Account...

AcOunts
and Concept of Trading 19.21
CX Finals

BALANCE SHEET

mes sets out the assets and liabilities at

a given date.
one1t that
ng Sheet is prepared after preparing Trading Account and Profit & Loss Account. It is
B a l a r
hement which sets out the assets and liabilities of a firm or an institution as at a certain date.
t
n s t a t e m e n t

given time, i.e, ned

assets owned
by the enterprise
showsthe financial position of the business as at a
lkabilities, i.e., claims of creditors and owners against these assets. Excess of assets over
andthel i a b
Accounts and Personal al Accounts.
liabilities is the capital. It is prepared from Real
outsideIk
accounts other than those which have bern
ing differently, the debit and credit balances of ledger
shown in the Balance Sheet. Debit balances
sferred to Trading Account and Profit & Loss Account are
transf
on the
Assets side and credit balamces on the Liabilities side.
e shorwn and includes all
The
'assets' denotes the economic resources (property) of the business
ferm
assets of the business
erent and fixed assets. The term liabilities' denotes all claims against the
Currer

and liabilities to the outsiders (Creditors) and towards the owners of the business.
include
Balance Sheet
Format of
The items usually shown in the Balance Sheet of a firm are as under
BALANCE SHEET OF .. as at ..

Particulars Particulars
Sundry Creditors Cash in Hand
Bil Payable Cash at Bank
Bank Overdraft BillsReceivable
Employees' Provident Fund Sundry Debtors/Book Debts
Loans and Advances Taken (Cr.) Loans and Advances Given (Dr.)
Reserves or Reserve Fund Closing Stock

Capital Loose Tools

Add: Interest on Capital Investments
Net Profit Furniture and Fittings *

Plant and Machinery

Less: Drawings Land and Building
Income Tax Business Premises
Interest on Drawings Patents and Trademarks, etc. **

Net Loss Goodwill

dVantages (Need) of Balance Sheet

at the time and
da alPosition. Balance Sheet shows the financial position of the business
On which it is prepared. It shows the financial position of a business in a systematic, standard
and u
It is a screen picture of the financial position of the business.
Standable form.
2.Fi ratios and many other
a ancal Statement Analysis. After preparing Balance Sheet, liquidity
anting ratios can be calculated for decision-making purposes.
3. Net
Worth of the Business. It is the basis for determining net worth of the business and
hence helps in determining purchase consideration of the business.
19.22 Double Entry Book
Keeping-IScwCXI
Characteristics of a Balance Sheet
1. Balance Sheet is prepared at a particular date, and not for a
period. It is true
rue only at the
tho
point
.

of preparing the Balance Sheet and not later.

2. Balance Sheet is
prepared after the preparation of the Profit & Loss Account; this is the reason
the Profit&& Loss Account and the Balance Sheet are
together called the Financial Statemend
son why
or Final Accounts. ements
3. Balance Sheet shows the
financial position of a business.
4 Balance Sheet is not an account but statement of assets and liabilities. On the left
a

the liabilities of the business hand side

are shown whereas on the
right hand side the assets of the
business are shown.
Nt
5. Totals of the assets side and liabilities side
match. If it is not so, there is an error in
or
posting of a transaction or transactions. recording law

Difference between Balance Sheet and Trial

Balance
Basis Balance Sheet
1. Purpose Trial Balance
The purpose is to show financial rayab
position. The purpose is to establish arithmetical
accuracy of the books of account.
2 Information about It provides information as to the financial | No such information is
Financial Position position of the firm. possible from the Tral
Balance.
3 Necessity It is essential to
in th
prepare Balance Sheet to Though desirable, it may be possible to Ay,
complete the accounting process. dispense with its preparation.
4 Headings Thetwo sides are headed as assets and liabilities. The two Lia
columns are headed as debit balanceal A
and credit balance.
5. Coverage
Only personal and real accounts are shown in In the Trial
the Balance Sheet. Balance all accounts must o
6. Closing Stock
written, no account should be left out
Closing Stock is shown in the Balance Sheet.
Normally, closing stock does not appearn uDes
Trial Balance.
7. Period
Normally, it is prepared only at the end of the A Trial
ayat
Balance is prepared normally
accounting period. month and whenever desired.
eve
8. Adjustments A Balance Sheet cannot
be prepared without ATrial Balance can be 0v
incorporating the items of adjustments. prepared at any Suyge
without even making adjustments.
ta
Grouping and Marshalling (Arrangement) of Assets and Ning
Liabilities
Assets and liabilities are shown in order
of either Net
It is
permanence or liquidity in the BalanceShee
called
Grouping and Marshalling of the Balance Sheet. Dr
similar nature under a common 'Grouping' means puting ite
heading. The arrangement of assets and liabilities in a
in the Balance Sheet is called particur ordd
Marshalling.
 and Concept of Trading 19.23
Accoun
Account .

IntheOrder of Permanence. Assets, which are nermanently in the business and are
lfore are shown first. Assets, which are mostused
sale a r e s liquid To
such as Cash in Hand are shown last.
ld
lities are
abilities are also;
also shown according to their maturity period or permanence. In this method,
chow the capital, tthen long-term liabilities and in the last of all short-term liabilities like
the capital,
show
due to suppliers of goods or bills payable. The format of a Balance Sheet under such
be follows:
arTangement would as

BALANCE SHEET OF
as at .

01/ies Assets
pital: Goodwill
ening Balance Land and Building
NetProfit Plant and Machinery
Furniture
Drawings Investment
ans Closing Stock
ni Overdraft Debtors
mdy Creditors Bills Receivable
sPayable ** Cash at Bank
Cash in Hand

In the Order of Liquidity. Under Order of Liquidity assets that can be converted into cash
dly, are shown first and those assets which take time to be converted into cash are shown
Liabilities shown first are short-term liabilities and then long-term liabilities and in last
tal. According to this arrangement, the format of a Balance Sheet is as follows:

BALANCE SHEET OF.

as at.
lIies
Assets
Payable Cash in Hand
dry Geditors Cash at Bank

Overdraft Bills Receivable

IS
Debtors
Closing Stock *

ing Balance Investment

Net Proft
Furniture
Plant and Machinery
Drawings Land and Building
Goodwill
 Double Entry Book
19.24 Keeping- ISCX
Difference between Order of Permanence and Order of Liquidity
Order of Permanence Order of Liquidity
Basis
are arranged in the order
of their Assets are arranged in the
1. Order of Assets Assets order of
permanence, i.e., the least liquid asset liquidity,i.e., the most liquid astetthe
(e.g, goodwill) is shown first and the
most hand), is shown first andthe leact shi
liquid asset (e.g, Cash in Hand) is shown last. | (e.g, goodwill) is shown last. 8set
Liabilities are arranged in the order óf their | Liabilities are arranged in the order
2. Order of Liabilities
permanence, i.e., the least urgent payment urgency of payment, i.e., the most
urgen
to be made (e.g, capital) is shown first and payment to be made (e.g., short-termcnt
the most urgent payment to be made (e.g, | is shown first. The least urgent payment to
editors
short-term creditors) is shown last. made (e.g, capital) is shown last. be

3. Usage
The company as defined under the Companies Generally, the banking and financial comoRN
Act, 2013 is required to prepare its Balance| sole proprietorshipand partnershipfimspre
Sheet in order of permanence. their Balance Sheet in the order of liquidity

CLASSIFICATION OF ASSETS AND LIABILITIES

As already discussed, Balance Sheet is prepared to show the financial position of an enterprise
Following financial statement shows various types of assets and liabilities:

BALANCE SHEET as at..

Liabilities Assets
Owner's Funds (Capital) Fixed Assets
Non-current or Long-term Liabilities Investments
Current or Short-term Liabilities ***

Current Assets
1. Fixed Assets. Fixed Assets are those assets that are acquired for use in business to generate
revenue. They are not meant for resale, although at a later date they may be sold.
Fixed Assets may be: (i) Tangible and (i) Intangible.
) Tangible Fixed Assets are those assets which can be seen and touched, eg, Land and
Building, Plant and Machinery, Furniture and Fixtures, etc.
i) Intangible Fixed Assets are those assets which are not in a physical form, i.e., they can neither
be seen nor touched, eg, goodwill, patents, trademarks, computer softwares, etc.
Note: Fixed Assets are valued at cost less depreciation/amortistation.
Difference between Tangible Assets and Intangible Assets
Basis Tangible Assets Intangible Assets
1. Physical Tangible Assets have physical existence. Intangible Assets do not have physical existence
Existence
Examples Landand Builing,Plantand Machinery.etc. Examples: Goodwill, Patents,Trademarks,etctc
2. Fixed Tangible Assets can be fixed or current, eg, stock. | Intangible Assets usually are in the natureo
vs.Current
fixed assets.
3 Deprediation or| Fixed tangible assets are depreciated Intangible Assets are amortised.
Amortisation
Risk of Loss These assets may be lost due to fire, theft, These assets cannot be lost due to fre, the
earthquake, etc. earthquake, etc.
setsas
5. Acceptance as Lenders accept such assets as security for giving Lenders usually do not accept theseasseo
Security loans. security for giving loans.
 afs amd Concept of Trading Account ..
inada
19.25
another category of assets called Fictitious
There1
nature which are either written off in more
are which
Assets. They are infact expenses
ve than one
management it will give benefit for more
a d
r e v e n r

proprnetoror year (Since in the view of

than one
d loss
distributed losses. Examples are:
Advertisement Suspense, accounting period) or are
undist
Profit & Loss
alance), e t c . Account (Debit
2 Investmen, onts. Investments are expenditure on purchase of
eaninterest, dividend and other benefits. shares, debentures, bonds, etc., to
It

i n v e
Lments are
s t m e
shown separately in the Balance Sheet.
Assets. These are those assets of the
Curre. business which are held with the
for converting into cash. Current assets are expected to be purpose to
realised within a period of
oneyear.

These assets include the following:

a Cash at Bank and Cash in Hand. It includes cash held for

day-to-day expenses and the
balance of cash in the account of an enterprise with a bank.
) Prepaid Expenses. Expenses which have been paid in advance for the services to be
in future.
received

mSundry Debtors. It is the amount due

against sale of goods and/or services rendered.
iv) Bills Receivable. Bills Receivable
are the bills of
exchange that are received from debtors
against amount due and have not yet matured for
payment and have not been
discounted.

()Closing Stock. Closing Stock is the value of goods unsold

the end of the at
accounting
year. It includes the stock of materials, semi-finished goods and finished
raw

valued at Cost
goods. It is
or Net Realisable Value (Market Value) which ever is lower.
These assets are temporary and
may change. These are also called Floating or Circulating Assets.
haurrent assets except
closing stock and prepaid expenses, all other assets are called Quick Assets
a category within Current
Assets). These include cash, bank balance, bills receivable, debtors
and
readily marketable securities.
Diference between Fixed Assets and Current Assets
Basis Fixed Assets Current Assets
Nature These are long lasting resources ofa business. These are short-term resources of a business.
Purpose of Holding These assets areused for operating the These assets are realised in cash
or consumed
business and to earn profits. during the period of normal operating cycle
of business.
3. Valuation
These assets are valued at cost less depreciation. These assets are valued at cost or market price,
whichever is less.
4.
Sources of Finance These assets are acquired out of long-term These assets are acquired out of short-term
funds of the business. funds of the business.
5. Subject to Change The assets are not usually subject to change. These assets are usually subject to change.
6Profit on Sale Profit on sale of these assets is a capital profit. | Profit on sale ofthese assets is a revenue proft
 Double Entry Book
19.26
Liabilities are the financial obligations of an enterprise other than owner's funds.
Keeping-ISC
Liabilities are shown in the Balance Sheet on the left hand side. They are divided as d.. ivided as follows,
0) Long-Term Liabilities or Non-Current Liabilities. These liabilties are payable by the h
e busines
after a period of 12 months from the date of Balance Sheet. They mainly include lude long-term
loans and amount of debentures, etc
(Gi) Current Liabilities. These are liabilities payable by the enterprise within a perio
12 months from the date of Balance Sheet. Examples are: trade creditors, bills na of

outstanding expenses, bank overdraft, etc.

payable,
Owner's Funds. Besides the liabilities towards outsiders, amount is also owed to the oum
Owner
(proprietor) as capital. It includes undistributed profits and reserves also. It is equal to the net
assets of the business, i.e., the difference between assets and outside liabilities.
Contingent Liabilities. Contingent Liability is a liability that becomes payable on the happenino
of an event. In case, the event does not happen, amount is not payable. Such liabilities are
hot
accounted and shown in the Balance Sheet, they are disclosed as a note. Following are the
examples of Contingent Liabilities:
) Liabilities in Respect of Bills Discounted. 1f the firm got its bills receivable discounted wih
the bank, the primary liability will be that of the acceptor. It the acceptor does not pay,.
only then the firm is liable.
i) Guarantee for Loan. If the firm has stood surety for a loan, it may be liable to pay the amount
it the other person fails to meet his obligation.
ii) Disputed Claims. If some other party has lodged a claim against the firm, the firm will be
liable to pay if the claim succeeds.
Following illustration shows how the Trading and Profit & Loss Account and the Balance Sheet
are prepared from a given Trial Balance:

llustration 13.
From the following particulars, prepare
Trading and Profit& Loss Account for the year ended
31st March, 2022, and Balance Sheet as at that date:
Particulars Particulars
Debit Balances Rent 8,000
Sundry Debtors 15,000 Salaries 20,000
Stock on 1st April, 2021
50,000 Drawings 20,000
Land and Building 1,00,000 Purchases 1,00,000
Cash in Hand 16,000 Office Expenses 25,000
Cash at Bank 40,000 Plant and Machinery 57,000
Wages 30,000 Credit Balances
Bills Receivable
20,000 Capital 2,50,000
Interest 2,000 Interest 6,000

Bad Debts 5,000 Sundry Creditors 70,000

Repairs 3,000 Sales 1,70,000

Furniture and Fixtures 15,000 Bills Payable 40,000

Depreciation
10,000
On 31st March, 2022, the stock was valued at 1,00,000.
 Double Entry Book o n c e p t ,of T
Concept
nd C
and

19.34 pKee
Account
io
Determine Gross Profitfrom
thefollowing: ec en mg-18c F i n a l

following informatior

2 Coun69 Ouhueud SdPe Side calouw liabilities-) in oorder of pe

20,000 Carriage on Sales (NE ) 8nd

Opening Stock
Closing Stock
18,000 Offhce Rent Goodwill

85,000 Sales Capital

Purchases Liabilities for Expenses

Carriagen Purchases) 2,300| Cash in Hand

3. From the following information, prepare Trading

Account for the year ended 1st Mare
31st March, 2022 Investment

Bills P a y a b l e

Stock on 1st April, 2021 40,000 Returns Outward P e Net Profit

Purchases
4,00,000 Wages and Salaries Sundry Debtors

Sales 3,80,000 ReturnsInwardSaln Q Land and Building

Carriage Inwards
20,000 Stock on 31st March, 2022 F i n a lA c c o u n t s

31st March, 2022 1,20,00o.

Net Realisable Value or Market Value of stock as on was Without GST

balances
4. From the following information, prepare Trading Account for the year ended 31st March. 201% the following
From
9.
Adjusted-Purchases 6,60,000; Salea z7,44,000; Closing Stock R 50,400; Freight and Carrada DebitBalances:

3,600; Wages 6,000; Freight and Cartage Outyyards R 2,000. Iriward Machineryy

Debtors

Preparation of Profit & Loss Account Drawings

5. From the following information, prepare Profit& Loss Account of Sohan for the year ended on 31st Mach Purchases

,212
Wages
Salaries and Wages 3,000 Advertising 1,00
Bank
Opening Stock
Commission Paid 200 Discount Allowed
150 Rent Received 180 valued at
Closing Stock
was
Postage 1,70
Insurance 300 Interest on Investment Trading Account, Pr
1500 10. Prepare
Interest Paid 400 Bad Debts 00
following balances:

Carriage Outwards 500 Brokerage Paid

The Gross Profit was 45% of sales, which amounted to R 65,000. Capital (Cr.)
6 Prepare Profit&Loss Account for the year ended 31st March, 2022 from the following information: Machinery
Sales
Purchases
Gross Profit 12,00,000| Discount Received 60,000 Sales Return
Rent 50,000 Printing and Stationery 40,00
1,00,000 Stock on 1st April, 2021
Salary 3,50,000Legal Charges 20,00
Drawings
Commission Paid 1,90,000| Bad Debts 60,000 Wages
Interest on Loan 50,000 Loss by Fire Carriage Inwards
40,000
Advertisement 80,000 Depreciation Stock was valued a
Closing
Interest Received 80,000 | Bad Debts Recovered 10,000
11. Following are the balance:
Preparation of Balance Sheet
7. From the following information, prepare Balance Sheet as at 31st March, 2022: Sales
Dr. ) Cr.R) Purchases
Capital 40,000 Returns Inward
Drawings 4,400 Returns Outward
Debtors 6,400 ***
Stock
Creditors 4,200 Carriage Inwards
Cash in Hand 360 Rent
Cash at Bank 7,200 Discount
Plant 10,000
Furniture
Printing
3,700 Insurance
Net Profit 1,660
General Reserve 1,000
Travelling Expenses
Stock on 31st March, 202
Closing Stock 14,800
Prepare Trading Accounta
46,860 46,860
 counts
and Concept of Trading Account . 19.35
inada

following information, prepare Balance Sheet of Amit as at 31st March, 2022 arranging the assets
Fomities() in order of permanence; and (i) in order of liquidity:
and
liat

G o o d w i l l
20,000 Bank 20,000
Capital
1,80,000 Sundry Creditors 63,000
Liabilties for Expenses 1,200 Bills Receivable 13,000
Cash in Hand 1,000 Plant and Machinery 40,000
I n v e s t m e n t
20,000 Provision for Doubtful Debts 2,500
BilsPayable 10,700 Closing Stock 80,000
NetProft 92,600 Furniture 16,000
Sundry Debtors
50,000 Drawings 30,000
Land and Building 60,000
F i n a lA c c o u n t s

wWithout GST
Grom the following balances, prepare Trading Account, Profit &Loss Account and Balance Sheet:
Debit Balances:
Debit Balances (Contd.):
Machinery 35,000 Rent 4,500
Debtors 27,000 Sundry Expenses 2,000
Drawings 9,000 Carriage 1,500
Purchases 95,000 Credit Balances:
Wages 50,000 Capital A/c 1,00,000
Bank 15,000 Creditors 14,000
Opening Stock 20,000 Sales 1,45,000
Closing Stock was valued at 7 3,000.
10. PrepareTrading Account, Profit & Loss Account and Balance Sheet of Jagat as at 31st March, 2022 from the
following balances:

Capital (Cr) 3,60,000 Salaries 60,000

Machinery 70,000 GeneralExpenses 20,000
Sales 8,20,000 Rent 50,000
Purchases 4,00,000 Purchases Return 5,000
Sales Return 10,000 Debtors 3,00,000
Stock on 1st April , 2021 1,00,000 Cash 40,000
Drawings 40,000 Carriage Outwards 20,000
Wages 1,00,000 Advertising 20,000
Carriage Inwards 5,000 Creditors 50,000
Cosing Stock was valued at 7 2,00,000.
O1OWing are the balances as on 31st March, 2022 extracted from the books of Bhagwan Dass:

Sales 9,20,000 Postage 6,200

Purchases 6.83,000 Miscellaneous Expenses 9,000
Returns Inward 13,000 Bad Debts 4,000
Returns Outward 22,000 Debtors 2,20,000
Stock 1,76,000 Creditors 1,28,000
Carriage Inwards 24,000 Loan-Mata Din (Cr.) 50,000
Rent
22,000 Capital 5,25,000
Discount 37,500 Drawings 19,100
Printing 7,200 Business Premises 3,90,000
\nsurance 5,000 Office Furniture 15,000
velling Expenses 14,000
Stock on 31st
March,
epare Trading Acco 2022 was valued at 7 2,40,000.
CCount, Profit & Loss Account and Balance Sheet as at 31st March, 2022.
19.36 Double Entry Book
Keeping-ISC XI
12. From the following balances extracted from the books of Anand, prepare Trading Account, Proft
Account, and Balance Sheet as at 31st March, 2022:
Profit &Loss AccOunt,
Credit Balances: | Debit Balances (Contd.):
Capital 3,60,000| Postage
Creditors 87,200 Bad Debts 2,730
Bills Payable 25,270 Interest 2,870
Sales 7,81,820Insurance 12,950
Loan 1,20,000 Machinery 4,170
Debit Balances: Stock (Opening) 1,00,000
Debtors 38,850 Purchases 99450
Salaries 40,000 Wages
6,20,920
Discount 10,000 Building 43,000
| Fixtures and Fittings 2,37,800
1,61,550
Value of goods on hand on 31st March, 2022 was1,43,000.
13. From the following balances, prepare Trading and Profit & Loss Account and Balance Sheet:

Capital AVc 1,00,000 Returns Outward 5,000

Plant and Machinery 40,000 Rent 4,000
Sundry Debtors 24,000 Sales 1,64,000
Sundry Creditors 12,000 Manufacturing Expenses 8,000
Drawings 12,000 General Expenses 7,500
Purchases 1,05,000| Bad Debts 2,000
Wages 50,000 Carriage Inwards 1,500
Bank 10,000 Bills Payable 7,000
Opening Stock 20,000 Returns Inward 4,000
Closing Stock on 31st March, 2022 was valued at 7 14,500.
14. Trial Balance of Chaman on 31st March, 2022 had the following balances:
Debit Balances: Debit Balances (Contd.):
Plant and Machinery 90,000 Rent 2,000
Purchases 58,750 Advertisement 3,200
Sales Return 1,000 Cash at Bank 6,900
Opening Stock 40,000 Credit Balances:
Discount Allowed 350 Capital 1,10,000
Bank Charges 75 Sales 1,27,000
Sundry Debtors 45,000 Purchases Return 1,275
Salaries 6,800 Discount Received 800
Wages 10,000 | Sundry Creditors 25,000
Stock on 31st March, 2022 was valued at 35,000. Prepare Trading Account, Profit & Loss Accountfor the
year ended 31st March, 2022 and Balance Sheet as at that date.
15.
From the following Trial Balance and additional information of Gaurav,
Account, Profit &Loss Account for the year ended 31st March, 2022 and Balance Sheet as at that date:
a proprietor, prepare Trading

Particulars Dr.( Cr.R)

Building amoaosoannnsspsnp, ***
***************** 1,60,000 *"

Wages **************
******e*** 26,000
Machineryy ****
16,000
Salaries and Wages **** ***** ************* 41,600
Debtors ********* ********************* 33,700
Capital 2,23,100

Purchases/Sales 56,500
1,00,700

Creditors ******
12,500
Income Tax *****s**o*s**uns
******** 2,000
Drawings ******sesaooo****** 500
Total 3,36,300
3,36,300
Closing Stock was valued at cost 1,00,000 but its net realisable value (market value) was 88,500
 Account.
and Concept of Trading
iaad
Acounts
andc

ts 19.37

taken from the books of Param, a merchant on 31st

are take
ros are
Folow ng
balances
March, 2022
p e b i t
B a l a n c e s

Debit Balances (Contd)

furnitureand Fittings 6,400 Insurance 12,500
MotorVehicles
62,500 General Charges 7,820
75,900 Salaries 33,000
1,250 Credit Balances:
Building

BadDebts

S u n d r yD e b t o r s 38,000 Capital 1,28,900

on 1st
April, 2021 34,600 Bills Payable 2,000
Stock
Purchases
55,750 Sundry Creditors 25,000
Sales Return 2,000 Sales 1,54,500

Advertising
4,500 Bank Overdraft 28,500
Interest
1,180 Purchases Return 1,250
Cash in Hand 6,500 Commission 1,750
in Hand on 31st March, 2022 was valued àt 32,500. From the above, prepare Trading Account,
Stock
t &LOSs Account for the year ended 31st March, 2022 and Balance Sheet as at that date.

Ealowing balances were extracted from the books of Harish on 31st March, 2022

2,45,000 Loan 78,800

Capital
Drawings
20,000 Sales 6,53,600

General Expenses 25,000 Purchases 4,70,000

1,10,000 Motor Car 20,000
Building
93,400 Reserve 9,000
Machinery
1,62,000 Commission(Cr.) 13,200
Stock
Power 22,400 Car Expenses 18,000
Insurance 13,150 Bills Payable 38,500
72,000 Cash 800
Wages 33,000
Debtors 62,800 Bank Overdraft
25,000 Charity 1,050
Creditors
Bad Debts 5,500
Stock on 31st March, 2022 was valued at 7 2,35,000.
31st March, 2022.
Prepare Final Accounts for the year ended

With GST
Loss Account for the year ended 31st March, 2022 and
18. Prepare Trial Balance, Trading Account, Profit &
the following extracts of Ledger balances:
Balance Sheet of the Premier Traders as at that date, from

1,19,400 Proprietor'sDrawings A/c 10,550

Proprietor's Capital A/c
9,500 Plant and Machinery 28,800
Bills Receivable
40,970 Salaries 14,370
Wages 60,830
Sundry Debtors 62,000 Sundry Creditors
20,000 ReturnsInward 2,780
Bank Loan
2,56,590 Sales 3,56,430
Purchases 5,640 Discount Allowed 5,870
Commission Received 5,620 Stock on 1st April, 2021 89,680
Rent
1,880 Insurance 400
Travelling Expenses 530 Bank(DebitBalance) 18,970
Cash
8,970 Bad Debts 3,620
Furniture 5,100 Output CGST 4,500
Input CGST 5,100 Output SGST
Input SGST 4,500
was valued atcost as 1,28,960.
OCk in Hand on 31st March, 2022
 Double Entry Book Keeping-Isc
19.38
Account, Profit & Loss Account for the vear
prepare Trading ended
19. From the following Trial Balance,
Sheet as at that date:
31st March, 2022 and Balance
Dr.) Cr.()
Particulars
***************************s******************************sesssseess*********************s******e****ssees*sss* 15,000
Sundry Debtors **************************************************************s*********************************************** 50,000 **

Stock on 1st April, 2021

**********w*ssssesn******************************************************************************************** 1,00,000
Land and Building
Capital
********a**************************************************************************************************
2,50,000
*************************************s*************ssseee*****************************************************
Rent
6,000
******************e*****************************************************************************************
16,000
Cash in Hand
**********************************************************************************assee************************ 40,000
Cash at Bank 30,000
****************************************************************************************************************
Wages
Sundry Creditors
****************e********************************************************************************************** 75,000
******************************************s******************************************************************** 20,000 ***

Bill Receivable
**************************************************************************************************************** 2,000
Interest 5,000
***************************************************************************************************************** ***

Bad Debts
*************************************************************************************************************** 3,000 ***

Repairs **************************************************************************************************************** *
1,70,000
Sales
*************************************************************************************************************** 40,000
Bills Payable
*******e******************************************************************************************************* 15,000
Furniture and Fixtures
************************************************************************************************************** 10,000
Depreciation
************************************************************************************************************ 8,000
Discount
***************************************************************************************************************** 20,000
Salaries
****************************************************ao******************************************************** 20,000
Drawings
*********************************************************************************************************"*** 1,00,000
Purchases
*************************************************************************************************************** 25,000
Office Expenses
********e****************************************************************************************************** 57,000
Plant and Machinery
Input CGST Ac
**************************************************************************************************************** 15,000
Input SGST Alc *************************************************************************************************************** 15,000
10,000
Output CGSTAc *********e******************ss********************************************************************************

10,000
Output SGSTA/C **************************e***********************************************************e*******************s*o

5,000
Output IGST A/C ********e*******e********e*****s********************************************************************************

5,66,000 5,66,000
Total

On 31st March, 2022, stockwas valued at cost as7 1,20,000. Its net realisable value (market value) was 1,00,000
Hint: Closing stock will be shown at 7 1,00,000 being lower of cost and net realisable value (market value)

20. From the following Trial Balance, prepare Trading Account, Profit & Loss Account for the year ended
31st March, 2022 and Balance Sheet as at that date:
Cr.
Particulars Dr. 5,00,000
Capital nnesspoppopeerepesgspseneenesessssst*****essse*************s*seessenss****

Plant and Machinery * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

1,00,000
1,20,000
Land and Building spopassppespessapassnease*essseesseese***sseasserens********tes*sssaess
9,00,000
Sales ***spsssN*****sp**************************ssssss*s********t************************

Furniture and Fixtures ww momsossssop**stppopsssesseseesssesse**********rt*******evensueesesea 50,000

Trade Expenses 30,000
Cash at Bank *************************************************************************
2,50,000
Wages and Salaries 60,000
* **** *************************************************************************

Repairs *******ssssseesse*****sesepse* ***************************************sesses***

10,000
Purchases *********** *****************************************************tepee***************
6,00,000
F i n aA
l ccoun
s amd Concept of Trading Account. 19.39

******* * s******ee**. ****************

p e n i n g
S t o c k
2,00,000
********* ******************************* ****
s u n d y
D e b t o r s
1,00,000
***********
YY***** 1,20,000
S u n d t y
C r e d i t o r s

******** **************e******9***
P U c h a s e sR e t u r n
10,000
************.
12,000
e n

8,000
Dscount

*********************** ******
****************
10,000
Dawings

Bls Receivable/Bills Payable ************* 30,000

40,000
*********
BadDebts
4,000
****************. 10,000
Ihterest

***** 10,000
InputCGSTAVCc
***
****** *****"********
inputSGSTA/c 10,000
**
****************************
Input1GSTA/c 5,000
Output CGST AVc 5,000
******
Output SGST A/c ****
5,000
Output IGST A/c 15,000
1otal
16,07,000 16,07,000

Stockon 31st March, 2022 was valued at 1,40,000.

Advanced Level Questions

as income and vice versa on the Financial Statements?
21.What is the effect of liabilities being treated
2 Why is it not correct to head the Balance Sheet as for the year ended 31st March, 2022?

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GUIDE TOANSWERS

bjective Type Questions

Slect the correct
alternative:
:Gi) (a); (Gii) (b;0(iv) (b); (v) b; (vi) (b); (vii) (c); (vii) (d); (ix) (c); (x) (c).

Short Answer Type Questions

17.
Closing 6,100; Cost of Goods Sold-7 9,000.

Gross
9.
Profit_ 20,000; Cost of Goods Sold- 80,000.
Cost of Goóds 35,000.
20.
Sold-
Proft z 25,000.
21. Net Profit_7
16,30o.
Gross Proft 8,000.
4.
Closing Stock 23,00t
24. Op
ing Stock-7 28,000.
19.40 ouble Entry Book
Practical Problemns Keeping-1s
1. Gross Profit- 22,900.
considered in the Trading Account.]
(Hint: Depreciation is not

2. Gross Profit- 51,400.

3. Gross Profit 50,000.

since Market Value is
Market Value R 1,20,000) las
less than the
Hint: Closing Stock is shown at
4. Gross Profit 74,400.
cost dh
(Hints: 1. Adjusted Purchases
= Net Purchases + - Closing Stock
Opening Stock
shown on the credit side ofTrading Account sines
2. Closing Stock will not be
while calculating the adjusted purchases.
adjusted
indirect expenses and hence not debited
Freight and Cartage Outwards
are to T..
3.

5. Net Profit- 24,105.

6. Net Profit- 3,7o,000.

7. Balance Sheet Total- 42,460.

8. Balance Sheet Total- 3,17,500.

18,500; Net Loss- 25,000; Balance Sheet Total- 80,000.

9. Gross Loss-
10. Gross Profit- 4,10,000; Net Profit-7 2,40,000; Balance Sheet Total-76,10,000.

2,86,000; Net Profit 1,81,100; BalanceSheet Total- 8,65,000.

11. Gross Profit
12. Gross Profit- 1,61,450; Net Profit- 88,730; Balance Sheet Total- 6,81,200.

13. Gross Loss- 5,000; Net Loss-7 18,500; Balance Sheet Total 88,500.
[Hint: Prepare the Trial Balance first.]
14. Gross Profit- 53,525; Net Profit-R 41,900; BalanceSheet Total 1,76,900.
15. Gross Profit-1,06,700; Net Profit- 65,100; Balance Sheet Total- 2,98,200.

16. Gross Profit- 95,900; Net Profit-T 37,400; Balance Sheet Total 2,21,800.
17. Gross Profit-7 1,62,200; Net Profit- 1,12,700; Balance Sheet Total-7 5,22,000.
e tT o t a - 2 8

18. Trial Balance Total-75,71,300;Gross Profit-T95,370; Net Profit-769,250; Balance She input
CGSTa

Hints: 1. Input CGST of 4,500 will be set-off against Output CGST and balance o
will be shown on the Assets side of Balance Sheet. SGSTo

balance ofInput
2. Input SGST of 4,500 will be set-off against Output SGST and
andbalane
will be shown on the Assets side of Balance Sheet.]

19. Gross Profit 90,000; Net Profit 23,000; Balance Sheet Total3,68,000
20. Gross Profit 1,90,000; Net Profit-1,60,000; Balance Sheet TotalR80000,000.

a p t e r Summa
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