Asok Nadhani-Accountancy-Final Accounts: Asok Nadhani-Accountancy-Final Accounts- Practical Problems 1

Practical Problems

By Asok Nadhani

Illustration: 1

Mr. X had prepared the following Trial Balance from his Ledger as on 31.3.2010:

Particulars	Dr. (Rs.)	Cr. (Rs.)
Stock as on 1st April,2009	5,00,000
Purchases and Returns	29,95,000	45,000
Sales and Return	55,000	40,45,000
Cash in Hand	2,55,000
Cash at Bank	5,05,000
Trader’s Capital		22,59,200
Rates and Taxes	50,000
Drawings	45,000
Salaries	1,00,000
Postage and Telegram	1,05,000
Insurance	94,000
Salesman Commission	78,000
Printing and Stationery	95,000
Advertisement	1,74,000
Furniture and Fittings	5,50,000
Motor Car	48,000
Discounts	55,500	1,00,000
General expenses	69,700
Carriage Inward	10,000
Carriage Outward	25,000
Wages	50,000
Sundry Debtors/Creditors	10,00,000	4,10,000
Total	68,59,200	68,59,200

You are required to prepare Trading and Profit & Loss Account for the year ended on 31st March, 2010 and Balance Sheet as on that date after making the necessary adjustments.

You are provided with the following information:

(i) Closing Stock as on 31st March, 2010 Rs.1,45,000.

(ii) Mr. X had withdrawn goods worth Rs.50,000 during the year.

(iii) Purchases include Purchase of furniture worth Rs.1,00,000.

(iv) Debtors include Rs.50,000 bad debts.

(v) Sales include goods worth Rs.1,50,000 sent out to AKN & Co. on approval and remained unsold as on 31st March, 2010. The cost of the goods was Rs.1,00,000.

(vi) Provision for Bad debts is to be created at 5% of Sundry Debtors.

(vii) Depreciate Furniture and Fittings by 10% and Motor Car by 20%.

(viii)The salesman is entitled to a commission of 10% on total sales.

Solution:

Trading and Profit and Loss Account of Mr. X

For the year ended 31st March, 2010

Particulars		Amount	Particulars		Amount
		(Rs.)			(Rs.)
To Opening Stock		5,00,000	By Sales	40,45,000
To Purchases	29,95,000		Less : Returns	55,000
Less : Returns	45,000			39,90,000
	29,50,000		Less : Goods sent on approval	1,50,000	38,40,000
Less: For personal use.	50,000		By Closing Stock	1,45,000
	29,00,000		Add: Cost of goods sent on
Less: Purchase of furniture.	1,00,000	28,00,000	approval	1,00,000	2,45,000
To Carriage Inward		10,000
To Wages		50,000
To Gross Profit c/d		7,25,000
		40,85,000			40,85,000
To Rates and Taxes		50,000	By Gross Profit b/d		7,25,000
To Salaries		1,00,000	By Discounts Received		1,00,000
To Postage and Telegram		1,05,000	By Net Loss		5,02,300
To Salesman’s commission	78,000
Add: Outstanding	3,16,500	3,94,500
To Insurance		94,000
To Advertisement		1,74,000
To Printing and Stationery		95,000
To Bad Debts		50,000
To Provision for Doubtful Debts		40,000
(Rs.8,00,000 x 5/100)
To Discounts Allowed		55,500
To General Expenses		69,700
To Carriage Outward		25,000
To Depreciation:
Furniture and Fittings	65,000
Motor Car	9,600	74,600
		13,27,300			13,27,300

Balance Sheet of Mr. X

As on 31^st March, 2010.

Liabilities			Amount	Assets		Amount
			(Rs.)			(Rs.)
Capital		22,59,200		Furniture & Fittings	5,50,000
Less : Net Loss		5,02,300		Addition	1,00,000
		17,56,900			6,50,000
Less: Drawings				Less: Depreciation @ 10 % p.a.	65,000	5,85,000
Opening Figure	45,000			Motor Car	48,000
Goods withdrawn	50,000	95,000	16,61,900	Less: Depreciation @ 20 % p.a.	9,600	38,400
Sundry Creditors			4,10,000	Sundry Debtors	10,00,000
Outstanding salesman’s comm.			3,16,500	Less: Sales on approval	1,50,000
					8,50,000
				Less: Bad Debts	50,000
					8,00,000
				Less: Prov. for Dubt. Debt @ 5%	40,000	7,60,000
				Cash in Hand		2,55,000
				Cash at Bank		5,05,000
				Closing stock	1,45,000
				Add: Cost of goods sent on approval	1,00,000	2,45,000
			23,88,400			23,88,400

Illustration: 2

Prepare Trading and Profit and Loss A/c also Balance Sheet for the year ended on 31^st March, 2010 of Fibres Packaging Industries from the following Trial Balance and adjustments:

Particulars	Rs.	Particulars	Rs.
Sundry Debtors	50,000	Creditors	64,000
Cash in Hand	2,000	Sales	2,16,000
Furniture	3,500	Capital A/c	20,000
Motor Car	15,000
Purchases	1,25,000
Sales Return	2,500
Salaries	8,000
Opening Stock	10,000
Car Expenses	6,500
Rent and Taxes	1,000
Insurance	2,500
Cash at Bank	4,000
Machinery	25,000
Wages	23,000
General Expenses	4,500
Carriage Inward	2,000
Carriage Outward	1,500
Power and Fuel	6,000
Drawing A/c	8,000
	3,00,000		3,00,000

Following addition information is available:

(a) Goods worth Rs.5,000 were distributed as free sample.

(b) Rs.1,000 paid for Machinery erection was debited to wages A/c.

(d) Depreciate Furniture and Machinery by 15% and Motor Car by 20%.

(e) Commission income outstanding Rs.3,000.

(f) Insurance Premium includes Rs.500 paid for Personal Insurance of the Proprietor.

(g) 50% of Motor Car Expenses and Depreciation is being charged to Proprietor A/c.

(h) Closing Stock was valued at Rs.37,000 on 31st March, 2010.

Solution:

Trading and Profit and Loss A/c of Fibres Packaging Industries

For the year 31^st March, 2010

Particulars		Amount (Rs.)	Particulars		Amount (Rs.)
To Opening Stock		10,000	By Sales	2,16,000
To Purchases		1,25,000	Less: Return	2,500	2,13,500
To Wages	23,000		By Goods distributed as sample		5,000
Less: Paid for erection	1,000	22,000	By Closing Stock		37,000
To Carriage inward		2,000
To Power and fuel		6,000
To Gross profit c/d		90,500
		2,55,500			2,55,500
To Salary		8,000	By Gross profit b/d		90,500
To Car expenses	6,500		By Commission receivable		3,000
Less: 50% of car expenses made for proprietor	3,250	3,250
To Rent and Taxes		1,000
To Insurance	2,500
Less: Personal insurance for proprietor	500	2,000
To General expenses		4,500
To Carriage outward		1,500
To Advertisement (free sample)		5,000
To Bad debts		2,000
To Provisions for bad debts		4,800
To Depreciation :
Machinery	3,900
Furniture	525
Motor car	1,500	5,925
To Net profit		55,525
		93,500			93,500

Balance Sheet

As on 31^st March, 2010

Liabilities		Amount	Assets		Amount
		(Rs.)			(Rs.)
Capital	20,000		Furniture	3,500
Add: Profit	55,525		Less: Depreciation @ 15% p.a.	525	2,975
	75,525		Motor car	15,000
Less : Drawings	8,000		Less: Depreciation @ 20% p.a.	3,000	12,000
	67,525		Machinery	25,000
Less: Insurance.	500		Add: Erection Charge	1,000
	67,025			26,000
Less: Car exp	3,250		Less: Depreciation @ 15% p.a.	3,900	22,100
	63,775		Sundry debtors	50,000
Less: Depreciation on Motor Car.	1,500	62,275	Less: Bad debts	2,000
Sundry Creditors		64,000		48,000
			Less: Prov. For bad debts @ 10% p.a.	4,800	43,200
			Closing stock		37,000
			Com. outstanding		3,000
			Cash in Hand		2,000
			Cash at Bank		4,000
		1,26,275			1,26,275

Illustration: 3

The following Trial Balance of Mr. Y as at 31st December, 2010 is given to you:

Debit Balance	Amount	Credit Balance	Amount
	(Rs.)		(Rs.)
Opening Stock	10,000	Capital	50,000
Land and Buildings	35,000	Loan from Mr. Amit @ 9% p.a.	30,000
Machinery	50,000	Sundry Creditors	9,600
Furniture & Fixtures	5,000	Purchase Returns	2,000
Purchases	1,02,850	Miscellaneous Receipts	2,000
Salaries	11,000	Sales	2,06,400
General Expenses	2,500
Rent	3,000
Postage, Telegrams, etc.	1,500
Stationery	2,000
Wages	26,000
Freight on Purchases	2,800
Carriage on Sales	3,000
Repairs	4,000
Sundry Debtors	30,000
Bad Debts	1,000
Cash in Hand	250
Cash at Bank	5,000
Sales Returns	5,100
	3,00,000		3,00,000

The following further information is given:

(a) Wages for December, 2010, amounting to Rs. 1,000 have not yet been paid.

(b) Included in General Expenses is insurance premium, Rs.600, paid for the year ending March 31, 2011.

(d) Depreciation is to be charged as follows :

Land and buildings 5%, Machinery 10% and Furniture and Fixtures 15%

(e) The loan from Mr. Amit was taken on 1st July, 2010. Interest has not been paid yet.

(f) The value of stock on hand on 31st December, 2010, was Rs.15,000.

Prepare Trading and Profit and Loss Account for the year ended 31^st December, 2010 also Balance Sheet as on that date.

Solution:

Trading Account of Mr. Y

For the year ended December 31, 2010

Particulars		Amount (Rs.)	Particulars		Amount (Rs.)
To Opening Stock		10,000	By Sales	2,08,550
To Purchases	1,05,000		Less : Returns	5,100	2,03,450
Less : Returns	2,000	1,03,000	By Closing Stock		15,000
To Wages	26,000
Add : Outstanding	1,000	27,000
To Freight on Purchases		2,800
To Gross Profit c/d
(Transferred to Profit & Loss A/c)		75,650
		2,18,450			2,18,450
To Salaries		11,000	By Gross Profit b/d		75,650
To General Expenses	2,500		By Miscellaneous Receipts		2,000
Less: Prepaid Insurance	150	2,350
To Rent		3,000
To Postage & Telegrams		1,500
To Stationery		2,000
To Carriage on Sales		3,000
To Repairs		4,000
To Bad Debts		1,000
To Provision For Doubtful Debts		1,500
To Depreciation :
Land and Buildings	1,750
Machinery	5,000
Furniture & Fixtures	750	7,500
To Interest [Rs.(30,000 x 9%) x ½]		1,350
To Net Profit		39,450
(Transferred to Capital A/c)
		77,650			77,650

Balance Sheet

As on 31^st December, 2010

Liabilities		Amount (Rs.)	Assets		Amount (Rs.)
Capital Account	50,000		Land & Buildings	35,000
Add: Net Profit	39,450	89,450	Less: Depreciation @5 % p.a.	1,750	33,250
Mr. Amit Loan	30,000		Machinery	50,000
Add: Interest [Rs.(30,000 x 9%) x ½]	1,350	31,350	Less: Depreciation @10 % p.a.	5,000	45,000
Wages Outstanding		1,000	Furniture & Fixtures	5,000
Sundry Creditors		9,600	Less: Depreciation @15 % p.a.	750	4,250
			Sundry Debtors	30,000
			Less: Provision for dubt. debts	1,500	28,500
			Cash in Hand		250
			Cash at Bank		5,000
			Prepaid Insurance		150
			Closing Stock		15,000
		1,31,400			1,31,400

Asok Nadhani-Accountancy-Final Accounts

Saturday, 8 February 2014

Asok Nadhani-Accountancy-Final Accounts- Practical Problems 1

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