Question 1:

Following are the balances extracted from the books of Manish Gupta on 31st
March, 2018:
₹ ₹
Capital 1,90,000 Cash at Bank 26,000
Drawing 7,000 Salaries 8,000
Plant and Machinery 1,20,000 Repairs 1,900
Delivery Vehicle 26,000 Stock on 1st April, 2017 16,000
Sundry Debtors 36,000 Rent 4,500
Sundry Creditors 26,000 Manufacturing Expenses 1,500
Purchases 20,000 Bills Payable 23,500
Sales 42,000 Bad Debts 5,000
Wages 8,000 Carriage 1,600
Prepare Trading and Profit and Loss Account and Balance Sheet as at 31st
March, 2018 after following adjustments are made:
 Closing Stock was ₹ 16,000.
 Depreciate Plant and Machinery @ 10% and Delivery Vehicle @ 15%.
 Unpaid Rent amounted to ₹ 500.
ANSWER:
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Opening stock 16,000 By Sales 42,000
To Purchases 20,000 By Closing Stock 16,000
To Wages 8,000
To Manufacturing Expenses 1,500
To Carriage 1,600
To Gross Profit 10,900
58,000 58,000
 Profit and Loss Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Salaries 8,000 By Gross Profit 10,900
To Repairs 1,900 By Net Loss 24,900
To Rent 4,500
Add: Unpaid Rent 500 5,000
To Bad Debts 5,000
To Depreciation on:
To Plant and 12,000
machinery
Delivery Vehicle 3,900 15,900
35,800 35,800

Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
(Rs) (Rs)
Capital 1,90,000 Fixed Assets
Less: Drawings (7,000) Plant and 1,20,000
Machinery
Less: Net Loss (24,900) Less:10% (12,000) 1,08,000
Deprecation
1,58,100 Delivery Vehicle 26,000
Less:15% (3,900) 22,100
Depreciation
Current Liabilities
Sundry Creditors 26,000 Current Assets
Bills Payable 23,500 Closing Stock 16,000
Unpaid Rent 500 Sundry Debtors 36,000
Cash at Bank 26,000
2,08,100 2,08,100
Question 2:
Prepare Trading and Profit and Loss Account and Balance Sheet from the
following balances relating to the year ended 31st March, 2018:

₹ ₹
Capital 1,00,000 Wages 50,000
Creditors 12,000 Bank 10,000
Returns Outward 5,000 Repairs 500
Sales 1,64,000 Stock on 1st April, 2017 20,000
Bills Payable 5,000 Rent 4,000
Plant and Machinery 40,000 Manufacturing Expenses 8,000
Sundry Debtors 24,000 Trade Expenses 7,000
Drawing 10,000 Bad Debts 2,000
Purchases 1,05,000 Carriage 1,500
Returns Inward 3,000 Fuel and Power 1,000

Additional Information:
 Closing Stock was valued at ₹ 14,500.
 Depreciate Plant and Machinery by ₹ 4,000.
 Write off Bad Debts ₹ 5,000.
 A sum of ₹ 400 is due for repairs.
ANSWER:
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Opening stock 20,000 By Sales 1,64,000
To Purchases 1,05,000 Less: Return (3,000) 1,61,000
Inwards
Less: Return out (5,000) 1,00,000 By Closing Stock 14,500
words
To Wages 50,000 By Gross Loss 5,000
To Manufacturing Expenses 8,000
To Carriage 1,500
To Fuel and Power 1,000
1,80,500 1,80,500

Profit and Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Gross Loss 5,000
To Repairs 500
Add: outstanding 400 900
To Rent 4,000
To Miscellaneous Expenses 7,000
To Bad Debts 2,000 By Net Loss 27,900
Add: Additional bad 5,000 7,000
debts
To Depreciation on Plant and 4,000
Machinery
27,900 27,900
 Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
(Rs) (Rs)
Capital 1,00,000 Fixed Assets
Less: Drawings (10,000) Plant and
Machinery 40,000
Less: Net Loss (27,900) 62,100 Less: Depreciation (4,000) 36,000
Current Liabilities Current Assets
Creditors 12,000 Closing Stock 14,500
Bills Payable 5,000 Sundry Debtors 24,000
Outstanding Repairs 400 Less: Further Bad (5,000) 19,000
Debts
Bank 10,000
79,500 79,500

Question 3:
Following Trial Balance has been extracted from the books of M/s. Ram Prasad
& Sons on 31st March, 2018:
Dr. Cr.
Particulars Particulars
₹ ₹
Machinery 4,00,000 Capital 9,00,000
Cash at Bank 1,00,000 Sales 16,00,000
Cash in Hand 50,000 Sundry Creditors 4,50,000
Wages 1,00,000 Interest Received 30,000
Purchases 8,00,000
Stock on 1st April, 2017 6,00,000
Sundry Debtors 4,40,000
Bills Receivable 2,90,000
Rent 45,000
Commission 25,000
General Expenses 80,000
Salaries 50,000
29,80,000 29,80,000
Additional Information:
 Outstanding salaries were ₹ 45,000.
 Depreciate Machinery at 10%.
 Wages outstanding were ₹ 5,000.
 Rent prepaid ₹ 10,000.
 Provide for interest on capital 5% per annum.
 Stock on 31st March, 2018 ₹ 8, 00,000.
Prepare Trading and Profit and Loss Account for the year ended
31st March, 2018 and Balance Sheet as at that date.

ANSWER:
Financial Statement of M/s. Ram Prasad & Sons
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Opening Stock 6,00,000 By Sales 16,00,000
To Purchases 8,00,000 By Closing Stock 8,00,000
To Wages 1,00,000
Add: Outstanding 5,000 1,05,000
Wages
To Gross Profit 8,95,000
24,00,000 24,00,000
 Profit and Loss Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Rent 45,000 By Gross Profit 8,95,000
Less: Prepaid Rent (10,000) 35,000 By Interest Received 30,000
To Commission 25,000
To General Expenses 80,000
To Salaries 50,000
Add: Outstanding 45,000 95,000
Salaries
To Depreciation on Machinery 40,000
To Net Profit 6,50,000
9,25,000 9,25,000

Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
(Rs) (Rs)
Capital 9,00,000 Fixed Assets
Add: Net Profit 6,50,000 15,50,000 Machinery 4,00,000
Current Liabilities Less: 10%
Depreciation (40,000) 3,60,000
Sundry Creditors 4,50,000 Current Assets
Outstanding Salary 45,000 Closing Stock 8,00,000
Outstanding Wages 5,000 Sundry Debtors 4,40,000
Bills Receivable 2,90,000
Prepaid Rent 10,000
Cash at Bank 1,00,000
Cash in Hand 50,000
20,50,000 20,50,000
Question 4:
From the following Trial Balance of M/s. Shradha & Sons as on 31st March,
2018, prepare Trading and Profit and Loss Account and Balance Sheet.

Dr. Cr.
Heads of Accounts Balance Balance
(₹) (₹)
Capital .................................................. … 80,000
Drawings .................................................. 18,000 …
Sales .................................................. … 1,55,000
Purchases .............................................. 82,600 …
Stock (1st April, 2017) ................................................. 42,000 …
Returns Outward .................................................. … 1,600
Carriage Inwards .................................................. 1,200 …
Wages .................................................. 4,000 …
Power .................................................. 6,000 …
Machinery .................................................. 50,000 …
Furniture .................................................. 14,000 …
Rent .................................................. 22,000 …
Salary .................................................. 15,000 …
Insurance .................................................. 3,600 …
8% Bank Loan .................................................. … 25,000
Debtors .................................................. 20,600 …
Creditors .................................................. … 18,900
Cash in Hand .................................................. 1,500 …
Total 2,80,500 2,80,500

Adjustments:
 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, 2018.
 Loan from the bank was taken on 1st October, 2017.
 Provide Depreciation on machinery @ 10% and on Furniture @ 5%.

ANSWER:
Financial statement of M/s. Shradha & Sons
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Opening Stock 42,000 By Sales 1,55,000
To Purchases 82,600
Less: Return Outwards (1,600) 81,000
To Carriages Inwards 1,200 By Closing Stock 64,000
To Wages 4,000
Add: Outstanding 2,400 6,400
Wages
To Power 6,000
To Gross Profit 82,400
2,19,000 2,19,000

***
 Profit and Loss Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Rent 22,000 By Gross Profit 82,400
Add: Outstanding for 2,000 24,000
One month (22,000/11)
To Salary 15,000
To Insurance 3,600
Less: Prepaid 2 (600) 3,000
month(3,600 × 2/12)
To Outstanding Interest on Bank
1,000
Loan (25,000 × 8% × 6/12)
To Bad Debts 600
Add: Provision for 1,000 1,600
Doubtful Debts
To Depreciation on:
Machinery 5,000
Furniture 700 5,700
To Net Profit 32,100
82,400 82,400
 Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
(Rs) (Rs)
Capital 80,000 Fixed Assets
Add: Net Profit 32,100 Machinery 50,000
Less: Drawings (18,000) 94,100 Less: 10% (500) 45,000
Depreciation
8% Bank Loan 25,000 Furniture 14,000
Add: Outstanding 1,000 26,000 Less: 5% (700) 13,300
Interest Deprecation
Current Liabilities Current Assets
Creditors 18,900 Closing Stock 64,000
Wages Outstanding 2,400 Debtors 20,600
Rent Outstanding 2,000 Less: Bad Debts (600)
Less: 5%
Provision for (1,000) 19,000
doubtful Debts
Prepaid Insurance 600
Cash in hand 1,500
1,43,400 1,43,400

Question 5:
Trial Balance of a business as at 31st March, 2018 is given below:
Dr. Cr.
Particulars Particulars
(₹) (₹)
Stock on 1st April, 2017 25,000 Sales 2,27,800
Furniture 8,000 Commission 500
Plant and Machinery 1,50,000 Returns Outward 1,000
Debtors 30.000 Creditors 40,000
 Wages 12,000 Capital 1,50,000
Salaries 20,000
Bad Debts 1,000
Purchases 1,20,000
Electricity Charges 1,200
Telephone Charges 2,400
General Expenses 3,000
Postage Expenses 1,800
Returns Inward 900
Insurance Premium 1,500
Cash in Hand 2,500
Cash at Bank 40,000
4,19,300 4,19,300

Prepare Trading and Profit and Loss Account for the year ended 31st March,
2018 and Balance Sheet as at that date after taking into account the following
adjustments:
 Closing Stock was valued at ₹7,000.
 Outstanding liabilities for wages were ₹600 and salaries ₹1,400.
 Depreciation is to be provided @ 5% p.a. on all fixed assets.
 Included in Plant and Machinery is a machine purchased for ₹10,000 on
1st October, 2017.
 Insurance premium paid in advance ₹200.
ANSWER:
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Opening Stock 25,000 By Sales 2,27,800
To Purchases 1,20,000 Less: Returns 900 2,26,900
Less: Returns 1,000 1,19,000 By Closing Stock 7,000
To Wages 12,000
Add: Outstanding 600 12,600
Wages
To Gross Profit 77,300
2,33,900 2,33,900

Profit & Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Bad Debts 1,000 By Gross Profit 77,300
To Insurance Premium 1,500 By Commission 500
Less: Prepaid 200 1,300
To Salaries 20,000
Add: Outstanding 1,400 21,400
Salaries
To Electricity Charges 1,200
To General Expenses 3,000
To Postage Expenses 1,800
To Telephone Charges 2,400
To Depreciation on:
Furniture 400
Plant & Machinery 7,250 7,650
To Net Profit 38,050
77,800 77,800
 Balance Sheet
as on March 31, 2018
Dr. Cr.
Amount Amount
Liabilities Assets
(₹) (₹)
Creditors 40,000 Furniture 8,000
Outstanding Wages 600 Less: Depreciation 400 7,600
Outstanding Salaries 1,400 Plant & Machinery 1,50,000
Capital 1,50,000 Less: Depreciation 7,250 1,42,750
Add: Net Profit 38,050 1,88,050 Cash at Bank 40,000
Cash in Hand 2,500
Closing Stock 7,000
Debtors 30,000
Prepaid Insurance 200
2,30,050 2,30,050

Question 6:
Following are the balances extracted from the books of Narain Lal on 31st
March, 2018:
Amount Amount
Particulars Particulars
(₹) (₹)
Narain Lal's Capital 3,00,000 Sales 15,00,000
Narain Lal's Drawings 50,000 Sales Return 20,000
Furniture and Fittings 26,000 Discount (Dr.) 16,000
Bank Overdraft 42,000 Discounts (Cr.) 20,000
Creditors 1,38,000 Insurance 20,000
Business Premises 2,00,000 General Expenses 40,000
Stock on 1st April, 2017 2,20,000 Salaries 90,000
Debtors 1,80,000 Commission (Dr.) 22,000
Rent from Tenants 10,000 Carriage on Purchases 18,000
Purchases 11,00,000 Bad Debts Written off 8,000
Additional Information:
 Closing Stock as on 31st March, 2018 was ₹2,00,600.
 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:
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Opening Stock 2,20,000 By Sales 15,00,000
To Purchases 11,00,000 Less: Returns 20,000 14,80,000
To Carriage on Purchases 18,000 By Closing Stock 2,00,600
To Gross Profit 3,42,600
16,80,600 16,80,600

Profit & Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Commission 22,000 By Gross Profit 3,42,600
To Insurance 20,000 By Discount 20,000
Premium
Less: Prepaid 2,000 18,000 By Rent from Tenants 10,000
To Salaries 90,000
Add: 1,05,000
Outstanding
Salaries 15,000
To Bad Debts Written Off 8,000
To Provision for Doubtful Debts 9,000
To Discount 16,000
To General Expenses 40,000
To Depreciation on:
Furniture 2,500
Business 3,000 5,500
Premises
To Net Profit 1,49,100
3,72,600 3,72,600

Balance Sheet
as on March 31, 2018
Dr. Cr.
Amount Amount
Liabilities Assets
(₹) (₹)
Bank Overdraft 42,000 Furniture &
Fittings 26,000
Creditors 1,38,000 Less: Depreciation 2,500 23,500
Outstanding Salaries 15,000 Business
Premises 2,00,000
Capital 3,00,000 Less: Depreciation 3,000 1,97,000
Less: Drawings 50,000 Debtors 1,80,000
Add: Net Profit 1,49,100 3,99,100 Less: Provision 9,000 1,71,000
Closing Stock 2,00,600
Prepaid Insurance 2,000
5,94,100 5,94,100
Question 7:
Following balances are taken from the books of Mr. Niranjan. You are required
to prepare Trading and Profit and Loss Account and Balance Sheet for the year
ended 31st March, 2018:

Particulars ₹ Particulars ₹
Capital 1,20,000 Drawings 21,000
Opening Stock 45,000 Plant and Machinery 24,000
Furniture 1,500 Purchases 2,95,000
Sales 4,35,000 Insurances 1,500
Purchases Return 4,000 Sales Return 7,000
Rent 5,000 Trade Expenses 2,000
Salaries 24,000 Wages 40,000
Bad Debts 1,000 6% Investments 50,000
Sundry Debtors 40,000 Sundry Creditors 19,000
Bills Payable 800 Cash 12,200
Advertisement Expenses 6,000 Miscellaneous Receipts 1,200
Patents 4,800

Adjustments:
 Closing Stock ₹ 75,000.
 Depreciate Machinery by 10% and Furniture by 20%.
 Wages ₹ 5,000 and salaries ₹ 2,000 are outstanding.
 Write off ₹ 5,000 as further Bad Debts and create 5% Provision for
Doubtful Debts.
 Investments were made on 1st July, 2017 and no interest has been
received so far.
ANSWER:
Financial statements of Mr. Niranjan
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Opening Stock 45,000 By Sales 4,35,000
To Purchases 2,95,000 Less: Sales 4,28,000
Return (7,000)
Less: Purchases 2,91,000 By Closing Stock 75,000
Return (4,000)
To Wages 40,000
Add: Outstanding 5,000 45,000
wages
To Gross Profit 1,22,000
5,03,000 5,03,000

Profit and Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Rent 5,000 By Gross Profit 1,22,000
To Salaries 24,000
Add: Outstanding 26,000
Salaries 2,000
To Bad Debts 1,000 By Interest Accrued on
Investment
Add: Further Bad (50,000 × 6% × 9/12) 2,250
Debts 5,000
 Add: Provision for 1,750 7,750 By Miscellaneous 1,200
Doubtful Debts Receipts
To Advertisement expenses 6,000
To Provision for discount on 665
debtors
To Insurances 1,500
To Trade Expenses 2,000
To Depreciation on:
Machinery 2,400
Furniture 300 2,700
To Net Profit 73,835
1,25,450 1,25,450

Balance Sheet
as on March 31, 2018
Liabilities Amount Amount
Assets
(₹) (₹)
Capital 1,20,000 Fixed Assets
Less: Drawings (21,000) Patents 4,800
Add: Net Profit 73,835 1,72,835 Plant and 24,000
Machinery
Current Liabilities Less: 10% (2,400) 21,600
Depreciation
Sundry Creditors 19,000 Furniture 1,500
Wages Outstanding 5,000 Less: 20% (300) 1,200
Depreciation
Salaries Outstanding 2,000 6% Investment 50,000
Bills Payable 800 Add: Accrued 2,250 52,250
Interest

Current Assets
 Closing Stock 75,000
Debtors 40,000
Less: Further Bad (5,000)
Debts
Less: Provision for
(1,750)
Doubtful Debts
33,250
Less: Provision for (665) 32,585
Discount
Cash 12,200
1,99,635 1,99,635

Question 8:
From the following Trial Balance of Mahesh, prepare his Final Accounts for the
year ended 31st March, 2018:
Trail balance of Mahesh as on 31-03-2018
Name of The Accounts Debit Credit
Purchases 2,50,000 …
Sales … 5,00,000
Returns Inward 12,000 ...
Returns Outward … 10,000
Carriage 8,000 …
Wages 60,000 …
Trade Expenses 2,000 …
Insurance 1,200 …
Repairs 8,000 …
Debtors 1,15,000 …
Creditors … 1,00,000
Printing and Stationery 6,000 …
Advertisement 15,000 …
 Bills Receivable 4,000 …
Bills Payable … 2,000
Opening Stock 30,000 …
Cash in Hand 12,000 …
Interest on Bank Loan 2,800 …
Machinery 2,80,000 …
Furniture 34,000 …
Drawings 20,000 …
Commission … 1,000
12% Bank Loan … 30,000
Capital … 2,40,000
Rent Received … 5,000
Cash at Bank 28,000 …
Total 8,88,000 8,88,000

Additional Information:
 Closing Stock on 31st March, 2018 was ₹ 21,000.
 Rent of ₹ 1,200 has been received in advance.
 Outstanding liability for trade 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
no entry has been passed in the books of account.
 ANSWER:
Financial Statement of Shri O.P. Yadav
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Opening stock 30,000
To Purchases 2,50,000 By Sales 5,00,000
Less: Drawings (2,000) Less: (12,000) 4,88,000
Return
Inwards
Less: Return outwards (10,000) 2,38,000 By Closing Stock 21,000
To Carriage 8,000
To Wages 60,000
To Gross Profit 1,73,000
5,09,000 5,09,000

Profit and Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Trade expenses 2,000 By Profit 1,73,000
Add: Outstanding 12,000 14,000 By Commission 1,000
Trade Expenses
To Insurance 1,200 Add: Accrued 2,100 3,100
Commission
To Repairs 8,000 By Rent Received 5,000
To Advertisement 15,000 Less: Advance Rent 1,200 3,800
To Interest on Bank 2,800
Loan
Add: Interest 800 3,600
Outstanding
To Printing and Stationary 6,000
To Net Profit 1,32,100
1,79,900 1,79,900

Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
(Rs) (Rs)
Capital 2,40,000 Fixed Assets
Less: Drawings (22,000) Machinery 2,80,000
Add: Net Profit 1,32,100 3,50,100 Furniture 34,000
10% Loan from Bank 30,000 Current Assets
Add: Outstanding 800 30,800 Closing Stock 21,000
Interest
Current Liabilities Debtors 1,15,000
Creditors 1,00,000 Bills Receivable 4,000
Bills Payable 2,000 Cash at Bank 28,000
Advance Rent 1,200 Cash in Hand 12,000
Outstanding Trade Expenses 12,000 Commission Accrued 2,100
4,96,100 4,96,100

Working Notes:
Calculation of Outstanding Interest on Loan
Interest on loan (30,000 × 12%) 3,600
Less: Interest Paid (2,800)
Interest Outstanding on Loan 800
Question 9:
Following balances were extracted from the books of Vijay Kumar on 31st
March, 2018:
Particulars ₹ Particulars ₹
Capital 2,45,000 Loan 78,800
Drawings 20,000 Sales 6,53,600
General Expenses 47,400 Purchases 4,70,000
Building 1,10,000 Motor Car 20,000
Machinery 93,400 Provision for Doubtful Debts 9,000
Stock on 1st April, 2017 1,62,000 Commission (Cr.) 13,200
Insurance 13,150 Car Expenses 18,000
Wages 72,000 Bills Payable 38,500
Debtors 62,800 Cash 800
Creditors 25,000 Bank Overdraft 33,000
Bad Debts 5,500 Charity 1,050

Prepare Trading and Profit and Loss Account for the year ended 31st March,
2018 and Balance Sheet as at that date after giving effect to the following
adjustments:
 Stock as on 31st March, 2018 was valued at ₹ 2, 30,000.
 Write off further ₹ 1,800 as Bad Debts and maintain the Provision for
Doubtful Debts at 5%.
 Depreciate Machinery at 10%.
 Provide ₹ 7,000 as outstanding interest on loan.
ANSWER:
Financial Statement of Vijay Kumar
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Opening Stock 1,62,000 By Sales 6,53,600
To Purchases 4,70,000 By Closing Stock 2,30,000
To Wages 72,000
To Gross Profit 1,79,600
8,83,600 8,83,600

Profit and Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Taxes and Insurance 13,150 By Gross Profit 1,79,600
To Bad Debts 5,500 By Commission 13,200
Add: Further Bad Debts 1,800
Add: Provision for Doubtful 3,050
Debts
10,350
Less: Exiting Provision 9,000 1,350
To Car Expenses 18,000
To Charity 1,050
To Depreciation on Machinery 9,340
To Outstanding Interest on Loan 7,000
 To General Expenses 47,400
To Net Profit 95,510
1,92,800 1,92,800

Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
(Rs) (Rs)
Capital 2,45,000 Fixed Assets
Add: Net Profit 95,510 Building 1,10,000
Less: Drawings (20,000) 3,20,510 Machinery 93,400
Loan 78,800 Less:10% Depreciation 9,340 84,060
Add: Outstanding 7,000 85,800 Motor Car 20,000
Interest
Current Liabilities Current Assets
Creditors 25,000 Closing Stock 2,30,000
Bills Payable 38,500 Debtors 62,800
Bank Overdraft 33,000 Less: Bad Debts (1,800)
Less: 5% Provision for
(3,050) 57,950
Doubtful Debts
Cash 800
5,02,810 5,02,810

Question 10:
Following Trial Balance has been extracted from the books of Shri Sunder Lal
on 31st March, 2018:

Trail balance of Shri Sunder lal as on 31-03-18

Cash in Hand and at Bank 77,400 …
Capital … 30,00,000
 Drawings 1,26,000 ...
Bills Receivable 37,200 …
Land and Building 6,51,600 …
Furniture 1,02,400 …
Wages 9,37,700 …
Discount Allowed 79,200 …
Discount Received … 59,700
6% Loan … 3,00,000
Bank Charges 2,100 …
Bad Debts 27,600 …
Sundry Debtors 13,15,500 …
Office Salaries 1,28,400 …
Purchases 39,81,600 …
Stock on 1st April, 2017 12,04,500 …
Sales Return 37,500 …
Carriage Inwards 1,03,600 …
General Expenses 1,53,600 …
Plant and Machinery 4,32,800 …
Rent 72,600 …
Purchases Return … 29,100
Sales … 56,30,100
Insurance 14,100 …
Provision for Doubtful Debts … 93,000
Sundry Creditors … 3,73,500
Total 94,85,400 94,85,400

Closing Stock on 31st March, 2018 was ₹ 12, 74,000. You are required to prepare
Trading and Profit and Loss Account for the year ended 31st March, 2018 and
Balance Sheet as at that date after making the following adjustments:
  Depreciate Plant and Machinery @ 10% and Furniture @ 5%.
 Provision for Doubtful Debts to be maintained at ₹ 1, 50,000.
 Insurance includes annual premium of ₹ 7,200 on a policy which will
expire on 30th September, 2018.
 Purchases include a computer costing ₹ 60,000 purchased on 1st July, 2017
and is subject to depreciation @ 10% p.a.
ANSWER:
Financial Statements of Shri Sunder Lal
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Opening Stock 12,04,500 By Sales 56,30,100
To Purchases 39,81,600 Less: Returns 37,500 55,92,600
Less: Returns (29,100) By Closing Stock 12,74,100
Less: Computer (60,000) 38,92,500
To Wages 9,37,700
To Carriage Inwards 1,03,600
To Gross Profit 7,28,400
68,66,700 68,66,700

Profit and Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Office Salaries 1,28,400 By Gross Profit 7,28,400
To General Expenses 1,53,600 By Discount 59,700
To Bank Charges 2,100
To Discount Allowed 79,200
To Depreciation on:
Plant and Machinery 43,280
Furniture 5,120
Computer (60,000×10/100 4,500 52,900
×9/12)
To Rent and Rates 72,600
To Bad Debts 27,600
Add: Provision for 1,50,000
Doubtful Debts
Less: Existing Provision (93,000) 84,600
To Insurance 14,100
Less: Prepaid Insurance (3,600) 10,500
(7,200 × 6/12)
To Outstanding Interest on Loan 18,000
To Net Profit 1,86,200
7,88,100 7,88,100

Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
(₹) (₹)
Sundry Creditors 3,73,500 Cash in Hand and Bank 77,400
6% Loan 3,00,000 Bills Receivable 37,200
Add: 18,000 Sundry Debtors 13,15,500
Outstanding
interest 3,18,000
(3,00,000 × 6% for 12 Less: Provision of
(1,50,000) 11,65,500
months) Doubtful Debts
Capital 30,00,000 Plant and 4,32,800
Machinery
 Less: Less: 10% (43,280) 3,89,520
(1,26,000)
Drawings Depreciation
Add: Net 1,86,200 30,60,200 Furniture 1,02,400
Profit
Less: 5% (5,120) 97,280
Depreciation
Land and Building 6,51,600
Computer 60,000
Less:10% Depreciation for 9 55,500
months (4,500)
Prepaid Insurance 3,600
Closing Stock 12,74,100
37,51,700 37,51,700

Question 11:
Sanjiv Sondhi started business on 1st April, 2017 with a capital of ₹ 3, 00,000.
Following Trial Balance was drawn up from his books at the end of the year:

Heads of Accounts ₹ Heads of Accounts ₹

Drawings 45,000 Capital 4,00,000
Plant and Fixtures 80,000 Sales 16,00,000
Purchases 11,60,000 Sundry Creditors 1,20,000
Carriage Inwards 20,000 Bills Payable 90,000
Returns Inward 40,000
Wages 80,000
Salaries 1,00,000
Printing and 8,000
Stationery
Advertisement 12,000
Trade Charges 6,000
 Rent and Taxes 14,000
Sundry Debtors 2,50,000
Bills Receivable 50,000
Investments 1,50,000
Discount 5,000
Cash at Bank 1,60,000
Cash in Hand 30,000
22,10,000 22,10,000

Value of Stock as on 31st March, 2018 was ₹ 2,60,000. You are required to
prepare his Trading and Profit and Loss Account for the year ended 31 st March
2018 and Balance Sheet as at that date after taking the following facts into
account:
 Plant and Fixtures are to be depreciated by 10%.
 Salaries outstanding on 31st March, 2018 amounted to ₹ 35,000.
 Accrued Interest on investment amounted to ₹ 7,500.
 ₹ 5,000 are Bad Debts and a Provision for Doubtful Debts is to be created
at 5% of the balance of debtors.
ANSWER:
Financial Statement of Sanjiv Sondhi
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Purchase 11,60,000 By Sales 16,00,000
To Carriage Inwards 20,000 Less: Return (40,000) 15,60,000
Inwards
To Wages 80,000 By Closing Stock 2,60,000
To Gross Profit 5,60,000
18,20,000 18,20,000
 Profit and Loss Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Depreciation on Plant and By Gross Profit 5,60,000
Fixture 8,000
By Accrued Interest
To Salaries 1,00,000 7,500
on Investment
Add: Outstanding 35,000 1,35,000
To Printing and Stationery 8,000
To Advertisement 12,000
To Trade Charges 6,000
To Rent and Taxes 14,000
To Bad Debts 5,000
Add: Provision for
Doubtful Debts 12,250 17,250
To Discount 5,000
To Net Profit 3,62,250
5,67,500 5,67,500

Balance Sheet
as on the year ended March 31, 2018
Amount Amount
Liabilities Assets
(Rs) (Rs)
Capital 4,00,000 Plant and Fixtures 80,000
Less: (45,000) Less: 10% (8,000) 72,000
Drawings Depreciation
Add: Net 3,62,250 7,17,250 Investment 1,50,000
Profit
Sundry Creditors 1,20,000 Add: Accrued 7,500 1,57,500
Interest
Bills Payable 90,000 Closing Stock 2,60,000
Salaries Outstanding 35,000 Sundry Debtors 2,50,000
Less: Bad Debts (5,000)
2,45,000
Less: 5% Provision
for Doubtful Debts (12,250) 2,32,750
Bills Receivable 50,000
Cash at Bank 1,60,000
Cash in Hand 30,000
9,62,250 9,62,250

Question 12:
Following Trial Balance were extracted from the books of Ram as on 31st March,
2018:
Debit Balances ₹ Debit Balances (Contd.) ₹
Drawings 70,000 Cash at Bank 1,24,000
Purchases 8,22,100 Cash in Hand 22,100
Sales Return 18,200 Office Furniture 35,000
Stock on 1st April, 2017 1,14,600 Bad Debts 10,000
Salaries 1,61,500 Carriage Outwards 32,400
Wages 85,600 Sundry Debtors 3,89,700
Leasehold Premises 2,50,000 Credit Balances
Rent, Rates and Insurance 69,400 Capital 9,00,000
Carriage Inwards 23,100 Purchases Return 42,400
Office Expenses 95,200 Sales 14,98,400
Plant and Machinery 2,40,000 Provision for Doubtful Debts 42,400
Light and Water (Factory) 79,500 Discount 1,800
Bills Receivable 12,400 Sundry Creditors 1,69,800
 Prepare Trading and Profit and Loss Account for the year ended 31st March,
2018 and Balance Sheet as at that date after taking into account the following:
 Depreciation is to be written off as follows: Leasehold premises 5%. Plant
and Machinery 10%.
 Write off ₹ 5,000 as further Bad Debts and make a Provision for Doubtful
Debts equal to ₹ 5,000.
 Wages amounted to ₹ 5,700 have become due but have not been paid.
 Wages include ₹ 10,000 incurred on installation of new machine. Machine
was installed on 1st April, 2017.
 The value of stock on 31st March, 2018 was ₹ 1, 49,200.
 Unexpired premium amount to ₹ 6,800 is to be carried forward to the next
year.
ANSWER:
Financial Statement of Ram
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Opening Stock 1,14,600 By Sales 14,98,400
To Purchase 8,22,100 Less: Sales (18,200) 14,80,200
Return
Less: Purchases (42,400) 7,79,700 By Closing Stock 1,49,200
Return
To Wages 85,600
Less: Machinery A/c (10,000)
Add: Outstanding 5,700 81,300
To Wages
To Carriage Inwards 23,100
To Light and Water 79,500
To Gross Profit 5,51,200
16,29,400 16,29,400
 Profit and Loss Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Depreciation on: By Gross Profit 5,51,200
Leasehold 12,500 By Discount 1,800
Premises
Plant and 25,000 37,500
Machinery
To Bad Debts 10,000
Add: Further Bad 5,000
Debts
Add: Provision for 50,000
Doubtful Debts
65,000
Less: Existing (42,400) 22,600
Provision
To Rent, Rates and
Insurance 69,400
Less: Prepaid (6,800) 62,600
Insurance
To Salaries 1,61,500
To Office Expenses 95,200
To Carriage Outwards 32,400
To Net Profit 1,41,200
5,53,000 5,53,000
 Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
(₹) (₹)
Capital 90,0000 Fixed Assets
Less: (7,0000) Leasehold Premises 2,50,000
Drawings
Add: Net 14,1200 9,71,200 Less: 5% Depreciation (12,500) 2,37,500
Profit
Current Liabilities Plant and Machinery 2,50,000
Sundry Creditors 1,69,800 Less: 10% Depreciation (25,000) 2,25,000
Wages Outstanding 5,700 Office Furniture 35,000
Current Assets
Closing Stock 1,49,200
Sundry Debtors 38,970
Less: Bad Debts 500
Less: Provision for 5,000 3,34,700
Doubtful Debts
Bills Receivable 12,400
Cash at Bank 1,24,000
Cash in Hand 22,100
Prepaid Insurance 6,800
11,46,700 11,46,700

Note: Wages for installation of machinery reduces the value of wages

and increase the value of machinery.
Question 13:
From the following Trial Balance of M/s Arjun and Sons as on 31st March, 2018,
prepare Trading and Profit and Loss Account and Balance Sheet:
Trail Balance of Arjun as on 31-03-18
Name of the Accounts Debit Credit
Drawings 1,80,000 …
Capital … 8,00,000
Purchases 8,26,000 ...
Sales … 15,50,000
Opening Stock 4,20,000 …
Returns Outward … 16,000
Carriage Inwards 12,000 …
Wages 40,000 …
Power 60,000 …
Machinery 5,00,000 …
Furniture 1,40,000 …
Rent 2,20,000 …
Salary 1,50,000 …
Insurance 36,000 …
8% Bank Loan … 2,50,000
Debtors 2,06,000 …
Creditors … 1,89,000
Cash in Hand 15,000 …
Total 28,05,000 28,05,000

Adjustments:
 Closing Stock ₹ 6, 40,000.
 Wages Outstanding ₹ 24,000.
 Bad Debts ₹ 6,000 and Provision for Bad and Doubtful Debts to 5% on
Debtors.
  Rent is paid for 11 months.
 Loan from bank was taken on 1st October, 2017.
 Provide Depreciation on Machinery @ 10% p.a.
 Provide Manager’s Commission at 10% on net profit after charging such
commission.
ANSWER:
Financial Statements of M/s Arjun and Sons
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Opening Stock 4,20,000 By Sales 15,50,000
To Purchases 8,26,000 By Closing Stock 6,40,000
Less: Return (16,000) 8,10,000
Outwards
To Carriage Inwards 12,000
To Wages 40,000
Add: Outstanding 24,000 64,000
To Power 60,000
To Gross Profit 8,24,000
21,90,000 21,90,000

Profit and Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Depreciation on Machinery 50,000 By Gross Profit 8,24,000
To Rent 2,20,000
Add: Outstanding Rent 20,000 2,40,000
 To Salary 1,50,000
To Insurance 36,000
To Interest on Bank Loan (for 6 Months) 10,000
To Bad Debts 6,000
Add: Provision for Doubtful 10,000 16,000
Debts
To Manger’s Commission 29,273
To Net Profit 2,92,727
8,24,000 8,24,000

Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
(Rs) (Rs)
Capital 8,00,000 Fixed Assets
Less: Drawings (1,90,000) Machinery 5,00,000
Add: Net Profit 2,92,727 9,02,727 Less: 10% (50,000) 4,50,000
Depreciation
8% Bank Loan 2,50,000 Furniture 1,40,000
Add: Interest 10,000 2,60,000 Current Assets
Outstanding
Current Liabilities Closing Stock 6,40,000
Creditors 1,89,000 Debtors 2,06,000
Wages Outstanding 24,000 Less: Bad Debts (6,000)
Rent Outstanding 20,000 2,00,000
Manger’s Commission Payable 29,273 Less: 5%
Provision for (10,000) 1,90,000
Doubtful Debts
Cash in Hand 15,000
14,35,000 14,35,000
Working Notes:
WN1 Calculation of Interest on Loan
Bank Loan = Rs 2, 50,000 Interest on Loan (from Oct. 01 to Mar. 31)
= 2, 50,000 × 8 / 100 × 6 / 12 = Rs 10,000
WN2 Calculation of Manager’s Commission
Manager's Commission = Profit before charging Commission × 10 / 100 + Rate
Profit before charging Commission
= 8, 24,000 − 5, 02,000 = 3, 22,000
Manager's Commission = 3, 22,000×10100+10=Rs 29,273

Question 14:
From the following Trial Balance and other information prepare Trading and
Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet
as at that date:

Trail balance as on 31-03-2018

Name of the Accounts Debit Credit
Sundry Debtors 3,20,000 …
Stock on 1st April, 2017 2,20,000 …
Cash in Hand 350 …
Cash at Bank 15,450 …
Plant and Machinery 1,75,000 …
Sundry Creditors … 1,06,500
General Expenses 10,750 …
Sales … 13,45,000
Salaries 22,250 …
Carriage Outwards 4,000 …
Rent 9,000 …
Bills Payable … 75,000
Purchases 11,88,700 …
 Discounts 11,000 …
Premises 3,45,000 …
Capital on 1st April 2017 … 7,95,000
Total 23,21,500 23,21,500

Additional Information:
 Stock on 31st March, 2018 was ₹ 1, 24,500.
 Rent was unpaid to the extent of ₹ 850
 ₹ 1,500 were outstanding for General Expenses
 ₹ 4,000 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 by 10% and Business Premises by 2%.
 Manager is entitled to a commission of 5% on net profit after charging his
commission.

ANSWER:
Financial Statement
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Opening Stock 2,20,000 By Sales 13,45,000
To Purchases 11,88,700 By Closing Stock 1,24,500
To Gross Profit 60,800
14,69,500 14,69,500
 Profit and Loss Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Rent 9,000 By Gross Profit 60,800
Add: Outstanding Rent 850 9,850 By Net Loss 42,750
To General Expenses 10,750
Add: Outstanding 1,500 12,250
General Expenses
To Bad Debts 4,000
Add: Provision for Debts 15,800 19,800
To Depreciation on
Plant and Machinery 17,500
Business Premises 6,900 24,400
To Salaries 22,250
To Carriage Outwards 4,000
To Discount 11,000
1,03,550 1,03,550

Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
(Rs) (Rs)
Capital 7,95,000 Fixed Assets
Less: Net Loss (42,750) 7,52,250 Plant and 1,75,000
Machinery
Current Liabilities Less: 10% (17,500) 1,57,500
Depreciation
Sundry Creditors 1,06,500 Premises 3,45,000
Bills Payable 75,000 Less: 2% (6,900) 3,38,100
Depreciation
Rent Outstanding 850 Current Assets
General Expenses 1,500 Closing Stock 1,24,500
Outstanding
Sundry Debtors 3,20,000
Less: Bad Debts (4,000)
3,16,000
Less: 5% Provision
(15,80) 3,00,200
for Doubtful Debts
Cash at Bank 15,450
Cash in Hand 350
9,36,100 9,36,100

Note: In the question, Manager Commission is given as 5% on Net Profit after

charging commission. But, during the year the firm had a Net Loss of Rs 42,750,
therefore, manager commission is not payable.

Question 15:
Following is the Trial Balance of Mr. Bharat on 31st March, 2018.
Dr. Cr.
Particulars
(₹) (₹)
Capital 40,000
Plant and Machinery 50,000
Office Furniture and Fittings 2,600
Stock on 1st April, 2017 48,000
Accrued Commission 12,000
Sundry Debtors 45,700
Cash in Hand 400
Cash at Bank 6,500
Wages 1,50,000
 Salaries 14,000
Purchases 2,13,500
Sales 4,80,000
Bills Receivable 7,200
Bills Payable 5,600
Sundry Creditors 52,000
Returns Inward 9,300
Provision for Doubtful Debts 2,500
Drawings 7,000
Returns Outward 5,500
Rent 6,000
Factory Lighting and Heating 800
Insurance 6,300
General Expenses 1,000
Bad Debts 2,500
Discount 6,500 3,700
Total 5,89,300 5,89,300

Following adjustments are to be made:

 Stock on 31st March, 2018 ₹52,000.
 Three months' factory lighting and heating due but not paid ₹300.
 5% depreciation to be written off on furniture.
 Write off further Bad Debts ₹700.
 Provision for Doubtful Debts to be increased to ₹3,000 and Provision of
Discount on Debtors @ 2% to be made.
 During the year, machinery was purchased for ₹20,000 but it was debited
to the Purchases Account.
 You are required to prepare Trading Account, Profit and Loss Account and
Balance Sheet.
ANSWER:
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Opening Stock 48,000 By Sales 4,80,000
To Purchases 2,13,500 Less: Returns 9,300 4,70,700
Less: Machinery 20,000 By Closing Stock 52,000
Less: Returns 5,500 1,88,000
To Factory Lighting 800
& Heating
Add: Outstanding 300 1,100
To Wages 1,50,000
To Gross Profit 1,35,600
5,22,700 5,22,700

Profit & Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Depreciation on Furniture 130 By Gross Profit 1,35,600
To Discount 6,500 By Discount 3,700
To General Expenses 1,000
To Insurance Premium 6,300
To Rent 6,000
To Bad Debts 2,500
Add: Further Bad Debts 700
Add: Provision for
Doubtful Debts 500
Add: Provision for 4540
Discount on Debtors 840
To Salaries 14,000
To Net Profit 1,00,830
1,39,300 1,39,300

Balance Sheet
as on March 31, 2018
Dr. Cr.
Amount Amount
Liabilities Assets
(₹) (₹)
Bills Payable 5,600 Furniture & 2,600
Fixtures
Creditors 52,000 Less: Depreciation 130 2,470
Factory, Lighting & Heating O/s 300 Debtors 45,700
Capital 40,000 Less: Further Bad 700
Debts
Less: Drawings 7,000 Less: Provision for 3,000
DD
Add: Net Profit 1,00,830 1,33,830 Less: Provision for 840 41,160
Discount
Plant & Machinery 50,000
Add: Machinery 20,000 70,000
Accrued Commission 12,000
Bills Receivable 7,200
Closing Stock 52,000
Cash in Hand 400
Cash at Bank 6,500
1,91,730 1,91,730
Question 16:
From the following Trial Balance, prepare Trading Account, Profit and Loss
Account for the year ended 31st March, 2018 and Balance Sheet as at the date:

Debit Balances ₹ Credit Balances ₹

Purchases 3,00,000 Sales 4,79,760
Drawings 3,500 Purchases Return 12,200
Plant and Machinery 1,23,000 Capital 5,90,000
Motor Vehicles 1,76,000 Creditors 11,870
Building 3,80,000 Bank Loan 33,700
Sundry Debtors 80,000
Stock in Trade (1.4.2017) 8,400
Sales Return 1,800
Wages 2,800
Carriage Inwards 890
Carriage Outwards 300
Telephone Charges 3,290
Salaries 12,000
Insurance and Taxes 31,200
Printing and Stationery 1,350
Expenses
Cash in Hand 3,000
11,27,530 11,27,530

Following adjustments are to be considered:

 Closing Stock ₹ 15,270.
 Printing and Stationery expenses due ₹ 58,650.
 Outstanding liabilities for salaries ₹ 12,000
 An old machine value at ₹ 12,000 (Book Value of which was ₹ 2,000) was
given in exchange for a new machine purchased on 1st April, 2017. The
 machine given in exchange was not recorded in the books. Cheque issued
for new machine purchased was accounted in the books of account.
 Depreciation @ 10% p.a. is to be provided on all fixed assets except
building.
ANSWER:
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Opening Stock 8,400 By Sales 4,79,760
To Purchases 3,00,000 Less: Sales (1,800) 4,77,960
Return
Less: Purchases (12,200) 2,87,800 By Closing Stock 15,270
Return
To Wages 2,800
To Carriage Inwards 890
To Gross Profit 1,93,340
4,93,230 4,93,230

Profit and Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Carriage Outwards 300 By Gross Profit 1,93,340
To Telephone Charges 3,290 By Profit on exchange 10,000
of Machinery
To Salaries 12,000
Add: Outstanding 12,000 24,000
To Insurance and Taxes 31,200
To Printing and Stationery
Expenses 1,350
Add: Outstanding 58,650 60,000
To Depreciation on
Plant and Machinery 13,300
Motor Vehicles 17,600 30,900
To Net Profit 53,650
2,03,340 2,03,340

Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
(Rs) (Rs)
Capital 5,90,000 Fixed Assets
Less: Drawings (3,500) Plant and
Machinery 1,33,000
Add: Net Profit 53,650 6,31,150 Less: 10% (13,300) 1,19,700
Depreciation
Bank Loan 33,700 Motor Vehicles 1,76,000
Current Liabilities Less: 10% 1,58,400
Depreciation (17,600)
Creditors 11,870 Building 3,80,000
Outstanding Printing and 58,650 Current Assets
Stationery
Outstanding Salaries 12,000 Sundry Debtors 80,000
Closing Stock 15,270
Cash in Hand 3,000
7,56,370 7,56,370
Question 17:
Following balances were extracted from the books of Modern Traders on
31st March, 2018:
Particulars ₹ Particulars ₹
Capital 8,50,000 Sundry Creditors 90,000
Drawings 50,000 Sales 12,00,000
Plant and Machinery 4,00,000 Postage and Telegrams 8,000
Accumulated Depreciation 90,000 Bad Debts 4,000
Stock on 1st April, 2017 1,50,000 Provision for Doubtful Debts 8,000
Purchases 8,20,000 Discounts received 4,000
Sundry Debtors 2,06,000 Rent Revenue 12,000
Furniture 50,000 Insurance 7,000
Freight Inwards 20,000 Salaries 2,00,000
Carriage Outwards 5,000 Wages 13,000
Rent, Rates and Taxes 46,000 Cash in Hand 62,000
Printing and Stationery 8,000 Cash at Bank 2,55,000
General Reserve 50,000

Prepare Final Accounts for the year ended 31st March, 2018 after taking into
account the following:
 Stock on 31st March, 2018 was valued at ₹ 1, 50,000.
 Outstanding Wages ₹ 5,000.
 Provision for Doubtful Debts is to be maintained at 5% of the Sundry
Debtors.
 Prepaid Insurance was ₹ 1,000.
 An advance paid by the proprietor from his personal bank account of ₹
50,000 for purchase of a machine on 1st April, 2017 was not recorded in
the books. Plant and Machinery was not debited in the books by the
amount paid from firm.
  Provide Depreciation on Plant and Machinery @ 10% on cost and on
Furniture @ 5%.
ANSWER:
Financial Statement of Modern Traders
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Opening Stock 1,50,000 By Sales 12,00,000
To Purchases 8,20,000 By Closing Stock 1,50,000
To Freight Inwards 20,000
To Wages 13,000
Add: Outstanding 5,000 18,000
Wages
To Gross Profit 3,42,000
13,50,000 13,50,000

Profit and Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Postage and Telegrams 8,000 By Gross Profit 3,42,000
To Bad Debts 4,000 By Discount Received 4,000
Add: Provision for 10,300 By Rent Revenue 12,000
Doubtful Debts
Less: Existing Provision (8,000) 6,300
To Carriage Outwards 5,000
To Rent, Rates and Taxes 46,000
Insurance 7,000
Less: Prepaid Insurance (1,000) 6,000
To Salaries 2,00,000
To Printing and Stationery 8,000
To Depreciation on:
Machinery 45,000
Furniture 2,500 47,500
To Net Profit 31,200
3,58,000 3,58,000

Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
(Rs) (Rs)
Capital 9,00,000 Plant and Machinery 4,50,000
Less: Accumulated
Less:
(50,000) Depreciation 3,15,000
Drawings (1,35,000)
(90,000 + 45,000)
Add: Net 31,200 8,81,200 Furniture 50,000
Profit
Reserve Fund 50,000 Less: 5% Depreciation (2,500) 47,500
Sundry Creditors 90,000 Closing Stock 1,50,000
Wages Outstanding 5,000 Sundry Debtors 2,06,000
Less: Provision for (10,300) 1,95,700
Doubtful Debts
Prepaid Insurance 1,000
Cash at Bank 2,55,000
Cash in Hand 62,000
10,26,200 10,26,200
Note: Advance paid by proprietor for Plant and Machinery out of his personal
bank account will increase the Capital A/c and Plant & Machinery A/c balance
by Rs 50,000. And also increase in the amount of depreciation by Rs 5,000.

Question 18:
From the following Trial Balance of Shubdo Banerjee, prepare final accounts for
the year ended in 31st March, 2018 and Balance Sheet as at that date:
Dr. Cr.
Particulars Balances Balances
(₹) (₹)
Land and Building 50,000
Purchases (Adjusted) 2,10,000
Stock (31st March, 2018) 45,000
Returns Inward 1,500
Returns Outward 2,500
Wages 45,300
Salaries 39,000
Office Expenses 15,400
Carriage Inwards 1,200
Carriage Outwards 2,000
Discount allowed 750
Discount received 1,200
Bad Debts 1,200
Sales 3,85,000
Capital Account 1,15,000
Chatterji's Loan A/c (taken on 25,000
1st Oct., 2017 @ 18% p.a.
Insurance 1,500
Commission 1,500
 Plant and Machinery 50,000
Furniture and Fixtures 20,000
Bills Receivable 20,000
Sundry Debtors 40,000
Sundry Creditors 25,000
Cash at Bank 16,000
Office Equipments 12,000
Bills Payable 12,350
Expenses Payable 3,300
Total 5,70,850 5,70,850

The following adjustments be taken care of:

 Depreciate Land and Building @ 6%, Plant and Machinery @ 10%, Office
equipments @ 20% and Furniture and Fixtures @ 15%
 Calculate Provision for Doubtful Debts at 2% on Debtors.
 Insurance premium includes ₹250 paid in advance.
 Provide salary to Banerjee ₹15,000 p.a.
 Outstanding Salaries ₹11,500.
 10% of the final profit is to be transferred to General Reserve.
ANSWER:
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Purchases 2,10,000 Sales 3,85,000
(Adjusted)
Less: Returns 2,500 2,07,500 Less: Returns 1,500 3,83,500
To Carriage Inwards 1,200
To Wages 45,300
To Gross Profit 1,29,500
3,83,500 3,83,500

Profit & Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Carriage Outwards 2,000 By Gross Profit 1,29,500
To Salaries 39,000 By Commission 1,500
Add: 11,500 By Discount 1,200
Outstanding
Add: Payable to 15,000 65,500
Proprietor
To Insurance 1,500
Premium
Less: Prepaid 250 1,250
To Discount 750
To Office Expenses 15,400
To Outstanding Interest on Loan 2,250
To Bad Debts 1,200
Add: Provision for 800 2,000
Doubtful Debts
To Depreciation on:
Furniture & Fixtures 3,000
Land & Building 3,000
Office Equipment 2,400
Plant & Machinery 5,000 13,400
To General Reserve 2,965
To Net Profit 26,685
1,32,200 1,32,200
 Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
(₹) (₹)
Bills Payable 12,350 Furniture & Fixtures 20,000
Creditors 25,000 Less: Depreciation 3,000 17,000
Expenses Payable 3,300 Land & Building 50,000
Capital 1,15,000 Less: Depreciation 3,000 47,000
Add: Salary 15,000 Debtors 40,000
Payable
Add: Net Profit 26,685 1,56,685 Less: Provision 800 39,200
Chatterji’s Loan 25,000 Plant & Machinery 50,000
Add: 2,250 27,250 Less: Depreciation 5,000 45,000
Outstanding
Interest
General Reserve 2,965 Office Equipment 12,000
Outstanding Salaries 11,500 Less: Depreciation 2,400 9,600
Bills Receivable 20,000
Closing Stock 45,000
Cash at Bank 16,000
Prepaid Insurance 250
2,39,050 2,39,050
Question 19:
Following is the Trial Balance as on 31st March, 2018. Prepare Trading and
Profit and Loss Account and Balance Sheet:
Dr. Cr.
Particulars
(₹) (₹)
Stock on 1st April, 2017 8,000
Sales 2,20,000
Purchases 1,26,000
Productive Wages 56,500
Salaries 16,000
Stores Consumed 6,050
Carriage 3,050
Rent 5,200
Insurance 1,320
Machinery 52,000
Building 67,000
Capital Less Drawings 1,45,600
Sundry Debtors 44,000
Sundry Creditors 20,000
Secured Loan 16,000
Furniture 3,350
General Expenses 2,600
Cash in Hand 1,930
Bad Debts 1,020
Bank 6,580
Input CGST 3,000
Input SGST 3,000
Output CGST 2,500
Output SGST 2,500
Total 4,06,600 4,06,600
You are to make adjustments in respect of the following:
 Stock on 31st March, 2018, ₹20,600.
 Depreciate Machinery at 10% p.a.
 Make a provision @ 5% for Doubtful Debts.
 Provide discount on debtors 2.5%
 Rent includes Rent deposit of ₹400.
 Insurance Prepaid ₹120.
ANSWER:
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Opening Stock 8,000 By Sales 2,20,000
To Purchases 1,26,000 By Closing Stock 20,600
To Carriage 3,050
To Productive Wages 56,500
To Stores Consumed 6,050
To Gross Profit 41,000
2,40,600 2,40,600

Profit & Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Salaries 16,000 By Gross Profit 41,000
To Insurance Premium 1,320
Less: Prepaid 120 1,200
To Depreciation on Machinery 5,200
To Rent 5,200
Less: Deposit 400 4,800
To Bad Debts 1,020
Add: Provision for 2,200
Doubtful Debts
Add: Provision for 1,045 4,265
Discount
To General Expenses 2,600
To Net Profit 6,935
1,32,200 1,32,200

Balance Sheet
as on March 31, 2018
Dr. Cr.

Liabilities Amount Amount

Assets
(₹) (₹)
Creditors 20,000 Bank 6,580
Secured Loan 16,000 Building 67,000
Capital 1,45,600 Closing Stock 20,600
Add: Net Profit 6,935 1,52,535 Cash in Hand 1,930
Debtors 44,000
Less: Provision for DD 2,200
Less: Provision for 1,045 40,755
Discount
Machinery 52,000
Less: Depreciation 5,200 46,800
Furniture 3,350
Prepaid Insurance 120
Rent Deposit 400
Input CGST 500
Input SGST 500
1,88,535 1,88,535
Question 20:
Following is the Trial Balance obtained from the books of Mr. Vishwanath on
31st March, 2018:
Dr. Cr.
Heads of Accounts
(₹) (₹)
Computers ............................................ 37,000 …
Plant and Machinery ............................................ 1,60,000 …
Motor Van ............................................ 2,20,000 …
Cash in Hand ............................................ 6,330 …
Cash at Bank ............................................ 50,000 …
Stock on 1st April, 2017 ........................................... 8,100 …
Debtors ............................................ 65,300 …
Creditors ............................................ … 29,500
Purchases ......................................... 2,74,685 …
Sales ........................................... … 5,21,870
Returns Inwards ........................................... 2,300 …
Returns Outwards ............................................ … 2,100
Rent ............................................ 6,700 …
Salaries ............................................ 35,000 …
Bank Loan taken on 1st April, ............................................ … 2,00,000
2017 @ 10% p.a ................
Carriage Outwards ............................................ 3,100 …
Wages ............................................ 54,755 …
Interest ............................................ 10,000 …
Electric Charges ......................................... 4,200 …
General Expenses ............................................ 24,000 …
Capital ............................................ … 2,10,000
Input IGST ........................................... 10,000 …
Output CGST ............................................ … 4,000
Output SGST ............................................ … 4,000
Total 9,71,470 9,71,470
You are required to prepare Mr. Vishwanath Trading and Profit and Loss
Account for the year ended 31st March, 2018 and his Balance Sheet as at that
date after taking into account the following adjustments:
 Stock on 31st March, 2018 was ₹ 15,600.
 Depreciate Motor Van and Plant and Machinery by 10% p.a. and
Computers @ 20% p.a.
 Create Provision for Doubtful Debts @ 5%
 General Expenses include ₹ 2,000 paid of wages.
ANSWER:
Financial Statements for Mr. G. Vishwanath
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Opening Stock 8,100 By Sales 5,21,870
To Purchases 2,74,685 Less: Return (2,300) 5,19,570
Inwards
Less: Return (2,100) 2,72,585 By Closing Stock 15,600
Outwards
To Wages 54,755
Add: General 2,000 56,755
Expenses
To Gross Profit 1,97,730
5,35,170 5,35,170
 Profit and Loss Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Rent 6,700 By Gross Profit 1,97,730
To Salaries 35,000
To Carriage Outwards 3,100
To Interest on Loan 10,000
Add: Interest 10,000 20,000
Outstanding
To Electricity Charges 4,200
To General Expenses 24,000
Less: Wages (2,000) 22,000
To Depreciation on
Motor Van 22,000
Plant and Machinery 16,000
Computer 7,400 45,400
To Provision for Doubtful Debts 3,265
To Net Profit 58,065
1,97,730 1,97,730

alance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
(₹) (₹)
Capital 2,10,000 Fixed Assets
Add: Net Profit 58,065 2,68,065 Plant and Machinery 1,60,000
Bank Loan 2,00,000 Less: 10% (16,000) 1,44,000
Depreciation
Add: Interest 10,000 2,10,000 Motor Van 2,20,000
Outstanding
Current Liabilities Less: 10% (22,000) 1,98,000
Depreciation
Creditors 29,500 Computer 37,000
Less: 20% (7,400) 29,600
Depreciation
Current Assets
Closing Stock 15,600
Debtors 65,300
Less: Provision for (3,265) 62,035
Doubtful Debts
Cash at Bank 50,000
Cash in Hand 6,330
GST Receivable (Input IGST) 2,000
5,07,565 5,07,565

Working Notes:
(1)Calculation of Interest Outstanding on Loan
Amount of Bank Loan = 2, 00,000
Interest on Loan (2, 00,000 × 10%) 20,000
Less: Interest Paid (10,000)
Interest Outstanding 10,000

(2)GST Set off

GST Payable/ (Receivable)= Output CGST + Output SGST - Input IGST
= 4,000 + 4,000 - 10,000 = (2,000)
Question 21:
Following Trial Balance has been extracted from the books of Santosh on 31st
March, 2018:
Debit Credit
Particulars balances balances
(₹) (₹)
Drawings 20,000
Plant and Machinery 10,00,000
Furniture and Fixtures 1,20,000
Capital A/c 19,60,000
Sales 46,80,000
Loose Tools 2,00,000
Goodwill 1,00,000
Opening Stock 2,00,000
Returns Outward 40,000
Discount 60,000
Purchases 21,20,000
Returns Inward 80,000
Wages 10,00,000
Sundry Creditors 2,40,000
Provision for Doubtful Debts 20,000
Carriage Inwards 1,20,000
Salaries 4,16,000
General Expenses 7,20,000
Rent 1,44,000
Postage 40,000
Output IGST 1,00,000
Output CGST 50,000
Output SGST 50,000
Sundry Debtors 5,60,000
 Shri B. Barua 20,000
Cash and Bank Balances 1,40,000
Input IGST 1,10,000
Input CGST 45,000
Input SGST 45,500
Total 72,00,000 72,00,000

Following additional information is available:

 Stock on 31st March, 2018 was ₹3,08,000.
 Depreciation is to be charged on Plant and Machinery at 5% and Furniture
and Fixtures at 6%. Loose Tools are revalued at ₹1,60,000.
 Provision for Doubtful Debts is to be maintained at 5% on Sundry Debtors.
 Remuneration of ₹20,000 paid to Shri B. Barua, a temporary employee,
stands debited to his personal account and it is to be corrected.
 Unexpired insurance was ₹4,000.
You are to prepare Trading and Profit and Loss Account for the year ended
31st March, 2018 and Balance Sheet as at that date.
ANSWER:
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Opening Stock 2,00,000 By Sales 46,80,000
To Purchases 21,20,000 Less: Returns 80,000 46,00,000
Less: Returns 40,000 20,80,000 By Closing Stock 3,08,000
To Carriage Inwards 1,20,000
To Wages 10,00,000
To Gross Profit 15,08,000
16,80,600 16,80,600
 Profit & Loss Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To General Expenses 7,20,000 By Gross Profit 15,08,000
To Salaries 4,16,000 By Discount 60,000
Add: Outstanding 20,000 4,36,000 By Unexpired Insurance 4,000
Salaries
To Postage 40,000
To Provision for Doubtful Debts 8,000
To Rent 1,44,000
To Depreciation on:
Furniture & Fixtures 7,200
Plant & Machinery 50,000
Loose Tools 40,000 97,200
To Net Profit 1,26,800
15,72,000 15,72,000

Balance Sheet
as on March 31, 2018
Dr. Cr.
Amount Amount
Liabilities Assets
(₹) (₹)
Creditors 2,40,000 Furniture & 1,20,000
Fixtures
Capital 19,60,000 Less: 7,200 1,12,800
Depreciation
Less: Drawings 20,000 Plant & 10,00,000
Machinery
Add: Net Profit 1,26,800 20,66,800 Less: 50,000 9,50,000
Depreciation
Debtors 5,60,000
 Less: 28,000 5,32,000
Provision
Cash & Bank Balances 1,40,000
Closing Stock 3,08,000
Goodwill 1,00,000
Loose Tools 1,60,000
Prepaid Insurance 4,000
23,06,800 23,06,800

Question 22:
Prepare Trading and Profit and Loss Account for the year ended 31st March,
2018 and Balance Sheet as at that date from the following Trail Balance:
Dr. Cr.
Particulars
(₹) (₹)
Capital ...................................................................... … 1,00,000
Cash ...................................................................... 15,000 …
Bank Loan ...................................................................... … 20,000
Purchases ...................................................................... 1,20,000 …
Sales .............................................................. … 1,50,000
Sales Return ...................................................................... 10,000 …
Purchases ...................................................................... … 20,000
Return ..........
Establishment ...................................................................... 22,000 …
Expenses ..........
Taxes and ...................................................................... 5,000 ...
Insurance ..........
Bad Debts ...................................................................... 5,000 …
Provision for ...................................................................... … 7,000
Doubtful Debts ..........
Debtors ...................................................................... 50,000 …
Creditors ...................................................................... … 20,000
Commission ...................................................................... … 5,000
Deposits ..................................................................... 40,000 …
Opening Stock ...................................................................... 30,000 …
Drawings ...................................................................... 14,000 …
Furniture ...................................................................... 6,000 …
Bills ...................................................................... 32,000 …
Receivable ..........
Bills Payable ...................................................................... … 25,000
Input CGST ...................................................................... 10,000 ...
Input SGST ...................................................................... 10,000 …
Output CGST ...................................................................... … 8,000
Output SGST ...................................................................... … 8,000
Output IGST ...................................................................... … 6,000
Total 3,69,000 3,69,000

Adjustments:
 Salaries ₹ 1,000 and Taxes ₹ 2,000 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 and 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, 2018 is ₹ 45,000
 A fire occurred on 1st April, 2018 destroying goods costing ₹ 10,000. These
goods were purchased paying CGST and SGST @ 6% each.
ANSWER:
 Financial Statements
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Opening Stock 30,000 By Sales 1,50,000
To Purchases 1,20,000 Less: Return (10,000) 1,40,000
Less: Return (20,000) 1,00,000 By Closing Stock 45,000

To Gross Profit 55,000

1,85,000 1,85,000

Profit and Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Taxes and 5,000 By Gross Profit 55,000
Insurance
Add: Outstanding 4,000 By Commission 5,000
Taxes
Less: Prepaid (500) 8,500 Less: Advance (1,000) 4,000
Insurance Commission
To Salary Outstanding 1,000 By Interest Accrued on 2,100
Investment
To Bad Debts 5,000
Add: Bad Debts 10,000
Reserve
Less: Existing (10,000) 5,000
Reserve
To Depreciation on Furniture 600
To Outstanding Interest on 1,000
Loan
To Establishment Charges 25,000
To Net Profit 20,000
71,100 61,100

Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
(₹) (₹)
Capital 1,00,000 Investments 40,000
(Deposits)
Less: Drawings (14,000) Add: Accrued 2,100 42,100
Interest
Add: Net Profit 20,000 1,06,000 Furniture 6,000
Bank Loan 20,000 Less: 10% (600) 5,400
Depreciation
Add: Interest 3,000 23,000 Sundry Debtors 50,000
Outstanding
Sundry Creditors 20,000 Less: Provision for 40,000
(10,000)
Doubtful Debts
Advance Commission 1,000 Bills Receivable 32,000
Bills Payable 25,000 Prepaid Insurance 500
Salary Outstanding 1,000 Closing Stock 45,000
Taxes Outstanding 2,000 Cash in Hand 15,000
GST Payable (WN 2) 2,000
1,80,000 1,80,000
Working Notes:
(1) Loss of stock by fire has occurred on 1st April, 2018. Hence, it will not affect
the Balance Sheet dated 31st March, 2018.
(2)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

Question 23:
The Trial Balance of M/s. Taj & Co. as on 31st March, 2018 was as follows:
Dr. Cr.
Ledger Accounts
(₹) (₹)
Purchases 1,62,505
Sales 2,52,400
Provision for Doubtful Debts 5,200
Sundry Debtors 50,200
Sundry Creditors 30,526
Bills Payable 3,950
Opening Stock 26,725
Wages 23,137
Salaries 5,575
Furniture 7,250
Postage 4,226
Power and Fuel 1,350
Trade Expenses 5,831
Bad Debts 525
 Loan to Suraj @ 10% p.a. (1st December, 2017) 3,000
Cash in Hand and at Bank 10,000
Trade Expenses Accrued but not Paid 700
Drawings 4,452
Capital 12,000
Outstanding Wages 2,000
Input CGST 5,000
Input SGST 5,000
Output CGST 4,000
Output SGST 4,000
Total 3,14,776 3,14,776
Prepare Trading and Profit and Loss Account for the year ended 31st March,
2018 and Balance Sheet after considering the following information:
 Depreciation on Furniture @ 10% to be charged.
 Sundry Debtors include ₹500 due from a customer who has become
insolvent.
 Provision for Doubtful Debts @ 5% on Sundry Debtors is to be maintained.
 Goods costing ₹1,500, purchased paying CGST and SGST @ 9% each, were
destroyed by fire and insurance company admitted a claim for ₹1,000.
 Stock on 31st March, 2018 was ₹12,550.
ANSWER:
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Opening Stock 26,725 By Sales 2,52,400
To Purchases 1,62,505 By Loss by Fire 1,500
To Power & Fuel 1,350 By Closing Stock 12,550
To Wages 23,137
To Gross Profit 52,733
2,66,450 2,66,450
 Profit & Loss Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Depreciation on Furniture 725 Gross Profit 52,733
To Loss by Fire 770 Old Provision for 5,200
DD
To Bad Debts 525 Less: Provision for 2,485 2,715
DD
Add: Further Bad 500 1,025 Interest Receivable 100
Debts
To Postage 4,226
To Salaries 5,575
To Trade Expenses 5,831
To Net Profit 37,396
55,548 55,548

Balance Sheet
as on March 31, 2018
Dr. Cr.
Amount Amount
Liabilities Assets
(₹) (₹)
Creditors 30,526 Furniture & 7,250
Fixtures
Capital 12,000 Less: 725 6,525
Depreciation
Less: Drawings 4,452 Loan to Suraj 3,000
Add: Net Profit 37,396 44,944 Add: Interest 100 3,100
Receivable
Bills Payable 3,950 Debtors 50,200
Outstanding Wages 2,000 Less: Further 500
Bad Debts
Trade Expenses Accrued 700 Less: Provision 2,485 47,215
Closing Stock 12,550
Cash in Hand & at Bank 10,000
Insurance Claim 1,000
Input CGST 865
Input SGST 865
82,120 82,120

Question 24:
From the following Trial Balance of Mr. Gaurav and additional information
given, prepare Trading and Profit and Loss Account for the year ended 31st
March,2018 and Balance Sheet as at 31st March, 2018:
Dr. Cr.
Particulars
(₹) (₹)
Opening Stock 62,500
Capital 4,66,000
Debtors 75,000
Creditors 43,750
Purchases 5,00,000
Sales 8,75,000
Carriage 10,000
Wages and Salaries 10,000
Commission 16,750
Machinery 1,38,750
Furniture 25,000
Bad Debts Recovered 8,000
 Bills Receivable 37,500
Bills Payable 33,750
Land and Building 5,00,000
Insurance 21,250
10% Bank Load 50,000
Interest on Bank Loan 3,000
Bank 24,500
Drawings 62,500
Input CGST 15,000
Input SGST 15,000
Input IGST 10,000
Output CGST 19,000
Output SGST 19,000
Total 15,31,250 15,31,250

Adjustments:
 Value of the Closing Stock as on 31st March, 2018 is ₹50,000.
 Wages and Salaries outstanding are ₹12,500 and Insurance prepaid
is ₹5,000.
 Depreciate Machinery and Furniture @ 10% and 15% p.a. respectively.
Machinery included a machine which was purchased for ₹38,500 on 30th
September, 2017.
 Goods costing ₹ 10,000 were taken by the proprietor for his personal use
but no entry has been made in the books of account. These goods were
purchased paying IGST @ 18%.
ANSWER:
 Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Opening Stock 62,500 By Sales 8,75,000
To Purchases 5,00,000 By Closing Stock 50,000
Less: Drawings 10,000 4,90,000
To Carriage 10,000
To Wages & 31,250
Salaries
Add: Outstanding 12,500 43,750
To Gross Profit 3,18,750
9,25,000 9,25,000

Profit & Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Insurance 21,250 By Gross Profit 3,18,750
Less: Prepaid 5,000 16,250 By Bad Debts Recovered 8,000
To Interest on Loan 3,000 By Commission 16,750
Add: Outstanding 2,000 5,000
Interest
To Depreciation on:
Furniture 3,750
Machinery 11,950 15,700
To Net Profit 3,06,550
3,43,500 3,43,500
 Balance Sheet
as on March 31, 2018
Dr. Cr.
Amount Amount
Liabilities Assets
(₹) (₹)
Creditors 43,750 Machinery 1,38,750
Capital 4,66,000 Less: 11,950 1,26,800
Depreciation
Less: Drawings 74,300 Furniture 25,000
Add: Net Profit 3,06,550 6,98,250 Less: 3,750 21,250
Depreciation
Bills Payable 33,750 Bank 24,500
Outstanding Wages & 12,500 Bills Receivable 37,500
Salaries
10% Bank Loan 50,000 Closing Stock 50,000
Add: Outstanding 2,000 52,000 Debtors 75,000
Interest
Input IGST 200
Land & Building 5,00,000
Prepaid Insurance 5,000
8,40,250 8,40,250

Question 25:
Following is the Trial Balance of Shri Bansi Lal as on 31st March, 2018. You are
required to prepare Final Accounts:
 Dr. Cr.
Particulars
(₹) (₹)
Sundry Creditors ..................................................... … 63,000
Sundry Debtors ..................................................... 1,45,000 …
Capital A/c ..................................................... … 7,10,000
Drawings .................................................... 52,450 …
Insurance ..................................................... 6,000 …
General Expenses .................................................... 30,000 …
Salaries ..................................................... 1,50,000 …
Patents ..................................................... 75,000 …
Machinery ..................................................... 2,00,000 …
Freehold Land ..................................................... 1,00,000 …
Building ..................................................... 3,00,000 …
Stock on 1st April, 2017 ..................................................... 57,600 …
Carriage on Purchases ..................................................... 20,400 …
Carriage on Sales ..................................................... 32,000 …
Fuel and Power ..................................................... 47,300 …
Wages .................................................... 1,04,800 …
Returns Outward ..................................................... … 5,000
Returns Inward ................................................ 6,800 …
Sales ..................................................... … 9,87,800
Purchases ..................................................... 4,06,750 …
Cash at Bank ..................................................... 30,300 …
Cash in Hand ................................................. 5,400 …
Input CGST ............................................... 20,000 …
Input SGST ................................................. 20,000 …
Output CGST .................................................. … 22,000
Output SGST ..................................................... … 22,000
Total 18,09,800 18,09,800
Following adjustments are to be made:
 Stock on 31st March, 2018 was valued at ₹ 68,000.
 Provision for Doubtful Debts is to be created to the extent of 5% on
Debtors.
 Depreciate Machinery by 10% and Patents by 20%.
 Wages include a sum of ₹ 20,000 spent on the erection of a cycle shed for
employees and customers.
 Salaries for the month of March, 2018 amounted to ₹ 15,000 were unpaid.
 Insurance includes a premium of ₹ 1,700 on a policy expiring on 30th
September, 2018.
ANSWER:
Financial Statements of Shri Bansi Lal
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Opening Stock 57,600 By Sales 9,87,800
To Purchases 4,06,750 Less: Return (6,800) 9,81,000
Inwards
Less: Return (5,000) 4,01,750 By Closing Stock 68,000
Outwards
To Carriage on Purchases 20,400
To Fuel and Power 47,300
To Wages 1,04,800
Less: Building (20,000) 84,800
To Gross Profit 4,37,150
10,49,000 10,49,000
 Profit and Loss Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Carriage on Sales 32,000 By Gross Profit 4,37,150
To Depreciation on Machinery 20,000
Amortisation of Patents 15,000
To Insurance 6,000
Less: Prepaid Insurance
(1,700 × 6/12) (850) 5,150
To General Expenses 30,000
To Salaries 1,50,000
Add: Unpaid Salaries 15,000 1,65,000
To Provision for Doubtful Debts 7,250
To Net Profit 1,62,750
4,37,150 4,37,150

Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
(₹) (₹)
Capital 7,10,000 Patents 75,000
Less: Drawings (52,450) Less: 20% (15,000) 60,000
Amortisation
Add: Net Profit 1,62,750 8,20,300 Machinery 2,00,000
Sundry Creditors 63,000 Less: 10% (20,000) 1,80,000
Depreciation
Salaries Outstanding 15,000 Freehold Land 1,00,000
GST Payable (WN 2) 4,000
 Sundry Debtors 1,45,000
Less: Provision
for Doubtful (7,250) 1,37,750
Debts
Prepaid Insurance 850
Building 3,00,000
Add: Wages 20,000 3,20,000
Closing Stock 68,000
Cash in Hand 5,400
Cash at Bank 30,300
9,02,300 9,02,300

Working Notes:
(1) ₹ 20,000 is reduced from Wages and added in Building since such amount is a
Capital Expenditure.
(2) GST Set Off:
CGST Payable/(Receivable) = Output CGST - Input CGST
= 22,000 - 20,000 = 2,000
SGST Payable/(Receivable) = Output SGST - Input SGST
= 22,000 - 20,000 = 2,000
Total GST Payable = CGST Payable + SGST Payable
= 2,000 + 2,000 = ₹4,000

Question 26:
From the following Trial Balance of M/s. Ram Lal and Sons, prepare Trading,
Profit and Loss Account for the year ending 31st March, 2018 and a Balance
Sheet as on that date:
Dr. Cr.
Heads of Accounts
(₹) (₹)
Drawings 15,000
Capital 3,50,000
Plant and Machinery 2,05,000
Debtors 50,000
Creditors 28,000
Returns Inward 8,000
Returns Outward 7,000
Discount Allowed 7,000
Discount Received 6,000
Commission 15,000
Interest on Bank Loan 12,000
Furniture 55,000
Provision for Doubtful Debts 13,000
Wages 50,000
Salaries 45,000
Advertisement 15,000
Rent and Taxes 13,000
Purchases 2,60,000
Sales 4,00,000
Stock on 1st April, 2017 70,000
Carriage 5,000
Land and Building 98,000
Cash in Hand 8,000
Cash at Bank 20,000
10% Bank Loan as on 1st April, 2017 1,50,000
Input CGST 9,000
Input SGST 9,000
Output IGST 15,000
Total 9,69,000 9,69,000
Adjustments:
 The cost of stock on 31st March, 2018 was ₹37,000. However, its market
value was ₹35,000.
 Wages outstanding were ₹6,000 and salaries outstanding were ₹5,000 on
31st March, 2018.
 Depreciate Land and Building @ 212/12%, Plant and Machinery @ 10% p.a.
and Furniture @ 15 % p.a.
 Purchase includes purchase of machinery for ₹10,000 on 1st October, 2017.
 Debtors include bad debts of ₹2,000. Maintain a provision for doubtful
debts @ 10% on Debtors.
ANSWER:
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Opening Stock 70,000 By Sales 4,00,000
To Purchases 2,60,000 Less: Returns 8,000 3,92,000
Less: Machinery 10,000 By Closing Stock 35,000
Less: Returns 7,000 2,43,000
To Carriage 5,000
To Wages 50,000
Add: Outstanding 6,000 56,000
To Gross Profit 53,000
4,27,000 4,27,000
 Profit & Loss Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Interest on 12,000 By Gross Profit 53,000
Bank Loan
Add: Outstanding 3,000 15,000 By Discount Received 6,000
To Salaries 45,000 By Old Provision 13,000
for DD
Add: Outstanding 5,000 50,000 Less: Provision for 4,800 8,200
DD
To Advertisement 15,000 By Net Loss 81,500
To Commission 15,000
To Discount Allowed 7,000
To Further Bad Debts 2,000
To Rent and Taxes 13,000
To Depreciation on:
Land & Building 2,450
Plant & Machinery 21,000
Furniture 8,250 31,700
1,48,700 1,48,700

Balance Sheet
as on March 31, 2018
Dr. Cr.
Amount Amount
Liabilities Assets
(₹) (₹)
Creditors 28,000 Plant &Machinery 2,05,000
Wages Outstanding 6,000 Add: Purchases 10,000
Capital 3,50,000 Less: Depreciation 21,000 1,94,000
Less: Drawings 15,000 Furniture 55,000
Less: Net Loss 81,500 2,53,500 Less: Depreciation 8,250 46,750
Outstanding Salaries 5,000 Debtors 50,000
Bank Loan 1,50,000 Less: FBD 2,000
Add: Outstanding 3,000 1,53,000 Less: Provision 4,800 43,200
Interest
Closing Stock 35,000
Cash at Bank 20,000
Land &Building 98,000
Less: Depreciation 2,450 95,550
Input SGST 3,000
Cash in Hand 8,000
4,45,500 4,45,500

Question 27:
Following is the Trial Balance of Mr. S. Kapur on 31st March, 2018:
Dr. Cr.
Particulars
(₹) (₹)
Cash in Hand 10,800
Cash at Bank 2,32,600
Purchases 8,13,500
Sales 19,75,600
Returns Inward 13,600
Returns Outward 10,000
Wages 2,09,600
Fuel and Power 94,600
Carriage Outwards 64,000
Carriage on Purchases 40,800
Stock on 1st April, 2017 1,15,200
 Building 6,00,000
Computer 2,00,000
Machinery 4,00,000
Salaries 3,00,000
Patents 1,50,000
Advertisement Expenses 60,000
Insurance 12,000
Capital 16,00,000
Drawings 1,04,900
Sundry Debtors 2,90,000
Sundry Creditors 1,31,000
Input CGST 7,500
Input SGST 7,500
Output IGST 10,000
Total 37,26,600 37,26,600

Taking into account the following adjustments, prepare Trading and Profit and
Loss Account and Balance Sheet:
 Stock in Hand on 31st March, 2018 is ₹1, 36,000.
 Machinery is to be depreciated @ 10% and patents @ 20%.
 Salaries for the month of March, 2018 amounting to ₹30,000 were unpaid.
 Insurance includes a premium of ₹1,700 for the year ending 31st March,
2019.
 Wages include a sum of ₹40,000 spent on constructing a scooter shed for
employees and customers.
 Provision for Doubtful Debts is to be created to the extent of 5% on Sundry
Debtors.
ANSWER:
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Opening Stock 1,15,200 By Sales 19,75,600
To Purchases 8,13,500 Less: Returns 13,600 19,62,000
Less: Returns 10,000 8,03,500 By Closing Stock 1,36,000
To Carriage on Purchases 40,800
To Fuel & Power 94,600
To Wages 2,09,600
Less: Scooter 40,000 1,69,600
Shed
To Gross Profit 8,74,300
20,98,000 20,98,000

Profit & Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Insurance 12,000 To Gross Profit 8,74,300
Less: Prepaid 1,700 10,300
To Salaries 3,00,000
Add: 30,000 3,30,000
Outstanding
To Advertisement Expenses 60,000
To Carriage Outwards 64,000
To Provision for DD 14,500
 To Depreciation on:
Machinery 40,000
Patents 30,000 70,000
Net Profit 3,25,500
8,74,300 8,74,300

Balance Sheet
as on March 31, 2018
Dr. Cr.
Amount Amount
Liabilities Assets
(₹) (₹)
Creditors 1,31,000 Machinery 4,00,000
Capital 16,00,000 Less: 40,000 3,60,000
Depreciation
Less: Drawings 1,04,900 Patents 1,50,000
Add: Net Profit 3,25,500 18,20,600 Less: 30,000 1,20,000
Depreciation
Outstanding Salaries 30,000 Debtors 2,90,000
Less: Provision 14,500 2,75,500
Input SGST 5,000
Prepaid Insurance 1,700
Building 6,00,000
Add: Scooter 40,000 6,40,000
Shed
Computer 2,00,000
Cash in Hand 10,800
Closing Stock 1,36,000
Cash at Bank 2,32,600
19,81,600 19,81,600
Question 28:
Following is the Trial Balance of Shri Paras on 31st March, 2018:

Dr. Cr.
Particulars Particulars
₹ ₹
Sundry Debtors 1,45,000 Sundry Creditors 63,000
Drawings 52,450 Capital A/c 7,10,000
Insurance 6,000 Returns Outward 5,000
Rent 10,000 Sales 10,00,000
General Expenses 20,000 Output CGST 20,000
Salaries 1,50,000 Output SGST 20,000
Patents and 75,000
Patterns
Machinery 2,00,000
Freehold Land 1,00,000
Building 3,00,000
Stock (1st April, 57,600
2017)
Cash at Bank 26,300
Freight on 20,400
Purchases
Carriage on Sales 32,000
Fuel and Power 47,300
Wages 1,04,800
Returns Inward 19,000
Purchases 4,06,750
Cash in Hand 5,400
Input IGST 40,000
18,18,000 18,18,000
 Following adjustments are made:
 Stock on 31st March, 2018 was valued at ₹ 68,000.
 Provision for Doubtful Debts is to be made to the extent of 5% on Sundry
Debtors.
 Depreciate Machinery by 10%, Patents 20% and Building 5%.
 Wages include a sum of ₹ 20,000 spent on construction of a cycle shed.
 Salaries for the months of February and March, 2018 were not paid.
 Insurance includes a premium of ₹ 1,700 on a policy expiring on 30th
September, 2018.
 General Manager is entitled to a commission of 10% on the net profit after
charging his commission.
You are required to prepare Final Accounts after giving effects to the
adjustments.
ANSWER:
Financial Statements of Shri Paras
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Opening Stock 57,600 By Sales 9,87,800
To Purchases 4,06,750 Less: Return (6,800) 9,81,000
Inwards
Less: Return (5,000) 4,01,750 By Closing Stock 68,000
Outwards
To Carriage on Purchases 20,400
To Fuel and Power 47,300
To Wages 1,04,800
Less: Building (20,000) 84,800
To Gross Profit 4,37,150
10,49,000 10,49,000
 Profit and Loss Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Insurance 6,000 By Gross Profit 4,37,150
Less: Prepaid Insurance 5,150
(1,700 × 1/2) (850)
To General Expenses 30,000
To Salaries 1,50,000
Add: Salaries Outstanding
(1,50,000 × 2/10) 30,000 1,80,000
To Depreciation on:
Machinery 20,000
Patents 15,000
Building 16,000 51,000
To Carriage on Sales 32,000
To Provision for Bad and Doubtful 7,250
Debts
To Manager’s Commission 11,977
To Net Profit 1,19,773
4,37,150 4,37,150

Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
(₹) (₹)
Capital 7,10,000
Add: Net Profit 1,19,773 Freehold Land 1,00,000
Less: Drawings (52,450) 7,77,323 Building 3,00,000
Sundry Creditors 63,000 Add: Wages 20,000
Salaries Outstanding 30,000 3,20,000
Manager’s Commission 11,977 Less: 5% Depreciation (16,000) 3,04,000
Payable
Patents 75,000
Less: 20% Depreciation (15,000) 60,000
Machinery 2,00,000
Less: 10% Depreciation (20,000) 1,80,000
Closing Stock 68,000
Sundry Debtors 1,45,000
Less: Provision for (7,250) 1,37,750
Doubtful Debts
Prepaid Insurance 850
Cash at Bank 26,300
Cash in Hand 5,400
8,82,300 8,82,300

Question 29:
Following is the Trial Balance of Atam Prakash as on 31st March, 2018:

Name of the Accounts Debit Credit

Capital A/c … 8,00,000
Drawings A/c 60,000 …
Stock on 1st April, 2017 4,50,000 …
Purchases 26,00,000 …
Sales … 31,00,000
Furniture 1,00,000 …
Sundry Debtors 4,00,000 …
Freight and Octroi 46,000 …
Trade Expenses 5,000 …
 Salaries 55,000 …
Rent 24,000 …
Advertisement Expenses 50,000 …
Insurance Premium 4,000 …
Commission … 13,000
Discount 2,000 …
Bad Debts 16,000 …
Provision for Doubtful … 9,000
Debts
Creditors … 2,00,000
Cash in Hand 52,000 …
Bank 58,000 …
Land and Building 2,00,000 …
Total 41,22,000 41,22,000

Adjustments:
 Stock on 31st March, 2018 was valued at ₹ 5, 30,000.
 Salaries have been paid so far for 11 months only.
 Unexpired insurance is ₹ 1,000
 Commission earned but not yet received amounting to ₹ 1,220 plus IGST @
12% is to be recorded in books of account.
 Provision for Doubtful Debts is to be bought up 3% of Sundry Debtors.
 Manager is to be allowed a commission of 10% on net profits after charging
such commission.
 Furniture is depreciated @ 10% p.a.
 Only one-fourth of advertisement expenses are to be written off.
Prepare Trading and Profit and Loss Account for the year ended 31st
March, 2018 and Balance Sheet as on that date.
ANSWER:
Financial Statement of Atam Prakash
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Opening Stock 4,50,000 By Sales 31,00,000
To Purchases 26,00,000 By Closing Stock 5,30,000
To Freight and Octroi 46,000
To Gross Profit 5,34,000

36,30,000 36,30,000

Profit and Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Trade Expenses 5,000 By Gross Profit 5,34,000
To Salaries 55,000 By 13,000
Commission
Add: Outstanding 5,000 60,000 Add: Accrued 1,220 14,220
Salaries Commission

(55,000 × 1/11)
To Rent 24,000
To Advertising To 12,500
Expenses (50,000×14)
To Insurance 4,000
Premium
Less: Prepaid (1,000) 3,000
Insurance
 To Discount 2,000
To Bad Debts 16,000
Add: Provision for 12,000
Doubtful Debts
28,000
Less: Existing (9,000) 19,000
Provision
To Depreciation on furniture 10,000
To Manager’s Commission 37,520
To Net Profit 3,75,200
5,48,220 5,48,220

Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
(₹) (₹)
Capital 8,00,000 Furniture 1,00,000
Less: Drawings (60,000) Less: 10% (10,000) 90,000
(WN2) Depreciation
Add: Net Profit 3,75,200 11,15,200 Sundry Debtors 4,00,000
Creditors 2,00,000 Less: Provision for (12,000) 3,88,000
Doubtful Debts
Manager’s Commission 37,520 Land and Building 2,00,000
Payable
Salaries Outstanding 5,000 Closing Stock 5,30,000
GST Payable (Output 146 Bank 58,000
IGST)
Cash in Hand 52,000
Prepaid Insurance 1,000
Accrued Commission 1,220
 Advertisement 37,500
Expenses (50,000×34) 146
GST Receivable
13,57,866 13,57,866

Working Notes:
WN1: Advance for Furniture is for furniture of proprietor's residence. Therefore,
it will transfer to drawings.
WN2: IGST on commission has not been received being accrued commission.
Hence, GST of ₹146 has been taken as GST payable and second as GST
receivable.
Question 30:
Following balances were extracted from the books of Modern Traders on
31st March, 2018:
Particulars ₹ Particulars ₹
Captial 8,50,000 Sales 12,00,000
Drawings 50,000 Postage and Telegrams 8,000
Plant and Machinery 4,00,000 Bad Debts 4,000
Accumulated Depreciation 90,000 Provision for Doubtful Debts 8,000
Stock on 1st April, 2017 1,50,000 Discount Received 4,000
Purchases 8,20,000 Rent Revenue 12,000
Sundry Debtors 2,06,000 Insurance 7,000
Furniture 50,000 Salaries 2,00,000
Freight Inwards 20,000 Wages 13,000
Carriage Outwards 5,000 Cash in Hand 62,000
Rent, Rates and Taxes 46,000 Cash at Bank 2,55,000
Printing and Stationery 8,000 General Reserve 50,000
Sundry Creditors 95,000 Input IGST 20,000
Input CGST 15,000 Output IGST 45,000
Input SGST 15,000
 Prepare Profit and Loss Account for the year ended 31st March, 2018 and the
Balance Sheet as at that date giving effect to the following:
 Closing Stock was ₹ 1, 50,000.
 Wages Outstanding were ₹ 5,000.
 Provision for Doubtful Debts is to be maintained at 5% of Sundry Debtors.
 Depreciate Plant and Machinery by 10% and Furniture by 5% on Straight
Line Method.
 Sundry Creditors include ₹ 10,000 due to Nayak who is also included in
Sundry Debtors at ₹ 15,000.
 New furniture for ₹ 12,000 was purchased on 1st April, 2017. Old furniture
valued at ₹ 2,000 was exchanged and balance was paid by cheque.
Purchase of furniture was recorded at the net value of furniture, i.e., ₹
10,000. The firm had purchased this furniture paying IGST @ 18%.
 A fire occurred on 27th March, 2018 destroying stock costing ₹ 10,000,
which were purchased paying CGST and SGST @ 9% each. Insurance
company conveyed acceptance of claim of ₹ 7,500 on 10th April, 2018. Final
accounts were prepared on 1st July, 2018.
ANSWER:
Financial Statement of Modern Traders
Trading Account
for the year ended March 31, 2017
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Opening Stock 1,50,000 By Sales 12,00,000
To Purchases 8,20,000 By Closing Stock 1,50,000
To Freight Inwards 20,000
To Wages 13,000
Add: Outstanding 5,000 18,000
Wages
To Gross Profit 3,42,000
13,50,000 13,50,000
 Profit and Loss Account
for the year ended March 31, 2017
Dr. Cr.
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Postage and Telegrams 8,000 By Gross Profit 3,42,000
To Bad Debts 4,000 By Discount Received 4,000
Add: Provision for 10,300 By Rent Revenue 12,000
Doubtful Debts
Less: Existing Provision (8,000) 6,300
To Carriage Outwards 5,000
To Rent, Rates and Taxes 46,000
To Insurance 7,000
Less: Prepaid Insurance (1,000) 6,000
To Salaries 2,00,000
To Printing and Stationery 8,000
To Depreciation on:
Machinery 45,000
Furniture 2,500 47,500
To Net Profit 31,200
3,58,000 3,58,000

Balance Sheet
as on March 31, 2017
Amount
Liabilities Amount Assets
(Rs) (Rs)
Capital 9,00,000 Plant and 4,50,000
Machinery
Less: Accumulated
Less: Drawings (50,000) Depreciation 3,15,000
(1,35,000)
(90,000 + 45,000)
 Add: Net Profit 31,200 8,81,200 Furniture 50,000
Reserve Fund 50,000 Less: 5% (2,500) 47,500
Depreciation
Sundry Creditors 90,000 Closing Stock 1,50,000
Wages Outstanding 5,000 Sundry Debtors 2,06,000
Less: Provision for (10,300) 1,95,700
Doubtful Debts
Prepaid Insurance 1,000
Cash at Bank 2,55,000
Cash in Hand 62,000
10,26,200 10,26,200

Note: Advance paid by proprietor for Plant and Machinery out of his personal
bank account will increase the Capital A/c and Plant & Machinery A/c balance
by Rs 50,000. And also increase in the amount of depreciation by Rs 5,000.

Question 31:
On 31st March, 2018 the following Trial Balance was extracted from the books
of Mohan:
Debit Balances Credit Balances
Particulars
(₹) (₹)
Capital 3,00,000
Plant and Machinery 50,000
Debtors 2,00,000
Creditors 1,00,000
Loan 95,000
Interest on Loan 3,000
Cash 20,000
Provision for Doubtful Debts 7,000
Stock on 1st April, 2017 68,000
 Motor Vehicles 1,00,000
Bank 35,000
Land and Building 1,20,000
Bad Debts 5,000
Purchases 6,60,000
Sales 11,00,000
Purchases Return 15,000
Sales Return 80,000
Carriage Outwards 25,000
Carriage Inwards 30,000
Salaries 90,000
Rent and Insurance 30,000
Advertising 35,000
Discount Received 5,000
General Expenses 34,000
Bills Receivable 60,000
Bills Payable 20,000
Rent Received 3,000
Total 16,45,000 16,45,000

Prepare Trading and Profit and Loss Account for the year ended 31st March,
2018 and Balance Sheet as at that date after taking into account the following:
 Stock as at 31st March, 2018 was valued at ₹70,000.
 All debtors are considered good for recovery.
 Depreciate Motor Vehicles by 20%.
 Bank intimation of customer's cheque of ₹10,000 being dishonored is not
recorded in the books.
 Travelling expenses of ₹5,000 paid to sales person was wrongly debited to
his Personal Account and was included in debtors.
  Amount of ₹6,000 received from Ronit was credited to his account and was
included in creditors. This amount was written off as bad debt in earlier
years.
 Drawings included an amount of ₹2,000 being amount drawn in cash. It
was used by Mohan for Purchase of stationery used in business.
ANSWER:
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Opening Stock 68,000 By Sales 11,00,000
To Purchases 6,60,000 Less: Returns 80,000 10,20,000
Less: Returns 15,000 6,45,000 By Closing Stock 70,000
To Carriage Inwards 30,000
To Gross Profit 3,47,000
10,90,000 10,90,000

Profit & Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Advertising 35,000 By Gross Profit 3,47,000
To Bad Debts 5,000 By Bad-Debts Recovered 6,000
To Carriage Outwards 25,000 By Discount Received 5,000
To Depreciation on Motor 20,000 By Provision for Doubtful 7,000
Vehicles Debts
To General Expenses 34,000 By Rent Received 3,000
To Interest on Loan 3,000
 To Stationery 2,000
To Salaries 90,000
To Rent & Insurance 30,000
To Travelling Expenses 5,000
To Net Profit 1,19,000
3,68,000 3,68,000

Balance Sheet
as on March 31, 2018
Dr. Cr.
Amount Amount
Liabilities Assets
(₹) (₹)
Creditors 94,000 Cash at Bank 25,000
(1,00,000 – 6,000) (35,000 – 10,000)
Capital 3,00,000 Cash in Hand 20,000
Less: Drawings 48,000 Motor Vehicles 1,00,000
Add: Net Profit 1,19,000 11,15,200 Less: 20,000 80,000
Depreciation
Loan 95,000 Debtors 2,00,000
Bills Payable 20,000 Less: Travelling 5,000
Expenses
Add: Dishonor 10,000 2,05,000
Closing Stock 70,000
Land & Building 1,20,000
Bills Receivable 60,000
5,80,000 5,80,000