Chapter 2 Financial Statements II Solutions

Question - 21 : - The following balances have been extracted from the books of M/s Green House for the year ended March 31, 2017, prepare trading and profit and loss account and balance sheet as on this date.

Account Title

Amount

₹

Account Title

Amount

₹

Purchases

80,000

Capital

2,10,000

Bank balance

11,000

Bills payable

6,500

Wages

34,000

Sales

2,00,000

Debtors

70,300

Creditors

50,000

Cash in hand

1,200

Return outwards

4,000

Legal expenses

4,000

Building

60,000

Machinery

120,000

Bills receivable

7,000

Office expenses

3,000

Opening stock

45,000

Gas and fuel

2,700

Freight and Carriage

3,500

Factory lighting

5,000

Office furniture

5,000

Patent right

18,800

4,70,500

4,70,500

Adjustments:
(a) Machinery is depreciated at 10% and buildings depreciated at 6%.
(b) Interest on capital @ 4%.
(c) Outstanding wages ₹ 50.
(d) Closing stock ₹ 50,000.

Answer - 21 : -

Trading Account
Dr.						Cr.
Particulars				Amount ₹		Particulars		Amount ₹
Opening Stock				45,000		Sales		2,00,000
Purchases		80,000				Closing Stock		50,000
	Less: Return Outwards	4,000		76,000

Wages		34,000
	Add: Wages Outstanding	50		34,050
Gas and Fuel				2,700
Freight and Carriage				3,500
Factory Lighting				5,000
Gross Profit				83,750

				2,50,000				2,50,000

Profit and Loss Account
Dr.							Cr.
Particulars			Amount ₹		Particulars		Amount ₹
To Legal Expenses			4,000		By Gross Profit		83,750
To Office Expenses			3,000
To Depreciation on Machine			12,000
To Depreciation on Building			3,600
To Interest on Capital			8,400
To Net Profit*			52,750

			83,750				83,750

Balance Sheet
Liabilities			Amount ₹	Assets			Amount ₹
Capital		2,10,000		Bank Balance			11,000
	Add: Interest on Capital	8,400		Debtors			70,300
	Add: Net profit	52,750	2,71,150	Cash in Hand			1,200
				Building		60,000
Bills Payable			6,500		Less: Depreciation	3,600	56,400
Creditors			50,000	Machinery		1,20,000
Outstanding Wages			50		Less: Depreciation	12,000	1,08,000
				Bills Receivable			7,000
				Patent Right			18,800
				Office Furniture			5,000
				Closing Stock			50,000

			3,27,700				3,27,700

Question - 22 : - From the following balances extracted from the book of M/s Manju Chawla on March 31, 2017. You are requested to prepare the trading and profit and loss account and a balance sheet as on this date.

Account Title

Amount

₹

Amount

₹

Opening stock

10,000

Purchases and Sales

40,000

80,000

Returns

200

600

Wages

6,000

Dock and cleaning charges

4,000

Lighting

500

Misc. Income

6,000

Rent

2,000

Capital

40,000

Drawings

2,000

Debtors and Creditors

6,000

7,000

Cash

3,000

Investment

6,000

Patent

4,000

Land and Machinery

43,000

Donations and Charity

600

Sales tax collected

1,000

Furniture

11,300

1,36,600

1,36,600

Closing stock was ₹ 2,000.
(a) Interest on drawings @ 7% and interest on capital @ 5%.
(b) Land and Machinery is depreciated at 5%.
(c) Interest on investment @ 6%.
(d) Unexpired rent ₹ 100.
(e) Charge 5% depreciation on furniture.

Answer - 22 : -

Trading Account
Dr.											Cr.
Particulars				Amount ₹		Particulars					Amount ₹
Opening Stock				10,000		Sales			80,000
Purchases		40,000						Less: Sales Return	200		79,800
	Less: Purchases Return	600		39,400		Closing Stock					2,000
Wages				6,000
Dock and Cleaning Charges				4,000
Gross Profit				22,400

				81,800							81,800


Profit and Loss Account
Dr.					Cr.
Particulars			Amount ₹		Particulars						Amount ₹
Lighting			500		Gross Profit						22,400
Donations and Charity			600		Miscellaneous Income						6,000
Interest on Capital			2,000		Rent					2,000
Depreciation on Furniture			565				Less: Unearned Rent			100	1,900
Depreciation on Land and Machinery			2,150		Interest on Drawings						140
Net Profit			24,985		Interest on Investment						360

			30,800								30,800

Balance Sheet
Liabilities			Amount ₹	Assets			Amount ₹
Capital		40,000		Debtors			6,000
	Add: Interest on Capital	2,000		Cash			3,000
	Add: Net Profit	24,985		Investment		6,000
	Less: Drawings	2,000			Add: Interest on Investment	360	6,360
	Less: Interest on Drawings	140	64,845	Patent			4,000
Creditors			7,000	Land and Machinery		43,000
Sales Tax Collected			1,000		Less: Depreciation	2,150	40,850
Unearned Rent			100
				Furniture		11,300
					Less: Depreciation	565	10,735
				Closing Stock			2,000
			72,945				72,945

Question - 23 : - The following balances were extracted from the books of M/s Panchsheel Garments on March 31, 2017.

Account Title

Debit

Amount

₹

Account Title

Credit

Amount

₹

Opening stock

16,000

Sales

1,12,000

Purchases

67,600

Return outwards

3,200

Return Inwards

4,600

Discount

1,400

Carriage inwards

1,400

Bank overdraft

10,000

General expenses

2,400

Commission

1,800

Insurance

4,000

Creditors

16,000

Scooter expenses

200

Capital

50,000

Salary

8,800

Cash in hand

4,000

Scooter

8,000

Furniture

5,200

Buildings

65,000

Debtors

6,000

Wages

1,200

1,94,400

1,94,400

Prepare the trading and profit and loss account for the year ended March 31, 2017 and a balance sheet as on that date.
(a) Unexpired insurance ₹ 1,000.
(b) Salary due but not paid ₹ 1,800.
(c) Wages outstanding ₹ 200.
(d) Interest on capital 5%.
(e) Scooter is depreciated @ 5%.
(f) Furniture is depreciated ₹ @ 10%.

Answer - 23 : -

Trading Account
Dr.												Cr.
Particulars				Amount ₹		Particulars						Amount ₹
Opening Stock				16,000		Sales				1,12,000
Purchases			67,600					Less: Return Inwards		4,600		1,07,400
	Less: Return Outwards		3,200	64,400		Closing Stock						15,000
Carriage Inwards				1,400
Wages			1,200
	Add: Outstanding Wages		200	1,400
Gross Profit				39,200
				1,22,400								1,22,400


Profit and Loss Account
Dr.											Cr.
Particulars							Amount ₹		Particulars		Amount ₹
General Expenses							2,400		Gross Profit		39,200
Insurance					4,000				Discount		1,400
		Less: Unexpired Insurance			1,000		3,000		Commission		1,800
Scooter Expenses							200
Salary					8,800
		Add: Outstanding Salary			1,800		10,600
Interest on Capital							2,500
Depreciation on Scooter							400
Depreciation on Furniture							520
Net Profit							22,780
							42,400				42,400

Balance Sheet
Liabilities			Amount ₹	Assets			Amount ₹
Capital		50,000		Cash in Hand			4,000
	Add: Interest on Capital	2,500		Scooter		8,000
	Add: Net Profit	22,780	75,280		Less: Depreciation	400	7,600
Bank Overdraft			10,000	Furniture		5,200
Creditors			16,000		Less: Depreciation	520	4,680
Outstanding Salary			1,800	Buildings			65,000
Outstanding Wages			200	Debtors			6,000
				Unexpired Insurance			1,000
				Closing Stock			15,000


			1,03,280				1,03,280

Question - 24 : - Prepare the trading and profit and loss account and balance sheet of M/s Control Device India on March 31, 2017 from the following balance as on that date.

Account Title

Debit

Amount

₹

Credit

Amount

₹

Drawings and Capital

19,530

67,500

Purchase and Sales

45,000

1,12,500

Salary and Commission

25,470

1,575

Carriage

2,700

Plant and Machinery

27,000

Furniture

6,750

Opening stock

42,300

Insurance premium

2,700

Interest

7,425

Bank overdraft

24,660

Rent and Taxes

2,160

Wages

11,215

Returns

2,385

1,440

Carriage outwards

1,485

Debtors and Creditors

36,000

58,500

General expenses

6,975

Octroi

530

Investment

41,400

2,73,600

2,73,600

Closing stock was valued ₹ 20,000.
(a) Interest on capital @ 10%.
(b) Interest on drawings @ 5%.
(c) Wages outstanding ₹ 50.
(d) Outstanding salary ₹ 20.
(e) Provide a depreciation @ 5% on plant and machinery.
(f) Make a 5% provision on debtors.

Answer - 24 : -

Trading Account
Dr.													Cr.
Particulars						Amount ₹		Particulars					Amount ₹
Opening Stock						42,300		Sales			1,12,500
Purchases				45,000						Less: Sales Return	2,385		1,10,115
		Less: Purchases Return		1,440		43,560		Closing Stock					20,000
Carriage						2,700
Wages				11,215
		Add: Outstanding Wages		50		11,265
Octroi						530
Gross Profit						29,760
						1,30,115							1,30,115


Balance Sheet
Liabilities					Amount ₹		Assets						Amount ₹
Capital			67,500				Plant and Machinery					27,000
	Add: Interest on Capital		6,750						Less: Depreciation			1,350	25,650
	Less: Net Loss		8,973				Furniture						6,750
	Less: Drawings		19,530				Debtors					36,000
	Less: Interest on Drawings		977		44,770				Less: New Provision			1,800	34,200
Bank Overdraft					24,660		Investment						41,400
Creditors					58,500		Closing Stock						20,000
Outstanding Wages					50
Salary Outstanding					20

					1,28,000								1,28,000

Question - 25 : - The following balances appeared in the trial balance of M/s Kapil Traders as on March 31, 2017

₹

Sundry debtors

30,500

Bad debts

500

Provision for doubtful debts

2,000

The partners of the firm agreed to records the following adjustments in the books of the Firm. Further bad debts ₹300. Maintain provision for bad debts 10%. Show the following adjustments in the bad debts account, provision account, debtors account, profit and loss account and balance sheet.

Answer - 25 : -

Profit and Loss Account

Dr.

Cr.

Particulars

Amount

₹

Particulars

Amount

₹

Bad Debts

500

Add: Further Bad Debts

300

Add: New Provision

3,020

Less: Old Provision

2,000

1,820

Balance Sheet

Liabilities

Amount

₹

Assets

Amount

₹

Debtors

30,500

Less: Further Bad Debts

300

Less: New Provision

3,020

27,180

Debtors Account
Dr.							Cr.
Date		Particulars	Amount ₹		Date				Particulars		Amount ₹
2017					2017
March 31		Balance b/d	30,500		March 31				Further Bad Debts		300
					March 31				Provision for Doubtful Debts		3,020
					March 31				Balance c/d		27,180

			30,500								30,500


Bad Debts Account
Dr.								Cr.
Date	Particulars			Amount ₹		Date				Particulars	Amount ₹
2017						2017
March 31	Balance b/d			500		March 31				Provision for Doubtful Debts	800
	(As per the Trial Balance)

March 31	Sundry Debtors			300
				800							800

Provision for Doubtful Debts Account
Dr.				Cr.
Date	Particulars	Amount ₹	Date		Particulars	Amount ₹
2017			2016
March 31	Bad Debt	800	April 01		Balance b/d (Old Provision)	2,000
			April 01		Profit and Loss	1,820
					(Balancing figure)
March 31	Balance b/d	3,020
	(New Provision)
		3,820				3,820

Question - 26 : - Prepare the bad debts account, provision for account, profit and loss account and balance sheet from the following information as on March 31, 2017

₹

Debtors

80,000

Bad debts

2,000

Provision for doubtful debts

5,000

Adjustments:
Bad Debts ₹ 500 Provision on Debtors @ 3%.

Answer - 26 : -

Profit and Loss Account

Dr.

Cr.

Particulars

Amount

₹

Particulars

Amount

₹

Bad Debts

2,000

Old Provision for Doubtful Debts

5,000

Add: Further Bad Debts

500

Add: New Provision for Bad Debts

2,385

4,885

Balancing figure

115

5,000

Balance Sheet

Liabilities

Amount

₹

Assets

Amount

₹

Debtors

80,000

Less: Further Bad Debts

500

Less: New Provision on Debtors

2,385

77,115

Bad Debts Account
Dr.							Cr.
Date	Particulars		Amount ₹		Date				Particulars	Amount ₹
2017					2017
Dec.31	Balance b/d		2,000		Dec.31				Provision for Doubtful Debts	2,500
	(as per the Trial Balance)

Dec.31	Sundry Debtors		500
			2,500							2,500


Provision for Doubtful Debts Account
Dr.						Cr.
Date	Particulars	Amount ₹		Date				Particulars		Amount ₹
2017				2017
Dec.31	Bad Debts	2,500		Jan.01				Balance b/d (Old Provision)		5,000

Dec.31	Balance b/d	2,385
	(New Provision)

Dec.31	Profit and Loss	115*
	(Balancing Figure)
		5,000								5,000

Free - Previous Years Question Papers

Account Title	Amount ₹	Account Title	Amount ₹
Purchases	80,000	Capital	2,10,000
Bank balance	11,000	Bills payable	6,500
Wages	34,000	Sales	2,00,000
Debtors	70,300	Creditors	50,000
Cash in hand	1,200	Return outwards	4,000
Legal expenses	4,000
Building	60,000
Machinery	120,000
Bills receivable	7,000
Office expenses	3,000
Opening stock	45,000
Gas and fuel	2,700
Freight and Carriage	3,500
Factory lighting	5,000
Office furniture	5,000
Patent right	18,800
	4,70,500		4,70,500

Account Title	Debit Amount ₹	Account Title	Credit Amount ₹
Opening stock	16,000	Sales	1,12,000
Purchases	67,600	Return outwards	3,200
Return Inwards	4,600	Discount	1,400
Carriage inwards	1,400	Bank overdraft	10,000
General expenses	2,400	Commission	1,800
Insurance	4,000	Creditors	16,000
Scooter expenses	200	Capital	50,000
Salary	8,800
Cash in hand	4,000
Scooter	8,000
Furniture	5,200
Buildings	65,000
Debtors	6,000
Wages	1,200
	1,94,400		1,94,400

Chapter 2 Financial Statements II Solutions

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