Financial Statements with Adjustments (Part - 2) - Commerce PDF Download

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Page No 22.90:

Question 11(B):
From the following particulars taken out from the books of Subhash General Store, prepare Trading and Profit & Loss Account for the year ended 31st March, 2017 and Balance Sheet as at the date:-

The following information is relevant:-
1. Closing Stock ₹ 55,000. Stock valued at ₹ 10,000 was destroyed by fire on 18th March, 2017 but the Insurance Company admitted a claim of ₹ 6,800 only which was received in April, 2017.
2. Stationery for ₹ 150 was consumed by the Proprietor.
3. Goods costing ₹ 1,200 were given away as charity.
4. A new Signboard costing ₹ 1,500 is included in Advertising.
5. Rent is to be allocated 2/3rd to Factory and 1/3rd to Office.
6. Depreciate machinery by 10% and Motor Car by 20%.
ANSWER:

Working Notes:
WN1: Calculation of Depreciation
Depreciationon Plant & Machinery

Depreciationon Motor Car
WN2: Calculation of Prepaid Insurance

Page No 22.91:

Question 12:
Give journal entries for the following adjustments in final accounts:
(i) Salaries ₹ 5,000 are outstanding.
(ii) Insurance amounting to ₹ 2,000 is paid in advance.
(iii) ₹ 4,000 for rent have been received in advance.
(iv) Commission earned but not received ₹ 1,000.
(v) Interest on capital ₹ 1,500.
(vi) Interest on Drawings ₹ 300.
(vii) Write off ₹ 2,000 as further bad-debts.
(viii) Closing Stock ₹ 3,000.
ANSWER:

Page No 22.91:
Question 13:
Give journal entries for the following adjustments in final accounts assuming CGST and SGST @ 9% each:
(i) Closing Stock ₹ 80,000.
(ii) Outstanding salaries ₹ 21,000.
(iii) Insurance premium amounting to ₹ 15,000 is paid in advance.
(iv) ₹ 9,000 received for rent related to the next accounting period.
(v) Commission accrued but not received during the accounting year ₹ 1,500.
(vi) Write off ₹ 500 as further bad debts.
(vii) Goods costing ₹ 8,000 destroyed by fire and insurance company admitted a claim for ₹ 5,000 only.
(viii) Goods costing ₹ 10,000 (Market value ₹ 11,000) were taken by proprietor for personal use.
ANSWER:

Page No 22.92:
Question 14:
Following is the Trial Balance of Mr. Gautam as at 31st March, 2017:

You are required to prepare Final Accounts after taking into account the following adjustments:
(a) Closing Stock on 31st March, 2017 was ₹ 60,000.
(b) Depreciate Plant and Machinery at 5%, Loose Tools at 15% and Furniture and fixtures at 5%.
(c) Provide  for  discount on Sundry Debtors and also provide 5% for Bad and Doubtful Debts on Sundry Debtors.
(d) Only three quarter's rent has been paid, the last quarter's rent being outstanding.
(e) Interest earned but not received ₹ 600.
(f) Write off 1/4th of Advertisement expenses.

ANSWER:

Working Notes:
WN1: Calculation of Depreciation

WN2: Calculation of Outstanding Rent

WN3: Calculation of Provision for Doubtful Debts

WN4: Calculation of Provision for Discount on Debtors

Page No 22.93:
Question 15:
From the following Trial Balance, extracted from the books of Raga Ltd., prepare a Profit and Loss Account for the year ended 31st March, 2014 and a Balance Sheet as at that date:

The additional informations are as under:
(i) Closing stock was valued at the end of the year at ₹ 20,000.
(ii) Depreciation on Plant and Machinery charged at 5% and on Land and Building at 10%.
(iii) Make a provision for discount on debtors at 3%.
(iv) Make a provision at 5% on debtors for Bad-debts.
(v) Salary outstanding was ₹ 100 and Wages prepaid were ₹ 40.
(vi) The manager is entitled to a Commission of 5% on Net Profit after charging such Commission.
ANSWER:

Working Notes:
WN1: Calculation of Amount of Depreciation

WN2: Calculation of Provision for Doubtful Debts
WN3: Calculation of Provision for Discount on Debtors

WN4: Calculation of Manager’s Commission

Page No 22.94:
Question 16:
The following balances were extracted from the books of Shri Krishan Kumar as at 31st March, 2017:

Adjustments:-
(i) Stock on 31st March, 2017 was valued at ₹ 23,500.
(ii) 1\5th of general expenses and taxes & insurance to be charged to factory and the balance to the office.
(iii) Write off a further Bad-debts of ₹ 160 and maintain the provision for Bad-debts at 5% on Debtors.
(iv) Depreciate Machinery at 10% and Scooter by ₹ 240.
(v) Provide ₹ 700 for outstanding interest on Bank Overdraft.
(vi) Prepaid Insurance is to the extent of ₹ 50.
(vii) Provide for Manager's Commission at 10% on the Net Profit after charging such Commission.
Prepare final accounts for the year ended 31st March, 2017 after giving effect to the above adjustments.

ANSWER:
Financial Statements of Shri Krishan Kumar
Trading Account
for the year ended March 31, 2017

Working Notes:
WN1: Calculation of Amount of Depreciation

WN2: Calculation of Provision for Doubtful Debts
Provision for Doubtful Debts

WN3: Calculation of Manager’s Commission

Page No 22.95:
Question 17(A):
On 31st March, 2017 the following Trial Balance was extracted from the books of Sh. Ghanshyam Das:-

Prepare Trading and Profit & Loss Account for the year ended 31st March, 2017 and Balance Sheet as at that date, after making adjustments for the following matters:
1. Depreciate Land and Building at 2.5% and Motor Vehicles at 20%.
2. Interest on Loan at 15% p.a. is unpaid for six months.
3. Ghanshyam Das withdrew ₹ 2,000 for his private use. This amount was included in general expenses.
4. Interest on Investments is receivable for full year @ 10%.
5. Provide for Manager's Commission at 10% on Net Profit after charging such commission.
6. Stock in hand on 31st March, 2017 was valued at ₹ 25,000 (Realisable value ₹ 22,000).
ANSWER:

Working Notes:
WN1: Calculation of Amount of Depreciation

WN2: Calculation of Outstanding Interest on Loan

WN3: Calculation of Manager’s Commission

Page No 22.96:
Question 17(B):
Prepare Trading and Profit and Loss Account and Balance Sheet as at 31st March, 2017 from the following Balances of Mr. Sardari Lal:

Adjustments:- The Closing stock was ₹ 23,000 but there has been a loss by fire on 20th March, 2017, to the extent of ₹ 20,000, not covered by insurance. Depreciate Plant and Machinery by 10% and Traveller's Samples by . Increase the Bad-debts Provision to ₹ 2,000. Write 20% off Advertising Development Account. Annual premium on insurance expiring 1st June, 2017 was ₹ 1,200. Provide for Manager's commission @ 5% on Net Profits after charging such Commission.
ANSWER:

Working Notes:
WN1: Calculation of Amount of Depreciation

WN2: Calculation of Prepaid Insurance

WN3: Calculation of Advertisement Expenditure Written-off

WN4: Calculation of Manager’s Commission
Manager will not be entitled to any commission because there is a net loss.

Page No 22.97:
Question 18:
State with reasons whether the following are capital or revenue expenditures:
(i) A new machine is purchased for ₹ 60,000, ₹ 800 were spent on its carriage and ₹ 1,500 were paid as wages for its installation.
(ii) A sum of ₹ 40,000 was spent on painting the new factory.
(iii) ₹ 6,000 were paid for annual insurance premium.
(iv) ₹ 20,000 were spent on repairs before using a second hand generator purchased recently.
(v) ₹ 5,000 were spent on the repair of a machinery.
(vi) ₹ 50,000 were spent for airconditioning of the office of the manager.
ANSWER:

Page No 22.97:
Question 19:
From the following Trial Balance of Mr. Alok, prepare Trading and Profit & Loss Account for the year ending 31st March, 2014, and a Balance Sheet as at that date:-

The following adjustments are to be made:
(i) Stock in the shop on 31st March, 2014 was ₹ 64,480.
(ii) Half the amount of X's Bill is irrecoverable.
(iii) Create a provision of 5% on other debtors.
(iv) Wages include ₹ 600 for erection of new Machinery.
(v) Depreciate Machinery by 5% and Furniture by 10%.
(vi) Commission includes ₹ 300 being Commission received in advance.
ANSWER:

Working Notes:
WN1: Calculation of Amount of Depreciation

WN2: Calculation of Provision for Doubtful Debts
Provision for Doubtful Debts 

WN3: Calculation of Outstanding Interest on Loan

Page No 22.98:
Question 20:
Extracts of Trial Balance as at 31st March, 2017:

Adjustments:
(i) 3/4th of Dewan's bill is irrecoverable.
(ii) Create a provision of 6% on Sundry Debtors.
Show the effect on Profit and Loss Account and Balance Sheet.
ANSWER:

Working Note:
WN1: Calculation of Provision for Doubtful Debts
Provision for Doubtful Debts

*Provision is to be maintained on Debtors other than Dewan

Page No 22.99:
Question 21:
From the following Trial Balance extracted from the books of S. Sujan Singh, prepare a Trading and Profit & Loss Account for the year ended 31st March, 2016 and a Balance Sheet as at that date:

Adjustments:-
1. Carry forward the following unexpired amounts:-
(i) Fire Insurance -   ₹ 125
(ii) Rates and Taxes  -  ₹ 240
2. Transfer to Building Account ₹ 3,000 from purchases and ₹ 2,000 from wages, representing cost of material and labour spent on additions to Building made during the year.
3. Charge Depreciation on Land and Buildings at 2.5% and on Plant & Machinery at 10%.
4. Make a Provision of 5% on Sundry Debtors for Bad-debts.
5. Charge 5% Interest on Capital but not on Drawings.
6. The value of Stock as on 31st March, 2016 was ₹ 29,390.

ANSWER:
Financial Statements of S. Sujan Singh
Trading Account
for the year ended March 31, 2016

Working Notes:
WN1: Calculation of Amount of Depreciation

WN2: Calculation of Provision for Doubtful Debts
Provision for Doubtful Debts