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11th | Adjustments in Preparation of Financial Statements | Question No. 9 and 10 | Ts Grewal Solution 2022-2023

Question 9:


From the following Trial Balance of Mahesh, prepare his Final Accounts for the year ended 31st March, 2022:

 

Heads of Accounts

Debit Balances

(`)

Credit Balances

(`)

Purchases

 

2,50,000

Sales

 

5,00,000

Returns Inward

 

12,000

...

Returns Outward

 

10,000

Carriage

 

8,000

Wages

 

60,000

Miscellaneous Expenses

 

2,000

Insurance

 

1,200

Repairs

 

8,000

Debtors

 

1,15,000

Creditors

 

1,00,000

Printing and Stationery

 

6,000

Advertisement

 

15,000

Bills Receivable

 

4,000

Bills Payable

 

2,000

Opening Stock

 

30,000

Cash in Hand

 

12,000

Interest on Bank Loan

 

2,800

Machinery

 

2,80,000

Furniture

 

34,000

Drawings

 

20,000

Commission

 

1,000

12% Bank Loan

 

30,000

Capital

 

2,40,000

Rent Received

 

5,000

Cash at Bank

 

28,000

Total

 

8,88,000

8,88,000

 

 

 

 


Additional Information:
(i) Closing Stock on 31st March, 2022 was
` 21,000.
(ii) Rent of
` 1,200 has been received in advance.
(iii) Outstanding liability for Miscellaneous expenses
` 12,000.
(iv) Commission earned during the year but not received was
` 2,100.
(v) Goods costing
` 2,000 were taken by the proprietor for his personal use but entry was not passed in the books of account.

Answer:


Financial Statement of Mahesh

Trading Account

for the year ended March 31, 2022

Dr.

 

 

Cr.

Particulars

 (`)

Particulars

 (`)

Opening stock

30,000

 

 

 

Purchases                                      2,50,000

 

Sales

5,00,000

 

   Less: Drawings

(2,000)

 

Less: Return Inwards

(12,000)

4,88,000

Less: Return Outwards

(10,000)

2,38,000

Closing Stock

21,000

Carriage

8,000

 

 

Wages

60,000

 

 

Gross Profit (Balancing Figure)

1,73,000

 

 

 

 

 

 

 

5,09,000

 

5,09,000

 

 

 

 

 

Profit and Loss Account

for the year ended March 31, 2022

Dr.

 

Cr.

Particulars

 (`)

Particulars

 (`)

Miscellaneous expenses

2,000

 

Gross Profit

1,73,000

Add: Outstanding Miscellaneous Expenses

12,000

14,000

Commission

1,000

 

Insurance

1,200

Add: Accrued Commission

2,100

3,100

Repairs

8,000

Rent Received

5,000

 

Advertisement

15,000

Less: Advance Rent

1,200

3,800

Interest on Bank Loan

2,800

 

 

 

Add: Interest Outstanding

800

3,600

 

 

Printing and Stationary

6,000

 

 

Net Profit (Balancing Figure)

1,32,100

 

 

 

 

 

 

 

1,79,900

 

1,79,900

 

 

 

 

 

Balance Sheet

as on March 31, 2022

Liabilities

 (`)

Assets

 (`)

Capital

2,40,000

 

Fixed Assets

 

Less: Drawings

(22,000)

 

Machinery

2,80,000

Add: Net Profit

1,32,100

3,50,100

Furniture

34,000

10% Loan from Bank

30,000

 

Current Assets

 

Add: Outstanding Interest

800

30,800

Closing Stock

21,000

Current Liabilities

 

Debtors

1,15,000

Creditors

1,00,000

Bills Receivable

4,000

Bills Payable

2,000

Cash at Bank

28,000

Advance Rent

1,200

Cash in Hand

12,000

Outstanding Trade Expenses

12,000

Commission Accrued

2,100

 

4,96,100

 

4,96,100

 

 

 

 

 

Working Notes:

Calculation of Outstanding Interest on Loan

Interest on loan (30,000 × 12%)

3,600

Less: Interest Paid

(2,800)

Interest Outstanding on Loan

800

Question 10:


From the following Trial Balance and other information, prepare Trading and Profit and Loss Account for the year ended 31st March, 2022 and Balance Sheet as at that date:
 

Particulars

Dr.

(`)

Cr.

(`)

Sundry Debtors

 

3,20,000

Stock on 1st April, 2018

 

2,20,000

Cash in Hand

 

350

Cash at Bank

 

15,450

Plant and Machinery

 

1,75,000

Sundry Creditors

 

1,06,500

General Expenses

 

10,750

Sales

 

13,45,000

Salaries

 

22,250

Carriage Outwards

 

4,000

Rent

 

9,000

Bills Payable

 

75,000

Purchases

 

11,88,700

Discounts

 

11,000

Premises

 

3,45,000

Capital on 1st April, 2018

 

7,95,000

Total

 

23,21,500

23,21,500

 

 

 

 


Stock on 31st March, 2022 was
` 1,24,500. Rent was unpaid to the extent of ` 850 and ` 1,500 were outstanding for General Expenses; ` 4,000 are to be written off as bad debts out of the above debtors; and 5% is to be provided for doubtful debts. Depreciate Plant and Machinery by 10% and Premises by 2%.
Manager is entitled to a commission of 5% on net profit after charging his commission.

Answer:


Financial Statement

Trading Account

for the year ended March 31, 2022

Dr.

 

 

Cr.

Particulars

 (`)

Particulars

 (`)

Opening Stock

2,20,000

Sales

13,45,000

Purchases

11,88,700

Closing Stock

1,24,500

Gross Profit (Balancing Figure)

60,800

 

 

 

14,69,500

 

14,69,500

 

 

 

 

 

Profit and Loss Account

for the year ended March 31, 2022

Dr.

 

 

 

Cr.

Particulars

 (`)

Particulars

 (`)

Rent

9,000

 

Gross Profit

60,800

Add: Outstanding Rent

850

9,850

Net Loss (Balancing Figure)

42,750

General Expenses

10,750

 

 

 

Add: Outstanding General Expenses

1,500

12,250

 

 

Bad Debts

4,000

 

 

 

Add: Provision for Debts

15,800

19,800

 

 

Depreciation on

 

 

 

Plant and Machinery

17,500

 

 

 

Business Premises

6,900

24,400

 

 

Salaries

22,250

 

 

Carriage Outwards

4,000

 

 

Discount

11,000

 

 

 

1,03,550

 

1,03,550

 

 

 

 

 

Balance Sheet

as on March 31, 2022

Liabilities

 (`)

Assets

 (`)

Capital

7,95,000

 

Fixed Assets

 

Less: Net Loss

(42,750)

7,52,250

Plant and Machinery

1,75,000

 

Current Liabilities

 

Less: 10% Depreciation

(17,500)

1,57,500

Sundry Creditors

1,06,500

Premises

3,45,000

 

Bills Payable

75,000

Less: 2% Depreciation

(6,900)

3,38,100

Rent Outstanding

850

Current Assets

 

General Expenses Outstanding

1,500

Closing Stock

1,24,500

 

 

Sundry Debtors

3,20,000

 

 

 

Less: Bad Debts

(4,000)

 

 

 

 

3,16,000

 

 

 

Less: 5% Provision for Doubtful Debts

(15,80)

3,00,200

 

 

Cash at Bank

15,450

 

 

Cash in Hand

350

 

9,36,100

 

9,36,100

 

 

 

 

 

Note: In the question, Manager Commission is given as 5% on Net Profit after charging commission. But, during the year the firm had a Net Loss of Rs 42,750, therefore, manager commission is not payable.

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