Padhuka's Practical Leaming Series - Accounting For CA Foundation

Practical Illustrations
1· Fr~m the above lnfonnation, prepare a Trading Account of Mis. ABC Traders for the year nd
e ed March 31 and Pass
A necessary closing entries In the journal proper of Mis. ABC Traders

Particulars t Particulars t
Opening Inventory 1,00,000 Sales 11,00,000
Purchases 1,00,000
6,72,000 Returns inward
l\.~ Carriage Inwards
30,000 Returns outward 72,000
Wages 2,00,000
~
50,000 Closing Inventory

In the books of M/s. ABC Traders

Tradin Account for the ear ended March 31
Particulars Amount Particulars Amount
To Opening Inventory 11,00,000
1,00,000 By Sales
To Purchases 6,72,000 (1,00,000) 10,00,000
Less: Returns Inward
Less: Returns outward (72,000) 6,00,000 By Closing Inventory 2,00,000
To Carriage Inwards 30,000
To Wages 50,000
To Gross profit 4,20,000
Total 12,00,000 Total 12,00,000

Date
.
Journal Proper in the Books of M/s ABC Traders
Particulars Debit f Credit t
Mar 31 Returns outward Ne Dr. 72,000
To Purchases Ne 72,000
(Being the transfer of returns to purchases account)
Mar 31 Sales Ne Dr. 1,00,000
To Returns Inward Ne 1,00,000
(Being the transfer of returns to sales account)
Mar 31 Sales Ne Dr. 10,00,000
To Trading Ne 10,00,000
(Being the transfer of balance of sales account to trading account)
Mar 31 Trading Ne Dr. 7,80,000
To Opening Inventory Ne 1,00,000
To Purchases Ne • 6,00,000
To Wages Ne 50,000
To Carriage Inwards Ne
30,000
(Being transfer of balances of opening Inventory, purchases & wages)
Mar 31 Closing Inventory Ne Dr. 2,00,000
To Trading Ne 2,00,000
(Being the incorporation of value of closing Inventory)
Mar 31 Trading Ne Dr. 4,20,000
To Gross Profit
4,20,000
(Being the amount of gross profit)
Mar 31 Gross profit Dr. 4,20,000
To Profit and Loss Ne
4,20,000
(Being the transfer of gross profit to Profit and Loss Account)

/\ 2. Trial Balance for the financial year (FY) ended March 31 of M/s Deepakshl shows following details - (~)

SA.18
 ____ ____ ____ ____ ___BFimnamncciical Statements - Final Accounts of
Sole Proprietorship Entities

Particulars Debit Credit

~ase&S ales
10,00,000 12,00,000
Debtors & Creditors
5,00,000 4,00,000
opening Stock
Closing Stock
2,00,000 -
Other Expenses & Incomes
3,00,000 -
7,00,000 9,00,000
Fixed Assets & Long Term Liabilities
25,00,000 6,00,000
capital
-- .. .
- 21,00,000
-Additional l~format,~n..Opening .
Creditors balance .1s f 3 00 000 You are required to calculate cost
52,00,000 52,00,000
paid to Creditors dunng the year. of goods sold and amount
' ' •

- .
1 Working Not es
Particulars
1. Adjusted Purchases (See Note)
2. Actual Purchases during the Year= Adj. Purchases+ Closing Stock
Computation
Closing Stock already adjusted '
10,00,000
10,00,000 + 3,00,000 13,00,000
3. cost of Goods Sold = Opening Stock + Adj. Purchases 12,00,000
- 2,00,000 + 10,00,000
Note: Smee CloSmg stock appears m Tnal Balance, it means following entry has already been passed
in books:
Closing Stock Nc • 3 oo ooo
Dr. , , ✓
To Purchases A/c 3,00,000

2. Creditors A/ c - To find amount paid to Creditors

Date Particulars
f Date Particulars t
Year To Bank Ne (Balancing Figure) 12,00,000 ,.Opening By Balance b/d 3,00,000
..,;
Closing To Balance c/d 4,00,000 Year By Purchases A/c (Note 1) 13,00,000
Total 16,00,000 Total 16,00,000

3. Crimpson Ltd's Profit and Loss Account for the year ended March 31 includes the following informatio
n:
(a) Depreciation 57,500
(b) Bad Debts written off 21,000
(c) Increase in Provision for Doubtful Debts 18,000
(d) Proposed Dividend 15,000
(e) Retained profit for the year 20,000
(ij Liability for tax • 4,000
Which of the above are- (a) Transfer to provisions, (b) Transfer to reserves, (c) neither related to Provisions
/ Reserves?

Transfer to Provisions 1, 3 & 6

Transfer to Reserves 5
Neither related to Provisions / Reserves 4&2

au, b~ ~~~I V\,\ ..

4. S & Co employs a team of eight workers w~o were ~~idt f30,000 ptehr mohnth eachtinbthetyhear ending Mharcdh ~· Att ~he startt
f fi . th company raised salaries by 10 ,o o per mon eac • 0n 0co er, e company 1re "~o ramees a
ll o I man~i; r;~rio
1
er month each. The work force are paid salary on the first working day of every month, one month in
sa ary O h 't th pe loyees receive their salary for January on the first working day of February etc.
Calculate:
arrears, so t a . e emh~ h uld be charged to the profit and loss for the year.
(a) Amount of_salaries w 1c wo . . ear
(b) Amount actually paid as salaries dunng the Y
f' (c) Outstanding Salaries as on March •
31

8A.19
 Padhuka's Practical Learning Series - Accounting - For CA Foum ndd,a J_!!ti
~on~ ------ ------ ----
computa tion Amount
Particulars Total

.A
1. Salaries to be charged to Profit and Loss Account
for the year
8 employees for full year @t 33,000 per month 33,000 X8X 12 31,68,000
-----
2,52,000

---
2 trainees for 6 months@ t 21,000 per month 21,000 X 2X6 34,20,000
2. Salaries actually paid
8 employees March PY salaries paid in April CT 8 X 30,000 2,40,000
8 employees for Apr to Feb paid in May to Mar 33,000 X 11 29,04,000
2,10,000
2 trainees for Oct to Feb paid in Nov to Mar
3. Outstanding salaries as at March 31
8 Employees @t33,000 each for 1 month March CT
21,000 X 5

33,000 X 8 2,64,000
--
33,54,ooo

2 Trainees @n1,ooo each for 1 month March Cy 21,000 X 2 42,000 3,06,ooo

-
·s:- Mr~k is-engaged in business of selling magazines. Several of his customers pay money in ad~ance for subscribing his
magazines. Information related to year ended March 31 has been given below: He had_ ~penmg
b_alance off 2,00,000
advance from customers of which t 1,50,000 is related to the current year while remammg
pertains to th e next year.
During the current year, he made cash sales of t 5,00,000. Compute:
'"' 1. Total Income for the year.
.
].. ~ Total money received during the year if the closing balance in advance from customers account
is f 1,70,000.

1. Computation of Income t 2. Total Cash received during the year

Money received during the year 5,00,000 cash Sales during the year 5,00,000
Add: Money received in advance during PY 1,50,000 Add: Advance received during the year 1,20,000
Total 6,50,000 Total 6,20,000

3. Advanc~ from Customers A/ c

Date Particulars t Date Particulars t
To Sales A/c (Advance related to current year) 1,50,000 Opg By Balance b/d 2,00,000
Qg To Balance c/d 1,70,000 By Bank A/c 1,20,000
Total 3,20,000 Total 3,20,000
• • balance sheet of Tha ar was as follows:
iabilities Amount Assets Amount
Trade payables 15,00,000 Plant & Machinery 30,00,000
Expenses Payable 1,50,000 Furniture & Fixture 3,00,000
Capital 50,00,000 Trade receivables 14,00,000
Cash at Bank 6,50,000
Inventories 13,000,000
Total 66,50,000 Total 66,50,000
During the year, his Profit and Loss Account revealed a net profit oft 18,30,000. This was after
{a) Rent received from property let out? 3,00,000. allowing for the following :
~ , •• i: ! ,·.-----:-• • • ) , • '·' r't • ~. \ l ,__ •
(b) Depreciation on Plant and Machinery@ 10% and on Furniture and Fixtures@ 5%.
(c) A provision for Doubtful Debts@ 5% of the trade receivables as at March, 31.
I
t

But while preparing the Profit and Loss Account he had forgotten to provide for (1) outstandi
ng expenses totaling t 1,80,000
and (2) prepaid Insurance to the extent of t 20,000. His current assets and liabilities on
March, 31 were: Inventories f
14,50,000, Trade receivables t 20,00,000, Cash at Bank t 10,35,000 and Trade payables t
11,40,000. During the year he
_withdrew f 6,00,000 for domestic use. Draw up his Balance Sheet at the end of the year.
'•

BA.20

◄
 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __JF~in~a~nc~ia~I~Sta~t~e~m~en~ts~~Fi~na~l~Ac~c~ou~n!!:ts~o~f~S~ol~e
~Pr~o'.epr~ie~to~r~sh~ip~E~n!.':ti~ties~
Pr01
fit and Loss Account (Revised)
Particulars
f Particulars t
WOutstanding expenses

----
1,80,000 By Balance b/d 18,30,000
To Net profit
16,70,000 By Prepaid insurance 20,000
Total
18,50,000 Total 18,50,000

..-- Balance Sheet of Thapar as on March, 31

-capital
Liabilities

Add: Net Profit

50,00,000
16,70,000
t Assets
Cash at Bank
t
10,35,000
t

Trade receivables 20,00,000

Less: Drawings (6,00,000) ,
60,70,000 Less: Provision (1,00,000) 19,00,000
outstanding expenses
1,80,000 Plant and Machinery 30,00,000
Trade payables
11,40,000 Less: Depreciation (3,00,000) 27,00,000 r
Furniture & Fixtures 3,00,000
2,85,000
I -
Less: Depreciation (15,000)
Inventories 14,50,000

- Total
73,90,000
Prepaid insurance 20,000

- Total 73,90,00 0
The balance sheet of Mittal on 1stJanuary was as follows:
Liabilities
Amountt Assets Amountf I •

Trade payables .
16,00,000 Plant & Machinery 31,00,000.,.
Expenses payable 2,50,000 Furniture & Fixture 4,00,000,
Capital 51,00,000 Trade receivables 14,50,000J
Cash at bank 7,00,000'
Inventories 13,00,000 v
69,50,000 69,50,000
During the year, his profit and loss account revealed a net profit oft 15,10,000. This was after allowing for
the following:
(i) Interest on capital @6% p.a.
(ii) Depreciation on plant and machinery@10% and on Furniture and Fixtures@5%.
(iii) Aprovision for Doubtful debts@ 5% of the trade receivables as at 31 st December.
But while preparing the profit and loss account he had forgotten to provide for (1) outstanding expenses
totalling f 1,85,000
and (2) prepaid insurance to the extent oft 25,000. His current assets and liabilities on 31 stDecember were:
Trade receivable f
21,00,000, Cash at bank f 5,20,000 and Trade payabales f 13,84,000. During the year he withdrew f 6,20,000
for domestic use.
Closing inventories is equal to net trade receivables at the year~nd. Draw up revised Profit and Loss
account and Balance
Sheet at the end of the year.
Solution:
• Revised Profi1t & L055 A/ c Ior the vear ended 31st December
Particulars f Particulars {
To Expenses Outstanding 1,85,000 By Gross Profit 22,51,000
Less: Prepaid Expenses (25,000} 1,60,000
To Depreciation
Plant and Machinery(31,00,000 x10%) 3,10,000
Furniture and Fixtures(4,00,000 x 5% ) 20,000 3,30,000
To Provision for Bad Debts (21,00,000 x 5%) 1,05,000
To Interest on Capital(Sl,00,000 x 6%) 3,06,000
To Net Profit after Adjustments (WN 1) 13,50,000 . "
Total 22,51,000 Total 22,51,000

8A.21

►
 11111

Padhuka's Practical Learning Series - Accounting For CA Foundation

Balance Sheet as at March 31

f -
~
Liabilities Assets
Capital
~ t -
51,00,000 / Fixed Assets:
Add: Net Profit Plant & Machinery 31,00,000
13,50,000 /
Add: Interest on Capital 3,06,000 /
(3,10,000) 27,90,000
Less: Drawings (given) (6,20,000)., ~61,36,000 Less: Depreciation at 10% V
Furniture & Fixtures 4,00,000
Depreciation at 10% (20,000) 3,80,000
Less:
Current Liabilities:
Trade Payables 13,84,000
v'
Current Assets
Outstanding Expenses 19,95,000
1,85,000 v Inventories
Prepaid Insurance 25,000 /

Trade Receivables 21,00,000

Less: Provision for Bad Debts 5% (1,05,000) 19,95,000 I/
Cash at Bank 5,20,000 V
Total 77,05,000 Total I 77,05,000

Working Notes· . .
1 Computation of Net Profit
Particulars ~

Net Profit as per Profit and Loss before Adjustments 15,10,000

Add: Prepaid Insurance 25,000
Less: Outstanding Expenses (1,85,000)
Total 13,50,000

8. The Closing Balance Sheet of Mr. Popatlal, a merchant on March, 31 below:

Liabilities Amount Assets Amount
Capital 2,40,000 Fixed Assets 1,25,600
Trade payables 1,64,000 Inventories 2,06,400
Bank Overdraft 1,46,000 Trade receivables 1,88,000
Less: Provision (6,200) 1,81,800
Cash 36,200
Total 5,50,000 Total 5,50,000
Show opening journal entry in the books of Mr. Popatlal.

(Dr.) t (Cr.) t
Apr 1 Fixed Assets Ne Dr. 1,25,600
Inventories Ne Dr. 2,06,400
Trade receivables A/c Dr. 1,88,000.
Cash Ne Dr. 36,200
To Trade payables A/c 1,64,000
To Bank Overdraft A/c 1,46,000
To Provision for Doubtful Debts A/c 6,200
To Capital A/c 2,40,000
'

Jt 9. You are required, prepare a Trading and Profit and Loss Account for the year ending March 31 and a Balance Sheet as on
that date from the Trial Balance given below:

SA.22

d
 ----------------- Financial Statements Final Accounts of Sole Proprietorship Entities
Debit Balance
1,ad8 Receivables Credit Balance
opening Inventory
3,50,000 Capital '
5,00,000 Trade payables
'v
25,00,000
9,00,000
✓

cash in Hand 5,60,000 Sales V

17,00,000
wages 3,00,000
sad Debts 50,000
fumlture and Fixtures
1,50,000
oepreciation 1,50,000
salaries 2,20,000
p0rchases 12,50,00
piant and Machinery
15,70,000
~
on March 31, the Inventory was valued at~ 10,00,000.
Trading and Profit and L
Particulars oss Account for the year ending March 31
~ Particulars t
Toopening Inventory 5,00,000. .,.By Sales 17,00,000
To PUrchases 12,50,000 ~Y Closing Inventory
I 10,00,000
To Wages 3,00,000"'
To Gross Profit /
- Total
6,50,000 •
27,00,000 Total 27,00,000
To Bad Debts 50,000, " By Gross Profit 6,50,000 •-
To 0epreciation 1,50,000 \ /
To Salaries 2,20,000'
/'

To Net Profit transferred to Capital A/c 2,30,000, /

Total 6,50,000 6,50,000
Total

Balance Sheet as at March 31

Liabilities Assets f
capital
PreVious Balance
'
25,00,000JI,
' Cash in Hand
Trade receivables
'
5,60,000 •
3,50,000'V
~

II'
Add: Net Profit 2,30,ooo..- 27,30,000 Closing Inventory 10,00,000 •;" 19,10,000
Trade payables 9,00,000 -4 Furnit1.1re & Fixtures 1,50,000 •;,
Plant & Machinery 15,70,000 •V 17,20,000
Total 36,30,000 Total 36,30,000

aa D. ollowing particular are extracted from the books of Mr. Sandeep for the year ended 31 st December.
Particulars Amount? Particulars Amount~
Debit Balances: ' Credit Balances:
Cash In hand 1,500 Capital 16,000
Purchase ' 12,000 Bank overdraft 2,000
--
Salesretum ' 1,000 Sales 9,000
Salaries 2,500 Purchase return 2,000
Tax and Insurance 500 Reserve for Bad debts 1,000
Bad debts 500 Creditors 2,000
Debto11 5,000 Commission 500
Investments 4,000 Bills payable 2,500
Opening stock 1,400
Orawlngs 2,000
f\lrnltura 1,600
3,000
JIii receivables Total 35,000
51!', 35,000
-Diilnfonnatlon: Total

I Closing stock was valued at ' 4,SOO t d' whereas insurance t 50 is prepaid.
~of, 100 and Tax off 200 are outs an in9
-lsslon received In advance is ' 100
8A.23
--~--
 ~Pa~d~h~uk~a~'s~P~ra~ct~i~ca!!_I~Le~a~rn!!!in~g~S~e~ries~:.!_A~c~co~u~nt~in~g__:..!F~o~rCA~F~o~u~nd~a~tio~n!___ _ _ _ _ _ _
_ _ _ _ _ _ _ __
(iv) Interest accrued on investment is ~ 21 o
(v~ Interest on overdraft is unpaid f 300
(v!~ Reserve for bad debts is to be kept at ~ 1,000
(vu) Depreciation of furniture is to be charged@ 10%
You are required to prepare the final accounts after making above adjustments.
1. Trading A/c of Mr. Sandeep for the year en ded 31st December
Particulars { -
To Opening Stock
f f
1,400
Particulars
By Sales 9,000 - f

To Purchases (1,000) 8,000

12,000 Less: Returns
Less: Returns (2,000) 10,000 By Closing Stock 4,500
To Gross Profit c/d 1,100
Total 12,500 Total 12,soo
31st
-
1 & Loss Account tor t he year ended
2• Profit December
Particulars Particulars f -
{ { f
To Salaries 2,500 By Gross Profit b/d 1,100
Add: O/s Salary 100 2,600
To Tax and Insurance 500 By Commission 500
Add: O/s Taxes 200 Less: commission Received in Advance (100) 400
Less: Prepaid Insurance (50) • 650 By Interest on Investment 210
To Bad debts
, 500
To Interest on Overdraft 300
,,
To Depreciation (1,600 x 10%) 160 By Net.Loss 2,500
Total 4,210 Total 4,210

.
3 Balance Sheet as on 31st December
Liabilities f t Assets t t
capital: Balance , 16,000 Non Current Assets: Furniture 1,600
Less: Net Loss (2,500) Less: Depreciation (160) 1,440
Less: Drawings (2,000) 11,500 Investments 4,000
Bank Overdraft 2,000 Current Assets:
Interest on Overdraft 300 Interest Accrued on Investments 210
Bills Payable 2,500 Stock in trade 4,500
Sundry Creditors 2,000 Bills Receivable 3,000
Salary O/s 100 Sundry Debtors 5,000
Tax O/s 200 Less: Reserve for Bad Debts (1,000) 4,000
Commission Received in Advance 100 Prepaid Insurance so
Cash in Hand 1,500
18,700 18,700
Note: Reserve for Bad Debts is t 1,000. Since it is to be kept at tl,000 - no entry for the said adjustmen
t shall be done.

/\ 11/4he following is the schedule of balances extracted from the books of Shri Gavaskar, who carries
on business under the
/ / same name and style of Messrs Gavaskar Viswanath & Co at Bombay:
Particular t Particular t
Cash in hand 14,000 Sundry Creditors 4,30,000
Cash at bank 26,000 Loan from Viswanath 3,00,000
Sundry Debtors 8,60,000 Provision for bad debts 30,000
Opening Stock 6,20,000 Purchase Returns 26,000
Furniture & fixtures 2,14,000 Sales 23,00,000
Office equipment 1,60,000 Discount received from Creditors 16,000

BA.24

◄
 - - - - - - - - - - - - - - FFiinancial Statements - Final Accounts of Sole Proprietorship Entities
Particular
f Particular t
~ 6,00,000 Capital Ale 16,20,000
Motor Car 2,00,000
purchases 14,00,000
sales Retums 42,000
salaries 1,10,000
Rent for Godown 55,000
t on loan from Viswanath 27,000
IntereS
Rates &Taxes 21,000
Discount allowed to Debtors 24,000
freight on purchases 12,000
carriage Outwards 20,000
'
orawings 1,20,000
printing and Stationery 18,000
Electricity Charges 22,000
Insurance Premium 55,000
General office expenses 30,000
Bad Debts 20,000
Bank charges 16,000
Motor car expenses 36,000
- TOTAL 47,22,000 TOTAL 47,22,000

'
Prepare Trading & Profit & Loss Ale for the year and the Balance Sheet as at that date after making provision
for the following:
and fixtures by 10%, One steel table purchased during the year fort 14,000
1. Depreciate: (a) Building by 5%, (b) Furniture
was sold for same price but the sale proceeds were wrongly credited to Sales Ale, (c) Office Equipmen t by 15%, Purchase
of atypewriter during the year for f 40,000 has been wrongly debited to Purchase, and (d) Motor car by 20%.
2. Value of stock at the close of the year was ? 4,40,000.
3. Two month's rent for godown is outstanding.
4. Interest on loan from Viswanath is payable at 12 %per annum, this loan was taken on May 1, current year.
5. Provision for bad debts is to be maintained at 5 %of Sundry Debtors.
of the insurance
6. Insurance premium includes ~ 40,000 paid towards proprietor's life insurance policy and the balance
® charges cover the period from April 1, current year to June 30, next year (15 months)

'@ Work"in~ Not es

t
·computation
1. Insurance premium
55,000 - 40,000 / 15,000
premium (Drawings)
... - Personal
Insurance pre~ium .
(3,000) iV
15,000 X 3/15
Less: Prepaid for 3 months
12,000
Transfer to Profit & Loss A/ c
' @ 5% on 6,00,000 30,000 v
2. Depreciation Building
@ 20% on 2,00,000 40,000
Motor Car
@ 10% on 2,00,000 (2,14,000 - 14,000) / 20,000 •
Furniture & Fittings
.,, @ 15% on 2,00,000 (1,60,000 + 40,000) 30,000 v
Office Equipment
~

1,20,000
Transfer to Profit & Loss A/ c
~.

3,00,000 X 12% X 11/12 33,000

l. Interest of Loan Interest on Loan
(27,000)
Less: Interest in Trial Balance
I--__
6,000
Profit & Loss A/c (Outsta nding)

8A.25
 Padhuka's Practical Leaming Series - Accounting For CA Foundation --- ----------
r ended March 31
Trading & Profit and Loss A/c of M s Gavaskar Viswanath &co. for the yea_ Details Amount
Particulars
To opening Stock
Details Amount Particulars
6,20,000 ,.,-By Sales
-
2
3,00,000 I/
14,000 ,/
-
To Purchases 14,00,000 _.,,. Less: Sale of furniture 42,000/'
Less: Typewriter 22,44,ooo
40,000 i' Less: Sales Returns .--
4,40,000 .11
Less: Purchase Returns 26,000 13,34,000 By Closing Stock
j L,

To Freight on purchase 12,000 ,/

To Gross Profit c/d 7,18,000
Total Total 26,84,ooo
26,84,000
To Salaries 1,10,000/'BY Gross profit b/d 7,1a,ooo-
To Rent for Godown ss,ooo, L,
By Discount received 16,ooo y
Add: Outstanding 11,000 66,000 V
To Provision for doubtful debts WN4 33,000 i v
To Rent and Taxes 21,000 ,v
To Discount Allowed 24,000 ,v
To carnage outwards 20,000 ,v
To Printing and stationery 18,000 i'
To Electricity charges WNl 22,000,
To Insurance premium 12,000~v
To Depreciation WN2 120 000 ,v
To General office expenses ' '
30,000 1 V
To Bank Charges 16,000 ,v
To Interest on Loan 27,000Y
Add: Outstanding (WN3) 6,000 33,000 V
To Motor car expenses 36,000 36,000.,v
To Net Profit - Trf to capital 1,73,000
Total 7,34,000 Total 7,34,000

.
2 Balance Sheet of M/s Gavaskar Vishwanath &Co as at March 31
Liabilities Details Amount Assets Details Amount
capital 16,20,000 .,, Building 6,00,000' V
Add: Net Profit 1,73,000. Less: Depreciation (30,000) V 5,70,000 V'
Less: Drawings (1,20,000) / Motor Car /
2,00,000 ~
Les.~: Insurance Premium (40,000) ,v 16,33,000 Less: Depreciation (40,000) 1,60,000 V
Loan from Vishwanath 3,00,000J Office equipment 2,00,000 V'
Add: Outstanding 6,000,1 3,06,000 V
Less: Depreciation (30,000) 1,70,000
Sundry Creditors 4,30,000,
~- Furniture & Fixture 2,00,000 ✓

Outstanding rent 11,000 ,, Less: Depreciation

~
(20,000) 1,80,000 V
Stock in Trade 4,40,000
Sundry Debtors 8,60,000 ll
Less: Provision for doubtful debts (43,000),,, 8,17,000
V

Cash at hand /
26,000
Cash in bank
14,000
V
Prepaid Insurance (WN 1) 3,000 I

Total 23,80,000 Total 23,80,000

8A.26
 of Sole Proprietorship Entities
Financial Statements - Final Accounts
Note 4·
workina I
Provision for bad debts A/ c
particulars Amount
Amount Particulars
30,000,
~e bt sa /c 20,000 By balance b/d
33,000
ro balance c/d 43,000 By P&L A/c
63,000
_;; .--- Total 63,000 Total
. . . Trial B Loss
3 e following Tnal Balance Is the 31 a d a1ance of a Proprietor as on March 31 . Prepare Trading and Profit and
If - "'{jcount for the vear end ing
Particulars
March
n a Balance Sheet as at that date. (~)
(?) Particulars
4,00 ,000
~ 5,00,000. Capital
plant 5,20,000
Office Fumiture 26,000 Sundry Creditors
48,00,000
opening Stock 4,80,000 Sales 56,000
Motor Van 1,20,000 Bills Payable 25,000
sundry Debtors 4,57,000 Provision for Doubtful Debts 55,000
cash in Hand 4,000 Returns Outwards 37,000
65,000 Discount Received
9 cash at Bank
Wages 15,00,000
Salaries 1,40,000
"
purchases 21,35,000
sills Receivable 72,000
Return Inwards 93,000
Drawings 70,000
I

Advertisement 60,000
Factory Rent 8,000
63,000
Insurance
10,000
General Expenses
25,000
Bad Debts
65,000
Discount allowed 1,73,000
1,73,000
.. . -
Additional Information to be considered
• Closing Stock on 31 March is f 5,20,000 ted to Purchases Account.
Durin g the year,Plant and Mac hinery was purchased for f3,00,000 but it was debi
•
paid f3,000.
• 3months Factory Rent is due, but not and Motor Van.
• Provide Depreciation at 5%~ p.a. on Furniture, and 10% on Machinery
• Further Bad Debts ~7,000
• Provision for Doubtful Debts to be incre
• Provision for Discount on Debtors to
.-
ased to f 30,000 at year-end.
be made at 2%.
r ended March 31
. 1. Tradinq A/c of .......... for the yea t
t Particulars ,,
Particulars 48,00,000
4,80,000 By Sales 47,07,000
To Opening Stock (93,000)
(-) Sales Returns
21,35,000 5,20,000..
To Purchases By Closing Stock
(3,00,000) •V
(-) Plant & M/c Purchase
18,35,000
Materials Purchase 17,80,000
(55,000)
(-) Purchase Returns 15,00,000
To Wages
8,000
To Factory Rent 3,000..-, 11,000
.·
Add: Rent Outstanding 14,56,000
Total 52,27,000
~Gross Profit c/d 52,27,000
Total

8A.27
 . cp. Foundation
Padhuka's Practical Leaming Series - Accounting - For
March 31
for the ulars
r--------~2.JP~ro~fi~•t~an~d~L~os!:srA~c::.:.Of:_:.';...-"' '~'1'"'
1 t
Particulars B Gross Profit b/d 14,SG,ooo
To Salaries 1,40,000 Y ·ved
Discount Rece1 37,ooo
To Advertisement 60,000 By
To Insurance 63,000
To General Expenses 10,000
To Discount Allowed 65,000
To Provision for Doubtful Debts (WN 1) 37,000
To Provision for Disc. on Debtors 8,400
To Depreciation on Assets (WN 2) 93,300
To Net Profit tfrcl to capital A/c 10,16,300
Total 14,93,ooo
Total 14,93,000

3. Balance Sheet of ..........as on March 31

Assets
Liabilities
Capital: Balance as per TB 4,00,000
t
Fixed AsSets:Net Block (WN 2) ---
t
8,52,700. 1 t
I

Add: Profit for the year 10,16,300 Current AsSets:Inventories s,20,000 V

4,57,000 V
Less: Drawings as per TB (70,000) 13,46,300 Trade Receivables (Debtors)
Less: Further Bad Debts (7,000) V
Cunent Liabilities: Net Balance 4,50,000
Sundry Creditors 5,20,000 Less: Provn for Doubtful Debts (30,000) V
Bills Payable 56,000 4,20,000
Factory Rent Payable 3,000 • r1 5,79,000 Less: Provn for Disc on Ors 2% (8,400) •/ 4,11,600 I
Bills Receivable 72,000
cash at Bank 65,000
cash in Hand 4,000
Total 19,25,300 Total 19,25,300
WN 1•• Provision for Bad and Doubtful Debts A/ c
Particulars t Particulars t
To Bad Debts (as per TB) - i.e. written off 25,000 By balance b/d (as per TB) - i.e. given 25,000
To Sundry Debtors A/c - i.e. further Bad Debts 7,000 By Profit and Loss Ne 37,000
To balance c/d - i.e. Provn required at year end 30,000 - Provision/ Expense transferred (bal.fig)
Total 62,000 Total ..
62,000
WN 2: Depreciation on Assets
Particulars Furniture Machinery Motor Vans Total
Cost of Asset TB: 26,000 5,00,000 + 3,00,000 =8,00,000. . '(I TB: 1,20,000 9,46,000
Less: Depreciation 5% =1,300J t 10% =80,000 .
Net Block 24,700
n
I
10% = 12,000 I/ 93,300
7,20,000 1,08,000 8,52,700.!.

,13. From the following Trial Balance and additional information of Mr. Hrishikesh, a Proprieto
r, prepare Trading Account,
Profit and Loss Account for the year ended March 31, and a Balance Sheet as at that date
Particulars .
(t) Particulars (t)_
Bad Debts 23,000 Rent Received
Rent 65,000
1,10,000 Discount Received
Wages 10,000
2,09,000 Sales
Building
. 10,07,000
6,00,000 Capital
Machinery 13,83,000
1,60,000 Commission Received
30,000
Salaries 4,16,000 Creditors
1,90,000

8A.28
 '

----~~~~ii-i.=ii~~~.::.::.::~::-!!:;~~~~~~~-!~!~:3~~~~~~~~7ni
Parti
Financial Statements - Final Accounts of Sole Proprietorship Entiti~

(t)
btors (includes Shyam's dishonoured Bills Particulars
Dt '1Vable off 8,000) 3,37,000
Rect
Discount Allowed
10,000
purchases 6,74,000
printing and Stationery
1,46,000
26,85,000 26,85,000
1, Wages include thefollowing amounts - {a) f 40,000 spent on additions to Building during the year.
01
0eprec1a. t' (b)f20,000 for erection of New Machine during the year.
provide 10,. 10n on Machine and Building.
!: 000
Discount otfhf 1i: w~~:" itially allowed to a Customer and was then reversed since he had not satisfied the conditions
relating to e iscoun 1owance. The reversal of Discount was posted to the credit of Discount Received Ale.
t Remuneration of f 20,000 paid to an Employee stands posted to his Personal Account.
5. Creditors in~lude fSS,OOO received from Mr. Kand credited to his account. The amount written off as Bad Debt laSt year.
6. Goods costing ?5,000 were taken by the Proprietor for personal use.
7. Goods costing f6,000 were sent to a Customer on Sale or Return basis for n,ooo on 30th March.
a. Loss of Stock due to fire on 251h March in the godownwas?10,000. Insurance Company admitted the claim at 60%.
g, Half of the amount of Shyam's dishonoured Bills Receivable is irrecoverable.
1o. create a Provision of 5% on other Debtors. . .
11, 50% of Printing and Stationery is to be carried forward for next year.
12, One third of the Commission Received is in respect of work to be done next year.
13, Rent has been paid for 11 months but has been received for 13 months. ·
14. Included amongst Debtors as ?30,000 due from Om and included among Creditors f10,000 due to him.
·1s. Stock in Hand is f4,88,880.
16. Manager is given Commission of 20% after charging his Commission. • _ _ _ ; _ ~ - - - - - - - - ~ - - ~

Solution: 1.Tradin A/c of .......... for the ear ended March 31

Particulars f Particulars
To Purchases 6,74,000 By Sales 10,07,000
(-) Goods for Personal Use (5,000} 6,69,000 (-) Goods sent on approval '
(7,00Q) 10,00,000
To Wages 2,09,000 By Abnormal Loss (Fire) 10,000
(-) capitalised in Building (40,000) By Closing Stock: in Hand 4,88,880
(-) capitalised in Machinery (20,000) 1,49,000 Add: Stock with Customer on
Approval basis 6,000 4,94,880
To Gross Profit c/d 6,86,880
Total 15,04,880 Total 15,04,880
.
2 Profit and Loss A/c of 11 I l l I I I I I for the year ended March 31
Particulars f Particulars f
To Salaries 4,16,000 By Gross Profit b/d 6,86,880
Add: Wrong Debit to Personal A/c 20,00_Q 4,36,000 By Bad Debts Recovered 55,000
To Printing & Stationery 1,46,000 By Commission Received 30,000
Less: Prepaid 50% 73,000 73,000 Less: 1/3rd for future period (10,0QQ) 20,000
To Rent Expense: Paid 1,10,000 By Rent Income Received 65,000
Add: Payable 1 month (1/ 11) 10,000 1,20,000 Less: 1/13th = Advance Rent (S,Q0O) 60,000
To Abnormal Loss of Stock by Fire 4,000
To Bad Debts (given) 23,000
Add: Shyam - Further Bad Debts 4,00Q 27,000
To Provision for Doubtful Debts (WN 1) 14,600
To Depreciation (WN 2) 82,000
~ Net Profit before Commission 65,280
...___ 8,21,880 Total 8,21,880 .
Total /
/'
I
♦
,

o A ..
•I
/

SA.29
 Padhuka's Practical Learning Series - Accounting - For CA Foundation
part icul ars~ ----- -t-- ~
~:-:-:----::-:-~Pa~rti~·c~u~la~rs~_ _ __J~-- -:-:='- t;;:--: --;;.~~
To Managers' Commission 20/120 of 65,280 commission b/d 65,280
10,880 By Net Profit before
~T~o~N~e~t~Pr~ofi~,t~tr~a~n~~e~rr~ed~ro~Ca~p~ira~l~N~c~_ _J__ ~5~4 ~,4~0
0~--- --71o tal
Total 65,280
on March 31
3.Balance Sheet of ..........a5 Assets
Liabilities t
Capital: Balance as per TB
Add: Profit for the year
13,83,000 ' Fixed As5ets:Net Block
(WN 2) 7,3¾Q
54,400
Less: Drawing of Goods (5,000) 14,32,400 current AsSets:
Inventories (from Trading A/c) 4,94,880
Trade Receivables (Debtors) (WN 1) 2,81,400
Current Liabilities:
.
Sundry Creditors (WN 3) 1,25,000 Prepaid Expenses.. Prtg
.
& Stnry 73,ooo
Rent Expense Payable . 10,000 Insurance Claim Receivable 6,000
Commission Payable 10,880
Advance Income Received:
Commission 10,000
'
Rent 5,000 1,60,880
Total 15,93,280 Total 15,93,280-
General Notes .
·
• Discoun t Allowed and ReceivedtlO 000 are not two separate transactions • ·th Debtors and Creditors. It represents
w,
reversal of entry but in wrong acco~nt. Hence, it should not be conside
red as Income or Expense.
• Om's balance of t30,000 lying in both Debtors and Creditors can
be subtracted from the respective Debtors and
Creditors balance, on account of Mutual Transactions / Owings.
• Recovery of Bad Debts constitutes a separate Income Item and is
credited to the Profit and Loss Account.
• Cost of Goods sent on Sale on Approval Basis is included in Invento
ry, whereas the Sale Value thereof is excluded from
Sales during the period.

WN 1: Computation of Debtors and Bad Debts Provision

Particulars ~
Debtors as per Trial Balance
3,37,000
Less: Debtors for Goods sent on Approval included in Sales, now reversed
7,000
Less: Employee's Salary wrongly included in Personal Ne (included in Debtors
) now reversed 20,000
Less: Bad Debts towards 50% of Shyam's Bills Receivable Dishonoured
4,000
Less: Om's Balance in Debtors and Creditors Ne, now set-off
10,000
Net Debtors Balance
2,96,000
Less: Provision for Doubtful Debts at 5% on "Other" Debtors= 2,96,000 - 4,000
Shyam recoverable 14,600
Net Debtors as per Balance Sheet
2,81,400
WN 2: Depreciation on Assets I

Particulars Building Machinery Total

Cost of Asset (TB + Wages) 6,00,000 + 40,000 = 6,40,000 1,60,000 + 20,000 = 1,80,000 8,20,000
Less: Depreciation
10% = 64,000 10% = 18,000 82,000
Net Block
5,76,000 1,62,000 7,38,00 0
WN 3: Sundry Creditors: Given 1,90,000 less Bad Debts Recovered 55,000
less Mutual Owings Om 10,000 = 1,25,000
14. A doctor, after retiring from Govt. Service, started private practice
on 1st April, with f20,000 of his own and t30,000
borrowed at an interest of 15% per annum on the security of his Life Policies
. His accounts for the year were kept on a
cash basis and the following is his summarized Cash Account:
-
Receipts t Payments f
Own Capital 20,000 Medicines purchased
24,500
Loan 30,000 Surgical Equipments
25,000

8A.30

d
 ------------------
-
- Receipts
Financial Statements - FmaI Accounts of Sole Proprietorship Entities

'
,-criptlon Fees
Gift trom Patients 52,500
13,500
Motor Car
Motor Car
Payments

Expenses
32,000
12,000
'
~ngfees 25,000
fee trom Lectures Wages and Salaries 10,500
2,400 Rent of Clinic 6,000
,enslon Received
30,000 General Charges 4,900
Household Expenses 18,000
Household Furniture 2,500
Expenses on Daughter's Marriage 21,500
Interest on Loan 4,500
Balance at Bank 11,000
- Total
1,73,400
Cash in Hand 1,000
1,73,400
-,repare his Capital Ale and Income and Ex . Total
Qle-thlrd of the Motor-Car Expenses mape;diture Alcfor the year ended March 31 and Balance Sheet on that date.
SalarleS are in respect of Domestic Servanls. e treated as applicable to the private use of car andt'3,000 of the Wages and
t{be Stock of Machines in hand on March 31 was va1ued at , 9,500.

Solution: .
A Incomeand ExDenditure Account for the year ended March 31
Particulars
To Medicines Consumed:
Purchases 24,500
' Particulars
By Prescription Fees
By Gift from Patients (= Income in kind)
52,500
13,500
'
a.ess: Closing Stock (9,500) 15,000 By Visiting Fees 25,000
To Motor Car Expenses (12,000 - Personal 4,000) 8,000 By Fee from Lectures 2,400
To Wages and Salaries c,10,soo - ,3,000) 7,500
To Ren.t for Clinic 6,000 .
To General Charges 4,900
To Interest on Loan 4,500
To Net Income (balancing figure) 47,500
Total 93,400 Total 93,400

B. Balance Sheet as on March 31

Capital and Liabilities f Properties and Assets
Capital 48,500 Non-Current Assets: Motor Car 32,000
Non-Current Liabilities: Loan 30,000 Surgical Equipments 25,000
Current Assets: Stock of Medicines 9,500
. .
Cash at Bank • - • 11,000
Cash in Hand 1,000
Total 78,500 Total 78,500
(,'(i .. 1,,

C. Ca ital Account for the ~e· r ended March 31

Particulars f 1• Particulars
By Cash / Bank 20,000
o Drawings:
- Motor Car Expenses (1/3'd of ~12,000) 4,000 By Cash/ Bank (Pension) 30,000
18,000 By Net Income from Practice 47,500
- Household Expenses
21,S0Q (from Income and Expenditure A/c)
- Daughter's Marriage Expenses
3,000
- Wages of Domestic Servan~~
2,5_00
- Household Furniture
(balancing figure) 48,500
balance c/d Total 97,500
97,50()
Total
""
the following particulars extracted from the ~ooks of ~.anguli, prepare Trading and Profit & Loss Ale and Balance
u at March 31 after making the necessary adJustmen~ '\.•

SA.31
 Padhuk ' p
.
a s ractical Leaming Series - Accounting - For CA Foun dati0n
particulars ~000s
Particulars ,ooos -::-:...
725
Ganguli's Capital Account (Cr.) 54,050 Interest Received 4,ooo
Opening Stock 23,400 Balance at Sank (Dr,) 1,495
Sales
1,44,800 Discounts received 2,soo
Sales Return 4,300 Investments (at 5%)
Purchases 900
1,21,550 Furniture
Purchases Return 3,770
2,900 Discounts Allowed
Carriage Inwards 1,960
9,300 General Expenses
Rent 2,850 Audit Fees 350
Salaries 4,650 Fire Insurance Premium 300
Sundry Debtors 12,000 Travelling Expenses 1,165
Sundry Creditors 7,400 Postage and Telegrams 435
Loan from K (at 12%) 10,000 Cash in Hand 190
Interest paid .. 15,000
450 Deposits at 10% (Or.)
Printing and Stationery 1,700 Drawings 5,000
Advertisement
.
AdJustments: .
(''" O00s)
5,600 -
(a) Value of Stock as on March 31 is' 39,300. This includ.!' goods returned by Customers on March
31 t~ the value of' 1,500
for which no entry has been passed in the books.
(b) Purchases include Furniture purchased on 1st January for ,1,000.
(c) Depreciation should be provided on Furniture at 10% per annum.
'd)
\ The Loan Account from Kin the books of Ganguli appears as follows:
Year Particulars . Particulars
I
'
Year
End To balance c/d 10,000 Beginning By balance b/d 5,00(
End By Bank 5,00(
10,000 10,00
(e) Sundry Debtors include ,2,000 due from Robert and Sundry Creditors include f1,000 due to
him.
(f) Interest paid include f300 paid to K. ..
(g) Interest received represents ,100 from the Sundry Debtors and the balance on Investments and
Deposits.
(h) Provide for Interest payable to Kand for Interest Receivable on Investments and Deposits.
(i) Make Provision for Doubtful Debts at 5% on the balance under Debtors. No such provision need
to be made for Deposits.
Solution: 1. Trad'lnJ A/,cof GanauI"I Ior the y,earended March 31
Particulars ,ooo . f 000 Particulars f 000 ~000
To Opening Stock·· • - - •• • • 23,400"' By Sales /'
To Purchases 1,44,800 ,
1,21,550, ,f
,,, Less: Returns (4,300 + 1,500) (5,800) \/ 1,39,000
Less: Transfer to Furniture A/c (1,000)\1 By Closing Stock
Less: Returns / 39,300 .. I
(2,900)' 1,17,650 /'
, ,
,
-
!>oo
To Carriage Inwards
To Gross Profit c/d
Total
J.1 l ~
1,78,300 Total 1,78,300
2. Profit & Loss Account for the ear ended March 31
Particulars fOOOs Particulars ?OOOs
To Salaries 4,650 By Gross Profit b/d ./1 27,950
To Rent 2,850 By Interest (725 + Accrued 1,000 WN 2) 1,725
To Advertisement 5,600 By Discount Received
To Printing & Stationery
. 1,495
~
1,700
To Interest (450 + Accrued 300 WN 2) 750
To Discount allowed 3,770 .,
To General Expenses 1,960

BA.32

C
 Entiti~
Financial Statements - Final Accounts of Sole Proprietorship
~ tooos
Particulars ?000s Particulars
~ velling Expenses 1,165 v1
10 rra 30011/
e Insurance Premium
ro fir
& Telegrams 435 I/
ro postage
I

v
for Doubtful Debts (WN 1) 475·
ro provision
predation on Furniture (WN 3) 115,II'
ro oe
3501 I/
roAudit FeeS

-------
To ca
pital Ne (Net Profit transferred)
Total
7,050
31,170
~

Total
31,17 0

3 Balance Sheet as on March31

I
tooos
Assets t000s
Liabilities ?000s ~000s
: Furniture 900 I v
S\r.O ~ .,- Non Curre nt Assets
~tal : Balance 1,000 / I
during the year
Add: Net Profit ~5\1 v'" Add: Additions
(115) V 1,785'V
2,500'v
Less: Drawings Loan from K l.._~ \:l) Less: Depreciation (WN 3)
- ~l~ Investments
~

Interest accrued on K's Loan 15,000 •v'

sundry Creditors (7,400 - 1,000) Deposits Current

to,~.. Assets: i.

Interest Accrued
1,000
v
~~ \L 300 Stock in trade WN2 39,300

Sundry Debtors 1(), <

ol) ~r 14,~ ✓ Less: Provision (WNl)
I,
9,500

t,Vf A~\ ~
~ \{-~ v (475) ~
'-'"' -
t~.2 ✓

72,800
. ' Cash at Bank
'-· cash in Hand
Total
lC\O
72,800
Total

Workin Notes: 1. Calculations of Provision for Doubtful Debts

~000s
Particulars
12,000
Sundry Debtors as per Trial Balance 1,500 V'
Less: Sales Returns not recorded 1,000
Less: Set off of Robert Ne against Sundry Creditors 9,500
• t '·
Adjusted balance of Sundry Debtors 475
Provision for Doubtful Debts @ 5%

2. Com utation of Interest Accrued ~000s

@ 10%
Interest accrued on - Loan from K @ 12% Investments @ 5% & Deposits
[Note] 5000 x 12% ~ 600 (2,500 x 5%) + (15,000 x 10%) = 1,625
Annual Interest
Given= 300 725 -100 = (625)
Less: Actual Interest as per Trial Bal.
' 300 1,000
Accrued Interest
Interest will not be charged on such amoun t.
Note: Since Additional Loan of t5,000 is taken only at Year End,
3. Depreciation= (900 x 10%) + (1,000 x 10% x 3/12) =
90 + 25 =115.

and Profit & Loss Account of Mr. X for the year ended
16. From the following balances and information, prepare Trading ~
March 31 and a Balance Sheet as on that date -
Particulars Dr. Particulars Cr.
Plant and Machinery 3,600 X's Capital Atcount 10,000
Depreciation on Plant and Machinery 400 Purcha ses Return 300
Repairs to Plant 520 Sales 49,800
Wages 5,400 Bank Overdraft 760
Salaries 2,100 Salaries Outstanding 400

8A.33
 Padhuka's Practical Leaming Seri
es - Accounting - For CA Foundatio
inn ~ - - - - - - - -
-- ------
Particulars Particulars
Dr.
Income Tax of Mr. x
100 Provision for Bad Debts ~
Cash in Hand and Bank 1,000
Land and Building 400 Bills Payable 1,600
Depreciation on Building 14,900 Discount on Purchases
708
Purchases 500 Creditors
~ 6,252
Accrued Income 25,000 .. ,.
Bills Receivable 300
Bad Debts 3,000 "'
Debtors 200 ..
Opening Stock 7,000
7,400
..
.
Other Information:
Total
70,820 Total
(i) Stock on March 31 was t6,000.
(ii) W~e off further t600 for Bad Deb .
-
70,820

ts and maintain aProvision for Bad Deb

,, (iiQ Goods costing t 1,000 were ts et fo/q ~n Debtors.
sent to Customer for t , on March
" fiv) f 240 paid as Rent of the Offi 1 200 on s~!e 'or return basis. It was recorded as actu
ce were debited to Landlord Account al sales.
" ·,· ·(v) General Manager is to be give and were included in the list of Debtors
n commission at 10% of NetProfifaf .
• •• 1 and his own. Works Manager is to tnr charging th·e Commission of the Wor
be given Commission at 12% of Net ks Manager
General Manager and his own. Profit before charging the Commission
of
• - Solution:
1. Tradin Account of,Mr; X for
Particulars the ear ended March 31 :'• ''"' ''
"' ·; ~ <. To Opening Stock
I I - Particulars
~--: r:- To Purchases 7 400 By Sale s v ~ !i ! •
, .... . ' 1 49,800
25,000 /
' 1 tl~ss: Sale on Approya
i.ess:•Returns l Basis . i, I 1 {1,,200)
(300) 24,700 -- -· .
By Closing Stock
To Wages 6,000
5,400 Add: Stock with Customer
....:ro Gross Profit c/d (Cost)
18,100...
Total
55,600 Total
55,600
2. Profit and Loss Account of Mr.
,, Particulars X for the vear ended March 31
.To Repairs to Plant
To Salaries
To Rent
0 ~ 1r' ~ "'
. J~
' ' 520 tey Gross Profit b/d
Particulars

2,100, By Discount on Purchases

I,
'
18,100
708'
To Bad Debts ~~ ,~ -t ~t t~ ~~~ 240• lay Provision for Bad Debts
800 .. ' 752
To Depreciation on (WN 2) (1,000 - 248)
Plant & Machinery
-
400
,,,
Building
500, / 900 ,,,,,
To Commission to -
Works Manager (WN 2)
1,800, l/
General Manager (WN 2)
1,200 I 3,000 ~
To Net Profit (Trf. to capital A/c)
12,000
Total
19,560
Total 19,560
3. Balance Sheet of Mr. X as at
Liabilities March 31 li
capital Account
Less: Income Tax
Add: Net Profit
10,00
' '
(100)
12,000
Assets
Land and Building
Plant and Machinery
21,900 Stock in Hand
' ' 14,900
3,600 /

Bank Overdraft 6,000 '

760 Add: Stock with Custom i
Bills Payable er 1,000 7,000
1,600 btors (WN 1)
4,960 li
BA.34

..
 ____ ____ ____ _______,:F~in~a~nc~ia~I~St~at~e~m~en~ts~-~Fi~na!!_I~Ac~c~ou~n~ts~o~f~So~le~P~ro~p~ri~et~o~rs~hi~p5:En~t~iti~es
- ;;-1
------- --;-;:: i::i:.:: ::----r --..-r- -.....-r ------- ---r--- -----r- ----;;;
Liabilities Assets
sundry Creditors .
salaries outstanding
' ' 6,252
400
ess: Provision for Bad Debts
Bills Payable
' '
248 4,712
3,000
300,
commission Payable to Manager 3,000 Accrued Income
, Cash in hand and at Bank 400
Total 33,912 Total 33,912
Working Notes:
. com utation of Debtors & Provision thereon:
1
Particulars
Debtors as per Trial Balance
Less: Debtors on account of goods sold on approvalbasis
7,000
(1,200)
(240)
'
Landlord Account wrongly taken as Debtors
Bad Debts written off (600)
Actual Debtors 4,960
,,, 248
Provision for Bad Debts required .(Closing Balance) = 5% on Debtors f 4,960
2. computation of Commission:
.1 ) , , ••

(a) Profit before deducting Commission =· 19,560 - (520 +2,100 + 240 + 800 + 900) = flS,000
(b) Calculation of Commission of Works Manager = ns,ooO x 12% = n,aoo @
0
(c) calculation of Commission of General Manager= (15,000 - 1,800)x 1\ 0 = fl,200

-
~ ~ I ,. _. J

.
17 ~ From the following particulars prepare Trading and Profit &. Loss Account and a Balance Sheet of Mr. R-
- •
...--, >•. -

... - Dr. (f) Cr. (f)

Building
..
·.\ ·-., .
5,00,000 -
-
\,: t!• I
'- . J

Machineries • 2,00,000 '

Furniture 1,00,000 -
Cash at Bank . 90,000 -
Cash in Hand 10,000 -
18% p.a. Loan obtained by Mr. R(taken on 1stJune)
- 3,00,000

R's Capital . - 5,20,000

5,00,000 4,00,000
Sundry Debtors / Sundry Creditors
Opening Stock 1,20,000 -
25,00,000 32,20,000
Purchases / Sales
1,20,000 1,00,000
Sales Return / Purchases Return
Rent 60,000 -
Establishment Expenses 1,80,000 -
Electricity Charges
15,000 -
Telephone Charges 10,000 -
Commission on Sales 30,000 -
Insurance Premium ~ 10,000 -
Bad Debts 20,000 -
Bills Receivable 75,000 -
Total 45,40,000 45,40,000
provide for
. .
Deprec1at1on on Buildings at 5% p.a. on Machineries at 25% p.a. on Furniture at 10% p.a.
You are required to
Provision for Bad Debts is to be made at 5% on Sundry Debtors. Mr. R's Manager is entitled to a Commission of 10% on the
Net Profit after charging his Commission. Closing Stock was not taken on March 31 but only on t"April. Following
st
transactions had taken place during the period from 1 April to i"April. Sales f2,50,000, Purchases f 1,50,000, Stock on
?"April was ,1,ao,000 and the Rate of Gross Profit on Sales was 20%. Insurance Premium mentioned in the Trial Balance was
In respect of Building and Machineries. Interest on Mortgage Loan to be provided up to March 31.

I
BA.35
f
 Padhuka's p cti
ra cal Leaming Series - Acc
ounting - For r.A Foun dation
Solution: ..____
unt of Mr. R for the year ---........
c===~:~~===~~~~~~~~===T~ ended March 31
r=a =d=
Particulars in~1g~a=n~dj=P~ro~=fi=t=an=dJLJ
~
1
To Opening Stock ? OSS~~A~c:c:o~===jP~a~rti~·c~u~la~rs~~==;~;~;~1
1,2 32,20,000 ==:----.. . . ._
To Purchases 0,000. By Sales __
25,00,000 Less: Returns
1,20,0000
less: Returns 31,00,
000
L_~T~O_S:G~ro~ss~Pr~o~fit~c~/d!_
1,00,000 24,00, ooo By Closing Stock (WN1) 2,30,000
_ _ _ _ _ _L~ 8,
1
I -:; ~ -~ -- -- ~1 0~ ,~ 00 ~0 W -- --./
-- -- _ J _ ~ ~33~ -- -- -- -- -- -- r3 3: ij;
To Rent ,30=,00--
0 = -- .~ ~ ;- :- -_
To Establishment Expenses G0,000 By Gross Profit b/d -- -- -T ~ ,3 0 ,0 ~ 00
8,10,
1,80,000 0oo
.:To Electricity Charges
, To Telephone Charges 15,000
--Io Commission on Sales 10,000
•To Insurance Premium 30,000
To Bad Debts 10,000
·To Provision for Bad Debts 20,000
(5,00,000 x 5%)
25,000
To Interest on Loan ( 18
x 3 00 000 x 10 )
100 ' ' 45,000
To Depreciation OR - 12
-~--
Building (5,00,000, ~ 5%)
Machineries (2,00,000 x 20% 25,000
) 50, 000
Furniture (1,00,000 x 10%
) 10,
To Manager's Commission 000 85,000
(WN 2)
To Net Profit transferred to 30,000
Capital Ne
3,00,000
Total
8,10,000 Total
8,10,000
Balance Sheet of Mr.Ras
Liabilities at March 31
Capital: Opening Balance
Add: Net Profit
Non Current Liabilities
5,20,000
3,00,000' 8,20,000 'No n Curre
Assets
nt Assets
Building
5,00,000 ' '
18% Mortgage Loan Less: Depreciation
3,00,000 25,000 4,75,000
Current Liabilities Machineries
2,00,000
Interest accrued on Loan Less: Depreciation
45,000 50,000 1,50,000
Sundry Creditors Furniture
4,00,000 Less: Deprecia 1,0 0,000
Commission due to Manag tion
er 30,000 Current Assets 10,000 90,000
Closing Stock
Sundry Debtors 2,30,000 /1
5,00,000
Less: Provision for Bad Debts
25,000 4,75,000
Bills Receivable
Cash at Bank 75,000
Cash on Hand 90,0 00
Total 10,0 00
15,95,000
Working Notes: Total
1. Memorandum Trading 15,95,000
A/c for the period from 1 st th
Particulars April to 7 April
To Opening Stock (Bal. fig
To Purchases
To Gross Profit c/d (2,50,0
.)

00 x 20%)
'
2,30,000 By Sales
1,50,000 By Closing Sto
50,000
ck
Pa rticulars
2,50,000
1,80,000
'
Total 4,30,000
. Ma na Total 4,30,000
2 ger's Commission:(a)Profit before
charging Commission= 3,30,0
00 (b) Commission = ~ 3,30,0 1
00 x ~ = t30,000
10

SA.36
 - - - _~-~h-=-T~------_£:Fi~na~n~c~ia~IS~ttiaatteements - Final Accounts of Sole Proprietorship Entities
........
- -- , ,

, Th• followlna 1s t e rail Balance of Hari as t M er. (f)

18· Particulars a arch 31:
Dr.(~) Particulars 76,690
~tock 46,800 Harl's Capital Account 3,89,600
8,600 Sales 14,800
rteturns inward
3,21,700 Sundry Creditors 20,000
purchases
c,rrfage inwards 19,600 Bank Loan@14% p.a. 4,440
4,700 Discount Earned 5,800
rtent &raxes
s,tari•S & Wages 9,300 Return Outward -
-
sundl'Y Debtors 24,000 -
sank interest
1,100 -
p,inting and Stationery Expenses 14,400 -
sank saiance 8,000 -
furniture & Fittings 5,000 -
atseOunt Allowed 1,800 -
General expenses 11,450 -
insurance -
1,300 -
postage & Telegram Expenses 2,330 , -
cash Balance 380 -
rravelling expenses 870 -
30,000 5,11,330
orawings Total
Total -5,11,330 ,
--
- .
;Jh8 following adJustments are to be made:
(;J _Included amongst the Debtors Is <'3,000 due from Ram and Included among the Creditors <'1,000 due to him.
j!I) ProVISion for Bad and Doubtful Debts t_o be created at 5% and for Discount @2% on Sundry Debtors.
Jc) Depreciation on Furniture & Fittings@ 10% shall be written off. -
M PefSOnal Purchases of Harl amounting to <'600 had been recorded in the Purchases Day Book.
(ti interest on Bank Loan shall be provided for the whole year. •
A quarter of the amount of Printing and Stationery Expenses is to be carried forward to the next year.

I Credit Purchase Invoice amounting to ?400 had been omitted from the books.
Stock on March 31 was t78,600. _ , •
piepare Trading & Profit and Loss'Ale for the year ended March 31, and Balance Sheet as on March 31.
~-~-~-----,

1. Tradina and Profit and Loss Ale of Mr~ Hari for the year ended March 31
Solution·•
Particulars
To Opening Stock '
3,21,700
46,800
'
Particulars
By Sales
Less: Returns
3,89,600
(8,600) 3,81,000
78,600
' '
To Purchases By Closing Stock
400
Add: Omitted Invoices
(5,800)
Less: Returns (600) 3,15,700
Less: Drawings 19,600
To Freight & Carriage 77,500 4,59,600
---- To Gross Profit c/d 4,59,600 Total
77,500
Total 4,700 By Gross profit b/d
----- 4,440
To Rent and Taxes 9,300 By Discount Received
To Salaries and Wages 1,100 '

To Bank Interest 1,700 2,800

~d: [~ue (20,000 x 14%) - 1,100] 14,400
0 Printing & Stationery 10,800 '
3,600
less: Prepaid ( 1/4thof 14,400) 1,800
I
~o Discount allowed 11,450
. oGeneral Expenses
8A.37
l
Padhuka's pract",caI Learning Series Accounting F r CA Foundation
- o

To Insurance
Particulars

To Postage & Telegrams ' ' 1,300

2,330
particulars
' --!
To Travelling Expenses 870
To Provision for Bad Debts 1,150
To Reserve for Discount on Debtors 437
To Depreciation on Furniture & Fittings 500
To Net Profit 34,503
Total :-:---
Total 81,940 81,940
--.::.....
2. Balance Sheet of Hari as at March 31 (f)
Assets
-!
Liabilities
Capital Opening Balance
Add: Net Profit ' '
76,690
34,503
Non Current Assets
Furniture & Fittings
'
5,000
Less: Drawings Cash Less: Depreciation at 10% 500 4,500
(30,000)
Goods (600) 80,593 Current Assets , ,
Non Current Liabilities sundry Debtors 23,000
Bank Loan 20,000 i.ess: Provision for Bad Debts (1,150)
Current Liabilities Less: Provision for Discount (437) 21,413
Bank Interest Due 1,700 Stock 78,600
Prepaid Expenses 3,600
Sundry Creditors (WN2) 14,200 Bank Balance 8,000
Cash Balance 380
Total 1,16,493 Total 1,16,493
Working Notes:
1. Sundry Debtors 2. Sundry Creditors
Balance given in TB 24,000 Balance given in TB 14,800
Less: Due to Ram (1,000) Less: Set off in respect of Ram (1,000)
Revised Balance 23,000 Add: Purchase Invoice omitted 400
Provision for Bad Debts @ 5% 1,150 Revised Balance 14,200
Provision for Discount 2% on (23,000 - 1:150) 437

tsfFrom the following· Trial Balance of Hari, prepare Trading-·and Profit &Loss Account for the year ended March 31 and a
✓ I Balance Sheet as on that date: Trial Balance as at March 31
Dr. (f) Cr. (t)
Furniture 20,000 Capital 1,00,000
Purchases 1,50,000 Interest Earned 4,000
Debtors 2,00,000 Sales 3,21,000
Salaries 30,000 Purchases Return 5,000
Wages 20,000 Creditors 1,20,000
Rent 15,000 Provision for Bad Debts 6,000
Sales Return 10,000 Provision for Depreciation ~ 2,000
Bad Debts written off 7,000
Drawings 24,000 b,r
Printing &Stationary 8,000
Insurance 12,000
Opening Stock 50,000
~J Office Expenses 12,000
Total 5,58,000 Total 5,58,000

SA.38
 rietorship Entitles
al Accounts of Sole Prop
Financial Statements - Fin

i rntonnation:
e by 10% on Original Coat.
~ fa ti o n Furnitur th
l Debts Is to be created t
('1 provision for Doubtfu
ies for the Ye ar is f 3 000
°
S e extent of 5% on Sundry De
d ~
btors.
(I>) ~.1etandfng Salar ' • a1aries lnclude ' 2,000 paid In Advance.
,, UI'...- ng to ,2,00 0 is pre paid.
(c, insurance amounti
fice Expenses u,ooo.
fd) provide tor Outstanding Of ,&,000.
Purpose
(•) Stock used for Private
(f) crosJng stock f so,ooo.
ft) .
1 Tradi ng and Pr ofi t and Loss Account fo r th e ve
ar en de d Ma rc h 31

sC!!
.
~a pe nin g Stock
Particulars f f Particulars
50,000 By Sales
I
3,2 1,0 00
(10 ,00 0)
'
10 1,50,000 Less: Sales Return 3,1 1,0 00
purchases By Closing stock
10 (5,000)
,._ : PUrchase Returns
vate purpose (6,000) 1,39,000
1,e55: stock used for pri
20,000
rowages 1,62,000 3, 71 ,0 00
To GrOSS Profit c/d 3,7 1,0 00 To tal 1,6 2,0 00
~
To ta l
30,000 By Gross Profit b/d 4,0 00
,
To5a1aries 3,000 By Interest Earned
Atfd: outstanding for the year (2,000) 31,000
. r.ess: Paid in Advance 15,000
To Rent 8,000
To Printing & Stationery
. 12,000
To insurance (2,000) 10,000
l,eSS: Prepaid Insura
nce
12,000
To Office Expenses 8,000 20,000
ar
Add: Outstanding for the ye 7,000
f
To Bad Debt Written of 10,000
Ba d Debts (5% x 2 lakhs)
To Provision for (6,000) 4,000
ailable
Less: Opening Balance av 2,000 •,.
tion
To Provision for Deprecia 69,000 1, 66 ,0 00
Profit transferred) To tal
To Capital Ne (Net 1,6 6,0 00
To ta l
on March 31

Liabilities
2. Balance Sheet As

1,00,000
' '
Assets
Fixed Assets: Furniture
Less: Provision for De
(Cost)
pm. 4,0 00
'
20 ,00 0
16 ,00 0
'
Capital: Balance 69,000 trade
60 ,00 0
sets: Sto ck in ~; j
Add: Net Profit 30,000 1,39,000 Current As 2,0 0,0 00
00) Debtors
Less: Drawings (24,000 + 6,0 (10 ,00 0) 1,9 0,0 00 '\
Provn. for Bad Debts
Cu1Tent Uabilities 1,20,000 Less: 2,0 00
Prepaid Salaries
Creditors 3,000 2,0 00
Prepaid Insurance
Outstanding Salaries 8,000
To tal
2, 70 ,0 00
es
9utstancJing Office Expens 2,7 0,0 00
To ta l as follows:
ab stract of his Trading and P & L Account is
business of Trading. An Ale for the ear ended March 31
. Fazhll is a Proprietor in Tradin and P&L
f Particulars
45,00,000
Particulars 22,00,000 By Sales
?
of Goods sold Total 45,00,000
?
Profit c/d
Total
BA.39
 Padhuka's p ct· .
- ra ical Learning Series - Accoun .
ting - For CACA ff= oo ~u n~ d~ at ~i on ~- ---
To Salaries paid --- --- - I
I

TO General Expenses 12,00,000 By Gross Profit bid -~ I

I
I
To Selling Expenses 6,00,000 By Other Income ? I
I
To Comm· s• 1 45,00Q I
I
h ,s ,on to Manager (on Net Pro I

c arglng such Commission fit before

) 1,00,000
To Net Profit
1
Total
Selling Expenses am 1 Total
ount to 10Yo of Total Sales. You are .
required to compute the missing figures.
i--------
~
Tradin1g A/ cof Ki h & c
rs na o. for the year ended March 31 (in t0OOs)
Particulars I
To Cost of Goods Sold Particulars
:ro Gross Profit (bal. fig. giv
en) (Sales- COGS)
'
22,00,000 By Sales (given) ~
45,oo,000 I
23,00,000,~
Total
To Salaries 45,00,000 Total
(given) 45~ \
To General Expenses
(given)
To Selling Expenses (1% of 45,0
12,0 0,000 By Gross Profit b/d (from Trading A/c
6,00,000 By Other Income (given)
) 23,oo,000 =--- I

0,000) 45,ooo
To Commission 45,000, 11
(given)
To Net Profit (bal. fig) 1,00,000
4,oo,ooo, lA
Total
23,45,000 Total
.25/ From the following Trial Balance and additional 23,45,00Q
-
V?
Proprietary FinnI for the year end info rmation, prepare the Financial Sta
ed March 31 . tement$ of Krishna & Co a
1
Trial Balance as on March 31 (in f '
Capital of Krishna OOOs)
Dr.
Opening Stock Cr.
Machinery and Furniture 1750
940 I J
Investments in Government Bonds -
1200
Drawings 500
Purchases 250
Sales 4040
Wages
Office Salaries 6350
520
Insurance 280
Stationery 36
Office Rent 23
Advertisement &Marketing 300
Sundry Debtors 30
Sundry Creditors 2050
Advances from Customers
1670
Cash and Bank Balances
420
Total 21
1. Physical Stock in Hand at the 10190 1019~
end of the year= t 9,20,000
,, 2. Sales include f 50,000 on .
approval basis, for which confirmatio
at 25% profit on cost. n is still awaited from customers. The
se goods were sold
/ 3. Purchases made but goods
in transit to the tune off 30,000. No entr
,,, 4. Depreciation on Machine y has been passed for these purchase
ry and Furniture to be charged at 10% s in the books.
5. Provision for Bad and Doubtfu .
l Debts to be created at 2% on Debtors
&. Wages accrued = f 20,000. Pre .
1 paid Insurance =, 6,000.

8A.40

◄
 Financial State . . ..
t income on Investments, at 10o/c is a ments - Final Accounts of Sole Proprietorship Entities
1ntereS o ccrued and t
1, ager Is entitled to Commission at 10o/c of th N' no considered In the books yet
I • r.,an I o e et Proflts aft .
.S. $tOCk of Stationery tems at the end of the year =t 3 er charging such commission.
000
,9, aood5 worth f 60,000 have been distributed as fr • •
f 10. A•""S worth f 1,00,000 have been withdrawn b eep samples, for Which no entry has been passed In the books
1
/ it1• ~
•
,;'was afire in• godown during the year aYd roprietor for s personal use.
hi

/ ·sz. fhtl surance Claim issued a Claim Acceptance Le~er~oo~s valued at f 4,00,000 have been estimated as lost. However, the
n or, 2,50,000 only.
"All' Tradin A/c of Krishna & Co f
,...1&Jt1111•• • or the ear dd
~ particulars f000s f000s en e March 31 in f000s
k Particulars f000s ?000s
c,peninQ Stoc 940 By Sales
fo rcflase5 as per TB 4040 6350
roPIJ .
, c;oocts in Transit 30 Less: Goods sent on approval so 6300
: : free Samples (60)
By Abnormal Loss 400.
1,e55: withdrawn by Proprietor (lOO)
3910
rowages 520
By Closing Stock 920
Add= ACCf'Ued Wages 20
540 Add: Goods sent o~ approval (WN 1) 40
Gross profit (bal. figure)
10 2300 Add: Goods in Transit 30 990 •
Total
7690 Total 7690

---
To Office Salaries
Profit & Loss A/ cof K • hna & Co. for the year ended March 31 (in f000s)
Particulars
r1s
?000s ?000s Particulars
280 By Gross Profit b/d
f000s f000s
2300
To InsUrance 36 By Interest on Investments so-
LeSS: Prepaid at end (6) v' 30 (Accrued Income)
\
To Stationery 23
LeSS: Stock of Stationery (3) • 20
.
To Office Rent 300
To Advertisement ~ Marketing 30
To Samples 60 1 I
To Abnormal Loss (400 - 250) 150 /
l/
To Depredation 120
To Provision for Bad Debts 40' /
To Manager's Commn (WN 2) 120
To Net Profit (bal. fig) 1200
2350 Total 2350
. Total
Balance Sheet as at March 31
t000s Assets f000s t000s
Uabilities ~000s
1750 Fixed Assets:
Capital 1200
1200 Machinery & Furniture
Add: Net Profit 120 1080
(250) Less: Depreciation at 10%
Less: Drawings (given)
(100) 2600
Less: Goods withdrawn Investments 500

current Assets
t Uabilities ✓ 1700 Stock in Trade 990
Oeditors (1670 + 30) 420 stock of Stationery Items 3
from Customers 20 Accrued Income on Investments so
yable 120 Insurance Claim Receivable 250
s Commission Payable

8A.41
Padhuka's Practical Learning Series Accounting - For CA Fou ndation
~000s
As5ets ,ooos
Liabilities ,ooos ,ooos ~
Prepaid Insurance 6 I/
2050 I
sundry Debtors
Less: Goods on approval (50)• 1..-.
2000
Less: Provision for Bad Debts 2% (40) I
1960 V
Cash and Bank Balances
Total
~V
Total 4860 4860
-..::..::...
Notes:
t _ i/Sth on sale Price. Cost of Goods sent on
1. On goods sent on approval, Profit = 25% on Cost, • 1/4th on Cos -
1.e.
Approval = ~50,000 less 1/5th thereon = f40,000. .
. _ i ooo. Hence, Manager's Commission = NP x
2. Net Profit before considering Manager's Comm
Iss1on - f 3, 20'
10/110 = ~1,20,000.

22. Max & Co employs a team of 9 workers who were paid . month each in the year ending 31.12.2022. At the start
' 40,000 per
of 2023, the Company raised Salaries by 10% to f 44,000 ~er
h O 01 07 2023 the Company hired 2trainees at
mont~~~~e· fi~t w~~ing day of every month, one month
salary oft 21,000 per month each. The work force are paid in
an,.,,, so that the employees receive their salary for salary rk' day of February etc. You are required
January on the first wo mg '
to calculate:
t Amou"nt of Salaries which would be charged to the Profit and
Loss for the year ended 31 -12-2023•
2. Amount actually paid as Salaries during 2023.
3. Outstanding Salaries as on 31.12.2023.

Salary for the Month of - Payment in Result (f)

(a) December 2022 (Outstanding at Year beginning) January 2023 9 xt40,000 = 3,60,000 j/
(b) January- November for 9 Workers Feb to Dec 2023-, 9 x t44,000 x 11 Months= 43,56,000 l/
(c) July- November for 2 Trainees Aug to Dec 2023 2 x t21,ooo x 5 Months= 2,10,000 v'
(d) December 2023 (Outstanding at the Year end) January 202~ (9 X 44,000) + (2 X 21,000) = 4,38,000
Total Payment during the Year 2023 a+b +c
Note: Salary to be charged in P&L = (9 x 44,000 x 12 49,26,000
Months)+ (2 x 21,000 x 6 Months) = 50,04,000✓

Format of Financial Statements of No n Corpo

rate En tities
Format of Financial Statements of Non Corporate Entitie "-
s is similar to Schedule III Format applicable for Comp
the following - anies except

Name of the Non Corporate Entity: ... ......... .. .. .. ..

.. .. Balance Sheet as at: .. .. .. ........
. ....... . (tin •••••••••• .. )
Figures as at the Figures as at the
Particulars Note end of Current end of the Previous
Reporting Period Reporting Period
1 2 3 4
I. EQUITY AND UABILffiES
(1) Owners' Funds
(a) Owners' capital A/c -
(b) Reserves & Surplus

For Schedule III Format - Refer Final Accounts of Com

panies Chapter

SA.42