Solution

SAMPLE PRACTICE PAPER

Class 11 - Accountancy
Part A
1. (d) All of these

Explanation: A voucher is prepared every time the company makes a payment. The company’s vouchers serve as a key source
of evidence when an audit is performed. Hence, vouchers are prepared for other disbursement transactions like cash purchases,
payment of payroll, replenishment of petty cash and other funds, payment of debts and other obligations, and even payment of
dividends.
2. (b) Both A and R are true but R is not the correct explanation of A.

Explanation: Art is the technique of achieving some pre-determined objectives and accounting is also done with some pre-
determined objectives.
3. (b) Real Account

Explanation: Goodwill account is a Real Account, goodwill is an intangible asset and all assets are real.
4. (c) No effect

Explanation: Debtors are assets and bank balance is also asset in business. When Company Receive cheque from debtor it will
increase the bank balance on the same time debtors gets reduced. Hence Both the effect on assets side. there is Increase in bank
or decrease in debtors , So there will be No effect.
OR
(c) Rs.8000

Explanation: Total assets = capital + Liability

Total assets = Rs. 18000
Now, 
 Current assets = Cash + inventories+ Debtors
 Current assets = 1000+4000+5000
Current assets = 10000
Total Assets = current Assets + Fixed Assets
18000= 10000+ Fixed Assets
Fixed Assets = 18000 -10000
Fixed Assets = Rs. 8000
5. (c) Both bill and invoice

Explanation: Both bill and invoice

6. (d) Comparability

Explanation: It becomes easier to compare accounts of one business with the other or intra firm comparison.
OR
(d) Statement B is correct

Explanation: Book Keeping and Accounting does not mean the same and are not used interchangeably.  At the same time,
both these processes are inherently different and have their own sets of advantages.
7. (d) Proprietor

Explanation: Reserves are created out of the profits of the business. Hence the profits belong to the proprietor the
accumulation of the profits in the form of reserves belong to the owner of the business.
8. (c) Dr. all expenses and Cr all gains & Dr. what goes out and Cr what comes in

Explanation: Impersonal account means account other than personal. 

Rule of Personal account is debit the receiver credit the giver.
So, option 3 and option 4 is other than personal means Impersonal.
OR
(b) All of these

Explanation: An asset A/c and expenses A/c will always/ mostly have a debit balance and capital A/c, liability A/c and income

1 / 18
 A/c will have credit balances. So Debit balance shows asset/expenses and credit balance shows capital/liability/income. 
9. (a)
Accrual concept

Explanation: Accrual concept

10. (a)
Accounting period principle

Explanation: Accounting period principle

11. (a) All of these

Explanation: Secret Reserves:- Because by all of this the profits are reduced in the Balance Sheet. The existence of the
reserve is not disclosed in the balance sheet. 
12. (b) revenue receipt

Explanation: Revenue Receipt:- Amount received or receivable against the sale of goods is revenue receipt.
13. (a) All of these

Explanation: The recording is made in Journal Proper of opening entries, adjustment entries, and closing entries.
14. (a) Rs.4500 loss

Explanation: Profit/loss= Capital at end + drawings -  capital at the beginning- Additional capital
Since there is no drawing and Additional capital ,so 
Profit/loss = Capital at end- capital at beginning
Profit/loss= 45500- 50000
Profit/loss =-4500 Rs.
Hence there is Loss of 4500rs.
15. (b) All of these

Explanation: Bills Payable, Creditors, Outstanding Expenses all are current liabilities. Hence it will be recorded as Current
Liability.
OR
(b) a liability

Explanation: The nature of capital is a liability. It is an internal liability.

16. (c) Rs 25,000

Explanation: Cash A/c ... Dr. ... 28,000

To Sales A/c ... 25,000

To IGST A/c ... 3,000

So, Sales A/c will be credited by Rs 25,000.

17. (b) Specific reserve

Explanation: Specific reserve

18. JOURNAL ENTRIES
Amount
Amount

S.R.No. Particulars L.F.

Dr. Cr.

₹ ₹

(i) Cash A/c Dr. 5,000

To Sales A/c 5,000

(Goods sold for Cash)

(ii) Furniture A/c Dr. 8,000

To Cash A/c 8,000

(Furniture purchased for Cash)

(iii) Purchases A/c Dr. 10,000

To Govind A/c 10,000

(Goods purchased on credit from Govind)

(iv) Purchases A/c Dr. 12,000

2 / 18
 To Murari A/c 12,000

(Goods purchased on credit from Murari)

(v) Mohan A/c Dr. 15,000

To Sales A/c 15,000

(Goods sold on credit to Mohan)

(vi) Cash A/c Dr. 500

To Interest A/c 500

(Interest received in cash)

OR
JOURNAL
S. No. Particulars L.F. Amount Dr. Amount Cr.

₹ ₹

Machinery
(i) Dr. 25,000
A/c

To Bank A/c

(Custom duty paid by cheque on 25,000

import of new machinery)

Abbas &
Sons
(ii) (50,000 × Dr. 49,500
110% ×
90%)

To Sales A/c

(Goods costing ₹ 50,000 sold

49,500
above 10%; less 10% trade
discount)

(iii) Cash A/c Dr. 46,000

Discount
Allowed Dr. 4,000
A/c

To Gaurav (46,000+4,000)

(Cash received from Gaurav and 50,000

discount allowed @ 8%)

Interest on
(iv) Capital Dr. 1,800
A/c

To Capital A/c

(Interest charged on capital of ₹ 1,800

20,000 @ 9 % p.a)

Machinery
(v) Dr. 50,000
A/c

To Bank A/c

(Machinery purchased for ₹

50,000
40,000 and spent ₹ 10,000 on its
installation)

3 / 18
19. Cash basis refers to a major accounting method that recognizes revenues and expenses at the time cash is received or paid out.
Cash Basis of Accounting =10,50,000+1,35,000-3,90,000-60,000

=Rs.7,35,000
Under the accrual basis of accounting (or accrual method of accounting), revenues are reported on the income statement when
they are earned. When the revenues are earned but cash is not received, the asset accounts receivable will be recorded.

Accrual Basis of Accounting=12,00,000-5,10,000

=Rs.6,90,000
OR
Accounting concepts are a number of conceptual issues that one must understand in order to develop a firm foundation of how
accounting works.
i. Historical cost concept
ii. Accounting period concept
iii. Verifiable objective concept
Basis of
Debtors Creditors
20. Difference
Persons or organizations that are liable to pay money Persons or organizations to whom the firm is liable to pay
(i) Meaning
to a firm are called debtors. money are called creditors.

(ii) Nature They have debit balance in the firm's books. They have a credit balance in the firm's books.

(iii)
Amount due is received from them. Payments are made to them.
Settlement

(iv) They are shown as assets in the Balance Sheet under They are shown as liabilities in the Balance Sheet under
Treatment Current Assets. Current Liabilities.
21. Trial Balance
Name of Account Balance Debit. (Rs) Balance Credit. (Rs)

Bank overdraft 2,800

Cash-in-hand 400

Purchases Returns 800

Sundry Expenditures 2,400

Sales Returns 1,600

Salaries 1,600

Purchases 5,600

Sales 8,800

Creditors 2,400

Debtors 1,600

Opening Stock 2,000

Plant and Machinery Account 4,000

Capital Account 4,400

Total 19,200 19,200

22. Cash Book (Double Column)
Dr. Cr.

Date Cash Bank Date Cash Bank

Particular L.F. Particular L.F.
2009 (Rs) (Rs) 2009 (Rs) (Rs)

Sept 1 To Balance b/d 7,500 Sept 1 By Balance b/d ( Bank 3,500

Overdraft )

4 / 18
 Sept 5 To Sales Account 7,000 Sept 2 By Wages Account 200

Sept 10 To Cash A/c (C) 4,000 Sept 10 By Bank A/c (C) 4,000

To Balance c/d (Bank

Sept 30 1,900 Sept 15 By Purchases A/c 2,000
Overdraft)

Sept 20 By Rent A/c 500

Sept 25 By Drawings A/c 400

Sept 30 By Salary A/c 1,000

Sept 30 By Balance c/d 8,800

14,500 5,900 14,500 5,900

23. BANK RECONCILIATION STATEMENT

as on 31st March, 2017

Particulars Plus Items Minus Items

₹ ₹

i. Credit Balance (Overdraft) as per Cash

25,000
Book

ii. Cheques sent for collection but not yet

36,000
collected by bank

iii. Cheque issued wrongly entered in

3,500
Cash Column

iv. Cheque issued but not presented and

recorded twice
20,000
(₹10,000+ ₹10,000)

v. Bills receivable dishonoured 8,000

Bank Charges debited in the Pass Book 125

vi. Bank Charge recorded twice in the

150
Cash Book

Bank Charge not recorded in the Cash

40
Book

20,150 72,665

Debit Balance (Overdraft) as per Pass

52,515
Book
OR
Bank Reconciliation Statement
as on 31 December 2014
S.No. Particulars Addition(₹) Subtract(₹)

Credit Balance as per Pass Book 11,000

Add:

Cheque deposited but not credited (5,700 - 4,700) 1,000

Bank charges 30

Less:

Cheque issued but not presented for payment (900 + 500) 1,400

Directly deposited by customer 850

5 / 18
 Interest allowed by bank 150

Debit Balance as per Cash Book 9,630

12,030 12,030
24. JOURNAL OF DEEPAK
Date Particulars L.F. Amount Dr. Amount Cr.

2018 ₹ ₹

Feb. 2 Purchases A/c Dr. 2,50,000

Input IGST A/c Dr. 22,500

Input SGST A/c Dr 22,500

To Anupriya A/c (2,50,000+22,500+22,500)

2,95,000
(Purchased goods within the state)

Feb. 5 Purchases A/c Dr. 3,00,000

Input IGST A/c

Dr. 36,000
(3,00,000x12%)

To Rana Rathore A/c

3,36,000
(Purchased goods from outside the state)

Feb. 10 Gurdeep Sidhu A/c Dr. 2,36,000

To Sales A/c 2,00,000

To Output CGST A/c 18,000

To Output SGST A/c

18,000
(Sale of goods within the state)

Feb. 12 Freight A/c Dr. 15,000

Input CGST A/c Dr. 1,350

Input SGST A/c Dr. 1,350

To Cash A/c

17,700
(Paid railway freight)

Feb. 16 Office Equipement A/c Dr. 80,000

Input CGST A/c Dr. 4,800

Input SGST A/c Dr. 4,800

To Dell Ltd. A/c

89,600
(Purchased Computer Printer)

Feb. 24 Bank A/c Dr. 4,95,600

To Sales A/c 4,20,000

To Output IGST A/c

75,600
(Sale of goods outside the state)

Feb. 25 Internet Charges A/c Dr. 10,000

Input CGST A/c Dr. 600

Input SGST A/c Dr. 600

To Bank A/c

11,200
(Paid for Broad-band services)

Feb. 28 Output CGST A/c (Note Dr. 11,250

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 2)

Output SGST A/c Dr. 11,250

To Input CGST A/c 11,250

To Input SGST A/c

11,250
(Adjustment of CGST and SGST

Output IGST A/c (Note

Feb. 28 Dr. 39,600
2)

To Input CGST A/c 11,250

To Input SGST A/c 11,250

To Bank A/c

17,100
(Final payment)

Total ₹ 15,79,200 15,79,200

Working Notes:

i. First of all, Output IGST will be adjusted against Input IGST: ₹

Input IGST 36,000

Output IGST 75,600

Excess of Output IGST 39,600

Excess of Output IGST of ₹ 39,600 is a liability payable to the Government.

While making this payment, adjustment shall be made for CGST and SGST.

ii. CGST ₹ SGST ₹

Input (₹ 22,500 + ₹ 1,350 + ₹ 4,800 + ₹ 600) 29,250 29,250

Output 18,000 18,000

11,250 11,250

Excess of Output IGST 60,000

Less: Adjusted for Input CGST 11,250

Adjusted for Input SGST 11,250

Net amount payable to Government 22,500

17,100
iii. If the goods are purchased or sold within the same state or locally then CGST and SGST are levied and if goods are purchased
or sold between different states then IGST is levied.
OR
In the books of Manohar Lal & Sons
JOURNAL ENTRIES
Date Particulars L.F. Amount Dr. Amount Cr.

March 1 Cash A/c Dr. 60,000

To Capital A/c

60,000
(Begin company with cash as capital)

March 2 Furniture A/c Dr. 10,000

To Cash A/c

10,000
(Furniture bought for cash)

March 4 Purchases A/c Dr. 25,000

7 / 18
 To Cash A/c
25,000
(Goods bought from cash)

March 5 Purchases A/c Dr. 15,000

To Kamlesh's A/c

15,000
(Goods bought from Kamlesh on credit)

March 10 Kamlesh A/c Dr. 15,000

To Cash A/c

15,000
(Paid cash to Kamlesh)

March 16 Purchases A/c Dr. 6,000

To Sohan's A/c

6,000
(Goods bought from Sohan on credit)

March 18 Purchases A/c Dr. 8,000

To Cash A/c

8,000
(Goods bought in cash)

March 20 Rent A/c Dr. 1,000

To Cash A/c

1,000
(Office rent paid by cash)

Total 1,40,000 1,40,000

25. Rectifying Journal Entries
Debit Amount Credit Amount
S.No. Particulars L.F.
(₹) (₹)

(i) Purchases A/c Dr. 2,600

Sales A/c Dr. 2,600

To Ajay's A/c (2,600+2,600) 5,200

(Goods purchased from Ajay were recorded in Sales Book now rectified)

(ii) Surendra's A/c (4,400+4,400) Dr. 8,800

To Sales A/c 4,400

To Purchases A/c 4,400

(Goods sold to Surendra recorded in Purchased Book now rectified)

(iii) Sales Return A/c Dr. 1,000

Purchases Return A/c Dr. 1,000

To Customer's A/c (1,000+1,000) 2,000

(Goods returned by a customer recorded in Purchases Return Book now

rectified)

(iv) Sales A/c (162-126) Dr. 36

To Rajesh's A/c 36

(Credit sales of ₹126 to Rajesh were recorded as ₹162 now rectified)

(v) Sales A/c Dr. 700

To Furniture A/c 700

(Sales of furniture was recorded as sale of goods now rectified)

(vi) Drawing A/c Dr. 800

8 / 18
 To Rent A/c 800

(Rent paid for proprietor's residence, debited to Rent Account now

rectified)
OR
Rectifying Journal Entries
S
Particulars L.F. Debit Amount (₹) Credit Amount (₹)
No.

(i) Suspense A/c Dr. 21,500

To Purchases Returns A/c 21,500

(Total of Return Outwards Book omitted to be posted now rectified)

(ii) Ramesh's A/c (3,400+4,300) Dr. 7,700

To Suspense A/c Dr. 7,700

(Sale of ₹4,300 to Ramesh credited to him as ₹3,400 now rectified)

(iii) Shyam's A/c (2,960-2,690) Dr. 270

To Sales A/c 270

(Sales of ₹2,960 recorded as ₹2,690 in Sales Book now rectified)

(iv) Sales A/c Dr. 4,500

Suspense A/c (5,400-4,500) Dr. 900

To Furniture A/c 5,400

(Sale of furniture recorded in Sales Account now rectified)

(v) Drawings A/c Dr. 1,000

To Purchases A/c 1,000

(Goods taken by the proprietor omitted to be recorded now rectified)

Suspense Account
Dr. Cr.

Particulars Amount (₹) Particulars Amount (₹)

To Purchases Return A/c 21,500 By difference as per Trial Balance (Balancing Figure) 14,700

To Furniture A/c 900 By Ramesh's A/c 7,700

22,400 22,400

26. Dr Machinery Account Cr

Amt Amt
Date Particulars J.F. Date Particulars J.F.
(Rs.) (Rs.)

2010 2010

Apr 1 To Bank A/c (i) 30,000 Dec 31 By Depreciation A/c

(i)
Oct 1 To Bank A/c (ii) 20,000 9
2,250
(30, 000 × 10% × )
12

(ii)
3
500 2,750
(20, 000 × 10% × )
12

Dec 31 By Balance c/d

9 / 18
 (i) 27,750

(ii) 19,500 47,250

50,000 50,000

2011 2011

Jan 1 To Balance b/d Dec 31 By Depreciation A/c

(i) 27,750 (i) (30,000*10%) 3,000

(ii) 19,500 47,250 (ii) (20,000*10%) 2,000

(iii)
Jul 1 To Bank A/c (iii) 10,000 6
500 5,500
(10, 000 × 10% × )
12

Dec 31 By Balance c/d

(i) 24,750

(ii) 17,500

(iii) 9,500 51,750

57,250 57,250

2012 2012

Jan 1 To Balance b/d Jan 1 By Bank A/c [sale price] 3,000

By Profit and Loss A/c

(i) 24,750 Jan 1 5,250
(W.N.1)

(ii) 17,500 Dec 31 By Depreciation A/c

(i) (10% on Rs.20,000)

(iii) 9,500 51,750 2,000
[Balance Machine 2/3]

(ii) 2,000

(iii) 1,000 5,000

Dec 31 By Balance c/d

(i) 14,500(W.N. 2)

(ii) 15,500

(iii) 8,500 38,500

51,750 51,750

2013

Jan 1 To Balance b/d 38,500

Working Notes :-
1. Calculation of loss on sale of one-third machinery
Particulars Amount

Balance of 1st machinery on 1st January, 2012 Rs.24,750

1
Therefore, balance of one-third machinery on 1st January, 2012 Rs.24, 750 ×
3
= 8, 250

(-) Selling price 3,000

Loss on sale 5,250

2. Calculation of value of Machine (i) on Dec,2012 after sale of 1/3rd Machine = (24750-8250) - 2000(depreciation during the
year) = 14,500

10 / 18
 3. Depreciation is calculated as per fixed installment method so it is always computed on cost.
4. Obsolescence of asset means that the asset become useless due to new technology comes in the market even if it is in the
position to run.
OR
Machinery Account
Dr. Cr.

Date Particulars J.F. Amount (Rs) Date Particulars J.F. Amount (Rs)

2014 April 1 To Balance b/d 25,00,000 2014 Oct. 1 By Machinery Disposal Account 5,00,000

2015 March 31 By Balance c/d 20,00,000

25,00,000 25,00,000

2015 April 1 To Balance b/d 20,00,000 2016 March 31 By Balance c/d 20,00,000

20,00,000 20,00,000
Provision for Depreciation Account
Dr. Cr.

Amount Amount
Date Particulars J.F. Date Particulars J.F.
(Rs) (Rs)

2013 March To Machinery Disposal Account 2014 April

2,12,000 By Balance b/d 5,80,000
31 (WN1) 1

By Depreciation Account
2014 Oct. 1 32,000
(WN 1)

2015 March 2015 March By Depreciation Account

To Balance b/d 7,20,000 3,20,000
1 31 (WN 2)

9,32,000 9,32,000

2016 April
By Balance b/d 7,20,000
1
Machinery Disposal Account
Dr. Cr.

Amount Amount
Date Particulars J.F. Date Particulars J.F.
(Rs) (Rs)

2014 2014 By Bank Account (Sale of

To Machinery Disposal Account 5,00,000 3,00,000
Oct. 1 Oct. 1 machinery)

2014 To Profit & Loss Account (Gain on sale 2014 By Provision for
12,000 2,12,000
Oct. 1 of machinery) Oct. 1 Depreciation Account

5,12,000 5,12,000
Working Note:
S.No. Particular Amount (Rs)

1. Depreciation Provided on Machinery sold till 31st Oct. 2014:

For 2012-2013 (5,00,000 × 20

100
) 1,00,000

For 2013-2014 (400000 × 20

100
) 80,000

For 2014-2015 (320000 × 20

100
×
6

12
) 32,000

Total Depreciation on Machinery sold 2,12,000

2. Calculation of Depreciation on machinery provided for 2014-15:

11 / 18
 Balance of provision for Depreciation on 1st April 2014 5,80,000

Add: Depreciation Provided on Sold Machinery 32,000

6,12,000

Less: Accumulated Depreciation on Machinery sold (WN 1) 2,12,000

Depreciation on the Remaining Machinery 4,00,000

Cost of Remaining Machinery 20,00,000

Less: Depreciation on Remaining Machinery 4,00,000

WDV of Remaining Machinery 16,00,000

Depreciation on machinery provided during 2014 - 15: 16,00,000 × 20

100
= Rs 3,20,000
Part B
27. (d) ₹ 271500

Explanation: purchases = 280000 - 5000 - 2000 - 1500 = 271500

OR
(a) Purchase Cost of the goods

Explanation: Drawing of goods includes only Purchase Cost of the goods.

28. (b) for a particular period

Explanation: Trading and Profit and Loss Account is prepared for a particular period. It is prepared to calculate profit or loss
of a business.
29. (b) Bad debt

Explanation: If a person fails to pay his debt, such amount is considered as bad debt.
OR
(d) Rs 5,273

Explanation: Net profit = Gross profit - general expenses

Net profit = 70, 000 - 12,000 = Rs.58,000

Commission to manager = 58,000 ×   10

110
 = Rs 5,273
30. Let Cost of Revenue from Operations = ₹ 100

Gross Profit = ₹ 25

Revenue from Operations = ₹ 125

Cost of Revenue from Operations is

× 5, 00, 000 = ₹ 4,00,000

100
=
125

Cost of Revenue from Operations = Purchase + Opening Inventory - Closing Inventory

₹ 4,00,000 = ₹ 3,00,000 + Opening Inventory - ₹ 60,000

₹ 4,00,000 = ₹ 2,40,000 + Opening Inventory

Opening Inventory = ₹ 1,60,000

31. Classification of different expenditure are as follows:-
i. Legal expenses incurred to defend a suit for breach of contract to supply goods is Revenue Expenditure because it is incurred
in the ordinary course of the business.
ii. Custom Duty paid on imported machinery is Capital Expenditure because it is related to acquisition of a fixed asset.
iii. Heavy expenditure on advertising is Deferred Revenue Expenditure because the benefit of advertising is likely to be derived
for more than one year say five to seven years.
iv. Amount spent to overhaul a motor truck purchased second hand is Capital Expenditure because the amount is spent to bring
the purchased asset in working condition.
v. It is Capital Expenditure because it is incurred to bring the new asset in working condition.
vi. It is Revenue Expenditure because this a normal business expenditure to produce the goods meant for sale.
32. Adjustment Journal Entry:-
Accrued Commission A/c Dr. 3,000

12 / 18
 To Commission Received A/c
3,000
(Commission receivable)
Effects on Final Accounts:-
PROFIT & LOSS A/c
Dr. Cr.

Particulars ₹ Particulars ₹

By Commission 15,000

Add: Accrued Commission 3,000 18,000

BALANCE SHEET
Liabilities ₹ Assets ₹

Accrued Commission 3,000

Note:- If Accrued Incomes have been mentioned inside the Trial Balance, they will be shown only on the Assets side only
because it means that it has already been included in the concerned account of income. Accrued Income Account is a
Representative Personal Account and always shows a Debit Balance.But if shows outside trial balance then shows in both profit
and loss account as well as in balance sheet.
Basis of
Capital Expenditure Revenue Expenditure
33. Difference
Expenditure beared for acquiring or improving an Expenses beared for running daily business
Meaning
asset. activities

Term Long Term, can span many accounting periods Short term limited to an accounting period

Benefits can be achieved across many accounting

Benefits Benefits can be availed only in the current year
periods

Nature Non-recurring Recurring

Shown in It is shown in Income Statement and Balance Sheet It is shown in Income statement
a. Capital expenditure
b. Revenue expenditure
c. Capital expenditure
d. Capital expenditure
e. Revenue expenditure
f. Capital expenditure
g. Deferred revenue expenditure
OR
Trading Account
for the year ended March 31, 2019
Dr. Cr.

Amount
Amount

Particulars Particulars
(₹) (₹)

To Opening Stock 12,000 By Sales 86,000

To Purchases 40,000 Less: Sales Return 6,000 80,000

Less: Purchases Return 4,000 36,000 By Closing Stock 16,000

To Carriage 700

To Wages 10,000

Add: Outstanding 2,000 12,000

To Gross Profit (Balancing Figure) 35,300

13 / 18
 96,000 96,000
Profit and Loss Account

for the year ended March 31, 2019

Dr. Cr.

Amount
Amount

Particulars Particulars
(₹) (₹)

To Depreciation: By Gross Profit 35,300

Machinery 2,000 By Discount 400

Building 2,500 4,500 By Interest 800

To Salaries 2,400

1,200

Add: Outstanding 3,600

To Insurance 800

Less: Prepaid 200 600

To Rent & Taxes 1,800

Add: Outstanding 1,000 2,800

To Office Expenses 1,200

To Travelling Expenses 400

To Commission 400

To Net Profit (Balancing Figure) 23,000

36,500 36,500
Balance Sheet

as on March 31 2019
Amount
Amount

Liabilities Assets
(₹) (₹)

Capital 62,000 Fixed Assets

Add: Net Profit 23,000 85,000 Machinery 20,000

Current Liabilities Less: Depreciation 2,000 18,000

Creditors 10,800 Building 50,000

Outstanding Wages 2,000 Less: Depreciation 2,500 47,500

Outstanding Salaries 1,200 Current Assets:

Outstanding Rent 1,000 Closing Stock 16,000

Prepaid Insurance 200

Debtors 16,000

Cash in Hand 2,300

1,00,000 1,00,000
Working Note:

Calculation of Depreciation:

Depreciation on Building = ₹50,000 × 5%

Depreciation on Building = ₹2,500

14 / 18
 Depreciation on Machinery = ₹20,000 × 10%

Depreciation on Machinery = ₹2,000

Adjustments (prepaid/outstanding) shown in trial balance will be shown only in balance sheet since already adjusted. Adjustments
given after trial balance will be shown in trading and profit and loss account as well as in balance sheet.
34. Trading Account
for the year ended March 31, 2019
Dr. Cr.

Amount
Amount

Particulars Particulars
(₹) (₹)

To Opening Stock 15,000 By Sales 5,30,000

To Purchases 3,30,000

Less: Drawings 2,000

Less: Charity 1,500

Less: Return Outwards 8,000 3,18,500

To Wages 33,000

Add: Outstanding (WN2) 3,000 36,000

To Power 5,400

To Gross Profit (balancing figure) 1,55,100

5,30,000 5,30,000
Profit and Loss Account

for the year ended March 31, 2017

Dr. Cr.

Amount
Amount

Particulars Particulars
(₹) (₹)

To Depreciation: By Gross Profit 1,55,100

Furniture 800 By Discount 3,000

Motor Car 40,000 40,800 By Miscellaneous Income 3,060

To Rent 7,480

Add: Outstanding 680 8,160

To Salaries 30,800

Add: Outstanding 2,800 33,600

To Charity (1,500 + 500) 2,000

To Motor Car Expenses 18,000

To Insurance 3,600

To Outstanding Manager's Commission 5,000

To Net Profit (Balancing Figure) 50,000

1,61,160 1,61,160
Balance Sheet

as on March 31, 2019

Amount
Amount

Liabilities Assets
(₹) (₹)

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Capital 2,00,000 Fixed Assets

Add: Net Profit 50,000 Furniture 8,000

Less: Drawings (5,000 + 2,000) 7,000 2,43,000 Less: Depreciation 800 7,200

Current Liabilities Motor Car 2,00,000

Trade Creditors 37,000 Less: Depreciation 40,000 1,60,000

Outstanding Manager's Commission 5,000 Current Assets

Outstanding Salaries 2,800 Closing Stock 36,000

Outstanding Rent 680 Debtors 53,000

Outstanding Wages 3,000 Unexpired Insurance 600

Cash in Hand 34,680

2,91,480 2,91,480
Working Note:

Calculation of Depreciation:-

Depreciation of Motor Car = ₹2,00,000 × 20% = ₹40,000

Depreciation of Fixtures and Furniture = ₹8,000 × 10% = ₹800

Calculation of Outstanding Expenses:-

Outstanding Rent = 7, 480 × = ₹680

11

= ₹3,000

1
Outstanding Wages = 33, 000 × 11

Outstanding Rent = 30, 800 × 11

1
= ₹2,800
Adjustments show in trial balance will be recorded in the balance sheet only while adjustments shown after trial balance will be
recorded both in trading and profit and loss account and balance sheet.
OR
In the books of Ram Krishnan

JOURNAL
Debit Credit
Date Particulars L/F Amount Amount
(Rs) (Rs)

Adjustment Entries

2013 Dec
Depreciation A/c Dr 7,000
31

To Machinery A/c 4,000

To Patents A/c

(Being the amount written-off as depreciation on machinery [10% on 40,000] and on 3,000
patents [20% on 15,000])

Dec 31 Salaries A/c Dr 3,000

To Salaries Outstanding A/c

3,000
(Being the amount still due on account of salaries)

Dec 31 Insurance Prepaid A/c Dr 170

To Insurance A/c

170
(Being premium on policy prepaid)

Dec 31 Building A/c (Note) Dr 4,000

To Wages A/c

4,000
(Being the wages spend on erection of a cycle shed transferred to building account)

Dec 31 Profit and Loss A/c Dr 1,450

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 To Provision for Doubtful Debts A/c
1,450
(Being the provision required to be maintained in respect of anticipated bad debts)

Closing Entries

Dec 31 Trading A/c Dr 1,24,730

To Stock A/c 11,520

To Purchases A/c 81,350

To Wages A/c 16,960

To Fuel and Power A/c 9,460

To Carriage on Purchases A/c 4,080

To Return Inwards A/c

1,360
(Being the various accounts transferred to the trading account on debit side)

Dec 31 Sales A/c Dr 1,97,560

Return Outwards A/c 1,000

To Trading A/c

1,98,560
(Being the amounts transferred to the credit of the trading account)

Dec 31 Stock A/c Dr 13,600

To Trading A/c

13,600
(Being the value of the closing stock)

Dec 31 Trading A/c Dr 87,430

To Profit and Loss A/c

87,430
(Being the transfer of gross profit)

Dec 31 Profit and Loss A/c Dr 53,430

To Carriage on Sales A/c 6,400

To Salaries A/c 33,000

To General Expenses A/c 6,000

To Insurance A/c 1,030

To Depreciation A/c

7,000
(Being the various expenses transferred to the debit of the profit and loss account)

Dec 31 Profit and Loss A/c Dr 32,550

To Capital A/c

32,550
(Being the transfer of net profit)

Dec 31 Capital A/c Dr 10,490

To Drawings A/c

10,490
(Being the transfer of the drawings account to the capital account)
Trading and Profit and Loss Account

for the year ended 31st December, 2013

Amount Amount
Particulars Particulars
(Rs) (Rs)

To Opening stock 11,520 By Sales 1,97,560

To Purchases 81,350 Less Returns 1,360 1,96,200

Less Return 1,000 80350 By Closing Stock 13,600

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To Wages 20,960

Less Wages Spend on Cycle Shed 4,000 16960

To Fuel and Power 9,460

To Carriage on Purchase 4,080

To Gross Profit Transferred to Profit and

87,430
Loss A/c
2,09,800 2,09,800

By Gross Profit Transferred from

To Carriage on Sales 6,400 87,430
Trading A/c

To Salaries 30,000

Add Outstanding Salaries 3,000 33,000

To General Expenses 6,000

To Insurance 1,200

Less Prepaid 170 1,030

To Depreciation:

Machinery@ 10% 4,000

Patents@ 20% 3,000 7,000

To Provision for Doubtful Debts 1,450

To Net Profit Transferred to capital A/c 32,550

87,430 87,430
Balance Sheet

as at 31st December,2013
Amount Amount
Liabilities Assets
(Rs) (Rs)

Creditors 12,600 Building 60,000

Outstanding Salaries 3,000 Add Wages 4,000 64,000

Capital 1,42,000 Freehold Land 20,000

Add Net Profit 32,550 Machinery 40,000

1,74,550 Less Depreciation 4,000 36,000

Less Drawings 10,490 1,64,060 Patents 15,000

Less Depreciation 3,000 12,000

Debtors 29,000

Less Provision for Doubtful Debtors 1,450 27,550

Prepaid Insurance 170

Closing Stock 13,600

Cash in hand 1,080

Cash at Bank 5,260

1,79,660 1,79,660

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