CH 3 Extension Part 1

Land Account
Particulars Amount(Rs.) Particulars Amount(Rs.)

Cash 1000000
Cash Account
Equity share capital 100000 Land 1000000
Securities premium 200000 Loan from SBI 500000
Sales 60000 Salary 580000
Goods 50000
Loan from SBI

Cash 500000
Interest expense
Interest payable 50000
Interest payable
Interest expense 50000
Equity share capital

Cash 100000
Securities premium
Cash 200000
Salary Account
Cash 580000
Salary payable 20000
Salary payable
Salary 20000
Goods Account
Cash 50000 Cost of goods sold 80000
Trade payable 50000
Trade payable
Goods 50000
Cost of goods sold

Goods 80000
Trade receivables
Sales 40000
Sales
Trade receivables 40000
Cash 60000
Make journal entries for the following transactions or events in the books of a compa
Sl no
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Make journal entries for the following transactions or events in the books of a company for t
Transaction/event
10,000 shares of Rs.20 each are issued for aprice of Rs.50 for cash
100,000 bonds of Rs. 10 each were issued at par, carrying coupon rate of 10%
Land purchased for Rs.1,50,000 by paying cash, registration cost Rs.10,000
Machinery purchased for Rs.3,00,000, installation cost paid Rs.30,000
Office furniture purchased for Rs.50,000, 60% paid, balance to be paid after
three months
Goods purchased for Rs.8,00,000 (20% credit)
Goods of Rs.10,000 found defective and returned to the supplier
Goods of Rs.6,00,000 sold for Rs.9,00,000 (50% credit)

Dues to supplier paid
One customer who owes Rs.20,000 goes bankrupt, unlikely to pay anything
Cash of Rs.2,50,000 collected from the customers
Office supplies purchased for Rs.15,000 (10% outstanding)
Salary for the year Rs.6,00,000 (50,000 for last month not paid)
Godown rent of Rs.10,000 p.m. for eight months payable for the whole year
out of which six months rent paid
Interest on bonds is outstanding at year end for six months (from date of issue)
Office supplies of Rs.4,000 left at year end.
Dues towards office supplies paid
TCS shares purchased from secondary market for Rs.30,000

a company for the year ended 31.03.22.
Journal entry Dr Cr
Cash 500,000
Equity share capital 200,000
Securities premium 300,000
Cash 1,000,000
10% Bonds 1,000,000
Land 160,000
Cash 160,000
Machinery 330,000
Cash 330,000
Furniture 50,000
Cash 30,000
Payable for furniture 20,000
Goods 800,000
Cash 640,000
Trade payable 160,000

Goods 10,000
Cash 450,000
Trade receivable 450,000
Sales 900,000
Cost of goods sold 600,000

Goods 600,000

Cash 150,000
Bad debt 20,000

Cash 250,000
Office supplies 15000

Cash 13500
Payable for office supplies 1500
Salary 600000
Cash 550000
Rent 80000
Cash 60000
Rent payable 20000
Interest expense 50000

Office supplies consumed 11000
Office supplies 11000
Payable for office supplies 1500

Cash 1500
Investment in TCS shares 30000

Cash 30000
Reason
What is the
financial element
involved vis-à-vis
the financial
item?
Asset Cash(asset) increases, so debited
Equity Equity increases, so credited
Equity Equity increases, so credited

Liability Liability increases, so credited
Asset Land(asset) increases, so debited

Asset Cash (asset) decreases, so credited
Asset Machinery(asset) increases, so debited

Asset Cash(asset) decreases, so credited
Asset Furniture(asset) increases, so debited

Asset Goods (asset) increases, so debited

Liability Liability decreases, so debited

Asset Goods (asset) decreases, so credited

Asset Asset increases, so debited
Income Income increases, so credited
Expense Goods sold, becomes expense. So debited

Asset Asset decreases, so credited
Liability Liability decresaes, so debited

Expense/loss Loss increases, so debited

Asset Asset decreases, credited

Asset Trade receivable(asset) decreases, so credited
Asset Asset increases, so debited

Expense Expense increases, so debited


Rent payable Liability increases, so credited

Expense Expense increases, debited
Liability Liability decreases, so debited

Asset Asset increases, debited

Open ledger accounts for the transactions given in Illu 3.6 and post the journal entries to respective accounts.
Prepare the trial balance as at 31.03.22.
Prepare the Statement of Profit & Loss and Cash flow statement for the period.
Prepare the balance sheet as at year end.
Dr Cr
Cash Account
To equity share capital 200,000 By Land 160,000
To Securities premium 300,000 By Machinery 330,000
To 10% Bond 1,000,000 By Furniture 30,000
To Sales 450,000 By Goods 640,000
To Trae receivable 250,000 By Trade payable 150,000

By Office supplies 13,500
By Salary 550,000
BY rent 60,000
By payable for office suuplies 1,500
By Investment in TCS shares 30,000
By Balance c/d 235,000
2,200,000 2,200,000
Land Account
To cash 160,000
Machinery Account
To cash 330,000 Balance c/d 330,000
Furniture Account
To Cash 30,000 Balance c/d 50,000
To Payable for funiture 20,000
Goods Account
To cash 640,000 Trade payable 10,000
To Trade paable 160,000 By COGS 600,000
Balance c/d 190,000
800,000 800,000
COGS Account
To Goods 600,000
Office supplies Account

To Payable for office supplies 1,500 By Office suuplies consumed 11,000
To cash 13,500 Balancec/d 4,000
Salary Account
To Salary payable 50,000
To cash 550,000
Rent Account
To cash 60,000
To rent payable 20,000
Interest Account
To Interest payable 50,000
Trade receivable Account

To Sales 450,000 By Bad debt 20,000
By Cash 250,000
Balance c/d 180,000
Investment in TCS shares Account

To Cash 30,000
Bad Debt Account

To Trade receivable 20,000
Office supplies consumed

To Office supplies 11,000
s to respective accounts.
Dr Cr
Share capital Account
Balance c/d 200,000 By cash 200,000
Securities premium Account

Balance c/d 300,000 By cash 300,000
10% Bonds Account

Balance c/d 1,000,000 By cash 1,000,000
Sales Account
By Cash 450,000
By Trade receivable 450,000
Interest payable Account

Balance c/d 50,000 By Interest 50,000
Trade payable Account

To Goods 10,000 BY Goods 160,000
To Cash 150,000 Balance c/d -
Payable for furinuture Account

Balance c/d 20,000 By Furniture 20,000
Payable for office supplies Account

To Cash 1,500 By Office supplies 1,500
Salary payable
Balance c/d 50,000 By Salary 50,000
Rent Payable
Balance c/d 20,000 By rent 20,000
Trial Balance as at 31.03.22
Account name Dr Cr
Cash 235,000
Land 160,000
Machinery 330,000
Furniture 50,000
Goods 190,000
COGS 600,000
Office supplies 4,000

Office suuplies consumed 11,000
Salary 600,000
Rent 80,000
Interest 50,000
Investment in TCS shares 30,000
Bad debt 20,000
Share capital 200,000
!0% Bonds 1,000,000
Sales 900,000
Interest payable 50,000
Salary payable 50,000
Rent payable 20,000
Payable for furniture 20,000
2,540,000 2,540,000
Cash flow statement for the year ended on 31.03 2022
Cash from operating activities
Cash received from customers 700,000
Paid to suppliers (790,000)
Office supplies purchased (15,000)
Salary paid (550,000)
Rent paid (60,000)
(715,000)
Cash from investing activities
Paid for machinery purchase (330,000)
Paid for land purchase (160,000)
Paid for furniture purchase (30,000)
TCS shares purchased (30,000)
(550,000)
Cash from financing activities
Share issue 500,000
Bond issue 1,000,000
1,500,000
Change in cash 235,000

Profit & Loss Statement for the year ended on 31.03.2022
Which statemParticulars Amount(Rs)
Sales 900,000
BS Other income -
BS Total Income 900,000
BS Less: Exepnses
BS COGS 600,000
BS Salary 600,000
P&L Rent 80,000
Office supplies consumed 11,000
BS Bad debt 20,000 1,311,000
P&L EBIT (411,000)
P&L Less: Interest 50,000
P&L EBT (461,000)
P&L Less: Tax -
BS Net loss (461,000)
BS
P&L Balance Sheet as at 31.03.2022
BS Noncurrent assets
BS Land 160,000
BS Machinery 330,000
P&L Furniture 50,000
BS Investment in TCS shares 30,000 570,000
BS
BS Current asets
BS Inventory 190,000
Cash 235,000
Office supplies 4,000 609,000
1,179,000
Equity
Equity share capital 200,000
Retained profit (461,000) 39,000
Noncurrent liabilities
10% Bonds 1,000,000
Current liabilities
Rent payable 20,000
Payable for furniture 20,000 140,000
1,179,000
Zeta Limited's balance sheet as at 31.03.2021 is given below.
Application Amount(Rs.) Amount(Rs.)
Noncurrent assets
Property, Plant & Equipment less Depreciation 2,800,000
Capital work-in-process 1,100,000
Intangibles less amortisation 800,000
Investments 700,000 5,400,000
Current assets
Inventory 1,400,000
Investments 650,000
Cash 900,000
Prepaid expenses for April & May 2021 50,000 3,400,000
Total of application 8,800,000

Sources Amount(Rs.) Amount(Rs.)
Equity
Equity share capital 2,000,000
Securities premium 1,500,000
Retained profit 1,800,000 5,300,000
Noncurrent liability
8% Bonds to be repaid after three years 1,500,000
Term loan from bank (interest @9% p.a.) 600,000 2,100,000
Current liability
Tax payable 440,000
Advance from customers 200,000 1,400,000

Total of sources 8,800,000
Transactions for the year 2021-22 are given below.
1. Inventory of Rs.10,00,000 were sold to customers for a value of Rs.15,00,000.
Advance from customer was adjusted against this sale. Rs.11,00, 000 was received
from customers against this sale.
2. Purchase of goods was made for Rs.12,00,000 (50% paid)
3. Goods of Rs.25,000 was retuned to the supplier and a damage claim of Rs.5,000 was made as per contract.
4. Customers returned the goods of Rs.40,000 and claimed damage of Rs.6,000.
5. Rs.1,00,000 was spent on capital work-in-process and an asset costing Rs.3,00,000 got completed.
6. Goods of Rs.1300,000 were sold at Rs.19,00,000 (10% credit). Freight charges of Rs.35,000 was paid.
7. Salary payable and interest payable of last year were paid.
8. Salary for the year: Rs.6,00,000 (Rs.75,000 not yet paid)
9. Interest for the year paid 50%.
10. Cash collected from old receivables: Rs.3,90,000.
11. An old machine of Rs.2,00,000 on which depreciation of Rs.50,000 was already charged was sold for Rs.1,40,000
12. Depreciation on other tangible assets: Rs.180,000.
13. Amortisation on intangibles: Rs.80,000

14. Nncurrent investments with cost of Rs.1,00,000 sold for Rs.1,10,000.
15. Current investments are accounted for under MTM accounting. Market value on year end is Rs.6,35,000.
16. Income tax rate is 30%. Last year's tax was paid.
Pass journal entries to record the above transactions or events.

Post these entries to ledger accounts and prepare trial balance.
Prepare balance sheet, profit & loss statement and cash flow statement for the year ended on 31.03.2022.
Trial Balace as on 31.03.2022

Account name DR CR
Capital work-in-process 900,000
Noncurrent Investments 600,000
Inventory 290,000
Current Investments 635,000
Cash 2,388,000
COGS 2,300,000
Salary 600,000
Interest 174,000
Depreciation on PPE 180,000

Amortisation of intangibles 80,000
Other expenses 50,000
Retained profit 1,800,000
Term loan from bank (interest @9% p.a.) 600,000
Trade payable 1,095,000
Tax payable -
Advance from customers -
Sales 3,400,000
Gain on sale of noncurrent investments 10,000
Damage claim 1,000
Loss on sale of PPE 10,000
Unrealised loss on current investments 15,000
12,067,000 12,067,000
Dr
COGS 1,000,000
Inventory
Cash 1,100,000
Advance from customer 200,000
Sales
Inventory 1,200,000
Cash
Trade payable
s made as per contract. Trade payable 55,000
Inventory
Damage claim
Inventory 40,000
Damage claim 6,000
Trade receivable
got completed. Capital work-in-process 100,000
Cash
PPE 300,000
Capital work-in-process
.35,000 was paid. COGS 1,300,000
Inventory
Cash 1,710,000
Sales
Cash
Salary 600,000
Cash
Salary payable
Interest 174,000
Cash
Interest payable
Cash 390,000
Trade receivables
arged was sold for Rs.1,40,000. Cash 140,000
PPE
Depreciation 180,000
PPE
Amortisation of intangibles 80,000
Intangibles
Cash 110,000
Noncurrent investments
Gain on sale of noncurrent investments
year end is Rs.6,35,000. Unrealised loss on current investments 15,000
Current investments

Prepaid expenses
Tax payable 440,000
Cash
ended on 31.03.2022.
Statement of Profit & Loss for the year ended on 31.03.2022

Sales
Other Income
Total Income
Less: Expenses
COGS 2,300,000
Salary 600,000
Amortisation 80,000
Loss on current investments 15,000
Damage claim 1,000
EBIT
Less: Interest
EBT
Less: Tax
EAT
Zeta Limited's balance sheet as at 31.03.2022

Application Amount(Rs.)
Noncurrent assets
Capital work-in-process 900,000
Investments 600,000
Current assets
Inventory 290,000
Investments 635,000
Cash 2,388,000
Total of application
Sources Amount(Rs.)
Equity
Retained profit 1,800,000
Noncurrent liability
Term loan from bank (interest @9% p.a.) 600,000
Current liability
Trade payable 1,095,000
Tax payable -
Advance from customers -

Total of sources
Dr
Cash Account
Particulars Amount(Rs.)
Balance b/d 900,000
Sales 1,100,000
Sales 1,710,000
PPE 140,000
Noncurrent investments 100,000
Gain on sale of noncurrent investment 10,000

4,350,000
Cr
Dr
1,000,000 PPE Account
Balance b/d 2,800,000
CWIP Account 300,000
1,500,000
3,100,000
600,000 Dr
600,000 CWIP Account
50,000 Balance b/d 1,100,000
5,000 Cash 100,000
1,200,000
Dr
46,000 Intangibles Account
100,000 Balance b/d 800,000
300,000 800,000
1,300,000 Dr
Noncurrent investment
1,900,000 Balance b/d 700,000
700,000
210,000
Dr
Inventory Account
525,000 Balance b/d 1,400,000
75,000 Cash 600,000
87,000 Trade receivables 40,000
2,640,000
87,000 Dr
Trade receivables
390,000 Particulars Amount(Rs.)
Balance b/d 400,000
Sales 200,000
150,000 Sales 190,000
790,000
Dr
180,000 COGS
80,000 Inventory Account 1,000,000
Inventory Account 1,300,000
100,000
10,000 Dr
Current investments
15,000 Particulars Amount(Rs.)
Balance b/d 650,000
50,000 650,000
Dr
440,000 Prepaid expenses
Balance b/d 50,000
on 31.03.2022
3,400,000 Dr
10,000 Share capital account
3,410,000 Particulars Amount(Rs.)
Dr
Securities premium account
3,236,000
174,000
174,000
0 Dr
0 Retained profit
0 Particulars Amount(Rs.)
.2022
Amount(Rs.)
Dr
8% Bond
4,990,000
Dr
Term loan from bank
8,657,000
Amount(Rs.)
Dr
5,300,000 Trade payable
Inventory 50,000
Damagae claim 5,000
2,100,000
Dr
Salary payable
Cash 100000
Dr
Interest payable
8,657,000 Cash 110000
Dr
Tax payable
Cash 440,000
Dr
Advance from customer
Sales 200,000
Dr
Sales Account
Dr
Damage claim
Trade receivable 6000
Dr
Salary Account
Cash 525000
Dr
Interest Account
Cash 87000
Dr
Loss on sale of PPE
To PPE 10000
Dr
Depreciation Account
PPE 180000
Dr
Amortisation Account
Intangibles 80000
Dr
Gain on sale of noncurrent investments
Dr
Unrealised loss on current investments
Current investments 15000
Dr
Other expenses
Prepaid expenses 50000
Cr
Cash Account
Inventory 600,000
CWIP 100,000
Interest 87,000
Tax payable 440,000
Balance c/d 2,388,000
4,350,000
Cr
PPE Account
Cash 140,000
Balance c/d 2,770,000
3,100,000
Cr
CWIP Account
PPE 300,000
Balance c/d 900,000
1,200,000
Cr
Intangibles Account
Amortisation 80,000
Balance c/d 720,000
800,000
Cr
Noncurrent investment
Cash 100,000
Balance c/d 600,000
700,000
Cr
Inventory Account
By COGS 1,000,000
COGS 1,300,000
Balance c/d 290,000
2,640,000
Cr
Trade receivables
Inventory 40,000
Damage claim 6,000
Cash 390,000
Balance c/d 354,000
790,000
Cr
COGS
Cr
Current investments
Unrealised loss on current investments 15,000
Balance c/d 635,000
650,000
Cr
Prepaid expenses
Other expenses 50000
Cr
Share capital account
Cr
curities premium account
Cr
Retained profit
Cr
8% Bond
Cr
Term loan from bank
Balance b/d 600,000
Cr
Trade payable
Balance b/d 550,000
Inventory 600,000
Cr
Salary payable
Balance b/d 100,000
Salary 75000
Cr
Interest payable
Balance b/d 110,000
Interest 87000
Cr
Tax payable
Balance b/d 440,000
Cr
Advance from customer
Balance b/d 200,000
Cr
Sales Account
Cash 1,100,000
Trade recevivable 200,000
Advance from customers 200,000
Cash 1,710,000
3,400,000
Cr
Damage claim
Trade payable 5000
Cr
Salary Account
Cr
Interest Account
Cr
Loss on sale of PPE
Cr
Depreciation Account
Cr
Amortisation Account
Cr
sale of noncurrent investments
Cash 10000
Cr
sed loss on current investments
Cr
Other expenses
Make journal entries for the following transactions or events in the books of a com
Sl no
10
11
12
13
14
15
16
17
18
Post these journal entries to ledger accounts.

Prepare trial balance as on 31.03.2022
Preparae Balance sheet, SOPL & cash flow statement for the year ended on 31.03.2022
Make journal entries for the following transactions or events in the books of a company
Transaction/event
100,000 shares of Rs.10 each are issued for a price of Rs.40 for cash
100,000 bonds of Rs. 10 each were issued at par on 01.07.2021, carrying coupon rate
of 8% p.a. payable semi-annually.
Office space hired with effect from 01.10.2021 by paying refundable security deposit
of Rs.1,00,000; monthly rent of Rs.20,000 p.m. to be paid in the first week of next
month.
IT systems procured from a vendor for Rs.3,00,000 (90% paid within the year).
Balance to be paid next month.
Operating system purchased for Rs.10,000
Application software purchased for Rs.20,000
Office furniture purchased for Rs.60,000, 80% paid within the year. Balance to be paid
next year.
Goods purchased for Rs.7,00,000 (30% credit).
Goods of Rs.10,000 destroyed by fire in store for which no insurance is there.
Goods of Rs.6,00,000 sold for Rs.9,00,000 (10% credit, not collected during the year)
Rs.150,000 dues to supplier paid during the year.
One customer who owes Rs.30,000 goes bankrupt without any prospect of recovery
Cash of Rs.50,000 collected from customers
Office supplies purchased for Rs.10,000 (10% outstanding)
Salary for the year paid: Rs.1,00,000; Unpaid: Rs.20,000
Interest payment on the bond is cleared in time.
Office supplies of Rs.2,000 left at year end.
Infosys shares purchased from secondary market for Rs.20,000
A customer paid an advance of Rs.45,000 for supply of goods next year.
A customer returns goods of Rs.10,000 due to quality issues. Company expects to sell
these goods at 50% discount.
Post these journal entries to ledger accounts.

Prepare trial balance as on 31.03.2022
Preparae Balance sheet, SOPL & cash flow statement for the year ended on 31.03.2022.
ompany for the year ended 31.03.22.
Journal entry Dr Cr
Reason
What is the financial
element involved vis-à-
vis the financial item?

CH 3 Extension Part 1

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Land Account

Particulars Amount(Rs.) Particulars Amount(Rs.)

Loan from SBI

Equity share capital

Cost of goods sold

Land purchased for Rs.1,50,000 by paying cash, registration cost Rs.10,000

Machinery purchased for Rs.3,00,000, installation cost paid Rs.30,000

Goods purchased for Rs.8,00,000 (20% credit)

Goods of Rs.10,000 found defective and returned to the supplier

Goods of Rs.6,00,000 sold for Rs.9,00,000 (50% credit)

Cash of Rs.2,50,000 collected from the customers

Office supplies purchased for Rs.15,000 (10% outstanding)

Dues towards office supplies paid

TCS shares purchased from secondary market for Rs.30,000

Trade payable 10,000

Cost of goods sold 600,000

Trade payable 150,000

Bad debt 20,000

Office supplies 15000

Interest expense 50000

Payable for office supplies 1500

Investment in TCS shares 30000

Asset Cash(asset) increases, so debited

Asset Land(asset) increases, so debited

Asset Machinery(asset) increases, so debited

Asset Furniture(asset) increases, so debited

Asset Goods (asset) increases, so debited

Liability Liability decreases, so debited

Asset Cash(asset) increases, so debited

Expense Goods sold, becomes expense. So debited

Liability Liability decresaes, so debited

Expense/loss Loss increases, so debited

Asset Cash(asset) increases, so debited

Asset Asset increases, so debited

Expense Expense increases, so debited

Expense Expense increases, so debited

Expense Expense increases, so debited

Liability Liability decreases, so debited

Asset Asset increases, debited

To Trae receivable 250,000 By Trade payable 150,000

Office supplies Account

Trade receivable Account

Investment in TCS shares Account

Bad Debt Account

Office supplies consumed

Securities premium Account

10% Bonds Account

Interest payable Account

Trade payable Account

Payable for furinuture Account

Payable for office supplies Account

Office supplies 4,000

Change in cash 235,000

Total of application 8,800,000

Advance from customers 200,000 1,400,000

4. Customers returned the goods of Rs.40,000 and claimed damage of Rs.6,000.

7. Salary payable and interest payable of last year were paid.

8. Salary for the year: Rs.6,00,000 (Rs.75,000 not yet paid)

9. Interest for the year paid 50%.

10. Cash collected from old receivables: Rs.3,90,000.

12. Depreciation on other tangible assets: Rs.180,000.

13. Amortisation on intangibles: Rs.80,000

Pass journal entries to record the above transactions or events.