6 Marks Question

Question 16 Marks

Show the treatment of the following in Final Accounts when given inside the Trial Balance.

Prepaid Expenses.
Depreciation.
Closing Stock.
Interest on Capital.
Commission received in advance.

Answer

Assets.
Dr. of P & L A/C.
Assets.
Dr. of P & L A/C.
Liability.

Question 26 Marks

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.

Adjustments:

Further bad debts ₹ 1,000. Discount on debtors ₹ 500 and make a provision on debtors @ 5%.
Interest received on investment @ 5%.
Wages and interest outstanding ₹ 100 and ₹ 200 respectely.
Depreciation charged on motor car @ 5% p.a.
Closing Stock ₹ 32,500.

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Question 36 Marks

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

Adjustments:

$\frac{3}{4}\text{th}$ of Dewan's bill is irrecoverable.
Create a provision of 6% on Sundry Debtors.

Show the effect on Profit and Loss Account and Balance Sheet.

Answer

Working Note:
Calculation of Provision for Doubtful Debts
Provision for Doubtful Debts (Sundry Debtors - Further Bad Debts - Amt. recoverable from Dewan*) $\times\frac{\text{Rate}}{100}$
$=(4,80,000-15,000-5,000)\times\frac{6}{100}=₹\ 27,600$
*Provision is to be maintained on Debtors other than Dewan.

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Question 46 Marks

From the following Trial Balance of Mr. Ramesh, you are required to complete the missing figures of Trading Account, Profit and Loss Account and Balance Sheet for the year ending 31st March, 2019:

Adjustments:

Amount of Purchases includes a machine purchased on 1st October, 2018 for ₹ 4,000 and wages include ₹ 2,000 paid for its installation.
Provide for depreciation on Machinery @ 10%.
Stock on 31st March, 2019 was worth ₹ 40,925.
Salaries unpaid ₹ 800 and rent is paid up to 30th June, 2019.
Write off further bad debte ₹ 400 and create a provision of 5% debtors for doubtful debts.
Prepaid insurance ₹ 300.

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Question 56 Marks

Distinguish between Capital Expenditure and Revenue Expenditure.

Answer

	Basis of Distinction	Capital Expenditure	Revenue Expenditure
1.	Purpose	Purpose It is incurred for the acquisition or erection of a fixed asset for running of the business.	It is incurred for the day-to-day running of the business.
2.	Earning	It increases the earning capacity of the business.	It is incurred for mantaining the earning capacity.
3.	Period	Its benefit extends to more than one year.	Its benefit is exhausted within a maximum period of one year.
4.	Accounting Treatment	It is debited to related Asset Account.	It is debited to related Expenses Account.
5.	Nature Account	It is a real account	It is a nominal account.

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Question 66 Marks

Fill in the missing figures in the following:

Answer

Working Notes:

Total of Cr. side of Trading A/c will be put on the Dr. side and the balancing figure will be opening Stock.
Figure of Outstanding Salaries will be taken from Liabilites side and will be added to /salaries on the Dr. side of P & L A/c.
Figure of Depreciation will be taken from Assets side and will be shown on Dr. side of P & L A/c.
Total of Cr. side of P & L A/c will be put on the Dr. side and balancing figure will be Net Profit. It will be added to capital on the Liabilities side.
Balancing firgure on Liabilites side will be sundry Creditors.
Balancing figure on Assets side will be Cash in hand.

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Question 76 Marks

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.

Adjustments:

Closing stock valued at 36,000.
Private purchases amounting to ₹ 5000 debited to purchases account
Provision for doubtful debts @ 5% on debtors.
Sign board costing ₹ 4,000 includes in advertising.
Depreciate furniture by 10%.

Answer

Coming Soon

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Question 86 Marks

Give Journal Entries for the following adjustments in final accounts:

Extract of Trial Balance as on 31st March, 2019

Additional Information:

Additional Bad Debts ₹ 20,000.
Maintain the provision for doubtful debts @ 5% on debtors.

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

Answer

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

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Question 96 Marks

Give Journal entries for the following adjustments in final accounts:

Salaries ₹ 5,000 are outstanding.
Insurance amounting to ₹ 2,000 is paid in advance.
₹ 4,000 for rent have been received in advance.
Cornmission earned but not received ₹ 1,000.
Interest on Capital ₹ 1,500.
Interest on Drawings ₹ 300.
Write off ₹ 2,000 as further debts.
Closing Stock ₹ 3,000.

Answer

Coming Soon

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Question 106 Marks

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.

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.

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Question 116 Marks

Prepare Trading and Profit and Loss Account and Balance Sheet from the following balance, retating to the year ended 31st march, 2019:

Additional Information:

Closing Stock was valued at ₹ 14,500.
Depreciation Plant and machinery.
Write off Debts ₹ 5,000.
₹ 400 is due for repairs.

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Question 126 Marks

Enter the following transactions in the Journal of Sahil Bros.:

2018		₹
October 1	Purchased goods from Anil for Cash	40,000
October 3	Purchased goods from Atul	75,000
October 6	Returned goods to Atul	3,000
October 8	Paid cash to Atul	50,000
October 10	Sold goods to Charu	1,00,000
October 12	Charu returned 20% of goods
October 15	Paid rent	2,000
October 20	Sahil withdrew for personal use	10,000

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Question 136 Marks

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:

The following adjustments are to be made:

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

Answer

Working Notes:
WN 1: Calculation of Depreciation,
Depreciationon Buildings $=7,500\times\frac{5}{100}=375$
Depreciationon Furniture $=640\times\frac{10}{100}=64$
Depreciationon Patents $=6,250-5,000=1,250$
WN 2: Calculation of Provision for Doubtful Debts,
Provision for Doubtful Debts $=(\text{Sundry Debtors}-\text{Further Bad Debts})\times\frac{\text{Rate}}{100}$
Provision for Doubtful Debts $=(3,800-100)\times\frac{5}{100}=185$

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Question 146 Marks

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

The following additional information is available:

Stock on 31st March, 2017 was ₹ 30,800.
Depreciation is to be charged on Plant and Machinery at 5% and Furniture at 6%. Loose Tools are revalued at ₹ 16,000.
Create a provision of 2% for Discount on Debtors.
Salary of ₹ 2,000 paid to Shri B. Barua, a temporary employee, stands debited to his personal account and it is to be corrected.
Write off $\frac{1}{5}\text{th}$ 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

Working Notes:
WN 1: Calculation of Amount of Depreciation, Depreciation on Machinery $=1,10,000\times\frac{5}{100}=₹\ 5,000$ Depreciationon Furniture $=12,000\times\frac{6}{100}=₹\ 720$ Depreciationon Loose Tools = ₹ 4,000 (20,000 - 16,000) WN 2: Calculation of Provision for Discount on Debtors, Provision for Discounton Debtors $=56,000\times\frac{2}{100}=₹\ 1,120$ WN 3: Calculation of Accrued Interest on Investment, Interest on Investment $=6,000\times\frac{10}{100}=₹\ 600$ Interest on Loan already received = ₹ 300 So, Accured Interest = ₹ 300

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Question 156 Marks

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.

Adjustments :

Machinery is depreciated at 10% and buildings depreciated at 6%.
Interest on capital @ 4%.
Outstanding wages ₹ 50.
Closing stock ₹ 50,000.

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Question 166 Marks

What adjusting entries would you record for the following:

Depreciation
Discount on debtors
Interest on capital
Manager’s commission

Answer

Depreciation

Discount on debtors

Interest on capital

Manager’s commission

There are two cases in manager’s commission.
Case 1: Manager’s commission based on profits before charging the manager’s commission.

Case 2: Manager’s commission based on profits after charging the manager’s commission.

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Question 176 Marks

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:

Adjustments:

Depreciation charged on Machinery @ 5% p.a.
Further Bad-debts ₹ 1,500, provision for discount on debtors @ 5% and provision for Doubtful Debts on debtors @ 6%.
Wages prepaid ₹ 1,000.
Interest on investments @ 5% p.a.

Answer

Working Notes:
WN 1: Calculation of Amount of Depreciation, Depreciation on Machinery $=20,000\times\frac{5}{100}=₹\ 1,000$ WN 2: Calculation of Provision for Doubtful Debts, Provision for Doubtful Debts $=(\text{Sundry Debtors}-\text{Further Bad Debts})\times\frac{\text{Rate}}{100}$ $=(50,000-1,500)\times\frac{6}{100}=₹\ 2,910$ WN 3: Calculation of Provision for Discount on Debtors, Provision for Discount on Debtors = (Sundry Debtors - Further Bad Debts - Provision for Bad Debts) $\times\frac{\text{Rate}}{100}$ $=(50,000-1,500-2,910)\times\frac{5}{100}=₹\ 2,280$ WN 4: Calculation of Accrued Interest on Investment Accrued Interest $=23,100\times\frac{5}{100}=₹\ 1,155$

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Question 186 Marks

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

Adjustments:

Closing stock was ₹ 45,000.
Provision for doubtful debts is to be maintained @ 2% on debtors.
Depreciation charged on : furniture and fixture @ 5%, plant and Machinery @ 6% and motor car @ 10%.
A Machine of ₹ 30,000 was purchased on October 01, 2016.
The manager is entitle to a commission of @ 10% of the net profit after charging such commission.

Answer

Manager's Commision

= Net Profit before commission $\times\frac{10}{110}$
= $75,800\times\frac{10}{110}$
= $₹ 6,891$

Out of the machinery of ₹ 1,00,000, ₹ 30,000 worth of machinery was purchased on 01/October/2016. Therefore, the depreciation will be for 6 months at 6% p.a.

*Depreciation on machinery (30,000) $=30,000\times\frac{6}{12}\times\frac{6}{100}=₹ 900$$$
**The rest of the machinery of ₹ (70,000) will bear depreciation at 6% p.a.
Depreciation on machinery (70,000) $=70,000\times\frac{6}{12}=₹ 900$
Note: As per solution Gross profit is ₹ 97,000, however, as per book it is ₹ 1,01,000.

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Question 196 Marks

Show the treatment of prepaid expenses depreciation, closing stock at the time of preparation of final accounts when:

When given inside the trial balance?
When given outside the trial balance?

Answer

Prepaid expenses

When given inside the Trial Balance: It will be posted only in the Assets side of the Balance Sheet.

When given outside the Trial Balance:

Depreciation

If depreciation is given inside the Trial Balance, then it can be shown in the Debit side of the Profit and Loss A/c. It means that this depreciation amount has already been deducted from the concerned assets in the Balance Sheet.

If depreciation is given outside the Trial Balance, i.e. in the adjustments, then it is shown in the debit side of the Profit and Loss Account and deducted from the concerned assets in the Assets side of Balance Sheet.

Closing stock

The closing stock is valued at cost price or realisable value, whichever of the two is lesser. If given inside the Trial Balance, then it will be posted only in the Assets side of the Balance Sheet.
If the closing stock is given outside the Trial Balance then, it needs to be posted at two places.

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Question 206 Marks

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

Prepare Final Accounts for the year ended 31st March, 2017 after taking into account the following:

Stock on 31st March, 2017 was valued at ₹ 15,000.
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.
Provision for Doubtful Debts is to be maintained at 5% of the Debtors.
Prepaid Insurance was ₹ 100.
Provide Depreciation on Plant and Machinery @ 10% and on Furniture @ 5%.

Answer

Working Notes:
WN 1: Calculation of Amount of Depreciation, Depreciationon Machinery $=40,000\times\frac{10}{100}=₹\ 4,000$ Depreciationon Furniture $=5,000\times\frac{5}{100}=₹\ 250$ WN 2: Calculation of Provision for Doubtful Debts, Provision for Doubtful Debts $=(\text{Sundry Debtors}-\text{Sale on Approval Basis})\times\frac{\text{Rate}}{100}$ $=(20,600-7,200)\times\frac{5}{100}=₹\ 670$

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Question 216 Marks

Give the Performa of income statement and balance in vertical form.

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Question 226 Marks

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.

Closing stock ₹ 10,000.

To provision for doubtful debts is to be maintained at 5 per cent on sundry debtors.
Wages amounting to ₹ 500 and salary amounting to ₹ 350 are outstanding.
Factory rent prepaid ₹ 100.
Depreciation charged on Plant and Machinery @ 5% and Building @ 10%.
Outstanding insurance ₹100.

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Question 236 Marks

Give Journal entries for the following adjustments in final Accounts:

New Machinery was purchased for ₹ 1,00,000, paid as follows:

An old machine valued at ₹ 10,000 (Book Value Nil) was given in exchange.
Balance amount by cheque.

New machine was recorded at net amount.

New furniture was purchased for ₹ 50,000 and in exchange old furniture valued at ₹ 5,000 (Book Value ₹ 2,000) was given. Entry for purchase was recorded at ₹ 45,000 in the books of account.
New car for ₹ 5,00,000 was purchased and Amar (proprietor) gave his personal car valued at ₹ 1,00,000 in exchange. Car was recorded in the books of account at ₹ 4,00,000.
Advance of ₹ 50,000 for purchase of a building remained unadjusted.
An old discarded asset was sold for ₹ 5,000 against cash which was used by the proprietor for his personal use. ₹ 5,000 was included in Cash-in-Hand.
Amrish, proprietor of Amrish & Co. sold his old car for ₹ 2,00,000 against cheque which is deposited in his savings account.

Answer

Coming Soon

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Question 246 Marks

Following is the Trial Balance of Laxminath as at 31st March, 2019:

Additional Informantion:

Closing Stock as on 31st March, 2019 was ₹ 42,000.
Rent is payble at the rate of ₹ 300 per month.
Insurance Premium was paid for the year ending on 30th June, 2019.
Write off futher bad debts of ₹ 5,000.
Create Provision for Discount on Debtors @ 2%.
Create a Provision for Doubtful Debts @ 10%.
Provide for depreciation on fixed assets @ 10% p.a.

Required: Complete the missing values of Trading Account, Profit and Loss Account and Balance Sheet.

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Question 256 Marks

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

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:

Private purchases amounting to ₹ 4,000 have been debited to Purchases Account.
Depreciate Land and Buildings at $2\frac{1}{2}\%$ and Motor Vehicles at 20%.
Salaries outstanding ₹ 200.
Prepaid Insurance ₹ 200.
Provision for Doubtful Debts is to be maintained at 5% on Debtors.
Stock on 31st March, 2017 was valued at ₹ 7,000.

Answer

Working Notes:
WN 1: Calculation of Depreciation,
Depreciation on Land & Buliding $=12,000\times\frac{2.5}{100}=300$
Depreciation on Notor Vehicles $=10,000\times\frac{20}{100}=2,000$
WN 2: Calculation of Provision for Doubtful Debts,
Provision for Doubtful Debts $=20,000\times\frac{5}{100}=1,000$

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Question 266 Marks

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:

Adjustments:

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

Answer

Working Note:
Calculation of Depreciation,
Depreciationon Building $=50,000\times\frac{5}{100}=2,500$
Depreciationon Machinery $=20,000\times\frac{10}{100}=2,000$

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Question 276 Marks

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:

Adjustments:

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

Answer

Working Notes:
WN 1: Calculation of Depreciation,
Depreciationon Freehold Premises $=1,00,000\times\frac{5}{100}=5,000$
Depreciation on Office Furniture $=9,000\times\frac{20}{100}=1,800$
WN 2: Calculation of Interest on Capital,
Intereston Capital $=1,50,000\times\frac{6}{100}=9,000$

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Question 286 Marks

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:

Adjustments:

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

Answer

Working Note:
Calculation of Depreciation,
Depreciationon Furniture $=600\times\frac{10}{100}=60$

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Question 296 Marks

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

Adjustments:

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

Answer

Working Note:
WN 1: Calculation of Amount of Depreciation,
Depreciation on Machinery $=2,00,000\times\frac{15}{100}=₹\ 30,000$
Depreciation on Motor Vehicle $=1,50,000\times\frac{20}{100}=₹\ 30,000$
WN 2: Calculation of Provision for Doubtful Debts,
Provision for Doubtful Debts $=(\text{Sundry Debtors}-\text{Further Bad Debts})\times\frac{\text{Rate}}{100}$
$=(70,000-500) \times\frac{1}{100}=₹\ 695$
WN 3: Calculation of Outstanding Salaries and Wages,
Salaries and Wages paid for 10 months = 24,000
Salaries and Wages outstanding for 2 months $=24,000\times\frac{2}{10}=₹\ 4,800$

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Question 306 Marks

State with reasons whether the following are capital or revenue expenditures:

A new machine is purchased for ₹ 60,000, ₹ 800 were spent on its carriage and ₹1,500 were paid as wages for its installation.
A sum of ₹ 40,000 was spent on painting the new factory.
₹ 6,000 were paid for annual insurance premium.
₹ 20,000 were spent on repairs before using a second hand generator purchased recently.
₹ 5,000 were spent on the repair of a machinery.
₹ 50,000 were spent for airconditioning of the office of the manager.

Answer

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.

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.

Revenue Expenditure.

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

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.

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.

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.

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Question 316 Marks

Following are the balance extracted from the books of Manish on 31st March, 2019:

Prepare Trading and Profit and Loss Account and Balance Sheet as 31st March, 2019 after following adjustments are made:

Closing Stock was ₹ 16,000.
Depreciation Plant and Machinery @ 10% and Delivery Vehicle @ 15%.
Unpaid Rent amounted to ₹ 500.

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Question 326 Marks

Give journal entries for the following adjustments in final accounts assuming CGST and SGST @ 9% each:

Closing Stock ₹ 80,000.
Outstanding salaries ₹ 21,000.
Insurance premium amounting to ₹ 15,000 is paid in advance.
₹ 9,000 received for rent related to the next accounting period.
Commission accrued but not received during the accounting year ₹ 1,500.
Write off ₹ 500 as further bad debts.
Goods costing ₹ 8,000 destroyed by fire and insurance company admitted a claim for ₹ 5,000 only.
Goods costing ₹ 10,000 (Market value ₹ 11,000) were taken by proprietor for personal use.

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Question 336 Marks

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:

Stock on 31st March, 2017 was valued ₹ 26,000.
General Manager is entitled to a Commission of 5% on Net Profits after charging such Commission.
₹ 2,000 paid for Salary & Wages have been included in Sundry Debtors.
Increase Bad-debts by ₹ 800 and create provision for Doubtful Debts at 10%.
General Expenses include insurance premium paid up to 30th June, 2017 @ ₹ 3,000 per annum.
₹ 600 out of the Advertisement Expenses are to be carried forward to the next year.
Charge one-fourth of 'Salaries and Wages' to Trading A/c.
Accrued Income ₹ 2,500.

Answer

Working Notes:
WN 1: Calculation of Provision for Doubtful Debts Provision for Doubtful Debts $=(\text{Sundry Debtors}-\text{Further Bad Debts})\times\frac{\text{Rate}}{100}$ $(73,800-800)\times\frac{10}{100}=₹\ 7,300 $ WN 2: Calculation of Accrued Interest on Loan to Malik Interest $=10,000\times\frac{18}{100}\times\frac{9}{12}=₹\ 1,350$ Interest Already Received = ₹ 900 $\therefore$ Accrued Interest = ₹ 450 WN 3: Calculation of Pre-paid Insurance Annual Insurance Premium = 3,000 Premium for the period 01 April 2012-30 June 2012 $=3,000\times\frac{3}{12}=₹\ 750 $ WN 4: Calculation of Manager’s Commission, Profit before Manager's Commission = ₹ 56,700 (1,16,150 - 59,450) Manager's Commission $=56,700\times\frac{5}{105}=₹\ 2,700$

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Question 346 Marks

Following balances are taken from the books of Niranjan. Prepare Trading and Profit and Loss Account and Balance Sheet for the year ended 31st March, 2019:
(iamge)
Adjustments:

Closing Stock ₹ 7,50,000.
Depreciate Machinery by 10% and Furniture by 20%.
Wages ₹ 50,000 and salaries ₹ 20,000 are outstanding.
Write off ₹ 50,000 as further Bad Debts and create 5% Provision for Doubtful Debts. Also, create a reserve for discount on Debtors @ 2%.
Investments were made on 1st July, 2018 and no interest has been received so far.

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Question 356 Marks

From the following Trial Balance of Mahesh, prepare his Final Accounts for the year ended 31st March, 2019:

Additional Information:

Closing Stock on 31st March, 2019 was ₹ 21,000.
Rent of ₹ 1,200 has been received in advance.
Outstanding liability for Miscellaneous expenses ₹ 12,000.
Commission earned during the year but not received was ₹ 2,100.
Goods costing ₹ 2,000 were taken by the proprietor for his personal use but entry was not passed in the books of account.

Answer

Working Notes:

Calculation of Outstanding Interest on Loan
Interest on loan (30,000 × 12%)	$3,600$
Less: Interest Paid	$\underline{\ \ \ 2,800}$
Interest Outstanding on Loan	$\underline{\underline{\ \ \ \ \ 800}}$

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Question 366 Marks

The following balances were extracted from the books of M/s Panchsheel Garments on March 31, 2017.

Prepare the trading and profit and loss account for the year ended March 31, 2017 and a balance sheet as on that date.

Unexpired insurance ₹ 1,000.
Saiary due but not paid Rs.₹ 1800.
Wages outstanding ₹ 200.
Interest on capital 5%.
Scooter is depreciated @ 5%.
Furniture is depreciated Rs.₹ @ 10%.
Closing stock was Rs.₹ 15,000.

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Question 376 Marks

Prepare Trading and Profit and Loss Account for the year ended 31st March, 2019 and Balance Sheet as at that date from the following Trial Balance:

Adjustments:

Taxes ₹ 3,000 are outstanding but Insurance ₹ 500 is prepaid.
Commission ₹ 1,000 received in advance for the next year.
Interest ₹ 2,100 is to be received on Deposits and Interest on Bank Loan ₹ 3,000 is to be paid.
Provision for Doubtful Debts to be maintained at ₹ 10,000.
Depreciate Furniture by 10%.
Stock on 31st March, 2019 is ₹ 45,000.
A fire occurred on 1st April, 2019 destroying goods costing ₹ 10,000. These goods were purchased paying CGST and SGST @ 6% each.

Answer

Working Notes:

Loss of stock by fire has ocurred on 1st April, 2019. Hence, it will not affect the Balance Sheet dated 31st March, 2019.
GST Set off:

First: CGST Payable/(Receivable) = Output CGST - Input CGST = 8,000 - 10,000 = (2,000)
Second: SGST Payable/(Receivable) = Output SGST - Input SGST = 8,000 - 10,000 = (2,000)
Third: IGST Payable/(Receivable) = Output IGST - Input CGST - Input SGST = 6,000 - 2,000 - 2,000 = 2,000
Final: GST Payable = Output IGST = 2,000

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Question 386 Marks

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

Adjustments:

Goods costing ₹ 20,000 were purchased and included into stock but no entry was passed to record the purchase.
Loan from Mr. Yadav was taken on 1st June, 2018.
Sundry Debtors include an amount of ₹ 2,000 due from a customer who has become insolvent and nothing is recoverable from his estate.
Create a provision of 5% for Doubtful Debts and 2% for discount on Debtors.
Three months lighting and heating bill due but not paid ₹ 3,000.
Rent is paid for 11 months but is received for 13 months.
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

Working Notes:
WN 1: Calculation of Outstanding Interest on Loan
Interest on Loan $=20,000\times\frac{15}{100}\times\frac{10}{12}=₹\ 2,500$
Interest Already Paid = ₹ 1,500
$\therefore$ Outstanding Interest on Loan = ₹ 1,000
WN 2: Calculation of Provision for Doubtful Debts
Provision for Doubtful Debts = (Sundry Debtors - Further Bad Debts) $\times\frac{\text{Rate}}{100}$
$=(1,42,000-2,000)\times\frac{5}{100}=₹\ 7,000$
WN 3: Calculation of Provision for Discount on Debtors
Provision for Discount on Debtors = (Sundry Debtors - Further Bad Debts - Provision for Bad Debts) $\times\frac{\text{Rate}}{100}$
$=(1,42,000-2,000-7,000)\times\frac{2}{100}=₹\ 2,660$
WN 4: Calculation of Advance Rent Received
Advance Rent $=3,900\times\frac{1}{13}=₹\ 300$
WN 5: Calculation of Outstanding Rent
Out standing Rent $=16,500\times\frac{1}{11}=₹\ 1,500$

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Question 396 Marks

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

Adjustments:

Closing stock was valued ₹ 35,000.
Depreciation charged on furniture and fixture @ 5%.
Further bad debts ₹ 1,000. Make a provision for bad debts @ 5% on sundry debtors.
Depreciation charged on motor car @ 10%.
Interest on drawing @ 6%.
Rent, rates and taxes was outstanding ₹ 200.
Discount on debtors 2%.

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Question 406 Marks

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

Adjustments:

Commission received in advance ₹ 1,000.
Rent receivable ₹ 2,000
Salary outstanding ₹ 1,000 and insurance prepaid ₹ 800.
Further bad debts ₹ 1,000 and provision for doubtful debts @ 5% on debtors and discount on debtors @ 2%.
Closing stock ₹ 32,000.
Depreciation on building @ 6% p.a.

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Question 416 Marks

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.

The following additional information is available:

Stock on March 31, 2017 was ₹ 30,000.
Depreciation is to be charged on building at 5% and motor van at 10%.
Provision for doubtful debts is to be maintained at 5% on Sundry Debtors.
Unexpired insurance was ₹ 600.
The Manager is entitled to a commissiion @ 5% on net profit after charging such commission.

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Question 426 Marks

Following are the balances extracted from the books of Narain on 31st March, 2019:

Additional Information:

Closing Stock as on 31st March, 2019 was ₹ 2,00,600, whereas its Net Realisable Value (Market Value) was ₹ 2,05,000.
Depreciate Business Premises by ₹ 3,000 and Furniture and Fittings by ₹ 2,500.
Make a provision of 5% on debtors for doubtful debts.
Carry forward ₹ 2,000 for unexpired insurance.
Outstanding salary was ₹ 15,000.

Prepare Trading and Profit and Loss Account for the year and Balance Sheet as at that date.

Answer

Note: As per the prudence concept, closing stock is taken to be at the market value or the book value whichever is less.

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Question 436 Marks

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

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

Working Notes:
WN 1: Calculation of Amount of Depreciation,
Depreciation on Plant & Machinery $=20,000\times\frac{10}{100}=₹\ 2,000 $
Depreciation on Traveller's Samples $=2,700\times\frac{100}{3\times100}=₹\ 900 $
WN 2: Calculation of Prepaid Insurance,
Prepaid Insurance $=1,200\times\frac{2}{12}=₹\ 200 $
WN 3: Calculation of Advertisement Expenditure Written-off,
Adv. Expenditure written-off $=8,000\times\frac{20}{10}=₹\ 1,600 $
WN 4: Calculation of Manager’s Commission,
Manager will not be entitled to any commission because there is a net loss.

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Question 446 Marks

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

Prepare Trading and Profit & Loss A/c and a Balance Sheet as at 31st March, 2017, after keeping in view the following adjustments:

Depreciate old Building at $2\frac{1}{2}\%$ and addition to Building at 2% and Office Furniture at 5%.
Write off further Bad-debts ₹ 570.
Increase the Bad-debts Provision to 6% of Debtors.
On 31st March, 2017 ₹ 570 are outstanding for salary.
Rent receivable ₹ 200 on 31st March, 2017.
Interest on capital at 5% to be charged.
Unexpired Insurance ₹ 240.
Stock was valued at ₹ 14,290 on 31st March, 2017.

Answer

Working Notes:
WN 1: Calculation of Amount of Depreciation,
Depreciation on Building $=25,000\times\frac{2.5}{100}=₹\ 625$
Depreciation on Addition to Building $=7,000\times\frac{2}{100}=₹\ 140$
Depreciation on Office Furniture $=3,500\times\frac{5}{100}=₹\ 175$
WN 2: Calculation of Provision for Doubtful Debts,
Provision for Doubtful Debts $=(\text{Sundry Debtors}-\text{Further Bad Debts})\times\frac{\text{Rate}}{100}$
$=(62,070-570)\times\frac{6}{100}=₹\ 3,690$

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Question 456 Marks

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

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:

Depreciate Land and Building at 2.5% and Motor Vehicles at 20%.
Interest on Loan at 15% p.a. is unpaid for six months.
Ghanshyam Das withdrew ₹ 2,000 for his private use. This amount was included in general expenses.
Interest on Investments is receivable for full year @ 10%.
Provide for Manager's Commission at 10% on Net Profit after charging such commission.
Stock in hand on 31st March, 2017 was valued at ₹ 25,000 (Realisable value ₹ 22,000).

Answer

Working Notes:
WN 1: Calculation of Amount of Depreciation,
Depreciationon Land & Building $=2,80,000\times\frac{2.5}{100}=₹\ 7,000$
Depreciationon Motor Vehicle $=50,000\times\frac{20}{100}=₹\ 10,000$
WN 2: Calculation of Outstanding Interest on Loan,
Outstanding Interest $=30,000\times\frac{15}{100}\times\frac{6}{123}=₹ \ 2,250$
WN 3: Calculation of Manager’s Commission,
Profit before Manager's Commission = ₹ 1,46,300 (2,08,900 - 62,600)
Manager's Commission $1,46,300\times\frac{10}{110}=₹\ 13,300 $

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Question 466 Marks

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.

Adjustments:

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

Answer

Working Notes: WN 1: Calculation of Amount of Depreciation, Depreciationon Plant $=60,000\times\frac{10}{100}=₹\ 6,000$ Depreciation on Furniture $=15,000\times\frac{20}{100}+5,000\times\frac{20}{100}\times\frac{6}{12}=₹\ 3,500$ WN 2: Calculation of Provision for Doubtful Debts, Provision for Doubtful Debts $=(\text{Sundry Debtors}-\text{Further Bad Debts})\times\frac{\text{Rate}}{100}$ $=(1,00,000-0)\times\frac{5}{100}=₹\ 5,000$ WN 3: Calculation of Provision for Discount on Debtors, Provision for Discounton Debtors = (Sundry Debtors - Further Bad Debts - Provision for Bad Debts) $\times\frac{\text{Rate}}{100}$ $=(1,00,000-0-5,000)\times\frac{2}{100}=₹\ 1,900$ WN 4: Calculation of Accrued Interest on Investments, Interest on Investments $=14,000\times\frac{10}{100}=₹\ 1,400$ Interest Already Received = ₹ 700 $\therefore$ Accrued Interest on Investments = ₹ 700 WN 5: Calculation of Prepaid Insurance Prepaid Insurance $=1,500\times\frac{4}{12}=₹\ 500$ WN 6: Calculation of Outstanding Expenses, Rent, Wages, Salariesand Office Expenses have been paid for 11 months. Outstanding Expense will be: Outstanding Rent $=27,500\times\frac{1}{11}=₹\ 2,500$ Outstanding Wages $=44,000\times\frac{1}{11}=₹\ 4,000$ Outstanding Salary $=33,000\times\frac{1}{11}=₹\ 3,000$ Outstanding Office Expenses $=6,600 \times\frac{1}{11}=₹\ 600$

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Question 476 Marks

From the following Trial Balance of shradha as on 31st March, 2019, prepare Trading and profit and Loss Account and balance Sheet:

adjustmnet:

Closing Stock ₹ 64,000.
wages outstanding ₹ 2,400.
Bad Debts ₹ 600.
Provision for Doubtful debts to be 5%.
Rent is paid for 11 months.
Insurance premium is paid per annum, ended 31st May, 2019.
Loen from the bank was taken on 1st October, 2018.
Provide depreciation on Machinery @ 10% and on Furniture @ 5%.

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Question 486 Marks

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

Prepare Trading and Profit & Loss Account for the year and a Balance Sheet as at 31st March, 2019, after taking into account the following:

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%.
One-third of the commission received is in respect of work to be done next year.
Create a provision of 5% for Doubtful Debts.
50% of Printing and Advertising is to be carried forward as a charge in the following year.
₹ 900 is due for interest on loan.
Provide for Manager's Commission at 10% on Net Profit before charging such commission.

Answer

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Question 496 Marks

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

Adjustments:

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

Answer

Working Notes:
WN 1: Calculation of Amount of Depreciation, Depreciation on Plant & Machinery $=3,80,000\times\frac{10}{100}+10,000\times\frac{10}{100}\times\frac{6}{12}=₹\ 38,500$ Depreciation on Fixtures & Fittings $=12,000\times\frac{20}{100}=₹\ 2,400$ WN 2: Calculation of Prepaid Rent, Rent paid for 14 months = ₹ 28,000 Prepaid Rent $=28,000\times\frac{2}{14}=₹\ 4,000$ WN 3: Calculation of Provision for Doubtful Debts, Provision for Doubtful Debts $=(\text{Sundry Debtors}-\text{Further Bad Debts})\times\frac{\text{Rate}}{100}$ $=(58,000-2,000)\times\frac{5}{100}=₹\ 2,800$ WN 4: Calculation of Interest on Loan, Interest on Loan Outstanding $=20,000\times\frac{12}{100}\times\frac{2}{12}=₹\ 400$ WN 5: Calculation of Prepaid Insurance, Prepaid Insurance $=1,000\times\frac{6}{12}=₹\ 500$

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Question 506 Marks

Give journal entries for the following adjustments in final accounts:

Salaries ₹ 5,000 are outstanding.
Insurance amounting to ₹ 2,000 is paid in advance.
₹ 4,000 for rent have been received in advance.
Commission earned but not received ₹ 1,000.
Interest on capital ₹ 1,500.
Interest on Drawings ₹ 300.
Write off ₹ 2,000 as further bad-debts.
Closing Stock ₹ 3,000.

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