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.
Solution:
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

Question:2
State with reasons whether the following are Capital or Revenue Expenses:
i
Excise duty paid on purchase of new machine.
ii
Wages paid to install a machine.
iii
Repairs carried out on existing car.
iv
Office block of building repainted for 50,000.
v
Paid telephone bill 2,500.
Solution:
1 Capital Expenditure: Paid for the acquisition of new asset

2 Capital Expenditure: Paid to make the asset ready to use

3 Revenue Expenditure: Paid for the running and maintenance of car

4 Revenue Expenditure: Paid for the maintenance of Building

5 Revenue Expenditure: Part of normal operating cost

Question:3
From the following information determine Gross Profit for the year ended 31st March, 2018

Opening Stock 1stApril, 2017 25,000 Goods purchased during the 1,40,000
year
Freight and Packing 10,000 Closing Stock 31stMarch, 2018 30,000
Sales 1,90,000 Packing Expenses on Sales 6,000
Solution:
Gross = Sales + Closing Stock –
Profit OpeningStock + FreightandPacking + GoodsPurchased
= 1,90,000 + 30,000 –
25, 000 + 10, 000 + 1, 40, 000
= 2,20,000 – 1,75,000 = Rs 45,000

Alternatively,

Trading Account

for the year ended March 31, 2018

Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Opening Stock 25,000 Sales 1,90,000
Purchases 1,40,000 Closing Stock 30,000
Freight and Packing 10,000
Gross Profit (Balancing 45,000
Figure)
2,20,000 2,20,000

Note: Packing Expenses

Rs6, 000 on Sales is an Indirect Expense, therefore it is not considered to compute the amount of Gross Profit.

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 1
333 %
Solution:
Calculation of amount of Closing Stock
1 1
Gross Profit = 333 % on cost =3 rd on cost
1
∴ Gross Profit on sales =4 th
on sales
And, Sales = Cash Sales + Credit Sales = 60,000+40,000 = Rs 1,00,000
1
So, Gross Profit =1,00,000 × 4 = 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 Stock
Closing Stock = Rs 15,000

Question:5
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.
Solution:
Trading Account
Dr. Cr.
Amount Amount
Particulars Particulars
Rs 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
Debit Credit
Date Particulars L.F. Amount Amount
Rs 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
TransferofbalancestothedebitsideofTradingA/c

Sales A/c Dr. 25,400

Purchase Return A/c Dr. 2,400
To Trading A/c 27,800
TransferofbalancestothecreditsideofTradingA/c

Closing Stock A/c Dr. 47,700

To Trading A/c 47,700
RecordingofClosingStock

Trading A/c Dr. 22,900

To Profit & Loss A/c 22,900
Transfer of gross profit to the Profit & Loss A/c

Question:6
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
Solution:
Trading Account
Dr. Cr.
Amount Amount
Particulars Particulars
Rs 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

Note: Carriage on Sales and Office Rent are the Indirect Expenses, therefore, these are not considered to compute
the amount of Gross Profit.

Question:7
From the following information prepare Trading Account for the year ended 31st March, 2018:

Stock on 1st April, 2017 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, 1,30,000
2018

Net Realisable Value MarketValue

of stock as on 31st March, 2018 was 1,20,000.
Solution:
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Opening Stock 40,000 Sales 3,80,000
Less: Return
Purchases 4,00,000 20, 000 3,60,000
Inwards
Less: Return
80, 000 3,20,000 Closing Stock 1,20,000
Outwards
Carriage Inwards 20,000
Wages and Salaries 50,000
Gross Profit (Balancing
50,000
Figure)
4,80,000 4,80,000

Note: Closing Stock is taken at its Market Price

i. e. Rs1, 20, 000 instead of its Cost
i. e. Rs1, 30, 000. This is because, as per Principle of Conservatism, Closing stock is taken at Cost or Market Price
whichever is less.

Question:8
From the following information, prepare Trading Account for the year ended 31st March, 2018:
Adjusted Purchases 6,60,000; Sales 7,44,000; Closing Stock 50,400; Freight and Carriage Inwards 3,600;
Wages 6,000; Freight and Cartage Outwards 2,000.
Solution:
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Purchase (Adjusted) 6,60,000 Sales 7,44,000
 Freight and Carriage
Inwards 3,600

Wages 6,000
Gross Profit (Balancing 74,400
Figure)
7,44,000 7,44,000

Notes:
1. Freight and Carriage Outwards are indirect expenses, therefore it is not recorded in the Trading Account.
2. Closing Stock
i. e. Rs50, 400 is not recorded in the Trading Account as it is already adjusted in the amount of Adjusted Purchases.

Question:9
Following balances appear in the Trail Balance of a firm as on 31st March, 2018:

Opening Stock: Raw Material 80,000

Finished Goods 1,40,000
Purchases 3,60,000
Sales 7,00,000
Returns: Purchases 10,000
Sales 6,000
Wages 1,30,000
Factory Expenses 90,000
Freight: Inwards 20,000
Outwards 30,000
At the end of the accounting period, stock
was:
Raw Materials 70,000
Work-in-Process 20,000
Finished Goods 1,10,000

Prepare Trading Account of the firm.

Solution:
Financial Statement of….
Trading Account
for the year ended March 31,2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Opening Stock Sales 7,00,000
Raw Materials 80,000 Less: Return Inwards 6,000 6,94,000
Finished Goods 1,40,000 2,20,000 Closing Stock
Purchases 3,60,000 Raw Materials 70,000
Less: Return Outwards 10,000 3,50,000 Work-in-Progress 20,000
Freight Inwards 20,000 Finished Goods 1,10,000 2,00,000
Wages 1,30,000
Factory Expenses 90,000
Gross Profit (Balancing Figure) 84,000
8,94,000 8,94,000

Note: Freight outwards is an indirect expense. It will be recorded in Profit & Loss A/c.
Question:10
From the following information, prepare Trading account for the year ended 31st March, 2018:
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.

Solution:
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Purchase (Adjusted) 5,50,000 Sales 6,25,000
Freight and Carriage
3,000
Inwards
Wages 7,000
Gross Profit (Balancing 65,000
Figure)
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. Rs50, 000 is not recorded in the Trading Account as it is already adjusted in the amount of Adjusted Purchases.

Question:11
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
Solution:
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:12
From the following, prepare Profit and Loss Account of Sohan Lal as it would appear in the 1st year that ended 31st
March, 2019:

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.
Solution:
Profit and Loss Account
for the year ended March 31, 2018
Dr. Cr.

Amount Amount
Particulars Particulars
Rs Rs
Gross Profit 2,92,500
Salaries and Wages 30,000
6, 50, 000 × 45
Commission Paid 2,000 Rent Received 17,000
Interest on
Postage and Telegram 1,500 15,000
Investments
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:13
From the following information, prepare Profit and Loss Account for the year ended 31st March, 2018:

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
Solution:
Profit and Loss Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
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

Question:14
From the following particular, prepare Balance Sheet as at 31st March, 2018:
 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

Solution:
Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
Rs Rs
Capital 4,00,000 Plant 1,00,000
Less: 44, 000
Furniture 37,000
Drawings
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 following information, prepare Balance Sheet of a trader as at 31st March, 2018 arranging the assets and
liabilities–i
in order of permanence and ii
in order of liquidity:

Goodwill 20,000 Bank 20,000

Capital 1,80,000 Sundry Creditors 63,000
Liabilities for Expenses 1,200 Bills Receivable 13,000
Cash in Hand 1,000 Plant and Machinery 40,000
Investment 20,000 Provision for Doubtful Debts 2,500
Bills Payable 10,700 Closing Stock 80,000
Net Profit 92,600 Furniture 16,000
Sundry Debtors 50,000 Drawing 30,000
Land and Building 60,000
Solution:
I Balance Sheet in Order of Permanence
Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
Rs Rs
Capital 1,80,000 Goodwill 20,000
Less: Drawings 30, 000 Land and Building 60,000
Add: Net Profit 92,600 2,42,600 Plant and Machinery 40,000
Sundry Creditors 63,000 Furniture 16,000
 Bills Payable 10,700 Investment 20,000
Liabilities for Expenses 1,200 Closing Stock 80,000
Sundry Debtors 50,000
Less: Provision for
Doubtful Debts 2, 500 47,500
Bill Receivable 13,000
Bank 20,000
Cash in Hand 1,000
3,17,500 3,17,500

II Balance Sheet in Order of Liquidity

Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
Rs Rs
Liabilities for Expenses 1,200 Cash in Hand 1,000
Bills Payable 10,700 Bank 20,000
Sundry Creditors 63,000 Bills Receivable 13,000
Capital 1,80,000 Sundry Debtors 50,000
Less: Drawings 30, 000 Less: Provision for Doubtful Debts 2, 500 47,500
Add: Net Profit 92,600 2,42,600 Closing Stock 80,000
Investment 20,000
Furniture 16,000
Plant and Machinery 40,000
Land and Building 60,000
Good will 20,000
3,17,500 3,17,500

Question:16
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, 2018
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

Solution:
(i) Fixed Assets = Land + Plant + Furniture + Goodwill
= 20,000 + 32,000 + 8,000 + 20,000 = Rs 80,000
(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
Prepare Trading and Profit and Loss Account and Balance Sheet of Jagat Shah as at 31st March, 2018 from the
following balances:

Capital Cr. 3,60,000 Salaries 60,000

Machinery 70,000 General Expenses 20,000
Sales 8,20,000 Rent 50,000
Purchases 4,00,000 Purchases Return 5,000
Sales Return 10,000 Debtors 3,00,000
Stock on 1st April, 2017 1,00,000 Cash 40,000
Drawing 40,000 Carriage Outwards 20,000
Wages 1,00,000 Advertising 20,000
Carriage Inwards 5,000 Creditros 50,000

The Closing Stock was valued at 2,00,000.

Solution:
Financial Statements of Jagat Shah
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Opening Stock 1,00,000 Sales 8,20,000
Purchases 4,00,000 Less: Sales
10, 000 8,10,000
Return
Less: Purchases 5, 000 3,95,000
Closing Stock 2,00,000
Return
Wages 1,00,000
Carriage Inwards 5,000
Gross Profit (Balancing 4,10,000
Figure)
10,10,000 10,10,000

Profit and Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Salaries 60,000 Gross Profit 4,10,000
General Expenses 20,000
Rent 50,000
Carriage Outwards 20,000
Advertising 20,000
Net Profit (Balancing 2,40,000
Figure)
 4,10,000 4,10,000

Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
Rs Rs
Capital 3,60,000 Fixed Assets
Less: Drawings 40, 000 Machinery 70,000
Add: Net Profit 2,40,000 5,60,000 Current Assets
Current Liabilities Closing Stock 2,00,000
Creditors 50,000 Debtors 3,00,000
Cash 40,000
6,10,000 6,10,000

Question:18
From the following balances, prepare Trading and Profit and Loss Account and Balance Sheet:

Debit Balances
Debit Balances:
Contd. :
Machinery 3,50,000 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
Bank 1,50,000 Creditors 1,40,000
Opening Stock 2,00,000 Sales 14,50,000
Closing Stock was valued at 30,000.
Solution:
Trading Account
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Opening Stock 2,00,000 Sales 14,50,000
Purchases 9,50,000 Closing Stock 30,000
Wages 5,00,000 Gross Loss (Balancing Figure) 1,85,000
Carriage 15,000
16,65,000 16,65,000

Profit and Loss Account

Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Gross Loss 1,85,000
Rent 45,000 Net Loss (Balancing Figure) 2,50,000
Sundry Expenses 20,000
2,50,000 2,50,000
 Balance Sheet
Amount Amount
Liabilities Assets
Rs Rs
Capital 10,00,000 Fixed Assets
Less: Drawings 90, 000 Machinery 3,50,000
Less: Net Loss 2, 50, 000 6,60,000 Current Assets
Current Liabilities Closing Stock 30,000
Creditors 1,40,000 Debtors 2,70,000
Bank 1,50,000
8,00,000 8,00,000

Question:19
The following are the balances as on 31st March, 2018 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, 2017 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, 2018 was valued at 2,40,000.

You are required to prepare Trading Account, Profit and Loss Account and Balance Sheet as at 31st March, 2018.
Solution:
Financial Statement of Bhagwan Das
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Stock 1,76,000
Purchases 6,83,000 Sales 9,20,000
Less: Return 22, 000 6,61,000 Less: Return
13, 000 9,07,000
Outwards Inwards
Carriage Inwards 24,000 Closing Stock 2,40,000
Gross Profit (Balancing 2,86,000
Figure)
11,47,000 11,47,000

Profit and Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
 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, 2018
Amount Amount
Liabilities Assets
Rs Rs
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:20
From the following balances of Anand, prepare Trading Account, Profit and Loss Account and Balance Sheet as at
31st March, 2018:

Credit Balances: Debit Balances

Contd. :
Capital 3,60,000 Postage 2,730
Creditors 87,200 Bad Debts 2,870
Bills Payable 25,270 Interest 12,950
Sales 7,81,820 Insurance 4,170
Bad Debts Recovered 1,750 Machinery 1,00,000
Loan 1,20,000 Stock Opening 99,450
Debit Balances: Purchases 6,20,920
Debtors 38,850 Wages 43,000
Salaries 40,000 Building 2,37,800
Discount 10,000 Selling Expenses 1,750
Fixtures and Fittings 1,61,550

Value of goods on hand 31stMarch, 2018

was 1,43,000.
Solution:
Financial Statement of Anand
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Opening Stock 99,450 Sales 7,81,820
 Purchases 6,20,920 Closing Stock 1,43,000
Wages 43,000
Gross Profit (Balancing 1,61,450
Figure)
9,24,820 9,24,820

Profit and Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Salaries 40,000 Gross Profit 1,61,450
Discount 10,000 Bad debts Recovered 1,750
Selling Expense 1,750
Postage 2,730
Bad Debts 2,870
Interest 12,950
Insurance 4,170
Net Profit (Balancing Figure) 88,730
1,63,200 1,63,200

Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
Rs Rs
Capita 3,60,000 Fixed Assets
Add: Net Profit 88,730 4,48,730 Building 2,37,800
Loan 1,20,000 Machinery 1,00,000
Current Liabilities Fixtures and fittings 1,61,550
Creditors 87,200 Current Assets
Bills Payable 25,270 Closing Stock 1,43,000
Debtors 38,850
6,81,200 6,81,200

Question:21
From the following balances, prepare Final Accounts of M./s. Raja & Sons for the year ended 31st March, 2018:
Salary 5,400; Insurance 2,500; Cash 400; Purchases 84,170; Rent Received 3,150; Drawings 2,100; Bills
Payable 3,900; Debtors 38,080; Stock 1stApril, 2017
29,500; Bank Overdraft 9,700; Carriage 2,200; Creditors 4,200; Trade Expenses 4,900; Sales Return 4,700;
Machinery 12,000; Wages 45,000; Sales 1,47,200; Purchases Return 3,900; Capital 58,900; Closing Stock
31stMarch, 2018
36,200.
Solution:
Financial Statement of M/s. Raja & Sons
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Opening Stock 29,500 Sales 1,47,200
Purchases 84,170 Less: Sales Return 4, 700 1,42,500
Less: Purchases Return 3, 900 80,270 Closing Stock 36,200
Carriage 2,200
Wages 45,000
 Gross Profit (Balancing Figure) 21,730
1,78,700 1,78,700

Profit and Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Salary 5,400 Gross Profit 21,730
Insurance 2,500 Rent Received 3,150
Trade Expenses 4,900
Net profit (Balancing Figure) 12,080
24,880 24,880

Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
Rs Rs
Capital 58,900 Fixed Assets
Add: Net Profit 12,080 Machinery 12,000
Less: Drawings 2, 100 68,880
Current Liabilities Current Assets
Creditors 4,200 Closing Stock 36,200
Bank Overdraft 9,700 Debtors 38,080
Bills Payable 3,900 Cash 400
86,680 86,680

Question:22
From the following balances, prepare Final Accounts of M./s. Mangal & Sons for the year ended 31st March, 2018:
Opening Stock 12,500; Bills Receivable 2,000; Sales 70,000; Purchases 37,500; Creditors 20,000; Salaries
3,850; Insurance 200; Debtors 32,500; Carriage 1,450; Commission 750; Interest 900; Printing 250; Bills
Payable 3,150; Returns In 1,300; Returns Out 500; Bank 5,250; Rent and Taxes 1,300; Furniture 1,000;
Capital 7,100; Stock on 31st March, 2018 15,000.
Solution:
Financial Statement of M/s. Mangal & Sons
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Opening Stock 12,500 Sales 70,000
Purchases 37,500 Less: Return Inwards 1, 300 68,700
Less: 500 37,000
Return Closing Stock 15,000
Outwards
Carriage 1,450
Gross Profit (Balancing Figure) 32,750
83,700 83,700

Profit and Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Salary 3,850 Gross Profit 32,750
Insurance 200
 Commission 750

Interest 900
Printing 250
Rent and Taxes 1,300
Net Profit (Balancing 25,500
Figure)
32,750 32,750

Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
Rs Rs
Capital 7,100 Fixed Assets
Add: Net Profit 25,500 32,600 Furniture 1,000
Current Liabilities Current Assets
Creditors 20,000 Closing Stock 15,000
Bills Payable 3,150 Debtors 32,500
Bills Receivable 2,000
Bank 5,250
55,750 55,750

Question:23
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.
Solution:
Financial Statement of….
Trading Account
for the year ended …
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Opening Stock 2,00,000 Sales 14,50,000
Purchases 9,50,000 Closing Stock
60,000
Note
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 Amount Particulars Amount
Rs 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, ….
Amount Amount
Liabilities Assets
Rs 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:24
From the following balances taken from the books of Hari & Co., prepare Trading and Profit and Loss Account for
the year ended 31st March, 2018 and Balance Sheet as at that date:

Capital 3,50,000 Salaries 11,100

Building 1,87,500 Discount Allowed 3,000
Machinery 92,500 Interest on 1,000
Investments
Debtors 35,000 Stock 1stApril, 2017 1,65,000
Investment 35,000 Bills Payable 50,000
General 8,000 Sales 6,35,000
Expenses
Rent Paid 37,100 Purchases 4,68,500
Proprietor's 6,500 Wages 25,000
Drawings
Electricity 1,900 Cash in Hand 18,000
Charges
Carriage 8,500 Sundry Creditors 1,00,000
Inwards
Cash at 30,000 Returns Inward 4,500
Bank
Returns 1,100
Outward

Closing Stock was valued at 1,82,100.

Solution:
Financial Statement of Hari & Co.
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Opening Stock 1,65,000 Sales 6,35,000
Purchases 4,68,500 Less: Return Inwards 4, 500 6,30,500
Less: Return Outwards 1, 100 4,67,400 Closing Stock 1,82,100
Wages 25,000
Carriage Inwards 8,500
Gross Profit (Balancing Figure) 1,46,700
8,12,600 8,12,600

Profit and Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
General Expenses 8,000
Rent Paid 37,100 Gross Profit 1,46,700
Electricity Charges 1,900 Interest on Investments 1,000
Salaries 11,100
Discount Allowed 3,000
Net Profit (Balancing 86,600
Figure)
1,47,700 1,47,700

Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
Rs Rs
Capital 3,50,000 Fixed Assets
Add: Net Profit 86,600 Building 1,87,500
Less: Drawings 6, 500 4,30,100 Machinery 92,500
Current Liabilities Investments 35,000
Sundry Creditors 1,00,000 Current Assets
Bills Payable 50,000 Closing Stock 1,82,100
Debtors 35,000
Cash at bank 30,000
Cash in Hand 18,000
5,80,100 5,80,100

Question:25
From the following balances, as on 31st March, 2018, prepare Trading and Profit and Loss Account and Balance
Sheet:

Capital Account 1,00,000 Returns Outward 5,000

Plant and 40,000 Rent 4,000
Machinery
Sundry Debtors 24,000 Sales 1,64,000
 Sundry Creditors 12,000 Manufacturing 8,000
Expenses
Life Insurance 12,000 Trade Expenses 7,000
Premium
Purchases 1,05,000 Bad Debts 2,000
Wages 50,000 Carriage 1,500
Bank 10,000 Bills Payable 7,000
Repairs 500 Returns Inward 4,000
Stock 1stApril, 2017 20,000

Closing Stock on 31st March, 2018 was valued at 14,500.

Solution:
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Opening Stock 20,000 Sales 1,64,000
Purchases 1,05,000 Less: Return Inwards 4, 000 1,60,000
Less: Return Outwards 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
1,79,500 1,79,500

Profit and Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Gross Loss 5,000
Repairs 500
Rent 4,000
Trade Expenses 7,000 Net Loss (Balancing
18,500
Figure)
Bad Debts 2,000
18,500 18,500

Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
Rs Rs
Capital 1,00,000 Fixed Assets
Less: Life Insurance Premium 12, 000 Plant and Machinery 40,000
Less: Net Loss 18, 500 69,500 Current Assets
Current Liabilities Closing Stock 14,500
Sundry Creditors 12,000 Sundry Debtors 24,000
Bills Payable 7,000 Bank 10,000
88,500 88,500

Question:26
Trial Balance of Chatter Sen on 31st March, 2018 revealed the following balances:
 Debit Balances: Debit Balances
Contd. :

Plant and 90,000 Rent 2,000

Machinery
Purchases 58,000 Advertisement 2,000
Sales Return 1,000 Cash at Bank 6,900
Opening Stock 40,000 Credit Balances:
Discount 350 Capital A/c 1,10,000
Allowed
Bank Charges 75 Sales 1,27,000
Sundry Debtors 45,000 Purchases Return 1,275
Salaries 6,800 Discount Received 800
Wages 10,000 Loan 5,000
Freight In 750 Sundry Creditors 20,000
Freight Out 1,200

Stock on 31st March, 2018 was valued at 35,000. Prepare Trading and Profit and Loss Account for the year ended
31st March, 2018 and Balance Sheet as at the date.
Solution:
Financial Statement of Chatter Sen
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Opening Stock 40,000 Sales 1,27,000
Purchases 58,000 Less: Sales Return 1, 000 1,26,000
Less: Purchases Return 1, 275 56,725 Closing Stock 35,000
Wages 10,000
Freight Inwards 750
Gross Profit (Balancing Figure) 53,525
1,61,000 1,61,000

Profit and Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Discount Allowed 350 Gross Profit 53,525
Bank Charges 75 Discount Received 800
Salaries 6,800
Freight Outwards 1,200
Rent, Rates and 2,000
Taxes
Advertisement 2,000
Net Profit (Balancing 41,900
Figure)
54,325 54,325

Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
Rs Rs
Capital 1,10,000 Fixed Assets
Add: Net 41,900 1,51,900
Plant and Machinery 90,000
Profit
Liabilities Current Assets
 Sundry Creditors 20,000 Closing Stock 35,000
Loan 5,000 Sundry Debtors 45,000
Cash at Bank 6,900
1,76,900 1,76,900

Question:27
Following Trial Balance is extracted from the books of a merchant on 31st March, 2018:

Debit Balances: Debit Balances

Contd. :
Furniture and 6,400 Insurance 12,500
Fittings
Motor Vehicles 62,500 General Charges 7,820
Building 75,900 Salaries 33,000
Bad Debts 1,250 Credit Balances:
Sundry Debtors 38,000 Capital 1,28,900
Stock on 1st 34,600 Bills Payable 2,000
April, 2017
Purchases 55,750 Sundry Creditors 25,000
Sales Return 2,000 Sales 1,54,500
Advertising 4,500 Bank Overdraft 28,500
Interest 1,180 Purchases Return 1,250
Cash in Hand 6,500 Commission 1,750

Stock in Hand on 31st March, 2018 was valued at 32,500.

From the above, prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance
Sheet as at that date.
Solution:
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Opening Stock 34,600 Sales 1,54,500
Purchases 55,750 Less: Sales Return 2, 000 1,52,500
Less: Purchases Return 1, 250 54,500 Closing Stock 32,500
Gross Profit (Balancing Figure) 95,900
1,85,000 1,85,000

Profit And Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Taxes and Insurance 12,500 Gross Profit 95,900
General Charges 7,820 Commission 1,750
Salaries 33,000
Bad Debts 1,250
Advertising 4,500
Interest 1,180
Net Profit (Balancing Figure) 37,400
97,650 97,650

Balance Sheet
as on March 31, 2018
 Amount Amount
Liabilities Assets
Rs Rs

Capital 1,28,900 Fixed Assets

Add: Net Profit 37,400 1,66,300 Building 75,900
Current Liabilities Furniture and Fittings 6,400
Sundry Creditors 25,000 Motor Vehicles 62,500
Bank Overdraft 28,500 Current Assets
Bills Payable 2,000 Closing Stock 32,500
Sundry Debtors 38,000
Cash in Hand 6,500
2,21,800 2,21,800

Question:28
The following balances were extracted from the books of Harish Chandra on 31st March, 2018:

Drawings 15,000 Capital 2,45,000

Life Insurance 5,000 Loan 78,800
Premium
General Expenses 25,000 Sales 6,53,600
Building 1,10,000 Purchases 4,70,000
Machinery 93,400 Motor Car 20,000
Stock on 1st April, 1,62,000 Reserve Fund 9,000
2017 Cr.
Power 22,400 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
Input CGST A/c 15,000 Charity 1,050
Input SGST A/c 15,000 Bad Debts 5,500
Output IGST A/c 30,000

Stock on 31st March, 2018 was valued at 2,35,000.

Prepare final accounts for the year ended 31st March, 2018.
Solution:
Financial Statement of Harish Chandra
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Opening Stock 1,62,000 Sales 6,53,600
Purchases 4,70,000 Closing Stock 2,35,000
Power 22,400
Wages 72,000
Gross Profit (Balancing Figure) 1,62,200
8,88,600 8,88,600

Profit and Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
General Expenses 25,000 Gross Profit 1,62,200
Taxes and Insurance 13,150 Commission 13,200
 Bad Debts 5,500

Car Expenses 18,000

Charity 1,050
Net Profit (Balancing Figure) 1,12,700
1,75,400 1,75,400

Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
Rs Rs
Capital 2,45,000 Fixed Assets
Add: Net Profit 1,12,700 Building 1,10,000
Less: Life Insurance Premium 5, 000 Machinery 93,400
Less: Drawings 15, 000 3,37,700 Motor Car 20,000
Reserve Fund 9,000 Current Assets
Loan 78,800 Closing Stock 2,35,000
Current Liabilities Debtors 62,800
Bank Overdraft 33,000 Cash 800
Bills Payable 38,500
Creditors 25,000
5,22,000 5,22,000

Working Note:
1 GST Set off
Output IGST-Input CGST-Input SGST= 30,000-15,000-15,000=Nil

GST Payable/Receivable=Nil

Hence, Computation of GST won't affect the Balance Sheet.

Question:29
From the following Trial Balance and additional information of Mr. Gaurav, a proprietor, prepare Trading and Profit
and Loss Account for the year ended 31st March, 2018 and Balance Seet as at that date:

Cr.
Dr.
Balance
Particular Balance

Building 1,60,000 …
Wages 26,000 …
Machinery 16,000 …
Salaries and Wages 41,600 …
Debtors 38,700 …
Capital … 2,23,100
Purchases 56,500 …
Sales … 1,00,700
Creditors … 12,500
Income Tax 2,000 …
Drawings 500 …
Input CGST A/c 10,000 …
Input SGST A/c 10,000 …
Output CGST A/c … 12,500
Output SGST A/c … 12,500
Total 3,61,300 3,61,300

Closing Stock at cost 1,00,000 but its market value is 88,500.

Solution:
Financial Statement of Mr. Gaurav
Trading Account
for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Purchases 56,500 Sales 1,00,700
Wages 26,000 Closing Stock 88,500
Gross Profit (Balancing Figure) 1,06,700
1,89,200 1,89,200

Profit and Loss Account

for the year ended March 31, 2018
Dr. Cr.
Amount Amount
Particulars Particulars
Rs Rs
Salaries and Wages 41,600 Gross Profit 1,06,700
Net Profit (Balancing Figure) 65,100
1,06,700 1,06,700

Balance Sheet
as on March 31, 2018
Amount Amount
Liabilities Assets
Rs Rs
Capital 2,23,100 Fixed Assets
Add: Net Profit 65,100 Building 1,60,000
Less: Drawings 500 Machinery 16,000
Less: Income Tax 2, 000 2,85,700 Current Assets
Current Liabilities Closing Stock 88,500
Creditors 12,500
GST Payable 5,000 Debtors 38,700
WN1

3,03,200 3,03,200

Working Notes:
1 GST Set off
First: Output CGST-Input CGST= 12,500-10,000=2,500
Second: Output SGST-Input SGST= 12,500-10,000=2,500

GST Payable=Output CGST+Output SGST=2,500+2,500=5,000

2 Closing Stock has been taken at its Market Price i. e. Rs88, 500
and not on its Cost. This is because, as per the Principle of Conservatism, Closing Stock is taken at Cost or
Market Price whichever is less.