Exercises - Trial Balance and Final Accounts - Practice

Financial Accounting. Page :159; Illustration:9.4; Prepare the correct Trial Balance. Particulars Capital Drawings Opening Inventory Purchases Sales Salaries and Wages Lighting And Heating Equipments Freights Outwards Sales Returns Purchases Return Postage and Telephones Discount Allowed Discount Received Insurance Motor Vehicles Cash In hand Amount Receivable Accounts Payable Bank Overdrafts

Debit RS.

Credit RS. 8,950

1,050 3,725 23,100 34,425 6,205 310 3,600 230 105 290 350 285 315 1,115 1,474 110 18,920 4,925 975 55,230

55,230

Financial Accounting Page :168; Illustration :9.11; Give the necessary adjusting entries for the following items as on 31ST March ,2000.

A. Closing stock as on 31ST March ,2000 –10,000 B. Salary due not paid – Rs1,000 C. Unexpired insurance on 31ST March,2000 –RS 2,000 D. Rent received in advance –RS 3,000 E. Interest due not received –RS6,00 F. Depreciation on fixed assets @ 33 1\3 % G. Bad debts to be written off Rs 5,000 H. 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% IMFORMATION AS PER TRIAL BALANCE: Fixed Assets RS 60,000; Creditors RS 1,00,000; Drawings RS 10,000

Debtors RS 2,05,000; Capital RS 5,00,000;

Financial Accounting Page :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 Capital Inventory (on Jan 1,2001) Accounts Receivable Accounts Payable Sales Purchases Sales Returns Purchases Returns Discount Received Bills Payable Rent Payable Insurance Drawings Land and Buildings Freehold Property Plant and Machinery Petty Expenses Cash at Bank Furniture Freight Wages Salaries Advertising Postage and Telephones General Expenses Total

Dr RS.

Cr RS. 2,50,000

60,000 1,00,000 70,000 6,00,000 3,70,000 20,000 10,000 10,000 40,000 10,000 10,000 20,000 1,50,000 50,000 50,000 6,000 20,000 30,000 20,000 15,000 15,000 10,000 10,000 34,000 9,90,000

9,90,000

Adjustments : 1. Inventory was valued on 31ST December ,19X1 AT RS 95,000 2. 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 Accounting Page :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 Cash Cash At Bank Purchases Return Inwards Wages Fuel and Power Carriage On Sales Carriage On purchases Inventory (1ST July,1991 ) Buildings Freehold land Machinery Patents Salaries General Expenses Insurance Drawings Accounts Receivable

RS 540 2,630 40,675 680 8,480 4,730

Sales Accounts Returns Outwards Capital Accounts Payable Rent

Cr RS 98,780 500 62,000 6,300 9,000

3,200 2,040 5,760 32,000 10,000 20,000 75,000 15,000 3,000 600 5,245 14,500 1,76,580

1,76,580

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 6,800 2. 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 ,2001 5. Bad debts to be written of are RS 725

6.

Rent receivableRS1,000.

Financial Accounting Page :176; Illustration:10.6 From 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 ,2002 Dr Opening Stock Purchases Sales Return Carriage Inwards Carriage Outwards Wages Salaries Rent Freight Fire Insurance Premium Bad Debts Discount Printing and Stationary Rates and Taxes Travelling Expenses Sundry Trade Expenses Business Premises Furniture and Fixtures Bills Receivable Sundry Debtors Packing Expenses Loan given to Smith Investments Cash in hand

RS 8,000 20,000 1,500 1,200 2,500 3,300 5,500 1,100 2,400 900 2,100 500 250 350 150 200 55,000 2,500 3,000 20,000 4,500 5,000 3,500 250

Capital a\c on 1-1-92 Sales Purchase Return Apprenticeship Premium Bills Payable Sundry Creditors

Cr RS 50,000 80,000 400 1,500 2,500 15,800

Cash at bank Proprietor’s Withdrawals

3,500 3,000 1,50,200

1,50,200

Adjustments to be made for the current period are:

1. Inventory in hand 31ST December,2002,RS 7,000 2. 3. 4.

5. 6. 7. 8.

9. 10. 11. 12. 13. 14.

Wages to laborers of RS 300 for the last month are outstanding. Salaries to the clerk of the month of December ,2002 are outstanding RS 500. Rent for the godown for the last month is outstanding RS100 Fire insurance premium includes RS 600 paid on 17TH July ,2002 to run for one year from 1st July ,2002 TO 30TH June 2003 Apprentice premiums are for three years paid in advance on 1ST Janaury,2002 A stationary for RS 30 remains unpaid and unrecorded. Depreciate business premises by 5% ,Furnitures and Fixtures by 10%and packing Machinery by 10% Interest on Smith’s loan has accrued as on 31ST December ,2002 Interest on investments RS 75 has accrued as on 31ST December ,2002 Interest on capital to be allowed at 5% for the year. Interest on drawings to be charged to him as ascertained for the year RS 80. Create a provision on debtors for doubtful debts 5% and discount at 3%. Create a reserve on creditors for discount at 3%.

Financial Accounting Page :183; Illustration:11.1 From 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 Cash in hand Purchases Stock as on 1-1-20x1 Debtors Plant and machinery Furniture Bills receivable Rent and taxes Wages Salaries Capital Bills payable Creditors Sales Total

debit RS 2,400 2,40,000 70,000 1,00,000 1,20,000 30,000 40,000 20,000 32,000 37,600

2,00,000 44,000 48,000 4,00,000 6,92,000

Additional Information:

1. Closing Inventory as on 31st December ,2003,RS 50,000 2. 3.

credit RS

Outstanding wages RS 5,000 Depreciation on Plant and Machinery at 10% and Furniture at 5%

6,92,000

Financial Accounting Page :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 RS

Capital Loans Sales Accounts Payable Bills Payable Purchase Returns Dividends Payable Plant and Machinery Buildings Receivables Purchases Discount Allowed Wages Salaries Travelling Expenses Freight Insurance Commission Paid Cash on Hand Bank Repairs Interest on Loans Opening Inventory

13,000 17,000 9,650 18,000 1,200 7,000 3,000 750 200 300 100 100 1,600 500 600 6,000

Total

79,000

Additional Data: 1. 2. 3. 4. 5.

Closing Inventory RS 8,000 Depreciation on Plant and Machinery at 15% and 10% on Buildings Provision for doubtful receivables RS 500 Insurance Prepaid RS50 Outstanding rent RS100

Credit RS 25,000 5,000 35,000 4,000 5,000 2,000 3,000

79,000

Financial Accounting Page :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 Sales Plant and Machinery Rent ,Rates and Taxes Sales ,Return Freight Accounts Receivable Opening Inventory Purchases Discount Paid Interest on Bank Loan Salaries Cash in Hand Purchase Returns Bank Loan Capital Accounts payable Bills payable Legal charges General Expenses Cash at Bank Total

Debit RS

3,00,000 1,20,000 20,000 30,000 4,000 70,000 1,20,000 2,30,000 5,000 5,000 70,000 5,000 10,000 1,50,000 1,81,500 40,000 26,000 500 8,000 20,000 7,07,500

Adjustments: 1. 2. 3.

Credit RS

Provision for bad and doubtful receivables @5% on accounts receivables Interest on Bank Loan outstanding RS 7,000 Closing Inventory as on 31.12.2005 RS 1,20,000.

7,07,500

Financial Accounting Page :185 ;Illustration :11.4; The following is the Trial Balance of Raman Traders as on 31st December ,2006.

Trial Balance Dr

Cr

Particulars Cash on hand Cash at bank Purchases Returns inwards Wages Power and Fuel Carriage outwards Carriage inwards Opening Inventory Land Buildings Machinery Patents Salaries Sundry expenses Insurance Drawings Accounts receivable Total

RS 1,500 3,000 1,10,000 1,500 20,000 8,000 6,000 5,000 6,000 10,000 80,000 30,000 15,000 12,000 6,000 1,000 8,000 15,000

Particulars Sales Returns outwards Capital Accounts payable

3,38,000

RS 2,50,000 2,000 56,000 30,000

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. 2. 3. 4.

Closing Inventory as at 31.12.2006,RS20,000. provisions for bad and doubtful receivables at 5% on debtors. Outstanding salaries RS5,000 ,outstanding wages RS 3,000. Depreciation at 10% on all assets.

Financial Accounting Page :186 ;Illustration :11.5 The 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 Cash in hand Cash at bank Office furniture Accounts receivable Commissions Bills receivables Power and Fuel Plant and Machinery Office expenses Carriage inwards Carriage outwards Rent, Rates and Taxes Leasehold premises Wages Salaries Opening Inventory Sales returns Purchases Drawings

Rs 500 1,200 6,000 15,000 1,200 3,500 6,000 24,000 2,000 1,200 3,500 1,700 25,000 30,000 7,000 12,000 2,000 60,000 7,000

Particulars Sales Purchase returns Accounts payable Bills payable Discount received Dividend received Rent received Capital

2,08,800

Adjustments: 1. 2. 3.

Closing Inventory as on 31-12-2006,RS18,000. Depreciate Plant and Machinery at 10%. Salaries outstanding RS 1,000, Power and Fuel outstanding RS 2,000.

Rs 1,50,300 5,000 12,000 8,000 1,000 2,000 3,500 27,000

2,08,00

4. 5. 6. 7. 8.

RS5,000 was spent on Plant and Machinery but wrongly included in wages. to provide for bed and doubtful debts for RS 1,500. Discount earned but not received RS100. Commission due but not recorded RS200. Rent received includes RS500received in advance.

Financial Accounting Page :187; Illustration:11.6; The following is the Trial Balance of Rajan Jewelers as on December 31,2005.

Dr.

Cr.

Particulars Opening Inventory Purchases Furniture Motor car Buildings Gangappa Gourishankar Mathews Advertisements Repairs and maintenance General expenses Insurance Cash in hand Cash at bank Salaries

RS 72,000 2,25,000 15,000 30,000 4,25,000 12,000 20,000 18,000 22,000 13,000 16,000 7,000 3,500 6,000 30,000

Particulars Capital Sales Purchase returns Murthy Varadan Commission

9,15,300

RS 5,00,000 3,50,000 1,800 32,000 24,000 7,500

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. 2. 3. 4. 5. 6.

Closing Inventory as at 31.12.2005,Rs 80,000. Interest on capital at 6%. Prepaid advertisements RS2,000. Goods used for domestic purpose RS 1,800. Outstanding salaries RS3,000. Depreciation on buildings at 5%,furniture 5%, and Motor car at 10%.

Financial Accounting TUTORIAL :1 JOURNALISING Q1. Multiple choices:A. All those to whom bus owes money are :a. Drs b. Investors c. Creditors d. Shareholders B. Which of the following is an example of personal a\c a. Mach b. Rent c. Cash d. Creditors C. Payment recd. from debtors a. 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\c c. debit purchases a\c , credit A a\c d. 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\c b. Debit X a\c ,credit purchase returns a\c c. Debit X a\c, credit sales a\c d. 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. RS50,000 b. RS 30,000 c. RS 20,000 d. RS 80,000 G. Carriage inwards refers to the cost of a. transportation for the purchases made b. transportation for sales c. 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\c c. debit cash a\c , credit rent a\c d. debit B a\c, credit rent a\c I. Bank a\c is a :a. personal a\c b. real a\c c. nominal a\c J. The accounting equation is :a. assets = liabilities +stockholders or Owner’s equity b. liabilities=assets + stockholders or Owner’s equity c. assets +liabilities =assets + stockholders equity

Q2. Journalize the following transaction in the book of X for the month of Jan 98. Jan 98 Jan 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. Explain any 4.

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 Bank Q1. 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.

Q3. Q4.

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.

Explain the principle of consistency. 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 concept b. conservation concept c. time period d. cost concept 2)Recording of capital contributed by the owner as liability insures the adherence of principal of :a. double entry b. going concern c. separate entity d. materiality 3)Op. balance of creditors RS25000 purchases of creditors RS30,000

payment made by creditors RS15,000 closing balance of creditors is a. RS15000 b. RS40,000 c. RS70,000 d. Expense 4) 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 20,000 c. Drawing of 40,000 d. Additional capital of RS40,000 5) Rent recd. is a. income b. asset c. liability d. expense FA AND FSA –WB Page 47 –Problem 9 Anand 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 Accounting Page 50 –problem 23 Prepare a Trial Balance as on 31.3.98 from the following data .

Particulars Purchases Sales Sales returns Purchase returns Stock 1.4.97 Sundry debtors Wages Salaries Furniture Bad debts reserve Sundry creditors Patents Postage Bills payable Lighting

RS 1,65,625 2,56,650 4,250 3,120 26,725 40,200 20,137 8,575 6,575 5,200 25,526 4,500 3,226 8,950 350

Particulars Trade expenses Rent, rates and taxes Bad debts Interest on investments Loan to A Investments Capital Outstanding wages Outstanding rent Prepaid insurance Cash in hand and at bank Bills receivables Drawings Depreciation on furniture

RS 2,314 3,517 525 800 3,000 11,500 28,000 2,017 750 524 5,725 17,070 6,000 675

Financial Accounting Page 51 –problem 26 Comment whether the following Trial Balance is correct , if not, draw a correct Trial Balance. Trial Balance

Particulars Commission received Capital Drawings Stock Purchases Sales Sundry creditors Bank O.D Carriage inwards Discount received Other income Sundry debtors Rent and rates

Debit

Credit

RS

RS 2,500

40,000 20,000 4,000 35,000 60,000 17,500 20,000 5,000 2,500 2,500 80,000 1,000 1,45,000

1,45,000

Financial Accounting Page 51-problem 28 From the following list of Balances prepare a Trial Balance as on 30.6.2000. Particulars 1.opening stock 2.wages 3.sales 4.bank loan 5.coal and coke 6.purchases 7.repairs 8.carriage 9.income tax 10.debtors 11.leasehold premises 12.cash in hand

RS 1,800 1,000 12,000 440 300 7,500 200 150 150 2,000 600 20

Particulars 13.plant and machinery 14.loose tools 15.lighting 16.creditors 17.capital 18.miscellaneous receipts 19.office salaries 20.office furniture 21.patents 22.goodwill 23.cash at bank

RS 750 180 230 800 4,000 60 250 60 100 1,500 510

Financial Accounting Page 52 –problem 29 From the following Ledger Accounts Balances prepare a Trail Balance of Choudhary Brothers as on 31.12.2001. Particulars 1.opening stock 2.freehold premises 3.plant and machinery 4.wages 5.sundry debtors 6.carriage inwards 7.carriage outwards 8.factory expenses 9.royalty 10.purchase of raw material 11.factory rent 12.capital 13.discount allowed 14.discount received 15.sundry creditors

RS 15,600 30,000 9,000 2,000 12,000 180 200 1,600 200 15,000 1,400 16,000 800 720 4,000

Particulars 16.insurance 17.bad debt reserve 18.commission received 19.commission paid 20.bad debts 21.office expenses 22.salaries 23.travelling expenses 24.legal expenses 25.cash at bank 26.cash in hand 27.loan taken 28.office rent 29.sales (net)

RS 400 300 3,000 1,000 300 1,500 2,000 200 200 840 800 6,000 800 66,000

Financial Accounting Page 52-problem 31 Given below is the Trial Balance of Srinivas and company as on 31st December,2001. Dr. Particulars Land Purchases Salaries Rent Postage Stationary Wages Freight and carriage on purchases Miscellaneous expenses Carriage on sales Repairs Bad debts Opening Inventory Buildings Furniture Accounts receivables Cash in hand Return inwards

RS 15,300 21,200 2,200 600 300 240 5,200 560

Particulars Sales Return outwards Interest Accounts payable Loan Capital

Cr. RS 41,460 420 240 4,920 3,000 12,000

500 800 900 120 3,100 1,700 1,000 6,000 1,300 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.