Financial Statements with Adjustments (Part - 1) - Commerce PDF Download

For students studying Accountancy in Class 11, DK Goel's Accountancy textbook is widely considered an invaluable resource. In this regard, the following EduRev Document offers comprehensive solutions for Chapter Financial Statements with Adjustments of Class 11 Accountancy, further enhancing the usefulness of DK Goel's textbook for students.

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

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Page No 22.90

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