Bhagya Achievers Test Series

CA Foundation

Paper 1: Accounting

Chapter 9: Accounts from Incomplete Records

Total Marks: 20

Time: 40 min.

Question1. (10 Marks)

M/s Rohan & Sons runs a business of Electrical goods on wholesale basis. The
books of accounts are closed on 31st March every year. The Balance Sheet as
on 31st March, 2022 is as follows:
Liabilities Rs Assets Rs
Capital 12,50,000 Fixed Assets 6 50,000
Closing stock 3,75,000
Trade Debtors 3,65,000
Trade Creditors 1,90,000 Cash & Bank 1,95,000
Profit & Loss A/c 1,45,000
15,85,000 15,85,000
The management estimates the purchase & sales for the year ended 31st
March, 2023 as under:
Particulars Upto February 2023 (Rs) March 2023 (Rs)
31.01.2023 (Rs)
Purchases 16,20,000 1,40,000 1,25,000
Sales 20,75,000 2,10,000 1, 75,000
All Sales and Purchases are on credit basis. It was decided to invest Rs 1,50,000
in purchase of Fixed assets, which are depreciated @ 10% on book value. A
Fixed Asset of book value as on 01.04.2022, Rs 60,000 was sold for Rs 56,000
on 31st March, 2023.
The time lag for payment to Trade Creditors for purchases is one month and
receipt from Trade debtors for sales, is two months. The business earns a gross
profit of 25% on turnover. The expenses against gross profit amounts to 15% of

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the turnover. The amount of depreciation is not included in these expenses.
Prepare Trading & profit & Loss Account for the year ending 31 st March, 2023
and draft a Balance Sheet as at 31st March, 2023 assuming that creditors are
all Trade creditors for purchases and debtors are all Trade debtors for sales
and there is no other current asset and liability apart from stock and cash and
bank balances.
Also, prepare Cash & Bank account and Fixed Assets account for the year
ending 31st March, 2023.

Answer: 1. (10 Marks)

Trading and Profit and Loss Account of M/s Rohan & Sons for the year ended
31st March, 2023

Rs Rs
To Opening stock 3,75,000 By Sales 24,60,000
To Purchases 18,85,000 By Closing stock 4,15,000
To Gross Profit c/d (25%) 6,15,000 (Balancing Figure)
28,75,000 28,75,000
To Depreciation 80,000 By Gross profit b/d 6,15,000
To Expenses (15% 3,69,000
o By Profit on sale of Fixed 2,000
f assets
Rs 24,60,000)
To Net Profit (b.f.) 1,68,000
6,17,000 6,17,000
Balance Sheet of M/s Rohan Sons as on 31st March, 2023

Liabilities Assets Rs
Capital 12,50,000 Fixed assets (less Dep.) 6,66,000
Profit & Loss A/c 3,13,000 Stock 4,15,000
(1,45,000 + 1,68,000)
Trade Creditors 1,25,000 Debtors 3,85,000
Cash and bank 2,22,000
16,88,000 16,88,000
Cash and Bank Account

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To Bal. b/d 1,95,000 By Creditors (1,90,000 + 19,50,000
16,20,000 + 1,40,000)
To Debtors 24,40,000 By Expenses 3,69,000
(3,65,000 + 20,75,000)
To Fixed assets 56,000 By Fixed assets 1,50,000
By Bal. c/d 2,22,000

26,91,000 26,91,000
Fixed Assets Account

To Bal. b/d 6,50,000 By Cash 56,000

To Profit on sale of Fixed asset 2,000 By Depreciation on sold6,000
fixed asset
By Depreciation 74,000
(59,000 + 15,000)
To Bank A/c 1,50,000 By Bal. c/d 6,66,000
8,02,000 8,02,000

Question2. (10 Marks)

Archana Enterprises maintain their books of accounts under single entry

system. The Balance- Sheet as on 31st March, 2022 was as follows:

Liabilities Amount (Rs) Assets Amount (Rs)

Capital A/c 6,75,000 Furniture & fixtures 1,50,000
Trade creditors 7,57,500 Stock 9,15,000
Outstanding 67,500 Trade debtors 3,12,000
expenses
Prepaid insurance 3,000
Cash in hand & at bank 1,20,000
15,00,000 15,00,000
The following was the summary of cash and bank book for the year ended 31st
March, 2023:
Receipts Amount (Rs) Payments Amount (Rs)

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 Cash in hand & at 1,20,000 Payment to trade 1,24,83,000
Bank on 1st April, creditors
2022
Cash sales 1,10,70,000 Sundry expenses paid 9,31,050
Receipts from trade 27,75,000 Drawings 3,60,000
debtors
Cash in hand & at Bank on
31st March, 2023 1,90,950

1,39,65,000 1,39,65,000
Additional Information:
(i) Discount allowed to trade debtors and received from trade creditors
amounted to Rs 54,000 and Rs 42,500 respectively (for the year ended
31st March, 2023).
(ii) Annual fire insurance premium of Rs 9,000 was paid every year on 1st
August for the renewal of the policy.
(iii) Furniture & fixtures were subject to depreciation @ 15% p.a. on
diminishing balance method.
(iv) The following are the balances as on 31st March, 2023:
Stock Rs 9,75,000
Trade debtors Rs 3,43,000
Outstanding expenses Rs 55,200
(v)Gross profit ratio of 10% on sales is maintained throughout the year.
You are required to prepare Trading and Profit & Loss account for the year
ended 31st March, 2023, and Balance Sheet as on that date.

Answer: 2. (10 Marks)

Trading and Profit and Loss Account of Archana Enterprises for the year
ended 31st March, 2023

Rs Rs
To Opening Stock 9,15,000 By Sales
To Purchases (W.N. 2) 125,97,000 Cash 110,70,000
To Gross profit c/d 13,93,000 Credit (W.N. 1) 28,60,000 139,30,000

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 (10% of 139,30,000) By Closing stock 9,75,000
149,05,000 149,05,000
To Sundry expenses (W.N. 4) 9,18,750 By Gross profit 13,93,000
b/d
To Discount allowed 54,000 By Discount 42,500
received
To Depreciation 22,500
(15% Rs 1,50,000)
To Net Profit (b.f.) 4,40,250
14,35,500 14,35,500
Balance Sheet of Archana Enterprises as at 31st March, 2023

Liabilities Amount Assets Amount

Rs Rs
Capital Furniture & Fittings1,50,000
Opening balance 6,75,000 Less: Depreciation (22,500) 1,27,500
Less: Drawing (3,60,000) Stock 9,75,000
3,15,000 Trade Debtors 3,43,000
Add: Net profit for Unexpired 3,000
the years 4,40,250 7,55,250 insurance
Trade creditors 8,29,000 Cash in hand & at 1,90,950
(W.N. 3) bank
Outstanding 55,200
expenses
16,39,450 16,39,450
Working Notes:
1. Trade Debtors Account
Rs Rs
To Balance b/d 3,12,000 By Cash/Bank 27,75,000
To Credit sales 28,60,000 By Discount 54,000
allowed
(Bal. fig.) By Balance c/d 3,43,000
31,72,000 31,72,000
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 2. Memorandum Trading Account
Rs Rs
To Opening stock 9,15,000 By Sales 139,30,000
To Purchases 125,97,000 By Closing stock 9,75,000
(Balancing figure)
To Gross Profit (10%13,93,000
on sales)
149,05,000 149,05,000
3. Trade Creditors Account
Rs Rs
To Cash/Bank 124,83,000 By Balance b/d 7,57,500
To Discount received 42,500 By Purchases (as 125,97,000
calculated
To Balance c/d in W.N. 2)
(balancing figure) 8,29,000
133,54,500 133,54,500
4. Computation of sundry expenses to be charged to Profit
& Loss A/c
Rs
Sundry expenses paid (as per cash and Bank book) 9,31,050
Add: Prepaid expenses as on 31–3–2022 3,000
9,34,050
Less: Outstanding expenses as on 31–3–2022 (67,500)
8,66,550
Add: Outstanding expenses as on 31–3–2023 55,200
9,21,750
Less: Prepaid expenses as on 31–3–2023 (Insurance
paid till July, 2023) (9,000 x 4/12) (3,000)

9,18,750

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