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Page No 22.82
Question 1:
The following are the balances extracted from the books of Raghunath Ji as on 31st March, 2017. From these balances, prepare his Trading and Profit & Loss Account and Balance Sheet as at that date:
Adjustment:-
1. Closing Stock was valued at ₹ 16,000.
2. Wages ₹ 2,000 and salaries ₹ 1,200 are outstanding.
3. Rent for two months at the rate of ₹ 500 per month is outstanding.
4. Depreciate Buildings by 5% and machinery by 10%.
5. Prepaid Insurance ₹ 200.
ANSWER:
Working Note:
Calculation of Depreciation
Page No 22.83
Question 2:
From the following Trial Balance prepare Trading and Profit & Loss Account for the year ended 31st March, 2017 and Balance Sheet as at that date:-
Adjustment:-
1. Stock at 31st March 2017 is ₹ 70,000.
2. Write of 5% Depreciation on Freehold Premises and 20% on office furniture.
3. Commission earned but not received ₹ 500.
4. Interest earned ₹ 600.
5. ₹ 200 for rent have been received in advance.
6. Charge interest on Capital @ 6% and ₹ 500 on Drawings.
ANSWER:
Working Notes:
WN1: Calculation of Depreciation
WN2: Calculation of Interest on Capital
Page No 22.84
Question 3:
On 31st March, 2017 the following Trial Balance was extracted from the books of Mohan:
Prepare Trading and Profit & Loss Account for the year ended 31st March, 2017 and Balance Sheet as at that date after taking into account the following:-
(a) Private purchases amounting to ₹ 4,000 have been debited to Purchases Account.
(b) Depreciate Land and Buildings at and Motor Vehicles at 20%.(c) Salaries outstanding ₹ 200.(d) Prepaid Insurance ₹ 200.
(e) Provision for Doubtful Debts is to be maintained at 5% on Debtors.
(f) Stock on 31st March, 2017 was valued at ₹ 7,000.
ANSWER:
Working Notes:
WN1: Calculation of Depreciation
WN2: Calculation of Provision for Doubtful Debts
Page No 22.85
Question 4:
Prepare Trading and Profit & Loss Account for the year ended 31st March, 2017 and Balance Sheet as at that date from the following Trial Balance:
Adjustments:-
1. Salaries ₹ 100 and taxes ₹ 200 are outstanding but insurance ₹ 50 is prepaid.
2. Commission ₹ 100 is received in advance for next year.
3. Interest ₹ 210 is to be received on Deposits and Interest on Bank overdraft ₹ 300 is to be paid.
4. Bad-debts provision is to be maintained at ₹ 1,000 on Debtors.
5. Depreciate furniture by 10%.
6. Stock on 31st March, 2017 was valued at ₹ 4,500.
ANSWER:
Working Note:
Calculation of Depreciation
Page No 22.85
Question 5:
The following are the balances of Messrs Gupta & Co. as at 31st March, 2009:
Prepare Trading and Profit & Loss A/c and a Balance Sheet as at 31st March, 2009 after taking into account the following adjustments:
(i) Stock on hand as on 31st March, 2009 is ₹ 6,800.
(ii) Machinery is to be depreciated at 10% and Patents at 20%.
(iii) Salaries for the month of March, 2009 amounting to ₹ 1,500 were unpaid.
(iv) Insurance includes a premium of ₹ 170 on a policy expiring on 30th September, 2009.
(v) Write off ₹ 500 as Bad-debts and create a provision for Doubtful Debts at 5% on Sundry Debtors.
(vi) Rent Receivable ₹ 1,000.
ANSWER:
Working Notes:
WN1: Calculation of Depreciation
WN2: Calculation of Pre-paid Insurance
If a policy is expiring on 30 September, 2009, it means insurance is pre-paid for the period 31 March 2009 – 30 September 2009 = 6 months
WN3: Calculation of Provision for Doubtful Debts
Page No 22.86
Question 6:
From the following Trial Balance extracted from the books of A, prepare Trading and Profit & Loss Account for the year ending 31st March, 2008 and a Balance Sheet as at that date:-
The following adjustments are to be made:
(i) Stock in hand on 31st March, 2008 was ₹ 3,250.
(ii) Depreciate Building at 5% and Furniture at 10%. Loss Tools are revalued at ₹ 5,000 at the end of the year.
(iii) Salaries ₹ 300 and taxes ₹ 120 are outstanding.
(iv) Insurance amounting to ₹ 100 is prepaid.
(v) Write off a further ₹ 100 as Bad-Debts and provision for Doubtful Debts is to be made equal to 5% on Sundry Debtors.
(vi) Half of the stationery was used by the proprietor for his personal purposes.
ANSWER:
Working Notes:
WN1: Calculation of Depreciation
WN2: Calculation of Provision for Doubtful Debts
Provision for Doubtful Debts
Page No 22.87:
Question 7:
From the following figures prepare the Trading and Profit and Loss Account for the year ended 31st March, 2012 and the Balance Sheet as at that date:-
Adjustments:-
(i) Commission include ₹ 1,600 being commission received in advance.
(ii) Write off ₹ 2,000 as further Bad-debts and maintain Bad-debts provision at 5% on debtors.
(iii) Expenses paid in advance are: Wages ₹ 5,000 and Insurance ₹ 1,200.
(iv) Rent and Salaries have been paid for 11 months.
(v) Loan from X has been taken at 18% p.a. interest.
(vi) Depreciate furniture by 15% p.a. and Motor Car by 20% p.a.
(vii) Closing Stock was valued at ₹ 60,000.
ANSWER:
Working Notes:
WN1: Calculation of Depreciation
WN2: Calculation of Outstanding Expenses
WN3: Calculation of Provision for Doubtful Debts
Provision for Doubtful Debts
Provision for Doubtful Debts
Provision for Doubtful Debts
Provision for Doubtful Debts
Page No 22.88
Question 8:
Extract of a Trial Balance as at March 31, 2017 is as follows:
Sundry Debtors - ₹ 1,02,000
Bad Debts - ₹ 1,400
Provision for doubtful debts - ₹ 3,400
Additional information:
A debtor of ₹ 2,000 could not be recovered. It is decided to maintain Provision for Doubtful Debtors @ 5% on Debtors and Provision for Discount at @ 2%.
How these adjustments will be shown in Financial Statements?
ANSWER:
Working Notes:
WN1: Calculation of Provision for Doubtful Debts
WN2: Calculation of Provision for Discount on Debtors
Question 9:
Prepare a Trading and Profit & Loss account for the year ending March 31, 2018, from the balances extracted of M/s Rahul Sons. Also prepare a balance sheet as at that date.
Adjustments :-
(i) Commission received in advance ₹ 1,000.
(ii) Rent receivable ₹ 2,000, subject to levy of CGST and SGST @ 9% each.
(iii) Salary outstanding ₹ 1,000 and insurance prepaid ₹ 800.
(iv) Further Bad-debts ₹ 1,000 and provision for Bad-debts @ 5% on debtors and provision for discount on debtors @ 2%.
(v) Closing Stock ₹ 32,000.
(vi) Depreciation on Building @ 6% p.a.
ANSWER
Working Notes:
WN1: Calculation of Depreciation
WN2: Calculation of Provision for Doubtful Debts
WN3: Calculation of Provision for Discount on Debtors
Provision for Discounton Debtors
*WN4: Adjustment Entry for Accrued Rent
Page No 22.89
Question 10:
From the following balances, prepare Final Accounts of Mr. Bal Gopal:-
Adjustments :-
(i) Stock on 31st March, 2018 was ₹ 10,000 and stationery unused at the end was ₹ 400.
(ii) Rent of Premises Sublet received in advance ₹ 100.
(iii) Provision for Doubtful Debts is to be created @ 10% on Debtors.
(iv) Provision for discount on Debtors is to be created @ 2%.
(v) Stock of the Value of ₹ 4,000 was destroyed by fire on 25th March, 2018. Stock was purchased paying IGST @ 12%. A Claim of ₹ 3,000 has been admitted by Insurance Co.
(vi) Bank Loan has been taken at 12% p.a. interest.
ANSWER:
Working Notes:
WN1: Calculation of Outstanding Interest on Bank Loan
WN2: Calculation of Provision for Doubtful Debts
ProvisionforDoubtful Debts
WN3: Calculation of Provision for Discount on Debtors
*WN4: Adjustment Entry for goods destroyed by fire
Page No 22.89
Question 11(A):
From the following balances, prepare Trading, Profit and Loss A/c and a Balance Sheet as at 31st March 2018:-
Take the following adjustments into account:
(a) General expenses include ₹ 5,000 chargeable to Furniture purchased on 1st October 2017.
(b) Create a provision of 5% on debtors for Bad and Doubtful Debts after treating ₹ 30,000 as a Bad-debt.
(c) Depreciation on Furniture and Fittings for the year is to be at the rate of 10% per annum.
(d) Closing Stock was ₹ 40,000, but there was a loss by fire on 20th March to the extent of ₹ 8,000. Insurance Company admitted the claim in full.
(e) Goods costing ₹ 2,500 were used by the proprietor.
Goods costing ₹ 1,500 were distributed as free samples.
Goods were purchased paying CGST and SGST @ 6% each.
ANSWER:
Working Notes:
WN1: Calculation of Depreciation
Furniture of Rs 5,000 was purchased on Oct 01, 2013
WN2: Calculation of Outstanding Rent
WN3: Calculation of Provision for Doubtful Debts
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