6 Marks Question

Question 16 Marks

The following balances were extracted from the books of Garim Aggarwal on 31st March, 2013

Capital	98,000	Loan	31,520
Drawings	8,000	Sales	2,61,440
General expenses	10,000	Purchases	1,88,000
Building	44,000	Motor car	8,000
Machinery	37,360	Reserve fund	3,600
Stock	64,800	Commission (Credit)	5,280
Power	8,960	Car expenses	7,200
Taxes and insurance	5,260	Bills payable	15,400
Wages	28,800	Cash	320
Debtors	25,120	Bank overdraft	13,200
Creditors	10,000	Charity	420
Bad debts	2,200

Stock on 31st March 2013 was valued at Rs. 23,500. Prepare the final accounts for the year ended 31st March 2013

Answer

In the books of Garrim Agarwal Trading And Profit \& Loss Account
Particulars	Amount (Rs)	Particulars	Amount (Rs)
To Opening Stock	64,800	By Sales	2,61,440
To Purchase	1,88,000	By Closing Stock	23,500
To Power	8,960	By Gross Loss	5,620
To Wages	28,800
	2,90,560 ========		2,90,560 ========
To Gross Loss	5,620	By Commission	5,280
To General expense	10,000	By Net Loss	25,420
Taxes and insurance	5,260
To Bad Debts	2,200
To Car expense	7,200
To Charity	420
	30,700		30,700
Particulars	Amount (Rs)	Particulars	Amount (Rs)
	========		========

Balance Sheet
Liability	Amount (Rs)	Asset	Amount (Rs)
Capital 98,000		Closing Stock	23,500
Less Drawings 8,000		Building	44,000
Less Net Loss , 25,420	64,580	Machine	37,360
Creditors	10,000	Debtors	25,120
Reserve fund	3,600	Loan	31,520
Bills Payable	15,400	Motor Car	8,000
Bank Overdraft	13,200	Cash	320
	1,69,820 ========		1,69,820 ========

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Question 26 Marks

Prepare Trading and Profit and Loss Account for the year ended $31^{\text {st }}$ March, 2023 and Balance Sheet as at that date from the given Trial Balance after the following adjustments:
i. Stock on $31^{\text {st }}$ March, 2023 was valued at ₹ 14,000 . Closing Stock includes goods costing ₹ 10,000 which were sold and recorded as sales but not delivered to the customer.
ii. Plant and Machinery includes a machine purchased for ₹ 20,000 on $1^{\text {st }}$ October, 2022.
iii. Outstanding liabilities for Wages ₹ 1,200 and Salaries ₹ 2,800 .
iv. Depreciation @ $5 \%$ p.a. on is to be provided on all fixed assets.
v. Write off bad debts ₹ 1,500 .
vi. Insurance premium paid in advance ₹ 400 .
vii. $80 \%$ of the commission earned was received and credited to Commission Account during the year.

Debit Balances	₹	Credit Balances	₹
Stock on $1^{s t}$ April, 2022	50,000	Capital	3,20,000
Furniture	16,000	Creditors	80,000
Building	1,60,000	Purchases Return	2,000
Debtors	60,000	Commission	6,000
Drawings	20,000	Sales	4,65,600
Plant and Machinery	1,40,000	Bad Debts Recovered	1,400
Wages	24,000
Salaries	40,000
Bad Debts	2,000
Purchases	2,40,000
Electricity Charges	12,000
Telephone Charges	4,800
Sales Return	1,800
Insurance Premium	3,000
Cash in Hand	6,400
Cash at Bank	95,000
	8,75,000		8,75,000

Answer

TRADING AND PROFIT AND LOSS ACCOUNT for the year ended 31 ${ }^{\text {st }}$ March, 2023
Dr.					Cr.
Particulars		₹	Particulars		₹
To Opening Stock		50,000	By Sales	4,65,600
To Purchases	2,40,000		Less: Sales Return	1,800	4,63,800
Less: Purchases Return	2,000	2,38,000	By Closing Stock	14,000
To Wages	24,000		Less: Goods sold but not delivered	10,000	4,000
Add: Outstanding Wages	1,200	25,200
To Gross Profit c/d (Transferred to Profit and Loss A/c)		1,54,600
		4,67,800			4,67,800
To Salaries	40,000		By Gross Profit b/d		1,54,600
Add: Outstanding Salaries	2,800	42,800	By Commission	6,000
To Bad Debts	2000		Add: Accrued Commission	1,500	7,500
Add: Further Bad Debts	1,500	3,500	By Bad Debts Recovered		1,400
To Electricity Charges		12,000
To Telephone Charges		4,800
To Insurance Premium	3,000
Less: Prepaid Insurance	400
To Depreciation on:
Plant and Machinery	6,500
Furniture (₹ 16,000$\times \frac{5}{100}$)	800
Building Furniture (₹ 1,60,000$\times \frac{5}{100}$)	8,000	15,300
To Net Profit transferred to Capital A/c		82,500
		1,63,500			1,63,500

Depreciation on Plant and Machinery @ 5% p.a.:
On ₹ 1,20,000 (₹ 1,20,000$\times \frac{5}{100}$) = 6,000
On 20,000 (for six months, i.e., ₹ 20,000$\times \frac{5}{100} \times \frac{6}{12}$ )=500
= 6,500

BALANCE SHEET as at $31^{\text {st }}$ March, 2023
Liabilities		₹	Assets		₹
Creditors		80,000	Cash in Hand		6,400
Wages Outstanding		1,200	Cash at Bank		95,000
Salaries Outstanding		2,800	Prepaid Insurance		400
Capital			Accrued Commission (Note)		1,500
Opening Balance	3,20,000		Debtors	60,000
Add: Net Profit	82,500		Less: Bad Debts	1,500	58,500
	4,02,500		Closing Stock		4,000
Less: Drawings	20,000	3,82,500	Plant and Machinery	1,40,000
			Less: Depreciation	6,500	1,35,500
			Furniture	16,000
			Less: Depreciation	800	15,200
			Building	1,60,000
			Less: Depreciation	8,000	1,52,000
		4,66,500			4,66,500

Note: 80% of Commission earned is received. It means 20% of commission earned has accrued but not received. it is calculated as follows:
Let Total Commission Earned during the year be x. It means 80% of x = ₹ 6,000 or x = ₹ 6,000 $\times \frac{100}{80}$ =₹6,500
Accrued Commission = 20% of ₹ 7,500 = ₹ 1,500.

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Question 36 Marks

A retailer had not kept proper books of account. From the details given, you are required to ascertain the Profit or Loss for the year ended $31^{\text {st }}$ March, 2023 and also to prepare his Statement of Affairs as at that date:

	$1^{\text {st }}$ April, 2022 (₹)	$31^{\text {st }}$ March, 2023 (₹)
Stock-in-Trade	16,700	18,100
Sundry Creditors	15,400	19,200
Sundry Debtors	27,200	15,600
Cash in Hand	250	1,400
Bank Overdraft	19,200	Nil
Fixtures and Fittings	1,500	1,500
Motor Van	1,900	Nil
Bank Balance	Nil	2,900

Drawings during the year amounted to ₹ 2,400 . Depreciate Fixtures and Fittings by $10 \%$. ₹ 600 is irrecoverable from Debtors. Provide ₹ 700 for Doubtful Debts.

Answer

STATEMENT OF AFFAIRS as at $1^{\text {st }}$ April, 2022
Liabilities	₹	Assets	₹
Sundry Creditors	15,400	Cash in Hand	250
Bank Overdraft	19,200	Sundry Debtors	27,200
Capital (Balancing Figure)	12,950	Stock-in-Trade	16,700
		Fixtures and Fittings	1,500
		Motor Van	1,900
	47,550		47,550

STATEMENT OF AFFAIRS (BEFORE ADJUSTMENTS) as at $31^{\text {st }}$ March, 2023
Liabilities	₹	Assets	₹
Sundry Creditors	19,200	Cash in Hand	1,400
Capital (Balancing Figure)	20,300	Cash at Bank	2,900
		Sundry Debtors	15,600
		Stock-in-Trade	18,100
		Fixtures and Fittings	1,500
	39,500		39,500

STATEMENT OF PROFIT OR LOSS for the year ended $31{ }^{\text {st }}$ March, 2023
Particulars	₹
Capital on $31^{\text {st }}$ March, 2023	20,300
Add: Drawings during the year	2,400
	22,700
Less: Capital on $1^{\text {st }}$ April, 2022	12,950
Gross Profit made during the year	9,750

PROFIT AND LOSS ACCOUNT for the year ended $31^{\text {st }}$ March, 2023
Dr.		Cr.
Particulars	₹	Particulars	₹
To Depreciation on Fixtures and Fittings	150	By Gross Profit	9,750
To Bad Debts	600
To Provision for Doubtful Debts	700
To Net Profit transferred to Capital A/c	8,300
	9,750		9,750

STATEMENT OF AFFAIRS (AFTER ADJUSTMENTS) as at $31^{\text {st }}$ March, 2023
Liabilities		₹	Assets		₹
Sundry Creditors		19,200	Cash in Hand		1,400
Capital	12,950		Cash at Bank		2,900
Add: Net Profit	8,300		Sundry Debtors	15,600
	21,250		Less: Bad Debts	600
Less: Drawings	2,400	18,850		15,000
			Less: Provision for Doubtful Debts	700	14,300
			Stock-in-Trade		18,100
			Fixtures and Fittings	1,500
			Less: Depreciation	150	1,350
		38,050			38,050

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Question 46 Marks

X who keeps incomplete records gives you the following information:

ASSETS AND LIABILITIES
	1st April, 2022 (₹)	31st March, 2023 (₹)
Stock in hand	18,700	20,400
Debtors	12,000	14,000
Creditors	9,000	1,500
Bills Receivable	4,000	5,000
Bills Payable	1,000	200
Furniture	600	600
Building	12,000	12,000
Bank Balance	4,350	3,350 (Overdraft)

You are also given the following information:
i. A provision of ₹ 1,450 is required for bad and doubtful debts.
ii. Depreciation @ $5 \%$ is to be written off on Building and furniture.
iii. Wages outstanding ₹ 3,000 ; salaries outstanding ₹ 1,200 .
iv. Insurance has been prepaid to the extent of ₹ 250 .
v. Legal Expenses outstanding ₹ 700 .
vi. Drawings of Mr. X during the year were ₹ 7,520 .
Prepare a statement of Profit as on 31st March, 2023, and a final statement of affairs as at that date.

Answer

STATEMENT OF AFFAIRS as on 1 April, 2022
Dr.		Cr.
Liabilities	Amount (₹)	Assets	Amount (₹)
Bills Payable	1,000	Cash at Bank	4,350
Creditors	9,000	Stock	18,700
Capital (Balancing Figure)	41,650	Debtors	12,000
		Bills Receivable	4,000
		Furniture	600
		Building	12,000
	51,650		51,650

STATEMENT OF AFFAIRS as on March 31, 2023
Liabilities	Amount (₹)	Assets	Amount (₹)
Bills Payable	200	Stock	20,400
Creditors	1,500	Debtors	14,000
Bank Overdraft	3,350	Bills Receivable	5,000
Capital (Balancing Figure)	46,950	Furniture	600
		Building	12,000
	52,000		52,000

Statement of Profit or Loss for the year ended March 31, 2023
Particulars	Amount (₹)
Capital at the end of the year	46,950
Add: Drawings made during the year	7,520
Adjusted capital at the end of the year	54,470
Less: Capital in the beginning of the year	41,650
Profit Before Adjustment	12,820
Less: Depreciation on Furniture	30
Less: Depreciation on Building	600
Less: Provision for Doubtful Debts	1,450
Less: Outstanding Wages	3,000
Less: Outstanding Salaries	1,200
Less: Outstanding Legal Expenses	700
Add: Prepaid Insurance	250

Final Statement of Affairs as on March 31, 2023
Liabilities		Amount(₹)	Assets		Amount (₹)
Creditors		1,500	Prepaid Insurance		250
Opening Capital	41,650		Bills Receivable		5,000
Add: Net Profit	6,090		Stock		20,400
Less: Drawings	7,520	40,220	Furniture	600
Outstanding Wages		3,000	Less: Depreciation	30	570
Outstanding Salaries		1,200	Debtors	14,000
Bills Payable		200	Less: Provision for Bad Debts	1,450	12,550
Bank Overdraft		3,350	Building	12,000
Outstanding Legal Expenses		700	Less: Depreciation	600	11,400
		50,170			50,170

Statement of affairs is like balance sheet of company. It is prepared to know capital of business. It is prepared when books of accounts of business are incomplete and accountant wants to know full details.

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Account 6 Marks Question

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