Financial Statements with Adjustments (Part - 1) Notes | Study DK Goel Solutions - Class 11 Accountancy - Commerce

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