TRADING AND PROFIT AND LOSS A/C FOR THE YEAR ENDING..

Dr PARTICULARS To Opening Stock To Purchase Lesss: Purchase return To Carriage Inwards/ On purchase To Wages To wages & Salaries To Octroi To import duty To custom duty To lending Charges To clearing Charges To coal, gas & water To fuel To heating/ lighting charges To power To manufacturing Expenses To Consumable Stores To assembling Charges To Direct expenses To Productive expenses To royalty To Gross profit c/d (If credit side exceed debit side) Total AMOUNT AMOUNT PARTICULARS By Sales Less: Sales return By Closing Stock By Gross Loss c/d (If debit side exceed credit side) Total AMOUNT Cr AMOUNT

To Gross Loss b/d To Salary To salary & Wages To charity/ Donation To sample Distribution Expenses To Delivery Charges To Brokerage To sales Tax To loss on sale of asset To loss by fire/ theft To rent,rates and taxes To Insurance To stationery To printing & stationery To lighting To establishment charges To postage and telegram To telephone expenses To repairs & renewals To distribution Expenses To travelling expenses To general expenses To carriage outward/on sales To interest Paid To Discount allowed To Bad Debts To Bad debts Reserve To Depriciation To Interest on capital To export charges To trade expenses To Administraive expenses To sundry/ Miscellaneous expenses To advertisement expenses To Net Profit (If credit side exceed debit side) Total

By Gross profit b/d By Interest Recived By rent received By Discount received By Commission received By dividend received By profit from sale of assets By refund of Tax By interest on drawings By bad debts recovered By miscellaneous receipts By income from investment By Net loss (if debit side exceeds credit side)

Total

BALANCE-SHEET AS ON . LIABILITIES Capital Add/Less: Net profit/Net loss Add: Interest on capital Less:Drawings Less:Interest on drawings Long term loan Reseves & Surplus Creditors Bills Payable Bank Overdraft Outstanding expenses Advance income AMOUNT AMOUNT ASSETS Land & Building less depreciation Plant & Machinery
Furniture & Fixtures less depreciation Stores/loose tools less depreciation Stock (Closing) Debtors Bills Receivables Investments Cash at Bank Cash in hand Prepaid expenses Accrued income Goodwill/patents/copyrights

AMOUNT AMOUNT

Total

Total

ADJUSTMENT ENTERIES 1. Outstanding Expenses Effect: Add in corresponding expense And show in liability side of balance-sheet. 2. Prepaid Expenses Effect: subtract from corresponding expense And show in asset side of balance-sheet. 3. Accrued Income Effect: Add in corresponding income And show in asset side of balance-sheet. 4. Advance Income : Effect: subtract from corresponding income And show in liability side of balance-sheet. 5. Interest on Capital Effect: Show in debit side of P&L a/c and add in capital in balance-sheet. 6. Interest on Drawings Effect: Show in credit side of P&L a/c and subtract from capital. 7. Provision for bad and doubtful debts or bad debts reserve Effect: Show in debit side of P&l a/c and subtract from debtors.

8. Provision for discount on debtors Effect: Show in debit side of P&L a/c and subtract from debtors. 9. Provision for discount on creditors Effect: Show in credit side of P&L a/c and subtract from creditors. 10. Depreciation Effect: Show in debit side of P&L a/c and subtract from corresponding assets. 11. Closing Stock Effect: Show in credit side of Trading account and Show in asset side of Balance-Sheet. 12.Goods damaged by fire/lost by theft/given as charity/distributed as free sample Effect: Subtract from purchase and show in debit side of P&L a/c. 13. Goods taken for personal use Effect: Add in drawings and subtract from purchase. 14. Purchase of assets wrongly written in purchase A/C Effect: Subtracts from purchase and show in asset side of balance sheet. 15. Managers commission Effect: Show in debit side of P&L a/c and Show in liability side of balance-sheet.

Calculation of provision for bad & doubtful debts or bad debts reserve 1. Old Bad Debts (given in trial balance) **** 2. Add: New Bad Debts (given in adjustment) **** 3. Add: New Bad Debts Reserve (given in adjustment) **** 4. Less: Old bad debts reserve (given in trial balance) **** 5 Amount of Bad Debts Reserve to be shown in P&L a/c **** (If positive record in debit and if negative record in credit)

Calculation of Debtors to be shown in Balance-Sheet 1. Debtors 2. Less: New Bad Debts 3. Net Debtors (1-2) 4. Less: New bad debts reserve on net debtors (3*rate) 5. Debtors after deducting new B.D.R. (3-4) 6. Less: Reserve for discount on debtors (5*rate) 7. Debtors to be shown in Balance-Sheet (5-6)

**** **** **** **** **** **** ****

Calculation of managers commission 1. If given fixed % on gross profit Managers Commission = Gross Profit * Rate 100 2. If given fixed % on net profit before charging such commission Managers commission = Profit before Commission * rate 100 3. If given fixed % on net profit after charging such commission Managers commission = Profit before Commission * rate 100 + rate

Practical Problems 1.From the following information prepare Trading Account: Opening stock 5000 Sales Return 400 Sales a/c 20000 Manufacturing Expenses 100 Purchase return 200 Octroi 500 Wages a/c 4000 Power 700 Carriage inward 300 Purchase a/c 8000 Closing Stock (31st December 2011) Rs. 2000. 2. Prepare Profit & Loss A/c: Carriage on purchase 2000 Carriage on sales 1000 Duty on Export 2020 Lighting 1050 Water & Electricity 2120 Advertisement 100 Salary of factory manager 2200 Salary of office manager 1500 Gross Profit 15200 Rent received 1500 Rent paid 500 Commission (cr.) 1200

3. Following are the closing balances on 31st march 2012: Outstanding rent 100 Creditors 1800 Bank 3000 Machinery 6300 Capital 20000 Prepaid wages 400 Net loss 4800 Debtors 5400 Drawing 1800 Closing stock 1200

4. From the following Trial- Balance extracted from the books of M/S Rai Bros., prepare Final Accounts for the year ending 31st march 2012. TRIAL-BALANCE Particulars Debtors & Creditors Capital & Drawings Rent & Rates Trade Expenses Purchases & Sales Returns Carriage Inward Wages Salaries Opening Stock Discount Bad Debts Plant & Machinery Furniture Cash in hand Cash at bank Total Closing stock amounted to Rs. 14220. Debit Amount 12000 2900 250 670 8640 190 250 2920 1200 3100 180 200 2510 1800 500 15400 52710 Credit Amount 7900 30000

14290 280

240

52710

5. From the following Trial- Balance prepare Final Accounts for the year ending 31st march 2012. TRIAL-BALANCE Particulars Debtors & Creditors Capital & Drawings Rent & Rates Sundry Expenses Purchases & Sales Carriage Wages Opening Stock Plant & Machinery Cash at bank Total Debit Amount 2700 900 450 200 9500 150 5000 2000 3500 1500 25900 Credit Amount 1400 10000

14500

25900

Closing Stock Rs. 300.

6. The following is the trial-balance of Mr. Kapur on 31st march 2012. Particulars Debtors & Creditors Capital & Drawings Carriage outward Purchases & Sales Returns Carriage Inward Wages Opening Stock Building Salaries Patents General expenses Insurance Fuel & Power Plant & Machinery Furniture Cash in hand Cash at bank Total
Taking into account the following adjustments, prepare Final Accounts. 1) Closing stock amounted to Rs. 13600. 2)Outstanding wages Rs. 4000. 3)Machinery is to be depreciated at the rate of 10% and patents at the rate of 20%. 4)Salaries for the month of March, 2012 amount to Rs. 3000 were unpaid. 4)Insurance include a premium of Rs. 170 for the next year. 5)Provision for bad & doubtful debt is 5% on debtors.

Debit Amount 29000 10490 4080 81350 1360 6400 20960 11520 60000 30000 15000 6000 1200 9460 40000 20000 1080 5260 353160

Credit Amount 12600 142000 197560 1000

353160

7. The following is the trial-balance of Punjab Jewelers as on 31st march 2012. Particulars Debtors & Creditors Capital Advertisement Purchases & Sales Purchase returns Commission received Opening Stock Repairs & Maintenance Salaries Car General expenses Insurance Building Furniture Cash in hand Cash at bank Total Debit Amount 500000 220000 2250000 Credit Amount 398000 5000000 3500000 180000 75000

720000 130000 300000 350000 160000 70000 4258000 100000 35000 60000 9153000

9153000

Taking into account the following adjustments, prepare Final Accounts. 1. Closing stock amounted to Rs. 800000. 2. Provide depreciation on Building @ 5%, Furniture @ 10% and car @ 20%. 3. Salaries for the month of March, 2012 amount to Rs. 30000 were unpaid. 4. Prepaid advertisement Rs. 20000. 5. Goods used for domestic purpose Rs. 18000. 6.Provision for bad & doubtful debt is 2% on debtors.

8. From the following trial-balance of Mr. Ram prepare Trading and Profit & Loss Account for the year ended 31st December 2011 and Balance-Sheet on that date:
Particulars Debtors & Creditors Capital & Drawings Carriage outward Purchases & Sales Returns Carriage Inward Wages Opening Stock Loan @ 9% (1st may 11) Coal, Gas & Water Duty & Clearing Charges Office Rent Printing & Stationery Bad Debts Reserve Bills Receivable & Payble Salaries Bank Charges General expenses Insurance Factory Rent Plant & Machinery Furniture Cash in hand Cash at bank Total Debit Amount 60000 5000 4200 100000 2500 7500 10000 30000 1200 1500 2500 500 45000 18000 25 800 350 1900 65000 3500 1250 4525 365250 750 10000 Credit Amount 28000 100000 200000 1500

25000

365250

Taking into account the following adjustments, prepare Final Accounts. 1. Closing stock amounted to Rs. 40000. 2. Machinery is to be depreciated at the rate of 10%. 3. Outstanding expenses are: Salaries Rs. 2400, factory rent Rs. 1500, Office Rent Rs. 550. 4. Interest on capital at 5% per annum. 5. Goods withdrawn for personal use Rs. 2525. 6. Provision for bad & doubtful debt is 2.5% on debtors after elimination of bad debts amounting to Rs. 2000. 7.The manager is allowed a commission of 5% of net profit before charging the commission.

9. From the following trial-balance prepare Trading and Profit & Loss Account for the year ended 31st December 2011and Balance-Sheet on that date:
Particulars Debtors & Creditors Capital & Drawings Freehold Property Purchases & Sales Returns Wages Opening Stock Loan to Krishna @ 10% (Balance on 1-1-11) Gas & Fuel Office expenses Freight Loose Tools Bad Debts Reserve Interest on loan to Bills Receivable & Payble Salaries Discount Postage Bad Debts Insurance Factory Lighting Office Rent Plant & Machinery Furniture Cash in hand Cash at bank Total Debit Amount 29260 13200 66000 110000 35200 38500 44000 2970 2750 9900 2200 880 1100 5500 13200 1320 1540 660 1760 1100 2860 99000 5500 2640 29260 512820 Credit Amount 44000 228800 231440 1100

512820

Taking into account the following adjustments, prepare Final Accounts. Closing stock amounted to Rs. 72600. 2. A Machinery was installed during the year costing Rs. 15400, but it was not recorded in the books as no payment was made for it. Wages Rs. 1100 paid for its erection has been debited to wages account. 3. Depreciate: Plant & Machinery by 33.33% ,Furniture by 10% and Freehold Property by 5% 4. Loose tools were valued at Rs. 1760 on 31st December 2011. 5. Of the sundry debtors Rs. 600 are bad and should be written off. Provision for bad & doubtful debt is 5% on debtors. The manager is allowed a commission of 10% of net profit after charging the commission.

10. Mr. Krishna Kumar carries on the business as a retailer. He extracted the following balances from his books of accounts as on 31st March 2012.
Particulars Capital account Drawings Buildings Furniture & Fixtures Opening stock Sales Purchases Creditors Debtors Office expenses Salaries Rent Traveling & conveyance Insurance Motorcar expenses Postage & Telephones Electricity charges Fixed deposits with bank@ 10% interest Cash in hand Cash at bank Loan from H.C. @ 12% interest Motor Car Printing & Stationery Provision for Bad & Doubtful Debts Total Debit Amount 18000 500000 20000 225000 1800000 1337000 200000 500000 24000 18000 6000 4000 1000 15000 3600 2400 50000 1000 10000 25000 40000 5000 2780000 5000 2780000 Credit Amount 750000

You are required to prepare a Trading. Profit & Loss account and Balance-Sheet for the year ending 31st March 2012 taking into consideration the following adjustments: (i) Closing Stock amounts to be Rs.300000. (ii) A customer returned goods on 31st March 2012amounting to Rs.4000, which was not accounted for , but already included in the closing stock at selling price. The cost price of said goods was Rs.3200. (iii) Annual insurance premium of Rs.1000 is valid upto 30th June 2012. (iv) Provision for bad and doubtful debts is to be kept at % on debtors. (v) interest on fixed deposit and payable on loan from H.C. is to be provided. (vi) Provide depreciation on Buildings at 2.5%, on furniture 10% and on motorcar 20%. (vii) Mr. Krishna Kumar withdraw goods for personal use costing Rs.2000. (viii) Make a provision for discount on debtors at 2% and discount on creditors at 1%.

11. The following is the trial-balance of Mr. Kapur on 31st march 2012.
Particulars Debtors & Creditors Capital & Drawings Carriage outward Purchases & Sales Returns Carriage Inward Wages Opening Stock Building Salaries Patents General expenses Insurance Fuel & Power Plant & Machinery Furniture Cash in hand Cash at bank Total Debit Amount 20,000 4,000 2,000 5,00,000 15,000 7,000 50,000 35,000 5,50,000 1,00,000 40,000 20,000 5,000 2,000 7,00,000 75,000 10,000 45,000 2,18,00,000 Credit Amount 25,000 9,30,000 12,00,000 25,000

2,18,00,000

Taking into account the following adjustments, prepare Final Accounts. Closing stock amounted to Rs. 45,000. Machinery is to be depreciated at the rate of 10% and patents at the rate of 20%. Salaries for the month of March, 2012 amount to Rs. 10,000 were unpaid. Insurance include a premium of Rs. 500 for the next year. Outstanding wages Rs. 4000. Provision for bad & doubtful debt is 5% on debtors.

12. The following is the trial-balance of Punjab Jewelers as on 31st march 2012.
Particulars Debtors & Creditors Capital Advertisement Purchases & Sales Purchase returns Commission received Opening Stock Repairs & Maintenance Salaries Car General expenses Insurance Building Furniture Cash in hand Cash at bank Total Debit Amount 1,00,000 3,500 2,500 2,10,000 2,000 39,000 2,100 6,000 2,400 1,50,000 500 2,00,000 50,000 10,000 12,000 7,90,000 Credit Amount 75,000 2,10,000 5,00,000 5,000

7,90,000

Taking into account the following adjustments, prepare Final Accounts. 1. Closing stock amounted to Rs. 45,000. 2. Provide depreciation on Building @ 5%, Furniture @ 10% and car @ 20%. 3. Salaries for the month of March, 2012 amount to Rs. 300 were unpaid. 4. Prepaid advertisement Rs. 200. 5. Goods used for domestic purpose Rs. 18000. 6. Provision for bad & doubtful debt is 2% on debtors.

13. The following is the trial-balance prepare final accounts on 31st December 2012.
Particulars Debtors & Creditors Capital Carriage Sales Returns Material consumed Wages Loan from Kapil @ 12% (balance on 1-4-12) Closing Stock Power & Fuel Coal, gas & water Trade expenses Rates & taxes Loose tools Bad debts reserve Interest on Kapils loan Bills Receivable & Bills payable Salaries Discount Outstanding trade expenses Insurance premium Bad debts Fire insurance Outstanding wages Bank charges Plant & Machinery Furniture Cash in hand Bank Total Debit Amount 54000 8200 240000 5000 150000 36100 10000 46500 5400 2200 14500 5200 16000 7600 600 4000 20000 3700 600 2000 4500 1800 3000 3400 300 80000 18000 1600 476900 8200 476900 Credit Amount 21400 180000

Taking into account the following adjustments, prepare Final Accounts. 1. Provision for bad & doubtful debt is Rs.4000. 2. Carry forward the following unexpired amounts: (a) Fire insurance Rs.500 (b) Rates & taxes Rs.1200 Insurance premium Rs.1500 . 3. Wages include Rs.5000 spent on installation of a new machine on 1st January 2012. 4. Depreciate plant & machinery by 10% and furniture by 20%. 5. Loose tools were valued at Rs.12000 on 31st December 2012. 6. accrued income Rs.2300.

14. On 31st March 2012 the following Trial Balance has been extracted from the books of a merchant:

Debit Balances Drawings A/c Debtors

Amount Credit balances 3,000 Capital Account 19,100 Creditors

Amount 30,000 8,401

Interest on Loan Cash in hand Opening Stock Motor Vehicles Cash at bank Land & Building Bad Debts Purchases Sales Return Carriage Outward Advertisement General Expenses Bills Receivables Carriage Inward Establishment Rates, Taxes & Insurance

200 5% loan on mortgage (1.4.2011) 3,050 5,839 9,000 4,555 12,000 Bad Debts Provision Purchas Return Discount Bills Payable Rent Received

8,500 710 1,346 440 2,714 250 1,11,243

625 Sales 67,458 7,821 1,404 2,264 4,489 6,882 3,929 8,097 3,891 163604

163604

Prepare Trading and Profit & Loss Account for the year ending on 31st March 2012 and a Balance Sheet as on that date after considering the following matters: Depreciate Land & Building at 5% p.a. and motor vehicles at 15% p.a. Goods costing Rs. 600 were sent to a customer on sale or return basis for Rs. 700 on 30th March 2012 and has been recorded in the books as actual sales. Salaries amounting to Rs. 700 and rates amounting to Rs. 400 due. A fire broke out on 1st April 2012 destroying goods worth Rs. 200. The provision for doubtful debts is to be brought up to 5% on sundry debtors. Stock in hand on 31st March 2012was valued at Rs. 6,250. Goods costing Rs. 500 were taken away by the proprietor for his personal use; no entry has been made in the books of accounts. Prepaid insurance amounted to Rs. 175. Provide for managers commission at 5% on net profit after charging such commission.

15. From the following trial balance and information, prepare Trading and Profit & Loss a/c of Mr. Rishabh for the year ended 31st March 2012 and a Balance-Sheet as on that date:

Particulars Capital/Drawing Land & Building Plant & Machinery Furniture Sales/Purchase Returns Debtors/Creditors Loan from Gajanand on 1.7.2011 @6%p.a. Carriage Sundry Expenses Printing & Stationery Insurance Expenses Provision for doubtful debts Provision for discount on Debtors Bad Debts Profit of Textile Dept. Stock of General Goods on 1.4.2011 Salaries & Wages Trade Expense Stock of Textile Goods on 31.3.2012 Cash at Bank Cash in Hand

Debit Amount 12,000 90,000 20,000 5,000 80,000 5,000 18,400 10,000 600 500 1,000

Credit Amount 1,00,000

1,40,000 4,000 12,000 30,000

1,000 380 400 10,000 21,300 18,500 800 8,000 4,600 1,280 297,380

297,380

Additional Information: Stock of general goods on 31.3.2012 valued at Rs. 27,300. Fire occurred on 23rd March 2012 and Rs.10,000 worth of general goods were destroyed. The insurance company accepted claim for Rs. 6,00o only and paid the claim money on 10th April 2012. Bad Debts amounting to Rs. 400 are to be written off. Provision for doubtful debts is to be made at 5% and for discount at 2% on debtors. Make a provision of 2% on creditors for discount. Received Rs. 6,000 worth of goods on 27th March 2012 but the invoice of purchase was not recorded in purchase book. Rishabh took away goods worth Rs. 2,000 for personal use but no record was made thereof. Charged depreciation at 2% on Land & Buildings, 20% on Plant & Machinery, and 5% on furniture. Insurance prepaid amounts to Rs. 200.

MANUFACTURING ACCOUNT

Manufacturing account is prepared by those business concerns which are engaged in manufacturing of products such as bricks, coal, pig iron and cloth etc. The main objective of preparing manufacturing account is to disclose the factory cost of production. It is necessary for manufacturing concerns to prepare manufacturing account before Trading account.

PARTICULARS To Opening Stock of Work In Progress To Raw Material Consumed Opening Stock Add: Purchase Add: Carriage Inward Add: Freight Inward Less: Return Outward Less: Closing Stock To Wages To Salary of Work Manager To power, electricity & water To Fuel To Factory Overheads To Factory Rent To Factory Insurance To Supervisor's remuneration To Plant Repairs To Plant Depreciation To Depreciation on Factory Building To Depreciation on Machinery To Manufacturing expenses To Consumable Stores To Packing Charges To Royalty

AMOUNT AMOUNT PARTICULARS .. .. .. .. .. .. . By Closing Stock Raw Materials Work In Progress By Cost Of Production (Balancing figure transferred to Trading Account)

AMOUNT

AMOUNT

.. ..

.. ..

. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..

Total

..

Total

..

TRADING ACCOUNT IN CASE OF MANUFACTURING CONCERN Dr PARTICULARS To Opening Stock Of Finished Goods To Manufacturing Account AMOU AMOU NT NT PARTICULARS By Sales . .. Less: Sales return By Closing Stock Of Finished Goods To Gross profit c/d (If credit side exceed debit side) Total By Gross Loss c/d (If debit side exceed credit side) Total Cr AMOUN AMOU T NT

Note: Profit and Loss Account and Balance-Sheet is same as trading Concern.

From the following particulars of Mr. Ganesh, Prepare, Manufacturing, Trading & Profit & Loss Accounts for the year ended 31st March 2012 and Balance-Sheet as on that date after adjustment entries: Particulars Debit Amount Credit Amount Debtors & Creditors Capital & Drawings Building Purchases & Sales Returns Manufacturing Wages Manufacturing Expenses Opening Stock Raw Materials Work In Progress Finished Goods Discount Carriage Inward Carriage Outward Interest & Bank Charges Insurance Bad Debts Bad Debts Reserve Bank Overdraft Furniture Plant & Machinery Salaries Cash in hand Cash at bank Total 11,000 70,000 1,50,000 1,20,000 860 60,000 50,000 40,000 30,000 20,000 1,500 4,000 4,200 1,260 3,000 1,500 80,000 2,50,000 6,75,000 5,300

5,720

6,000 40,000 15,000 4,50,000 28,000 1,400 300 10,62,020

10,62,020

Additional Information: Outstanding Manufacturing Expenses are Rs. 500. Depreciate Machinery @ 10% . Closing Stock of Raw Material Rs. 25,000, W.I.P. Rs. 20000 and Finished Goods Rs. 20,000