Illustration10.

20 From the following Trial Balance and additional information, you are required to
prepare Final Accounts.
Trial Balance
as on 31 st December, 1998
Particulars
Capital
Sundry Debtors
Drawings
Machinery
Sundry Creditors
Wages
Purchases
Opening Stock
Bank Balance
Carriage Charges
Salaries
Rent and Taxes
Sales

Dr. Amount
Rs.

Cr. Amount
Rs.
20,000

5,400
1,800
7,000
2,800
10,000
19,000
4,000
3,000
300
400
900
51,800

29,000
51,800

Additional Information:
(i)
Closing Stock Rs 1,200.
(ii)
Outstanding Rent and Taxes Rs 100.
(iii)
Charge depreciation on machinery at 10%.
(iv)
Wages prepaid Rs 400.
Solution
Particulars
To Opening Stock
To Adjusted Purchases
To Wages
To Carriage
To Gross Loss b/d
To Salaries
To Rent and Taxes
To Depreciation Machinery

Trading and Profit and Loss Account

For the year ending 31st December, 1998
Rs
Particulars
4,000
By Sales
17,800
By Gross Loss c/d
9,600
300
31,700
By Net Loss taken to Capital A/c
2,700
400
1,000
700
4,800

Rs
29,000
2,700
31,700
4,800

4,800

BALANCE SHEET
as on 31st December, 1998
Rs.
Assets

Liabilities
Outstanding Rent
Creditors
Capital
Less : Net Loss
Less : Drawings

20,000
4,800
15,200
1,800

Rs.

100
2,800

Cash at Bank
Debtors
Closing Stock
Prepaid Wages

3,000
5,400
1,200
400

13,400

Machinery

6,300

16,300

16,300

Illustration 10.21
The following is the Trial Balance of Shri Om, as on 31 st March, 1999. You are
requested to prepare the Trading and Profit and Loss Account for the year ended 31 st March, 1999 and
Balance sheet as on that date after making the necessary adjustment.
Particulars

Debit
Rs

Credit
Rs

Sundry Debtors
Sundry Creditors
Payment of Outstanding Liability for Expenses
Wages
Carriage Outwards
Carriage Inwards
General Expenses
Cash Discounts
Bad Debts
Motor car
Printing and Stationery
Furniture and Fittings
Advertisement
Insurance
Salesmens Commission
Postage and Telephone
Salaries
Rates and Taxes
Drawings
Capital Account
Purchases
Sales
Stock on 1.4.90
Cash at Bank
Cash in hand

5,00,000
..
55,000
1,00,000
1,10,000
50,000
70,000
20,000
10,000
2,40,000
15,000
1,10,000
85,000
45,000
87,500
57,500
1,60,000
25,000
20,000
.
15,50,000
..
2,50,000
60,000
10,500
36,30,500

..
2,00,000
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
14,43,000
..
19,87,500
..
..
..
36,30,500

The following adjustments are to be made:

(1) Stock on 31st March, 1999 was valued at Rs 7,25,000.
(2) Purchases include purchase of Furniture worth Rs 50,000
(3) Depreciate:
Furniture and Fittings by 10%
Motor Car by 20%
(4) Shri Om had withdrawn goods worth Rs 25,000 during the year.
(5) Sales include goods worth Rs 75,000 sent out to Shanti & Company on approval and
remaining unsold on 31st March, 1999. The cost of the goods was Rs 50,000.
(6) The salesmen are entitled to a Commission of 5% on total sales.
(7) Debtors include Rs 25,000 bad debts.
(8) A Provision for Bad and Doubtful Debts is to be created to the extent of 5 per cent on Sundry
Debtors.
(9) Printing and stationery expenses of Rs 55,000 relating to 1997-98 had not been charged in
that year. This expense was paid this year and trial balance shows it as an asset by Payment
of outstanding liabilities.

Solution

Particulars

SHRI OM
Trading and profit and Loss Account
for the year ended 31st March, 1999
Rs
Particulars

Rs

To opening Stock
To Purchases
Less: Drawings
Less: Furniture
To wages
To Carriage Inwards
To Gross profit c/d

2,50,000
15,50,000
25,000
15,25,000
50,000

To Salaries
To Rates and Taxes
To postage and Telephone
To Insurance
To printing and Stationery
To General Expenses
To Depreciation:
Furniture (11,000+5,000)
Motor Car
To Salesmens Commission
(5% on Rs 19,12,500)
To Advertisement
To Carriage Outwards
To Bad Debts
Add: Addl. Bad Debts
Add: Prov. for Bad Debts
(5% on Rs. 4,00,000:
See WN 3)
To Cash Discount
To Net Profit

14,75,000
1,00,000
50,000
8,12,500
26,87,500
1,60,000
25,000
57,500
45,000
15,000
70,000

By Sales
19,87,500
Less: Goods sent on
approval
75,000
By Closing Stock
Add: Stock on
approval (at cost)

19,12,500

7,25,000
7,75,000
50,000
26,87,500
8,12,500

By Gross profit b/d

16,000
48,000
95,625
85,000
1,10,000
10,000
25,000
20,000

55,000
20,000
10,375
8,12,500

8,12,500

SHRI OM
Balance Sheet
as on 31st March, 1999
Liabilities

Rs.

Assets

Rs.

Capital as on 31.3.91
Add: Net Profit
Less: Drawings
(20,000 + 25,000)

14,43,000
___10,375
14,53,375
___45,000
14,08,375

Less: Printing & Stationery

of last year
___55,000
sundry Creditors
Salesmens Commission Outstanding
(Rs. 95,625 Rs. 87,530)

Furniture & Fittings

1,10,000
Additions during the yr. __50,000
1,60,000
Less: Depn.
__16,000
Motor-car
2,40,000
Less: Depn.
__48,000
Closing Stock
13,53,375 (7,25,000 + 50,000)
2,00,000 Sundry Debtors
5,00,000
Less: Goods sent on
8,125 approval
__75,000
4,25,000
Less: Addl. Bad debts
25,000
4,00,000
Less: Provisions for
doubtful debts
20,000
(5% on 4,00,000)
Cash at Bank
Cash in Hand
15,61,500

1,44,000
1,92,000
7,75,000

3,80,000
60,000
10,500
15,61,500

Working Notes:
1. Both Sales and Sundry Debtors have been reduced by Rs. 75,000 representing invoice value of
goods sent on approval Rs. 50,000 have been added to the closing stock being the cost of
goods sent on approval.
2. Last years short provision for Printing and Stationery has not been charged to the current
years Profit and Loss Account. It is preferable to charge it directly to the Capital Account.
3. sundry Debtors = [Rs. 5,00,000 [Rs. 75,000 (Goods on Approval) + Rs. 25,000 (Bad Debt)]
= Rs. 4,00,000.

Illustration 10.23
below:

The Trial Balance of Jagfay Corporation, New Delhi, as on 30.9.1998 is as

Particulars

Capital Account (including Rs. 5,000 introduced on 1.4.1998)

Stock as on 1.10.1997:
Finished Goods
3,500
Work-in-progress
7,000
Raw Materials
3,000
Purchase of Raw Materials

Rs.
22,500

13,500
70,500

Machinery
Sales
Carriage Inwards
Carriage Outwards
Rent (including Rs. 450 for the factory premises)
Rebates and Discounts allowed
Fire Insurance (for machinery)
Sundry Debtors
Sundry Creditors
Reserve for Bad and Doubtful Debts
Printing and Stationery
Miscellaneous Expenses
Advertisement
Drawings of Proprietor
Office Salaries
Manufacturing Wages
Furniture and Fixtures
Factory Power and Fuel
Cash on hand
Balance with Bank of Bikaner Ltd., Delhi (Dr.)

22,500
1,26,225
750
450
1,350
105
210
18,900
5,100
60
180
840
4,500
1,800
5,400
6,000
2,250
300
600
3,750

Adjustments:
(i) Provide for interest @ 10% per annum on Capital. (No interest on drawings need be provided.)
(ii) A motor-car purchased on 1.4.1998 for Rs. 6,000 has been included in purchases.
(iii) Provide depreciation:
Machinery @10% p.a., Motor-Car @ 20% p.a., Furniture and Fixtures @ 10% p.a.
(iv) Provision for unrealized rent in respect of a portion of the office sub-let at Rs. 50 per month from
1.4.1998 has to be made.
(v) Sundry Debtors include bad debts of Rs. 400 which must be written off.
(vi) Provision for Bad and Doubtful Debts as on 30.9.1998 should be maintained at 10% of the
Debtors.
(vii) A sum of Rs. 2,000, transferred from the Current Account with Bank of Bikaner Ltd. to Fixed
Deposit Account on 1.2.1998, has not been passed through the books. Make suitable adjustments and
provide for accrued interest @ 6% p.a.
(viii) Stock as on 30.9.1998.
Finished goods Rs. 5,000, Raw Materials Rs. 1,000, Work-in-progress Rs. 5,500.
Prepare the Manufacturing, Trading and Profit and Loss Account for the year ended 30.9.1998 and
Balance Sheet as on that date after making the necessary adjustments. (Journal entries are not
required.)
Solution
MESSERS JAGFAY CORPORATION, NEW DELHI
Manufacturing Account

for the year ended 30.9.1998

Particulars
To Work-in-progress
To Material used:
Opening Stock
3,000
Purchases
64,500
67,500
Less: Closing Stock
1,000
To Carriage Inwards
To Factory Power and Fuel
To Manufacturing Wages
To Factory Rent
To fire Insurance for Machinery

Rs.
7,000

Particulars
By Cost of Manufactured
Good transferred to
Trading Account
By Work-in-progress at end

66,500
750
300
6,000
450
210
81,210

Rs.

75,710
5,500

81,210

Trading and Profit and Loss Account

for the year ended 30.9.1998
Particulars
To Opening Stock:
Finished Goods
To Cost of Goods manufactured
transferred from Manufacturing A/c
To Gross Profit c/d

Rs.
3,500
75,710
52,015
1,31,225

Particulars
By Sales
By Closing Stock:
Finished Goods

Rs.
1,26,225
5,000
1,31,225

To Office Salaries
To Rent
To Advertisement
To Carriage Outwards
To Rebates and Discounts
To Bad Debts written off
Add: New provision for
bad debts

5,400
900
4,500
450
105

By Gross Profit b/d

By Rent Receivable
By Interest receivable
(On fixed deposit for Rs. 2,000 for
8 months @ 6% p.a.)

52,015
300

80

400
1,850
2,250

2,190
180
840
3,075
1820
32,935

Less: Old provision for

bad debts
60
To Printing and Stationery
To Miscellaneous Expenses
To Depreciation written off
To Interest on Capital
To Net Profit transferred to Capital A/c

52,395

52,395

Balance Sheet
as on 30.9.1998
Liabilities

Rs.

Assets

Rs.

Capital Account:
Balance
Add: Profit for the year
Interest
Less: Drawings
Sundry Creditors

Machinery: (as per last

Balance Sheet)
Less: Depreciation
Motor-car: Cost
Less: Depreciation

22,500
32,935
1820
57,255
1,800 55,455
5,100 Furniture & Fixtures:
(as per last Balance Sheet)
Less: Depreciation
Closing Stock:
Finished goods
Work-in-progress
Raw Materials
Sundry Debtors
Less: Bad Debts written off

22,500
2,250
6,000
600
2,250
225
5,000
5,500
1,000
18,900
400
18,500

Less: Provision for bad

and doubtful debts
1,850
Interest Accrued
Rent Receivable
Bank Balance:
Fixed Deposit with Bank of Bikaner Ltd.
Balance with Bank of Bikaner Ltd.
Cash in hand
60,555

20,250
5,400

2,025

11,500

16,650
80
300
2,000
1,750
600
60,555