CHATPER 14

FINANCIAL STATEMENT
(WITHOUT ADJUSTMENT)
HOTS QUESTIONS
1) Explain the term liquidity. List out the items of assets and liabilities in the order
of liquidity. Also list out the items in the balance sheet in the order of reverse
liquidity ( permanence).
2) Distinguish between trial balance and balance sheet and also between trading
account and profit loss account.
3) Distinguish between :
i)
Capital and Revenue Expenditure
ii)
Capital and Revenue Receipts
4) Mention two points of difference between Trial balance and balance sheet.
5) Differentiate between Gross Profit and net profit.
PRACTICAL QUESTIONS
1) Calculate the gross profit from the following information :
Rs.
Name of Accounts
15,000
Opening Stock
25,000
Net Purchases
40,000
Net Sales
7,000
Wages
6,000
Discount
4,000
Carriage Outward
3,000
( Hint. Gross profit = Net sales Cost of goods sold)
( Ans. Gross profit = Rs. 1,000)
2) Calculate Gross profit and cost of goods sold from the following information :
Net Sales Rs. 1,00,000.
Gross profit is 25% on cost.
( Ans. Gross profit = Rs. 20,000; Cost of goods sold = Rs. 80,000)
3) Opening stock Rs. 5,000; sales Rs. 16,000; carriage inward Rs. 1,000; Sales return
Rs. 1,000; Gross profit Rs. 6,000; purchases Rs. 10,000; and purchases return Rs.
900. Calculate the closing stock and the cost of goods sold.
( Ans. Closing stock = Rs. 6,100; Cost of goods sold = Rs .9,000)
4) Calculate Gross profit from the following information :
Rs.
Capital as on Jan. 1,2012
10,500
Drawings made during the year
3,000
Fresh capital introduced during the year
1,000

Purchased a transistor for proprietors son

Capital as on December 31, 2012
( Ans. Gross profit = Rs. 14,500)

500
22,500

5) Cash sales of a business in a year were Rs. 29,000 and credit sales Rs. 31,000.
The cost of goods sold ( including direct expenses) works out at Rs. 52,000. Find
out the gross profit.
( Ans. Gross profit = Rs. 8,000)
6) S. Kumar & Sons close their financial books on 31st December. Stock taking takes
about two weeks. In 2012, the value of closing stock thus arrived at was Rs.
25,000. During the two weeks in which stock taking took place purchases made
were Rs. 1,000 and sales totaled Rs. 4,000. The firm makes a gross profit of 30%
on sales. Ascertain the value of closing stock on 31st December, 2012.
( Ans. The value of closing stock = Rs. 26,800)
7) Capital of X at the beginning of the year was Rs. 70,000. During the year his
business earned a profit of Rs. 20,000, he withdrew Rs. 7,000 for his personal use.
He sold ornaments of his wife for Rs. 20,000 and invested that amount into the
business. Find out his capital at the end of the year.
( Ans. Capital at the end = Rs. 1,03,000)
8) Calculate closing stock from the following information :
Name of Accounts
Sales
Purchases
Returns Inward
Carriage Inward
Returns Outward
Gross Profit
( Ans. Closing stock = Rs. 200)

Rs.
20,000
12,300
500
400
1,000
8,000

9) Calculate closing stock from the following information :

Name of Accounts
Opening Stock
Net purchases
Salaries and Wages
Sales
Gross loss
Freight Inward
( Ans. Closing stock = Rs. 23,000)

Rs.
36,000
45,000
7,000
60,000
4,000
6,000

10) Prepare a Trading account from the following information :

Name of Account
Debit
Rs.
Opening Stock
28,000

Credit
Rs.

Purchases and Sales

Return Inward and Outward
Import duty
Export duty
Stores consumed
Closing stock was valued at Rs. 8,000
( Ans. Gross loss = Rs. 15,000)

42,000
2,000
7,000
2,000
5,000

58,000
3,000

11) From the following information extracted from the books of Rustamji. Prepare the
Trading Account for the year ending March 31, 2012.
Name of Account
Rs.
Sales
50,000
Sales return
150
Salaries and Wages
4,000
Carriage Inward
2,000
Returns Outward
250
Freight Inward
2,500
Office expenses
2,000
Octroi
5,000
Fuel
1,000
Insurance
3,721
Cash
1,500
Purchases
40,000
Rent
750
( Ans. Gross profit = Rs. 2,600)
12) Following balances were extracted from the books of Shri Rajesh on 30th June,
2012.
Name of Accounts
Rs.
Capital
24,500
Drawings
2,000
General expenses
2,500
Building
11,000
Stock
16,200
Power
2,240
Insurance
1,315
Wages
7,200
Debtors
6,280
Charity
105
Bad debts
550
Sales
63,360
Purchases
47,000
Scooter
2,000
Bad debts provision
900
Bills payable
3,850
Cash
80

Bank Overdraft
3,300.
th
Prepare Trading A/c for year ended 30 June, 2012. Closing Stock amounted to
Rs. 23,500)
( Ans. Gross Profit = Rs. 16,220)
13) A book-keeper has submitted you the following Trial Balance. You are required
to prepare Trading and Profit and Loss A/c as on March 31, 2012.
Rs.
Debit Balances :
30
Cash in hand
8,990.
Purchases
885
Fixtures and Fittings
225
Freehold Premises
1,500
Lighting & heating
65
Bills Receivable
825
Return Inward
30
Salaries
1,075
Debtors
5,700
Stock (1.4.2011)
3,000
Printing
225
Rates, Taxes & Insurance
190
Disc. Allowed
200
Capital
7,610
Sales
11.060
Creditors
1,950
Bills Payable
1,875
Discount received
445
22,940
Closing stock on 31st March, 2012 was Rs. 1800.
( Ans. Gross Profit = Rs. 840 Net Loss Rs. 470)
14) Prepare the trading account of Anil Kumar from the following particulars for the
year ending 31st March, 2012.
Rs.
Opening Stock
12,200
Purchases
9,000
Wages
4,500
Carriage
140
Sales
15,800
Closing Stock
11,390
( Ans. Gross Profit = Rs. 1,350)
Final Accounts

15) The trial balance of Bihari Lal on 31st March, 2012 revealed the following
balances :
Rs.
Debit Balance :
Plant and Machinery
90,000
Purchases
58,000
Sales Returns
1,000
Opening Stock
40,000
Discount Allowed
350
Bank charges
75
Sundry Debtors
45,000
Salaries
6,800
Wages
10,000
Freight Inward
750
Freight Outward
1,200
Rent, Rates and Taxes
2,000
Advertisement
2,000
Cash at Bank
6,900
Credit Balances :
Capital Account
1,10,000
Sales
1,27,000
Purchase Return
1,275
Discount Received
800
Sundry Creditors
25,000
The stock on 31st March, 2012 was valued at Rs. 13,262. Prepare Trading and profit
and loss account for the year ended 31st March, 2012 and Balance sheet as on that
date.
( Ans. Gross profit = Rs. 31,787; Net profit = Rs. 20,162; Total of Balance
Sheet = Rs. 1,55,162)
16) Prepare the Trading account of Rajeev Sharma from the following balances for
the year ending 31st March, 2012.
Rs.
Opening Stock
60,255
Purchases
1,99,080
Sales
2,81,505
Returns Outward
1,455
Returns Inward
1,875
Manufacturing Wages
46,875
Carriage Inward
15,175
Coal. Gas and Water
1,100
Factory Fuel & Power
1,305
Closing Stock
63,705
( Ans. Gross Profit = Rs. 21,000)

17) From the following Trial Balance of Pardip, prepare Trading and Profit and Loss
account and Balance sheet on 31st December, 2012 :
Rs.
Debit Balances :
Furniture and Fittings
7,700
Bills receivable
10,000
Sundry Debtors
76,720
Cash in hand
5,250
Interest
3,400
Wages
27,890
Goodwill
25,000
Carriage
1,720
Salaries
5,000
Insurance
600
Opening Stock
38,500
Audit Fee
1,000
Law Costs
710
Drawings
13,200
Purchases
61,900
Repairs
3,300
Credit Balance :
Capital
1,05,000
Commission
9,000
Sales
1,30,000
Returns Outward
2,570
Bank Overdraft
10,000
Creditors
25,320
Closing stock was valued at Rs. 12,560.
( Ans. G.P. = Rs. 15,120; N.P. = Rs. 10,110; B.S. = Rs. 1,37,230)
18) From the following balances of Seth Tent House, prepare Trading and Profit and
loss account and Balance sheet as on 31st Dec., 2012.
Name of Account
Dr. (Rs.)
Cr. (Rs.)
Capital
10,000
Plant and Machinery
14,000
Furniture and Fixtures
200
Debtors and Creditors
2,400
1,700
Drawings A/c
1,000
Purchases
10,500
Wages
5,000
Cash in hand
200
Cash at Bank
800
Stock on 1st January, 2012
2,000
Returns Outward
500
Rent and Taxes
400
Depreciation
420

Sales
26,800
Manufacturing Expenses
800
Travelling expenses
100
Sundry expenses
400
Bad Debts
150
Printing and Stationery
50
Carriage
130
Returns Inward
400
Repairs
50
Total
39,000
39,000
The values of stock on that date was Rs. 11,355.
( Ans. Gross Profit = Rs. 19,825; Net Profit = Rs. 18,255; Total of balance
sheet = 28,955)
19) From the following balances prepare final accounts of M/s Mangal & Sons for the
year ending 31st December, 2012 :
Salary Rs. 5,400; Insurance Rs. 2,500; Cash Rs. 400; Purchases Rs. 84,170; Rent
received Rs. 3,150; Drawings Rs. 2,100; Bills payable Rs. 3,900; Debtors Rs.
38,080; Stock (1-1-2012) Rs. 29,500; Bank overdraft Rs. 9,700; Carriage Rs.
2,200; Creditors Rs. 4,200; Trade expensese Rs. 4,900; Sales return Rs. 4,700;
Machinery Rs. 12,000; Wages Rs. 45,000; Sales Rs. 1,47,200; Purchases Return
Rs. 3,900; Capital Rs. 58,900; Closing Stock (31-12-2012) Rs. 36,200.
( Ans. Gross Profit = Rs. 21,730; Net Profit = Rs. 12,080; Balance Sheet
Total = 86,680)
20) Prepare a Balance Sheet with the following items :
Rs.
Net profit
15,000
Drawings
4,000
Debtors
25,000
Capital
70,000
Outstanding Wages
3,000
Creditors
18,000
Stock
22,000
Building
42,000
Loan ( Cr.)
5,000
Bank Overdraft
7,000
Furniture
5,000
Cash
20,000
( Ans. Total of Balances sheet Rs. 1,14,000)
21) Prepare Final Accounts from the following balances of a firm at the end of
December 2012.
Name of Accounts
Debit (Rs.)
Credit (Rs.)
Capital
10,000
Cash in hand
1,500
-

Bank Overdraft
Purchases and Sales
Returns
Office expenses
Taxes and Insurance
Discount
Debtors and Creditors
Commission
Investments
Stock ( Opening)
Drawings
Furniture
Bill Receivable

2,000
12,000
15,000
1,000
2,000
2,500
500
500
1,000
5,000
2,000
500
4,000
3,000
1,400
600
3,000
2,500
35,000
35,000
( Ans. Gross Profit Rs. 20,000; Net Profit Rs. 18,000; Balance
Sheet Rs. 33,100)
22) From the following information extracted from the books of M/s Pragati printers.
Pass the necessary closing entries and prepare a Profit & Loss Account and
Balance sheet.
Dr.
Particulars
Opening Stock
Depreciation
Carriage Inward
Furniture
Carriage Outward
Plant & Machinery
Cash
Salaries
Debtors
Discount
Bills Receivable
Wages
Sales Return
Purchases

Particulars
Sales
Commission Received
Capital
Creditors
Bills Payable

Amount (Rs.)
12,500
7,000
700
8,000
500
2,00,000
8,900
7,500
19,000
1,500
17,000
16,000
14,000
86,00
3,98,600
Cr.
Amount (Rs.)
1,89,000
2,000
1,71,300
17,500
5,000

Returns Outward

13,800
3,98,600
Closing stock on 31-3-2012 was Rs. 45,000.
( Ans. Gross Profit Rs. 1,18,600; Net Profit Rs. 1,04,000; Balance Sheet
Rs. 2,97,900)
23. From the following balances taken from the books of Simmi and Vimmi Ltd. for the
year ending March 31, 2003, calculate the gross profit.
(Rs.)
Closing stock
2,50,000
Net sales during the year
40,00,000
Net purchases during the year
15,00,000
Financial Statements - I
Opening stock
15,00,000
Direct expenses
80,000
(Ans. Gross profit Rs. 11,70,000)
24. From the following balances extracted from the books of M/s Ahuja and Nanda.
Calculate the amount of :
(a) Cost of goods available for sale
(b) Cost of goods sold during the year
(c) Gross Profit
Rs.
Opening stock
25,000
Credit purchases
7,50,000
Cash purchases
3,00,000
Credit sales
12,00,000
Cash sales
4,00,000
Wages
1,00,000
Salaries
1,40,000
Closing stock
30,000
Sales return
50,000
Purchases return
10,000
(Ans. (a) Rs. 11,65,000 ; (b) Rs.11,35,000 ; (c) Rs.4,15,000)
25. Calculate the amount of gross profit and operating profit on the basis of the following
balances extracted from the books of M/s Rajiv & Sons for the year ended March 31,
2005.
Rs.
Opening stock
50,000
Net sales
11,00,000
Net purchases
6,00,000
Direct expenses
60,000
Administration expenses
45,000
Selling and distribution expenses
65,000
Loss due to fire
20,000

Closing stock
70,000
(Ans. Gross profit Rs.4,60,000, Operating profit Rs.3,50,000)
26. Operating profit earned by M/s Arora & Sachdeva in 2005-06 was Rs.17,00,000. Its
non-operating incomes were Rs.1,50,000 and non-operating expenses were Rs.3,75,000.
Calculate the amount of net profit earned by the firm.
(Ans. Net profit Rs.14,75,000)
27. Prepare trading and profit and loss account and balance sheet as on
March 31, 2005 :
Account Title
Debit
Account Title
Credit
Machinery
27,000
Capital
60,000
Sundry debtors
21,600
Bills payable
2,800
Drawings
2,700
Sundry creditors
1,400
Purchases
58,500
Sales 7
3,500
Wages
15,000
Sundry expenses
600
Rent & taxes
1,350
Carriage inwards
450
Bank
4,500
Openings stock
6000
Closing stock as on March 31, 2005 Rs.22,400
28. The following trial balance is extracted from the books of M/s Ram on March 31,
2005. You are required to prepare trading and profit and loss account and the balance
sheet as on date :
Account Title
Debit
Account Title
Credit
Debtors
12,000
Apprenticeship premium
5,000
Purchases
50,000
Loan
10,000
Coal, gas and water 6,000
Bank overdraft
1,000
Factory wages
11,000
Sales 80,000
Salaries 9,000
Creditors
13,000
Rent 4,000 Capital 20,000
Discount
3,000
Advertisement
500
Drawings
1,000
Loan
6,000
Petty cash
500
Sales return
1,000
Machinery
5,000
Land and building
10,000
Income tax
100
Furniture
9,900
(Ans. Gross profit: Rs. 12,000, Net profit: Rs. 500, Total balance sheet: Rs. 43,400)

29. The following is the trial balance of Manju Chawla on March 31, 2005. You are
required to prepare trading and profit and loss account and a balance sheet as on date :
Account title
Opening stock
Purchases and sales
Returns
Productive wages
Dock and Clearing charges
Donation and charity
Delivery van expenses
Lighting
Sales tax collected
Bad debts
Misc. incomes
Rent from tenants
Royalty
Capital
Drawings
Debtors and Creditors
Cash
Investment
Patents
Land and Machinery

Dedbit
10,000
40,000
200
6,000
4,000
600
6,000
500

Credit
80,000
600

1,000
600
6,000
2,000
4,000
40,000
2,000
6,0000
3,000
6,000
4,000
43,000

7,000

Closing stock Rs.

2,000.
(Ans. Gross Profit: Rs. 18,400, Net profit: Rs. 18,700, Total balance sheet: Rs. 64,700)
30. The following is the trial balance of Mr. Deepak as on March 31, 2005. You are
required to prepare trading account, profit and loss account and a balance sheet as on date
:
Account Title
Debit
Drawings
36,000
Insurance
3,000
General expenses
29,000
Rent and taxes
14,400
Lighting (factory)
2,800
Travelling expenses 7,400
Cash in hand
12,600
Bills receivable
5,000
Sundry debtors
1,04,000
Furniture
16,000
Plant and Machinery 1,80,000
Opening stock
40,000
Purchases
1,60,000

Account Title
Capital
Bills payable
Creditors
Discount recived
Purchases return
Sales

Credit
2,50000
3,600
50,000
10,400
8,000
4,40,000

Sales return
Carriage inwards
Carriage outwards
Wages
Salaries

6,000
7,200
1,600
84,000
53,000

Closing stock Rs. 35,000.

(Ans. Gross profit: Rs.1,83,000, Net profit : Rs. 85,000, Total balance sheet: Rs.
3,52,600)
31. Prepare trading and profit and loss account and balance sheet from the following
particulars as on March 31, 2005.
Account title
Purchases and Sales
Return inwards and Return outwards
Carriage inwards
Carriage outwards
Fuel and power
Opening stock
Bad debts
Debtors and Creditors
Capital
Investment
Interest on investment
Loan
Repairs
General expenses
Wages and salaries
Land and buildings
Cash in hand
Miscellaneous receipts
Sales tax collected

Dedbit
3,52,000
9,600
7,000
3,360
24,800
57,600
9,950
1,31,200

Credit
5,60,000
12,000

48,000
3,48,000

32,000
3,200
16,000
2,400
17,000
28,800
2,88,000
32,000
160
8,350

Closing stock Rs. 30,000.

(Ans. Gross profit: Rs. 1,22,200, Net profit : Rs.92,850, Total balance sheet: Rs.5,13,200)
32. From the following trial balance of Mr. A. Lal, prepare trading, profit and loss
account and balance sheet as on March 31, 2005
Account title
Stock as on April 01,
Purchases and Sales
Returns inwards and outwards
Carriage inwards
General expenses

Dedbit
2005
67,600
4,600
1,400
2,400

Credit
16,000
1,12,000
3,200

Bad debts
Discount received
Bank over draft
Interest on bank overdraft
Commission received
Insurance and taxes
Scooter expenses
Salaries
Cash in hand
Scooter
Furniture
Building
Debtors and Creditors
Capital

600
1,400
10,000
600
1,800
4,000
200
8,800
4,000
8,000
5,200
65,000
6,000

16,000
50,000

Closing stock Rs.

15,000.
(Ans. Gross profit : Rs. 40,600, Net profit: Rs. 27,200, Total balance sheet: Rs. 1,03,200)
33. Prepare trading and profit and loss account and balance sheet of M/s Royal Traders
from the following balances as on March 31, 2005.
Account Title
Stock
Cash
Bank
Carriage on purchases
Purchases
Drawings
Wages
Machinery
Debtors
Postage
Sundry expenses
Rent
Furniture

Debit
20,000
5,000
10,000
1,500
1,90,000
9,000
55,000
1,00,000
27,000
300
1,700
4,500
35,000

Account Title
Sales
Creditors
Bills payable
Capital

Credit
2,45,000
10,000
4,000
2,00,000

Closing stock Rs.8,000

(Ans. Gross loss Rs. 13,500, Net loss Rs. 20,000, Total balance sheet Rs. 1,85,000)
34. Prepare trading and profit and loss account from the following particulars of M/s
Neema Traders as on March 31, 2005.
Account Title
Buildings
Plant
Carriage inwards

Debit
23,000
16,930
1,000

Account Title
Sales
Loan
Bills payable

Credit
1,80,000
8,000
2,520

Wages
Purchases
Sales return
Opening stock
Machinery
Insurance
Interest
Bad debts
Postage
Discount
Salaries
Debtors

3,300
1,64,000
1,820
9,000
2,10,940
1,610
1,100
250
300
1,000
3,000
3,900

Bank overdraft
Creditors
Capital
Purchases return

4,720
8,000
2,36,000
1,910

Stock on March 31, 2005 Rs.16,000.

(Ans. Gross profit Rs.17,850, Net profit Rs. 10,590, Total of balance sheet Rs.2,69,830)
35. From the following balances of M/s Nilu Sarees as on March 31, 2005. Prepare
trading and profit and loss account and balance sheet as on date.
Account Title
Opening stock
Purchases
Carriage inwards
Salaries
Commission
Wages
Rent & taxes
Repairs
Telephone expenses
Legal charges
Sundry expenses
cash in hand
Debtors
Machinery
Investments
Drawings

Debit
10,000
78,000
2,500
30,000
10,000
11,000
2,800
5,000
1,400
1,500
2,500
12,000
30,000
60,000
90,000
18,000

Account Title
Sales
Capital
Interest
Commission
Creditors
Bills payable

Credit
2,28,000
70,000
7,000
8,000
28,000
2,370

Closing stock as on March 31, 2005 Rs.22,000.

(Ans. Gross profit Rs. 1,56,500, Net profit Rs. 1,10,300, Total balance sheet Rs.2,14,000)
36. Prepare trading and profit and loss account of M/s Sports Equipments for the year
ended March 31, 2006 and balance sheet as on that date :
Account title
Opening stock
Purchases and sales

Dedbit
50,000
3,50,000

Credit
4,21,000

Sales returns
Capital
Commission
Creditors
Bank overdraft
Cash in hand
Furniture
Debtors
Plants
Carriage on purchases
Wages
Rent
Bad debts
Drawings
Stationery
Travelling expenses
Insurance
Discount
Office expenses

5,000
3,00,000
4,000
1,00,000
28,000
32,000
1,28,000
1,40,000
60,000
12,000
8,000
15,000
7,000
24,000
6,000
2,000
7,000
5,000
2,000

Closing stock as on March 31, 2006 Rs.2,500

(Ans. Gross loss Rs. 1,500, Net loss Rs. 41,500 , Total balance sheet Rs.3,62,500)