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Word-Final A - Cs
Word-Final A - Cs
Mr. Kamal, a furniture merchant submits the following Trial Balance on 31.12.12
Capital 50,400
1,83,720 1,83,720
Prepare Trading and Profit and Loss Account for the year ended on 31.12.13 and a Balance Sheet as
on the same date after taking into consideration the following:
1. A credit sale of ₹ 2,000 has not been recorded in the books.
2. Secondhand furniture of ₹ 2,000 was purchased on 1.12.12 for resale was included in Office
Furniture.
3. Bad Debts Reserve is to be increased to 5% on Debtors.
4. Goods costing ₹ 500 has been taken by the proprietor for his private use.
5. Rent outstanding on 31.12.12 was ₹ 400 and rates paid in advance ₹ 800.
6. Stock on 31.12.13 was valued at ₹ 15,300.
7. Provide 10% depreciation on Office Furniture.
8. The manager is to be paid a commission of 10% of Net Profit before charging such commission.
Solution:
Kamal
Dr. Trading and Profit and Loss Account for the year ended 31st December 2012
Cr.
Included within Asset [Note 1] 2,000 Less: Returns (Dr.) 2,100 1,18,960
1,03,120
“” Wages 2,400
1,36,260 1,36,260
Add: Outstanding Rent 400 Add: Accrued Interest [Note 3] 150 450
3,600
[10 % of 9,500]
19,500 19,500
Add : Net Profit of the year 11,142 Less: Purchases wrongly included 2,000
61,542 9,500
32,000
72,680 72680
Working Notes :
Kamal is a furniture merchant. If he purchases any furniture for re-sale, that should be recorded as his
Purchases and not as Office Furniture. So, ₹ 2,000 should be added with purchases and deducted
from Office Furniture. Other effects to be considered for the rectification made above --
Effects to be considered --
(a) Closing Debtors = ₹ 30,000 + ₹ 2,000 = ₹ 32,000
(b) Closing Provision for Bad Debts = 5% of ₹ 32,000 = ₹ 1,600
(c) ₹ 2,000 to be added with sales.
4. Manager’s Commission
12,380
Prepare the Trading & Profit and Loss Account and the Balance of the shop after
taking into consideration the following:
(i) Closing Stock – ₹ 51,324; (ii) Unpaid expenses – Salary ₹ 1,600; Wages ₹ 2,100
and Rent ₹ 4,200;
1
(iii) Write off 10% on Plant and 7 % on Furniture as depreciation; (iv) Write off ₹
2
400 on debtors as bad debts and increase the balance of the reserve for bad &
1
Doubtful Debts to 2 % on Debtors; (v) The manager is to be paid a commission at
2
4% on the net profit left after deducting the commission.
Solution:
Dr. Trading and Profit & Loss Account for the year ended
31.12.2019 Cr.
Particulars Amount Amount Particulars Amount Amount
₹ ₹ ₹ ₹
To Opening Stock 36,000 By Sales 1,59,050
‘’ Purchases 77,000 ‘’ Closing Stock 51,324
‘’ Carriage on 1,200
Purchases 13,500
‘’ Wages 2,100 15,600
Add: Unpaid
Amount 80,574
1,65,130 1,65,130
Working Notes:
1. Calculations on Debtors
27,600
1
Less : Provision for Bad Debts 2 % on 27,600
2
690
2. Manager’s Commission
Trading and P & L A/c for the year eneded 31 DEC 2019
Particulars ₹ ₹ Particulars ₹ ₹
To op Stock 148200 By Sales 123
760
0
To Purchases 1021800 By Closing 205
Stock 400
To salaries 64610
To Gross Profit 2,08,390
1443000 144
300
0
By Gross 2,08
Profit ,390
To rates and 2496
Insurance
less: Prepaid 650 By Provision 416
for BD 0
To General 46826
expenses
To electricity 2314
To bad debt 11,180 By Discount 229
Received 32
To prov for BD 5980
To dist allowed 28964
To dep on 1742
furniture
Particulars ₹ ₹ Particulars ₹ ₹
Capital 3,25,000 Goodwill 156
00
Add:Net profit 135330
Less: 76440 383890 Freehold land 117
Drawings and building 000
[75400+1040]
Furniture & 17420
fittings
Less: Dep 1742 156
78
Stock in trade 205
400
Trade 99450 Debtors 123500
Creditors
Less: prov for 5980 117
BD 520
Prepaid rates 650
and insurance
Bank 107
12
4,82,560 482
560
Question 2:
The following Trial Balance was extracted from the book of Mr. AII as on 31.3.2020.
Debit Balances ₹ Credit Balances ₹
Machinery 30,000 Capital 60,000
Debtors 22,000 Creditors 18,000
Stock (1.4.2019) 10,000 Sales 1,80,00
0
Purchases 98,000 Bills Payable 13,000
Salary 23,000 Outstanding Rent 4,000
(1.4.2019)
Freight Outward 9,000 Interest Received 4,000
Bills Receivable 14,000 PF Payable 2,000
Rent 18,000 Income Tax Refund 1,000
Prepaid Salary (1.4.2019) 1,000
Investment 25,000
Drawings 12,000
Advance Income Tax 5,000
Accrued Interest 2,000
(1.4.2019)
Bank 10,000
Cash 3,000
2,82,000 2,82,00
0
On scrutiny the following information are revealed which need necessary adjustment.
a) Unsold stock on 31.3.2020 is valued at ₹ 19,000.
b) Outstanding Expenses on 31.3.2020 – Salary ₹3,000 and Rent ₹5,000.
c) Interest still receivable on 31.3.2020 ₹1,000
d) Depreciation is to be charged on Machinery at 10%
e) Freight outward represents the amount of freight paid during the year; total freight for
the year amounted to ₹10,500.
f) Purchases include goods costing ₹3,000 purchased for owner’s personal use.
g) Interest received ₹4,000 is the amount received after deduction of Tax ₹500; tax
deduction remained unrecorded.
h) The bank has informed that a customer’s cheque of ₹3,000 (deposited on 29.3.2020)
has been dishonoured.
Required to pass the necessary adjustment entries and to prepare Trading and Profit
and Loss Account for the year ended on 31.3.2020 and the Balance Sheet as on
31.3.2020.