CA - Foundation Principles and Practice of Accounting Index Sr.No. | Chapter Page No. 1 Accounting Theory &Concepts 1 2 Financial Statements of NPO 22 3 Final Accounts 34 4 Bank Reconcilation Statement 46 5 Capital Revenue Expenditure 54 6 Rectification of Errors 56 7 Consignment 71 8 Partnership Account 81 3 Inventories 107 10 Bill of Exchange 117 11 Average Due Date 126 12 Account Current 131 13 Depreciation 134 14 Sale of Goods on approval basis 144 15 Issue Forfeiture of Shares & Issues of 151 Debentures2) Sim psa ae net —__ Accoun rng ore. | =e | a Bevoui —{—MMethools_of_appl t . Su WDy { v ¥ { | a 10.00,000 Rg 10.00.000 t |leaDep. tot/e = 1.00.00 c= DeplO%s _1.00.000 2 ! 9..00,D00 9,090,000 g 4 # lomoniny. vmneon | => Dep lot= —to,000 a 100,000 | 3,00.000 oe = oDee jot |, 00,00 DDep-lofo glo - , 100.000 “J,0.4,000. [SP Changs — in octounting polity ftom Surin wD. os | 4H Chonge—in_dep riciation_uith prospective Clerk. 7sEh Or To ekg ca agai for Puture period a ang @) inom cunt. Retrospective Efe ay epee ee Bad_debts 19.000 New bad-debls 5.000 2. provisi: a isi 10.000. _Labiliby T Resets T+ l > Jigbiliby Assets Assets? Assehs J 4 Hille ili 5 | | asec ‘Relation —| f TJ t . fantlaeat —_Depencis on_ apperiag or a —tenialat fi oP future events. | ContrGent _—} 1 peu willl ho CP pele _wlll be ttl benefit atte appt | Contigent. ‘ . Conkigent i tabities Assets. = Disclose_ik in "No disclogure in __ eats Alc Sila Alc: a - Eg: : - (Can_be disclosed in VBile Di : ' Board: of Directors —_ Outsiders on organisation. -£q.0 : ; Suit _Hled by ___ - : pty organisation OnProvisions shall be cecogniséd if all | conditions _ ———.are_satisbied --_ —_}\— — Sreent obligation pected oubiPlows ob Benefit @ Reliable _esbimationis_ayailable o_candlitions: ceo -Putfled __ then _ik vis = Papen Liability Provisions 2or “Taxati ( \ aenerake : sue by at r = tandacd Board cae ~ Never Reece ——Bet-up_by ear] “+ | Tmpairment_:- Asset aa oe aa,* — ig era) Accounting _ Standards Precries _cules. far: ' Memurment = Amb. a , Presentation, | Disclosune_!= 2 ReduchOn_in_Nariation : @g: AS-9 tor love! etn dian 2 verage Method. _ CLIFO_and_simple_aug. method not._allawed) “Tmprover_Comparison: : | AS demands additional_in formation —eyen_whi is _nok_required by ——2 Limita F__Accountin rode: ___§ — 1 st enon ates teen bee ta tuill be Aeniteale8. Variations a [2° reduced but nob complet ~——eliminabed._ / I 9 Ne Bea indi iding = i—_ ~S Jateed_tm ha een — = is Rett = ducked aed waged tt B10 > property, Plant? Equipment. ——— rrr. i 1 I I me a|. oe 7 _ ' Ea 6 B) cL ACCOUNTING. a Measure mene, Urscraune: LM oney_Peayremént = Counting. eae ——— > fill_items which _can_be measured in beyms | | of om onety_shall_be@ recorded. ___. Unik.,in iahinhinuesdemenaned | examp | e=r Rilegram, litre, Meler ebt. jtabili O-ther ail ane nob suiieels comparison, only money is sui Comparison Limitations of money_as Meawremenk Scale: }i Money ts volatile_in_nakure Money has _no_universal_applicobility —__ India __, ¢- usaecuurement Principles | Basis. istorical Cost Purchase Price of Asset. Aj Historical} Purchare Cosh ~ ; v =50,000. ‘ 96%. Dep” + im | | 1 I . | 4 i I =—=- == see a i ec_ sae) Tdentificatinn. _ —Transaclion + Exchange. of pene fit with outsiders. Event Ultimate reyule of brangaction Example: Purchaye —» 9.00.000 ~ —Transactian © Goods sold» 50,000 = =Tronsaction — 50,000. = Evenb. Event. dy always _shoven_an balance sheet _— Measurement. + J Te accounting we vecord the items——— hich can be Converted V interms of. money Foe aa proahi b sonane gene |imitations op. Povey y as meaturement. cpeclet = ______.i)_ Mone niverscul_applicabili 8 _—____4 eq. Ua “todio_i {63 sd Aoerica. ‘ey = Hl 5 Aye In—nate a eat ee ined oy —_|Tatecpretation:— . _ rae Lackbietas 2b ee ~ulhy f pe aS tk —allte wi t_rearon _beRind result of l sppnisation _ + | Communicat 3 eameaee Bon, Managers eb * Externd Users te Emaployee ,oovb.. customers ete General Ac cooled. Pecounting —einciples(ees0s) | Eyamople i ing, Stepler i nature , but it ig treated ay because his items care_not material_™Expect and record au Pulure Jose, _ a ——— fish seperated Radic, oe luchichever is. Nes + «| Going Concern: — | ys Assumes that the life of ——businers_is_long_Jaiting | d = Periodicity. alter a period of time Ceverysime)Liabili * allTrcome-“. completion of cbligation Cuserk) (Bentfiy gre —— Canta eecflan mete bene — Cot Rectlad) E c 3 + Trade off. Balansing 16}—+ se lane | created oft of profits. Prowision i iB oat M2019 |) == sake ORAONNNO TROT |, See 2 couisions._ stud Cigans_tt-is created _onjy —___against._ profi \s_Comp wher — i ei teem — Ct pe Ti Ganps) Cas.) SIND_fs Der mae oa Ca bue” Standards . 4 _ a a eoLuca, Pacioli- — Counder of. See: psn) Type a? a Accounts Personal Account. ae Ss + = 0 PuBL toss Ole ___Tntome & Eapendiye i pF ano basedl_on peri aattching and cctruyy ~ J concept] >, Baie enn ap | A foc No } ~ + For NO. I Balance Sheet Baignce Snook 7 CSame Principle) = [padtionally I — eipt_and Qayment Ble of Reread Payment pie. “PRIMES ——_—¥ Ee ae i oe ie rind ——— . -sitety feloweg enol Bh BA — —Acerual nok oe — r a a grec a ee: fe — J os —Tivane € Expendture : Receipes and Pour — “Ly mane. Bpindlins ——Recapnaid Payment. = ~~" are_cecorded. (Copital_exp. recorded irrapectne. of -e shown q_aiseb) whether ik is_capital or —_-framole revenue. ikem Pad — De of THE ) Building > Golance sheep S in 166 j | on_building ig = debited tp ref) ——-B Sports material _conéumad —___=Paymen. for_sPorts __ lh f ial = Ve PTE here Circeapectve of use) 5 = Te records trcame A | = jpt_and | witrenk_eyear only. Payment: includ 1 Le advance intome and —____incame_and_prepaid exp | prepaid ep. are bub: oubstanding exp. & | deduched/ i: i js no _* | Receipt or Payment | | stat Expenditure oc __sieh = Ree par Pose Income. 334. fel ar + ov otal.“Commton Adjustments | Gubecription Cincome Por Po) eae Subscription Recelued xxx|g Donation Received: i — foe Secit Purpose — ae _ for_ General purpose. - | , : | tis_récud___Qanation oP TE Question_ | * sor __js_silenk__ j to meer. 2_@ Moterial_consumed, Paid to creditors Rr [Ort Tél) sports material. = ——lepening stove XKK 5 x Creditors_ Alc _ 40 Purchone atte i— ~— cau +-credit [0 Gone|_| | By.Bal bd Perea. purchase m I cashigert |__| By purchase | xxx — 16 missing then prep- To Bolane | xxx | Con. given | Gre creditors ae FY i ’ Godeut GA) .Glasing)| || _toelow Pea = | ated Material consumed — ro. x 5 How to calculate, Purchase. # | 4 - Material Consumed __xxey__ gf I @) Closing Stack YOK © Opening Stack Cah. 5 1 “Tota Purchwe KX. s : © Cash purchepe Cave) 7 Credit Purchaye Xxx rete| 2s 3) ening. __ KR = ip Bieta Teton 2 on es Lt le Sale Ci ang) ee ‘@2_Closin FAC tes : L Hon. xxx, — i | | : | 4 4 j | 1 ai us tT i i i. s _ V/ | ' r | {| i A 19, | j a 27Financial statements of Not for Profit Organizations CIenee! ees 1019 (20 MARKS) ‘Smith Library Society showed the following position on 31 March, 2017: Balance Sheet as on 31 March, 2017 Liabilities = [Assets z Capital fund 7,93,000 | Electrical fittings 41,50,000, Expenses payable 7,000 | Furniture 50,000 Books 4,00,000 Investment in securities 41,50,000 Cash at bank 25,000 —— | Cashin hand 25,000 8,00,000 8,00,000 ‘The receipts and payment account for the year ended on 31+ March, 2018 is given below: x z To Balance b/d By Electric charges 7,200 Cash at bank 25,000 By Postage and stationary 5,000 Cash in hand 25,000 50,000 | By Telephone charges 5,000 ‘To Entrance fee 30,000 | By Books purchased 60,000 To Membership subscription | 2,00,000 | By Outstanding expenses 7,000 paid To Sale proceeds of old 1500 | By Rent 88,000 papers To Hire oflecture hall 20,000 | By Investmentin securities | 40,000 To Interest on securities. 8,000 | By Salaries 66,000 By Balance c/a Cash at bank 20,000 — _| cash in hana 11,300 3,09,500 309,500 You are required to prepare income and expenditure account for the year ended 31% March, 2018 and abalance sheet as at 315, March, 2018 after making the following adjustments: Membership subscription included % 10,000 received in advance. Provide for outstanding rent % 4,000 and salaries % 3,000, Books to be depreciated @ 10% including additions. Electrical fittings and furniture are also to be depreciated. at the same rate. 75% of the entrance fees is to be capitalized. Interest on securities is to be calculated @ 5% p.a. including purchases made on 1.10.2017 for % 40,000. 28 By CMA, CS Rohan NimbalkarTeachMe Academy @ (88887 88889) Financial Statements of Not for Profit Organizations Answer Smith Library Society Income and Expenditure Account for the year ended 31* March, 2018 Dr. Expenditure x © [income To Electric charges 7,200 | By Entrance fee (25% oF 7,500 To. Postage and stationary 5,000 | ® 30,000) ‘To Telephone charges 5,000 | By Membership To Rent 88,000 subscription 190,000 Add: Outstanding 4.000 | 92,000 | Less: Received in advance To Salaries 66,000 By Sale proceeds of old 1,500 Add: Outstanding 3000 | 69,000 | papers To Depreciation (W.N.1) By Hire of lecture hall 20,000 Electrical fittings 15,000 By Interest on securities 8,000 Furniture 5,000 (WN2) Books 46,000 | 66,000 | Add: Receivable s00 | 8,500 By Deficit- excess of 16,700 expenditure over income 244.200 244.200 Balance Sheet of Smith Library Society as on 31st March, 2018 Liabilities z = ‘Asset z z Capital fund 7,93,000 Electrical fittings 1,50,000 ‘Add: Entrance fees 22.500 Less: Depreciation 15.000) | 1,35,000 815,500 Furniture 50,000 Less: Excess of expenditure | (16.700) | 7.98800 | Less: Depreciation G.000) | 45,000 over income ‘Outstanding expenses: Books 60,000 Rent 4000 Less Depreciation 6.000) | 414,000 Salaries z000 [7,000 | Investment: ‘Membership subscription in 10,000 | Securities 7,90,000 advance ‘Accrued interest 500} 1,90,500 Cash at bank 20,000 Cash in hand 11,300 815,800 8.15,000 29 By CMA, CS Rohan NimbalkarTeachMe Academy @ (88887 88889) Financial Statements of Not for Profit Organizations Working Notes: 1. Depreciation z Electrical fittings 10% of & 1,50,000 15,000 Furniture 10% of & 50,000 5,000 Books 10% of & 4,60,000 46,000 Interest on Securities x zx Interest @ 5% pa. on 8 1,50,000 for full year 7,500 Interest @ 5% pa. on % 40,000 for half year 1,000 | 8,500 Less: Received (8.000) Receivable 500 Coreen ar) Paes) he following information of M/s. Club are related for the year ended 31s March, 2018: oO Balances [as on 01-04-2017 (®) [As on 31-3-2018 (®) Stock of Sports Material 75,000 7,12,500 Amount due for Sports Material 67,500 97,500 Subscription due 11,250 16,500 Subscription received in advance 9,000 5,250 (2) Subscription received during the year & 3,75,000 (3) Payments for Sports Material during the year & 2,25,000 You are required to: (A) Calculate the amount of Subscription and Sports Material that will appear in Income & Expenditure Account for the year ended 31.03.2018 and (B) Also show how these items would appear in the Balance Sheet as on 31.03.2018. 30Financial Statements of Not for Profit Organizations Answer Subscription forthe year ended 31.3.2018 z Subscription received during the year 3,75,000 Less: Subscription receivable on 14.2017 11,250 Less: Subscription received in advance on 31.3.2018 5.250 | (16.500) 358,500 ‘Add: Subscription receivable on 31.3.2018 16,500 ‘Add: Subscription received in advance on 1.4.2017 9.000 | 25500 Amount of Subscription appearing in Income & Expenditure 3,84,000 Account Sports material consumed during the year end 31.3.2018, x ‘Payment for Sports material 2,25,000 Loss: Amounts due for sports material on 1.4.2017 (67,500) 1,57,500 ‘Add: Amounts due for sports material on 31.3.2018 97,500 Purchase of sports material 255,000 Sports material consumed: Stock of sports material on 1.4.2017 75,000 ‘Add: Purchase of sports material during the year 255,000 3,30,000 Less: Stock of sports material on 31.3.2018 (2.12500) Amount of Sports Material appearing in Income & Expenditure Account 2,17,500 Balance Sheet of M/s TT Club For the year ended 31% March, 2018 (An extract) Liabilities = | Assets t Unearned Subscription 5,250 | Subscription receivable 16,500 Amount due for sports material | 97,500 | Stock of sports material 1,12,500 3Financial Statements of Not for Profit Organizations cr Ie} RTP May 2019 The Receipts and Payments account of Trustwell Club prepared on 31* March, 2018 is as follows: Receipts and Payments Account Receipts ‘Amount © | Payments ‘Amount | To Balance b/d 450 | By Expenses (including 6,300 For sports material & 2,700) To Annual Income from Payment 4,590 Subscription Add: Outstanding of last year 180 By Loss on Sale of 180 received this year Furniture (cost price & 450) 4.770 By Balance c/d 90,450 Less: Prepaid of last year 20 4,680 To Other fees 1100 To Donation for Building 90,000 96,930 96,930 Additional information: 1. Trustwell club had balances as on 1.4.2017 :- Furniture 1,800; Investment at 5% & 27,000; Sports material & 6,660; 2. Balance as on 313.2018 Subscription Receivable 8 270; Subscription received in advance 9 Stock of sports material @ 1,800. Do you agree with above Receipts and Payments account? If not, prepare correct Receipts and Payments account and Income and Expenditure account for the year ended 31st March, 2018 and Balance Sheet on that date. Answer Corrected Receipts and Payments Account of Trustwell Club for the year ended 31st March, 2018 Receipts = | Amount | Payments ‘Amount x x To Balance b/d 450. | By Expenses To Subscription (% 6,300 -%2,700) 3,600 Annual Income 4590 By Sports Material 2,700 Less: Receivable as on 31.3.2018 270 By Balance c/a Add: Advance received for the year 2018-| 90 (Cash in Hand and at Bank) 90,720 2019 Add: Receivable as on 31.3.2017 180 Less: Advance received as on 31.3.2017 90 4,500 Other Fees 1,800 To Donation for Building 90,000 To Sale of Furniture 270 97,020 97,020 32.TeachMe Academy @ (88887 88889) Financial Statements of Not for Profit Organizations Income and Expenditure Account of Trustwell club for the year ended 31st March, 2018 Expenditure ‘Amount | Income Amount] x x To Sundry Expenses 3,600 | By Subscription 4,590 To Sports Material By Other fees 1,800 Balance as on 1.4.2017 6,660 By Interest on investment 1,350 Add: Purchases 2,700 (5% on 27,000) Less: Balance as on 31.3.2018 | 1,800 7,560 | By Deficit: Excess of Expenditure To Loss on sale of Furniture ‘go | over Income 3,600 11,340 11,340 Balance Sheet of Trustwell club as on 31st March, 2018 Liabilities ‘Amount ‘Assets ‘Amount @ @ Capital Fund 36,000 Furniture 1,800 Less: Excess of Less: Sold 450 | 1350 Expenditure 3,600 | 32,400 | 5% Investment 27,000 over Income Building Fund 90,000 | interest Accrued on Investment 1,350 Subscription Recelved 90 | sports Material 1,800 in Advance Subscription 270 Receivable Cash in Hand and —— | atBank 90.720 1,22,490 1,22,490 Working Note: Balance Sheet of Trustwell Club as on 1st April, 2017 Liabilities Amount | Assets Amount z x Subscription Furniture 1,800 Received in Advance 90 | Investment 27,000 Capital Fund 36,000 | Sports Material 6,660 (Balancing Figure) Subscription Receivable 180 Cash in Hand and at Bank 450 36,090 36,090 33—_{Maruki_} ZU 2 —___Non- ‘MoouPadurin. Vito Pate sting | —_— (Sci Servic g-retoiler Entity __ iz = lo PanuPacburing fle Customer, ——_—» Trading_ale AN J 9 Pere Non Monubh j s 4) Palance_ Sheek fn ral j t DPR Ale 5 + : ) Balance Sheet = —lficect Material cengyngy ty — othe" salty j .__Dpering. Stock "x | 4Adejn.~ & distr..! © Purchase ae Te Overhead —_ HBC ———@)_€up..on_Purchane sxx = Inditec: ~!Dep%on__=Salaman 4 {© _Purchae Return xy Material ormpuber Salary! lea clotng stack uy laity Loft co cpauntera| ~—— Raw material consumed xxx __coal,.gar_|» Salary -Shawrsom i <= —=factory.cent P&S __expenser = Supervisors, - 1 yer} = -Corriage | eet me OubwiBG. -Ainched Goal =) —____ phe te ta Te ading.| __ lr. acmerrsigeeeasscalel T t, ———_|To_Opening Stock (P-@)_| xxx _| By Sales | w#xx ———_ To Purchase (F.G)__| xxx | By cn KAA — | e_nanuPacturing sic} xx] t. su) ——_|(éa. ManuPacured_ — | by ua) — — | Expenes_on. Lt xs | + | purchae an To G.P. COD 1} xxx XK I {| OGL Alc —t Shae Bata — Sting ng — 1®_ Finished Gooob. man Dr : 28 = Purchau | x , STeqding De. oF eee sadutt on . fa Gln i 6 Trading_Cr-y —— + ~~) Raw. Material_Consumed: - So Ep. co-purthase(r es Purchase Retuien cart) __________Opening_Siock es) KEK ae KKK [ I © Closing. cer). ht pana material Consumed —sasce i 7 @)_labour. 1 KL _ + +) Factory Ep HK ° a_i o XK { - © Closing Stock (WIP)! Gea | a ured | Produced a Boro Opening stock of 6a. cx Pd sing sine oP C6 aoe poo Cost ob Geos Sold. ue GPs tate ek r 4 Sale. sae L : vaca OP Gonads used Por purpose ather thon eal} Gooch nok> Sold Cclosing Stock) pip es _____beieoass ———_ 6 Purchase ale _+ i (a L Ale = de (Advertisement) ~ ~Feadtag, Ale oe~_ Adjuitment. tee Sample ac — Dr. — 2d ale =o ———_ Donntion oiler en ie FL fle ae decor tte. — De —Bolonce sheet. ess by Fire/ late Lane ge ‘ale — Dr ings Alc _— Dr. © Prom capital Closing Stock) ——-lrocds in transite. =Dr,___fiss et ; ;—=Te_Purchave Ale Afacling ALC. (Cee side) Ic losing. “Stock ~always salwed ak cosk_or 312 whichever ie less. (Due to conservatism) ——+ Prepaid Expenses: Entity —_______sP-_ seporate entry ta ——| Prepaid! Exp. ple —De___nob_tevonded 6 prepaid Bank exp. the! ae iked bo expense pt are: debit —_- le catich is, nt comme bs — c77 (th rect deduct Prom ge Tr ooh tl htt prt - oo ie + Advance Income a eporate eniny. isn | Bank_Ale —=De___ed then ad. names. n~ “16 Aduance éd_in_income Alc: Income Alc. seeteckt Deduct: feo Income Sia) : Show. it.on_liab..sidé ~ ndvistonding. Expenses eee cobras =e D Add-in respective exp. i ers exp. Ale. Liobiliy) 2 Show on. zy side. {Depron oe ead “le : 92 Deduct -Prom:aseb | 2s (ae oi (Provision Created Pht Alc P6--Hle_—— Dr ad_debts xxx ‘to provision tor conan ee——.TP answer _| - is negative. pg ————.then_cr. this amount ___ Debtors 4 = jin P fe Ble Now bad-debts__xx: Balance. “sheet _ © New ROD Debtors 2K © Provision for xxx Qad_-debbs Assume loss- 101) Loss by fire Ale — Dr 1d,00000 _.~ sen ny Raa a fi_3 gonnno: I Insurance_Company Ate — Dr. g.00000. - PAL Ale — Dr oom: -ber ee Coeol tbr ey Os Conn ews & Rectification of Errors ) ‘The following are the balances as at 31st March, 2017 extracted from the books of Mr. XYZ. © z Plant and Machinery 19,550 | Bad debts recovered 450 Furniture and Fittings 10,250 | Salaries 22,550 Bank Overdraft 80,000 | Salaries payable 2,450 Capital Account 65,000 | Prepaid rent 300 Drawings 8,000 | Rent 4,300 Purchases 41,60,000 | Carriage inward 4,125 Opening Stock 32,250 | Carriage outward 1,350 Wages 12,165 | Sales 2,15,300 Provision for doubtful debts| 3,200 | Advertisement Expenses 3,350 Provision for Discount on Printing and Stationery 1,250 debtors 1,375 | Cash in hand 1,450 Sundry Debtors 1,20,000 | Cash at bank: 3,125 Sundry Creditors 47,500 | Office Expenses 10,160 Bad debts 1,100 | Interest paid on Ioan 3,000 Additional Information: 1. Purchases include sales return of £2,575 and sales include purchases return of 81,725. 2. Goods withdrawn by Mr. XYZ for own consumption 3,500 included in purchases. 3. Wages paid in the month of April for installation of plant and machinery amounting to 8450 were included in wages account. 4, Free samples distributed for publicity costing 8825, Create a provision for doubtful debts @ 5% and provision for discount on debtors @ 2.5%. 6. Depreciation is to be provided on plant and machinery @ 15% p.a. and on furniture and fittings @ 10% pa. 7. Bank overdraft is secured against hypothecation of stock. Bank overdraft outstanding as on 313.2017 has been considered as 80% of real value of stock (deducting 20% as margin) and after adjusting the marginal value 80% of the same has been allowed to draw as an overdraft. Prepare a Trading and Profit and Loss Account for the year ended 31st March, 2017, and a Balance Sheet as on that date. Also show the rectification entries. 4Answer Rectification Entries accounts Particulars Dr Amount Amount a ‘To Purchases account To Returns outward account (Being sales return and purchases return wrongly included in purchases and sales respectively, now rectified) 2,575 1725 2,875 1,725 () | Drawings account... ‘To Purchases account (Being goods withdrawn for own consumption included in purchases, now rectified) r. 3,500 3,800 Gil) | Plant and machinery account.. ‘To Wages account (Being wages paid for installation of plant and machinery wrongly debited to wages, now rectified) Dr. 450 450 (iv) | Advertisement expenses account now rectified) To Purchases account (Being free samples distributed for publicity out of purchases, Ds 825 825 ‘Trading and Profit and Loss Account of Mr. XYZ, for the year ended 31st March, 2017 Dr. ‘Amount | Amount | Cr. ‘Amount | Amount z z z x To Opening stock 32,250 | By Sales 213,575 To Purchases 153,100 Less: Sales return 2575 | 2,11,000 Less: Purchases return 1,725 | 1,51,375 | By Closing stock To Carriage inward 1.125 | = 80,000 x 100/80 x 100/80 1,258,000 To Wages 14,715 To Gross profit ¢/d 1,39,535 3,36,000 336,000 To Salaries 22,550 | By Gross profit b/d 1,39,535 To Rent 4,300 | By Bad Debts recovered 450 To Advertisement expenses 4175 To Printing and stationery 1,250 To Bad debts 1,100 To Carriage outward 1,350 To Provision for doubtfulFinal accounts debts 5% of 11,20,000 6,000 Less: Existing provision 3200/ 2,800 To Provision for discount 2,850 on debtors 2.5% of €1,14,000 Less: Existing provision uszs| 1,475 To Depreciation: Plant and machinery 3,000 Furniture and fittings 1025} 4,025 To Office expenses 10,160 To Interest on loan 3,000 To Net profit (Transferred to 83,800 capital account) Balance Sheet of Mr. XYZ as on 31st March, 2017 ‘Amount | Amount ‘Amount | Amount Liabilities z | Assets z z Capital 65,000 Plant and machinery 20,000 account Less: Depreciation 3000| 17,000 Add: Net profit 83,800 Furniture and fittings 10,250 1,48,800 Less: Depreciation 1.025 9,225 Less: 11.500 Closing stock 1,25,000 Drawings 1,37,300 | sundry debtors 120,000 Bank overdraft 80,000 Sundry creditors 47,500 | Less: Provision for doubtful debts 6,000 Payable salaries 2,450 Provision for bad debts 2.850 1,11,150 Prepaid rent 300 Cash in hand 1450 Cash at bank 3.125 267,250 267,250 Crerenn ry Perr ‘The following is the trial balance of Hari as at 31st December, 2017: Di a Hari’s capital account : 76,690 Stock 1* January, 2017 46,800 | - Sales : 3,89,600 Returns inward 8600 |- Purchases 3,21,700 | - Returns outward : 5,800 Carriage inwards 19,600 | - Rent & taxes, 4,700 | - Salaries & wages 9,300 | - Sundry debtors 24,000 | - 43accounts Sundry creditors - 14,800 Bank loan @ 14% pa. - 20,000, Bank interest 1100 |- Printing and stationary expenses 14,400. | - Bank balance 000 |- Discount earned : 4,440 Furniture & fittings 5,000 |- Discount allowed 1800 |- General expenses a14so_ | Insurance 1300, |- Postage & telegram expenses 2330 |- Cash balance 380 | - ‘Travelling expenses 870 |- Drawings 30,000 511.330 | 5.11330 ‘The following adjustments are to be made: (1) Included amongst the debtors is 23,000 due from Ram and included among the credit tohim. (2) Provision for bad and doubtful debts be created at 5% and for discount @ 2% on sundry debtors. (8) Depreciation on furniture & fittings @ 10% shall be written off. (4) Personal purchases of Hari amounting to 8600 had been recorded in the purchases day book. (5) Interest on bank loan shall be provided for the whole year. (6) A quarter of the amount of printing and stationary expenses is to be carried forward to the next year. (7) Credit purchase invoice amounting to 2400 had been omitted from the books. (8) Stock on 31.12.2017 was 278,600. Prepare (i) Trading & profit and loss account for the year ended 31.12.2017 and (i) Balance sheet as on 318 December, 2017. rs €1,000 due Answer ‘Trading and Profit and Loss Account of Mr. Hari for the year ended 31% December, 2017 z z z x ‘To Opening stock 46,800 | By Sales 3,869,600 To Purchases 321,700 Less: Returns (8,600) | 3,81,000 Add: Omitted invoice 400 By Closing stock 78,600 3,22,100 Less: Returns (5,800. 3,16,300 Less: Drawings {600} | 3,15,700 To Carriage 19,600 To Gross profit e/a 77,500 459,600 459,600 ‘To Rent and taxes 4,700 | By Gross profit b/d 7,500 To Salaries and wages 9,300 | By Discount 4,440 To Bank interest 1,100 Add: Due 1.200 2,800 ‘To Printing and Stationary 14,400 Less: Prepaid (1/4) 3.600| 10,800 To Discountallowed 1,800 To General expenses 11,450 To Insurance 1,300accounts To Postage & telegram expenses 2330 ‘To Travelling expenses 870 ‘To Provision for bad debts 1.150 [WN] To Provision for discount on 437 debtors [W.N.(ii)] 500 To Net profit 34.503 81,940 81,940 Balance Sheet of Hari as at 31* December, 2017 Liabilities x | Assets z g Capital 76,690 Furniture & fittings 5,000 Add: Net profit, 34,503 Less: Depreciation soo| 4,500 411,193 Sundry debtors (W.N.1) 23,000 Less: Drawings: Less: Provision for bad & doubtful debts (W.N.2) 50 Cash 30,000 21,850 Goods 600 30,600 | 80,593 | Less: Provision for discount (W.N.2) | 437] 21,413 Bank loan 20,000 | stock 78,600 Bank interest due 1,700 | Prepaid expenses: Sundry creditors (W.N.3) 14,200] Printing & stationary 3,600 Bank balance 8,000 Cash balance 380 116,493 116,493 Working Notes: (1) Sundry debtors Balance as per trial balance 24,000 Less: Due to Ram 1.000 23,000 2) Provision for bad & doubtful debts: (@5% on 823,000 1.150 Provision for discount: 2% on ¥21,850 (23,000 -1,150) 437 (3) Sundry creditors Balance as per trial balance 14,800 Less: Set off in respect of Ram 1.000 13,800 ‘Add: Purchase invoice omitted 400 14.200 45— — Deposit 10.000 — { — Denes soot —F— ; 4 —| ising Ruger i x } @Deduce O-Signed—Goe—_——_— | teioco—Prem + As—Al { 59 { ~-4| Stocted with = Bal. P Answer i = i i a Stacked with Bal Answer is negatives Qverdratt alltacted with Old £ Answoe is positive = Cuercchet +| Started with old & Answer i negative « Balance. j SL