FINAL ACCOUNT

Q. 1 From the following balances extracted from the books of Sh. Gyan on 3st December, 1993, prepare a
Trading Account, P & L A/c and a Balance Sheet.

Closing Stock valued on that date was Rs. 15,000.

Dr. Balances Rs. Rs.

Capital 1,28,200

Household Expenses 10,000

Sales 1,80,000

Return inwards 4,000

Return outwards 6,000

Purchases 1,50,000

Cash at Shop 1,600

Bank Overdraft 15,000

Interest on Overdraft 1,500

Creditors 17,800

Stock at the Commencement 18,000

Freight 8,500

Rent and Taxes 7,000

Debtors 32,600

Commission 3,000 2,200

Freehold Property 30,000

Sundry Expenses 3,900

Salaries and wages 20,000

Life Insurance Premium 1,800

Insurance Premium 1,600

Motor Vehicle 39,800

Typewriter 8,000

Interest 800

Carriage inwards 2,000

Carriage outwards 800

Power 2,200

Audit Fee 1,700

Lighting 2,000
TOTAL 3,50,000 3,50,000

Q. 2 From the following balances of the ledger of Sh. Gurdeep Singh, prepare Trading and Profit and
Loss Account and Balance Sheet :—

Balances Rs. Rs.

Stock on 30-6-2007 30,000

Stock on 30-6-2008 46,200

Purchases and Sales 2,30,000 3,45,800

Returns 12,500 15,200

Commission on Purchases 1,200

Freight, octroi and carriage 26,000

Wages and Salary 10,800

Fire Insurance Premium 820

Business premises 40,000

Sundry Debtors 26,100

Sundry Creditors 26,700

Goodwill 8,000

Patents 8,400

Coal, Gas and Power 7,600

Printing and Stationery 2,100

Postage and Telegram 710

Travelling expenses 4,250

Drawings 7,200

Depreciation 1,000

General Expenses 8,350

Capital 89,760

Investments 8,000
Interest on Investments 800

Custom Duty on imported goods 4,500

Cash in hand 2,570

Banker's Account 5,200

Commission 4,600 4,400

Loan on Mortgage 30,000

Interest on Loan 3,000

B/P 2,280

B/R 4,540

Income Tax 3,000

Horses and Carts 20,300

Discount on Purchases 1,600

TOTAL 5,21,740 5,21,740

Ans. Gross Profit Rs. 38,400, Net Profit Rs. 20,370, Balance Sheet Rs. 1,64,110

Q. 3 From the following balances of Sehajta Ltd. prepare Final Accounts as on 31st March, 2008 :—

Rs. Rs.
Stock on 01-4-2007 23,500 Freight In 1,100

Purchases 46,800 Freight Out 3,000

Sales 1,30,000 Rent (Factory 1/3, Office 2/3) 7,500

Productive Expenses 27,000 Legal Expenses 800

Unproductive Expenses 5,800 Miscellaneous Receipts 500

Trade Expenses 1,200 Sundry Debtors 30,000

Returns In 6,600 Sundry Creditors 12,200

Returns Out 2,800 Donation 600

Loose Tools 7,200 Bad-Debts 4,750

Trade Marks 5,000 Bad-Debts Recovered 4,000

Discount Cr. 2,100 Sales Tax Collected 3,900

Salaries 9,600 Bank Charges 2,800

Fixed Deposit with P.N.B. 10,000 Loan on Mortgage 20,000

Interest on Loan 2,400

Cash in Hand 1,300

Motor Vehicles 50,000

Leasehold Land 60,000

Capital 1,37,450

Life Insurance Premium 6,000

Value of Closing Stock was Rs. 36,500 on 31st March 2008.

Q. 4 From the following Trial Balance of Gurdeep Singh as at 31st December, 2007, prepare Trading and
Profit and Loss Account and Balance Sheet:

Dr. Balances Rs. Cr. Balances Rs.

Opening Stock 15,500 Capital 60,000

Land and Building 35,000 Loan from Mrs. Gurdeep Singh @9% 30,000

Machinery 50,000 Sundry Creditors 9,600

Furniture & Fixtures 5,000 Purchase Returns 2,100

Purchases 1,06,000 Sales 2,07,300

Salaries 11,000 Discount 1,200

General Expenses 2,500

Rent 3,000

Postage and Telegrams 1,400

Stationery 1,300

Wages 26,000

Freight on Purchases 2,800

Carriage on Sales 4,000

Repairs 4,500

Sundry Debtors 30,000

Bad Debts 600

Cash in Hand 100

Cash at Bank 6,400

Sales Returns 5,100

3,10,200 3,10,200
The following further information was given:

(a) Wages for December, 2007 amounting to Rs. 2,100 have not yet been paid.

(b) Included in General Expenses is Insurance Premium Rs. 600, paid for the year ending 31 st march,
2008.

(c) A provision for doubtful debts @5% on debtors is necessary.

(d) Depreciation is to be charged as follows:

Land and Building 2%, Machinery 10% and Furniture and Fixtures 15%.

(e) The loan from Mrs. Gurdeep Singh was taken on 1 st July, 2007. Interest has not been paid yet.

(f) The value of stock on hand on 31st Dec, 2007 was Rs. 14,900.

Q. 5 The following is the Trial Balance of Mr. Gyan on 30th June, 2007 :

Balances Rs. Rs.

Cash in Hand 540

Cash at bank 2,630

Purchases Account 40,675

Sales Account 98,780

Returns Inward Account 680

Returns Outward Account 500

Wages Account 10,480

Fuel & Power Account 4,730

Carriage on Sales Account 3,200

Carriage on Purchase Account 2,040

Stock Account (1st July, 2007) 5,760

Building Account 30,000

Freehold Land Account 10,000

Machinery Account 20,000

Patent Account 7,500

Salaries Account 15,000

General Exps. Account 3,000

Insurance Account 600

Drawings Account 5,245

Capital Account 71,000

Sundry Debtors Account 14,500

Sundry Creditors Account 6,300

TOTAL 1,76,580 1,76,580

Taking into account the following adjustments, Prepare Trading Account and Profit and Loss Account and the
Balance Sheet:

(a) Stock on hand on 30th June, 2007 is Rs. 6,800.

(b) Machinery is to be depreciated at the rate of 10% and patents at the rate of 20%.

(c) Salaries for the month of June 2007 amounting to Rs. 1,500 were unpaid.

(d) Insurance includes a premium of Rs. 170 on a policy expiring on 31 st December 2007.

(e) Wages include a sum of Rs. 2,000 spent on the erection of a cycle shed for employees and customers.

(f) A provision for Bad and Doubtful Debts is to be created to the extent of 5 per cent on Sundry Debtors.

Q. 6 The following trial balance is extracted from the books of a merchant on 31st December 2007:

PARTICULARS DR. Cr.

Rs. Rs.
Furniture and Fittings 640

Motor Vehicles 6,250

Buildings 7,500

Capital Account 12,500

Bad Debts 125

Provision for Bad Debts 200

Sundry Debtors and Creditors 3,800 2,500

Stock on January 1, 2007 3,460

Purchases and Sales 5,475 15,450

Bank Overdraft 2,850

Sales and Purchases Returns 200 125

Advertising 450

Interest Account 118

Commission 375

Cash 650

Taxes and Insurance 1,250

General Expenses 782

Salaries 3,300

34,000 34,000

The following adjustments are to be made:

(a) Stock in Hand on 31st December, 2007 was Rs. 3,250.

(b) Depreciate Building @5%, Furniture and Fitting @ 10% and Motor Vehicle @ 20%.

(c) Rs. 85 is due for interest on bank Overdraft.

(d) Salaries Rs. 300 and Taxes Rs. 120 are outstanding.

(e) Insurance amounting to Rs. 100 is prepaid.

(f) One-third of the commission received is in respect of work to be done next year.

(g) Write off further Rs. 100 as Bad Debts and Provision for Bad Debts is to be made equal to 5% on
Sundry Debtors.

Prepare a Trading and Profit and Loss Account for the year ending 31st December, 2007 and a Balance Sheet as
on that date.
Q. 7 From the following Trial Balance prepared from the books of Gurdeep on 31 st December 2007, prepare
Trading and Profit and Loss Account for the year ending 31 st December, 2007 and Balance Sheet as on that date

Particulars Rs. P. Particulars Rs. P.

Gurdeep's drawings 10,550 Gurdeep's Capital 1,19,400

Bills Receivable 9,500 Loan at 6% p.a. 20,000

Plant and Machinery 28,800 Sales 3,56,430

Sundry debtors (Including Mr. Gyan for Commission received 5,640

dishonoured cheque—Rs. 1,000)
62,000 Sundry Creditors 59,630
Wages (Manufacturing)
40,970
Returns inward
2,780
Purchases
2,56,590
Rent and Taxes
5,620
Stock on 1st Jan, 2007
89,680
Salaries
11,000
Travelling expenses
1,880
Insurance
400
Cash
530
Bank
18,970
Repairs and renewals
3,370
Interest of Loan
1,000
Interest and discount
4,870
Bad debts
3,620
Fixtures and Fittings
8,970

5,61,100 5,61,100

The following adjustments are to be made:

(a) Stock-in-trade in hand on December 31, 2007 Rs. 1, 28,960.

(b) Write off half of Gyan's cheque.

(c) Create a provision of 5% on sundry debtors.

(d) Manufacturing wages include Rs. 1,200 for erection of new machinery purchased.
 (e) Depreciate plant and machinery by 5% p.a. For fixtures and fittings by 10% per annum.

(f) Commission not earned but received amounts to Rs. 600.

Q. 8 On 31st December, 2007 the following Trail Balance was extracted from the books of Mr. Himmat Singh.

Particulars Rs. P. Particulars Rs. P.

Dr. Balances: Rates Taxes and Insurance 2,891

Drawings 3,000 Advertising 3,264

Sundry Debtors 20,100 General Expenses 3,489

Interest on Loan 300 Bills Receivable 6,882

Cash in Hand 2,050 Cr. Balances:

Stock on 1st Jan, 2007 6,839 Capital 28,000

Motor Vehicles 10,000 Sundry Creditors 10,401

Cash at Bank 3,555 Loan on Mortgage 9,500

Land & Buildings 12,000 Bad Debts Reserve 710

Bad Debts 525 Sales 1,10,243

Purchases 66,458 Purchases Returns 1,346

Sales Returns 7,821 Discounts 540

Carriage Outward 2,404 Bills Payable 2,614

Carriage Inward 2,929 Rent Received 250

Salaries 9,097

Prepare Trading and Profit and Loss Account for the year ended 31 st December, 2007 and Balance Sheet as on
that date, after making adjustments for the following matters:

1. Depreciate Land and Building at 2-1/2 % and Motor Vehicles at 20%.

2. Interest on Loan at 6% p.a. Is unpaid for six months.
3. Goods costing Rs. 500 were sent to a customer on sale or return for Rs. 600 on 30 th December, 2007
and had been recorded in the books as actual sales.
4. Salaries amounting to Rs. 750 and rates amounting to Rs. 350 are outstanding.
5. Prepaid Insurance amounted to Rs. 150.
6. The provision for Bad Debts is to be maintained at 5% on Sundry Debtors.
7. Provide for manager's Commission at 10% on net profits after charging such commission.
8. Stock in hand on 31st December, 2007 was valued at Rs. 6,250.
Q. 9 From the following balances extracted from the books of Mr. Hardev Singh, prepare trading and profit and
loss account for the year ended 31.32007 and a balance sheet on that date:

Purchases 71,280 Capital account 60,000

Computer at cost Creditors 13,000

(bought on 31.3.2007) 18,380 Bills Payable 10,220

Cash at Bank 4,000 Discount 22,000

Cash in Hand 2,836 Sales 60,720

Furniture and fittings at cost 1,540 Returns outwards 11,432

Rent 12,540 Rent due 320

Bills receivable 6,720

Trade Charges 920

Sundry debtors 34,156

Drawings 5,200

Discount 540

Wages 1,800

Salaries 16,780

Returns Inwards 1,000

1,77,692 1,77,692

Adjustments:

(a) Stock at the end at cost Rs. 25,600 (market-value Rs. 26,200).

(b) Rs. 6,000 paid to Mrs. Red against Bills payable were debited by mistake to Mr. Green's account and
included in the list of sundry debtors.

(c) Travelling expenses paid to sales representatives Rs. 5,000 for the month of March 2007 were debited
to his personal account and included in the list of sundry debtors.

(d) Depreciation on furniture and fittings shall be provided at 10% p.a.

(e) Provide for doubtful debts at 5% on sundry debtors.

(f) Goods costing Rs. 1,500 were used by the proprietor.

(g) Salaries included Rs. 12,000 paid to sales representative who is further entitled to a commission of 5%
on net sales.

(h) Stationery charges Rs. 1,200 due on 31.3.2007.

 (i) Purchases included opening stock valued at cost Rs. 7,000.

(j) Sales representative further entitled to an extra commission of 5% on net profit after charging his extra
commission.

Q. 10 Define accounting and explain the steps in the accounting process.

Mrs. Gurdeep Singh , shopkeeper had prepared the following trial balance from his ledger as on 31 st March,
2007 :

Particulars Dr. Cr.

Rs. Rs.

Purchases and sales 6,20,000 8,30,000

Cash in hand 4,200

Cash at Bank 24,000

Stock of goods on 01-04-2006 1,00,000

Capital A/c 5,77,200

Drawings 8,000

Salaries 64,000

Postage and telephones 23,000

Salesmen’s commission 70,000

Insurance 18,000

Advertising 34,000

Furniture 44,000

Printing and Stationery 6,000

Motor Car 96,000

Bad debts 4,000

Cash discount 8,000

General expenses 60,000

Carriage inwards 20,000

Carriage outwards 40,000

Wages 40,000

Debtors and creditors 2, 00,000 80,000

14,87,200 14,87,200
You are required to prepare Trading and Profit & Loss Account for the year ended 31 st March, 2007 and
Balance Sheet on that date. You are also given the following information:

1. Stock on 31-3-2007 was Rs. 1,45,000.

2. Mr. Gurdeep Singh had withdrawn goods worth Rs. 5,000 during the year.
3. Purchases include purchase of furniture worth Rs. 10,000.
4. Debtors are bad to the extent of Rs. 5,000.
5. Creditors include a balance of Rs. 4,000 to the credit of Mr. Mandeep in respect of which it has been
decided and settled with the party to pay only Rs. 1,000.
6. Sales include goods worth Rs. 15,000 sent to Gyan & Co. on approval and remaining unsold as on 31-
3-2007. The cost of the goods was Rs. 10,000.
7. Provision for Bad Debts is to be created at 5% on Sundry Debtors.
8. Depreciate Furniture by 15% and Motor Car by 20%.
9. The salesmen are entitled to a commission of 10% on total sales.

Q11) From the following information prepare Trading and Profit & Loss Account/ Income Statement for the
year ended 31″ December 2005 and prepare the Balance Sheet at the end and also take into Account the
adjustments.

Dr. Rs. Cr. Rs.

Opening Stock 10,000 Capital 15,000
Drawings 11,000 Sales 85,000
Purchases 75,000 Purchases Returns 1,300
Sales returns 2,700 Sundry Creditors 30,000
Trade Expenses 3.675 Bank Overdraft 10,000
Wages 3,500
Salaries 5,600
Travelling Expenses 110
Advertising 420
Taxes & Insurance 2,800
Discount 300
Bank interest 215
Bad debts 400
Premises 6,000
Machinery 10,000
Furniture 2,450
Sundry debtors. 6,100
Cash in hand 1.030
Total 141,300 141,300

Adjustments:

i) Stock on 31st December, 2005 was valued Rs. 45,000

ii) Salary Rs. 200 is outstanding.

iii) Depreciate Machinery at 10%

iv) Insurance Rs. 50 is prepaid.

Answer: Gross Profit Rs. 40,100, Net Profit Rs. 25, 430, Balance Sheet Rs. 69,630