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11th | Adjustments in Preparation of Financial Statements | Question No. 3 and 4 | Ts Grewal Solution 2022-2023

Question 3:


Following Trial Balance has been extracted from the books of Prasad on 31st March, 2022:
 

Particulars

Dr. (`)

Particulars

Cr. (`)

Machinery

4,00,000

Capital

9,00,000

Cash at Bank

1,00,000

Sales

16,00,000

Cash in Hand

50,000

Sundry Creditors

4,50,000

Wages

1,00,000

Interest Received

30,000

Purchases

8,00,000

 

 

Stock on 1st April, 2018

6,00,000

 

 

Sundry Debtors

4,40,000

 

 

Bills Receivable

2,90,000

 

 

Rent

45,000

 

 

Commission

25,000

 

 

General Expenses

80,000

 

 

Salaries

50,000

 

 

 

29,80,000

 

29,80,000

 

 

 

 


Additional Information:
(i) Outstanding salaries were
 ` 45,000.
(ii) Depreciate Machinery at 10%.
(iii) Wages outstanding were  ` 5,000.
(iv) Rent prepaid  ` 10,000.
(v) Provide for interest on capital @ 5% per annum.
(vi) Stock on 31st March, 2022  ` 8,00,000.
Prepare Trading and Profit and Loss Account for the year ended 31st March, 2022 and Balance Sheet as at that date.

Note: In this question, in the book, amount of Machinery is given as ` 2,40,000 by mistake, it is may be typing mistake.

Answer:


Financial Statement of M/s. Ram Prasad & Sons

Trading Account

for the year ended March 31, 2022

Dr.

 

 

Cr.

Particulars

 (`)

Particulars

 (`)

Opening Stock

6,00,000

Sales

16,00,000

Purchases

8,00,000

Closing Stock                        

8,00,000

Wages

1,00,000

 

 

 

Add: Outstanding Wages

5,000

1,05,000

 

 

Gross Profit (Balancing Figure)

8,95,000

 

 

 

 

 

 

 

24,00,000

 

24,00,000

 

 

 

 

 

Profit and Loss Account

for the year ended March 31, 2022

Dr.

 

Cr.

Particulars

Amount

(`)

Particulars

Amount

(`)

Rent

45,000

 

Gross Profit

8,95,000

Less: Prepaid Rent

(10,000)

35,000

Interest Received

30,000

Commission

25,000

 

 

General Expenses

80,000

 

 

Salaries

50,000

 

 

 

Add: Outstanding Salaries

45,000

95,000

 

 

Depreciation on Machinery

40,000

 

 

Net Profit (Balancing Figure)

6,50,000

 

 

 

9,25,000

 

9,25,000

 

 

 

 

 

Balance Sheet

as on March 31, 2022

Liabilities

Amount

(`)

Assets

Amount

(`)

Capital

9,00,000

 

Fixed Assets

 

Add: Net Profit

6,50,000

15,50,000

Machinery

4,00,000

 

Current Liabilities

 

Less: 10% Depreciation

(40,000)

3,60,000

Sundry Creditors

4,50,000

Current Assets

 

Outstanding Salary

45,000

Closing Stock

8,00,000

Outstanding Wages

5,000

Sundry Debtors

4,40,000

 

 

Bills Receivable

2,90,000

 

 

Prepaid Rent

10,000

 

 

Cash at Bank

1,00,000

 

 

Cash in Hand

50,000

 

20,50,000

 

20,50,000

 

 

 

 

 

Question 4:


From the following Trial Balance of Shradha as on 31st March, 2022, prepare Trading and Profit and Loss Account and Balance Sheet:
 

Heads of Accounts

Debit Balances
(`)

Credit Balances
(`)

Capital

 

80,000

Drawings

 

18,000

Sales

 

1,55,000

Purchases

 

82,600

Stock (1st April, 2018)

 

42,000

Returns Outward

 

1,600

Carriage Inwards

 

1,200

Wages

 

4,000

Power

 

6,000

Machinery

 

50,000

Furniture

 

14,000

Rent

 

22,000

Salary

 

15,000

Insurance

 

3,600

8% Bank Loan

 

25,000

Debtors

 

20,600

Creditors

 

18,900

Cash in Hand

 

1,500

Total

 

2,80,500

2,80,500

 

 

 

 


Adjustments:
(i) Closing Stock
 `64,000.
(ii) Wages outstanding
`2,400.
(iii) Bad Debts
` 600.
(iv) Provision for Doubtful Debts to be 5%.
(v) Rent is paid for 11 months.
(vi) Insurance premium is paid per annum, ended 31st May, 2022.
(vii) Loan from the bank was taken on 1st October, 2018.
(viii) Provide Depreciation on machinery @ 10% and on Furniture @ 5%.

Answer:


Financial statement of M/s. Shradha & Sons

Trading Account

for the year ended March 31, 2022

Dr.

 

Cr.

Particulars

 (`)

Particulars

 (`)

Opening Stock

42,000

Sales

1,55,000

Purchases

82,600

 

 

 

Less: Return Outwards

(1,600)

81,000

 

 

Carriages Inwards

1,200

Closing Stock

64,000

Wages

4,000

 

 

 

Add: Outstanding Wages

2,400

6,400

 

 

Power

6,000

 

 

Gross Profit (Balancing Figure)

82,400

 

 

 

2,19,000

 

2,19,000

 

 

 

 

 

 

 

 

 

 

 

Profit and Loss Account

for the year ended March 31, 2022

Dr.

 

 

Cr.

Particulars

 (`)

Particulars

 (`)

Rent

22,000

 

Gross Profit

82,400

Add: Outstanding for One month (22,000/11)

2,000

24,000

 

 

Salary

15,000

 

 

Insurance

3,600

 

 

 

Less: Prepaid 2 month(3,600 × 2/12)

(600)

3,000

 

 

Outstanding Interest on Bank Loan

(25,000 × 8% × 6/12)

1,000

 

 

Bad Debts

600

 

 

 

Add: Provision for Doubtful Debts

1,000

1,600

 

 

Depreciation on:

 

 

 

Machinery

5,000

 

 

 

Furniture

700

5,700

 

 

Net Profit (Balancing Figure)

32,100

 

 

 

82,400

 

82,400

 

 

 

 

 

Balance Sheet

as on March 31, 2022

Liabilities

 (`)

Assets

 (`)

Capital

80,000

 

Fixed Assets

 

Add: Net Profit

32,100

 

Machinery

50,000

 

Less: Drawings

(18,000)

94,100

Less: 10% Depreciation

(500)

45,000

  8% Bank Loan

25,000

 

Furniture

14,000

 

Add: Outstanding Interest

1,000

26,000

Less: 5% Deprecation

(700)

13,300

Current Liabilities

 

Current Assets

 

Creditors

18,900

Closing Stock

64,000

Wages Outstanding

2,400

Debtors

20,600

 

Rent Outstanding

2,000

Less: Bad Debts

(600)

 

 

 

Less: 5% Provision for doubtful Debts

(1,000)

19,000

 

 

Prepaid Insurance

600

 

 

Cash in hand

1,500

 

1,43,400

 

1,43,400

 

 

 

 

 

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