Give the necessary adjusting entries for the following items as on 31ST March ,2000.
A. Closing stock as on 31ST March ,2000 –10,000B. Salary due not paid – Rs1,000C. Unexpired insurance on 31ST March,2000 –RS 2,000D. Rent received in advance –RS 3,000E. Interest due not received –RS6,00F. Depreciation on fixed assets @ 33 1\3 %G. Bad debts to be written off Rs 5,000H. Create provision for bad and doubtful debts @12%I. Create provision for discount on debtors @ 2%J. Create reserve for discount on creditors @2%K. Allow interest on capital @ 10% charge interest on drawing @ 12%
Financial AccountingPage :172; Illustration :10.1;From The following Trial Balance of Sovera Medicos prepare a Profit and Loss account for the year ended December 31,2001. Trial Balance
Particulars Dr Cr RS. RS.
Capital 2,50,000Inventory 60,000(on Jan 1,2001)
Accounts 1,00,000 Receivable Accounts 70,000 Payable Sales 6,00,000 Purchases 3,70,000 Sales 20,000 Returns Purchases 10,000 Returns Discount 10,000 Received Bills 40,000 Payable Rent 10,000 Payable Insurance 10,000 Drawings 20,000 Land and 1,50,000 Buildings Freehold 50,000 Property Plant and 50,000 Machinery Petty 6,000 Expenses Cash at 20,000 Bank Furniture 30,000 Freight 20,000 Wages 15,000 Salaries 15,000 Advertising 10,000 Postage and 10,000 Telephones General 34,000 Expenses
Total 9,90,000 9,90,000
Adjustments :1. Inventory was valued on 31ST December ,19X1 AT RS 95,0002. Depreciate Plant and Machinery by 15% and furniture by 10%3. Provide for interest on capital at 10% and interest on drawing at 6%4. Provide for following outstanding expenses: Wages RS 10,000 Salaries RS 7,000 General RS 5,000 Expenses 5. Insurance was prepaid to the extent of RS 3,000.6. A sum of RS2,000 was earned by the of discount, but not yet received and hence not included in
accounts. 7. A sum of RS 3,000 represents rent received in advance but not yet due.8. A provision of 2% is required on debtors towards bad and doubtful debts.9. A provision of 50% towards taxation on profits (before taxation) is required.
Financial AccountingPage :73; Illustration:5.2;The following is the trial balance of Gupta as on 30th June ,2001 Trial Balance Of Gupta For The Year Ending 30TH June ,2001
Dr Cr RS RS Cash 540 Sales 98,780 Cash 2,630 Accounts At Returns 500 Bank Outwards Purchases 40,675 Capital 62,000 Return 680 Accounts 6,300 Inwards Payable Wages 8,480 Rent 9,000 Fuel and 4,730Power Carriage 3,200 On Sales Carriage 2,040 On purchases Inventory 5,760(1ST July,1991 )Buildings 32,000Freehold land 10,000Machinery 20,000 Patents 75,000Salaries 15,000General 3,000 Expenses
Taking into account the following adjustments prepare the Trading ,Profit and Loss Account as on 30TH June ,2001.
1. Inventory on hand on 30TH June ,2001 is RS 6,8002. Machinery to be depreciated at the rate of 10% and patents at the rate of 20%3. Salaries for the month of June 2001 amounting to RS1,500 were unpaid.4. Insurance includes an annual premium of RS 170 on a policy expiring on 31ST December ,20015. Bad debts to be written of are RS 725
6. Rent receivableRS1,000.
Financial AccountingPage :176; Illustration:10.6From the following Trial Balance of Pratibha and company, prepare Trading & Profit and Loss Account for the year ending 31ST Dacamber,2002 after giving effect to the undermentioned adjustments.
Trial balance for the year ending 31ST December ,2002Dr Cr RS RSOpening 8,000 Capital a\c on 50,000 Stock 1-1-92Purchases 20,000 Sales 80,000Sales 1,500 Purchase 400 Return Return Carriage 1,200 Apprenticeship 1,500
Inwards Premium Carriage 2,500 Bills 2,500Outwards Payable Wages 3,300 Sundry 15,800Salaries 5,500 CreditorsRent 1,100Freight 2,400Fire 900InsurancePremium Bad Debts 2,100Discount 500 Printing 250 and StationaryRates and Taxes 350Travelling 150 Expenses Sundry 200TradeExpenses Business 55,000 PremisesFurniture and 2,500FixturesBills Receivable 3,000Sundry Debtors 20,000 Packing 4,500ExpensesLoan given to 5,000SmithInvestments 3,500Cash in hand 250Cash at bank 3,500
Proprietor’s 3,000Withdrawals
1,50,200 1,50,200
Adjustments to be made for the current period are:
1. Inventory in hand 31ST December,2002,RS 7,0002. Wages to laborers of RS 300 for the last month are outstanding.3. Salaries to the clerk of the month of December ,2002 are outstanding RS 500.4. Rent for the godown for the last month is outstanding RS1005. Fire insurance premium includes RS 600 paid on 17TH July ,2002 to run for one year from 1st
July ,2002 TO 30TH June 20036. Apprentice premiums are for three years paid in advance on 1ST Janaury,20027. A stationary for RS 30 remains unpaid and unrecorded.8. Depreciate business premises by 5% ,Furnitures and Fixtures by 10%and packing Machinery by
10%9. Interest on Smith’s loan has accrued as on 31ST December ,200210. Interest on investments RS 75 has accrued as on 31ST December ,200211. Interest on capital to be allowed at 5% for the year.12. Interest on drawings to be charged to him as ascertained for the year RS 80.13. Create a provision on debtors for doubtful debts 5% and discount at 3%.14. Create a reserve on creditors for discount at 3%.
Financial AccountingPage :183; Illustration:11.1From the following trial balance of Evergreen and company prepare trading and profit and loss account and balance sheet.
Trial balance as on December 31,2003
Particulars debit credit RS RSCash in hand 2,400Purchases 2,40,000 Stock as on 1-1-20x1 70,000Debtors 1,00,000 Plant and machinery 1,20,000Furniture 30,000Bills receivable 40,000Rent and taxes 20,000Wages 32,000Salaries 37,600Capital 2,00,000Bills payable 44,000Creditors 48,000Sales 4,00,000
Total 6,92,000 6,92,000
Additional Information:
1. Closing Inventory as on 31st December ,2003,RS 50,0002. Outstanding wages RS 5,0003. Depreciation on Plant and Machinery at 10% and Furniture at 5%
Financial AccountingPage :184; Illustration:11.2;From the following Trial Balance of Sun shine and Company prepare Trading ,Profit ,and Loss Account and Balance sheet. Trial Balance as on 31.12.2004 Particulars Debit Credit RS RS Capital 25,000Loans 5,000Sales 35,000Accounts Payable 4,000 Bills Payable 5,000Purchase Returns 2,000Dividends Payable 3,000Plant and Machinery 13,000Buildings 17,000Receivables 9,650Purchases 18,000Discount Allowed 1,200Wages 7,000Salaries 3,000Travelling Expenses 750 Freight 200Insurance 300Commission Paid 100 Cash on Hand 100Bank 1,600Repairs 500Interest on Loans 600Opening Inventory 6,000
Total 79,000 79,000
Additional Data:
1. Closing Inventory RS 8,0002. Depreciation on Plant and Machinery at 15% and 10% on Buildings3. Provision for doubtful receivables RS 5004. Insurance Prepaid RS505. Outstanding rent RS100
Financial AccountingPage :184; Illustration :11.3;Prepare Trading and Profit and Loss account and Balance sheet from the following data of Premier and Company. Trial Balance as on 31.12.2005
Particulars Debit Credit RS RS
Sales 3,00,000Plant and Machinery 1,20,000 Rent ,Rates and Taxes 20,000Sales ,Return 30,000Freight 4,000Accounts Receivable 70,000 Opening Inventory 1,20,000 Purchases 2,30,000 Discount Paid 5,000Interest on Bank Loan 5,000Salaries 70,000Cash in Hand 5,000Purchase Returns 10,000Bank Loan 1,50,000Capital 1,81,500Accounts payable 40,000Bills payable 26,000Legal charges 500General Expenses 8,000Cash at Bank 20,000
Total 7,07,500 7,07,500
Adjustments:
1. Provision for bad and doubtful receivables @5% on accounts receivables2. Interest on Bank Loan outstanding RS 7,0003. Closing Inventory as on 31.12.2005 RS 1,20,000.
Financial AccountingPage :185 ;Illustration :11.4;The following is the Trial Balance of Raman Traders as on 31st December ,2006.
Trial Balance
Dr Cr
Particulars RS Particulars RS
Cash on hand 1,500 Sales 2,50,000 Cash at bank 3,000 Returns outwards 2,000Purchases 1,10,000 Capital 56,000Returns inwards 1,500 Accounts payable 30,000Wages 20,000Power and Fuel 8,000 Carriage outwards 6,000Carriage inwards 5,000Opening Inventory 6,000Land 10,000 Buildings 80,000 Machinery 30,000Patents 15,000Salaries 12,000Sundry expenses 6,000Insurance 1,000Drawings 8,000Accounts receivable 15,000
Total 3,38,000 3,38,000
You are required to prepare a Trading and Profit and Loss account for the year ended 31.12.2006 and a Balance as at 31.12.2006.Adjustments to be made are given below. 1. Closing Inventory as at 31.12.2006,RS20,000.2. provisions for bad and doubtful receivables at 5% on debtors.3. Outstanding salaries RS5,000 ,outstanding wages RS 3,000.4. Depreciation at 10% on all assets.
Financial AccountingPage :186 ;Illustration :11.5The following is The Trial Balance of Kamal Enterprises for the year ended 31st December ,2006.You are required to prepare a Profit and a Loss account and Balance Sheet after taking into account the adjustments given below.
Trial Balance
Dr. Cr.
Particulars Rs Particulars Rs Cash in hand 500 Sales 1,50,300Cash at bank 1,200 Purchase returns 5,000Office furniture 6,000 Accounts payable 12,000Accounts receivable 15,000 Bills payable 8,000Commissions 1,200 Discount received 1,000Bills receivables 3,500 Dividend received 2,000 Power and Fuel 6,000 Rent received 3,500Plant and Machinery 24,000 Capital 27,000Office expenses 2,000Carriage inwards 1,200Carriage outwards 3,500Rent, Rates and Taxes 1,700Leasehold premises 25,000Wages 30,000Salaries 7,000Opening Inventory 12,000Sales returns 2,000Purchases 60,000Drawings 7,000
2,08,800 2,08,00
Adjustments:
1. Closing Inventory as on 31-12-2006,RS18,000.2. Depreciate Plant and Machinery at 10%.3. Salaries outstanding RS 1,000, Power and Fuel outstanding RS 2,000.4. RS5,000 was spent on Plant and Machinery but wrongly included in wages.5. to provide for bed and doubtful debts for RS 1,500.
6. Discount earned but not received RS100.7. Commission due but not recorded RS200.8. Rent received includes RS500received in advance.
Financial AccountingPage :187; Illustration:11.6;The following is the Trial Balance of Rajan Jewelers as on December 31,2005.
Dr. Cr.
Particulars RS Particulars RSOpening Inventory 72,000 Capital 5,00,000 Purchases 2,25,000 Sales 3,50,000Furniture 15,000 Purchase returns 1,800Motor car 30,000 Murthy 32,000Buildings 4,25,000 Varadan 24,000 Gangappa 12,000 Commission 7,500Gourishankar 20,000Mathews 18,000Advertisements 22,000Repairs and maintenance 13,000General expenses 16,000Insurance 7,000Cash in hand 3,500Cash at bank 6,000Salaries 30,000
9,15,300 9,15,300
Note:To arrive at accounts receivables and accounts payables you have to add necessary ledger accounts.
You are required you draft Profit and Loss accounts and Balance sheet as on 31st December 2005.
1. Closing Inventory as at 31.12.2005,Rs 80,000.2. Interest on capital at 6%.3. Prepaid advertisements RS2,000.4. Goods used for domestic purpose RS 1,800.5. Outstanding salaries RS3,000.6. Depreciation on buildings at 5%,furniture 5%, and Motor car at 10%.
Financial Accounting
TUTORIAL :1 JOURNALISINGQ1. Multiple choices:-A. All those to whom bus owes money are :-
a. Drsb. Investorsc. Creditorsd. Shareholders
B. Which of the following is an example of personal a\ca. Machb. Rentc. Cashd. Creditors
C. Payment recd. from debtorsa. downwards cash balance and upwards debtors balance.b. Upwards cash balance and downwards debtors balance.c. Downwards cash and debtors balance.
D. purchase of goods on credits from A is recorded as a. debit purchases a\c ,credit cash a\c.b. debit A a\c, credit purchases a\cc. debit purchases a\c , credit A a\cd. debit A a\c, credit stock a\c
E. Goods returned from X is entered as :-a. debit sales returned a\c , credit X a\cb. Debit X a\c ,credit purchase returns a\cc. Debit X a\c, credit sales a\cd. Debit sales a\c, credit X a\c
F. The total assets of the firm were RS50,000.Outside liabilities were RS 30,000..capital contributed by the owner is :
a. RS50,000b. RS 30,000c. RS 20,000d. RS 80,000
G. Carriage inwards refers to the cost of a. transportation for the purchases madeb. transportation for salesc. return of unsold goods d. return of extra purchases
H. Rent recd. from B is recorded by:-a. debit rent a\c , credit B a\c
b. debit rent a\c, credit cash a\cc. debit cash a\c , credit rent a\cd. debit B a\c, credit rent a\cI. Bank a\c is a :- a. personal a\cb. real a\c c. nominal a\cJ. The accounting equation is :-a. assets = liabilities +stockholders or Owner’s equityb. liabilities=assets + stockholders or Owner’s equityc. assets +liabilities =assets + stockholders equity
Q2. Journalize the following transaction in the book of X for the month of Jan 98.Jan 98Jan 1:- X commenced bus. with a capital of Rs10,000.Jan 1:-Bought furniture for cash RS 3,000.Jan 2:-bought goods for cash from B RS 500.Jan 3:-sold goods for cash to A RS 1,000.Jan 4:-purchased goods from C on credit RS 2,000.Jan 5:-credit sales to D RS 1,500.Jan 8:-bought mach. for cash RS 3,000.Jan 12:-paid trade expenses RS 50.Jan 18:-paid for advertising to Apple Advertising Ltd. RS 1,000.Jan 19:-cash deposited in bank RS2,000.Jan 20:-recd. interest RS500.Jan 24:-paid insurance premium RS 200.Jan 30:-paid rent RS 500.Jan 31:-paid salary to P RS1,000.Jan 32:-withdrawn RS 200for personal use.
Q3. Name any 8 accounting principles. 4 Explain any 4. 4
Q4. Name the rules of debit and credit for all the types of a\c s. 7
Financial Accounting
TUTORIAL 2
Ledger A\C ,Cash BankQ1. Journalize the following transactions and post them to ledger. 8\1\2001 1.Ram invests RS 10,000 in the business.
10\1\2001 2.He bought goods worth RS 2000 from Sham. 12\1 3.He bought a machine for RS 5000 from Laxman on credit. 14\1 4.He paid Laxman RS 4,500. 18\1 5.he sold goods for cash RS 3,000. 19\1 6.he sold goods to A on credit RS 4000. 25\1 7.he paid Sham RS 2,000. 28\1 8.he received from A RS 3,500.
Q2. The cash transactions of Anand during the first week of Jan are as follows: Jan 1:purchased stationery RS 100. Jan 2:cash sales RS 500. Jan 4:purchased goods for cash RS 400. Jan 5:received from Ram an advance of RS 800. Jan 6:paid for sign board RS300. Jan 7:purchased calculator RS 1000. Jan 8:cash sales RS 300.
Q3. Explain the principle of consistency. Q4. Explain giving an example the difference between the cash methods of accounting and the
Accrual method of accounting.Q5. 1)P&L account is prepared for a period of one year by following :-
a. consistency conceptb. conservation conceptc. time period d. cost concept
2)Recording of capital contributed by the owner as liability insures the adherence of principal of :-a. double entryb. going concernc. separate entityd. materiality3)Op. balance of creditors RS25000 purchases of creditors RS30,000 payment made by creditors RS15,000 closing balance of creditors is
a. RS15000b. RS40,000c. RS70,000 d. Expense4) opening capital RS 80,000 closing capital RS 1,20,000 net profit RS 20,000
the trader has a. brought addl. Capital of RS 20,000.b. Drawings of 20,000c. Drawing of 40,000d. Additional capital of RS40,000
5) Rent recd. is a. incomeb. assetc. liability d. expense
FA AND FSA –WBPage 47 –Problem 9Anand started business with RS 10,000.,of this he paid RS 5,000.into his bank account. His cash transactions during the first week of Jan are as follows.
Jan 1 purchased stationery RS 100.Jan 2 cash sales RS 500.Jan 4 purchased goods for cash RS400.Jan 5 received from Ram an advance RS800. Jan 5 paid for sign board RS300.Jan 6 purchased typewriter RS1,000.Jan 7 cash sales RS300.
Prepare single column cash book.
Financial AccountingPage 50 –problem 23Prepare a Trial Balance as on 31.3.98 from the following data .
Particulars RS Particulars RSPurchases 1,65,625 Trade expenses 2,314 Sales 2,56,650 Rent, rates and taxes 3,517 Sales returns 4,250 Bad debts 525Purchase returns 3,120 Interest on investments 800Stock 1.4.97 26,725 Loan to A 3,000Sundry debtors 40,200 Investments 11,500Wages 20,137 Capital 28,000Salaries 8,575 Outstanding wages 2,017Furniture 6,575 Outstanding rent 750Bad debts reserve 5,200 Prepaid insurance 524Sundry creditors 25,526 Cash in hand and at bank 5,725 Patents 4,500 Bills receivables 17,070Postage 3,226 Drawings 6,000Bills payable 8,950 Depreciation on furniture 675Lighting 350
Financial Accounting
Page 51 –problem 26Comment whether the following Trial Balance is correct , if not, draw a correct Trial Balance. Trial Balance Debit Credit
Particulars RS RS
Commission received 2,500 Capital 40,000Drawings 20,000Stock 4,000Purchases 35,000Sales 60,000Sundry creditors 17,500Bank O.D 20,000Carriage inwards 5,000Discount received 2,500Other income 2,500Sundry debtors 80,000Rent and rates 1,000
1,45,000 1,45,000
Financial AccountingPage 51-problem 28From the following list of Balances prepare a Trial Balance as on 30.6.2000.
Particulars RS Particulars RS
1.opening stock 1,800 13.plant and machinery 7502.wages 1,000 14.loose tools 180 3.sales 12,000 15.lighting 2304.bank loan 440 16.creditors 8005.coal and coke 300 17.capital 4,0006.purchases 7,500 18.miscellaneous receipts 60 7.repairs 200 19.office salaries 2508.carriage 150 20.office furniture 609.income tax 150 21.patents 10010.debtors 2,000 22.goodwill 1,500 11.leasehold premises 600 23.cash at bank 51012.cash in hand 20
Financial AccountingPage 52 –problem 29From the following Ledger Accounts Balances prepare a Trail Balance of Choudhary Brothers as on 31.12.2001.
Particulars RS Particulars RS1.opening stock 15,600 16.insurance 400 2.freehold premises 30,000 17.bad debt reserve 3003.plant and machinery 9,000 18.commission received 3,0004.wages 2,000 19.commission paid 1,0005.sundry debtors 12,000 20.bad debts 300 6.carriage inwards 180 21.office expenses 1,5007.carriage outwards 200 22.salaries 2,0008.factory expenses 1,600 23.travelling expenses 200 9.royalty 200 24.legal expenses 20010.purchase of raw 15,000 25.cash at bank 840 material 26.cash in hand 800 11.factory rent 1,400 27.loan taken 6,00012.capital 16,000 28.office rent 800 13.discount allowed 800 29.sales (net) 66,00014.discount received 72015.sundry creditors 4,000
Financial Accounting Page 52-problem 31Given below is the Trial Balance of Srinivas and company as on 31st December,2001.
Dr. Cr. Particulars RS Particulars RSLand 15,300 Sales 41,460 Purchases 21,200 Return outwards 420Salaries 2,200 Interest 240Rent 600 Accounts payable 4,920Postage 300 Loan 3,000Stationary 240 Capital 12,000Wages 5,200Freight and carriage 560 on purchasesMiscellaneous expenses 500Carriage on sales 800Repairs 900Bad debts 120Opening Inventory 3,100 Buildings 1,700Furniture 1,000Accounts receivables 6,000Cash in hand 1,300Return inwards 1,020
62,040 62,040
In addition ,the following information is also given:-1. A provision at 5% for doubtful debts has to be made.2.The value of inventory on 31st December ,2001 was estimated as RS 2,980.3.Depreciation on buildings was to be charged at 10%. 4. Salaries for the month of December amounting to RS200. is still to be paid.5.Miscellaneous expenses include insurance premium of RS 60 pertaining to 2001.
From the above information , prepare a Trading and Profit and Loss account of Srinivas and company.
