Numericals on Final Accounts: Manufacturing, Trading and Profit and Loss

Account and Balance Sheet

Problem No 1: (Problem no 15 page 1.219 of SN Maheshwari) The following is the schedule of balance as on 31-03-1998 extracted from the books of Shri Gavaeshker, who carries on business under the name and style of Messrs Gavasker Vishwanath & Co at Mumbai. Particulars
Cash in Hand Cash at Bank Sundry Debtors Stock as on 01-04-1997 Furniture & Fixtures Office Equipment Buildings Motor Car Sundry Creditors Loan from Vishwanath Reserve for Bad Debts Purchases Purchase Returns Sales Sales Returns Salaries Rent for Godown Interest on Loan from Vishwanath Rates and Taxes Discount allowed to debtors Discount received from Creditors Freight on Purchases Carriage Outwards Drawings Printing & Stationery Electricity Charges Insurance Premium General Office expenses Bad Debts Bank Charges Motor Car Expenses Capital Account

Dr Amount
1,400 2,600 86,000 62,000 21,400 16,000 60,000 20,000

Cr Amount

43,000 30,000 3,000 1,40,000 2,600 2,30,000 4,200 11,000 5,500 2,700 2,100 2,400 1,600 1,200 2,000 12,000 1,800 2,200 5,500 3,000 2,000 1,600 3,600 1,62,000

TOTAL

4,72,200

4,72,200

Prepare Trading and Profit & Loss Account for the year ended 31ST March 1998 and a Balance sheet as at that date after making provisions for the following:

1) Depreciate a) Buildings used for business by 5% b) Furniture and fixtures by10%--one steel table purchased during the year for Rs1,400 was sold for the same price but the sale proceeds were wrongly credited to sales account. c) Office Equipment by 15%--Purchases of a typewriter during the year for Rs4000 has been wrongly debited to purchases d) Motor car by 20% 2) Value of stock at the close of the year was Rs44,000 3) One months rent for godown is outstanding 4) One months salary is outstanding 5) Interest on loan from Vishwanath is payable at 12% p.a. This loan was taken on 01-05-1997. 6) Reserve for Bad Debts is to be maintained at 5% of Sundry Debtors 7) Insurance premium includes Rs4,000 paid towards proprietors Life Insurance Policy and the balance of the Insurance charges cover the period from 01-04-1997 to 30-06-1998 8) Half of the buildings are used for residential purposes of Shri Gavasker

(Ans: GP 71,800; NP 18,400 BST2,39,500)

Problem No 2: (Problem no 16 page 1.220 of SN Maheshwari) From the following trial balance of Shri Goyal, prepare Trading and Profit & Loss Account for the year ended 31ST March 1996 and a Balance sheet as at that date after taking into consideration the adjustments given at the end of the trial balance: Particulars
Sales Purchases (adjusted) Wages Capital account National Insurance Carriage Inwards Carriage Outwards Lighting Rates and Insurance (including Premium of Rs150 p.a. upto 30th June 1997) Stock as on 31-12-1996 Cash in Hand and at Bank Discount earned Plant and Machinery Discount allowed Debtors and Creditors Furniture Dividends Received

Dr Amount
3,49,600 10,450

Cr Amount
3,70,000

34,250 150 200 250 300 200 30,625 875 300 15,000 50 3,000 4,000 4,14700

10,000 150 4,14,700

TOTAL

Adjustments: 1) National Insurance also includes employees contribution of Rs75. Wages are shown NET after deducting national insurance contribution borne by the employees 2) Owing to the nature of employment, some employees are housed in the building of the business. The rental value of such portion is assessed at Rs250 per annum. The benefit to the employee treated as wages and the rental as income for Shri Goyal. 3) Depreciate Plant and Machinery at 15% per annum and Furniture at10% p.a 4) Goods worth Rs2,000/- given by Shri Goyal to his son at cost 5) The Manager is entitled to a commission of 20% of the Net Profit after charging his commission (Calculations may be made nearest to the multiple of a rupee)

(Ans: GP 11,350; NP 7,229 BST 50,925)

Problem No 3: (Problem no 17 page 1.220 and 1.221 of SN Maheshwari)

The following Trial Balance is extracted from the books of a merchant on 31st March 1997.

Particulars
Furniture and Fittings Motor Vehicles Buildings Capital Bad debts Provision for Bad Debts Sundry Debtors and Creditors Stock as on 1st January 1997 Purchases and Sales Bank Overdraft Sales and Purchases Returns Advertising Interest on Bank Overdraft Commission Cash Taxes and Insurance General Expenses Salaries TOTAL

Dr Amount
640 6,250 7,500

Cr Amount

12,500 125 3,800 3,460 5,475 200 450 118 375 650 1,250 782 3,300 34,000 200 2,500 15,450 2,850

34,000

The following adjustments are to be made: 1) Stock in Hand as at 31st December 1997 was Rs 3,350 2) Depreciate buildings at the rate of 5%; furniture & fittings @ 10% and Motor Vehicles @ 20% 3) Rs 85 is due for interest on bank overdraft 4) Salaries Rs300 and taxes Rs120 are outstanding 5) Insurance amounting to Rs100 is prepaid 6) One-third of the commission received is in respect of work to be done next year 7) Write off a further sum of Rs100 as bad debts and provision for bad debts to be made equal to 10% on sundry debtors

(Ans: GP 9,690, NP 1,551, BST 20,031)

Problem No 4: (Problem no 18 page 1.221 and 1.222 of SN Maheshwari)

From the following balances taken from the ledger accounts of Shri Krishna on March 31, 1999, prepare the Trading and Profit and Loss Account for the year ended 31st March 1999 and a Balance Sheet as at the same date of Shri Krishna

Particulars Sundry Creditors Building Income tax Loose Tools Cash at Bank Sundry Expenses Bank Interest (Cr) Purchases Wages Carriage Inwards Sales Motor van Cash in Hand Bad Debts Loan from Ram Sundry Debtors Investments Bad Debts Reserve Rent and Taxes Furniture Stock (01-04-1998) Capital Discount allowed Dividends received Drawings Bills Payable

Amount 19,000 15,000 1,025 1,000 16,200 1,990 75 1,57,000 10,000 1,120 1,85,000 12,500 335 100 2,500 9,500 6,500 1,600 850 3,000 27,350 47,390 630 535 2,000 10,000

Adjustments to be taken into account: 1)Write off further Rs300 as bad out of Sundry Debtors and create a Reserve for Bad Debts at 20% on Debtors 2) Dividends accrued and due on Investments is Rs135. Rates paid in advance Rs100 and wages owing Rs450 3) On 31-03-1999, stock was valued at Rs15,000 and Loose Tools were valued at Rs800 4) Write off 5% for depreciation on Buildings and 40% on Motor van 5) Provide for interest at 12% per annum due on loan taken on 01-06-1998 6) Income-Tax paid has to be treated as Drawings (Ans: GP 4,080; NP 5,385 BST 71,180)

Problem No 5: (Problem no 19 page 1.222 of SN Maheshwari)

The following Trial Balance was extracted from the books of Mr A as on 30-09-1998

Particulars
Capital Account Plant and Machinery Furniture Sales Purchases Returns Opening Stock Discount Sundry Debtors Sundry Creditors Salaries Manufacturing wages Carriage Outward Provision for Bad debts Rent, Rates and Taxes Advertisements Cash TOTAL

Dr Amount
78,000 2,000

Cr Amount
1,00,000

1,27,000 60,000 1,000 30,000 425 45,000 7,550 10,000 1,200 525 10,000 2,000 6,900 2,54,075 2,54,075 750 800 25,000

Prepare the Trading and Profit & Loss Account for the year ended 30-09-1998 and a Balance Sheet as on that date after taking into account the following adjustments: 1) Closing stock was valued at Rs34,220 2) Provision for Bad Debts is to be kept at Rs500 3) Allow interest on Capital at 10% per annum 4) Furniture was sold and the same was disposed of for Rs760 in exchange of new Furniture costing Rs1680. The net invoice of RS920 was passed through Purchase Register (No depreciation need be charged on old and new furniture) 5) Depreciate Plant and Machinery by 10% per annum 6) The Proprietor Mr A has taken goods worth Rs5000 for personal use, and distributed goods worth rs1000 as samples (Ans GP 67,890; NP27,500 BST 1,57,000)

Answer to Problem No 1: (Problem no 15 page 1.219 of SN Maheshwari)

Trading and P & L Account of Messrs Gavasker Vishwanath & Co., for the year ended 31-031998 Dr Cr Particulars Amt Amt Particulars Amt Amt To Op Stock 62,000 By Sales 230000 2,24,400 Less Returns 4200 Less Table 1400 To Purchases 140000 Closing Stock 44,000 Less Returns 2600 Less Furniture 4000 1,33,400 Freight 1,200 Gross Profit C/d 71,800 TOTAL 2,68,400 TOTAL 2,68,400 To Reserve for Bad Debts Bad Debts Further Bad Debts To Salaries Add Outstanding To Rent for Godown Add O/s To Interest On Loans Add O/s To Rates and Taxes To Discount To Carriage Outwards To Printing & Stationery To Electricity charges To Insurance Premium (5500-4000) Less Prepaid Exp To General off Exp To Bank Charges To Motor Car Exp To Depreciation: F & F (21400-1400) Bldgs (5% on 30000) Office Eq Motor Cars To Net profit transferred to Capital account TOTAL (3000) 2000 4300 11000 1000 5500 500 2700 600 3,300 By Discount received 12,000 6,000 3,300 2,100 2,400 2,000 1,800 2,200 1,600 By G/P B/d 71,800

1500 300

1,200 3,000 1,600 3,600

2000 1500 3000 4000

10,500 18,400 73,400 TOTAL 73,400

Messrs Gavasker Vishawanath & Co Balance Sheet as at 31st March 1999 LIABILITIES Capital Less Drawings Less Insurance premium ADD Net Profit Loan from Vishwanath Sundry Creditors Outstanding Charges Salaries Godown Rent Interest on Loan Amt 162000 12000 4000 18400 Amt ASSETS Cash In Hand 1,64,400 30,000 Cash at Bank 43,000 Stock Sundry Debtors Less Provisions 2,100 Furniture and fixtures Less Dep Office Equipments (16000 +4000) Less Dep Buildings Less Dep Motor Car Less Dep Prepaid Expenses 2,39,500 TOTAL 20,000 2000 20,000 3000 60000 1500 20000 4000 18,000 2,600 44,000 86000 4300 81,700 Amt Amt 1,400

1000 500 600

17,000

58,500

TOTAL

16,000 300 2,39500

Answer to Problem No 2: (Problem no 16 page 1.220 of SN Maheshwari)

Trading and P & L Account of Shri Goyal Messrs., for the year ended 31-03-1996 Dr Particulars Amt Amt Particulars Amt To Purchases 3,49,600 By Sales To Wages 10,450 By Goods taken by Add O/s 150 Owners son at cost Add accommodation to employees 250 10,850 To Commission To G/P C/d TOTAL To Carriage Outwards To Lighting To Rates and Insurance Less employees contribution Discount allowed DepP & M Dep--Furniture Managers Commission Net profit transferred to Balance sheet TOTAL 200 11,350 3,72,000 250 By G/P B/d 300 By Discount By Dividends 125 50 By Rent 2,250 400 1,446 7,229 12,050

Cr Amt 3,70,000 2,000

TOTAL

3,72,000 11,350 300 150

200 75

250

TOTAL

12,050

Shri Goyal--Balance Sheet as at 31st March 1996 LIABILITIES Capital Less Drawings ADD Net Profit Sundry Creditors Outstanding Charges Commission Payable Amt 34,250 2,000 7,229 Amt ASSETS Cash In Hand 39,479 10,000 Stock Plant and Machinery 1,446 Less Dep Furniture Less Dep Debtors Prepaid Expenses 50,925 TOTAL 15,000 2,250 4,000 400 30,625 Amt Amt 875

12,750 3,600 3,000 75 50,925

TOTAL

Answer to Problem No 3: (Problem no 17 page 1.220 and 1.221 of SN Maheshwari) Trading and P & L Account of the merchant, for the year ended 31-03-1997 Dr Particulars Amt Amt Particulars Amt
To Op Stock To Purchases Less Returns Gross Profit C/d TOTAL To Bad Debts Further Bad Debts Provision for Bad Debts 10% on (3800-100) Less CR Balance To Salaries Add Outstanding Advertisement To Interest On Bank OD Add O/s To Taxes and Insurance Less Prepaid Add Outstanding To General expenses To Depreciation on Buildings Furniture Motor Vehicle To Net profit transferred to Capital account TOTAL 125 100 370 200 3,300 300 118 85 1,250 100 120 5,475 125 3,460 By Sales Less Returns Closing Stock 15,450 250

Cr Amt
15,250 3,250

5,350 9,690 18,500 By G/P B/d 225

TOTAL

18,500 9,690 375 125

By Commission Less Recd in Advance 170 3,600 450 203

250

1,270 782

375 64 1,250

1,689 1,551 9,940 TOTAL 9,940

LIABILITIES
Capital ADD Net Profit Sundry Creditors Bank Overdraft Add Interest Income received in Advance Outstanding Charges: Salaries Taxes

Balance Sheet as at 31st March 1997 Amt Amt ASSETS

12,500 1,551 2,850 85 Cash In Hand 14,051 2,500 2,935 Stock Sundry Debtors Less Bad Debts Less Further provisions Buildings Less Dep Furniture and Fixtures Less Dep Motor vehicles Less Dep Prepaid Expenses TOTAL 20,031 TOTAL

Amt

Amt
650 3,250

125 300 120

3800 100 370 7,500 325 640 64 6,250 1,250

3,330 7,125 576

420 5,000 100 20,031

Answer to Problem No 4: (Problem no 18 page 1.221 of SN Maheshwari) Trading and P & L Account of Krishna, for the year ended 31-03-1999 Dr Particulars Amt Amt Particulars
To Op Stock To Purchases To Wages Add O/sing To Carriage Inwards Gross Profit C/d TOTAL To Bad Debts Provision for Bad Debts Further Provi Reserve To Dep on Loose Tools To Sundry Expenses To Interest On Loan To Rent and Taxes Less Prepaid To Discount To Depreciation on Buildings Motor Vehicle TOTAL 27,350 1,57,000 10,000 450 10,450 1,120 4,080 2,00,000 100 (1600) 300 1,840 By Sales Closing Stock

Amt

Cr Amt
1,85,000 15,000

TOTAL By G/P B/d By Dividend Received Accrued Dividends By Bank Interest Net Loss transferred to B/S

2,00,000 4,080 535 135 670 75 5,385

540 200 1,990 250

850 100

750 630

750 5000 10,185

5,750 TOTAL 10,185

LIABILITIES
Capital LESS Net Loss Less Drawings (2000 +1025)

Balance Sheet as at 31st March 1997 Amt Amt ASSETS

47,390 5,385 3,025 Cash In Hand 38,980 Cash at Bank Sundry Debtors Less Bad Debts Stock Investments Furniture Buildings Less Dep Loose Tools Less Dep Motor Vans Less Dep Prepaid Expenses Dividends Accrued due TOTAL

Amt

Amt
335

16,200 9,500 2,140 7,360 15,000 6,500 3,000

Sundry Creditors Loan from Ram Add Interest Bills Payable Outstanding Charges: Wages

19,000 2,500 250 2,750 10,000

450

15,000 750 1,000 200 12,500 5,000

14,250 800 7,500 100 135 71,180

TOTAL

71,180