Chapter 1 Financial Statements I Solutions
Question - 11 : - From the following balances taken from the books of Simmi and Vimmi Ltd.
for the year ending March 31, 2017, calculate the gross profit.
| | Rs |
| Closing stock | 2,50,000 |
| Net sales during the year | 40,00,000 |
| Net purchases during the year | 15,00,000 |
| Opening stock | 15,00,000 |
| Direct expenses | 80,000 |
Answer - 11 : -
| Trading Account as on March 31, 2017 |
| Dr. | | | Cr. |
| Particulars | Amount Rs | Particulars | Amount Rs |
| Opening Stock | 15,00,000 | Net Sales | 40,00,000 |
| Net Purchases | 15,00,000 | Closing Stock | 2,50,000 |
| Direct Expenses | 80,000 | | |
| Gross Profit | 11,70,000 | | |
| | 42,50,000 | | 42,50,000 |
| | | | |
Question - 12 : - From the following balances extracted from the books of M/s Ahuja and Nanda. Calculate the amount of:
(a) Cost of goods available for sale
(b) Cost of goods sold during the year
(c) Gross Profit
| | Rs |
| Opening stock | 25,000 |
| Credit purchases | 7,50,000 |
| Cash purchases | 3,00,000 |
| Credit sales | 12,00,000 |
| Cash sales | 4,00,000 |
| Wages | 1,00,000 |
| Salaries | 1,40,000 |
| Closing stock | 30,000 |
| Sales return | 50,000 |
| Purchases return | 10,000 |
Answer - 12 : -
(a) Cost of Goods Sold Available for Sales
Or
Cost of Goods Manufactured = Opening Stock + Net Purchases + Wages
= 25,000 + 10,40,000 + 1,00,000
= Rs 11,65,000
(b) Cost of Goods Sold = Opening Stock + Net Purchases + Wages – Closing Stock
= 25,000 + 10,40,000 + 1,00,000 – 30,000
= Rs 11,35,000
Or
Cost of Goods Sold = Net Sales – Gross Profit
= 15,50,000 – 4,15,000
= Rs 11,35,000
(c)
| Trading Account |
| Dr. | | | Cr. |
| Particulars | Amount Rs | Particulars | Amount Rs |
| Opening Stock | 25,000 | Sales | |
| Purchases | | | Add: Credit Sales | 12,00,000 | |
| Add: Credit Purchases | 7,50,000 | | | Add: Cash Sales | 4,00,000 | |
| Add: Cash Purchases | 3,00,000 | | | | 16,00,000 | |
| | 10,50,000 | | | Less: Sales Return | (50,000) | 15,50,000 |
| Less: Purchases Return | (10,000) | 10,40,000 | | | | |
| Wages | | 1,00,000 | | Closing Stock | | 30,000 |
| Gross Profit | | 4,15,000 | | | | |
| | | 15,80,000 | | | | 15,80,000 |
| | | | | | | | |
Gross Profit Rs 4,15,000
| | Rs |
| Opening stock | 50,000 |
| Net sales | 11,00,000 |
| Net purchases | 6,00,000 |
| Direct expenses | 60,000 |
| Administration expenses | 45,000 |
| Selling and distribution expenses | 65,000 |
| Loss due to fire | 20,000 |
| Closing stock | 70,000 |
Answer - 13 : -
| Trading Account as on March 31, 2017 |
| Dr. | | | Cr. |
| Particulars | Amount Rs | Particulars | Amount Rs |
| Opening Stock | 50,000 | Net Sales | 11,00,000 |
| Net Purchases | 6,00,000 | Closing Stock | 70,000 |
| Direct Expenses | 60,000 | | |
| Gross Profit | 4,60,000 | | |
| | 11,70,000 | | 11,70,000 |
| | | | |
| Operating Profit | = | Sales – (Opening Stock + Net Purchases + Direct Expenses + Administration Expenses + Selling and Distribution Expenses) + Closing Stock |
| | = | 11,00,000 – (50,000 + 6,00,000 + 60,000 + 45,000 + 65,000) + 70,000 |
| | = | Rs 3,50,000 |
Question - 14 : - Operating profit earned by M/s Arora and Sachdeva in 2016-17 was Rs 17,00,000. Its non-operating incomes were Rs 1,50,000 and non-operating expenses were Rs 3,75,000. Calculate the amount of net profit earned by the firm.
Answer - 14 : -
Net Profit = Operating Profit + Non-operating Income – Non-operating Expenses
= 17,00,000 + 1,50,000 – 3,75,000
= Rs 14,75,000
Net profit earned by M/S Arora and Sachdeva in 2016–17 is Rs 14,75,000.
Question - 15 : - The following are the extracts from the trial balance of M/s Bhola and Sons as on March 31, 2017 | Account title | Debit Rs | Credit Rs |
| Opening Stock | 2,00,000 | |
| Purchases | 8,10,000 | |
| Sales | | 10,10,000 |
| | 10,10,000 | 10,10,000 |
| | | |
(Only relevant items)
Closing Stock as on date was valued at Rs 3,00,000.
You are required to record the necessary journal entries and show how the above items will appear in the trading and profit and loss account and balance sheet of M/s Bhola and Sons.
Answer - 15 : -
| Books of M/s Bhola and Sons Journal |
| Date | | Particulars | | L.F. | Debit Amount Rs | Credit Amount Rs |
| 2017 | | | | | | |
| Mar.31 | Trading A/c | Dr. | | 10,10,000 | |
| | | To Opening Stock A/c | | | | 2,00,000 |
| | | To Purchases A/c | | | | 8,10,000 |
| | (Balances from Purchases Account and Stock Account transferred to Trading Account) | | | |
| | | | | | | |
| Mar.31 | Sales A/c | Dr. | | 10,10,000 | |
| | Closing Stock A/c | | | 3,00,000 | |
| | | To Trading A/c | | | | 13,10,000 |
| | (Balance from sales and closing stock transferred to Trading Account) | | | |
| | | | | | | |
| Mar.31 | Trading A/c | Dr. | | 3,00,000 | |
| | | To Profit and Loss (Gross Profit) A/c | | | | 3,00,000 |
| | (Balance of Trading Account (gross profit) transferred to Profit and Loss Account) | | | |
| | | | | |
| Trading Account as on March 31, 2017 |
| Dr. | | | Cr. |
| Particulars | Amount Rs | Particulars | Amount Rs |
| Opening Stock | 2,00,000 | Sales | 10,10,000 |
| Purchases | 8,10,000 | Closing Stock | 3,00,000 |
| Profit and Loss A/c – Gross Profit | 3,00,000 | | |
| | | | |
| | 13,10,000 | | 13,10,000 |
| | | | |
| Balance Sheet as on March 31, 2017 |
| Liabilities | Amount Rs | Assets | Amount Rs |
| | | Closing Stock | 3,00,000 |
| | | | |
| | | | |
Question - 16 : - Prepare trading and profit and loss account and balance sheet, as on March 31, 2017 : | Account Title | Amount Rs | Account Title | Amount Rs |
| Machinery | 27,000 | Capital | 60,000 |
| Sundry debtors | 21,600 | Bills payable | 2,800 |
| Drawings | 2,700 | Sundry creditors | 1,400 |
| Purchases | 58,500 | Sales | 73,500 |
| Wages | 15,000 | | |
| Sundry expenses | 600 | | |
| Rent and taxes | 1,350 | | |
| Carriage inwards | 450 | | |
| Bank | 4,500 | | |
| Openings stock | 6,000 | | |
Closing stock, as on March 31, 2017 Rs 22,400.
Answer - 16 : -
| Trading Account as on March 31, 2017 |
| Dr. | | | Cr. |
| Particulars | Amount Rs | Particulars | Amount Rs |
| Opening Stock | 6,000 | Sales | 73,500 |
| Purchases | 58,500 | Closing Stock | 22,400 |
| Wages | 15,000 | | |
| Carriage Inwards | 450 | | |
| Profit and Loss (Gross Profit) | 15,950 | | |
| | 95,900 | | 95,900 |
| | | | |
| Profit and Loss Account as on March 31, 2017 |
| Dr. | Cr. |
| Particulars | Amount Rs | Particulars | Amount Rs |
| Sundry Expenses | 600 | Trading (Gross Profit) | 15,950 |
| Rent and Taxes | 1,350 | | |
| | | | |
| Net Profit | 14,000 | | |
| | 15,950 | | 15,950 |
| | | | |
| | | | | |
| Balance Sheet as on March 31, 2017 |
| Liabilities | Amount Rs | Assets | Amount Rs |
| Capital | 60,000 | | Fixed Assets | |
| | Add: Net Profit | 14,000 | | Machinery | 27,000 |
| | | 74,000 | | | |
| | Less: Drawings | 2,700 | 71,300 | Current Assets | |
| | | | | Bank | 4,500 |
| Sundry Creditors | | 1,400 | Closing Stock | 22,400 |
| Bills Payable | | 2,800 | Sundry Debtors | 21,600 |
| | | | 75,500 | | 75,500 |
| | | | | | |
Question - 17 : - The following trial balance is extracted from the books of M/s Ram on March 31, 2017. You are required to prepare trading and profit and loss account and the balance sheet as on date: | Account title | Amount Rs | Account title | Amount Rs |
| Debtors | 12,000 | Apprenticeship premium | 5,000 |
| Purchases | 50,000 | Loan | 10,000 |
| Coal, gas and water | 6,000 | Bank overdraft | 1,000 |
| Factory wages | 11,000 | Sales | 80,000 |
| Salaries | 9,000 | Creditors | 13,000 |
| Rent | 4,000 | Capital | 20,000 |
| Discount | 3,000 | | |
| Advertisement | 500 | | |
| Drawings | 1,000 | | |
| Loan | 6,000 | | |
| Petty cash | 500 | | |
| Sales return | 1,000 | | |
| Machinery | 5,000 | | |
| Land and building | 10,000 | | |
| Income tax | 100 | | |
| Furniture | 9,900 | | |
Answer - 17 : -
| Trading Account as on March 31, 2017 | |
| Dr. | | | | Cr. | |
| Particulars | Amount Rs | Particulars | Amount Rs | |
| Purchases | | | 50,000 | Sales | 80,000 | | |
| Coal, Gas and Water | | | 6,000 | | Less: Sales Return | 1,000 | 79,000 | |
| Factory Wages | | | 11,000 | | | |
| Profit and Loss (Gross Profit) | 12,000 | | |
| | | | 79,000 | 79,000 | |
| | | | | | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
| Profit and Loss Account as on March 31, 2017 |
| Dr. | | | Cr. |
| Particulars | Amount Rs | Particulars | Amount Rs |
| Salaries | 9,000 | Trading (Gross Profit) | 12,000 |
| Rent | 4,000 | Apprenticeship Premium | 5,000 |
| Discount | 3,000 | | |
| Advertisement | 500 | | |
| Net Profit | 500 | | |
| | | | |
| | 17,000 | | 17,000 |
| | | | |
| Balance Sheet as on March 31, 2017 | |
| Liabilities | | Amount Rs | Assets | | Amount Rs | |
| Capital | 20,000 | | Machinery | | 5,000 | |
| | Add: Profit and Loss (Net Profit) | 500 | | Land and Building | | 10,000 | |
| | | 20,500 | | Furniture | | 9,900 | |
| | Less: Drawings | (1,000) | | Loan (Given) | | 6,000 | |
| | Less: Income Tax | (100) | 19,400 | Debtors | | 12,000 | |
| | | | | Petty Cash | | 500 | |
| Loan (Taken) | | 10,000 | | | | |
| Creditors | | 13,000 | | | | |
| Bank Overdraft | | 1,000 | | | | |
| | | | | | | | |
| | | | 43,400 | | | | 43,400 |
| | | | | | | | |
Question - 18 : - The following is the trial balance of Manju Chawla on March 31, 2017. You are required to prepare trading and profit and loss account and a balance sheet as on date: | Account title | Debit Amount Rs | Credit Amount Rs |
| Opening stock | 10,000 | |
| Purchases and sales | 40,000 | 80,000 |
| Returns | 200 | 600 |
| Productive wages | 6,000 | |
| Dock and Clearing charges | 4,000 | |
| Donation and charity | 600 | |
| Delivery van expenses | 6,000 | |
| Lighting | 500 | |
| Sales tax collected | | 1,000 |
| Bad debts | 600 | |
| Misc. incomes | | 6,000 |
| Rent from tenants | | 2,000 |
| Royalty | 4,000 | |
| Capital | | 40,000 |
| Drawings | 2,000 | |
| Debtors and Creditors | 6,000 | 7,000 |
| Cash | 3,000 | |
| Investment | 6,000 | |
| Patents | 4,000 | |
| Land and Machinery | 43,000 | |
Closing stock Rs 2,000.
Answer - 18 : -
| Trading Account as on March 31, 2017 |
| Dr. | Cr. |
| Particulars | Amount Rs | Particulars | Amount Rs |
| Opening Stock | 10,000 | Sales | 80,000 | |
| Purchases | 40,000 | | | Less: Sales Returns | (200) | 79,800 |
| | Less: Purchases Returns | (600) | 39,400 | | |
| Productive Wages | 6,000 | Closing Stock | 2,000 |
| Dock and Clearing Charges | 4,000 | | |
| Royalty | 4,000 | | |
| Profit and Loss (Gross Profit) | 18,400 | | |
| | | | |
| | | | |
| | 81,800 | | 81,800 |
| | | | |
| | | | | | | | |
| Profit and Loss Account as on March 31, 2017 |
| Dr. | Cr. |
| Particulars | Amount Rs | Particulars | Amount Rs |
| Donation and Charity | 600 | Trading (Gross Profit) | 18,400 |
| Delivery Van Expenses | 6,000 | Misc. Incomes | 6,000 |
| Lighting | 500 | Rent from Tenants | 2,000 |
| Bad Debts | 600 | | |
| Net Profit | 18,700 | | |
| | | | |
| | 26,400 | | 26,400 |
| | | | |
Note: As per the solution, net profit is Rs 18,700;however, according to the answer given in the book, it is Rs 18,400.
| Balance Sheet as on March 31, 2017 |
| Liabilities | | Amount Rs | Assets | | Amount Rs |
| Capital | 40,000 | | Patents | | 4,000 |
| | Add: Profit and Loss (Net Profit) | 18,700 | | Land and Machinery | | 43,000 |
| | | 58,700 | | Investment | | 6,000 |
| | Less: Drawings | (2,000) | 56,700 | Debtors | | 6,700 |
| | | | | Cash | | 3,000 |
| Sales Tax Collected | | 1,000 | Closing Stock | | 2,000 |
| Creditors | | 7,000 | | | | |
| | | | | | | | |
| | | | 64,700 | | | | 64,700 |
| | | | | | | | |
| | | | | | | | | | |
Question - 19 : - The following is the Trial Balance of Mr. Deepak as on March 31, 2017. You are required to prepare trading account, profit and loss account and a balance sheet as on date: | Account title | Debit Amount Rs | Account title | Credit Amount Rs |
| Drawings | 36,000 | Capital | 2,50,000 |
| Insurance | 3,000 | Bills payable | 3,600 |
| General expenses | 29,000 | Creditors | 50,000 |
| Rent and taxes | 14,400 | Discount received | 10,400 |
| Lighting (factory) | 2,800 | Purchases return | 8,000 |
| Travelling expenses | 7,400 | Sales | 4,40,000 |
| Cash in hand | 12,600 | | |
| Bills receivable | 5,000 | | |
| Sundry debtors | 1,04,000 | | |
| Furniture | 16,000 | | |
| Plant and Machinery | 1,80,000 | | |
| Opening stock | 40,000 | | |
| Purchases | 1,60,000 | | |
| Sales return | 6,000 | | |
| Carriage inwards | 7,200 | | |
| Carriage outwards | 1,600 | | |
| Wages | 84,000 | | |
| Salaries | 53,000 | | |
Closing stock Rs 35,000.
Answer - 19 : -
| Trading Account as on March 31, 2017 |
| Dr. | | | | | Cr. |
| Particulars | | Amount Rs | Particulars | | Amount Rs |
| Opening Stock | | 40,000 | Sales | 4,40,000 | |
| Purchases | 1,60,000 | | | Less: Sales Return | 6,000 | 4,34,000 |
| | Less: Purchases Return | (8,000) | 1,52,000 | Closing Stock | | 35,000 |
| | | | | | |
| Lighting (Factory) | | 2,800 | |
| Carriage Inwards | | 7,200 | |
| Wages | | 84,000 | |
| Profit and Loss (Gross Profit) | 1,83,000 | |
| | 4,69,000 | 4,69,000 |
| | |
| | | | | | | | | |
| Profit and Loss Account as on March 31, 2017 |
| Dr. | Cr. |
| Particulars | Amount Rs | Particulars | Amount Rs |
| Insurance | | 3,000 | Trading (Gross Profit) | | 1,83,000 |
| General Expenses | | 29,000 | Discount Received | | 10,400 |
| Rent and Taxes | | 14,400 | | | | |
| Travelling Expenses | | 7,400 | | | | |
| Carriage Outwards | | 1,600 | | | | |
| Salaries | | 53,000 | | | | |
| Net Profit | | 85,000 | | | | |
| | | | 1,93,400 | | | | 1,93,400 |
| | | | | | | | |
| | | | | | | | | |
| | | | | | | | | | |
| Balance Sheet as on March 31, 2017 |
| Liabilities | Amount Rs | Assets | Amount Rs |
| Capital | 2,50,000 | | Plant and Machinery | 1,80,000 |
| | Add: Net Profit | 85,000 | | Furniture | 16,000 |
| 3,35,000 | | Sundry Debtors | 1,04,000 |
| | Less: Drawings | (36,000) | 2,99,000 | Closing Stock | 35,000 |
| | | Bills Receivable | 5,000 |
| Creditors | 50,000 | Cash in Hand | 12,600 |
| Bills Payable | 3,600 | | |
| | | |
| 3,52,600 | 3,52,600 |
| | |
Question - 20 : - Prepare trading and profit and loss account and balance sheet from the following particulars as on March 31, 2017. | Account Title | Debit Amount Rs | Credit Amount Rs |
| Purchases and Sales | 3,52,000 | 5,60,000 |
| Return inwards and Return outwards | 9,600 | 12,000 |
| Carriage inwards | 7,000 | |
| Carriage outwards | 3,360 | |
| Fuel and power | 24,800 | |
| Opening stock | 57,600 | |
| Bad debts | 9,950 | |
| Debtors and Creditors | 1,31,200 | 48,000 |
| Capital | | 3,48,000 |
| Investment | 32,000 | |
| Interest on investment | | 3,200 |
| Loan | | 16,000 |
| Repairs | 2,400 | |
| General expenses | 17,000 | |
| Wages and salaries | 28,800 | |
| Land and buildings | 2,88,000 | |
| Cash in hand | 32,000 | |
| Miscellaneous receipts | | 160 |
| Sales tax collected | | 8,350 |
Closing stock Rs 30,000.
Answer - 20 : -
| Trading Account as on March 31, 2017 |
| Dr. | | | | | | | Cr. |
| Particulars | | Amount Rs | Particulars | | Amount Rs |
| Opening Stock | | 57,600 | Sales | 5,60,000 | |
| Purchases | 3,52,000 | | | Less: Return Inwards | (9,600) | 5,50,400 |
| | Less: Return Outwards | (12,000) | 3,40,000 | Closing Stock | | 30,000 |
| Carriage Inwards | 7,000 | | | | |
| Fuel and Power | | 24,800 | | | | |
| Wages and Salaries | | 28,800 | | | | |
| Profit and Loss (Gross Profit) | | 1,22,200 | | | | |
| | | | | | |
| | | | 5,80,400 | | | | 5,80,400 |
| | | | | | | | |
| | | | | | | | | | | | | |
| Profit and Loss Account as on March 31, 2017 |
| Dr. | | | Cr. |
| Particulars | Amount Rs | Particulars | Amount Rs |
| Carriage Outwards | 3,360 | Trading (Gross Profit) | 1,22,200 |
| Bad Debts | 9,950 | Interest on Investment | 3,200 |
| Repairs | 2,400 | Miscellaneous Receipts | 160 |
| General Expenses | 17,000 | | |
| Net Profit | 92,850 | | |
| | 1,25,560 | | 1,25,560 |
| | | | |
| Balance Sheet as on March 31,2017 |
| Liabilities | | Amount Rs | Assets | | Amount Rs |
| Capital | 3,48,000 | | Land and Building | | 2,88,000 |
| | Add: Net Profit | 92,850 | 4,40,850 | Investment | | 32,000 |
| | | | | Debtors | | 1,31,200 |
| Loan | | 16,000 | Closing Stock | | 30,000 |
| Creditors | | 48,000 | Cash in Hand | 32,000 |
| Sales Tax Collected | | 8,350 | | |
| | | 5,13,200 | | 5,13,200 |
| | | | | | |
| | | | | | | | |