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11th | Adjustments in Preparation of Financial Statements | Question No. 5 and 6 | Ts Grewal Solution 2022-2023

Question 5:


Trial Balance of a business as at 31st March, 2022 is given below:

Particulars

Dr.
(`)

Particulars

Cr.
(`)

Stock on 1st April, 2018

25,000

Sales

2,27,800

Furniture

8,000

Commission

500

Plant and Machinery

1,50,000

Returns Outward

1,000

Debtors

30,000

Creditors

40,000

Wages

12,000

Capital

1,50,000

Salaries

20,000

 

 

Bad Debts

1,000

 

 

Purchases

1,20,000

 

 

Electricity Charges

1,200

 

 

Telephone Charges

2,400

 

 

General Expenses

3,000

 

 

Postage Expenses

1,800

 

 

Returns Inward

900

 

 

Insurance Premium

1,500

 

 

Cash in Hand

2,500

 

 

Cash at Bank

40,000

 

 

 

4,19,300

 

4,19,300

 

 

 

 

 

 

 

 

Prepare Trading and Profit and Loss Account for the year ended 31st March, 2022 and Balance Sheet as at that date after taking into account the following adjustments:
(i) Closing Stock was valued at  ` 7,000.
(ii) Outstanding liabilities for wages were  ` 600 and salaries  ` 1,400.
(iii) Depreciation is to be provided @ 5% p.a. on fixed assets.
(iv) Included in Plant and Machinery is a machine purchased for  ` 10,000 on 1st October, 2018.
(v) Insurance premium paid in advance  ` 200.

Answer:


Trading Account

for the year ended March 31, 2022

Dr.

 

 

Cr.

Particulars

 (`)

Particulars

 (`)

Opening Stock

25,000

Sales

2,27,800

 

Purchases

1,20,000

 

  Less: Returns

900

2,26,900

  Less: Returns

1,000

1,19,000

Closing Stock

7,000

Wages

12,000

 

 

 

  Add: Outstanding Wages

600

12,600

 

 

Gross Profit

77,300

 

 

 

2,33,900

 

2,33,900

 

 

 

 

 

Profit & Loss Account

for the year ended March 31, 2022

Dr.

 

 

Cr.

Particulars

 (`)

Particulars

 (`)

Bad Debts

1,000

Gross Profit

77,300

Insurance Premium

1,500

 

Commission

500

  Less: Prepaid

200

1,300

 

 

Salaries

20,000

 

 

 

  Add: Outstanding Salaries

1,400

21,400

 

 

Electricity Charges

1,200

 

 

General Expenses

3,000

 

 

Postage Expenses

1,800

 

 

Telephone Charges

2,400

 

 

Depreciation on:

 

 

 

Furniture

400

 

 

 

Plant & Machinery

7,250

7,650

 

 

Net Profit

38,050

 

 

 

77,800

 

77,800

 

 

 

 

 

Balance Sheet

as on March 31, 2022

Dr.

 

 

Cr.

Liabilities

 (`)

Assets

 (`)

Creditors

40,000

Furniture

8,000

 

Outstanding Wages

600

  Less: Depreciation

400

7,600

Outstanding Salaries

1,400

Plant & Machinery

1,50,000

 

Capital

1,50,000

 

  Less: Depreciation

7,250

1,42,750

  Add: Net Profit

38,050

1,88,050

Cash at Bank

40,000

 

 

Cash in Hand

2,500

 

 

Closing Stock

7,000

 

 

Debtors

30,000

 

 

Prepaid Insurance

200

 

2,30,050

 

2,30,050

 

 

 

 

 

Question 6:


Following balances were extracted from the books of Vijay on 31st March, 2022:
 

Particulars

 `

Particulars

 `

Capital

2,45,000

Loan

78,800

Drawings

20,000

Sales

6,53,600

General Expenses

47,400

Purchases

4,70,000

Building

1,10,000

Motor Car

20,000

Machinery

93,400

Provision for Doubtful Debts

9,000

Stock on 1st April, 2018

1,62,000

Commission (Cr.)

13,200

Insurance

13,150

Car Expenses

18,000

Wages

72,000

Bills Payable

38,500

Debtors

62,800

Cash

800

Creditors

25,000

Bank Overdraft

33,000

Bad Debts

5,500

Charity

1,050


Prepare Trading and Profit and Loss Account for the year ended 31st March, 2022 and Balance Sheet as at that date after giving effect to the following adjustments:
(a) Stock as on 31st March, 2022 was valued at
 ` 2,30,000.
(b) Write off further  ` 1,800 as Bad Debts and maintain the Provision for Doubtful Debts at 5%.
(c) Depreciate Machinery at 10%.
(d) Provide  ` 7,000 as outstanding interest on loan.

Answer:


Financial Statement of Vijay Kumar

Trading Account

for the year ended March 31, 2022

Dr.

 

 

Cr.

Particulars

 (`)

Particulars

 (`)

Opening Stock

1,62,000

Sales

6,53,600

Purchases

4,70,000

Closing Stock                     

2,30,000

Wages

72,000

 

 

Gross Profit (Balancing Figure)

1,79,600

 

 

 

8,83,600

 

8,83,600

 

 

 

 

 

Profit and Loss Account

for the year ended March 31, 2022

Dr.

 

Cr.

Particulars

 (`)

Particulars

 (`)

Taxes and Insurance

13,150

Gross Profit

1,79,600

Bad Debts

5,500

 

Commission                              

13,200

Add: Further Bad Debts

1,800

 

 

 

Add: Provision for Doubtful Debts

3,050

 

 

 

 

10,350

 

 

 

Less: Exiting Provision

9,000

1,350

 

 

Car Expenses

18,000

 

 

Charity

1,050

 

 

Depreciation on Machinery

9,340

 

 

Outstanding Interest on Loan

7,000

 

 

General Expenses

47,400

 

 

Net Profit (Balancing Figure)

95,510

 

 

 

1,92,800

 

1,92,800

 

 

 

 

 

Balance Sheet

as on March 31, 2022

Liabilities

 (`)

Assets

 (`)

Capital            

2,45,000

 

Fixed Assets

 

Add: Net Profit        

95,510

 

Building

1,10,000

Less: Drawings

(20,000)

3,20,510

Machinery

93,400

 

Loan

78,800

 

Less:10% Depreciation

9,340

84,060

Add: Outstanding Interest

7,000

85,800

Motor Car

20,000

Current Liabilities

 

Current Assets

 

Creditors

25,000

Closing Stock

2,30,000

Bills Payable

38,500

Debtors

62,800

 

Bank Overdraft

33,000

Less: Bad Debts

(1,800)

 

 

 

Less: 5% Provision for Doubtful Debts

(3,050)

57,950

 

 

Cash

800

 

5,02,810

 

5,02,810

 

 

 

 

 

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