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Account 6 Marks Question

Financial Statements – With Adjustments · CBSE STD 11 Commerce (CBSE - English Medium). 51 questions.

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Question 36 Marks
Show the treatment of the following in Final Accounts when given inside the Trial Balance.
  1. Prepaid Expenses.
  2. Depreciation.
  3. Closing Stock.
  4. Interest on Capital.
  5. Commission received in advance.
Answer
  1. Assets.
  2. Dr. of P & L A/C.
  3. Assets.
  4. Dr. of P & L A/C.
  5. Liability.
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Question 56 Marks
Extracts of Trial Balance as at 31st March, 2017:

Adjustments:
  1. $\frac{3}{4}\text{th}$ of Dewan's bill is irrecoverable.
  2. 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 66 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 76 Marks
Fill in the missing figures in the following:

Answer
Working Notes:
  1. Missing figure of Closing stock will be the balancing figure of Cr. side of Trading A/c. It will be taken to the Assets side of Balance Sheet.
  2. Total of Cr. side of Trading A/c will be put on the Dr. side and balancing figure will be Gross profit.
  3. Figure of New Provision will be taken from Assets side of Balance Sheet. It will be shown as deduction on Cr. side of P & L A/c.
  4. Total of Cr. side of P & L A/c will be put on the Dr. side and blancing figure will be Net Profit. It will be added to capital on the Liabilites side.
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Question 86 Marks
Fill in the missing figures in the following:
Answer


Working Notes:
  1. Total of Cr. side of Trading A/c will be put on the Dr. side and the balancing figure will be opening Stock.
  2. 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.
  3. Figure of Depreciation will be taken from Assets side and will be shown on Dr. side of P & L A/c.
  4. 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.
  5. Balancing firgure on Liabilites side will be sundry Creditors.
  6. Balancing figure on Assets side will be Cash in hand.
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Question 96 Marks
Give Journal Entries for the following adjustments in final accounts:
  1. Extract of Trial Balance as on 31st March, 2019

Additional Information:
  1. Additional Bad Debts ₹ 20,000.
  2. Maintain the provision for doubtful debts @ 5% on debtors.
  1. Goods costing ₹ 20,000 were distributed among staff members as free of cost. These goods were purchased paying IGST @ 12%.
  2. Two month's rent @ ₹ 15,000 per month is outstanding. Rent is subject to levy of 12% IGST.
  3. Included in general expenses is annual Insurance Premium of ₹ 10,000 paid for the year ending 30th June, 2019. IGST is levied @ 12%.
  4. 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 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
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:
  1. Stock in hand on 31st March, 2019 was ₹ 3,250.
  2. Depreciate Building at 5% and Furniture at 10%. Loose Tools are revalued at ₹ 5,000 at the end of the year.
  3. Salaries ₹ 300 and taxes ₹ 120 are outstanding.
  4. Insurance amounting to ₹ 100 is prepaid.
  5. Write off a further ₹ 100 as Bad-Debts and provision for Doubtful Debts is to be made equal to 5% on Sundry Debtors.
  6. 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 126 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:
  1. Stock on 31st March, 2017 was ₹ 30,800.
  2. Depreciation is to be charged on Plant and Machinery at 5% and Furniture at 6%. Loose Tools are revalued at ₹ 16,000.
  3. Create a provision of 2% for Discount on Debtors.
  4. Salary of ₹ 2,000 paid to Shri B. Barua, a temporary employee, stands debited to his personal account and it is to be corrected.
  5. Write off $\frac{1}{5}\text{th}$ of advertisement expenses.
  6. 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 136 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:
  1. Depreciation charged on Machinery @ 5% p.a.
  2. Further Bad-debts ₹ 1,500, provision for discount on debtors @ 5% and provision for Doubtful Debts on debtors @ 6%.
  3. Wages prepaid ₹ 1,000.
  4. 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 146 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:
  1. Stock on 31st March, 2017 was valued at ₹ 15,000.
  2. 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.
  3. Provision for Doubtful Debts is to be maintained at 5% of the Debtors.
  4. Prepaid Insurance was ₹ 100.
  5. 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 156 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:
  1. Private purchases amounting to ₹ 4,000 have been debited to Purchases Account.
  2. Depreciate Land and Buildings at $2\frac{1}{2}\%$ and Motor Vehicles at 20%.
  3. Salaries outstanding ₹ 200.
  4. Prepaid Insurance ₹ 200.
  5. Provision for Doubtful Debts is to be maintained at 5% on Debtors.
  6. 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 166 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:
  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



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 176 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:
  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



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 186 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:
  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



Working Note:
Calculation of Depreciation,
Depreciationon Furniture $=600\times\frac{10}{100}=60$
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Question 196 Marks
Prepare Trading and Profit and Loss Account and Balance Sheet from the following Trial Balance and information as on 31st March, 2019:

Adjustments:
  1. Closing Stock was valued at ₹ 1,12,500.
  2. Commission include ₹ 1,200 being commission received in advance.
  3. Salaries and wages is outstanding for the month of Feb. & March, 2019.
  4. Depreciate Plant & Machinery by 15% and Motor Vehicle by 20%.
  5. 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 206 Marks
State with reasons whether the following are capital or revenue expenditures:
  1. A new machine is purchased for ₹ 60,000, ₹ 800 were spent on its carriage and ₹1,500 were paid as wages for its installation.
  2. A sum of ₹ 40,000 was spent on painting the new factory.
  3. ₹ 6,000 were paid for annual insurance premium.
  4. ₹ 20,000 were spent on repairs before using a second hand generator purchased recently.
  5. ₹ 5,000 were spent on the repair of a machinery.
  6. ₹ 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.
  1. 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.
  1. Revenue Expenditure.
Reason: Annual insurance premium is a recurring expenditure to carry on day-to-day business activities. Thus, it is a revenue expense.
  1. 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.
  1. 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.
  1. 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 216 Marks
Give journal entries for the following adjustments in final accounts assuming CGST and SGST @ 9% each:
  1. Closing Stock ₹ 80,000.
  2. Outstanding salaries ₹ 21,000.
  3. Insurance premium amounting to ₹ 15,000 is paid in advance.
  4. ₹ 9,000 received for rent related to the next accounting period.
  5. Commission accrued but not received during the accounting year ₹ 1,500.
  6. Write off ₹ 500 as further bad debts.
  7. Goods costing ₹ 8,000 destroyed by fire and insurance company admitted a claim for ₹ 5,000 only.
  8. Goods costing ₹ 10,000 (Market value ₹ 11,000) were taken by proprietor for personal use.
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Question 226 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:
  1. Stock on 31st March, 2017 was valued ₹ 26,000.
  2. General Manager is entitled to a Commission of 5% on Net Profits after charging such Commission.
  3. ₹ 2,000 paid for Salary & Wages have been included in Sundry Debtors.
  4. Increase Bad-debts by ₹ 800 and create provision for Doubtful Debts at 10%.
  5. General Expenses include insurance premium paid up to 30th June, 2017 @ ₹ 3,000 per annum.
  6. ₹ 600 out of the Advertisement Expenses are to be carried forward to the next year.
  7. Charge one-fourth of 'Salaries and Wages' to Trading A/c.
  8. 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 236 Marks
The following Trial Balance was extraced from the books of Mr. Gupta as at 31st March, 2019:

Adjustments:
  1. Goods costing ₹ 20,000 were purchased and included into stock but no entry was passed to record the purchase.
  2. Loan from Mr. Yadav was taken on 1st June, 2018.
  3. Sundry Debtors include an amount of ₹ 2,000 due from a customer who has become insolvent and nothing is recoverable from his estate.
  4. Create a provision of 5% for Doubtful Debts and 2% for discount on Debtors.
  5. Three months lighting and heating bill due but not paid ₹ 3,000.
  6. Rent is paid for 11 months but is received for 13 months.
  7. 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 246 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 256 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:
  1. Depreciate old Building at $2\frac{1}{2}\%$ and addition to Building at 2% and Office Furniture at 5%.
  2. Write off further Bad-debts ₹ 570.
  3. Increase the Bad-debts Provision to 6% of Debtors.
  4. On 31st March, 2017 ₹ 570 are outstanding for salary.
  5. Rent receivable ₹ 200 on 31st March, 2017.
  6. Interest on capital at 5% to be charged.
  7. Unexpired Insurance ₹ 240.
  8. 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 266 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:
  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



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 276 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:
  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
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 286 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:
  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



Working Notes:
WN 1: Calculation of Provision for Doubtful Debts
Provision for Doubtful Debts $=(\text{Sundry Debtors}-\text{Further Bad Debts})\times\frac{\text{Rate}}{100}$
$=(4,000-0)\times\frac{5}{100}=₹\ 2,000$
WN 2: Calculation of Manager’s Commission
Profit before Manager's Commission = ₹ 60,000 (1,06,900 - 46,900)
Manager's Commission $=60,000\times\frac{10}{100}=₹\ 6,000$
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Question 296 Marks
Prepare Trading and Profit & Loss Account and Balance Sheet as at 31st March, 2017, from the following balances:

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
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 306 Marks
Give journal entries for the following adjustments in final accounts:
  1. Salaries ₹ 5,000 are outstanding.
  2. Insurance amounting to ₹ 2,000 is paid in advance.
  3. ₹ 4,000 for rent have been received in advance.
  4. Commission earned but not received ₹ 1,000.
  5. Interest on capital ₹ 1,500.
  6. Interest on Drawings ₹ 300.
  7. Write off ₹ 2,000 as further bad-debts.
  8. Closing Stock ₹ 3,000.
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Question 316 Marks
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:

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



Working Notes:
WN 1: Calculation of Depreciation,
Depreciationon Furniture $=20,000\times\frac{15}{100}=3,000$
Depreciationon Motor Car $=1,50,000\times\frac{20}{100}=30,000$
WN 2: Calculation of Outstanding Expenses,
Salaries for 11 months = 35,200
Salary for 1 month $=\frac{35,200}{11}\times1=3,200$ = Salary Outstanding
Rent for 11 months = 5,500
Rent for 1 month $=\frac{5,500}{11}\times1=500$ = Rent Outstanding
Interest on Loan $=10,000\times\frac{18}{100}=1,800$
Interest paid = 1,500
$\therefore$ Interest Outstanding = 300(1,800 - 1,500)
WN 3: 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 $=(82,000-2,000)\times\frac{5}{100}=4,000$
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Question 326 Marks
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:

Adjustments:
  1. Carry forward the following unexpired amounts:-
(i)
Fire Insurance
₹ 125
(ii)
Rates and Taxes
₹ 240
  1. 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.
  2. Charge Depreciation on Land and Buildings at 2.5% and on Plant & Machinery at 10%.
  3. Make a Provision of 5% on Sundry Debtors for Bad-debts.
  4. Charge 5% Interest on Capital but not on Drawings.
  5. The value of Stock as on 31st March, 2016 was ₹ 29,390.
Answer



Working Notes:
WN 1: Calculation of Amount of Depreciation,
Depreciationon Land & Buildings $=30,000\times\frac{2.5}{100}=₹\ 750$
Depreciationon Plant & Machinery $=14,270\times\frac{10}{100}=₹\ 1,427$
WN 2: Calculation of Provision for Doubtful Debts
Provision for Doubtful Debts $=(\text{Sundry Debtors}-\text{Further Bad Debts})\times\frac{\text{Rate}}{100}$
$=(37,800-0)\times\frac{5}{100}=₹\ 1,890$
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Question 336 Marks
From the following balances, prepare Final Accounts of Mr. Bal Gopal:

Adjustments:
  1. Stock on 31st March, 2018 was ₹ 10,000 and stationery unused at the end was ₹ 400.
  2. Rent of Premises Sublet received in advance ₹ 100.
  3. Provision for Doubtful Debts is to be created @ 10% on Debtors.
  4. Provision for discount on Debtors is to be created @ 2%.
  5. 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.
  6. Bank Loan has been taken at 12% p.a. interest.
Answer



Working Notes:
WN 1: Calculation of Outstanding Interest on Bank Loan,
Interest on Bank Loan $=5,000\times\frac{12}{100}=600$
Interest charged by Bank = 450
$\therefore$ Outstanding Interest = ₹ 150 (600 - 450)
WN 2: Calculation of Provision for Doubtful Debts,
Provision for Doubt ful Debts $=\text{Sundry Debtors}\times\frac{\text{Rate}}{100}$
$=10,500\times\frac{10}{100}=₹\ 1,050$
WN 3: Calculation of Provision for Discount on Debtors
Provision for Discounton Debtors = (Sundry Debtors - Provision for Bad Debts) $\times\frac{\text{Rate}}{100}$
*WN 4: Adjustment Entry for goods destroyed by fire,​​​​
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Question 346 Marks
Following is the Trial Balance as on 31st March 2016. Prepare Trading and Profit and Loss Account and Balance Sheet:

Additional Information:
  1. Stock on 31st March 2016 is ₹ 20,600.
  2. Depreciate machinery @ 10% p.a.
  3. Make a Provision @ 5% for Doubtful Debts.
  4. Provide $2\frac{1}{2}\%$ for discount on sundry debtors.
  5. Rent and Rates include security deposit of ₹ 400.
  6. Insurance prepaid ₹ 120.
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Question 356 Marks
Following are balances from the trial balance of Ritesh Traders as at 31st March 2019:

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:
  1. Closing Stock was valued at ₹ 19,000.
  2. Depreciation to be provided on Land and Building @ 5% p.a. and on Plant & Machinery @ 10% p.a.
  3. Write off ₹ 2,000 as Bad debt.
  4. Insurance was prepaid ₹ 700.
  5. Create provision for doubtful debts @ 5% on debtors.
  6. Wages include ₹ 4,800 for installation of a new machinery.
Answer



Working Note:
WN 1: Calculation of Depreciation,
Depreciationon Machinery $=1,86,800\times\frac{10}{100}=₹\ 18,680$
Depreciationon Building $=10,00,000\times\frac{5}{100}=₹\ 50,000$
WN 2: Calculation of Provision for Doubtful Debts
Provisionfor Doubtful Debts $=(\text{Sundry Debtors}-\text{Further Bad Debts})\times\frac{\text{Rate}}{100}$
$=(15,800-2,000)\times\frac{5}{100}=₹\ 690$
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Question 366 Marks
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:

Adjustments:
  1. Closing Stock was valued at ₹ 61,700.
  2. Depreciate Furniture and Machinery @10% p.a. and Sale Van @20% p.a.
  3. Outstanding Rent amounted to ₹ 900.
  4. Bad Debts ₹ 200.
  5. Make a provision for Doubtful Debts @5% on Debtors.
  6. Charge one-fourth of salaries and wages to the Trading Account.
  7. 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
Working Notes:
WN 1: Calculation of Amount of Depreciation, Depreciationon Furniture $=5,000\times\frac{10}{100}=₹\ 500$ Depreciation on Sales Van $=15,000\times\frac{20}{100}=₹\ 3,000$ Depreciationon Machinery $=15,000\times\frac{10}{100}\times\frac{3}{12}=₹\ 375$ WN 2: Calculation of Provision for Doubtful Debts, Provision for Doubtful Debts = (Sundry Debtors - Further Bad Debts) $=(18,200-200)\times\frac{5}{100}=₹\ 900$
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Question 376 Marks
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:

Adjustments:
  1. Closing Stock amounted to ₹ 50,000.
  2. 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.
  3. Allow 8% interest on Capital and charge ₹ 3,000 as interest on drawings.
  4. Depreciate: Business premises by 5%, Furniture and Fixtures by 20% and Packing Machinery by 10%. Tools are to be revalued at ₹ 12,000.
  5. $2\frac{1}{2}\%$ for discounts is to be provided on Debtors.
  6. ₹ 1,500 is to be provided for Bad and Doubtful Debts.
Answer



Working Notes:
WN1: Calculation of Amount of Depreciation
Depreciationon Premises $=2,00,000\times\frac{5}{100}=₹\ 10,000$
Depreciationon Furniture $=40,000\times\frac{20}{100}=₹\ 8,000$
Depreciationon Packing Machinery $60,000\times\frac{10}{100}=₹\ 6,000$
Depreciationon Tools $=₹\ 3,000(15,000-12,000)$
WN 2: Calculation of Provision for Discount on Debtors
Provision for Discount on Debtors = (Sundry Debtors - Further Bad Debts - Provision for Bad Debts) $\times\frac{\text{Rate}}{100}$
$=(1,31,500-1,500-0)\times\frac{2.5}{100}=₹\ 3,250$
WN 3: Calculation of Accrued Interest
Accrued Interest $=10,000\times\frac{12}{100}\times\frac{5}{12}=₹\ 500$
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Question 386 Marks
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:

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 $\frac{1}{5}\text{th}$ of patents.
Answer



Working Notes:
WN 1: Calculation of Amount of Depreciation,
Depreciation on Patents $=8,000\times\frac{1}{5}=₹\ 1,600$
Depreciation on Furniture $=15,000\times\frac{10}{100}=₹\ 1,500$
WN 2: Calculation of Prepaid Insurance,
Prepaid Insurance $=1,200\times\frac{6}{12}=₹\ 600$
WN 3: Calculation of Provision for Doubtful Debts,
Provision for Doubtful Debts = (Sundry Debtors + Unrecorded Sales - Further Bad Debts) $\times\frac{\text{Rate}}{100}$
$=(80,000+12,000-600)\times\frac{5}{100}=₹\ 4,570$
WN 4: Calculation of Outstanding Interest on Loan,
Outstanding Interest $=40,000\times\frac{15}{100}\times\frac{9}{12}=₹\ 4,500$
WN 5: Calculation of Rent Received in Advance,
Rent Received in Advance $=4,000\times\frac{6}{12}=₹\ 2,000$
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Question 396 Marks
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: Adjustments:
  1. Stock on 31 March, 2018 was valued at ₹ 60,000.
  2. 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.
  3. An advance of ₹ 10,000 given alongwith purchase order was wrongly recorded in purchases.
  4. General expenses include ₹ 20,000 paid for Wages.
  5. Wages include a sum of ₹ 50,000 spent on the erection of a Scooter Stand for employees.
  6. Advance for Furniture is for furniture at proprietor's residence.
  7. Depreciate Furniture at 15%, Plant & Machinery at 20% and Building at 10%.
  8. Carry forward 2/3 of Advertisement Expenses as unexpired.
  9. A B/R of ₹ 20,000 was discounted with bank on 15 Nov. 2017, but not yet matured.
Answer
Solution is as follows.


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Question 406 Marks
From the following balances, prepare Trading, Profit and Loss A/c and a Balance Sheet as at 31st March 2018:

Take the following adjustments into account:
  1. General expenses include ₹ 5,000 chargeable to Furniture purchased on 1st October 2017.
  2. Create a provision of 5% on debtors for Bad and Doubtful Debts after treating ₹ 30,000 as a Bad-debt.
  3. Depreciation on Furniture and Fittings for the year is to be at the rate of 10% per annum.
  4. 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.
  5.  
  1. Goods costing ₹ 2,500 were used by the proprietor.
  2. Goods costing ₹ 1,500 were distributed as free samples.
Goods were purchased paying CGST and SGST @ 6% each.
Answer



Working Notes:
WN 1: Calculation of Depreciation
Furniture of ₹ 5,000 was purchased on Oct 01, 2013
Depreciationon Furniture $=58,000\times\frac{10}{100}+5,000\times\frac{10}{100}\times\frac{6}{12}$
$=5,800+250=₹\ 6,050$
WN 2: Calculation of Outstanding Rent
Amount of Rent Outstanding $=10,000\times\frac{2}{10}=₹\ 2,000$
WN 3: Calculation of Provision for Doubtful Debts
Provision for Doubtful Debts = (Sundry Debtors - Further Bad Debts) $\times\frac{\text{Rate}}{100}$
$=(2,30,000-30,000)\times\frac{5}{100}=₹\ 10,000$
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Question 416 Marks
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:

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



Working Notes:
WN 1: Calculation of Amount of Depreciation,
Depreciationon Plant & Machinery $=10,00,000\times\frac{10}{100}+2,00,000\times\frac{10}{100}\times\frac{6}{12}=₹\ 1,10,000$
Depreciationon Horse & Carts $=2,60,000\times\frac{20}{100}=₹\ 52,000$
WN 2: Calculation of Provision for Doubtful Debts
Provision for Doubtful Debts = (Sundry Debtors + Unrecorded Sales) $\times\frac{\text{Rate}}{100}$
$=(3,40,000+15,000)\times\frac{5}{100}=₹\ 17,750$
WN 3: Calculation of Outstanding Expenses
Salaries for 10 months = 80,000
Salary for 2 months $=\frac{80,000}{10}\times12=₹\ 16,000$
WN 4: Calculation of Accrued Interest on Ram’s Loan
Interest on Loan $=20,000\times\frac{12}{100}=₹\ 2,400$
Interest on Loan already received = ₹ 1,800
So, Accrued Interest = ₹ 600
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Question 426 Marks
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:

Informations:
  1. Goods Costing ₹ 2,000 were taken away by the proprietor for his personal use and goods costing ₹ 1,500 were given away as charity.
  2. Expenses for wages, rent and salaries are uniform throughout the year and those for March have not been paid.
  3. Provide 10% depreciation on Furniture and 20% on Motor Car.
  4. Provide for Manager's Commission at 10% on Net Profit after charging such Commission.
Answer
Working Notes:
WN 1: Calculation of Amount of Depreciation, Depreciation on Furniture $=8,000\times\frac{10}{100}=₹\ 800$ Depreciation on Motor Car $=2,00,000\times\frac{20}{100}=₹\ 40,000$ WN 2: Calculation of Outstanding Expenses, Outstanding Rent $=7,480\times\frac{1}{11}=₹\ 680$ Outstanding Wages $=33,000\times\frac{1}{11}=₹\ 3,000$ Outstanding Salaries $=30,800\times\frac{1}{11}=₹\ 2,800$ WN 3: Calculation of Manager’s Commission, Profit before Manager's Commission = ₹ 55,000 (1,61,160 - 1,06,160) Manager's Commission $=55,000\times\frac{10}{110}=₹\ 5,000$
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Question 436 Marks
The following is the trial balance of Mr. Amar Chand as at 31st March, 2016:

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



Working Notes:
WN 1: Calculation of Amount of Depreciation,
Depreciation on Furniture $=10,000\times\frac{15}{100}+6,000\times\frac{15}{100}\times\frac{3}{12}=₹\ 1,725$
Depreciation on Salesvan $=75,000\times\frac{20}{100}=₹\ 15,000$
WN 2: Calculation of Provision for Bad Debts,
Provision for Bad Debts $=(\text{Sundry Debtors}-\text{Further Bad Debts})\times\frac{\text{Rate}}{100}$
$=(80,000-2,000)\times\frac{5}{100}=₹\ 3,900$
WN 3: Calculation of Provision for Discount on Debtors,
Provision for Discount on Debtors = (Sundry Debtors - Further Bad Debts - Provisions for Bad Debts) $\times\frac{\text{Rate}}{100}$
$=(80,000-2,000-3,900)\times\frac{2}{100}=₹\ 1,482$
WN 4: Calculation of Outstanding Rent
Rent is paid @ Rs 1,000 per month
Annual Rent = 1,000 × 12 = ₹ 12,000
Rent Already Paid = ₹ 10,000
Therefore, Outstanding Rent = ₹ 2,000
WN 5: Calculation of Prepaid Insurance,
Insurance is prepaid for 9 months
Prepaid Insurance $=3,600\times\frac{9}{12}=₹\ 2,700$
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Question 446 Marks
Following is the Trial Balance of Mr. Gautam as at 31st March, 2017:

You are required to prepare Final Accounts after taking into account the following adjustments:
  1. Closing Stock on 31st March, 2017 was ₹ 60,000.
  2. Depreciate Plant and Machinery at 5%, Loose Tools at 15% and Furniture and fixtures at 5%.
  3. Provide $2\frac{1}{2}\%$ for discount on Sundry Debtors and also provide 5% for Bad and Doubtful Debts on Sundry Debtors.
  4. Only three quarter's rent has been paid, the last quarter's rent being outstanding.
  5. Interest earned but not received ₹ 600.
  6. Write off $\frac{1}{4}\text{th}$ of Advertisement expenses.
Answer



Working Notes:
WN 1: Calculation of Depreciation,
Depreciationon Plant & Machinery $=40,000\times\frac{5}{100}=₹\ 2,000$
Depreciationon Furniture & Fixtures $=1,200\times\frac{5}{100}=₹\ 60$
Depreciationon Loose Tools $=3,000\times\frac{15}{100}=₹\ 450$
WN 2: Calculation of Outstanding Rent,
Rent paid for 3 quarters = 2,700
Rent per quarter $=\frac{2,700}{3}=₹\ 900$ = Outstanding Rent
WN 3: Calculation of Provision for Doubtful Debts,
Provision for Doubtful Debts $=\text{Sundry Debtors}\times\frac{\text{Rate}}{100}$
$=45,000\times\frac{5}{100}=₹\ 2,250$
WN 4: Calculation of Provision for Discount on Debtors,
Provision for Discounton Debtors = (Sundry Debtors - Provision for Bad Debts) $\times\frac{\text{Rate}}{100}$
$=(45,000-2,250)\times\frac{2.5}{100}=₹\ 1,068.75\text{ or }1,069$
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Question 456 Marks
From the following information prepare financial Statements of M/s Raj & Bros, for the year ending March 31, 2017.

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



Working Notes:
WN 1: Calculation of Amount of Depreciation
Depreciation on Machinery $=18,000\times\frac{10}{100}+12,000\times\frac{10}{100}\times\frac{9}{12}=₹\ 2,700$
WN 2: Calculation of Outstanding Interest on Bank Loan
Interest on Loan $=24,000\times\frac{10}{100}\times\frac{9}{12}=₹\ 1,800$
Interest Already Paid = ₹ 1,000
Outstanding Interest = ₹ 800
WN 3: Calculation of Manager’s Commission
Profit before Manager's Commission = ₹ 1,800 (50,150 - 48,350)
Manager's Commission $=1,800\times\frac{10}{100}=₹\ 180$
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Question 466 Marks
The following balances were extracted from the books of Shri Krishan Kumar as at 31st March, 2017:

Adjustments:
  1. Stock on 31st March, 2017 was valued at ₹ 23,500.
  2. $\frac{1}{5}\text{th}$ of general expenses and taxes & insurance to be charged to factory and the balance to the office.
  3. Write off a further Bad-debts of ₹ 160 and maintain the provision for Bad-debts at 5% on Debtors.
  4. Depreciate Machinery at 10% and Scooter by ₹ 240.
  5. Provide ₹ 700 for outstanding interest on Bank Overdraft.
  6. Prepaid Insurance is to the extent of ₹ 50.
  7. 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



Working Notes:
WN 1: Calculation of Amount of Depreciation
Depreciationon Machinery $=9,340\times\frac{10}{100}=₹\ 934$
WN 2: Calculation of Provision for Doubtful Debts
Provision for Doubtful Debts = (Sundry Debtors - Further Bad Debts) $\times\frac{\text{Rate}}{100}$
$=(6,280-160)\times\frac{5}{100}=₹\ 306$
WN 3: Calculation of Manager’s Commission,
Profit before Manager's Commission = ₹ 9,900 (16,787 - 6,887)
Manager's Commission $=9 ,900\times\frac{10}{110}=₹\ 900$
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Question 476 Marks
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.

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



Working Notes:
WN 1: Calculation of Depreciation,
Depreciationon Building $=1,10,000\times\frac{6}{100}=6,600$
WN 2: Calculation of Provision for Doubtful Debts,
Provision for Doubtful Debts $=(\text{Debtors}-\text{Further Bad Debts})\times\frac{\text{Rate}}{100}$
$=(82,000-1,000)\times\frac{5}{100}=4,050$
WN 3: Calculation of Provision for Discount on Debtors,
Provision for Discounton Debtors = (Debtors - Further Bad Debts - Provision for Doubtful Debts) $\times\frac{\text{Rate}}{100}$
$=(82,000-1,000-4,050)\times\frac{2}{100}=1,539$
WN 4: Adjustment Entry for Accrued Rent,
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Question 486 Marks
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:

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



Working Notes:
WN 1: Calculation of Depreciation,
Depreciationon Plant & Machinery $=80,000\times\frac{10}{100}+20,000\times\frac{10}{100}\times\frac{9}{12}=₹\ 9,500$
Depreciationon Motor Car $=70,000\times\frac{20}{100}=14,000$
WN 2: Calculation of Prepaid Insurance,
Prepaid Insurance $=1,200\times\frac{9}{12}=₹\ 900$
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Question 496 Marks
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:

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



Working Notes:
WN 1: Calculation of Amount of Depreciation,
Depreciation on Plant & Machinery $=40,000\times\frac{5}{100}=₹\ 2,000$
Depreciation on Buliding $=12,000\times\frac{10}{100}=₹\ 1,200$
WN 2: Calculation of Provision for Doubtful Debts,
Provision for Doubtful Debts $=\text{Sundry Debtors}\times\frac{\text{Rate}}{100}$
$=54,300\times\frac{5}{100}=₹\ 2,715$
WN 3: Calculation of Provision for Discount on Debtors,
Provision for Discount on Debtors = (Sundry Debtors - Provision for Bad Debts) $\times\frac{\text{Rate}}{100}$
$=(54,300-2,715)\times\frac{3}{100}=₹\ 1,547.5\text{ or }1,548$
WN 4: Calculation of Manager’s Commission,
Profit before Manager's Commission = ₹ 13,297 (27,730 - 14,433)
Manager's Commission $=13,297\times\frac{5}{105}=₹\ 633$
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Question 506 Marks
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:

The following adjustments are to be made:
  1. Stock in the shop on 31st March, 2019 was ₹ 64,480.
  2. Half the amount of X's Bill is irrecoverable.
  3. Create a provision of 5% on other debtors.
  4. Wages include ₹ 600 for erection of new Machinery.
  5. Depreciate Machinery by 5% and Furniture by 10%.
  6. Commission includes ₹ 300 being Commission received in advance.
Answer
Working Notes:
WN 1: Calculation of Amount of Depreciation Depreciation on Machinery $=(14,400+600)\times\frac{5}{100}=₹\ 750$ Depreciation on Furniture $=4,480\times\frac{10}{100}=₹\ 448$ WN 2: Calculation of Provision for Doubtful Debts Provision for Doubtful Debts = (Sundry Debtors - Further Bad Debts - Amount recoverable from X*) $\times\frac{\text{Rate}}{100}$ $=(30,000-500-500)\times\frac{5}{100}=₹\ 1,450$ *Provisionis to be maintained on Debtors other than X* Provisionis to be maintained on Debtors other than X WN 3: Calculation of Outstanding Interest on Loan Intereston Loan $=10,000\times\frac{8}{100}=₹\ 800$ Interest on Loan already Paid = 300 $\therefore$ Outstanding Interest on Loan = ₹ 300
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