Financial Statements - II

From the following balances of M/s Jyoti Exports, prepare trading and profit and loss account for the year ended March 31, 2017 and balance sheet as on this date. [Trial Balance Data: Sundry debtors 9,600; Sundry creditors 2,500; Opening stock 22,800; Sales 72,670; Purchases 34,800; Purchases returns 2,430; Carriage inwards 450; Bills payable 15,600; Wages 1,770; Capital 42,000; Office rent 820; Insurance 1,440; Factory rent 390; Cleaning charges 940; Salary 1,590; Building 24,000; Plant and Machinery 3,600; Cash in hand 2,160; Gas and Water 240; Octroi 60; Furniture 20,540; Patents 10,000] Closing stock ₹10,000.

1. To provision for doubtful debts is to be maintained at 5 per cent on sundry debtors.
2. Wages amounting to ₹500 and salary amounting to ₹350 are outstanding.
3. Factory rent prepaid ₹100.
4. Depreciation charged on Plant and Machinery @ 5% and Building @ 10%.
5. Outstanding insurance ₹100.

Prepare the trading and profit and loss account and a balance sheet of M/s Shine Ltd. from the following particulars. [Trial Balance Data: Sundry debtors 1,00,000; Bills payable 85,550; Bad debts 3,000; Sundry creditors 25,000; Trade expenses 2,500; Provision for bad debts 1,500; Printing and Stationary 5,000; Return outwards 4,500; Rent, Rates and Taxes 3,450; Capital 2,50,000; Freight 2,250; Discount received 3,500; Sales return 6,000; Interest received 11,260; Motor car 25,000; Sales 1,00,000; Opening stock 75,550; Furniture and Fixture 15,500; Purchases 75,000; Drawings 13,560; Investments 65,500; Cash in hand 36,000; Cash in bank 53,000] Adjustments:

1. Closing stock was valued ₹ 35,000.
2. Depreciation charged on furniture and fixture @ 5%.
3. Further bad debts ₹ 1,000. Make a provision for bad debts @ 5% on sundry debtors.
4. Depreciation charged on motor car @ 10%.
5. Interest on drawing @ 6%.
6. Rent, rates and taxes was outstanding ₹200.
7. Discount on debtors 2%.

From the following information prepare trading and profit and loss account of M/s Indian sports house for the year ending March 31, 2017. [Trial Balance Data: Drawings 20,000; Capital 2,00,000; Sundry debtors 80,000; Return outwards 2,000; Bad debts 1,000; Bank overdraft 12,000; Trade Expenses 2,400; Provision for bad debts 4,000; Printing and Stationery 2,000; Sundry creditors 60,000; Rent Rates and Taxes 5,000; Bills payable 15,400; Feright 4,000; Sales 2,76,000; Return inwards 7,000; Opening stock 25,000; Purchases 1,80,000; Furniture and Fixture 20,000; Plant and Machinery 1,00,000; Bills receivable 14,000; Wages 10,000; Cash in hand 6,000; Discount allowed 2,000; Investments 40,000; Motor car 51,000] Adjustments:

1. Closing stock was ₹45,000.
2. Provision for doubtful debts is to be maintained @ 2% on debtors.
3. Depreciation charged on: furniture and fixture @ 5%, plant and machinery @ 6% and motor car @ 10%.
4. A Machine of ₹30,000 was purchased on October 01, 2016.
5. The manager is entitled to a commission of @ 10% of the net profit after charging such commission.

If the insurance premium paid ₹ 1,000 and pre-paid insurance ₹ 300. The amount of insurance premium shown in profit and loss account will be:

The following balances were extracted from the books of Avika Enterprises on 31st March 2017. [Trial Balance Data: Capital Cr 24,500; Drawings Dr 2,000; General Expenses Dr 2,500; Buildings Dr 21,000; Machinery Dr 9,340; Stock (1.4.2016) Dr 16,200; Power Dr 2,240; Taxes and Insurance Dr 1,315; Wages Dr 7,200; Debtors and Creditors Dr 6,280/Cr 2,500; Charity Dr 105; Bad debts Dr 550; Bank Overdraft Cr 11,180; Sales and Purchases Dr 13,500/Cr 65,360; Stock (31.03.2017) Dr 23,500; Motor Vehicles Dr 2,000; Motor Vehicle expenses Dr 500; Provision for doubtful debts Cr 900; Commission Cr 1,320; Trade expenses Dr 1,280; Bills payable Cr 3,850; Cash Dr 100] You are required to: (i) Prepare final accounts for the year ended March 31, 2017 after giving effect to the following adjustments: (a) 1/5th of General expenses and Taxes & Insurance to be charged to factory and the balance to the office. (b) Write off a further Bad debts of ₹ 160 and maintain the provision for doubtful debts at 5% and create a provision for discount on Debtors at 10%. (c) Depreciate Machinery at 10% and Motor Vehicles by ₹ 240. (d) Provide ₹ 700 for interest on Bank Overdraft to be paid. (e) ₹ 50 is to be carried forward to next year out of Insurance. (f) Provide for Manager’s Commission at 10% on the Net Profit after charging such commission. (ii) Name the accounting concepts which are followed while treating the adjustment (a), (b) and (d) above?

The following balances were extracted from the books of Anushka Enterprises on March 31, 2017. [Trial Balance Data: Creditors 2,00,000; Loan from SBI 2,00,000; Sales 12,30,000; Debtors 2,00,000; Dividend Received on Shares 20,000; Bad Debt 2,000; Bad Debt Recovered 12,000; Bills Receivables 1,50,000; Interest on Loan 50,000; Goodwill 4,00,000; Purchases 2,10,000; Stock (1.4.2016) 1,00,000; Cash at Bank 3,00,000; Factory Repairs 40,000; Capital 7,24,000; Audit Fees 6,000; Petty Expenses 4,000; Salary 70,000; Life Insurance Premium 15,000; Premises 4,00,000; Insurance 25,000; Sales Returns 12,000; Employees Provident Fund 60,000; Provision for Doubtful Debts 75,000; Delivery Expenses 8,000; Dock Charges (Outward) 6,000; Packing Charges 17,000; Advance Salary 30,000; Warehouse Insurance 13,000; Loss in Exchange 9,000; Bank Charges 5,000; Bonus from Suppliers 3,45,000; Purchases Returns 10,000; Machinery 8,00,000; Discounting of Bills of Exchange 1,000] You are required to: (i) Prepare final accounts for the year ended March 31, 2017 after giving effect to the following adjustments: (a) Insurance is due but not yet paid for 31 March 2017 ₹ 500. (b) Salary Unexpired ₹ 900. (c) Write off a further Bad debts ₹ 2,000 and maintain the provision for bad debts at 5% on Debtors. (d) Machinery is to be valued at 90% less than the book value. (e) Goods kept in warehouse worth ₹ 10,0000 were used for staff welfare. (f) Half of the Bills Receivable were irrecoverable. (h) Closing Stock is ₹ 40,000 (ii) Name the accounting concepts which will be followed while treating the adjustment (a), (b), (c) and (d) above?

Give the Performa of income statement and balance in vertical form.

What adjusting entries would you record for the following: (a) Depreciation (b) Discount on debtors (c) Interest on capital (d) Manager’s commission

What is meant by provision for doubtful debts? How are the relevant accounts prepared and what journal entries are recorded in final accounts? How is the amount for provision for doubtful debts calculated?

Show the treatment of prepaid expenses depreciation, closing stock at the time of preparation of final accounts when: (a) When given inside the trial balance? (b) When given outside the trial balance?

Prepare the bad debts account, provision for account, profit and loss account and balance sheet from the following information as on March 31, 2017 Debtors: 80,000; Bad debts: 2,000; Provision for doubtful debts: 5,000. Adjustments: Bad debts 500. Provision on debtors @ 3%.

Rahul’s trial balance provide you the following information: Debtors ₹ 80,000 Bad debts ₹ 2,000 Provision for doubtful debts ₹ 4,000 It is desired to maintain a provision for bad debts of ₹ 1,000 State the amount to be debited/credited in profit and loss account:

From the following Trial Balance of M/s Karan on March 31, 2017, prepare a Trading and Profit and Loss Account and a Balance Sheet: [Trial Balance Data: Creditors/Debtors Dr 2,05,000/Cr 96,000; Bills Payable/Bills Receivables Dr 10,000/Cr 9,600; 15% Loan Cr 50,000; Sales/Purchases Dr 2,80,000/Cr 12,00,000; Discount Dr 4,000/Cr 3,000; Bad Debt Recovered/Bad Debt Dr 5,000/Cr 14,000; Interest on Investments Cr 6,000; Interest on Loan Dr 8,000/Cr 4,000; Vehicles Dr 6,50,000; Stock Dr 3,00,000; 10% Investments Dr 1,80,000; Cash in hand Dr 20,000; Cash at bank Dr 37,000] (I) Additional Information: (a) The cost of closing stock was ₹ 50,000 but the market value was ₹ 40,000. (b) Rent is due but not yet paid for March 2017 ₹ 500. (c) Insurance carried forward ₹ 900. (d) 1/3 of the commission received is in respect of work to be done in next year and commission paid represents only 1/4 of the actual commission to be paid during the year. (e) Vehicles were valued at 90% of the book value. (f) The Horse worth ₹ 30,000 was donated to a charitable organization. (II) Name the accounting concept followed while treating the adjustment (a), (b) and (d) above?

What are adjusting entries? Why are they necessary for preparing final accounts?

Prepare a trading and profit and loss account for the year ending March 31, 2017, from the balances extracted of M/s Rahul Sons. Also prepare a balance sheet at the end of the year. [Trial Balance Data: Stock 50,000; Sales 1,80,000; Wages 3,000; Purchases return 2,000; Salary 8,000; Discount received 500; Purchases 1,75,000; Provision for doubtful debts 2,500; Sales return 3,000; Capital 3,00,000; Sundry Debtors 82,000; Bills payable 22,000; Discount allowed 1,000; Commission received 4,000; Insurance 3,200; Rent 6,000; Rent Rates and Taxes 4,300; Loan 34,800; Fixtures and fittings 20,000; Trade expenses 1,500; Bad debts 2,000; Drawings 32,000; Repair and renewals 1,600; Travelling expenses 4,200; Postage 300; Telegram expenses 200; Legal fees 500; Bills receivable 50,000; Building 1,10,000] Adjustments:

1. Commission received in advance ₹1,000.
2. Rent receivable ₹2,000.
3. Salary outstanding ₹1,000 and insurance prepaid ₹800.
4. Further bad debts ₹ 1,000 and provision for doubtful debts @ 5% on debtors and discount on debtors @ 2%.
5. Closing stock ₹ 32,000.
6. Depreciation on building @ 6% p.a.

From the following balances extracted from the book of M/s Manju Chawla on March 31, 2017. You are requested to prepare the trading and profit and loss account and a balance sheet as on this date. [Trial Balance Data: Opening stock 10,000; Purchases 40,000; Sales 80,000; Returns 200 (Dr), 600 (Cr); Wages 6,000; Dock and cleaning charges 4,000; Lighting 500; Misc. Income 6,000; Rent 2,000 (Cr); Capital 40,000; Drawings 2,000; Debtors 6,000; Creditors 7,000; Cash 3,000; Investment 6,000; Patent 4,000; Land and Machinery 43,000; Donations and Charity 600; Sales tax collected 1,000; Furniture 11,300] Closing stock was ₹ 2,000. (a) Interest on drawings @ 7% and interest on capital @ 5%. (b) Land and Machinery is depreciated at 5%. (c) Interest on investment @ 6%. (d) Unexpired rent ₹100. (e) Charge 5% depreciation on furniture.

Prepare the trading and profit and loss account and balance sheet of M/s Control Device India on March 31, 2017 from the following balance as on that date. [Trial Balance Data: Drawings 19,530; Capital 67,500; Purchase 45,000; Sales 1,12,500; Salary 25,470; Commission 1,575; Carriage 2,700; Plant and Machinery 27,000; Furniture 6,750; Opening stock 42,300; Insurnace premium 2,700; Interest 7,425; Bank overdraft 24,660; Rent and Taxes 2,160; Wages 11,215; Returns 2,385 (Dr), 1,440 (Cr); Carriage outwards 1,485; Debtors 36,000; Creditors 58,500; General expenses 6,975; Octroi 530; Investment 41,400] Closing stock was valued ₹ 20,000. (a) Interest on capital @ 10%. (b) Interest on drawings @ 5%. (c) Wages outstanding ₹ 50. (d) Outstanding salary ₹ 20. (e) Provide a depreciation @ 5% on plant and machinery. (f) Make a 5% provision on debtors.

The following balances were extracted from the books of M/s Panchsheel Garments on March 31, 2017. [Trial Balance Data: Opening stock 16,000; Sales 1,12,000; Purchases 67,600; Return outwards 3,200; Return Inwards 4,600; Discount 1,400; Carriage inwards 1,400; Bank overdraft 10,000; General expenses 2,400; Commission 1,800; Insurance 4,000; Creditors 16,000; Scooter expenses 200; Capital 50,000; Salary 8,800; Cash in hand 4,000; Scooter 8,000; Furniture 5,200; Buildings 65,000; Debtors 6,000; Wages 1,200] Prepare the trading and profit and loss account for the year ended March 31, 2017 and a balance sheet as on that date. (a) Unexpired insurance ₹ 1,000. (b) Salary due but not paid ₹ 1800. (c) Wages outstanding ₹ 200. (d) Interest on capital 5%. (e) Scooter is depreciated @ 5%. (f) Furniture is depreciated @ 10%. (g) Closing stock was ₹ 15,000.

If the rent of one month is still to be paid the adjustment entry will be:

State the meaning of: (a) Outstanding expenses (b) Prepaid expenses (c) Income received in advance (d) Accrued income