TS Grewal accountancy class 11 solution chapter 19 adjustments in preparation of financial statements

 Ts grewal solution (2023-2024) | Class-11th | Chapter-19 | Adjustments In Preparation Of Financial Statements

Page No 19.64:

Question 1:

Following are the balances extracted from the books of Manish on 31st March, 2019:
 

	`		`
Capital	1,90,000	Cash at Bank	26,000
Drawing	7,000	Salaries	8,000
Plant and Machinery	1,20,000	Repairs	1,900
Delivery Vehicle	26,000	Stock on 1st April, 2018	16,000
Sundry Debtors	36,000	Rent	4,500
Sundry Creditors	26,000	Manufacturing Expenses	1,500
Purchases	20,000	Bills Payable	23,500
Sales	42,000	Bad Debts	5,000
Wages	8,000	Carriage	1,600

Prepare Trading and Profit and Loss Account and Balance Sheet as at 31st March, 2019 after following adjustments are made:
(i) Closing Stock was  ` 16,000.
(ii) Depreciate Plant and Machinery @ 10% and Delivery Vehicle @ 15%.
(iii) Unpaid Rent amounted to  ` 500.

Answer:

Trading Account for the year ended March 31, 2019
Dr.					Cr.
Particulars		Amount ( `)	Particulars	Amount ( `)
Opening stock		16,000	Sales	42,000
Purchases		20,000	Closing Stock	16,000
Wages		8,000
Manufacturing Expenses		1,500
Carriage		1,600
Gross Profit (Balance Figure)		10,900
		58,000		58,000

 

Profit and Loss Account for the year ended March 31, 2019
Dr.						Cr.
Particulars			Amount ( `)	Particulars	Amount ( `)
Salaries			8,000	Gross Profit	10,900
Repairs			1,900	Net Loss (Balancing Figure)	24,900
Rent		4,500
Add: Unpaid Rent		500	5,000
Bad Debts			5,000
Depreciation on:
Plant and machinery		12,000
Delivery Vehicle		3,900	15,900
			35,800		35,800

 

Balance Sheet as on March 31, 2019
Liabilities		Amount ( `)	Assets		Amount ( `)
Capital	1,90,000		Fixed Assets
Less: Drawings	(7,000)		Plant and Machinery	1,20,000
Less: Net Loss	(24,900)		Less:10% Deprecation	(12,000)	1,08,000
		1,58,100	Delivery Vehicle	26,000
			Less:15% Depreciation	(3,900)	22,100
Current Liabilities
Sundry Creditors		26,000	Current Assets
Bills Payable		23,500	Closing Stock		16,000
Unpaid Rent		500	Sundry Debtors		36,000
			Cash at Bank		26,000
		2,08,100			2,08,100

Page No 19.65:

Question 2:

Prepare Trading and Profit and Loss Account and Balance Sheet from the following balances, relating to the year ended 31st March, 2019:
 

	`		`
Capital	1,00,000	Wages	50,000
Creditors	12,000	Bank	10,000
Returns Outward	5,000	Repairs	500
Sales	1,64,000	Stock on 1st April, 2018	20,000
Bills Payable	5,000	Rent	4,000
Plant and Machinery	40,000	Manufacturing Expenses	8,000
Sundry Debtors	24,000	Trade Expenses	7,000
Drawings	10,000	Bad Debts	2,000
Purchases	1,05,000	Carriage	1,500
Returns Inward	3,000	Fuel and Power	1,000

Additional Information:
(i) Closing Stock was valued at  ` 14,500.
(ii) Depreciate Plant and Machinery by  ` 4,000.
(iii) Write off Bad Debts  ` 5,000.
(iv)  ` 400 is due for repairs.

Answer:

Trading Account for the year ended March 31, 2019
Dr.							Cr.
Particulars			Amount ( `)	Particulars		Amount ( `)
Opening stock			20,000	Sales	1,64,000
Purchases		1,05,000		Less: Return Inwards	(3,000)	1,61,000
Less: Return out words		(5,000)	1,00,000	Closing Stock		14,500
Wages			50,000	Gross Loss (Balancing Figure)		5,000
Manufacturing Expenses			8,000
Carriage			1,500
Fuel and Power			1,000
			1,80,500			1,80,500

 

Profit and Loss Account for the year ended March 31, 2019
Dr.						Cr.
Particulars			Amount ( `)	Particulars	Amount ( `)
Gross Loss			5,000
Repairs		500
Add: outstanding		400	900
Rent			4,000
Miscellaneous Expenses			7,000
Bad Debts		2,000		Net Loss (Balancing Figure)	27,900
Add: Additional bad debts		5,000	7,000
Depreciation on Plant and Machinery			4,000
			27,900		27,900

 

Balance Sheet as on March 31, 2019
Liabilities		Amount ( `)	Assets		Amount ( `)
Capital	1,00,000		Fixed Assets
Less: Drawings	(10,000)		Plant and Machinery	40,000
Less: Net Loss	(27,900)	62,100	Less: Depreciation	(4,000)	36,000
Current Liabilities			Current Assets
Creditors		12,000	Closing Stock		14,500
Bills Payable		5,000	Sundry Debtors	24,000
Outstanding Repairs		400	Less: Further Bad Debts	(5,000)	19,000
			Bank		10,000
		79,500			79,500

Page No 19.66:

Question 5:

​Trial Balance of a business as at 31st March, 2019 is given below:

Particulars	Dr. ( `)	Particulars		Cr. ( `)
Stock on 1st April, 2018	25,000	Sales		2,27,800
Furniture	8,000	Commission		500
Plant and Machinery	1,50,000	Returns Outward		1,000
Debtors	30,000	Creditors		40,000
Wages	12,000	Capital		1,50,000
Salaries	20,000
Bad Debts	1,000
Purchases	1,20,000
Electricity Charges	1,200
Telephone Charges	2,400
General Expenses	3,000
Postage Expenses	1,800
Returns Inward	900
Insurance Premium	1,500
Cash in Hand	2,500
Cash at Bank	40,000
	4,19,300			4,19,300

Prepare Trading and Profit and Loss Account for the year ended 31st March, 2019 and Balance Sheet as at that date after taking into account the following adjustments:
(i) Closing Stock was valued at  ` 7,000.
(ii) Outstanding liabilities for wages were  ` 600 and salaries  ` 1,400.
(iii) Depreciation is to be provided @ 5% p.a. on fixed assets.
(iv) Included in Plant and Machinery is a machine purchased for  ` 10,000 on 1st October, 2018.
(v) Insurance premium paid in advance  ` 200.

Answer:

Trading Account for the year ended March 31, 2018
Dr.					Cr.
Particulars		Amount ( `)	Particulars		Amount ( `)
Opening Stock		25,000	Sales	2,27,800
Purchases	1,20,000		Less: Returns	900	2,26,900
Less: Returns	1,000	1,19,000	Closing Stock		7,000
Wages	12,000
Add: Outstanding Wages	600	12,600
Gross Profit		77,300
		2,33,900			2,33,900

 

Profit & Loss Account for the year ended March 31, 2018
Dr.				Cr.
Particulars		Amount ( `)	Particulars	Amount ( `)
Bad Debts		1,000	Gross Profit	77,300
Insurance Premium	1,500		Commission	500
Less: Prepaid	200	1,300
Salaries	20,000
Add: Outstanding Salaries	1,400	21,400
Electricity Charges		1,200
General Expenses		3,000
Postage Expenses		1,800
Telephone Charges		2,400
Depreciation on:
Furniture	400
Plant & Machinery	7,250	7,650
Net Profit		38,050
		77,800		77,800

 

Balance Sheet as on March 31, 2018
Dr.					Cr.
Liabilities		Amount ( `)	Assets		Amount ( `)
Creditors		40,000	Furniture	8,000
Outstanding Wages		600	Less: Depreciation	400	7,600
Outstanding Salaries		1,400	Plant & Machinery	1,50,000
Capital	1,50,000		Less: Depreciation	7,250	1,42,750
Add: Net Profit	38,050	1,88,050	Cash at Bank		40,000
			Cash in Hand		2,500
			Closing Stock		7,000
			Debtors		30,000
			Prepaid Insurance		200
		2,30,050			2,30,050

 

Page No 19.67:

Question 6:

Following are the balances extracted from the books of Narain on 31st March, 2019:

Particulars	Amount ( `)	Particulars		Amount ( `)
Narain's Capital	3,00,000	Sales		15,00,000
Narain's Drawings	50,000	Sales Return		20,000
Furniture and Fittings	26,000	Discounts (Dr.)		16,000
Bank Overdraft	42,000	Discounts (Cr.)		20,000
Creditors	1,38,000	Insurance		20,000
Business Premises	2,00,000	General Expenses		40,000
Stock on 1st April, 2018	2,20,000	Salaries		90,000
Debtors	1,80,000	Commission (Dr.)		22,000
Rent from Tenants	10,000	Carriage on Purchases		18,000
Purchases	11,00,000	Bad Debts Written off		8,000

Additional Information:
(i) Closing Stock as on 31st March, 2019 was  ` 2,00,600, whereas its Net Realisable Value (Market Value) was  ` 2,05,000.
(ii) Depreciate: Business Premises by  ` 3,000 and Furniture and Fittings by  ` 2,500.
(iii) Make a provision of 5% on debtors for doubtful debts.
(iv) Carry forward  ` 2,000 for unexpired insurance.
(v) Outstanding salary was  ` 15,000.
Prepare Trading and Profit and Loss Account for the year and Balance Sheet as at that date.

Answer:

Trading Account for the year ended March 31, 2019
Dr.				Cr.
Particulars	Amount ( `)	Particulars		Amount ( `)
Opening Stock	2,20,000	Sales	15,00,000
Purchases	11,00,000	Less: Returns	20,000	14,80,000
Carriage on Purchases	18,000	Closing Stock		2,00,600
Gross Profit	3,42,600
	16,80,600			16,80,600

Note: As per the prudence concept, closing stock is taken to be at the market value or the book value whichever is less.
 

Profit & Loss Account for the year ended March 31, 2019
Dr.					Cr.
Particulars			Amount ( `)	Particulars	Amount ( `)
Commission			22,000	Gross Profit	3,42,600
Insurance Premium	20,000			Discount	20,000
Less: Prepaid	2,000		18,000	Rent from Tenants	10,000
Salaries	90,000
Add: Outstanding Salaries	15,000		1,05,000
Bad Debts Written Off			8,000
Provision for Doubtful Debts			9,000
Discount			16,000
General Expenses			40,000
Depreciation on:
Furniture		2,500
Business Premises		3,000	5,500
Net Profit			1,49,100
			3,72,600		3,72,600

 

Balance Sheet as on March 31, 2019
Dr.					Cr.
Liabilities		Amount ( `)	Assets		Amount ( `)
Bank Overdraft		42,000	Furniture & Fittings	26,000
Creditors		1,38,000	Less: Depreciation	2,500	23,500
Outstanding Salaries		15,000	Business Premises	2,00,000
Capital	3,00,000		Less: Depreciation	3,000	1,97,000
Less: Drawings	50,000		Debtors	1,80,000
Add: Net Profit	1,49,100	3,99,100	Less: Provision	9,000	1,71,000
			Closing Stock		2,00,600
			Prepaid Insurance		2,000
		5,94,100			5,94,100

Page No 19.68:

Question 7:

Following balances are taken from the books of Niranjan. Prepare Trading and Profit and Loss Account and Balance Sheet for the year ended 31st March, 2019:
 

Particulars	`	Particulars	`
Capital	12,00,000	Drawings	2,10,000
Opening Stock	4,50,000	Plant and Machinery	2,40,000
Furniture	15,000	Purchases	29,50,000
Sales	43,50,000	Insurances	15,000
Purchases Return	40,000	Sales Return	70,000
Rent	50,000	Trade Expenses	20,000
Salaries	2,40,000	Wages	4,00,000
Bad Debts	10,000	6% Investments	5,00,000
Sundry Debtors	4,00,000	Sundry Creditors	1,90,000
Bills Payable	8,000	Cash	1,22,000
Advertisement Expenses	60,000	Miscellaneous Income	12,000
Patents	48,000

Adjustments:
(i) Closing Stock  ` 7,50,000.
(ii) Depreciate Machinery by 10% and Furniture by 20%.
(iii) Wages  ` 50,000 and salaries  ` 20,000 are outstanding.
(iv) Write off  ` 50,000 as further Bad Debts and create 5% Provision for Doubtful Debts. Also, create a reserve for discount on Debtors @ 2%.
(v) Investments were made on 1st July, 2018 and no interest has been received so far.

Answer:

Financial statements of Mr. Niranjan
Trading Account for the year ended March 31, 2019
Dr.					Cr.
Particulars		Amount ( `)	Particulars		Amount ( `)
Opening Stock		4,50,000	Sales	43,50,000
Purchases	29,50,000		Less: Sales Return	(70,000)	42,80,000
Less: Purchases Return	(40,000)	29,10,000	Closing Stock		7,50,000
Wages	4,00,000
Add: Outstanding wages	50,000	4,50,000
Gross Profit (Balancing Figure)		12,20,000
		50,30,000			50,30,000

 

Profit and Loss Account for the year ended March 31, 2019
Dr.						Cr.
Particulars			Amount ( `)	Particulars	Amount ( `)
Rent			50,000	Gross Profit	12,20,000
Salaries		2,40,000
Add: Outstanding Salaries		20,000	2,60,000
Bad Debts		10,000		Interest Accrued on Investment
Add: Further Bad Debts		50,000		(5,00,000 × 6% × 9/12)	22,500
Add: Provision for Doubtful Debts		17,500	77,500	Miscellaneous Receipts	12,000
Advertisement expenses			60,000
Provision for discount on debtors			6,650
Insurances			15,000
Trade Expenses			20,000
Depreciation on:
Machinery		24,000
Furniture		3000	27,000
Net Profit (Balancing Figure)			7,38,350
			12,54,500		12,54,500

 

Balance Sheet as on March 31, 2019
Liabilities		Amount ( `)	Assets		Amount ( `)
Capital	12,00,000		Fixed Assets
Less: Drawings	(2,10,000)		Patents		48,000
Add: Net Profit	7,38,350	17,28,350	Plant and Machinery	2,40,000
Current Liabilities			Less: 10% Depreciation	(24,000)	2,16,000
Sundry Creditors		1,90,000	Furniture	15,000
Wages Outstanding		50,000	Less: 20% Depreciation	(3,000)	12,000
Salaries Outstanding		20,000	6% Investment	5,00,000
Bills Payable		8000	Add: Accrued Interest	22,500	5,22,500
			Current Assets
			Closing Stock		7,50,000
			Debtors	4,00,000
			Less: Further Bad Debts	(50,000)
			Less: Provision for Doubtful Debts	(17,500)
				3,32,500
			Less: Provision for Discount	(6,650)	3,25,850
			Cash		1,22,000
		19,96,350			19,96,350

Page No 19.68:

Question 8:

From the following Trial Balance of Mahesh, prepare his Final Accounts for the year ended 31st March, 2019:

Heads of Accounts		Debit Balances ( `)	Credit Balances ( `)
Purchases		2,50,000	…
Sales		…	5,00,000
Returns Inward		12,000	...
Returns Outward		…	10,000
Carriage		8,000	…
Wages		60,000	…
Miscellaneous Expenses		2,000	…
Insurance		1,200	…
Repairs		8,000	…
Debtors		1,15,000	…
Creditors		…	1,00,000
Printing and Stationery		6,000	…
Advertisement		15,000	…
Bills Receivable		4,000	…
Bills Payable		…	2,000
Opening Stock		30,000	…
Cash in Hand		12,000	…
Interest on Bank Loan		2,800	…
Machinery		2,80,000	…
Furniture		34,000	…
Drawings		20,000	…
Commission		…	1,000
12% Bank Loan		…	30,000
Capital		…	2,40,000
Rent Received		…	5,000
Cash at Bank		28,000	…
Total		8,88,000	8,88,000

Additional Information:
(i) Closing Stock on 31st March, 2019 was  ` 21,000.
(ii) Rent of  ` 1,200 has been received in advance.
(iii) Outstanding liability for Miscellaneous expenses  ` 12,000.
(iv) Commission earned during the year but not received was  ` 2,100.
(v) Goods costing  ` 2,000 were taken by the proprietor for his personal use but entry was not passed in the books of account.

Answer:

Financial Statement of Mahesh
Trading Account for the year ended March 31, 2019
Dr.					Cr.
Particulars		Amount ( `)	Particulars		Amount ( `)
Opening stock		30,000
Purchases                                  2,50,000			Sales	5,00,000
Less: Drawings	(2,000)		Less: Return Inwards	(12,000)	4,88,000
Less: Return Outwards	(10,000)	2,38,000	Closing Stock		21,000
Carriage		8,000
Wages		60,000
Gross Profit (Balancing Figure)		1,73,000
		5,09,000			5,09,000

 

Profit and Loss Account for the year ended March 31, 2019
Dr.							Cr.
Particulars			Amount ( `)	Particulars		Amount ( `)
Miscellaneous expenses		2,000		Gross Profit		1,73,000
Add: Outstanding Miscellaneous Expenses		12,000	14,000	Commission	1,000
Insurance			1,200	Add: Accrued Commission	2,100	3,100
Repairs			8,000	Rent Received	5,000
Advertisement			15,000	Less: Advance Rent	1,200	3,800
Interest on Bank Loan		2,800
Add: Interest Outstanding		800	3,600
Printing and Stationary			6,000
Net Profit (Balancing Figure)			1,32,100
			1,79,900			1,79,900

 

Balance Sheet as on March 31, 2019
Liabilities		Amount ( `)	Assets	Amount ( `)
Capital	2,40,000		Fixed Assets
Less: Drawings	(22,000)		Machinery	2,80,000
Add: Net Profit	1,32,100	3,50,100	Furniture	34,000
10% Loan from Bank	30,000		Current Assets
Add: Outstanding Interest	800	30,800	Closing Stock	21,000
Current Liabilities			Debtors	1,15,000
Creditors		1,00,000	Bills Receivable	4,000
Bills Payable		2,000	Cash at Bank	28,000
Advance Rent		1,200	Cash in Hand	12,000
Outstanding Trade Expenses		12,000	Commission Accrued	2,100
		4,96,100		4,96,100

 

Working Notes:

Calculation of Outstanding Interest on Loan

Interest on loan (30,000 × 12%)	3,600
Less: Interest Paid	(2,800)
Interest Outstanding on Loan	800

Page No 19.69:

Question 9:

Following balances were extracted from the books of Vijay on 31st March, 2019:
 

Particulars	`	Particulars	`
Capital	2,45,000	Loan	78,800
Drawings	20,000	Sales	6,53,600
General Expenses	47,400	Purchases	4,70,000
Building	1,10,000	Motor Car	20,000
Machinery	93,400	Provision for Doubtful Debts	9,000
Stock on 1st April, 2018	1,62,000	Commission (Cr.)	13,200
Insurance	13,150	Car Expenses	18,000
Wages	72,000	Bills Payable	38,500
Debtors	62,800	Cash	800
Creditors	25,000	Bank Overdraft	33,000
Bad Debts	5,500	Charity	1,050

Prepare Trading and Profit and Loss Account for the year ended 31st March, 2019 and Balance Sheet as at that date after giving effect to the following adjustments:
(a) Stock as on 31st March, 2019 was valued at  ` 2,30,000.
(b) Write off further  ` 1,800 as Bad Debts and maintain the Provision for Doubtful Debts at 5%.
(c) Depreciate Machinery at 10%.
(d) Provide  ` 7,000 as outstanding interest on loan.

Answer:

Financial Statement of Vijay Kumar
Trading Account for the year ended March 31, 2019
Dr.			Cr.
Particulars	Amount ( `)	Particulars	Amount ( `)
Opening Stock	1,62,000	Sales	6,53,600
Purchases	4,70,000	Closing Stock	2,30,000
Wages	72,000
Gross Profit (Balancing Figure)	1,79,600
	8,83,600		8,83,600

 

Profit and Loss Account for the year ended March 31, 2019
Dr.						Cr.
Particulars			Amount ( `)	Particulars	Amount ( `)
Taxes and Insurance			13,150	Gross Profit	1,79,600
Bad Debts		5,500		Commission	13,200
Add: Further Bad Debts		1,800
Add: Provision for Doubtful Debts		3,050
		10,350
Less: Exiting Provision		9,000	1,350
Car Expenses			18,000
Charity			1,050
Depreciation on Machinery			9,340
Outstanding Interest on Loan			7,000
General Expenses			47,400
Net Profit (Balancing Figure)			95,510
			1,92,800		1,92,800

 

Balance Sheet as on March 31, 2019
Liabilities		Amount ( `)	Assets		Amount ( `)
Capital	2,45,000		Fixed Assets
Add: Net Profit	95,510		Building		1,10,000
Less: Drawings	(20,000)	3,20,510	Machinery	93,400
Loan	78,800		Less:10% Depreciation	9,340	84,060
Add: Outstanding Interest	7,000	85,800	Motor Car		20,000
Current Liabilities			Current Assets
Creditors		25,000	Closing Stock		2,30,000
Bills Payable		38,500	Debtors	62,800
Bank Overdraft		33,000	Less: Bad Debts	(1,800)
			Less: 5% Provision for Doubtful Debts	(3,050)	57,950
			Cash		800
		5,02,810			5,02,810

 

Page No 19.70:

Question 10:

From the following Trial Balance and other information, prepare Trading and Profit and Loss Account for the year ended 31st March, 2019 and Balance Sheet as at that date:
 

Particulars		Dr. ( `)	Cr. ( `)
Sundry Debtors		3,20,000	…
Stock on 1st April, 2018		2,20,000	…
Cash in Hand		350	…
Cash at Bank		15,450	…
Plant and Machinery		1,75,000	…
Sundry Creditors		…	1,06,500
General Expenses		10,750	…
Sales		…	13,45,000
Salaries		22,250	…
Carriage Outwards		4,000	…
Rent		9,000	…
Bills Payable		…	75,000
Purchases		11,88,700	…
Discounts		11,000	…
Premises		3,45,000	…
Capital on 1st April, 2018		…	7,95,000
Total		23,21,500	23,21,500

Stock on 31st March, 2019 was  ` 1,24,500. Rent was unpaid to the extent of  ` 850 and  ` 1,500 were outstanding for General Expenses;  ` 4,000 are to be written off as bad debts out of the above debtors; and 5% is to be provided for doubtful debts. Depreciate Plant and Machinery by 10% and Premises by 2%.
Manager is entitled to a commission of 5% on net profit after charging his commission.

Answer:

Financial Statement Trading Account for the year ended March 31, 2019
Dr.			Cr.
Particulars	Amount ( `)	Particulars	Amount ( `)
Opening Stock	2,20,000	Sales	13,45,000
Purchases	11,88,700	Closing Stock	1,24,500
Gross Profit (Balancing Figure)	60,800
	14,69,500		14,69,500

 

Profit and Loss Account for the year ended March 31, 2019
Dr.						Cr.
Particulars				Amount ( `)	Particulars	Amount ( `)
Rent			9,000		Gross Profit	60,800
Add: Outstanding Rent			850	9,850	Net Loss (Balancing Figure)	42,750
General Expenses			10,750
Add: Outstanding General Expenses			1,500	12,250
Bad Debts			4,000
Add: Provision for Debts			15,800	19,800
Depreciation on
Plant and Machinery		17,500
Business Premises		6,900		24,400
Salaries				22,250
Carriage Outwards				4,000
Discount				11,000
				1,03,550		1,03,550

 

Balance Sheet as on March 31, 2019
Liabilities		Amount ( `)	Assets		Amount ( `)
Capital	7,95,000		Fixed Assets
Less: Net Loss	(42,750)	7,52,250	Plant and Machinery	1,75,000
Current Liabilities			Less: 10% Depreciation	(17,500)	1,57,500
Sundry Creditors		1,06,500	Premises	3,45,000
Bills Payable		75,000	Less: 2% Depreciation	(6,900)	3,38,100
Rent Outstanding		850	Current Assets
General Expenses Outstanding		1,500	Closing Stock		1,24,500
			Sundry Debtors	3,20,000
			Less: Bad Debts	(4,000)
				3,16,000
			Less: 5% Provision for Doubtful Debts	(15,80)	3,00,200
			Cash at Bank		15,450
			Cash in Hand		350
		9,36,100			9,36,100

 

Note: In the question, Manager Commission is given as 5% on Net Profit after charging commission. But, during the year the firm had a Net Loss of Rs 42,750, therefore, manager commission is not payable.

 

Page No 19.73:

Question 13:

Prepare Trading and Profit and Loss Account for the year ended 31st March, 2019 and Balance Sheet as at that date from the following Trial Balance:
 

Particulars		Dr. ( `)	Cr. ( `)
Capital		…	1,00,000
Cash		15,000	…
Bank Loan		…	20,000
Purchases		1,20,000	…
Sales		…	1,50,000
Sales Return		10,000	…
Purchases Return		…	20,000
Establishment Expenses		22,000	…
Taxes and Insurance		5,000	...
Bad Debts		5,000	…
Provision for Doubtful Debts		…	7,000
Debtors		50,000	…
Creditors		…	20,000
Commission		…	5,000
Deposits		40,000	…
Opening Stock		30,000	…
Drawings		14,000	…
Furniture		6,000	…
Bills Receivable		32,000	…
Bills Payable		…	25,000
Input CGST		10,000	...
Input SGST		10,000	…
Output CGST		…	8,000
Output SGST		…	8,000
Output IGST		…	6,000
Total		3,69,000	3,69,000

Adjustments:
(i) Taxes  ` 3,000 are outstanding but Insurance  ` 500 is prepaid.
(ii) Commission  ` 1,000 received in advance for the next year.
(iii) Interest  ` 2,100 is to be received on Deposits and Interest on Bank Loan  ` 3,000 is to be paid.
(iv) Provision for Doubtful Debts to be maintained at  ` 10,000.
(v) Depreciate Furniture by 10%.
(vi) Stock on 31st March, 2019 is  ` 45,000.
(vii) A fire occurred on 1st April, 2019 destroying goods costing  ` 10,000. These goods were purchased paying CGST and SGST @ 6% each.

Answer:

Financial Statements Trading Account for the year ended March 31, 2019
Dr.					Cr.
Particulars		Amount ( `)	Particulars		Amount ( `)
Opening Stock		30,000	Sales	1,50,000
Purchases	1,20,000		Less: Return	(10,000)	1,40,000
Less: Return	(20,000)	1,00,000	Closing Stock		45,000
Gross Profit (Balancing Figure)		55,000
		1,85,000			1,85,000

 

Profit and Loss Account for the year ended March 31, 2019
Dr.					Cr.
Particulars		Amount ( `)	Particulars		Amount ( `)
Taxes and Insurance	5,000		Gross Profit		55,000
Add: Outstanding Taxes	3,000		Commission	5,000
Less: Prepaid Insurance	(500)	7,500	Less: Advance Commission	(1,000)	4,000
			Interest Accrued on Investment		2,100
Bad Debts	5,000
Add: Bad Debts Reserve	10,000
Less: Existing Reserve	(10,000)	5,000
Depreciation on Furniture		600
Outstanding Interest on Loan		3,000
Establishment Charges		25,000
Net Profit (Balancing Figure)		20,000
		61,100			61,100

 

Balance Sheet as on March 31, 2019
Liabilities		Amount ( `)	Assets		Amount ( `)
Capital	1,00,000		Investments (Deposits)	40,000
Less: Drawings	(14,000)		Add: Accrued Interest	2,100	42,100
Add: Net Profit	20,000	1,06,000	Furniture	6,000
Bank Loan	20,000		Less: 10% Depreciation	(600)	5,400
Add: Interest Outstanding	3,000	23,000	Sundry Debtors	50,000
Sundry Creditors		20,000	Less: Provision for Doubtful Debts	(10,000)	40,000
Advance Commission Bills Payable		1,000 25,000	Bills Receivable Prepaid Insurance Closing Stock		32,000 500 45,000
Taxes Outstanding GST Payable (WN 2)		3,000 2,000	Cash in Hand		15,000
		1,80,000			1,80,000

Working Notes:

(1) Loss of stock by fire has ocurred on 1st April, 2019. Hence, it will not affect the Balance Sheet dated 31st March, 2019.

(2)GST Set off

First:CGST Payable/(Receivable)=Output CGST-Input CGST=8,000-10,000=(2,000)
Second:SGST Payable/(Receivable)=Output SGST-Input SGST=8,000-10,000=(2,000)
Third:IGST Payable/(Receivable)=Output IGST-Input CGST-Input SGST=6,000-2,000-2,000=2,000

Final:GST Payable=Output IGST=2,000
Page No 19.74:

Question 14:

From the following Trial Balance of Ramesh, prepare Trading, Profit and Loss Account for the year ending 31st March, 2019 and a Balance Sheet as on that date:​

Heads of Accounts	Dr. ( `)	Cr. ( `)
Drawings	15,000
Capital		3,50,000
Plant and Machinery	2,05,000
Debtors	50,000
Creditors		28,000
Returns Inward	8,000
Returns Outward		7,000
Discount Allowed	7,000
Discount Received		6,000
Commission	15,000
Interest on Bank Loan	12,000
Furniture	55,000
Provision for Doubtful Debts		13,000
Wages	50,000
Salaries	45,000
Advertisement	15,000
Rent and Taxes	13,000
Purchases	2,60,000
Sales		4,00,000
Stock on 1st April, 2018	70,000
Carriage	5,000
Land and Building	98,000
Cash in Hand	8,000
Cash at Bank	20,000
10% Bank Loan as on 1st April, 2018		1,50,000
Input CGST	9,000
Input SGST	9,000
Output IGST		15,000
Total	9,69,000	9,69,000

Adjustments:
(i) Cost of stock on 31st March, 2019 was  ` 37,000. However, its market value was  ` 35,000.
(ii) Wages outstanding were  ` 6,000 and salaries outstanding were  ` 5,000 on 31st March, 2019.
(iii) Depreciate Land and Building @ 212%, Plant and Machinery @ 10% p.a. and Furniture @ 15% p.a.
(iv) Purchase includes purchase of machinery for  ` 10,000 on 1st October, 2018.
(v) Debtors include bad debts of  ` 2,000. Maintain a provision for doubtful debts @ 10% on Debtors.

Answer:

Trading Account for the year ended March 31, 2019
Dr.						Cr.
Particulars			Amount ( `)	Particulars		Amount ( `)
Opening Stock			70,000	Sales	4,00,000
Purchases	2,60,000			Less: Returns	8,000	3,92,000
Less: Machinery	10,000			Closing Stock		35,000
Less: Returns	7,000		2,43,000
Carriage			5,000
Wages		50,000
Add: Outstanding		6,000	56,000
Gross Profit			53,000
			4,27,000			4,27,000

 

Profit & Loss Account for the year ended March 31, 2019
Dr.							Cr.
Particulars				Amount ( `)	Particulars		Amount ( `)
Interest on Bank Loan		12,000			Gross Profit		53,000
Add: Outstanding		3,000		15,000	Discount Received		6,000
Salaries	45,000				Old Provision for DD	13,000
Add: Outstanding	5,000			50,000	Less: Provision for DD	4,800	8,200
Advertisement				15,000	Net Loss		81,500
Commission				15,000
Discount Allowed				7,000
Further Bad Debts				2,000
Rent and Taxes				13,000
Depreciation on:
Land & Building			2,450
Plant & Machinery			21,000
Furniture			8,250	31,700
				1,48,700			1,48,700

 

Balance Sheet as on March 31, 2019
Dr.					Cr.
Liabilities		Amount ( `)	Assets		Amount ( `)
Creditors		28,000	Plant &Machinery	2,05,000
Wages Outstanding		6,000	Add: Purchases	10,000
Capital	3,50,000		Less: Depreciation	21,000	1,94,000
Less: Drawings	15,000		Furniture	55,000
Less: Net Loss	81,500	2,53,500	Less: Depreciation	8,250	46,750
Outstanding Salaries		5,000	Debtors	50,000
Bank Loan	1,50,000		Less: FBD	2,000
Add: Outstanding Interest	3,000	1,53,000	Less: Provision	4,800	43,200
			Closing Stock		35,000
			Cash at Bank		20,000
			Land &Building	98,000
			Less: Depreciation	2,450	95,550
			Input SGST		3,000
			Cash in Hand		8,000
		4,45,500			4,45,500