Chapter 7 Assignment

May’22 MTP 1:

1. The trial balance of Sahil as at 31st March, 2021 is as follows:

The following adjustments are to be made:

(1) Provision for bad and doubtful debts be created at 5% and for discount @ 2% on sundry debtors.
(2) Personal purchases of Sahil amounting to ` 1,500 had been recorded in the purchases day book.
(3) Depreciation on furniture & fittings @ 10% shall be written off.
(4) Included amongst the debtors is ` 7,500 due from Sunder and included among the creditors ` 2,500 due to him.
(5) A quarter of the amount of printing and stationary expenses is to be carried forward to the next year.
(6) Credit purchase invoice amounting to ` 1,000 had been omitted from the books.
(7) Stock on 31.03.2021 was ` 1,96,500.
(8) Interest on bank loan shall be provided for the whole year.
You are required to prepare Trading & profit and loss account for the year ended 31. 03.2021.

(15 Marks)

Answer:
Trading and Profit and Loss Account of Mr. Sahil
for the year ended 31st March, 2021
May’22 MTP 2:

2. Zavier & Co. employs a team of 9 workers who were paid ` 1,20,000 per month each in the year ending 31st December,
2020. At the start of 2021, the company raised salaries by 10% to ` 1,32,000 per month each.
On 1 July, 2021 the company hired 2 trainees at salary of ` 63,000 per month each. The work force is paid salary on the
first working day of every month, one month in arrears, so that the employees receive their salary for January on the first
working day of February, etc.
You are required to calculate:
(i) Amount of salaries which would be charged to the profit and loss account for the year ended 31 December,
st

2021.
(ii) Amount actually paid as salaries during 2021.
(iii) Outstanding salaries as on 31st December, 2021.
(5 Marks)
Answer:
RTP May’20:

3. The following are the balances extracted from the books of Shri Raghuram as on 31.03.2018, who carries on business
under the name and style of M/s Raghuram and Associates at Chennai:
Prepare Trading and Profit and Loss Account for the year ended 31.03.2018 and the Balance Sheet as at that date after making
provision for the following:
(a) Depreciate Building by 5%, Furniture and Fixtures by 10%, Office Equipment by 15% and Motor Car by 20%.
(b) Value of stock at the close of the year was ` 4,10,000.
(c) One month rent for godown is outstanding.
(d) Interest on loan from Rajan is payable @ 10% per annum. This loan was taken on 01.07.2017
(e) Provision for bad debts is to be maintained at 5% of Sundry debtors.
(f) Insurance premium includes ` 42,000 paid towards proprietor's life insurance policy and the balance of the insurance
charges cover the period from 01.04.2017 to 30.06.2018.

Answer:
M/s Raghuram & Associates
Trading Account for the year ended 31st March 2018

M/s Raghuram & Associates

Profit and Loss Account for the year ended 31st March 2018

Balance Sheet of M/s Raghuram & Associates

as at 31st March 2018
RTP Nov’20:

4. The following is the Trial Balance of T on 31st March, 2019:

Stock on 31st March, 2019 was valued at ` 1,00,000. Depreciation is to be provided at 10% per annum on fixed assets purchased
during the year. A scrutiny of the books of account revealed the following matters :
 (i) ` 20,000 drawn from bank was debited to Drawings account, but out of this amount withdrawn ` 12,000 was used in
the business for day-to-day expenses.
(ii) Purchase of goods worth ` 16,000 was not recorded in the books of account upto 31.03.2019, but the goods were
included in stock.
(iii) Purchase returns of ` 1,000 was recorded in Sales Return Journal and the amount was correctly posted to the Party’s
A/c on the correct side.
(iv) Expenses include ` 6,000 in respect of the period after 31st March, 2019.
Give the necessary Journal Entries in respect of (i) to (iv) and prepare the Final Accounts for the year ended 31st March, 2019.

Answer:
Journal Entries

Trading, Profit and Loss Account of T

for the year ending 31st March, 2019

Balance Sheet as on 31st March, 2019

RTP May’21:

5. The following is the trial balance of Manan as at 31st March 2020:

RTP Nov’21:
 6. The following are the balances as at 31st March, 2021 extracted from the books of Mr. Satender.

Answer:

Rectification Entries
 Balance Sheet of Mr. Satendra as on 31st March, 2021

RTP May’22:

7. Mr. Bansal submitted to you the following trial balance, which he has not been able to agree. Rewrite the trial balance and
prepare trading and profit and loss account for the year ended 31.3.2021 and a balance sheet as on that date after giving
effect to the undermentioned adjustments:

Adjustments:
 1. Write off ` 600 as bad debt and make a provision for doubtful debts at 5% on balance sundry debtors.
2. Stock valued at ` 2,000 was destroyed by fire on 25th March,2021, but insurance company admitted a claim for ` 1,500
only and paid the sum in April,2021.
3. Depreciation to be provided on furniture at 10% per annum.

Answer:

Trading and Profit and Loss Account of Mr. Bansal

for the year ended 31st March,2021

Balance Sheet of Mr. Bansal

as at 31st March,2021
Past Year Papers:
Nov’19:
8. Mr. Shyamal runs a factory, which produces detergents. Following details were available in respect of his
manufacturing activities for the year ended 31-03-2019.

You are required to prepare a Manufacturing Account of Mr. Shyamal for the year ended 31-03-2019.
(5 Marks)
ANswer:
In the Books of Mr. Shyamal
Manufacturing Account for the Year ended 31.03.2019
 9. The balance sheet of Mittal on 1st January, 2018 was as follows:

During 2018, his profit and loss account revealed a net profit of ` 15,10,000. This was after allowing for the following:
(i) Interest on capital @ 6% p.a.
(ii) Depreciation on plant and machinery @ 10% p.a. and on Furniture and Fixtures @ 5% p.a.
(iii) A provision for Doubtful debts @ 5% of the trade receivables as at 31st December 2018.
But while preparing the profit and loss account he had forgotten to provide for (1) outstanding expenses
totalling ` 1,85,000 and (2) prepaid insurance to the extent of ` 25,000.
His current assets and liabilities on 31st December, 2018 were: Trade receivables ` 21,00,000; Cash at bank `
5,20,000 and Trade payables ` 13,84,000. During the year he withdrew ` 6,20,000 for domestic use. Closing
inventories is equal to net trade receivables at the year-end. You are required to draw up revised Profit and
Loss account and Balance Sheet at the end of the year.
(10 Marks)
Answer:
Nov’20:
10. Max & Co. employs a team of 9 workers who were paid ` 40,000 per month each in the year ending 31st
December, 2018. At the start of 2019, the company raised salaries by 10% to ` 44,000 per month each.
On 1 July, 2019 the company hired 2 trainees at salary of ` 21,000 per month each. The work force is paid
salary on the first working day of every month, one month in arrears, so that the employees receive their
salary for January on the first working day of February, etc. You are required to calculate :
(i) Amount of salaries which would be charged to the profit and loss account for the year ended 31 st
December, 2019.
(ii) Amount actually paid as salaries during 2019.
(iii) Outstanding salaries as on 31st December, 2019.
(5 Marks)
Answer:

11. Following are the Manufacturing A/c, Creditors A/c and Raw Material A/c provided by M/s. Shivam related
to financial year 2019-20. There are certain figures missing in these accounts.
You are required to prepare revised Manufacturing A/c and Raw Material A/c.
(10 Marks)
Answer:
Jan’21:
12. Mr. K is engaged in business of selling magazines. Several of his customers pay money in advance for subscribing his
magazines. Information related to year ended 31st March, 2020 has been given below: On 1st April, 2019 he had a
balance of ` 3,00,000 advance from customers of which ` 2,25,000 is related to year 2019-20 while remaining pertains to
year 2020-21- During the year 2019-20 he made cash sales of ` 7,50,000. You are required to compute :
(i) Total income for the year 2019-20.
(ii) Total money received during the year, if the closing balance as on 31st March, 2020 in Advance from
Customers Account is ` 2,55,000.
(5 Marks)
Answer:
July’21:

13. Karuna decided to start business of fashion garments under the name of M/s. Designer Wear on 1 st April,
2020. She had a saving of about ` 10,00,000. She invested ` 3,00,000 out of her savings and borrowed equal
amount from bank. She purchased a commercial space for ` 5,00,000 and further spent ` 1,00,000 on its
renovation to make it ready for business. Loan and interest repaid by her in the first year are as follows:

In view of further capital requirement, she transferred ` 2,00,000 from her saving bank account to the bank account of
the business. She paid security deposit of ` 7,000 for telephone connection. Furniture of ` 10,000 was purchased, All
payments were made by cheque and all receipts in cash were deposited in the bank. At the end of the year, her
business showed the following results:

Other Information:
(i) She withdrew ` 5,000 by cheque each month for her personal expenses.
(ii) Depreciation on building @ 5% p.a. and oil furniture @ 10% p.a.
(iii) Closing stock in hand as on 31st March, 2021: ` 5,50,000
Prepare trading account, profit and loss account for the year ended 31-3-2021 and Balance
Sheet as on that date.
(10 Marks)
Answer:
In the books of M/s Designer wear
Trading and Profit & Loss Account (for the year ending 31.3.2021)

Balance Sheet as on 31st March, 2021

Working Note:
Bank A/c

Dec’21:
 14. On 31st March, 2021 the Trial Balance of Mr. Black was as follows:

The following additional information is available:

Stocks on 31st March,2021 were:

Salaries and wages unpaid for the year ended 31st March,2021 were respectively, ` 9,000 and ` 20,000. Machinery is to
be depreciated by 10% and off ice furniture by 7½%. A provision for doubtful debts is to be maintained @1% of sales.
Rent is to be charged as to 3/4 to factory and 1/4 to office. Lighting is to be charged as to 2/3 to factory and 1/3 to
office.
Prepare the Manufacturing Account, Trading Account and Profit and Loss Account for the
year ended on 31st March,2021.
(15 Marks)
Answer:
In the books of Mr. Black
Manufacturing Account for the year ended 31st March, 2021
 Trading Account for the year ended 31st March, 2021

Profit and Loss Account for the year ended 31st March, 2021