6 Marks Question

Question 16 Marks

From the following balances of the year ended 31st December, 2013 and additional information, prepare the trading and profit and loss account and the balance sheet M/s Ram Lai Sons.

Name of Accounts	Amt(Rs)	Name of Accounts	Amt(Rs)
Capital	80,000	Insurance	600
Purchases	82,000	Salaries	12,500
Sales	1,10,000	Bad Debts	200
Return Outwards	1,000	Carriage on purchases	200
Building	45,000	Commission (credit)	1,500
Opening Stock	15,000	Cash in hand	5,000
Debtors	20,100	Cash at Bank	25,000
Creditors	28,000	Sales tax paid	5,000
Furniture	7,000	Sales tax collected	3,500
Wages	1,800	Interest on investment	500
Rent	5,100

Additional Information
i. Closing stock was valued at Rs 20,000.
ii. Provide depreciation on building @ 5% and on furniture @10%.
iii. Outstanding salaries Rs 1,000.
iv. Unexpired insurance Rs 50.
v. Accrued commission Rs 300.
vi. Provide for manager's commission at 5% on net profit after charging such commission.

Answer

In addition to salaries, companies may offer a fixed percentage of their net profit to managers as commission. This is done to motivate and encourage them to generate more revenue for the company. Journal entry will be:
Profit and Loss A/C Debit
To Manager's Commission A/C Credit

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Question 26 Marks

From the following balances, prepare Trading, Profit and Loss $A / c$ and a Balance Sheet as at $31^{\text {st }}$ March 2023:-

Particulars	₹	Particulars	₹
Opening Stock	20,000	Goodwill	16,000
Purchases	2,92,000	Furniture and Fittings	58,000
Fuel and Power	34,000	Repair Charges	2,900
Capital	1,60,000	Bank	18,000
Sales	5,90,000	Salaries	1,10,000
Rent	10,000	General Expenses	18,000
Returns Inwards	16,000	Debtors	2,30,000
Cash Discount allowed	15,000	Creditors	1,35,000
Cash Discount received	19,000	Output CGST	5,000
Drawings	58,100	Output SGST	5,000
		Input CGST	8,000
		Input SGST	8,000

Take the following adjustments into account:
i. General expenses include ₹ 5,000 chargeable to Furniture purchased on 1st October 2022.
ii. Create a provision of 5% on debtors for Bad and Doubtful Debts after treating ₹ 30,000 as a Bad-debt.
iii. Depreciation on furniture and Fittings for the year is to be at the rate of $10 \%$ per annum.
iv. Closing Stock was ₹ 40,000 , but there was a loss by fire on $20^{\text {th }}$ March to the extent of ₹ 8,000 . Insurance Company admitted the claim in full.
v. a. Goods costing ₹ 2,500 were used by the proprietor.
b. Goods costing ₹ 1,500 were distributed as free samples. Goods were purchased paying CGST and SGST @ 6% each.

Answer

Working Note:-
Calculation of Drawings $=₹ 58,100+₹ 2,800(2,500+300( GST ))=₹ 60,900$
Calculation of Depreciation:
Depreciation on Furniture (i) $=58,000 \times 10 \%=5,800$
Depreciation on Furniture (ii) $=5,000 \times 10 \% \times \frac{6}{12}=250$
Total Depreciation $=₹ 5,800+₹ 250=₹ 6,050$
Calculation of outstanding rent:
Outstanding Rent $=10,000 \times \frac{2}{10}=₹ 2,000$
Calculation of Provision for Doubtful debts:-
Provision for doubtful debts $=$ Sundry Debtors $-$ further Bad debts $\times$ Rate
Provision for doubtful debts $=(₹ 2,30,000-₹ 30,000) \times 5 \%$
Provision for doubtful debts $=₹ 10,000$
When adjustments are given in trial balance all the adjustments will be taken in the balance sheet only. Adjustments that are given after trial balance will be shown both in trading and profit and loss account and balance sheet.

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Question 36 Marks

Ram Prashad maintains his books on Single Entry System, and from them and the particulars supplied, the following figures were gathered together on $31^{\text {st }}$ March 2023: Books Debts, ₹ 10,000 , Cash in Hand, ₹ 510 , Stock in Trade (Estimated) ₹ 6,000, Furniture and Fittings, ₹ 1,200 , Trade Creditors, ₹ 4,000 , Bank Overdraft, ₹ 1,000 . Ram Prashad stated that he started business on $1^{\text {st }}$ April, 2022 with Cash ₹ 6,000 paid into bank but stocks valued at ₹ 4,000 . During the year he estimated his drawings to be ₹ 2,400 . You are required to prepare the statement, showing the profit for the year, after writing off $10 \%$ for depreciation on furniture and fittings.

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Question 46 Marks

From the following information supplied by Ms. Sudha, calculate the amount of 'Net Sales'

	₹
Debtors on April 01, 2016	65,000
Debtors on March 31, 2017	50,000
Opening balance of bills receivable as on April 01, 2016	23,000
Closing balance of bills receivable as on March 31, 2017	29,000
Cash received from debtors	3,02,000
Discount allowed	8,000
Cash received against bills receivable	21,000
Bad debts	14,000
Bill receivables (dishonoured)	20,000
Cash sales	2,25,000
Sales return	17,000

Answer

Working Notes
With the preparation of total debtors account and total bills receivable account, the net sales will be computed as follows:
Net Sales = Cash Sales +Credit Sales - Sales return
=₹ 2,25,000 + ₹ 3,53,000 - ₹ 1,7000
=₹ 5,61,000

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Account 6 Marks Question

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