4.

FINAL ACCOUNTS
[Illustration Problems]
1. From the trial balance of Miss Biba Ganguly prepare final accounts as on 31-12-2019
Particulars Dr.[Rs.] Cr.[Rs.]
Capital/ Drawings 3,500 20,000
Machine 25,000
Office furniture 1,300
Stock on 1-1-2019 24,000
Motor vehicle 6,000
Sundry debtors/ Sundry creditors 22,850 26,000
Cash in hand 200
Cash at bank 3,250
Wages 75,000
Salaries 7,000
Purchases/ Sales 1,06,750 2,40,000
Discount 3,250 1,850
Bills receivable/ Bills payable 3,600 2,800
Return inwards/ Return outwards 4,650 2,750
Provision for doubtful debts 1,250
Rent 3,000
Factory lighting 400
Insurance 3,150
General expenses 500
Bad debts 1,250
Total 2,94,650 2,94,650
Adjustments: [1] Stock on 31-12-2019 Rs.26,000
[2] Furniture to be depreciated by 5%
[3] Factory lighting is due for 3 months but not paid Rs.150
[4] Write off further bad debts Rs.350
[5] The provision for doubtful debts to be increased to Rs.1,500 and provision for discount on
debts @ 2 % to be made
[6] During the year machine was purchased for Rs.10,000 but it was debited to purchases
account.
Trading account of Miss Biba Ganguly for the year ended 31-12-2019
Dr. Rs. Cr. Rs.
To Opening stock 24,000 By Sales 2,40,000
Less: Sales return 4,650 2,35,350
To Purchases 1,06,750 By Closing stock 26,000
Less: Return outwards 2,750
1,04,000
Less: Purchase of
Machine 10,000 94,000
To Wages 75,000
To Factory lighting 400
Add: Unpaid 150 550
To Gross Profit 67,800
2,61,350 2,61,350
 Profit & Loss account of Miss Biba Ganguly for the year ended 31-12-2019
Dr. Rs. Cr. Rs.
To Salaries 7,000 By Gross Profit 67,800
To Rent 3,000 By Discount 1,850
To Insurance 3,150
To Depreciation on furniture [1,300x5%] 65
To Discount 3,250
To General expenses 500
To Provision on bad debts:
To Existing bad debts 1,250
Add: New further bad debts written off 350
1,600
Add: New provision on doubtful debts 1,500
3,100
Less: Existing provision on bad debts 1,250 1,850
To New provision for discount on debtors: 420
[22,850-350=22,500-1,500= 21,000 x 2%]
To Net Profit 50,415
69,650 69,650

Balance sheet of Miss Biba Ganguly as on 31-12-2019

Liabilities Rs. Assets Rs.
Capital 20,000 Machine 25,000
Add: Net Profit 50,415 Add: Purchase 10,000 35,000
70,415 Furniture 1,300
Less: Drawings 3,500 66,915 Less: Depreciation 65 1,235
Motor vehicle 6,000
Sundry creditors 26,000 Debtors 22,850
Less: New Bad debts written off 350
22,500
Less: New Provision on debtors 1,500
[20,000x5%] 21,000
Less: New provision for discount
on debtors [21,000 x2%] 420 20,580
Bills payable 2,800 Cash 200
Unpaid Factory lighting 150 Bank 3,250
Bills receivable 3,600
Closing stock 26,000

95,865 95,865
2. Trial balance of Govil & Co. on 31-3-2020. Prepare final accounts.
Particulars Dr. [Rs.] Cr. [Rs.]
Cash in hand 540
Cash at bank 12,630
Purchases/ Sales 1,40,675 2,58,780
Return Inwards/ Return Outwards 2,680 1,500
Wages 20,480
Fuel and Power 4,730
Carriage on sales 3,200
Carriage on purchase 2,040
Stock on 1-4-2019 25,760
Building 30,000
Freehold land 20,000
Machinery 20,000
Patents 7,500
Salaries 15,000
General expenses 13,000
Insurance 600
Drawings 15,245
Capital 82,000
Sundry Debtors/Creditors 14,500 6,300
Total 3,48,580 3,48,580
Adjustments: [1] Stock on hand on 31-3-2020 is Rs.26,800
[2]Machinery is depreciated @ 10% and Patents @ 20%
[3] Salaries for the month of March 2020 Rs.1,500 were unpaid
[4] Insurance includes a premium of Rs.170 on a policy expiring on 30-9-2019
[5] Wages include a sum of Rs.2,000 spent on the erection of a cycle shed for employees
[6] A provision for bad and doubtful debts to be created to the extent of 5% on debtors.

Trading account of Govil & Co. for the year ended 31-03-2020
Dr. Rs. Cr. Rs.
To Opening stock 25,760 By Sales 2,58,780 2,56,100
Less: Return Inwards 2,680
To Purchases 1,40,675 By Closing stock 26,800
Less: Return Outwards 1,500 1,39,175
To Wages 20,480
Less: Erection of cycle shed 2,000 18,480
To Fuel & Power 4,730
To Carriage on purchase 2,040
To Gross Profit 92,715
2,82,900 2,82,900
 Profit & Loss account of Govil & Co. for the year ended 31-03-2020
Dr. Rs. Cr. Rs.
To Salaries 15,000 By Gross Profit 92,715
Add: Unpaid 1,500 16,500
To Carriage on sales 3,200
To Insurance 600
Less: Prepaid 85
[Rs. 170x6/12 Oct 19 to Mar 20 = 6 months] 515
To Depreciation on machine [20,000x10%] 2,000
To Depreciation on patents [7,500x20%] 1,500
To New Provision on bad and doubtful 725
debts [14,500x5%]
To General expenses 13,000
To Net Profit 55,275
92,715 92,715

Balance sheet of Govil & Co. as on 31-03-2020

Liabilities Rs. Assets Rs.
Capital 82,000 Building 30,000
Add: Net Profit 55,275 Add: Erection of cycle shed 2,000 32,000
1,37,275 Freehold land 20,000
Less: Drawings 15,245 1,22,030 Machine 20,000 18,000
Less: Depreciation 2,000
Patents 7,500 6,000
Less: Depreciation 1,500
Cash in hand 540
Cash at bank 12,630
Sundry Debtors 14,500
Less: New Provision on bad & 13,775
doubtful debts 725
Sundry Creditors 6,300 Closing stock 26,800
Unpaid Salary 1,500 Prepaid Insurance 85
1,29,830 1,29,830
3. From the following ledger balances of PPG & Co. Prepare Trading, Profit & Loss account
and Balance sheet [Permanency order] for the year ended on 31-12-2019
Particulars Rs. Particulars Rs.
Drawings 9,000 Capital 26,000
Discount on purchase 2,000 Bills receivable 3,000
Cash 1,000 Creditors 11,680
Machinery 10,000 Purchase returns 750
Opening stock 50,000 Sales 1,30,000
Purchases 60,000 Debtors 12,000
Salaries 2,800 Interest on bank loan 200
Carriage on purchase 2,500 Building 2,500
Rent 3,500 Bills payable 2,500
Wages 14,000 Bank loan 2,000
Reserve for bad debts 2,500
Adjustments: [1] Rent @Rs.100 per month is not paid for 2 months.
[2] Wages and salaries are unpaid of Rs.750 and Rs.225.
[3] Depreciate machinery @10%.
[4] Closing stock Rs.17,500
[5] Write off Rs.1,500 as bad debts and maintain a reserve of 5% on debtors.

Trial balance of PPG & Co. as on 31-12-2019. Prepare final accounts.

Particulars Dr. [Rs.] Cr. [Rs.]
Cash in hand 1,000
Interest on bank loan 200
Bank loan 2,000
Purchases/ Sales 60,000 1,30,000
Return Outwards 750
Wages 14,000
Reserve for bad debts 2,500
Rent 3,500
Carriage on purchase 2,500
Discount on purchase 2,000
Stock on 1-4-2019 50,000
Building 2,500
Machinery 10,000
Salaries 2,800
Drawings/Capital 9,000 26,000
Bills receivable/ Bills payable 3,000 2,500
Sundry Debtors/Creditors 12,000 11,680
Differences in Trial balance 6,930
Total 1,77,430 1,77,430
 Trading account of PPG & Co. for the year ended 31-12-2019
Dr. Rs. Cr. Rs.
To Opening stock 50,000 By Sales 1,30,000
To Purchases 60,000 By Closing stock 17,500
Less: Return Outwards 750 59,250
To Wages 14,000
Add: Unpaid 750 14,750
To Carriage on purchase 2,500
To Gross Profit 21,000
1,47,500 1,47,500

Profit & Loss account of PPG & Co. for the year ended 31-12-2019
Dr. Rs. Cr. Rs.
To Salaries 2,800 By Gross Profit 21,000
Add: Unpaid 225 3,025
To Rent 3,500 Discount on purchase 2,000
Add: Unpaid [Rs.100x2Months] 200 3,700
To Interest on bank loan 200
To Depreciation on machine [10,000x10%] 1,000
To Provision on bad debts:
To Existing bad debts xxx
Add: New further bad debts written off 1,500
1,500
Add: New Reserve on Debtors 525
[12,000-1,500=10,500x5%] 2,025
Less: Existing provision on bad debts 2,500 [475]
To Net Profit 15,550
23,000 23,000

Balance sheet of PPG & Co. as on 31-12-2019 [Permanency order]

Liabilities Rs. Assets Rs.
Capital 26,000 32,550 Machine 10,000 9,000
Add: Net Profit 15,550 Less: Depreciation 1,000
41,550
Less: Drawings 9,000
Bank loan 2,000 Building 2,500
Bills payable 2,500 Cash in hand 1,000
Sundry Creditors 11,680 Bills receivable 3,000
Unpaid Rent 200 Debtors 12,000
Less: New Bad debts written off 1,500
10,500
Less: New Reserve on debtors 525 9,975
[12,000-1,500=10,500x5%]
Unpaid Wages 750 Closing stock 17,500
Unpaid Salaries 225 Differences in Trial balance 6,930
49,905 49,905
4. From the trial balance of Rajkumar Prepare Trading, Profit & Loss account and Balance
sheet [Liquidity order] as on 31-03-2019
Particulars Dr.[Rs.] Cr.[Rs.]
Capital/ Drawings 10,000 60,000
Building 40,000
Furniture 5,200
Opening stock 44,000
Tax & Insurance 4,000
Sundry debtors/ Sundry creditors 36,000 27,600
Bank overdraft 8,400
Commission 4,400
Salaries 18,000
Purchases/ Sales 2,20,000 3,00,000
Sales returns 4,000
Rent 2,000
General expenses 8,000
Carriage on purchase 3,600
Discount 3,200 4,000
Bad debts 1,600
Total 4,02,000 4,02,000
Adjustments:
[1] The closing stock was valued at Rs.40,120 but there has been a loss of stock by fire during
the period to the extent of Rs.10,000 not covered by insurance.
[2] Depreciation on building Rs.2,000 and on furniture Rs.500.
[3] A provision for doubtful debts @5% on debtors.
[4] Unexpired insurance Rs.400
[5] Interest on capital @5% p.a.

Trading account of Rajkumar for the year ended 31-03-2019

Dr. [Rs.] Cr. [Rs.]
To Opening stock 44,000 By Sales 3,00,000
Less: Sales return 4,000 2,96,000
To Purchases 2,20,000 By stock destroyed by fire 10,000
To Carriage on purchases 3,600 By Closing stock 40,120
To Gross profit 78,520
3,46,120 3,46,120
Profit & Loss account of Rajkumar for the year ended 31-03-2019
Dr. [Rs.] Cr. [Rs.]
To Salaries 18,000 By Gross profit 78,520
To Tax & Insurance 4,000 By Rent 2,000
Less: Unexpired Insurance 400 3,600
To Commission 4,400 By Discount 4,000
To Discount 3,200
To Depreciation on building 2,000
To Depreciation on furniture 500
To Bad debts 1,600
Add: New Provision on Debtors [36,000x5%] 1,800 3,400
To Interest on capital [60,000x5%] 3,000
To Loss of stock destroyed by fire 10,000
To General expenses 8,000
To Net profit 28,420
84,520 84,520

Balance sheet of Rajkumar as on 31-03-2019 [Liquidity order]

Liabilities Rs. Assets Rs.
Sundry creditors 27,600 Unexpired insurance 400
Bank overdraft 8,400 Closing stock 40,120
Capital 60,000 Sundry debtors 36,000
Add: Net profit 28,420 Less: New provision on debtors 1,800 34,200
88,420
Less: Drawings 10,000
78,420
Add: Interest on capital 3,000 81,420
Furniture 5,200 4,700
Less: Depreciation 500
Building 40,000
Less: Depreciation 2,000 38,000
1,17,420 1,17,420
5. From the following Trial balance of KRR prepare Final accounts as on 31-03-2020
Particulars Dr. [Rs.] Cr. [Rs.]
Drawings/ Capital 45,000 1,60,000
Goodwill 80,000
Land and Buildings 60,000
Sundry debtors /Creditors 45,000 70,000
Plant and Machine 40,000
Loose tools 3,000
Bills receivables/ Bills payable 3,000 33,800
Stock 1-4-2019 40,000
Purchases/Purchases return 2,51,000 2,650
Wages 20,000
Carriage outward 500
Carriage inward 1,000
Coal 5,800
Salaries 35,000
Rent rates and taxes 2,800
Discount 1,500
Cash at bank 25,000
Cash in hand 400
Repairs 1,800
Printing and stationery 500
Bad debts 1,200
Advertisements 3,500
Sales/Sales return 2,000 4,18,000
Furniture 11,200
General expenses 5,250
Total 6,84,450 6,84,450
Adjustments: [a] Closing stock Rs.35,000 [b] Depreciate Machine, Tools and Furniture
@10% and Land & Building @ 5% [c] Advertisement prepaid Rs.500 [d] Rs.1,500 wages were
outstanding [e] Provide 5% on debtors against bad debts and 2% against discount.

Trading account of KRR for the year ended 31-03-2020

Dr. Rs. Cr. Rs.
To Opening stock 40,000 By Sales 4,18,000 4,16,000
Less: Sales Return 2,000
To Purchases 2,51,000 By Closing stock 35,000
Less: Purchase Return 2,650 2,48,350
To Wages 20,000
Add: Outstanding 1,500 21,500
To Carriage inward 1,000
To Coal 5,800
To Gross Profit 1,34,350
4,51,000 4,51,000
 Profit & Loss account of KRR for the year ended 31-03-2020
Dr. Rs. Cr. Rs.
To Salaries 35,000 By Gross Profit 1,34,350
To Rent rates and taxes 2,800
To Carriage outward 500
To Repairs 1,800
To Printing & Stationery 500
To Advertisement 3,500 3,000
Less: Prepaid 500
To General expenses 5,250
To Depreciation on machine [40,000x10%] 4,000
To Depreciation on L. Tools [3,000x10%] 300
To Depreciation on furniture [11,200x10%] 1,120
To Depreciation on Land & 3,000
Buildings[60,000x5%]
To Provision on bad debts:
To Existing bad debts 1,200
Add: New Bad debts written off xxx
600
Add: New Provision on debtors 2,250
[45,000 x 5%] 3,450
Less: Existing provision on bad debts xxx 3,450
To Discount 1,500
Add: To New Reserve for
discount on debtors:
[45,000 x 5% = 2,250 - 45,000
= 42,750 x 2%] 855 2,355
To Net Profit 71,275
1,34,350 1,34,350
 Balance sheet of KRR as on 31-03-2020
Liabilities Rs. Assets Rs.
Goodwill 80,000
Capital 1,60,000 Machine 40,000
Add: Net Profit 71,275 Less: Depreciation 4,000 36,000
2,31,275 Loose Tools 3,000
Less: Drawings 45,000 1,86,275 Less: Depreciation 300 2,700
Furniture
11,200 10,080
Less: Depreciation 1,120
Land & Buildings
60,000 57,000
Less: Depreciation 3,000
Cash in hand 400
Cash at Bank 25,000
Creditors 70,000 Bills receivables 3,000
Bills payable 33,800 Debtors 45,000
Less: New Bad debts written off xxx
45,000
Less: New Provision on debtors 2,250
[45,000x5%] 42,750
Less: New Reserve for discount
on debtors
[45,000-2,250=42,750x2%] 855 41,895
Outstanding wages 1,500 Closing stock 35,000
Prepaid Advertisement 500
2,91,575 2,91,575