UNIT 1- Practical Problems on Final Accounts
1. Prepare the Trial Balance and the financial Statements for the year ending 31.3.2016
from the following details.
Sl. no Particulars of Accounts Rs
1 Drawings Dr 15000
2 Capital Cr 50000
3 Purchases Dr 40000
4 Sales Cr 70000
5 Returns Inwards (sales returned) Dr 2000
6 Returns Outwards (purchase returned) Cr 3000
7 Wages Dr, direct expense 4000
8 Salaries Dr, indirect expense 8000
9 Debtors Dr (assets) 12000
10 Creditors Cr (liabilities) 10000
11 Bills Receivable Dr (asset) 5000
12 Bills Payable Cr (liability) 4000
13 Furniture Dr 15000
14 Opening Stock Dr 13000
15 General Expenses Dr (indirect expenses) 3000
16 Insurance premium- expense, policy- asset; 1000
Dr
17 Cash Dr 19000
Adjustments: (after TB is made, Adjustments added to TB) – final accounts mei ek baar
record- trading/profit,loss/balance sheet. Dual entry karo.
a. Closing stock is Rs.20000
b. Insurance prepaid Rs.200 minus because it isn’t for this month/period.
c. Provide for doubtful debts @ 5% - not sure if we’ll receive/not- loss. 5% of debters.
d. Depreciation on furniture by 10% p.a.
From the TB, we include income and expenses : first direct, then indirect. Items will
not be repeated. Credit side only has 2 aspects in P&L – Sales and Closing stock.
Trading account and Profit&Loss account consists of only incomes and expenses;
Balance sheet consists of only Assets and Liabilities
2. Prepare the financial Statements for the year ending 31.3.2016 from the following
details.
Sl. no Particulars of Accounts Debit Rs Credit Rs
1 Drawings and Capital (Dr-Dr; Cap-Cr) L 6000 150000
2 Cash at Bank A 14000
3 Bills Receivable A 2000
4 Land And Building A 43000
5 Furniture A 5000
6 Discount Allowed and Received Allowed- 4000 3000
expense Dr; receive- income Cr) indirect-
P&L acc
7 Bank charges indirect expense 500
8 Salaries expense - indirect 6500
9 Purchases and Sales pur- debit; sales- 200000 282000
credit (Trading acc)
10 Stock( opening) once only in trading acc 60000
(beginning)
11 Sales and Purchase Returns (sales:in-Dr; 2000 1000
purchase: out-Cr as it is deduction;-ve)
12 Provision for Bad Debts (some bad debt 4000
got recovered- outstanding income-
previous years debt that might be received
this year)
13 Carriage direct expense (we assume 5000
carriage inwards)
14 Rent and Taxes indirect expense P&L 7500
15 General Expenses indirect expense 3500
16 Plant and Machinery balance sheet asset 31000
17 Book debts and Creditors (BD-debters) 82000 20000
current asset/ current liab
18 Loans liability 15000
19 Bad Debts not reovered – P&L ac 1000
20 Insurance premium - expense 2000
475000 475000
Adjustments
a. Closing Stock Rs.20000. ending of CR (2nd time in Bal sheet as current asset)
b. Create a provision for bad and doubtful debts @10% on book debts. 10% of 82000,
remove old bad debts, only retain new ones.
c. Insurance prepaid Rs.500. subtract it from insurance 2000-500 (prepaid expense is an
asset) (500 in Bal sheet)
d. Rent outstanding Rs.1500. 9000 in P&L a/c; 1500 in Balance sheet.
e. Interest on loan is due @ 6%p.a. liability- attracting interest. Interest is thus expense,
will go on debit side.
Book balance – last year’s balance
Bad debts – not going to pay.
Reserve for bad debts – may or may not pay. Therefore, its not a loss; it’s a probable loss
3. From the following trial balance of Ravi Kumar as on 31.12.2016 prepare the
financial statements.
Sl. no Particulars of Accounts Debit Rs Credit Rs
1 Drawings and capital Dr- DR/ Ca-CR 15000 120000
2 Bills Receivable A 22000
3 Machinery A- DR 20000
4 Debtors and Creditors D – Dr C- Cr 60000 58000
5 Wages Trading ac 39000
6 Purchases and Sales P- Dr/ S- Cr 252000 355000
7 Commission P/L 5500
8 Rent and Taxes Indirect expense 6000
9 Stock P&L 90000
10 Salaries P&L 10500
11 Travelling Expenses P&L 2000
12 Insurance P&L 600
13 Repairs indirect P&L 3400
14 Bad Debts indirect expense 3500
15 Furniture asset balance sheet 9000
16 Returns sales return, purchase return 5000 2000
17 Cash in Hand 500
18 Cash at Bank 2000
540500 540500
Purchase – debit
Purchase return – credit
Therefore, opposite entry.
Same goes for sales
Adjustments all adjustments to be shown at 2 places.
a. Closing Stock Rs.100000 balance sheet
b. Create provision for bad debts on debtors @ 5% No old reserve, so 5% of 600000.
Therefore, reserve 3000. (P&L ac, and balance sheet)
c. Prepaid insurance Rs.100 Dr in P&L, Cr in Bal sheet
d. Commission earned but not received Rs.500 Outstanding income – Cr in P&L, and
Bal sheet.
e. Wages and Salaries are unpaid to the extent of Rs.1000 and Rs.1500 respectively.
Outstanding expenses : additional charges respectively.
f. Depreciation on machinery by 5% and furniture by 10% p.a. indirect loss in P&L ac;
Bal sheet- deduct.
3 things for debters:
1. Bad debts – may not pay.
2. Provision for bad debts (prov. For additional amt. of loss). Provision – for persons
paying nxt year.
3. Provision for discount for debters
4. From the following balances of M/s Apeksha Traders, prepare the necessary final
accounts.
Debit Balances Rs Credit Balances Rs
Plant and Machinery 130000 Sales 300000
Debtors 50000 Returns Outwards 2500
Interest 2000 Creditors 250000
Wages 1200 Bills Payable 70000
Salary 2500 Provision for Bad Debts 1600
Carriage Inwards 500 Capital 220000
Carriage Outwards 700 Rent Received 10400
Returns Inwards 2000 Commission Received 16000
Factory Rent 1500
Office Rent 2300
Insurance 800
Furniture 22000
Buildings 280000
Bills Receivable 3000
Cash 22500
Bank 35000
Commission 1000
Opening Stock 60000
Purchases 250000
Bad Debts 3500
870500 870500
Adjustments
a. Write off further bad debts for Rs.2000 and create a provision for bad debts @ 5%
b. Rent received in advance Rs.6000
c. Prepaid Insurance Rs.2000
d. Depreciation on furniture @ 5%. Plant and Machinery @ 6%
e. Closing Stock Rs.70000
5. The following information has been taken from the trial balance of Ms Ahishek
Brothers; you are required to prepare the trading and profit and loss account and
balance sheet as on March 31st 2015.
Sl.no Particulars Debit Rs. Credit Rs.
1 Cash 20000
2 Wages 45000
3 Returns inwards & outwards 4800 300
4 Bad Debts 4600
5 Salaries 16000
6 Octroi 1000
7 Charity 500
8 Machinery 32000
9 Debtors & Creditors 60000 50000
10 Stock 81000
11 Purchases & Sales 260000 361000
12 12% Loan (1.7.2014) 40000
13 Capital 85000
14 Repairs 3300
15 Interest on loan 1200
16 Sales Tax 1600
17 Insurance 2000
18 Rent 4000
19 Discount received 700
537000 537000
Adjustments
a. Wages prepaid Rs.4000
b. Provide 5% depreciation on machinery
c. Salaries unpaid Rs.1600
d. Closing Stock Rs. 82000
e. Create a provision @ 5% on debtors
f. Create a provision @ 2% for discount on creditors
6. From the following trial balance of Mr. Chatan Kumar Prepare final accounts.
Sl.no Particulars Debit Rs. Credit Rs.
1 Capital 60000
2 Purchases and Sales 35000 74000
3 Drawings 4000
4 Returns 2000 1500
5 Carriage Inwards 500
6 Rent 1800
7 Debtors and Creditors 20000 15000
8 Land and Buildings 20000
9 Opening Stock (1.4.2015) 9000
10 Wages 5000
11 Discount 500
12 Commission 200 300
13 Printing and Stationery 300
14 Salary 2500
15 Loan 4000
16 Plant and Machinery 30000
17 Furniture 10000
18 Bad debts 1000
19 Bills Receivable and Payable 10000 6000
20 Provision for Bad Debts 500
21 Cash in hand 3500
22 Cash at Bank 6700
Interest 700
162000 162000
Adjustments
a. Stock on 31.3.2016 Rs.15000
b. Prepaid rent Rs.300
c. Salary outstanding Rs.500
d. Depreciate plant and machinery at 10% and furniture at 5% p.a.
e. Provide for doubtful debts on debtors at 5%
7. From the following trial balance of Sumathi prepare the Financial Statements as on
31st March 2016.
Sl.no Particulars Debit Rs. Credit Rs.
1 Sumathi’s Capital 58000
2 Sumathi’s Drawings 1520
3 Purchases and Sales 17800 30000
4 Returns 560 900
5 Stock( 1.4.15) 2400
6 Wages 1600
7 Land and Buildings 44000
8 Manufacturing expenses 4000
9 General expenses 400
10 Advertisement 480
11 Interest 700
12 Taxes and Insurance 260
13 Debtors and Creditors 13000 2400
14 Bills Receivable and Payable 3000 1400
15 Cash at Bank 2400
16 Cash in Hand 380
17 Salaries 1600
93400 93400
Adjustments
a. Stock on March 31st 2016 Rs.3000
b. Insurance was prepaid to the extent of Rs.80
c. Outstanding Liabilities were Salaries Rs.400 and Taxes Rs.260
d. Appreciate Land and Buildings by 2% p.a.
______________________________________________
