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Question-1

Explain the concept of cost of goods sold?

Solution:
Cost of goods sold includes the costs that is included in creating the products that a company sells

Cost of goods sold = Purchases + Direct Expenses – Closing Stock

Question-2

What is a balance sheet. What are its characteristics?

Solution:
The balance sheet may be defined as "A Statement which sets out the Assets and Liabilities if a firm or an institution as at a certain date".

The Balance Sheet has certain characteristics which should be noted. These are:

It is prepared at a particular date, rather on the close of the day and not for a period. It is true only on that date and not later.
  The Balance Sheet is prepared after the preparation of the Profit and Loss Account. This is the reason why the Profit and Loss Account (including the Trading Account) and the Balance Sheet together called the ‘Final Accounts’.
  The Balance Sheet shows the financial position of a business as a going concern.
  The Balance Sheet is not an account but only a statement of assets and liabilities. On the left – hand side, the liabilities of the business are shown whereas on the right – hand side the assets of the business appear.
  The total of the asset side must be equal to the total of liabilities side. i.e., the two sides of the Balance Sheet must have the same totals. If this is not the case, there is certainly an error somewhere.

 

Question-3

What is an operating profit?

Solution:
Operating Profit is the excess of gross profit over operating expenses. Gross profit is the excess of net sales revenue over cost of goods sold. Operating expenses includes office and administration expenses, selling and distribution expenses, cash discount allowed, interest on bills payable and other short term debts, bad debts and so on. Net sales means cash sales + credit sales – sales return.

Operating Profit = Net Sales – Operating Cost

                      = Net Sales – (cost of Goods sold+ Administration and Office Expenses + Selling and Distribution Expenses)

or

Operating Profit = Net Profit + Non – Operating Expenses – Non – Operating Income.

 

Question-4

What are financial statements? What information do they provide.

Solution:
At the end of the financial year or at the end of the accounting period, Financial Statements are prepared to know profit or loss and also the financial position of the business. These statements are presented to users of accounting information for decision – making. A complete set of financial statements include a. a balance sheet,b. a profit and loss account and c. schedules and notes forming part of balance sheet. In many countries, Financial Statements also include a statement of changes in financial position (which may be presented as cash flow statement or funds flow statement).

Financial Statements are prepared from the Trial Balance drawn taking the ledger balances and cash book balances. The Trial Balance tests the arithmetical accuracy of the entries effected. On being satisfied by this, the owner of the business likes to know the ultimate results of operating the business. i.e.,

How much profit the business has earned in a particular period (generally one year)? Profit and Loss Account (Income Statement) shows the profit earned during the year and
  What is the financial position of the business at the end of a particular period (generally one year) Balance Sheet (Position Statement) shows the financial position on a particular date.

These two financial statements are "Final Accounts".

Question-5

What are closing entries? Give four examples of closing entries.

Solution:
Preparation of a Trading Account requires recording entries to transfer the balance of accounts of all the concerned items to the Trading Account. These entries are called Closing Entries as after recording the entries these accounts are closed. The following closing entries are passed to give effect of such transfer of balances:
 

 

1

For the items of Debit Side

Trading A/c                       Dr

To Opening Stock A/c

To Purchases A/c

To Direct Expenses A/c

2

For the Items on Credit Side

Sales A/c (Net) A/c             Dr

Closing Stock A/c                Dr

To Trading A/c

3

For Gross Profit

Trading A/c                        Dr

To Profit and Loss A/c

4

For Gross Loss

Profit and Loss A/c              Dr

To Trading A/c

 

Question-6

Discuss the need of preparing a balance sheet.

Solution:
Need: A Balance Sheet is prepared with a view to measure the true financial position of a business at a particular point of time. It is a device to show the financial position of a business in a systematic and standard form. It is a screen picture of the financial position of the business. Through it the position of the business, at a particular point of time, can be understood at a glance. Just as a doctor will feel the pulse of a person and know whether he is enjoying good health or not, in the same manner by looking at the Balance Sheet one can know whether the firm is solvent or not. If the assets exceed liabilities it is solvent; in the other case, it would be insolvent. It may serve as the basis for determining purchase consideration of the business.

Question-7

What is meant by Grouping and Marshalling of assets and liabilities. Explain the ways in which a balance sheet may be marshalled.

Solution:
The assets and liabilities should be shown in a certain order in the Balance Sheet. Therefore, they should be arranged in certain groups and in a particular order. This is called ‘Grouping’ and ‘Marshalling’ of the Balance Sheet. Thus, ‘Grouping’ means putting items of a similar nature under a common heading. The arrangement of assets and liabilities in a particular order in the Balance Sheet is called ‘Marshalling’.

Before we discuss the arrangement of assets and liabilities in the Balance Sheet, let us first understand what assets and liabilities mean. The team ‘assets’ denote the economic resources (property) of the business and includes all current and fixed assets. These are discussed subsequently. The term liabilities denote all claims against the assets of the business and include those of the outsiders (creditors) or those of the owners of the business. Assets and liabilities are shown in the Balance Sheet either in the order of liquidity or in the order of permanence.

Question-8

From the following balances taken from the books of Simmi and Vimmi Ltd. for the year ending March 31, 2003, calculate the gross profit.
 
  (Rs.)
Closing stock 2,50,000
Net sales during the year 40,00,000
Net purchases during the year 15,00,000
Opening stock 15,00,000
Direct expenses 80,000

 


Solution:

Trading and profit and Loss Account for the year ended March 31, 2003

Dr.  

 Cr.

Expenses / Losses

Amount (Rs.)

Revenues / Gain

Amount (Rs.)

Opening Stock

15,00,000

Net Sales

40,00,000

Net Purchases

15,00,000

Closing Stock

  2,50,000

Direct Expenses

    80,000

   

Gross Profit

11,70,000

   
 

42,50,000

 

42,50,000

 

Question-9

From the following balances extracted from the books of M/s Ahuja and Nanda. Calculate the amount of :

 

(a) Cost of goods available for sale

(b) Cost of goods sold during the year

(c) Gross Profit

  Rs.
Opening stock 25,000
Credit purchases 7,50,000
Cash purchases 3,00,000
Credit sales 12,00,000
Cash sales 4,00,000
Wages 1,00,000
Salaries 1,40,000
Closing stock 30,000
Sales return 50,000
Purchases return 10,000

Solution:
a) Cost of Goods available for sale

b) Cost of goods sold

Cost of goods sold = Purchases + Direct expenses – Closing Stock

             = 10,50,000 + 1,00,000 – 30,000

             = Rs. 11,50,000 – 30,000

             = Rs. 11,20,000

c) Gross profit

Trading and profit and Loss Account for the year ended March 31, 2003

Dr.  

Cr.

Expenses / Losses

Amount (Rs.)

Revenues / Gain

Amount (Rs.)

Opening Stock

25,000

Net Sales 16,00,000

Less Sales return 50,000

15,50,000

Net Purchases10,50,000

Less P/R 10,000

10,40,000

Closing Stock

    30,000

Direct Expenses

1,00,000

   

Gross Profit

4,15,000

   
 

15,80,000

 

15,80,000

 

Question-10

Calculate the amount of gross profit and operating profit on the basis of the following balances extracted from the books of M/s Rajiv & Sons for the year ended March 31, 2005.
 
  Rs.
Opening stock 50,000
Net sales 11,00,000
Net purchases 6,00,000
Direct expenses 60,000
Administration expenses 45,000
Selling and distribution expenses 65,000
Loss due to fire 20,000
Closing stock 70,000

Solution:

Trading and profit and Loss Account for the year ended March 31, 2003

Dr.  

Cr.

Expenses / Losses

Amount (Rs.)

Revenues / Gain

Amount (Rs.)

Opening Stock

50,000

Net Sales

11,00,000

Net Purchases

6,00,000

Closing Stock

70,000

Direct Expenses

60,000

   

Gross Profit

4,60,000

   
 

11,70,000

 

11,70,000

       

Administrative expenses

45,000

Gross profit b/d

4,60,000

Selling and distributive expenses

65,000

   

Loss by fire

20,000

   

Net profit transferred to capital account

3,30,000

   
 

4,60,000

 

4,60,000

 
Operating Profit = Net profit + Non –operating expenses – Non-operating incomes
  = 3,30,000 + 20,000 – Nil
  = Rs. 3,50,000

 

Question-11

Operating profit earned by M/s Arora & Sachdeva in 2005-06 was Rs.17,00,000. Its non-operating incomes were Rs.1,50,000 and non-operating expenses were Rs.3,75,000. Calculate the amount of net profit earned by the firm.

Solution:
Operating profit = Net profit + Non-operating expenses – non-operating income

17,00,000 = Net profit + 3,75,000 – 1,50,000

17,00,000 = Net profit + 2,25,000

Net profit = Rs. 14,75,000

Question-12

The following are the extracts from the trial balance of M/s Bhola & Sons ason March 31, 2005

 

Account Title

Debit
Rs.

Credit
Rs.

Opening stock

Purchases

2,00,000

8,10,000


 

10,10,000

 

 

 10,10,000

10,10,000

(only relevant items)

Closing Stock as on date was valued at Rs.3,00,000.

You are required to record the necessary journal entries and show how the above items will appear in the trading and profit and loss account and balance sheet of M/s Bhola & Sons.


Solution:
Journal entries

a) Sales a/c Dr. 10,10,000

           To Trading        10,10,000

b) Trading a/c Dr. 8,10,000

          To Purchases      8,10,000

c) Trading a/c Dr. 2,00,000

          Opening Stock     2,00,000

d) Closing Stock a/c Dr. 3,00,000

          To Trading                3,00,000

Trading and profit and Loss Account for the year ended March 31, 2005

Dr.  

Cr.

Expenses / Losses

Amount (Rs.)

Revenues / Gain

Amount (Rs.)

Opening Stock

2,00,000

Net Sales

10,10,000

Net Purchases

8,10,000

Closing Stock

3,00,000

Gross profit

3,00,000

   
 

13,10,000

 

13,10,000

Balance sheet as on 31 March, 2005

 

Liabilities

Amount (Rs)

Assets

Amount (Rs)

Gross profit

3,00,000

   

Opening Stock

2,00,000

   

 

Question-13

Prepare trading and profit and loss account and balance sheet as on March 31, 2005 :

 

Account Title

Amount

Account Title

Amount

 

Rs.

 

Rs.

Machinery

27,000

Capital

60,000

Sundry debtors

21,600

Bills payable

2,800

Drawings

2,700

Sundry creditors

1,400

Purchases

58,500

Sales

73,500

Wages

15,000

 

 

Sundry expenses

600

 

 

Rent & taxes

1,350

 

 

Carriage inwards

450

 

 

Bank

4,500

 

 

Openings stock

6,000

 

 

Closing stock as on March 31, 2005 Rs.22,400.


Solution:

Trading and profit and Loss Account for the year ended March 31, 2005

Dr.   Cr.

Expenses / Losses

Amount (Rs.)

Revenues / Gain

Amount (Rs.)

Opening Stock

6,000

Net Sales

73,500

Net Purchases

58,500

Closing Stock

22,400

Direct Expenses

15,000

   

Carriage inwards

450

   

Gross profit

15,950

   
 

95,900

 

95,900

       

Rent and taxes

1,350

Gross profit b/d

15,950

Sundry expenses

600

   

Net profit

14,000

   
 

15,950

 

15,950

Balance sheet as on 31 March, 2005

 

Liabilities

Amount (Rs)

Assets

Amount (Rs)

Capital           60,000

 

 

 


71,300

Machinery

27,000

Less: Drawings 2,700
  57,300
Add: Net Profit 14,000
   

Sundry debtors

21,600

Bills Payable

2,800

Bank

  4,500

Sundry Creditors

1,400

Closing Stock

22,400

 

75,500

 

75,500

 

Question-14

The following trial balance is extracted from the books of M/s Ram on March 31, 2005. You are required to prepare trading and profit and loss account and the balance sheet as on date :

 

Account title

Amount Rs.

Account title

Amount Rs.

Debtors

13,000

Apprenticeship premium

5,000

Purchases

50,000

Loan

10,000

Coal, gas and water

6,000

Bank overdraft

1,000

Factory wages

11,000

Sales

80,000

Salaries

9,000

Creditors

13,000

Rent

4,000

Capital

20,000

Discount

3,000

 

 

Advertisement

500

 

 

Drawings

1,000

 

 

Loan

6,000

 

 

Petty cash

500

 

 

Sales return

1,000

 

 

Machinery

5,000

 

 

Land and building

10,000

 

 

Income tax

100

 

 

Furniture

9,900

 

 


Solution:

Trading and profit and Loss Account for the year ended March 31, 2005

Dr.   Cr.

Expenses / Losses

Amount (Rs.)

Revenues / Gain

Amount (Rs.)

Net Purchases

50,000

Net Sales 80,000

Less

Sales Return 1,000

 

79,000

Wages

11,000

   

Coal, Gas and water

  6,000

   

Gross profit

12,000

   
 

79,000

 

79,000

       

Salary

   9,000

Gross profit b/d

12,000

Rent

   4,000

Apprenticeship premium

   5,000

Discount

   3,000

   

Advertisement

      500

   

Net profit

      500

   
 

17,000

 

17,000

Balance sheet as on 31 March, 2005

Liabilities

Amount (Rs)

Assets

Amount (Rs)

Capital               20,000
















19,400

Machinery

5,000

Less: Drawings 1,000
  19,000
Add: Net Profit 500
  19,500
Less: Income tax 100

Loan

10,000

Sundry debtors

13,000

Sundry Creditors

13,000

Land and building

10,000

Bank overdraft

  1,000

Machinery

  5,000

   

Furniture

  9,900

   

Cash

    500

 

43,400

 

43,400

 

Question-15

The following is the trial balance of Manju Chawla on March 31, 2005. You are required to prepare trading and profit and loss account and a balance sheet as on date :

 

Account title

Debit Amount Rs.

Credit Amount Rs.

Opening stock

10,000

 

Purchases and sales

40,000

80,000

Returns

     200

600

Productive wages

6,000

 

Dock and Clearing charges

4,000

 

Donation and charity

    600

 

Delivery van expenses

6,000

 

Lighting

   500

 

Sales tax collected

 

   1,000

Bad debts

   600

 

Misc. incomes

 

   6,000

Rent from tenants

 

   2,000

Royalty

4,000

 

Capital

 

40,000

Drawings

2,000

 

Debtors and Creditors

6,0000

   7,000

Cash

3,000

 

Investment

6,000

 

Patents

4,000

 

Land and Machinery

43,000

 

Closing stock Rs. 2,000.


Solution:

Trading and profit and Loss Account for the year ended March 31, 2005

Dr.  

Cr.

Expenses / Losses

Amount (Rs.)

Revenues / Gain

Amount (Rs.)

Opening Stock

10,000

Sales          80,000

Less:
Sales Return    600

 


79,400

Purchases         40,000

Less:
Purchase return     200

 

39,800

Closing stock

  2,000

Productive Wages

6,000

   

Dock and clearing charges

4,000

   

Lighting

   500

   

Gross profit

21,100

   
 

81,400

 

81,400

       

Donation and charity

     600

Gross profit b/d

21,100

Delivery van expenses

  6,000

Miscellaneous income

  6,000

Bad debts

    600

Rent from tenants

  2,000

Net Profit

21,900

   
 

29,100

 

29,100

Balance sheet as on 31 March, 2005

 

Liabilities

Amount (Rs)

Assets

Amount (Rs)

Capital          40,000

Less:
Drawings         2,000

                    38,000
Add:
net profit       21,900

 

 

 

59,900

Royalty

4,000

Creditors

7,000

Cash

3,000

   

Bank

1,900

Service tax collected

1,000

Investment

4,000

   

Patents

4,000

   

Land machinery

43,000

   

Closing stock

2,000

   

Debtors

6,000

 

67,900

 

67,900

 

Question-16

The following is the trial balance of Mr. Deepak as on March 31, 2005. You are required to prepare trading account, profit and loss account and a balance sheet as on date:
 

Account title

Debit Amount Rs.

Account title

Credit Amount Rs.

Drawings

36,000

Capital

2,50000

Insurance

3,000

Bills payable

3,600

General expenses

29,000

Creditors

50,000

Rent and taxes

14,400

Discount received

10,400

Lighting (factory)

2,800

Purchases return

8,000

Travelling expenses

7,400

Sales

4,40,000

Cash in hand

12,600

 

 

Bills receivable

5,000

   
Sundry debtors 1,04,000    
Furniture 16,000    
Plant and Machinery 1,80,000    
Opening stock   40,000    
Purchases 1,60,000    
Sales return      6,000    
Carriage inwards      7,200    
Carriage outwards      1,600    
Wages   84,000    

Salaries

  53,000    

Closing stock Rs. 35,000.


Solution:

Trading and profit and Loss Account for the year ended March 31, 2005

Dr.    Cr.

Expenses / Losses

Amount (Rs.)

Revenues / Gain

Amount (Rs.)

Opening stock

40,000

Sales         4,40,000

Less:
Sales return    6,000

 

4,34,000

Purchases         1,60,000

Less:
Purchase return      8,000

 

1,52,000

Closing Stock

   35,000

Carriage inwards

    7,200

   

Wages

   84,000

   

Lighting (factory)

     2,800

   

Gross profit

1,83,000

   
 

4,69,000

 

4,69,000

       

Insurance

    3,000

Gross profit b/d

1,83,000

General expenses

  29,000

Discount received

   10,400

Rent and taxes

  14,400

   

Travelling expenses

    7,400

   

Carriage outwards

   1,600

   

Salaries

  53,000

   

Net profit

85,000

   
 

1,93,400

 

1,93,400

Balance sheet as on 31 March, 2005

 

Liabilities

Amount (Rs)

Assets

Amount (Rs)

Capital       2,50,000

Less:
Drawings      36,000

                2,14,000

Add:
Net Profit      85,000

 

 

 

 


2,99,000

Cash in hand

12,600

Bills Payable

3,600

Bills receivable

5,000

Sundry Creditors

50,000

Sundry Debtors

1,04,000

   

Furniture

16,000

   

Plant and Machinery

1,80,000

   

Closing stock

35,000

 

3,52,600

 

3,52,600

 

Question-17

Prepare trading and profit and loss account and balance sheet from the following particulars as on March 31, 2005.

 

Account Title

Debit Amount Rs.

Credit Amount Rs.

Purchases and Sales

3,52,000

5,60,000

Return inwards and Return outwards

9,600

12,000

Carriage inwards

7,000

 

Carriage outwards

3,360

 

Fuel and power

24,800

 

Opening stock

57,600

 

Bad debts

9,950

 

Debtors and Creditors

1,31,200

48,000

Capital

 

3,48,000

Investment

32,000

 

Interest on investment

 

3,200

Loan

 

16,000

Repairs

2,400

 

General expenses

17,000

 

Wages and salaries

28,800

 

Land and buildings

2,88,000

 

Cash in hand

32,000

 

Miscellaneous receipts

 

160

Sales tax collected

 

8,350

Closing stock Rs. 34,800.


Solution:

Trading and profit and Loss Account for the year ended March 31, 2005

Dr.  

Cr.

Expenses / Losses

Amount (Rs.)

Revenues / Gain

Amount (Rs.)

Opening Stock

57,600

Sales          5,60,000

Less:
Sales return   12,000

 

5,48,000

Purchases      3,52,000

Less:
Purchase return 9,600

 

3,42,400

Closing stock

34,800

Carriage inwards

    7,000

   

Wages and salaries

  28,800

   

Fuel and power

  24,800

   

Gross profit

1,22,200

   
 

5,82,800

 

5,82,800

       

Carriage outwards

  3,360

Gross profit b/d

1,22,200

General expenses

17,000

Miscellaneous receipts

       160

Bad debts

  9,950

Interest on investment

    3,200

Repairs

  2,400

   

Net profit

92,850

   
 

1,25,560

 

1,25,560

Balance sheet as on 31 March, 2005

 

Liabilities

Amount (Rs)

Assets

Amount (Rs)

Capital      3,48,000

Add:
Net Profit     92,850

 


4,40,850

Debtors

1,31,200

Creditors

48,000

Land and buildings

2,88,000

Service tax collected

8,350

Cash in hand

32,000

Loan

16,000

Investment

32,000

   

Closing Stock

30,000

       
 

5,13,200

 

5,13,200

Question-18

From the following trial balance of Mr. A. Lal, prepare trading, profit and loss account and balance sheet as on March 31, 2005

 

Account Title

Debit Amount Rs.

Credit Amount Rs.

Stock as on April 01, 2005

16,000

 

Purchases and Sales

67,600

1,12,000

Returns inwards and outwards

4,600

3,200

Carriage inwards

Wages

1,400

   2,800

 

General expenses

2,400

 

Bad debts

   600

 

Discount received

 

1,400

Bank over draft

 

10,000

Interest on bank overdraft

   600

 

Commission received

 

1,800

Insurance and taxes

4,000

 

Scooter expenses

   200

 

Salaries

8,800

 

Cash in hand

4,000

 

Scooter

8,000

 

Furniture

5,200

 

Building

65,000

 

Debtors and Creditors

6,000

16,000

Capital

 

50,000

Closing stock Rs. 15,000.


Solution:

Trading and profit and Loss Account for the year ended March 31, 2005

Dr.    

Cr.

Expenses / Losses

Amount (Rs.)

Revenues / Gain

Amount (Rs.)

Opening stock

16,000

Sales        1,12,000

Less:
Sales Return 3,200

 

1,08,800

Purchases        67,600

Less:
Purchase return 4,600

 

63,000

Closing stock

   15,000

Carriage inwards

  1,400

   

Wages

  2,800

   

Gross profit

40,600

   
 

1,23,800

 

1,23,800

       

General expenses

     2,400

Gross profit b/d

40,600

Bad debts

        600

Discount received

  1,400

Insurance and taxes

     4,000

Commission received

  1,800

Salaries

     8,800

   

Scooter expenses

       200

   

Interest on bank overdraft

       600

   

Net profit

   27,200

   
 

   43,800

 

43,800

Balance sheet as on 31 March, 2005

 

Liabilities

Amount (Rs)

Assets

Amount (Rs)

Capital         50,000

Add:
Net profit     27,200

 


77,200

Cash in hand

4,000

Bank overdraft

10,000

Scooter

 8,000

Creditors

16,000

Furniture

 5,200

   

Building

65,000

   

Debtors

  6,000

   

Closing Stock

15,000

 

1,03,200

 

1,03,200

 

Question-19

Prepare trading and profit and loss account and balance sheet of M/s Royal. Traders from the following balances as on March 31, 2005.
 

Debit balances

Amount Rs.

Credit balances

Amount Rs.

Stock

20,000

Sales

2,45,000

Cash

5,000

Creditors

10,000

Bank

10,000

Bills payable

4,000

Carriage on purchases

1,500

Capital

2,00,000

Purchases

1,90,000

 

 

Drawings

9,000

 

 

Wages

55,000

 

 

Machinery

1,00,000

 

 

Debtors

27,000

 

 

Postage

300

 

 

Sundry expenses

1,700

 

 

Rent

4,500

 

 

Furniture

35,000

 

 

Closing stock Rs.8,000.


Solution:

Trading and profit and Loss Account for the year ended March 31, 2005

Dr.  

Cr.

Expenses / Losses

Amount (Rs.)

Revenues / Gain

Amount (Rs.)

Opening stock

20,000

Sales       

2,45,000

Purchases

1,90,000

Closing stock

   8,000

Carriage on purchases

  1,500

Gross Loss 13,500

Wages

  55,000

   
  2,66,500   2,66,500
       
Gross Loss b/d 13,500 Net Loss 20,000
Postage 300    
Sundry expenses 1,700    
Rent 4,500    
  20,000   20,000

Balance sheet as on 31 March, 2005

 

Liabilities

Amount (Rs)

Assets

Amount (Rs)

Capital       2,00,000

Less:
Net loss        20,000

                 1,80,000
Less:
drawings         9,000

 






1,71,000

Cash

5,000

Creditors 10,000 Bank 10,000

Bills payable

4,000 Machinery 1,00,000
    Debtors 27,000
    Furniture 35,000
    Closing stock 8,000
 

1,85,000

 

1,85,000

 

Question-20

Prepare trading and profit and loss account from the following particulars of M/s Neema Traders as on March 31, 2005.

 

Account Title

Debit Amount Rs.

Account Title

Credit Amount Rs.

Buildings

23,000

Sales

1,80,000

Plant

16,930

Loan

8,000

Carriage inwards

1,000

Bills payable

2,520

Wages

3,300

Bank overdraft

4,720

Purchases

1,64,000

Creditors

8,000

Sales return

1,820

Capital

2,36,000

Opening stock

9,000

Purchases return

1,910

Machinery

2,10,000

 

 

Insurance

1,610

 

 

Interest

1,100

 

 

Bad debts

250

 

 

Postage

300

 

 

Discount

1,000

 

 

Salaries

3,000

 

 

Debtors

3,900

 

 

Stock on March 31, 2005 Rs.16,000.


Solution:

Trading and profit and Loss Account for the year ended March 31, 2005

Dr.  

Cr.

Expenses / Losses

Amount (Rs.)

Revenues / Gain

Amount (Rs.)

Opening stock

9,000

Sales         1,80,000

Less:
Sales return    1,820

 

1,78,180

Carriage inwards

1,000

Closing stock

   16,000

Wages

3,300

   

Purchases       1,64,000

Less:
Purchase return   1,910

 

1,62,090

   

Lighting

        940

   

Gross Profit

17,850

   
 

1,94,180

 

1,94,180

       

Insurance

    1,610

Gross profit b/d

    17,850

Interest

    1,100

   

Bad debts

      250

   

Postage

      300

   

Discount

    1,000

   

Salaries

    3,000

   

Net profit

  10,590

   
 

17850

 

    17,850

Balance sheet as on 31 March, 2005

 

Liabilities

Amount (Rs)

Assets

Amount (Rs)

Capital       2,36,000

Add:
Net profit      10,590

 

2,46,590

Buildings

  23,000

Creditors

    8,000

Plant

  16,930

Loan

    8,000

Machinery

2,10,000

Bills payable

    2,520

Debtors

    3,900

Bank overdraft

    4,720

Closing Stock

   16,000

       
 

2,69,830

 

2,69,830

 

Question-21

From the following balances of M/s Nilu Sarees as on March 31, 2005. Prepare trading and profit and loss account and balance sheet as on date.

 

Account Title

Debit Amount Rs.

Account Title

Credit Amount Rs.

Opening stock

10,000

Sales

2,28,000

Purchases

78,000

Capital

70,000

Carriage inwards

2,500

Interest

7,000

Salaries

30,000

Commission

8,000

Commission

10,000

Creditors

28,000

Wages

11,000

Bills payable

2,370

Rent & taxes

2,800

 

 

Repairs

5,000

 

 

Telephone expenses

1,400

 

 

Legal charges

1,500

 

 

Sundry expenses

2,500

 

 

cash in hand

12,000

 

 

Debtors

30,000

 

 

Machinery

60,000

 

 

Investments

90,000

 

 

Drawings

18,000

 

 

Closing stock as on March 31, 2005 Rs.22,000.


Solution:

Trading and profit and Loss Account for the year ended March 31, 2005

Dr.  

Cr.

Expenses / Losses

Amount (Rs.)

Revenues / Gain

Amount (Rs.)

Opening Stock

   10,000

Sales

2,28,000

Purchases

   78,000

Closing Stock

   22,000

Carriage inwards

     2,500

Commission

     8,000

Wages

   11,000

   

Gross profit

1,56,500

   
 

2,58,000

 

2,58,000

       

Salaries

   30,000

Gross profit b/d

1,56,500

Commission

   10,000

Interest

      7,000

Rent & taxes

     2,800

   

Repairs

     5,000

   

Telephone expenses

     1,400

   

Legal charges

     1,500

   

Sundry expenses

     2,500

   

Net profit

1,10,300

   
 

1,63,500

 

1,63,500

Balance sheet as on 31 March, 2005

 

Liabilities

Amount (Rs)

Assets

Amount (Rs)

Capital          70,000

Add:
Net profit    1,10,300

                  1,80,300

Less:
Drawings        18,000








 

1,62,300

Cash in hand

12,000

Creditors

   28,000

Debtors

30,000

Bills Payable

   23,700

Machinery

60,000

   

Investments

90,000

   

Closing stock

22,000

       
 

2,14,000

 

2,14,000

 

Question-22

Prepare trading and profit and loss account of M/s Sports Equipments for the year ended March 31, 2006 and balance sheet as on that date:

 

Account Title

Debit Amount Rs.

Credit Amount Rs.

Opening stock

50,000

 

Purchases and sales

3,50,000

4,21,000

Sales returns

5,000

 

Capital

 

3,00,000

Commission

 

4,000

Creditors

 

1,00,000

Bank overdraft

 

28,000

Cash in hand

32,000

 

Furniture

1,28,000

 

Debtors

1,40,000

 

Plants

60,000

 

Carriage on purchases

12,000

 

Wages

8,000

 

Rent

15,000

 

Bad debts

7,000

 

Drawings

24,000

 

Stationery

6,000

 

Travelling expenses

2,000

 

Insurance

7,000

 

Discount

5,000

 

Office expenses

2,000

 

Closing stock as on March 31, 2006 Rs.2,500.


Solution:

Trading and profit and Loss Account for the year ended March 31, 2005

Dr.  

Cr.

Expenses / Losses

Amount (Rs.)

Revenues / Gain

Amount (Rs.)

Opening Stock

50,000

Sales         4,21,000

Less:
Sales Return   5,000

4,16,000

Purchases

3,50,000

Closing stock

     2,500

Carriage on purchases

  12,000

Gross Loss

     1,500

Wages

   8,000

   
 

4,20,000

 

4,20,000

       

Gross Loss b/d

     1,500

Commission

     4,000

Rent

  15,000

Net loss

    41,500

Bad debts

   7,000

   

Stationary

   6,000

   

Travelling expenses

   2,000

   

Insurance

   7,000

   

Insurance

   5,000

   

Office expenses

   2,000

   
       
 

44,500

 

44,500

Balance sheet as on 31 March, 2005

 

Liabilities

Amount (Rs)

Assets

Amount (Rs)

Capital       3,00,000

Less:
Net Loss        41,500

                 2,58,500

Less:
Drawings       24,000

 

 

 

 

2,34,500

Cash in hand

  32,000

Creditors

1,00,000

Debtors

1,40,000

Bank overdraft

   28,000

Furniture

1,28,000

   

Plant

   60,000

   

Closing Stock

     2,500

       
 

3,62,500

 

3,62,500

 





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