Preparation of Income Statement and Balance Sheet

1. From the following Trial Balance of Madras Traders Ltd for the year ended 31 st
March 2014, prepare the Income Statement and Balance Sheet.

Particulars Amt Particulars Amt

Goodwill 50,000 Capital 1,25,000

Leasehold land 67,450 Sales 1,78,940

Loose Tools 7,000 Income from service 19,630

Wages 25,860 Purchase returns 940

Rent 8,700 Loan 20,000

Purchases 96,420 Accounts payable 25,229

Stock 38,610 Bank overdraft 4,530

Sales Returns 400 Provision for bad debts 3,000

Carriage on purchases 2,240 Retained earnings 14,000

Insurance 1,180

Salaries 11,470

Vehicles 27,000

Furniture 3,200

Maintenance 1,000

Accounts receivable 39,910

Power 1,070

Advertising 9,750

TOTAL 3,91,260 TOTAL 3,91,260

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 Adjustments: Closing Stock – Rs 40,000

2. From the following Trial Balance of ZeeP Ltd for the year ended 31st March 2014,
prepare the Income Statement and Balance Sheet.

Particulars Amt
Opening Stock 45,000
Plant and Machinery 85,000
Furniture and fixtures 7,500
Freehold Premises 75,000
Purchases 1,50,000
Salaries 14,000
Sundry Debtors 55,000
Manufacturing Wages 30,000
Maintenance Expenses 15,000
Carriage Inwards 2,000
Carriage Outwards 2,100
Other Expenses 10,000
Bad Debts 750
Interest and Bank Charges 625
Rent 750
Insurance Premium Paid 1,500
Cash at Bank 695
Cash at hand 150
Capital 90,000
Sundry Creditors 43,000
Discount Received 3,500
Bank overdraft 20,000
Purchase Returns 1,500
Sales 3,37,070

Adjustments:
 Closing Stock – Rs 57000
 Insurance Prepaid – Rs 500
 Salary paid in advance – Rs 600
 Outstanding interest on overdraft – Rs 1000
 Rent unpaid – Rs 400

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  Depreciation in plant and machinery – 10% p.a
 Depreciation on furniture and fixtures – 20% p.a

3. From the following Trial Balance of ABC Ltd for the year ended 31 st March 2014,
prepare the Income Statement and Balance Sheet.

Particulars Debit (Rs) Credit(Rs)

Cash in hand 1,600
Cash at bank 7,100
Purchases 69,500
Sales 1,18,400
Sales Returns 600
Purchase Returns 700
Insurance 300
Wages 10,000
Power and Fuel 6,800
Carriage Inwards 3,900
Carriage Outwards 3,100
Opening Stock 11,000
Interest Received 500
Building 40,000
Machinery 36,000
Patents 10,000
Salaries 12,000
Trade Expenses 3,500
Capital 85,000
Miscellaneous Expenses 9,000
Receivables 46,000
Sundry Creditors 59,000
Bills Payable 6,800
Total 2,70,400 2,70,400

Adjustments:
 Closing Stock – Rs 17,000
 Provide for outstanding salary – Rs 1,500 and wages Rs 1,000
 Insurance was prepaid to the extent of Rs 75; Interest Accrued- Rs 250
 Machinery and Patents are depreciated @10% p.a and 20% p.a respectively
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4. From the following Trial Balance of NS Ltd for the year ended 31st March 2014,
prepare the Income Statement and Balance Sheet.

Particulars Amt Amt

Machinery 12,000
Building 11,21,000
Motor Vehicles 2,30,000
Debtors 5,300
Opening stock 8,400
Purchases 70,000
Sales returns 800
Electricity charges 24,000
Wages and salaries 2,800
Carriage inwards 5,000
Carriage outwards 4,000
General expenses 15,200
Insurance and taxes 9,200
Printing expenses 1,350
Cash in hand 2,800
Capital 6,40,000
Creditors 18,900
Sales 2,70,900
Purchase Returns 2,200
Bank Overdraft 54,850
Long term loan 5,25,000

Adjustments:
 Closing Stock – Rs 8,700
 Outstanding Printing Expenses – Rs 64,000
 Depreciation on machinery – 10%
 Taxes due – Rs 500
 Advance wages paid to employee – Rs 100
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5. From the following Trial Balance of Success Ltd for the year ended 31st March 2014,
prepare the Income Statement and Balance Sheet.

Particulars Amt
Land 1,00,000
Buildings 2,00,000
Sales 3,00,000
Purchases 1,75,000
Sales Returns 10,000
Stock 25,000
Debtors 1,84,800
Bank Overdraft 1,50,000
Purchase Returns 5,000
Cash in hand 5,000
Creditors 20,000
Salaries 10,000
Wages 12,000
Goodwill 15,000
General Expenses 5,000
Selling Expenses 12,000
Bad Debts 1,000
Insurance 1,200
Capital 2,81,000

Adjustments
 Closing Stock – Rs 30,000
 Depreciation on buildings @ 10%
 Write off further bad debts Rs 1000
 Salaries yet to be paid - Rs 3000
 Insurance prepaid – Rs 300

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6. From the following Trial Balance of ABC Ltd for the year ended 31 st March 2014,
prepare the Income Statement and Balance Sheet.

Particulars Amt Amt

Computers 37,000
Plant and Machinery 3,80,000
Cash in hand 4,500
Cash at bank 51,830
Opening Stock 8,100
Debtors 65,300
Purchases 2,73,685
Sales 5,20,870
Carriage Outward 3,100
Creditors 20,600
Rent 41,700
General Expenses 24,000
Loan @ 10% p.a 2,00,000
Returns Inwards 1,300
Returns Outward 1,100
Repairs 1,400
Wages 54,755
Interest 10,000
Electricity Charges 2,800
Bills Payable 6,900
Capital 2,10,000
Total 9,59,470 9,59,470

Adjustments:
 Closing Stock – Rs 15600
 Create a provision for doubtful debts @ 5%
 Depreciation on plant and machinery – 10%; Computers – 20%
 General expenses – Rs 2000 paid in advance

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7. From the following information extracted from the Trial Balance of Mint Systems Ltd
prepare the Income Statement and Balance Sheet for the year ended 31 st March
2014.

Particulars Amt Amt

Equity Share Capital 4,00,000
Debentures 2,00,000
Long Term Loans 1,00,000
Short Term Loans 5,00,000
Goodwill 2,00,000
Land & Buildings 10,00,000
Machinery 50,000
Debtors 2,00,000
Creditors 20,000
Bills Receivable 10,000
Bills Payable 15,000
Cash in hand 25,000
Cash in Bank 5,50,000
Bank Overdraft 6,50,000
Deposits from Fun Ltd 3,00,000
Loans to Fox Ltd 3,50,000
Sales from Domestic Market 15,00,000
Sales from International Markets 30,00,000
Manufacturing Expenses 1,00,000
Salaries 2,00,000
Rent 4,00,000
Administrative Expenses 3,00,000
Marketing & Selling Expenses 2,00,000
Investments 31,00,000
TOTAL 66,85,000 66,85,000

Adjustments:
 Sales Revenue of Rs 5,00,000 yet to be received
 Depreciate all machinery by 20%
 Bad Debts – Rs 10,000
 Outstanding Rent – RS 50000

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8. Prepare the Income Statement and Balance Sheet of TOW Ltd for the year ending
31st March 2014.

Particulars Amt
Salaries 36,000
Repairs 2,500
Cash 1,000
Interest Received 3,000
Interest Paid 24,000
Debtors 38,000
Bills Payable 4,000
Opening Stock 30,000
Bank Overdraft 3,10,000
Carriage in 2,000
Creditors 4,500
Travelling Expenses 5,000
Returns Outwards 4,000
Machinery 2,10,000
Building 4,50,000
Sales 3,80,000
Returns Inward 5,000
Capital 2,43,000
Purchases 1,45,000

Adjustments:
 Depreciation on Machinery - @ 10% p.a
 Travelling Expenses include Rs 1,200 for the previous year
 Repair Charges due – Rs 300
 Debtors were bad to the extent of Rs 6,000
 Create a provision for doubtful debts @ 5%
 Closing Stock – Rs 14,200

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 REAL-LIFE PROBLEMS
9. The following are the incomes and expenses of ABCD Ltd for the year ending March
31st, 2013. You are required to prepare a Profit and Loss Statement.

Particulars Amt (Rs in Crore)

Advertising Revenue 173.25
Equipment Hire Revenue 17.26
Interest on Fixed Deposits 8.48
Rental Income 1.32
Production Expenses 54.63
Salary, Wages and Other Benefits 38.03
Rent Expenses 11.89
Provision for doubtful debts 3.34
Other expenses 17.22
Depreciation on equipments 5.53
Amortization of Software licenses 6.73
Interest on bank loans 14.34
Other finance charges 0.33
Current tax on income 10.14
Deferred tax 3.87

10.From the following Trial Balance of Shivam Ltd prepare the Profit and Loss A/c and
Balance Sheet for the year ended 31st March 2011.

Particulars Amt Amt

Share Capital (1,20,000 Shares of Rs 10 12,00,000
each)
General Reserve 5,00,000
Calls in arrear (20,000 shares @ Rs 5 each) 1,00,000
Unclaimed Dividends 13,052
Sundry Creditors 1,73,716
Buildings (at Cost) 3,00,000
Purchases 10,01,806
Sales 21,67,894

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 Manufacturing Expenses 7,18,000
Salaries 53,628
General Expenses 62,156
Machinery (at Cost) 4,00,000
Vehicles (at Cost) 60,000
Furniture (at Cost) 10,000
Opening Stock 3,44,116
Debtors 4,46,760
Investments 5,77,900
Provision for depreciation (1.4.2010) on 1,10,000
Machinery
On Building 50,000
On Vehicles 30,000
On Furniture 4,000
Advance Income Tax (2009-10) 1,00,000
Advance Income Tax (2010-2011) 1,25,000
Cash at Bank 1,44,480
Directors Fees 3,600
Interest in Investment 17,088
Profit and Loss A/c 91,696
Provision for Income Tax (1.4.2010) 90,000
TOTAL 44,47,446 44,47,446

Additional information:

 Stock in hand on 31 March 2011 – Rs 2,97,360

 Provide depreciation on the fixed assets at the original cost at the following rates:
o Plant and machinery – 10%, Motor Vehicles – 20%, Furniture – 10%, Buildings – 2%
 Interest accrued on investments- Rs 5,500
 Provision for doubtful debts to be made- 2%
 Provision for tax for the current year to be made – Rs 1,20,000
 Salary for the month of March is outstanding – Rs 4,800
 General expense include insurance paid amounting to Rs 8,000 for the period from Jan 1, 2011
to 31 December 2011.
 The board of directors has proposed transfer of Rs 50,000 to general reserves and a dividend
on equity shares @4%.

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