TS Grewal accountancy class 11 solution chapter 18 financial statement of sole proprietorship

 Class 11th | Chapter-18 | Financial Statements of Sole Proprietorship | 2023-2024 | Ts Grewal Solution

Question 1:

State whether the following expenses are capital or revenue in nature:
(i) Expenses on whitewashing and painting of a building purchased to make it ready for use.
(ii)  ` 10,000 spent on constructing platform for a new machine.
(iii) Repair expenses of `25,000 incurred for whitewashing of factory building.
(iv) Insurance premium paid as renewal premium.
(v) Purchased a new car.

(vi) Excise duty paid on purchase of new machine.
(vii) Wages paid to install a machine.

(viii) Repairs carried out on existing car.
(ix) Office block of building repainted for `50,000.
(x) Paid telephone bill `2,500.

Answer:

(1) Capital Expenditure: Paid to make an asset ready to use

(2) Capital Expenditure: Paid to make an asset ready to use

(3) Revenue Expenditure: Made for the maintenance of asset

(4) Revenue Expenditure: Part of normal operating cost

(5) Capital Expenditure: Used in business for a number of years

(6) Capital Expenditure: Paid for the acquisition of new asset
(7) Capital Expenditure: Paid to make the asset ready to use
(8) Revenue Expenditure: Paid for the running and maintenance of car
(9) Revenue Expenditure: Paid for the maintenance of Building
(10) Revenue Expenditure: Part of normal operating cost

 

Question 2:

From the following information, determine Gross Profit for the year ended 31st March, 2022:

	`		`
Opening Stock (1st April, 2018)	25,000	Goods purchased during the year	1,40,000
Freight and Packing	10,000	Closing Stock (31st March, 2022)	30,000
Sales	1,90,000	Packing Expenses on Sales	6,000

Answer:

Gross Profit	=	Sales + Closing Stock – (Opening Stock + Freight and Packing + Goods Purchased)
	=	1,90,000 + 30,000 – (25,000 + 10,000 + 1,40,000)
	=	2,20,000 – 1,75,000 =  `45,000

 

Alternatively,

Trading Account for the year ended March 31, 2022
Dr.			Cr.
Particulars	( `)	Particulars	( `)
Opening Stock	25,000	Sales	1,90,000
Purchases	1,40,000	Closing Stock	30,000
Freight and Packing	10,000
Gross Profit (Balancing Figure)	45,000
	2,20,000		2,20,000

Note: Packing Expenses (Rs 6,000) on Sales is an Indirect Expense, therefore it is not considered to compute the amount of Gross Profit.

 

 Question 3:

Prepare Trading Account from the transactions givne below:
 

	`		`
Opening Stock	23,000	Purchases Return	2,400
Purchases	29,000	Closing Stock	47,700
Sales Return	500	Carriage Inwards	100
Sales	25,400	Depreciation	2,000

Also pass the Journal entries.

Answer:

Trading Account
Dr.							Cr.
Particulars			(Rs)	Particulars		(Rs)
Opening Stock			23,000	Sales	25,400
Purchases		29,000		Less: Sales Return	(500)	24,900
Less: Purchases Return		(2,400)	26,600	Closing Stock		47,700
Carriage Inwards			100
Gross Profit (Balancing Figure)			22,900
			72,600			72,600

Note: Depreciation is an Indirect Expense, therefore it is not shown in the Trading Account.
 

Journal
Date	Particulars		L.F.	Debit  (Rs)	Credit  (Rs)
	Trading A/c	Dr.		52,600
	To Opening Stock A/c				23,000
	To Purchases A/c				29,000
	To Carriage Inwards A/c				100
	To Sales Return A/c				500
	(Transfer of balances to the debit side of Trading A/c)
	Sales A/c	Dr.		25,400
	Purchase Return A/c	Dr.		2,400
	To Trading A/c				27,800
	(Transfer of balances to the credit side of Trading A/c)
	Closing Stock A/c	Dr.		47,700
	To Trading A/c				47,700
	(Recording of Closing Stock)
	Trading A/c	Dr.		22,900
	To Profit & Loss A/c				22,900
	(Transfer of gross profit to the Profit & Loss A/c)

 

 

Question 4:

Calculate Closing Stock from the following details:
 

	`		`
Opening Stock	20,000	Purchases	70,000
Cash Sales	60,000	Credit Sales	40,000
		Rate of Gross Profit on Cost 331/3%

Answer:

Calculation of amount of Closing StockGross Profit=331/3% on cost =1/3rd on cost

∴Gross Profit on sales =14th on salesAnd, Sales = Cash Sales + Credit Sales 

        = 60,000+40,000 = Rs 1,00,000

So, Gross Profit =1,00,000×14

=Rs 25,000

Cost of Goods Sold=Sales−Gross Profit          

=1,00,000−25,000=Rs 75,000

Cost of Goods Sold=Opening Stock+Purchases+Direct Expenses−Closing Stock

75,000=20,000+70,000+0−Closing StockClosing Stock

=Rs 15,000

Question 5:

Ascertain Gross Profit from the following:
 

	`		`
Opening Stock	2,00,000	Carriage on Sales	30,000
Closing Stock	1,80,000	Office Rent	58,000
Purchases	8,50,000	Sales	14,07,000
Carriage on Purchases	23,000

Answer:

Trading Account
Dr.			Cr.
Particulars	(Rs)	Particulars	(Rs)
Opening Stock	2,00,000	Sales	14,07,000
Purchases	8,50,000	Closing Stock	1,80,000
Carriage on Purchases	23,000
Gross Profit (Balancing Figure)	5,14,000
	15,87,000		15,87,000

.

Question 6:

From the following information, prepare Trading Account for the year ended 31st March, 2022:
 

	`		`
Stock on 1st April, 2018	40,000	Returns Outward	80,000
Purchases	4,00,000	Wages and Salaries	50,000
Sales	3,80,000	Returns Inward	20,000
Carriage Inwards	20,000	Stock on 31st March, 2022	1,30,000

Net Realisable Value (Market Value) of stock as on 31st March, 2022 was  ` 1,20,000.

Answer:

Trading Account for the year ended March 31, 2022
Dr.							Cr.
Particulars			( `)	Particulars		( `)
Opening Stock			40,000	Sales	3,80,000
Purchases		4,00,000		Less: Return Inwards	(20,000)	3,60,000
Less: Return Outwards		(80,000)	3,20,000	Closing Stock		1,20,000
Carriage Inwards			20,000
Wages and Salaries			50,000
Gross Profit (Balancing Figure)			50,000
			4,80,000			4,80,000

Question 7:

From the following information, prepare Trading Account for the year ended 31st March, 2022:

Answer:

Trading Account for the year ended March 31, 2022
Dr.					Cr.
Particulars		( `)	Particulars	( `)
Purchase (Adjusted)		6,60,000	Sales	7,44,000
Freight and Carriage Inwards		3,600
Wages		6,000
Gross Profit (Balancing Figure)		74,400
		7,44,000		7,44,000

Notes:

     1. Freight and Carriage Outwards are indirect expenses,

therefore it is not recorded in the Trading Account.

     .

Question 9:

From the following information, prepare Trading account for the year ended 31st March, 2022:
Adjusted Purchases  ` 5,50,000; Sales  ` 6,25,000; Freight and Carriage Inwards  ` 3,000;

Wages  ` 7,000; Freight and Cartage Outwards  ` 2,500; Closing Stock  ` 50,000.

Answer:

Trading Account for the year ended March 31, 2022
Dr.					Cr.
Particulars		( `)	Particulars	( `)
Purchase (Adjusted)		5,50,000	Sales	6,25,000
Freight and Carriage Inwards		3,000
Wages		7,000
Gross Profit (Balancing Figure)		65,000
		6,25,000		6,25,000

Notes:

     1. Freight and Carriage Outwards are indirect expenses,

therefore it is not recorded in the Trading Account.

     2. Closing Stock (i.e. Rs 50,000) is not recorded in the Trading Account

as it is already adjusted in the amount of Adjusted Purchases.

 

Question 10:

From the following figures, calculate Operating Profit:
 

	`		`
Net Profit	1,00,000	Rent Received	10,000
Gain on Sale of Machine	15,000	Interest on Loans	20,000
Donation	2,000

Answer:

Operating Profit=Net Profit−Rent Received−Gain on Sale of Machine+Interest on Loan−Donation                          

=1,00,000−10,000−15,000+20,000−2,000

=Rs 93,000

Question 11:

From the following, prepare Profit and Loss Account of Sohan Lal

as it would appear in the 1st year that ended 31st March, 2022:
 

	`		`
Salaries and Wages	30,000	Advertising	10,000
Commission Paid	2,000	Discount Allowed	18,000
Postage and Courier	1,500	Rent Received	17,000
Insurance	3,000	Interest on Investment	15,000
Interest Paid	4,000	Bad Debts	9,000
Carriage Outwards	5,000	Brokerage Paid	950

The Gross Profit was 45% of sales, which amounted to  ` 6,50,000.
Also, pass the Journal entries.

Answer:

Profit and Loss Account                                                for the year ended March 31, 2022
Dr.			Cr.
Particulars	(Rs)	Particulars	(Rs)
Salaries and Wages	30,000	Gross Profit (6,50,000 × 45%)	2,92,500
Commission Paid	2,000	Rent Received	17,000
Postage and Telegram	1,500	Interest on Investments	15,000
Insurance	3,000
Interest Paid	4,000
Carriage Outwards	5,000
Advertising	10,000
Discount Allowed	18,000
Bad Debts	9,000
Brokerage Paid	950
Net Profit (Balancing Figure)	2,41,050
	3,24,500		3,24,500

Question 12:

From the following information, prepare Profit and Loss Account for the year

ended 31st March, 2022:
 

	`		`
Gross Profit	1,20,000	Discount Received	6,000
Rent	5,000	Printing and Stationery	4,000
Salary	35,000	Legal Charges	10,000
Commission Paid	19,000	Bad Debts	2,000
Interest on Loan	5,000	Loss by Fire	6,000
Advertisement	8,000	Depreciation	4,000
Interest Received	8,000	Input IGST A/c	2,000
Output IGST A/c	1,000

Answer:

Profit and Loss Account for the year ended March 31, 2022
Dr.			Cr.
Particulars	( `)	Particulars	( `)
Rent	5,000	Gross Profit	1,20,000
Salary	35,000	Interest Received	8,000
Commission Paid	19,000	Discount Received	6,000
Interest on Loan	5,000
Advertisement	8,000
Printing and Stationery	4,000
Legal Charges	10,000
Bad Debts	2,000
Loss by Fire	6,000
Depreciation	4,000
Net Profit (Balancing Figure)	36,000
	1,34,000		1,34,000

Note:  `1,000 Input IGST after adjusting against Output IGST

will be shown on the asset side of the balance sheet.

Question 13:

From the following particulars, prepare Balance Sheet as at 31st March, 2022:
 

	Dr. ( `)	Cr. ( `)
Capital	…	4,00,000
Drawings	44,000	…
Debtors and Creditors	64,000	42,000
Cash in Hand	3,600	…
Cash at Bank	72,000	…
Plant	1,00,000	…
Furniture	37,000	…
Net Profit	…	16,600
General Reserve	…	10,000
Closing Stock	1,48,000	…
Total	4,68,600	4,68,600

Answer:

Balance Sheet as on March 31, 2022
Liabilities		( `)	Assets	( `)
Capital	4,00,000		Plant	1,00,000
Less: Drawings	(44,000)		Furniture	37,000
Add: Net Profit	16,600	3,72,600	Closing Stock	1,48,000
General Reserve		10,000	Debtors	64,000
Creditors		42,000	Cash at Bank	72,000
			Cash in Hand	3,600
		4,24,600		4,24,600

 

Question 15:

From the Balance Sheet given below, calculate:
(i) Fixed Assets        (ii) Current Assets
(iii) Current Liabilities (iv) Working Capital

BALANCE SHEET as at 31st March, 2022
Liabilities	`	Assets	`
Trade Creditors	42,000	Stock in Hand	48,000
Expenses Accrued	3,200	Debtors	36,000
Bank Overdraft	4,800	Prepaid Expenses	400
Long-Term Loan	20,000	Goodwill	20,000
Interest on Loan	1,000	Land	20,000
Capital	93,400	Plant	32,000
		Furniture	8,000
	1,64,400		1,64,400

Answer:

(i)Fixed Assets=Land+Plant+Furniture+Goodwill                        

   =20,000+32,000+8,000+20,000=Rs 80,000(ii) 

(ii) Current Assets=Stock+Debtors+Prepaid Expenses                            

=48,000+36,000+400=Rs 84,400

(iii) Current Liabilities=Creditors+Expenses Accrued+Bank Overdraft+Interest on Loan                                    

=42,000+3,200+4,800+1,000=Rs 51,000

(iv) Working Capital=Current Assets−Current Liabilities                                  

=84,400−51,000=Rs 33,400

question-17

The following are the balances as on 31st March, 2022 extracted from the books of Dass:
 

	`		`
Sales	9,20,000	Postage and Courier	6,200
Purchases	6,83,000	Miscellaneous Expenses	9,000
Returns Inward	13,000	Bad Debts	4,000
Returns Outward	22,000	Debtors	2,20,000
Stock on 1st April, 2018	1,76,000	Creditors	1,28,000
Carriage Inwards	24,000	Loan from Sahil	50,000
Rent	22,000	Capital	5,25,000
Discount	37,500	Drawings	19,100
Printing	7,200	Business Premises	3,90,000
Insurance	5,000	Office Furniture	15,000
Travelling Expenses	14,000

The stock on 31st March, 2022 was valued at  ` 2,40,000.
You are required to prepare Trading Account,

Profit and Loss Account and Balance Sheet as at 31st March, 2022.

Answer:

Financial Statement of Bhagwan Das
Trading Account  for the year ended March 31, 2022
Dr.							Cr.
Particulars			( `)	Particulars		( `)
Stock			1,76,000
Purchases		6,83,000		Sales	9,20,000
Less: Return Outwards		(22,000)	6,61,000	Less: Return Inwards	(13,000)	9,07,000
Carriage Inwards			24,000	Closing Stock		2,40,000
Gross Profit (Balancing Figure)			2,86,000
			11,47,000			11,47,000

 

Profit and Loss Account  for the year ended March 31, 2022
Dr.					Cr.
Particulars		( `)	Particulars	( `)
Rent, Rates and Taxes		22,000	Gross Profit	2,86,000
Discount		37,500
Printing		7,200
Insurance		5,000
Travelling Expenses		14,000
Postage and Courier		6,200
Miscellaneous Expenses		9,000
Bad Debts		4,000
Net Profit (Balancing Figure)		1,81,100
		2,86,000		2,86,000

 

Balance Sheet as on March 31, 2022
Liabilities		( `)	Assets	( `)
Capital	5,25,000		Fixed Assets
Less: Drawings	(19,100)		Business Premises	3,90,000
Add: Net Profit	1,81,100	6,87,000	Office Furniture	15,000
Loan from Sahil		50,000	Current Assets
Current Liabilities			Closing Stock	2,40,000
Creditors		1,28,000	Debtors	2,20,000
		8,65,000		8,65,000

Question 19:

From the following balances, prepare Trading and Profit and Loss Account and the Balance Sheet:
 

Debit Balances:	`	Debit Balances (Contd.):	`
Machinery	2,00,000	Opening Stock	2,00,000
Building	1,50,000	Rent	45,000
Debtors	2,70,000	Sundry Expenses	20,000
Drawings	90,000	Carriage	15,000
Purchases	9,50,000	Credit Balances:
Wages	5,00,000	Capital	10,00,000
Bed Debts	10,000	Creditors	1,40,000
Bank	1,50,000	Sales	14,50,000
		Commission	10,000

Closing Stock was of  ` 70,000 but its net realisable value was estimated at  ` 60,000.

Answer:

Financial Statement of….
Trading Account  for the year ended …
Dr.					Cr.
Particulars		(Rs)	Particulars	(Rs)
Opening Stock		2,00,000	Sales	14,50,000
Purchases		9,50,000	Closing Stock (Note)	60,000
Carriage		15,000	Gross Loss (Balancing Figure)	1,55,000
Wages		5,00,000
		16,65,000		16,65,000

 

Profit and Loss Account  for the year ended March 31, …..
Dr.					Cr.
Particulars		(Rs)	Particulars	(Rs)
Gross Loss		1,55,000	Commission	10,000
Bad Debts		10,000	Net Loss (Balancing Figure)	2,20,000
Rent		45,000
Sundry Expenses		20,000
		2,30,000		2,30,000

 

Balance Sheet  as on March 31, ….
Liabilities		(Rs)	Assets	(Rs)
Capital	10,00,000		Fixed Assets
Less: Net Loss	2,20,000		Building	1,50,000
Less: Drawings	90,000	6,90,000	Machinery	2,00,000
Current Liabilities			Current Assets
Creditors		1,40,000	Closing Stock	60,000
			Debtors	2,70,000
			Bank	1,50,000
		8,30,000		8,30,000

 

Note: Closing Stock is recorded at cost price or market price which is lower.

Question 20:

The following is the Trial Balance of Atul as at 31st March, 2020:

Heads of Accounts	L.F.	Dr. Balance (`)	Cr. Balance (`)
Capital			50,000
Drawings		10,000
Debtors		24,000
Creditors			16,000
Adjusted Purchases		75,700
Sales			1,31,000
Sales Return		1,500
Bank Loan			10,000
Interest on Loan		300
Cash in Hand		3,000
Cash at Bank		7,500
Miscellaneous Income			1,000
Wages		6,000
Furniture		33,900
Carriage Outwards		4,500
Carriage Inwards		5,000
Salaries		12,000
Rent		18,000
Bad Debts		600
Discount Allowed		5,000
Discount Received			2,600
Bills Receivable		10,000
Bills Payable			8,000
Insurance		2,000
Commission			15,400
Closing Stock		15,000
Total		2,34,000	2,34,000

Prepare Trading and Profit and loss account for the year ending

on 31 March, 2022 and Balance Sheet as on that date.

Answer:

Trading and Profit and Loss Account
Particulars	(`)	Particulars		(`)
Adjusted Purchases	75,700	Sales	1,31,000
Wages	6,000	Sales Return	1,500	1,29,500
Carriage Inwards	5,000
Gross Profit	42,800
	1,29,500			1,29,500
Interest on Loan	300	Gross Profit		42,800
Carriage Outwards	4,500	Miscellaneous Income		1,000
Rent	18,000	Discount Received		2,600
Bad Debts	600	Commission		15,400
Discount Allowed	5,000
Insurance	2,000
Salary	12,000
Net Profit	19,400
	61,800			61,800

1

Balance Sheet
Liabilities		(`)	Assets	(`)
Capital	50,000		Debtors	24,000
Add: Net Profit	19,400		Cash in Hand	3,000
	69,400		Cash at Bank	7,500
Less: Drawings	10,000	59,400	Furniture	33,900
			Bills Receivable	10,000
Creditors		16,000	Closing Stock	15,000
Bank Loan		10,000
Bills Payable		8,000
		93,400		93,400

q

From the following Trial Balance, prepare Trading and Profit & Loss Account for the year

ended 31st March, 2022 and Balance Sheet as at that date:

Heads of Accounts	LF.	Dr. Balance (`)	Cr. Balance (`)
Capital			500000
Plant and Machinery		100000
Land and Building		120000
Sales			900000
Furniture and Fixtures		50000
Trade Expenses		30000
Cash at Bank		250000
Wages and Salaries		60000
Repairs		10000
Purchases		600000
Opening Stock		200000
Sundry Debtors		100000
Sundry Creditors			120000
Purchases Return			10000
Rent			22000
Discount		8000
Drawings		10000
Bills Receivable		40000
Bills Payable			30000
Bad Debts		4000
Input CGST A/c		10000
Input SGST A/c		10000
Input IGSTA/c		5000
Output CGST A/c			5000
Output SGST A/c			5000
Output IGST A/c			15000
Total		16,07,000	16,07,000

The stock on 31th March, 2022 was valued at ` 1,40,000.

Dr.		Trading and Profit & Loss A/c			Cr.
Particulars		(`)	Particulars		(`)
Opening stock		2,00,000	Sales		9,00,000
Purchases	6,00,000		Closing stock		1,40,000
Less: Purchases Return	10,000	5,90,000
Wages		60,000
Gross Profit		1,90,000
		10,40,000			10,40,000
Discount Allowed		8,000	Gross Profit		1,90,000
Travelling Expenses		30,000	Rent Received		22,000
Repair		10,000
Bad debts		4,000
Net Profit		1,60,000
		2,12,000			2,12,000

1

Balance Sheet
Liabilities		(`)	Assets	(`)
Capital	5,00,000		Bill receivable	40,000
Add: Net Profit	1,60,000		Debtors	1,00,000
	6,60,000		Plant and Machinery	1,00,000
Less: Drawings	10,000	6,50,000	Land and Building	1,20,000
Bills Payable		30,000	Furniture	50,000
Creditors		1,20,000	Bank	2,50,000
			Closing stock	1,40,000
		8,00,000		8,00,000