NCERT Solutions for Class 11 Accountancy Chapter 8 - Financial Statement (Without Adjustment)
1. What are the objectives of preparing financial statements?
Ans. Financial statements are prepared with the following objective:
(i) Determine the financial position of a business.
(ii) Ascertain the financial performance of the business.
(iii) To measure the changes in the financial position of a business.
(iv) To compare the financial performance of business both intra and inter-firm wise.
2. What is the purpose of preparing trading and profit and loss accounts?
Ans. Financial statements are prepared with the following objective:
(i) Determine the financial position of a business.
(ii) Ascertain the financial performance of the business.
(iii) To measure the changes in the financial position of a business.
The profit and loss account is prepared for the following purpose:
(i) Ascertaining net profit or net loss.
(ii) Analysing indirect expenses.
(iii) It provides a basis for profitability ratios.
3. Explain the concept of the cost of goods sold.
Ans. Costs incurred in producing goods that a company sells are known as Cost of Goods Sold or Cost of Goods Sold.
(i) If all the goods are sold out. Then, it can be computed as:
Cost of Goods Sold = Purchases + Direct Expenses
(ii) If there is some stock left at the end of the financial year. Then, it can be computed as:
Cost Goods Sold = Purchases + Direct Expenses – Closing Stock
(iii) A stock which is carried forward at the beginning of the financial year from the previous financial year is called opening stock and is computed as:
Cost of Goods Sold = Opening Stock + Purchases + Direct Expenses – Closing Stock
4. What is a Balance Sheet? What are its characteristics?
Ans. A statement prepared to determine the values of assets and liabilities of a business on a specific date is called a Balance Sheet. Debit signifies the assets, while credits represent the liabilities.
It has the following features:
(i) It depends on other statements, i.e., trading and Profit and loss accounts.
(ii) It reflects the financial position of a company.
(iii) It is generally prepared at the end of an accounting period.
(iv) The balance of both sides should match.
5. Distinguish between capital and revenue expenditure and state whether the following statements are items of capital or revenue expenditure:
(a) Expenditure incurred on repairs and whitewashing at purchasing an old building to make it usable.
(b) Expenditure incurred to provide one more exit in a cinema hall in compliance with a government order.
(c) Registration fees are paid at the time of purchase of a building.
(d) Expenditure incurred in maintaining of a tea garden which will produce tea after four years.
(e) Depreciation charged on a plant.
(f) The expenditure incurred in erecting a platform on which a machine will be fixed.
(g) Advertising expenditure, the benefits of which will last for four years.
Ans.
| Basis of Difference | Capital Expenditure | Revenue Expenditure |
| Meaning | Expenditure is borne for acquiring or improving an asset. | Expenses borne for running daily business activities. |
| Place of adjustment | It is shown in the Balance Sheet and Income Statement. | It is shown in the Income statement. |
| Nature | Non-recurring | Recurring |
| Benefits | Benefits can be attained across many financial years. | Benefits can be achieved only in the present year. |
| (a) Capital expenditure | (e) Revenue expenditure |
| (b) Revenue expenditure | (f) Capital expenditure |
| (c) Capital expenditure | (g) Deferred revenue expenditure |
| (d) Capital expenditure |
6. What is an operating profit?
Ans. Operating profit is a profit of a company generated from its core operations. In other words, it is the profit a business earns from its normal business activities. It is often used as a measure of a company’s profitability and efficiency in managing its operations.
The following equation can be used to represent:
Operating Profit = Net Profit + Non-Operating Expenses – Non-Operating Incomes
Long Answer Type Questions
7. What are financial statements? What information do they provide ?
Ans. Statements that contain financial information about a company’s financial performance or position that can satisfy the information required by the internal and external users are called financial statements.
(i) It acts as a source of financial information that caters to the varied information requirements of users.
(ii) It is made to represent a fair and true value of the business.
(iii) The financial statements are trading and profit and loss account and balance sheet, which depicts gross profit or gross loss and net profit or not loss, liabilities and assets.
(iv) It enables a business to compare itself from the other businesses and to compare its performance with performance of previous years.
The various users of information are :
(i) Prospective Owner: These are the external users who want to know the previous year's profits and financial position of the company and also the company's future performance
(ii) Government: It is an external user who wants to know a company's financial position to safeguard stakeholders' rights, to calculated correct tax liabilities etc.
(iii) Current Owners: These are internal users who want to know the profits earned by the company in the current financial year and the current position of the liabilities and assets.
8. What are closing entries? Give four examples of closing entries.
Ans. A journal entry made at the end of a financial year that carries balances from a temporary account to a permanent account is called a closing entry. Some examples of closing entry are:
(i) The purchase returns are closed by transferring the balance to the purchase account.
Following entries are made:
| Purchases return A/c | Dr |
| To Purchases A/c |
(ii) The sales return account is closed by the balance transfer to the sales account. Entries will be:
| Sales A/c | Dr |
| To Sales Return A/c |
(iii) Purchases account closed by transferring to the debit side of trading and Porit and Loss Account
| Trading A/c | Dr |
| To Purchases A/c |
(iv) Sales account closed by transferring the balance to the credit side of trading and Profit and Loss account.
| Sales A/c | Dr |
| To Trading A/c |
9. Discuss the need for preparing a balance sheet.
Ans. The balance sheet needs to be prepared due to following reasons :
(i) To highlight value assets and liabilities a company is having.
(ii) To indicate the liquidity and financial position of a company.
(iii) It aids the management in planning and controlling company operations.
(iv) It acts as an information source for external and internal users.
(v) It serves as a reference for balances that need to be carried forward.
10. What is meant by Grouping and Marshalling of assets and liabilities? Explain the ways in which a balance sheet may be marshalled.
Ans. Grouping refers to including liabilities and assets of similar nature under a common heading. For instance, different kinds of creditors can be placed under one heading. Likewise, raw materials, work in progress, and finished goods can be placed under one heading named inventories.
Marshalling refers to arranging liabilities and assets in order of permanence and liquidity.
In order of permanence: In this method, the most permanent liability or an asset gets the top position on the balance sheet, and the remaining assets are arranged to reduce the level of permanence. For example,
| (i) Debtors | (ii) Bank | (iii) Cash |
Likewise, liabilities in order of permanence are as follows:
| (i) Capital | (ii) Long-term loan | (iii) Creditors |
In order of Liquidity: It indicates how easily an asset can be transformed into cash or liability can be paid off. The asset examples are arranged as follows:
| (i) Cash | (ii) Bank | (iii) Debtors |
Numerical Questions
11. From the following balances taken from the books of Simmi and Vimmi Ltd.
For the year ending March 31, 2017, calculate the gross profit.
| (₹) | |
| Closing stock | 2,50,000 |
| Net sales during the year | 40,00,000 |
| Net purchases during the year | 15,00,000 |
| Opening stock | 15,00,000 |
| Direct expenses | 80,000 |
Ans.
Trading Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Opening Stock | 15,00,000 | By Net Sales | 40,00,000 |
| To Net Purchases | 15,00,000 | By Closing Stock | 2,50,000 |
| To Direct Expenses | 80,000 | ||
| To Gross Profit | 11,70,000 | ||
| 42,50,000 | 42,50,000 |
12. From the following balances extracted from the books of M/s Ahuja and Nanda. Calculate the amount of:
(a) Cost of goods available for sale
(b) Cost of goods sold during the year
(c) Gross Profit
| (₹) | |
| Opening stock | 25,000 |
| Credit purchases | 7,50,000 |
| Cash purchases | 3,00,000 |
| Credit sales | 12,00,000 |
| Cash purchases | 3,00,000 |
| Credit sales | 12,00,000 |
| Cash sales | 4,00,000 |
| Wages | 1,00,000 |
| Salaries | 1,40,000 |
| Closing stock | 30,000 |
| Sales return | 50,000 |
| Purchases return | 10,000 |
Ans. (a) Cost of Goods Sold available for Sales or Cost of Goods Manufactured = Opening Stock + Net Purchases + Wages
= 25,000 + 10,40,000 + 1,00,000
= ₹11,65,000
(b) Cost of Goods Sold = Opening Stock + Net Purchases + Wages – Closing Stock
= 25,000 + 10,40,000 + 1,00,000 – 30,000
= ₹11,35,000
(c)
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
||
| To Opening Stock | 25,000 | By Sales | |||
| To Purchases | Add: Credit Sales | 12,00,000 | |||
| Add: Credit Purchases | 7,50,000 | Add: Cash Sales | 4,00,000 | ||
| Add: Cash Purchases | 3,00,000 | Less: Sales Return | (50,000) | 15,50,000 | |
| Less: Purchases Return | (10,000) | 10,40,000 | By Closing Stock | 30,000 | |
| To Wages | 1,00,000 | ||||
| To Gross Profit | 4,15,000 | ||||
| 15,80,000 | 15,80,000 |
13. Calculate the amount of gross profit and operating profit on the basis of the following balances extracted from the books of M/s Rajiv and Sons for the year ended 31st March, 2017.
| (₹) | |
| Opening stock | 50,000 |
| Net sales | 11,00,000 |
| Net purchases | 6,00,000 |
| Direct expenses | 60,000 |
| Administration expenses | 45,000 |
| Selling and distribution expenses | 65,000 |
| Loss due to fire | 20,000 |
| Closing stock | 70,000 |
Ans.
Trading Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Opening Stock | 50,000 | By Sales | 11,00,000 |
| To Purchases | 6,00,000 | By Closing Stock | 70,000 |
| To Direct Expenses | 60,000 | ||
| To Gross Profit | 4,60,000 | ||
| 11,70,000 | 11,70,000 |
Operating Profit = Sales – (Opening Stock + Net Purchases + Direct Expenses + Administration
Expenses + Selling and Distribution Expenses) + Closing Stock
= 11,00,000 – (50,000 + 6,00,000 + 60,000 + 45,000 + 65,000) + 70,000 = ₹3,50,000
14. Operating profit earned by M/s Arora and Sachdeva in 2016-17 was ₹17,00,000. Its non-operating incomes were ₹1,50,000 and non-operating expenses were ₹3,75,000. Calculate the amount of net profit earned by the firm.
Ans. Net Profit = Operating Profit + Non-operating Income – Non-operating Expenses
= 17,00,000 + 1,50,000 – 3,75,000 = ₹14,75,000
Net profit earned by M/s Arora and Sachdeva in 2016–17 is ₹14,75,000
15. The following are the extracts from the trial balance of M/s Bhola and Sons as on March 31, 2017:
| Account Title | Debit (₹) |
Credit (₹) |
| Opening Stock | 2,00,000 | |
| Purchases | 8,10,000 | |
| Sales | 10,10,000 | |
| 10,10,000 | 10,10,000 |
(Only relevant items)
Closing Stock as on date was valued at ₹3,00,000.
You are required to record the necessary journal entries and show how the above items will appear in the trading and profit and loss account and balance sheet of M/s Bhola and Sons.
Ans.
In the Books of M/s Bhola and Sons
Journal
| Date | Particulars | L.F. | Amount (Dr.) (₹) |
Amount (Cr.) (₹) |
|
| 2017 | |||||
| Mar. 31 | Trading A/c | Dr. | 10,10,000 | ||
| To Opening Stock A/c | 2,00,000 | ||||
| To Purchases A/c | 8,10,000 | ||||
| (Being balance from purchases account and stock accounttransferred to trading account) | |||||
| Mar. 31 | Sales A/c | Dr. | 10,10,000 | ||
| Closing Stock A/c | Dr. | 3,00,000 | |||
| To Trading A/c | 13,10,000 | ||||
| (Being balance from sales and closing stock transferred to trading account) | |||||
| Mar. 31 | Trading A/c | Dr. | 3,00,000 | ||
| To Profit and Loss A/c (Gross Profit) | 3,00,000 | ||||
| (Being balance of trading account (gross profit) transferred to Profit and Loss A/c) |
Trading Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Opening Stock | 2,00,000 | By Sales | 10,10,000 |
| To Purchases | 8,10,000 | By Closing Stock | 3,00,000 |
| To Gross Profit | 3,00,000 | ||
| 13,10,000 | 13,10,000 |
Balance Sheet
as at 31st March, 2017
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
| Closing Stock | 3,00,000 | ||
| 3,00,000 |
16. Prepare trading and profit and loss account and balance sheet, as on March 31, 2017:
| Account Title | Amount (₹) |
Account Title | Amount (₹) |
| Machinery | 27,000 | Capital | 60,000 |
| Sundry debtors | 21,600 | Bills payable | 2,800 |
| Drawings | 2,700 | Sundry creditors | 1,400 |
| Purchases | 58,500 | Sales | 73,500 |
| Wages | 15,000 | ||
| Sundry expenses | 600 | ||
| Rent and taxes | 1,350 | ||
| Carriage inwards | 450 | ||
| Bank | 4,500 | ||
| Opening stock | 6,000 |
Closing stock as on March 31, 2017 ₹22,400
Ans. Trading and profit and loss account and balance sheet are prepared as follows:
Trading Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Opening Stock | 6,000 | By Sales | 73,500 |
| To Purchases | 58,500 | By Closing Stock | 22,400 |
| To Wages | 15,000 | ||
| To Carriage Inwards | 450 | ||
| To Gross Profit | |||
| (Transferred to Profit and Loss A/c) | 15,950 | ||
| 95,900 | 95,900 |
Profit and Loss Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Sundry Expenses | 600 | By Gross Profit | 15,950 |
| To Rent and Texes | 1,350 | ||
| To Net Profit | 14,000 | ||
| (Tranferred to Capital A/c) | |||
| 15,950 | 15,950 |
Balance Sheet
as at 31st March, 2017
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
||
| Capital | 60,000 | Fixed Assets: | |||
| Add: Net Profit | 14,000 | Machinery | 27,000 | ||
| Less: Drawings | (2,700) | 71,300 | Current Assets: | ||
| Sundry Creditors | 1,400 | Bank | 4,500 | ||
| Bills Payable | 2,800 | Closing Stock | 22,400 | ||
| Sundry Debtors | 21,600 | 48,500 | |||
| 75,500 | 75,500 |
17. The following trial balance is extracted from the books of M/s Ram on March 31, 2017. You are required to prepare trading and profit and loss account and the balance sheet as on date:
| Account Title | Amount (₹) |
Account Title | Amount (₹) |
| Debtors | 12,000 | Apprenticeship premium | 5,000 |
| Purchases | 50,000 | Loan | 10,000 |
| Coal, gas and water | 6,000 | Bank overdraft | 1,000 |
| Factory wages | 11,000 | Sales | 80,000 |
| Salaries | 9,000 | Creditors | 13,000 |
| Rent | 4,000 | Capital | 20,000 |
| Discount | 3,000 | ||
| Advertisement | 500 | ||
| Drawings | 1,000 | ||
| Loan | 6,000 | ||
| Petty cash | 500 | ||
| Sales return | 1,000 | ||
| Machinery | 5,000 | ||
| Land and Building | 10,000 | ||
| Income tax | 100 | ||
| Furniture | 9,900 |
Ans. Trading and profit and loss account and balance sheet are prepared as follows:
Trading Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Particulars | Amount (₹) |
| To Purchases | 50,000 | By Sales | 80,000 | |
| To Coal, Gas and Water | 6,000 | Less: Sales Return | (1,000) |
79,000 |
| To Factory Wages | 11,000 | |||
| To Gross Profit | ||||
| (Transferred to Profit and Loss A/c) | 12,000 | |||
| 79,000 | 79,000 |
Profit and Loss Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
|
| To Purchases | 50,000 | By Sales | 80,000 | |
| To Coal, Gas and Water | 6,000 | Less: Sales Return | (1,000) |
79,000 |
| To Factory Wages | 11,000 | |||
| To Gross Profit | ||||
| (Transferred to Profit and Loss A/c) | 12,000 | |||
| 79,000 | 79,000 |
Profit and Loss Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Salaries | 9,000 | By Gross Profit | 12,000 |
| To Rent | 4,000 | By Apprenticeship Premium | 5,000 |
| To Discount | 3,000 | ||
| To Advertisement | 500 | ||
| To Net Profit | 500 | ||
| (Transferred to capital A/c) | |||
| 17,000 | 17,000 |
Balance Sheet
as at 31st March, 2017
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Capital | 20,000 | Machinery | 5,000 | |
| Add: Profit & Loss (Net Profit) | 500 | Land and Building | 10,000 | |
| Less: Drawings | (1,000) | Furniture | 9,900 | |
| Less: Income Tax | (100) | 19,400 | Loan (Advance) | 6,000 |
| Loan (Taken) | 10,000 | Debtors | 12,000 | |
| Creditors | 13,000 | Petty Cash | 500 | |
| Bank Overdraft | 1,000 | |||
| 43,400 | 43,400 | |||
18. The following is the trial balance of Manju Chawla on March 31, 2017. You are required to prepare trading and profit and loss account and a balance sheet as on date:
| Account Title | Debit (₹) |
Credit (₹) |
| Opening Stock | 10,000 | |
| Purchases and sales | 40,000 | 80,000 |
| Returns | 200 | 600 |
| Productive wages | 6,000 | |
| Dock and Clearing charges | 4,000 | |
| Donation and charity | 600 | |
| Delivery van expenses | 6,000 | |
| Lighting | 500 | |
| Sales tax collected | 1,000 | |
| Bad debts | 600 | |
| Misc. incomes | 6,000 | |
| Rent from tenants | 2,000 | |
| Royalty | 4,000 | |
| Capital | 40,000 | |
| Drawings | 2,000 | |
| Debtors and Creditors | 6,700 | 7,000 |
| Cash | 3,000 | |
| Investment | 6,000 | |
| Patents | 4,000 | |
| Land and Machinery | 43,000 |
Closing stock ₹2,000.
Ans. Trading and profit and loss account and balance sheet are prepared as follows:
Trading Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
||
| To Opening Stock | 10,000 | By Sales | 80,000 | ||
| To Purchases | 40,000 | Less: Sales Return | (200) | 79,800 | |
| Less: Purchases Returen | (600) | 39,400 | By Closing Stock | 2,000 | |
| To Productive Wages | 6,000 | ||||
| To Dock and Clearing Charges | 4,000 | ||||
| To Royalty | 4,000 | ||||
| Gross Profit | 18,400 | ||||
| (Tranferred to profit and loss A/c) | |||||
| 81,800 | 81,800 |
Profit and Loss Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Donation and Charity | 600 | By Gross Profit | 18,400 |
| To Delivery Van Expenses | 6,000 | By Misc. Incomes | 6,000 |
| To Lighting | 500 | By Rent from Tenants | 2,000 |
| To Bad Debts | 600 | ||
| To Net Profit | 18,700 | ||
| (Transferred to Capital A/c) | |||
| 26,400 | 26,400 |
Balance Sheet
as at 31st March, 2017
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Capital | 40,000 | Patents | 4,000 | |
| Add: Profit & Loss (Net Profit) | 18,700 | Land and Machinery | 43,000 | |
| Less: Drawings | (2,000) | 56,700 | Investment | 6,000 |
| Sales Tax Collected | 1,000 | Debtors | 6,700 | |
| Creditors | 7,000 | Cash | 3,000 | |
| Closing Stock | 2,000 | |||
| 64,700 | 64,700 |
19. The following is the Trial Balance of Mr. Deepak as on March 31, 2017. You are required to prepare trading account, profit and loss account and a balance sheet as on date:
| Account Title | Amount (₹) |
Account Title | Amount (₹) |
| Drawings | 36,000 | Capital | 2,50,000 |
| Insurance | 3,000 | Bills payable | 3,600 |
| General expenses | 29,000 | Creditors | 50,000 |
| Rent and taxes | 14,400 | Discount received | 10,400 |
| Lighting (factory) | 2,800 | Purchases return | 8,000 |
| Travelling expenses | 7,400 | Sales | 4,40,000 |
| Cash in hand | 12,600 | ||
| Bills receivable | 5,000 | ||
| Sundry debtors | 1,04,000 | ||
| Furniture | 16,000 | ||
| Plant and Machinery | 1,80,000 | ||
| Opening stock | 40,000 | ||
| Purchases | 1,60,000 | ||
| Sales return | 6,000 | ||
| Carriage inwards | 7,200 | ||
| Carriage outwards | 1,600 | ||
| Wages | 84,000 | ||
| Salaries | 53,000 |
Closing stock ₹35,000.
Ans. The trading account, profit and loss account and a balance sheet are prepared below :
Trading Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
||
| To Opening Stock | 40,000 | By Sales | 4,40,000 | ||
| To Purchases | 1,60,000 | Less: Sales Return | (6,000) | 4,34,000 | |
| Less: Purchases Returen | (8,000) | 1,52,000 | By Closing Stock | 35,000 | |
| To Lighting (factory) | 2,800 | ||||
| To Carriage Inwards | 7,200 | ||||
| To Wages | 84,000 | ||||
| To Gross Profit | 1,83,000 | ||||
| (Transferred to Profit and Loss A/c) | |||||
| 4,69,000 | 4,69,000 |
Profit and Loss Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Insurance | 3,000 | By Gross Profit | 1,83,000 |
| To General Expenses | 29,000 | By Discount Received | 10,400 |
| To Rent and Taxes | 14,400 | ||
| To Travelling Expenses | 7,400 | ||
| To Carriage Outwards | 1,600 | ||
| To Salaries | 53,000 | ||
| To Net Profit | 85,000 | ||
| (Transferred to Capital A/c) | |||
| 1,93,400 | 1,93,400 |
Balance Sheet
as at 31st March, 2017
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Capital | 2,50,000 | Plant and Machinery | 1,80,000 | |
| Add: Net Profit | 85,000 | Furniture | 16,000 | |
| Less: Drawings | (36,000) |
2,99,000 | Sundry Debtors | 1,04,000 |
| Creditors | 50,000 | Closing Stock | 35,000 | |
| Bills payable | 3,600 | Bills Receivable | 5,000 | |
| Cash in Hand | 12,600 | |||
| 3,52,600 | 3,52,600 |
20. Prepare trading and profit and loss account and balance sheet from the following particulars as on March 31, 2017.
| Account Title | Debit (₹) |
Credit (₹) |
| Purchases and sales | 3,52,000 | 5,60,000 |
| Returns inwards and Return outwards | 9,600 | 12,000 |
| Carriage inwards | 7,000 | |
| Carriage outwards | 3,360 | |
| Fuel and power | 24,800 | |
| Opening stock | 57,600 | |
| Bad debts | 9,950 | |
| Debtors and Creditors | 1,31,200 | 48,000 |
| Capital | 3,48,000 | |
| Investment | 32,000 | |
| Interest on investment | 3,200 | |
| Loan | 16,000 | |
| Repairs | 2,400 | |
| General expenses | 17,000 | |
| Wages and salaries | 28,800 | |
| Land and buildings | 2,88,000 | |
| Cash in hand | 32,000 | |
| Miscellaneous receipts | 160 | |
| Sales tax collected | 8,350 |
Closing stock ₹30,000.
Ans. Trading and profit and loss account and balance sheet for the question are posted below:
Trading Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
||
| To Opening Stock | 57,600 | By Sales | 5,60,000 | ||
| To Purchases | 3,52,000 | Less: Return Inwards | (9,600) |
5,50,400 | |
| Less: Returen outwards | (12,000) | 3,40,000 | By Closing Stock | 30,000 | |
| To Carriage Inwards | 7,000 | ||||
| To Fuel and Power | 24,800 | ||||
| To Wages and Salaries | 28,800 | ||||
| To Gross Profit | 1,22,200 | ||||
| (Transferred to Profit and Loss A/c) | |||||
| 5,80,400 | 5,80,400 |
Profit and Loss Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Carriage Outwards | 3,360 | By Gross Profit | 1,22,200 |
| To Bad Debts | 9,950 | By Interest on Investment | 3,200 |
| To Repairs | 2,400 | By Miscellaneous Receipts | 160 |
| To General Expenses | 17,000 | ||
| To Net Profit | 92,850 | ||
| (Transferred to Capital A/c) | |||
| 1,25,560 | 1,25,560 |
Balance Sheet
as at 31st March, 2017
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Capital | 3,48,000 | Land and Building | 2,88,000 | |
| Add: Net Profit | 92,850 |
4,40,850 | Investment | 32,000 |
| Loan | 16,000 | Debtors | 1,31,200 | |
| Creditors | 48,000 | Closing Stock | 30,000 | |
| Sales Tax Collected | 8,350 | Cash in Hand | 32,000 | |
| 5,13,200 | 5,13,200 |
21. From the following trial balance of Mr. A. Lal, prepare trading, profit and loss account and balance sheet as on March 31, 2017.
| Account Title | Debit (₹) |
Credit (₹) |
| Stock as on April 01, 2016 | 16,000 | |
| Purchases and Sales | 67,600 | 1,12,000 |
| Returns inwards and outwards | 4,600 | 3,200 |
| Carriage inwards | 1,400 | |
| General expenses | 2,400 | |
| Bad debts | 600 | |
| Discount received | 1,400 | |
| Bank overdraft | 10,000 | |
| Interest on bank overdraft | 600 | |
| Commission received | 1,800 | |
| Insurance and taxes | 4,000 | |
| Scooter expenses | 200 | |
| Salaries | 8,800 | |
| Cash in hand | 4,000 | |
| Scooter | 8,000 | |
| Furniture | 52,000 | |
| Building | 65,000 | |
| Debtors and Creditors | 6,000 | 16,000 |
| Capital | 50,000 |
Closing stock ₹15,000.
Ans. Trading and profit and loss account and balance sheet for the question are posted below :
Trading Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
||
| To Opening Stock | 16,000 | By Sales | 1,12,000 | ||
| To Purchases | 67,600 | Less: Return inwards | (4,600) | 1,07,400 | |
| Less: Return outwards | (3,200) |
64,400 | By Closing Stock | 15,000 | |
| To Carriage Inwards | 1,400 | ||||
| To Gross Profit | 40,600 | ||||
| (Transferred to Profit and Loss A/c) | |||||
| 1,22,400 | 1,22,400 |
Profit and Loss Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To General Expenses | 2,400 | By Gross Profit | 40,600 |
| To Bad Debts | 600 | By Discount Received | 1,400 |
| To Interest on Bank Overdraft | 600 | By Commission Received | 1,800 |
| To Insurance and Taxes | 4,000 | ||
| To Scooter Expenses | 200 | ||
| To Salaries | 8,800 | ||
| To Net Profit | 27,200 | ||
| (Transferred to Capital A/c) | |||
| 43,800 | 43,800 |
Balance Sheet
as at 31st March, 2017
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Capital | 50,000 | Building | 65,000 | |
| Add: Net Profit | 27,200 |
77,200 | Furniture | 5,200 |
| Creditors | 16,000 | Scooter | 8,000 | |
| Sales Tax Collected | 10,000 | Debtors | 6,000 | |
| Closing Stock | 15,000 | |||
| Cash in Hand | 4,000 | |||
| 1,03,200 | 1,03,200 |
22. Prepare trading and profit and loss account and balance sheet of M/s Royal Traders from the following balances as on March 31, 2017.
| Account Title | Amount (₹) |
Account Title | Amount (₹) |
| Stock | 20,000 | Sales | 2,45,000 |
| Cash | 5,000 | Creditors | 10,000 |
| Bank | 10,000 | Bills payable | 4,000 |
| Carriage on purchases | 1,500 | Capital | 2,00,000 |
| Purchases | 1,90,000 | ||
| Drawings | 9,000 | ||
| Wages | 55,000 | ||
| Machinery | 1,00,000 | ||
| Debtors | 27,000 | ||
| Postage | 300 | ||
| Sundry expenses | 1,700 | ||
| Rent | 4,500 | ||
| Furniture | 35,000 |
Closing stock ₹8,000.
Ans. Trading and profit and loss account and balance sheet are prepared below :
Trading Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Opening Stock | 20,000 | By Sales | 2,45,000 |
| To Purchases | 1,90,000 | By Closing Stock | 8,000 |
| To Carriage Inwards | 1,500 | By Gross Loss | 13,500 |
| To Wages | 55,000 | (Transferred to Profit and Loss A/c) | |
| 2,66,500 | 2,66,500 |
Profit and Loss Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Gross Loss | 13,500 | To Net Loss | 20,000 |
| To Postage | 300 | (Transferred to Capital A/c) | |
| To Sundry Expenses | 1,700 | ||
| To Rent | 4,500 | ||
| 20,000 | 20,000 |
Balance Sheet
as at 31st March, 2017
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Capital | 2,00,000 | Machinery | 1,00,000 | |
| Less: Net Loss | (20,000) | Furniture | 35,000 | |
| Less: Drawings | (9,000) | 1,71,000 | Debtors | 27,000 |
| Creditors | 10,000 | Closing Stock | 8,000 | |
| Bills Payable | 4,000 | Bank | 10,000 | |
| Cash | 5,000 | |||
| 1,85,000 | 1,85,000 |
23. Prepare trading and profit and loss account from the following particulars of M/s Neema Traders as on March 31, 2017.
| Account Title | Amount (₹) |
Account Title | Amount (₹) |
| Buildings | 23,000 | Sales | 1,80,000 |
| Plant | 16,930 | Loan | 8,000 |
| Carriage inwards | 1,000 | Bills payable | 2,520 |
| Wages | 3,300 | Bank overdraft | 4,720 |
| Purchases | 1,64,000 | Creditors | 8,000 |
| Sales return | 1,820 | Capital | 2,36,000 |
| Opening Stock | 9,000 | Purchases return | 1,910 |
| Machinery | 2,10,940 | ||
| Insurance | 1,610 | ||
| Interest | 1,100 | ||
| Bad debts | 250 | ||
| Postage | 300 | ||
| Discount | 1,000 | ||
| Salaries | 3,000 | ||
| Debtors | 3,900 |
Stock on March 31, 2017 ₹16,000.
Ans. Trading and profit and loss account and balance sheet are prepared below:
Trading Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
||
| To Opening Stock | 9,000 | By Sales | 1,80,000 | ||
| To Purchases | 1,64,000 | Less: Sales Return | (1,820) |
1,78,180 | |
| Less: Purchases Return | (1,910) | 1,62,090 | By Closing Stock | 16,000 | |
| To Carriage Inwards | 1,000 | ||||
| To Wages | 3,300 | ||||
| To Gross Profit | 18,790 | ||||
| (Transferred to Profit and Loss A/c) | |||||
| 1,94,180 | 1,94,180 |
Profit and Loss Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Insurance | 1,610 | By Gross Profit | 18,790 |
| To Interest | 1,100 | ||
| To Bad Debts | 250 | ||
| To Postage | 300 | ||
| To Discount | 1,000 | ||
| To Salaries | 3,000 | ||
| To Net Profit | 11,530 | ||
| (Transferred to Capital A/c) | |||
| 18,790 | 18,790 |
Balance Sheet
as at 31st March, 2017
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Capital | 2,36,000 | Building | 23,000 | |
| Less: Net Profit | 11,530 | 2,47,530 | Plant | 16,930 |
| Loan | 8,000 | Machinery | 2,10,940 | |
| Creditors | 8,000 | Debtors | 3,900 | |
| Bills Payable | 2,520 | Closing Stock | 16,000 | |
| Bank Overdraft | 4,720 | |||
| 2,70,770 | 2,70,770 |
24. From the following balances of M/s Nilu Sarees as on March 31, 2017. Prepare trading and profit and loss account and balance sheet as on date.
| Account Title | Amount (₹) |
Account Title | Amount (₹) |
| Opening stock | 10,000 | Sales | 2,28,000 |
| Purchases | 78,000 | Capital | 70,000 |
| Carriage inwards | 2,500 | Interest | 7,000 |
| Salaries | 30,000 | Commission | 8,000 |
| Commission | 10,000 | Creditors | 28,000 |
| Wages | 11,000 | Bills payable | 2,370 |
| Rent and taxes | 2,800 | ||
| Repairs | 5,000 | ||
| Telephone expenses | 1,400 | ||
| Legal charges | 1,500 | ||
| Sundry expenses | 2,500 | ||
| Cash in hand | 12,000 | ||
| Debtors | 30,000 | ||
| Machinery | 60,000 | ||
| Investments | 90,000 | ||
| Drawings | 18,000 |
Closing stock, as on March 31, 2017 ₹22,000.
Ans.
Trading Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Opening Stock | 10,000 | By Sales | 2,28,000 |
| To Purchases | 78,000 | By Closing Stock | 22,000 |
| To Carriage Inwards | 2,500 | ||
| To Wages | 11,000 | ||
| To Gross Profit | 1,48,500 | ||
| (Transferred to Profit and Loss A/c) | |||
| 2,50,000 | 2,50,000 |
Profit and Loss Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Salaries | 30,000 | By Gross Profit | 1,48,500 |
| To Commission | 10,000 | By Interest | 7,000 |
| To Rent and Taxes | 2,800 | By Commission | 8,000 |
| To Repairs | 5,000 | ||
| To Telephone Expenses | 1,400 | ||
| To Legal Charges | 1,500 | ||
| To Sundry Expenses | 2,500 | ||
| To Net Profit | 1,10,300 | ||
| (Transferred to capital A/c) | |||
| 1,63,500 | 1,63,500 |
Balance Sheet
as at 31st March, 2017
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Capital | 70,000 | Machinery | 60,000 | |
| Add: Net Profit | 1,10,300 | Investments | 90,000 | |
| Less: Drawings | (18,000) |
1,62,300 | Debtors | 30,000 |
| Creditors | 28,000 | Closing Stock | 22,000 | |
| Bills Payable | 2,370 | Cash in Hand | 12,000 | |
| Suspense | 21,330 | |||
| 2,14,000 | 2,14,000 | |||
25. Prepare trading and profit and loss account of M/s Sports Equipment for the year ended March 31, 2017 and balance sheet as on that date:
| Account Title | Debit (₹) |
Credit (₹) |
| Opening stock | 50,000 | |
| Purchases and Sales | 3,50,000 | 4,21,000 |
| Sales returns | 5,000 | |
| Capital | 3,00,000 | |
| Commission | 4,000 | |
| Creditors | 1,00,000 | |
| Bank overdraft | 28,000 | |
| Cash in hand | 32,000 | |
| Furniture | 1,28,000 | |
| Debtors | 1,40,000 | |
| Plants | 60,000 | |
| Carriage on purchases | 12,000 | |
| Wages | 8,000 | |
| Rent | 15,000 | |
| Bad debts | 7,000 | |
| Drawings | 24,000 | |
| Stationery | 6,000 | |
| Travelling expenses | 2,000 | |
| Insurance | 7,000 | |
| Discount | 5,000 | |
| Office expenses | 2,000 |
Closing stock as on March 31, 2017 ₹2,500
Ans. Trading and profit and loss account and balance sheet are prepared below:
Trading Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
|
| To Opening Stock | 50,000 | By Sales | 4,21,000 | |
| To Purchases | 3,50,000 | Less: Sales Return |
(5,000) | 4,16,000 |
| To Carriage on Purchases | 12,000 | By Closing Stock | 2,500 | |
| To Wages | 8,000 | By Gross loss | 1,500 | |
| (Transferred to Profit and Loss A/c) | ||||
| 4,20,000 | 4,20,000 | |||
Profit and Loss Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Gross Loss | 1,500 | By Commission | 4,000 |
| To Rent | 15,000 | By Net Loss | 41,500 |
| To Bad Debts | 7,000 | (Transferred to capital A/c) | |
| To Stationery | 6,000 | ||
| To Travelling Expenses | 2,000 | ||
| To Insurance | 7,000 | ||
| To Discount | 5,000 | ||
| To Office Expenses | 2,000 | ||
| 45,500 | 45,500 |
Balance Sheet
as at 31st March, 2017
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Capital | 3,00,000 | Plants | 60,000 | |
| Less: Net Loss | (41,500) | Furniture | 1,28,000 | |
| Less: Net Loss | (24,000) | 2,34,500 | Debtors | 1,40,000 |
| Less: Drawings | (24,000) |
2,34,500 | Debtors | 1,40,000 |
| Creditors | 1,00,000 | Closing Stock | 2,500 | |
| Bank Overdraft | 28,000 | Cash in Hand | 32,000 | |
| 3,62,500 | 3,62,500 | |||
