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Final Accounts (Non-Corporate) Problems and

Solutions
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Problems # 1:
From the following particulars taken out from the books of Abdul Hanan & Co. You are required to prepare Trading
st
and Profit & Loss Account and Balance Sheet as at December 31 , 2019.

Adjustments:

(a) Closing stock Rs, 35,000.

(b) Provision for doubtful debts at 5% of sundry debtors.

(c) Depreciation furniture and machinery by 10%.

(d) Commission of Rs. 3,600 has been earned but not received till the closing of accounts.

Solution:
-20% -20% -20% -20% -20% -20%

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 >>> For more detail see Final Accounts

Problems # 2:
From the following trial balance of Faris Ali Qureshi & Bros. and additional information, prepare Trading and Profit
th
& Loss account and Balance sheet for the year ended June 30 , 2019.

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Additional Information
1. Depreciation furniture by 10% by written down method (WDM).
2. A provision for doubtful debts is to be created to the extent of 5% on sundry debtors.
3. Salaries for the month of June, 2019 amounting to Rs. 3,000 were unpaid which must be provided for. However,
salaries included Rs. 2,000 paid in advance. Office expenses outstanding Rs. 8,000.
4. Insurance amounting to Rs. 2,000 is prepaid.
5. Stock use for private purpose Rs. 6,000 and closing stock Rs. 60,000.

Solution:

-20% -20% -20% -20% -20% -20%

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2
 >>> Practice Final Accounts MCQs

Problems # 3:
th
The following Trial Balance of Amna Mushtaq Ahmed & Brothers on June 30 , 2020, Prepare Profit and Loss

Account and Balance Sheet.

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Adjustments:
Stock at the end of year Rs. 5,200 and Three months Excise duties is due, but not paid Rs. 30.
5 percent depreciation to be written-off on furniture and write-off further bad debts Rs. 70.
The provision for bad debts to be Rs. 300 and provision for discount on debtor @ 2 % to be made.
During the year machinery was purchased for Rs. 2,000, but was debited to Purchase account.

Solution:

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2
 >>> Try Final Account Quiz 1

Problems # 4:
st
The following are the balances taken from the books of Muhammad Zain Ammar Safdar & Co. on May 31 , 2020.

You are required to prepare Trading and Profit and Profit and Loss Account / Income Statement for the year ended
st
May 31 , 2020 and Balance Sheet as on that date.

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Adjustments:
1. Depreciation furniture and machinery at 10% p.a.
2. Insurance is paid in advance to the extent of Rs. 200.
3. Reserve for discount is no longer required and is to be written back.
4. Closing stock is valued at Rs. 100,000.
5. Interest on bank loan is outstanding.

Solution:

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2
 >>> Practice for more understanding Final Account Quiz 2

Problems # 5:
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The following Trial Balance of Hashim & Ibrahim Enterprises as on December 31 , 2019, Prepare Financial

Statement in horizontal style.

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Hashim and Ibrahim share profit and loss equally, other information is given below:

st
Stock at the December 31 , 2019 was Raw material Rs. 4,000 and Finished goods Rs. 12,000.
Outstanding expenses: Salaries Rs. 1,500; Carriage Rs. 2,100.
Insurance paid for 15 months upto March 2020.
Write-off Bad debts of Rs. 400 and Provision for bad debts @ 5 % of debtors.
Goods withdrawn by Hashim for personal use Rs. 2,000.

Solution:

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Swadhin Bhuyan on May 5, 2022 at 10:38 am

Nice

Reply

Johnsonmeshiya S on November 12, 2021 at 9:18 am

100% Useful THANK YOU SO MUCH.

Reply

Krishnamoorthi on July 29, 2021 at 10:28 am

Provision for bad debts should be in Debit in P&L but sum 5 answer showin credit side
please can you explain why

Reply

Krishnamoorthi on July 29, 2021 at 10:40 am

Debit bad debt provision expense P+L

Credit bad debit provision B/S

Reply 2

Varsh on July 16, 2021 at 5:22 pm

Wages include 1000rs and paid for installation of machinery it’s journal entry??
 Reply

FINNERZ on September 1, 2021 at 3:21 pm

Greetings from FINNERZ Coaching Center for Commerce !!

Kindly note that if the wages are paid for the installation for machinery, then it will be included
in the cost of the machine. All expenses related to acquiring and installation of a fixed asset will
be included in the cost of the fixed asset. Journal entry is : Debit Machinery A/c and Credit
cash/bank A/c

Reply

Anupreethi.M on April 1, 2021 at 8:16 am

Really it’s worthful for the learners to have a self-assessment on understanding these final accounts.

In problem 5 – I could not understand the nature of the transaction & its effects regarding the “Reserve
for discount is no longer required and is to be written back.”

Can you explain in detail?

Reply

Alishba on February 12, 2021 at 4:18 pm

THIS SITE IS VERY HELPFUL!

Reply

Alishba on February 12, 2021 at 4:17 pm

Great site!

Reply

kimeng on February 10, 2021 at 10:17 am

Why do you assume wages is part of goods sold and not expenses to be deducted from gross profit?
because im sure they didn’t specify warehouse wages

Reply

gvp on January 17, 2021 at 1:54 pm

1st problem, prepaid insurance is not mentioned any where, but mentioned in solution.
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Reply

Zaheer Swati on January 20, 2021 at 2:01 pm

 See where Insurance account reported in question along with adjustment in brackets.

Reply

Ajay singh bhandari on February 23, 2021 at 2:54 pm

But the date is given sir….

Reply

Iorgyer Sebastine Terzungwe on June 28, 2021 at 12:25 am

The site is equipped and a great sources for academic knowledge enrichment. Scholarly work
can also be tapped here.

Reply

Anaup on September 1, 2021 at 12:15 pm

Prepaid insurance is 600 not 1800 in 1st problem

I e., 2400/12 = 200 * 3months prepaid = 600
1800 is not prepaid

Reply

sangeetha on April 29, 2022 at 7:19 am

In that first question prepaid insurance is not mentioned any where but it mentioned in
solution???

Reply

Aadhi on November 13, 2020 at 1:29 pm

Great site dude! Ive been looking for something like this.

Reply

tejas on November 8, 2020 at 6:20 am

the sums were useful

Reply

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