Gross Profit 37,600
Salary and Wages 5,000 Interest Received 20,000
Legal Expenses 3,000
Postage and Telegram 1,000
Bad Debts 6,500
Add: New Provision 1,250 7,750
Depreciation on Building 5,000
Depreciation on Motor Van 3,000
Insurance 3,500
Less: Unexpired Insurance 600 2,900
Net Profit 26,650
57,600 57,600
Manager’s Commission Payable 1,269 Balance b/d 26,650
Net Profit after Commission 25,381
26,650 26,650
Balance Sheet
Liabilities Amount

₹

 Assets Amount

₹
Capital 3,50,000 Cash in Hand 79,000
Add: Net Profit 25,381 Cash at Bank 98,000
Less: Drawings 75,000 3,00,381 Buildings 1,00,000
Creditors 50,000 Less: Depreciation 5,000 95,000
Bills Payable 63,700
Manager’s Commission Payable 1,269 Motor Van 30,000
Less: Depreciation 3,000 27,000
Sundry Debtors 25,000
Less: New Provision 1,250 23,750
Investments 40,000
Machinery 22,000
Unexpired Insurance 600
Closing Stock 30,000
4,15,350 4,15,350

 

Q8Written answer

From the following balances extracted from the books of Raga Ltd., prepare the trading and profit and loss accounts 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 ₹ 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 ₹ 100, and wages prepaid was ₹ 40.

6. The manager is entitled to a commission of 5% on net profit after charging such commission.

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The solution is given below:

Trading Account
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
Carriage Inwards 100
Wages 500
Less: Prepaid 40 460
Coal, Gas and Water 1,200
Gross Profit 21,240
2,39,800 2,39,800
Profit and Loss Account
Dr. Cr.
Particulars Amount

₹

 Particulars Amount

₹
Salary 2,000 Gross Profit 21,240
Add: Outstanding Salary 100 2,100 Discount 1,260
Bank Charges 200 Apprentice Premium 5,230
Trade Expenses 3,800
Rates and Taxes 870
Depreciation on Plant and Machinery 2,000
Depreciation on Land and Building 1,200
Provision for Doubtful Debts 2,715
Discount on Debtors 1,548
Net Profit 13,297
27,730 27,730
Manager’s Commission 633 Balance b/d 13,297
Net Profit after Commission 12,664
13,297  13,297
Balance Sheet
Liabilities Amount

₹

 Assets Amount

₹
Capital 1,01,110 Cash at Bank 50,000
Add: Net Profit 12,664 Land and Building 12,000
Less: Drawings 20,000 93,774 Less: Depreciation 1,200 10,800
Plant and Machinery 40,000
Bills Payable 1,28,870 Less: Depreciation 2,000 38,000
Outstanding Salary 100 Bills Receivable 24,500
Outstanding Manager’s Commission 633 Sundry Debtors 54,300
Less: New Provision 2,715
Less: Discount on Debtors 1,548 50,037
Cash in Hand 30,000
Closing Stock 20,000
Prepaid Wages 40
2,23,377 2,23,377
Q9Written answer

From the following balances of M/s Jyoti Exports, prepare the trading and profit and loss accounts for the year ended March 31, 2017, and the balance sheet as on this date.

Account Title Debit

Amount

₹

 Account Title Credit

Amount

₹
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 ₹ 10,000.

1. To provision for doubtful debts is to be maintained at 5 per cent on sundry debtors.

2. Wages amounting to ₹ 500 and salary amounting to ₹ 350 are outstanding.

3. Factory rent prepaid for ₹ 100.

4. Depreciation charged on Plant and Machinery @ 5% and Building @ 10%.

5. Outstanding insurance of ₹ 100.

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Worked solution

The solution is given below:

Trading Account
Dr. Cr.
Particulars Amount

₹

 Particulars Amount

₹
Opening Stock 22,800 Sales 72,670
Purchases 34,800 Closing Stock 10,000
Less: Purchases Return 2,430 32,370
Carriage Inwards 450
Wages 1,770
Add: Outstanding Wages 500 2,270
Factory Rent 390
Less: Prepaid Rent 100 290
Gas and Water 240
Octroi 60
Cleaning Charges 940
Gross Profit 23,250
82,670 82,670

 

Profit and Loss Account
Dr. Cr.
Particulars Amount

₹

 Particulars Amount

₹
Office Rent 820 Gross Profit  23,250
Insurance 1,440
Add: Outstanding Insurance 100 1,540
Depreciation on Plant and Machinery 180
Salary 1,590
Add: Outstanding Salary 350 1,940
Provision for Doubtful Debts 480
Depreciation on Building 2,400
Net Profit 15,890
23,250 23,250
Balance Sheet
Liabilities Amount

₹

 Assets Amount

₹
Capital 42,000 Sundry Debtors 9,600
Add: Net Profit 15,890 57,890 Less: New Provision 480 9,120
Sundry Creditors 2,500 Building 24,000
Bills Payable 15,600 Less: Depreciation 2,400 21,600
Outstanding Salary 350 Plant and Machinery 3,600
Outstanding Wages 500 Less: Depreciation 180 3,420
Outstanding Insurance 100 Cash in Hand 2,160
Furniture 20,540
Patents 10,000
Closing Stock 10,000
Prepaid Factory Rent 100
76,940 76,940

 

Q10Written answer

The following balances have been extracted from the books of M/s Green House for the year ended March 31, 2017. Prepare the trading and profit and loss accounts 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 of ₹ 50.

(d) Closing stock of ₹ 50,000.

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Worked solution

The solution is given below:

Trading Account
Dr. Cr.
Particulars Amount

₹

 Particulars Amount

₹
Opening Stock 45,000 Sales 2,00,000
Purchases 80,000 Closing Stock 50,000
Less: Return Outwards 4,000 76,000
Wages 34,000
Add: Wages Outstanding 50 34,050
Gas and Fuel 2,700
Freight and Carriage 3,500
Factory Lighting 5,000
Gross Profit 83,750
2,50,000 2,50,000
Profit and Loss Account
Dr. Cr.
Particulars Amount

₹

 Particulars Amount

₹
To Legal Expenses 4,000 By Gross Profit 83,750
To Office Expenses 3,000
To Depreciation on Machine 12,000
To Depreciation on Building 3,600
To  Interest on Capital 8,400
To Net Profit 52,750
83,750 83,750
Balance Sheet
Liabilities Amount

₹

 Assets Amount

₹
Capital 2,10,000 Bank Balance 11,000
Add: Interest on Capital 8,400 Debtors 70,300
Add: Net profit 52,750 2,71,150 Cash in Hand 1,200
Building 60,000
Bills Payable 6,500 Less: Depreciation 3,600 56,400
Creditors 50,000 Machinery 1,20,000
Outstanding Wages 50 Less: Depreciation 12,000 1,08,000
Bills Receivable 7,000
Patent Right 18,800
Office Furniture 5,000
Closing Stock 50,000
3,27,700 3,27,700