Financial Accounting

FINANCIAL ACCOUNTING
13. Company Accounts (Company Final Account)
Students’ Notes: This area covers the Accounts of Company related terms.

13.1 Practice Question 01:

From the following balances, takes from books of a business it is required to prepare Statement of profit
and loss (Income Statement) and Statement of Financial Statement (Balance Sheet) for the year ended
31.03 2021.

Account Explanation Dr. Amount Account Explanation Cr. Amount

Cash 29,100 Account Payable 10,000
Account Receivable 15,000 Paid up Capital 30,000
Building 50,000 Debentures / Bonds 20,000
Office Equipment 1,500 Sales 150,000
Furniture 2,000 Loan from Bank 2,000
Machinery 40,000 Last year Profit 2,500
Audit Fee (Expense) 1000
Purchases 60,000
Prepaid Rent 2,000
Opening Inventory 8,000
Salary 4,500
Advertising 200
Insurance Premium 1,200
Total 214,500 Total 214,500

The following further information is given:

✓ Closing stock Rs. 7,000
✓ Prepaid Insurance amount Rs. 400
✓ Interest payable on Debentures @ 10% p.a (Expense and liability both a time)
✓ Proposed annual Dividend 10% per share

13.2 Practice Question 02:

From the following trial balance of Noor and Sons. Prepare Income Statement and Balance Sheet for the
year ended 30 June 2022.

Account Explanation Dr. Amount Account Explanation Cr. Amount

Cash 11,500 Bill Payable 2,040
Account Receivable 32,670 Paid up Capital 70,000
Sales Return 1,730 Account Payable 9,440
Opening Stock 21,450 Purchases Return 190
Machinery 23,400 Purchase Discount 3,300
Office Equipment 5,500 Sales 52,730
Purchases 21,860
Wages 9,810
Carriage-Inward 2,170
Instructor: Farhan Bajwa
 Financial Accounting
Sales Discount 2,100
Salary 4,460
Rent 1,050
Total 1,37,700 Total 1,37,700

The following further information is given:

✓ Closing stock Rs. 18,020
✓ Previous year Profit is Rs. 180
✓ Proposed annual Dividend is Rs. 3,500
✓ Depreciate machinery at 5%

13.3 Practice Question 03:

Following Trail Balance was extracted from the books of Nauman & Co. on 31th December 2022. Prepare
Statement of Profit and Loss and Statement of financial Position.

Account Explanation Dr. Amount Account Explanation Cr. Amount

Account Receivable 1,500 Paid up Capital 10,000
Plan and Machinery 15,360 Debentures 1000
Sales Return 260 Creditors 4,820
Opening Stock 4,156 Sales 22,665
Purchases 10,944 Other Income 1300
Carriage-Inward 1,350 Discount on Purchases 130
Income Tax 725
Advertisement 2,000
Salaries 2,240
Rent 1,380
Total 39,915 Total 39,915

The following further information is given:

✓ Closing stock Rs. 400
✓ Salary outstanding Rs. 360
✓ Proposed annual Dividend is Rs. 3,500
✓ Provision for General Reserves Rs. 2000
✓ Provision for Taxation Rs. 1000

13.4 Practice Question 04:

The following Trial Balance was extracted from the books of Nadeem and Mustafa on 31st Dec 2019.
Prepare Statement of Profit and Loss and Statement of financial Position.

Account Explanation Dr. Amount Account Explanation Cr. Amount

Purchases 9,564 Paid up Capital 10,000
Opening Stock 4,516 Debentures 1,000
Sales Discount 260 Account Payable 4,300
Plant and Machinery 15,360 Sales 25,360
Account Receivable 1,620 Purchase Discount 130
Cash in Hand 3,415 Profit from last year 1,640
Salaries 300 Reserves for Doubtful Debt 300
Instructor: Farhan Bajwa
 Financial Accounting
Rent 1,380
Advertisement 4,240
Insurance 725
Wages 1,350
Total 42,730 Total 42,730

The following further information is given:

✓ Closing stock Rs. 5,000
✓ Salary outstanding Rs. 300
✓ Rent Paid in Advance Rs. 380
✓ Depreciate Plant and Machinery at 10% p.a
✓ Proposed annual Dividend is 5% of paid-up Capital
✓ Provision for General Reserves Rs. 800

13.5 Practice Question 04:

Following Trial Balance, Prepare Statement of Profit and Loss and Statement of financial Position.

Account Explanation Dr. Amount Account Explanation Cr. Amount

Opening Inventory 6,500 Sales 55,000
Cash in Hand 375 Profit from last year 250
Cash at Bank 8,000 Purchase Return 500
Sales Return 600 Account Payable 8,470
Investments in Debentures 3,000 Purchase Discount 110
Insurance 200 Bill Payable 3,400
Account Receivable 10,000 Debentures 5,000
Sales Discount 100 Authorized Capital 30,000
Bad Debt 300 Paid-up Capital 15,000
Carriage-Inward 150
Bill Receivable 4,000
Rent 550
Furniture 1,100
Repair Charges 15
Stationary 90
Trading Expense 250
Salaries 3,500
Purchases 48,000
Postage and Telegram 80
Interest on Debentures 120
Office Equipment 800
Total 87,730 Total 87,730

The following further information is given:

✓ Closing stock Rs. 9,000
✓ Interest on debentures Rs. 750
✓ Proposed annual Dividend is 5% of paid-up Capital
✓ Provision for General Reserves Rs. 1000
✓ Reserves for Provident fund Rs. 900

Instructor: Farhan Bajwa