Solution

SAMPLE QUESTION PAPER - 2

Accountancy (055)
Class XI (2024-25)
Part A
1.
(d) Pay-in-slip
Explanation:
Pay-in-slip
2.
(d) A is false but R is true.
Explanation:
A is false but R is true.
3.
(c) Personal account
Explanation:
Accounts recording transactions with a person or group of persons are known as personal
accounts.
4. (a) No change, Increase, Decrease
Explanation:
Outstanding expenses will be treated as a liability because these are expenses that are due
to be paid but are not yet paid.
OR

(b) liabilities and assets

Explanation:
liabilities and assets
5.
(d) All of these
Explanation:
All of these
6.
(c) Business transactions
Explanation:
The supply of goods or services in exchange for money between two parties is known as
business transactions.
OR
 (b) Suppliers of goods and services on credit
Explanation:
Suppliers of goods and services on credit
7.
(c) All of these
Explanation:
All of these
8. (a) Debit Balance
Explanation:
Real accounts are the assets of the firm and will always have a debit balance except for
sales account and purchase returns accounts which will show a credit balance. Real
Account includes only Assets account only.
OR
(a) an increase in liability
Explanation:
A credit is an accounting entry that results in either a decrease in assets or an increase in
liabilities.
9.
(d)​​Recording of asset in the books at cost price
Explanation:
​Recording of asset in the books at cost price
10.
(b) By Institute of Chartered Accountants of India
Explanation:
By Institute of Chartered Accountants of India
11.
(c) Capital Reserves
Explanation:
Capital Reserves :- Capital reserves are those reserves which are created out of the
capital profits which are not available for distribution as dividend.
12.
(c) Goodwill
Explanation:
Goodwill is fixed intangible asset. It is not Fictitious Assets.
13. (a) credit note
Explanation:
 credit note is issued by seller of goods to purchaser of goods informing that his account
has been credited to the extent of goods received back.
14. (a) Increase stock
Explanation:
when sumit will intoduce stock in business out of his personal funds then it will increase
the stock columm in assets and also the capital get increases.
15. (a) Only C is correct
Explanation:
Withdrawing money from the business for private expenses will be treated as drawings.
Hence it is Debited.
OR
(a) iii, iv
Explanation:
iii, iv
16.
(c) credit purchases of goods dealt in.
Explanation:
credit purchases of goods dealt in.
17. (a) Necessary
Explanation:
Necessary
18. The accounts in the ledger are balanced at periodic intervals of daily, weekly, fortnightly,
monthly, quarterly or any other pre-defined periodic intervals. The goal of balancing is to
determine the net position of each amount. The following steps are involved in the balance
of the accounts:
i. The debit and credit side are totalled.
ii. The total on the side which is higher is written on the corresponding side.
iii. The difference between both sides is recorded on the shorter side. This makes the total
on both sides equal.
iv. In case the debit side exceeds the credit side, the difference is written on the credit side.
This is called Debit Balance.
v. If the credit side exceeds the debit sided, the difference is written on the debit side. This
is called Credit Balance.
vi. The words balance c/d are written against the amount of the difference between the two
sides. Balance c/d stands for balance carried down.
vii. The amount of balance is brought down (b/d) in the next accounting period. It is
denoted with Balance b/d. This indicates that it is a continuing account, till finally
 settled or closed. Here Balance b/d stands for Balance Brought Down.
viii. The accounts of expenses losses and gains/revenues are not balanced. Instead, these are
transferred to trading and profit and loss accounts.
OR
Journal Entries
Amount Dr. Amount Cr.
Date Particular L.F.
(Rs) (Rs)
Loss by Fire Account Dr. 4,500
(i) To Purchase Account 4,500
(Being goods destroyed by fire)
Machinery Account Dr. 1,500
(ii) To cash Account 1,500
(Being wages paid for installation Machinery)
Purchase Account Dr. 7,500
(iii) To Bank Account 7,500
(Being goods purchased by cheque)
M/s Kalu Sons Dr. 6,270
To Sales Account 6,270
(iv)
(Being goods sold costing Rs 6,000 at on
invoice above cost less 5% trade discount)
19. 'Cash Basis of Accounting' is not a better basis for depicting the correct financial position
of an enterprise because it does not give a true and fair view of the or loss and the
financial position of an enterprise because it ignores outstanding and prepaid expense and
accrual income and income received in advance adjustments.
OR
IFRS stands for international financial reporting standards. It’s a set of accounting rules
and standards that determine how accounting events should be reported in your business’s
financial statements. Issued by the International Accounting Standards Board (IASB),
IFRS aims to make financial statements consistent, comparable, and transparent across the
world. Due to increasing globalization, there is an increasing cross-border flow of goods,
services, capital, and technology and the role of multinational corporations is increasing.
As a result of this, financial statements produced in one country are used in other countries
more and more frequently.
20. Difference between Capital Expenditure and Revenue Expenditure
 Basis of
Capital Expenditure Revenue Expenditure
Difference
It is charged to expense in the
It is charged as expense gradually via
(i) Timings current period, or shortly
depreciation over a long period of time.
thereafter.
It is assumed to be consumed
(ii) It is assumed to be consumed over the
within a very short period of
Consumption useful life of the related fixed asset.
time. (i.e one year)
It tends to involve larger monetary Quite large expenditures can
amounts than revenue expenditures. This still be classified as revenue
is because expenditure is only classified as expenditures, as long they are
(iii) Size
a capital expenditure if it exceeds a certain directly associated with sale
threshold value; if not, it is automatically transactions or are period
designated as revenue expenditure. costs.
This is of Revenue nature
This is of Capital nature hence shown on
(iv) Nature hence shown as Expenditure
Assets sides of balance sheet.
in P&L A/c.
21. Books of M/s Dhruv Rathee & Sons
Trial Balance
as on March 31, 2023
Name of Accounts L.F. Debit Balance (₹) Credit Balance (₹)
Cash in Hand 4,500
Overdraft 8,000
Opening Stock 20,000
Purchases 80,000
Purchases Return 2,000
Sales 1,30,000
Sales Return 5,000
Travelling Expenses 1,800
Discount Allowed 600
Discount Received 1,500
Machinery 24,000
 Land & Building 50,000
Debtors 18,400
Creditors 8,500
Bills Receivable 2,850
Bills Payable 1,650
Capital 60,000
Drawings 6,000
Rent 3,700
Salary 3,600
Loan 10,000
Interest on Loan 1,200 –
Total 2,21,650 2,21,650
Since trial balance debit and credit total match then all statements prepared are accurate.
22. In the books of ________
CASH BOOK
Dr. Cr.
Particulars V. Particulars V.
Date L.F. Amount Date L.F. Amount
(Receipts) No. (Payments) No.
2023 ₹ 2023 ₹
March March By Purchases
To Capital A/c 20,000 5,000
1 2 A/c
5 To Sales A/c 4,000 13 By Rajesh 7,000
By Furniture
15 To Sales A/c 8,000 18 6,000
A/c
To Commission
26 600 20 By Wages A/c 380
A/c
24 By Rent A/c 400
By Drawings
28 1,000
A/c
31 By Salary A/c 900
 Total
Total Receipts 32,600 20,680
Payments
By Balance
31 11,920
c/d
32,600 32,600
April 1 To Balance b/d 11,920
Hint: Cashbook never records credit transactions only cash transactions are recorded in
cash book. Hence no record will be made in the cash book of the credit purchase of goods
th
from Rajesh on March 10 .
23. BANK RECONCILIATION STATEMENT
as on December 31, 2023
Particulars (+) (-)
Unfavourable balance as per Cash Book (Cr.) 40,500
Cheques issued not yet presented 5,000
Post dated Cheque received but it could not have been presented in any
900
case
Cheques not yet credited 10,200
Cheques dishonoured 4,000
Bill retiring Under the Rebate. 150
Unfavourable balance as per Pass Book (Dr.) (Balancing figure) 50,450
55,600 55,600
OR
BANK RECONCILIATION STATEMENT
as on 31st March, 2023
Plus Items Minus Items
Particulars
(₹) (₹)
Balance as per Bank Statement (Cr.) 33,570
Cheques and drafts deposited but not yet collected and
7,900
credited
Cheque deposited returned unpaid (Dishonoued) 2,000
Cheques issued but not yet presented for payment 6,500
 Plus Items Minus Items
Particulars
(₹) (₹)
Cheque paid by the bank but not entered in the Cash
10,000
Book
Cheque discounted dishonoured 5,000
Bank Commission not recorded in Cash Book 130
Interest credited by the bank but not recorded in Cash
100
Book
Wrong Debit by Bank 5,000
Balance as per Cash Book (Dr.) (₹ 61,600 - ₹ 8,600) 53,000
61,600 61,600
24. JOURNAL
Amount Amount
Date Particulars L.F.
Dr. Cr.
2023 ₹ ₹
April
No Entry as order received only
1

April
Bank A/c Dr. 1,80,000
3
To Shekhar & Co. A/c (Advance)
1,80,000
(Advance received against an order of ₹ 5,00,000)

April
Gupta & Sons A/c(Advance) Dr. 1,00,000
5
To Bank A/c
(Paid Rs.1,00,000 advance against an order of ₹ 1,00,000
2,50,000)

April
Purchases A/c Dr. 2,50,000
7
To Gupta & Sons A/c
2,50,000
(Goods purchased)
 Amount Amount
Date Particulars L.F.
Dr. Cr.
2023 ₹ ₹
April
Gupta & Sons A/c (1,50,000 × 60%) Dr. 90,000
10
To Bank A/c
90,000
(60 % of ₹ 1,50,000 paid on account)

April
Loss by fire A/c (20,000+10,000) Dr. 30,000
15
To Purchases A/c 20,000
To Furniture A/c
10,000
(Goods and furniture destroyed by fire)

April
Railway claim A/c Dr. 50,000
20
To purchases A/c
(Claim made from railways for goods damaged in 50,000
transit)

April
Cash A/c Dr. 60,000
22
Travelling Expenses A/c Dr. 4,000
To Sales A/c (60,000+4,000)
(Cash received from salesman after deducting his 64,000
travelling expenses)

April
Vishesh A/c (Note 1) (45,000+1,000) Dr. 46,000
25
To Sales A/c (40,000 × 90% × 125%) 45,000
To Cash A/c
(Goods sold on credit and paid for cartage ₹ 1,000 1,000
to be charged from him)

April
Bank A/c Dr. 40,000
28
 Amount Amount
Date Particulars L.F.
Dr. Cr.
2023 ₹ ₹
Profit & Loss A/c (50,000-40,000) Dr. 10,000
To Railway Claim A/c
(Money received from Railway authorities against 50,000
the claim)
Total ₹ 8,60,000 8,60,000
Working Notes:

i. Cost of Goods 40,000

Add: Profit: 25% of ₹ 40,000 10,000
50,000
Less: Trade Discount: 10% of ₹ 50,000 5,000
45,000
Add: Cartage 1,000
46,000
ii. It is assumed that the cheques received are deposited into the bank on the same day.
OR
Journal Entries
Debit Amount Credit Amount
Date Particulars L.F.
(₹) (₹)
(i) Accrued Interest A/c Dr. 4,000
To Interest A/c
4,000
(interest due but not received)

Salaries A/c Dr. 50,000

(ii) To Outstanding Salaries A/c
50,000
(salaries due to staff)

Prepaid Rent A/c Dr. 5,000

(iii) To Rent A/c
5,000
(rent paid in advance)

(iv) Depreciation A/c Dr. 10,000

 To Furniture A/c
10,000
(Depreciation provided on furniture)

(v) Furniture A/c Dr. 4,000

To Purchases A/c
4,000
(goods used for making office furniture)

Bank A/c Dr. 20,000

(vi) To Commission Received A/c
20,000
(Commission Received)

Commission Received A/c Dr. 10,000

To Commission Received in Advance
A/c
10,000
(commission received in advance
adjusted)

(vii) Interest on Capital A/c Dr. 8,000

To Capital A/c
8,000
(interest allowed on capital)

(viii) Capital A/c Dr. 1,500

To Interest on Drawings A/c
1,500
(interest on drawings charged)
25. Journal Entry
S. Amount Amount
Particulars L.F.
No. (Dr.) (Cr.)
(i) Typewriter A/c Dr. 17,000
To Office expense 17,000
(wrongly charged to office expense)

(ii) Abhishek A/c Dr. 5,000

Sales A/c Dr. 5,000
To Suspense A/c 10,000
(wrongly posted to credit side)

(iii) Commission Received A/c Dr. 200

 Suspense A/c Dr. 19,800
To Sales A/c 20,000
(wrong posted of ₹ 200 as commissioned
Received)

(iv) Building A/c Dr. 9,090

To Cash 9,090
(Debited to building account)

(v) Salary A/c Dr. 12,000

To Outstanding Salary 12,000
(Outstanding Salary Rectified)
OR
Rectifying Journal Entries
Debit Credit
Date Particulars L.F.
Amount (₹) Amount (₹)
(i) Sales Account Dr. 11,500
To furniture Account 11,500
(Sold old furniture to A for ₹ 11,500 was
passed through the Sales Book now rectified)

(ii) Purchases Account Dr. 12,000

To Ashely's Account 12,000
(rectification entry passed)

(iii) Repair Account Dr. 7,000

To Building Account 7,000
(rectifying entry passed)

(iv) Sales Account Dr. 6,300

To Anshika's Account 6,300
(rectifying entry passed)

(v) Office furniture Account Dr. 6,000

To Office Expense Account 6,000
 (rectifying entry passed)

(vi) Rajesh's Account Dr. 30,000

To Sales Account 15,000
To Purchases Account 15,000
(rectifying entry passed)
26. PLANT ACCOUNT
Dr. Cr.
Date Particulars ₹ Date Particulars ₹
2021 2022
By Depreciation A/c
April 1 To Bank A/c 7,00,000 March 31 70,000
(₹ 7,00,000 × 10

100
)
March 31 By Balance c/d 6,30,000
7,00,000 7,00,000
2022 2023
By Depreciation A/c (WN 1)
April 1 To Balance b/d 6,30,000 Jan. 1 52,500
(₹ 7,00,000 × 10

100
×
9

12
)
Jan. 1 By Plant Disposal A/c (Bal. Fig.) 5,77,500
6,30,000 6,30,000
DEPRECIATION ACCOUNT
Dr. Cr.
Date Particulars ₹ Date Particulars ₹
2022 2022
March 31 To Plant A/c 70,000 March 31 By Profit & Loss A/c 70,000
70,000 70,000
2023 2023
Jan. 1 To Plant A/c 52,500 March 31 By Profit & Loss A/c 52,500
52,500 52,500
PLANT DISPOSAL ACCOUNT
Dr. Cr.
Date Particulars ₹ Date Particulars ₹
 2023 2023
Jan. 1 To Plant A/c 5,77,500 Jan. 1 By Bank A/c (Sale) 4,20,000
By Loss on Sale of Plant A/c
Jan. 1 (Profit & Loss A/c) 1,57,500
(Bal. Fig.) (WN 2)
5,77,500 5,77,500
Working Notes:
i. In the second year, depreciation will be charged for the nine months because the
st st
machinery is sold on 1 January, 2023, i.e., before closing the books on 31 March,
2023.
ii. Second year depreciation and loss on sale of plant will be transferred to Profit & Loss
st
Account on 31 March, 2023.
iii. Book value of plant on the date of sale is transferred to Plant Disposal Account since
depreciation is charged to Plant Account.
OR
MACHINERY ACCOUNT
Dr. Cr.
Date Particulars J.F. Rs. Date Particulars J.F. Rs.
To Bank A/c - By Depreciation
01.04.15 6,00,000 31.03.16 70,000
cost (M1) A/c
To Bank A/c
01.10.15 2,00,000 By Balance c/d 7,30,000
(M2)
8,00,000 8,00,000
By Deprecation
01.04.16 To Balance b/d 7,30,000 31.03.17 73,000
A/c
By Balance c/d 6,57,000
7,30,000 7,30,000
01.04.17 To Balance b/d 6,57,000 01.10.17 By Cash A/c 2,86,000
To Bank A/c By Profit & Loss
01.10.17 4,48,000 1,75,700
(M3) A/c
By Depreciation
31.03.18 63,800
A/c
By Balance c/d 5,79,500
 11,05,000 11,05,000
01.04.18 To Balance b/d 5,79,500
Working Notes:
Machine Machine Machine
Particulars Total
I II III
Cost (5,82,000+18,000) 6,00,000 2,00,000 4,48,000
Less: Depreciation for 2015-16 @ 10% -60,000 -10,000 0 70,000
W.D.V. 5,40,000 1,90,000 4,48,000
Less: Depreciation for 2016-17 @ 10% -54,000 -19,000 0 73,000
W.D.V. 4,86,000 1,71,000 4,48,000
Less : Depreciation for 2017-18 @ 10% -24,300 -17,100 -22,400 63,800
W.D.V. 4,61,700 1,53,900 4,25,600
Less: Sale value -2,86,000
Loss on sale 1,75,700
Depreciation is calculated by Diminishing value method so it is calculated on balance
value of an asset or written down value of asset not on the cost of the asset.
GST paid on purchase of asset increase the cost of the asset.
Part B
27.
(c) Rs.50,000
Explanation:
Calculation of profit:
Opening capital: 1,20,000
less: closing capital 1,80,000
less: Drawings 10,000
add: capital added during the year 20,000
Profit 50,000
OR

(d) Trader
Explanation:
Generally, incomplete records are maintained by the trader. Incomplete records may be
due to a partial recording of transactions, as is the case with small shopkeepers such as
 grocers and vendors.
28.
(b) Profit and Loss Account
Explanation:
Carriage Outward is an indirect expense hence it is shown in Profit and Loss Account.
29.
(b) Rs.1000
Explanation:
per annum premium is 3000 so 1000 is extra paid for next year so it is prepaid
OR

(d) Income received in advance

Explanation:
Income received in advance is called unearned income.
30. Operating Profit = Net Profit + Non-operating Expenses - Non-operating Income
Operating profit (Given) = 17,00,000
Non-operating income = 1,50,000
Non-operating expenses = 3,75,000
Hence, Net profit = 17,00,000 + 1,50,000 - 3,75,000 = ₹ 14,75,000.
31. TRADING ACCOUNT
for the year ended 31st March, 2023
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Opening Stock 10,000 By Sales 2,00,000
To Purchases 2,00,000 Less: Returns Inward 5,000 1,95,000
Less: Returns
2,500 1,97,500 By Closing Stock 20,000
Outward
By Gross Loss c/d
To Wages 11,000 (Transferred to Profit and Loss 7,500
A/c)
To Carriage Inwards 1,500
To Freight Inwards 2,500
2,22,500 2,22,500
 Note: Carriage Outwards, being an indirect expense not debited to trading account and
will be debited to Profit and Loss Account of entity.
32. Adjustment Entries
Date Particulars Debit Credit
Accured Commission Dr 1,800
To Commission A/c 1,800
Effects on Final Account:
Profit and Loss Account
Dr Cr
Date Particulars Amt(Rs) Date Particulars Amt(Rs)
By Commission 9,000
(+)Accured Commission 1,800 10,800
Extract of the Balance Sheet
Liabilities Amt(Rs) Assets Amt(Rs)
Accured Commission 1,800
33. Total Bills Receivable Account
Dr. Cr.
Date Particulars J.F. ₹ Date Particulars J.F. ₹
Cash (bills
Opening balance 23,000 21,000
honoured)
Debtors (Bills receivable) Bills receivable
47,000 20,000
(balancing figure) dishonoured
Closing balance 29,000
70,000 70,000
Total Debtors Account
Dr. Cr.
Date Particulars J.F. ₹ Date Particulars J.F. ₹
2016
Apr.
Opening balance 65,000 Cash received 3,02,000
01
Bills receivable
20,000 Discount allowed 8,000
(dishonoured)
 Sales (balancing
3,53,000 Sales return 17,000
figure)
Bad debts 14,000
Bills receivable
(transferred from bills 47,000
receivable account)
2017
Mar.31 Closing balance 50,000
4,38,000 4,38,000
Working Notes
With the preparation of total debtors account and total bills receivable account, the net
sales will be computed as follows:
Net Sales = Cash Sales + Credit Sales - Sales return
= ₹ 2,25,000 + ₹ 3,53,000 - ₹ 1,7000
= ₹ 5,61,000
OR
STATEMENT OF AFFAIRS OF RAM PRASHAD
Liabilities April March Assets April March
Creditors 4,000 Cash 6,000 510
Bank overdraft 1,000 Book Debts 10,000
Capital 10,000 12,710 Stock 4,000 6,000
Furniture 1,200
10,000 17,710 10,000 17,710
STATEMENT SHOWING PROFIT OF LOSS OF RAM PRASHAD
Particulars Amount (₹)
Closing Capital 12,710
Add: Drawings 2,400
Total 15,110
Less: Opening Capital 10,000
Gross Profit 5,110
Less: Depreciation on Furniture = 1,200× 10% 120
Net Profit 4,990
34. Trading Account
for the year ended March 31st, 2023
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
To Opening Stock 20,000 By Sales 5,90,000
Less: Return
To Purchases 2,92,000 (16,000) 5,74,000
Inwards
Less: Goods Destroyed by Fire (8,000) By Closing Stock 40,000
Less: Drawings (2,500)
Less: Advertisements (1,500) 2,80,000
To Fuel and Power 34,000
To Gross Profit c/d (Balancing
2,80,000
Figure)
6,14,000 6,14,000
Profit and Loss Account
for the year ended March 31st, 2023
Dr. Cr.
Amount Amount
Particulars Particulars
(₹) (₹)
By Gross Profit
To Depreciation on Furniture 6,050 2,80,000
b/d
By Discount
To General Expenses 18,000 19,000
Received
Less: Furniture (5,000) 13,000
To Rent 10,000
To Further Bad Debts 30,000
Add: New Provision 10,000 40,000
To Discount Allowed 15,000
To Repair Charges 2,900
To Advertisement (Free Samples) 1,680
To Salaries 1,10,000
To Net Profit (Balancing Figure) (transfer
1,00,370
to capital account)
2,99,000 2,99,000
Balance Sheet
as at March 31, 2023
Amount Amount
Liabilities Assets
(₹) (₹)
Capital 1,60,000 Fixed Assets
Add: Net Profit 1,00,370 Furniture & Fittings 58,000
Less: Drawings (60,900) 1,99,470 Add: Additions 5,000
Current
Less: Depreciation (6,050) 56,950
Liabilities
Creditors 1,35,000 Goodwill 16,000
Current Assets
Closing Stock 40,000
Insurance company (8,000 +
8,960
12% GST)
Input CGST (8,000 - 240 - 480)
= 7,280
Less: Output CGST = 5,000 2,280
Input CGST (8,000 - 240 - 480)
= 7,280
Less: Output CGST = 5,000 2,280
Cash at Bank 18,000
Debtors 2,30,000
Less: Bad Debts (30,000)
Less: Prov. for Bad Debts (10,000) 1,90,000
3,34,470 3,34,470
Working Note:-
Calculation of Drawings = ₹ 58,100 + ₹ 2,800 (2,500 + 300 (GST)) = ₹ 60,900
Calculation of Depreciation:
Depreciation on Furniture (i) = 58,000 × 10% = 5,800
Depreciation on Furniture (ii) = 5,000 × 10% × 6

12
= 250
Total Depreciation = ₹ 5,800 + ₹ 250 = ₹ 6,050
Calculation of outstanding rent:
Outstanding Rent = 10,000 × 2

10
= ₹ 2,000
Calculation of Provision for Doubtful debts:-
Provision for doubtful debts = Sundry Debtors - further Bad debts × Rate
Provision for doubtful debts = (₹ 2,30,000 - ₹ 30,000) × 5 %
Provision for doubtful debts = ₹ 10,000
When adjustments are given in trial balance all the adjustments will be taken in the
balance sheet only. Adjustments that are given after trial balance will be shown both in
trading and profit and loss account and balance sheet.
OR
In the books of M/S Ram Lai & Sons
Trading and Profit and loss Account
for the year ended 31st December, 2013
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Opening stock 15,000 By Sales 1,10,000
To Purchases 82,000 By Closing Stock 20,000
Less Return Outwards 1,000
To Wages 1,800
To Carriage on Purchases 200
To Gross Profit c/d 32,000
1,30,000 1,30,000
======== =======
To Rent 5,100 By Gross Profit b/d 32,000
To Insurance 600 By Interest on Investment 500
Less Unexpired Insurance 50 550 By Commission 1,500
To Salaries 12,500 Add Accrued Commission 300 1,800
Add Outstanding Salaries 1,000 13,500
To Bad Debts 200
To Depreciation on:
Building 2,250
Furniture 700 2,950
To Net Profit before Manager's
12,000
Commission
34,300 34,300
======= =======
To Manager's Commission(5/105 By Net Profit Before
571 12,000
× 12,000) Manager's Commission
To Net Profit after Manager's
11,429
Commission
12,000 12,000
====== =======
Balance Sheet
as at 31st December,2013
Amount Amount
Liabilities Assets
(Rs) (Rs)
Creditors 28,000 Cash in hand 5,000
Outstanding Salaries 1,000 Cash at Bank 25,000
Manager's Commission Payable 571 Closing Stock 20,000
Capital 80,000 Debtors 20,100
Add Net Profit 11,429 91,429 Advance Sales Tax Paid 1,500
Accrued Commission 300
Prepaid Insurance 50
Building 45,000
Less Depreciation 2,250 42,750
Furniture 7,000
Less Depreciation 700 6,300
1,21,000 1,21,000
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In addition to salaries, companies may offer a fixed percentage of their net profit to
managers as commission. This is done to motivate and encourage them to generate more
revenue for the company. Journal entry will be:
Profit and Loss A/C Debit
To Manager’s Commission A/C Credit