Unit – 1

Problem – 1

Journalize the following transaction in the books of Mr. Bala for the year month of
January 2021.

Date Particular Rs
January – 1 Bala started business with a capital of 10,000
January – 4 Bought goods from Velan 6750
January – 7 Cash purchases 3000
January - 10 Cash sales 4000
January – 13 Bought goods from Velan 2000
January – 16 Sold goods to Gurunath 5000
January – 18 Paid cash to Velan 2850
January – 19 Sold goods to Gurunath 500
January – 24 Paid Velan on account 2400
January – 26 Received cash from Gurunath 1650
January – 27 Paid salaries 1250
January – 30 Received cash from Gurunath 200

Format of Trail Balance

Sl. No Name of the account Debit Credit

Rs. Rs.
1. Capital account --- XXX
2. Land & Buildings XXX ---
3. Plant & Machinery XXX ---
4. Equipment XXX ---
5. Furniture & Fixtures XXX ---
 6. Cash in hand XXX ---
7. Sundry Debtors XXX ---
8. Bills Receivables XXX ---
9. Stock of Raw Materials XXX ---
10. Work-in-progress XXX ---
11. Stock of Finished Goods XXX ---
12. Carriage inwards XXX ---
13. Carriage outwards XXX ---
14. Sales --- XXX
15. Sales returns XXX ---
16. Purchases XXX ---
17. Purchases returns --- XXX
Total XXX XXX

Problems – 2

Prepare a Trail balance as on 31st March 2020 from the books of Smt. Janagi.

Sl. No. Particulars Rs

1. Capital 249000
2. General Expenses 97000
3. Machinery 118680
4. Wages 14400
5. Bad debts 1100
6. Sales 330720
7. Commission 5500
8. Bills Payables 7700
 9. Bank Overdraft 28600
10. Discount 1210
11. Drawings 24000
12. Buildings 78000
13. Stock (01-04-2019) 132400
14. Insurance 2610
15. Creditors 5000
16. Loan (Cr) 75000
17. Purchases 210800
18. Reserve fund 15000
19. Cash in hand 25320

Problem - 3

From the following balances extracted at the close of the year ended 31st December 2020,
Prepare Profit and Loss account of Shri. Raman as at that date.

Particulars Rs. Particulars Rs.

Gross Profit 55,000 Repairs 500

Carriage on Sales 500 Telephone expenses 520
Office rent 500 Interest (Dr) 480
General Expenses 900 Fire Insurance premium 900
Discount to customers 360 Bad debts 2,100
Interest from Bank 200 Apprentice Premium (Cr) 1,500
Travelling Expenses 700 Printing and Stationary 2,500
Salaries 900 Trade expenses 300
Commission 300

Problem - 4

Prepare Trading, Profit and Loss account and Balance Sheet from the following Trail Balance of
Mr.Kumaran.
 Debit Balances Rs. Credit Balances Rs.
Sundry Debtors 92000 Kumaran’s Capital 70000
Plant and Machinery 20000 Purchases returns 2600
Interest 430 Sales 250000
Rent, Taxes & Insurance 5600 Sundry creditors 60000
Conveyance charges 1320 Bank Overdraft 20000
Wages 7000
Sales returns 5400
Purchases 150000
Opening Stock 60000
Kumaran’s Drawings 22000
Trade Expenses 1350
Salaries 11200
Advertising 840
Discount 600
Bad debts 800
Business Premises 12000
Furniture & Fixtures 10000
Cash in hand 2060
Total 4,02,600 Total 4,02,600

Adjustments :

1. Stock on hand on 31st December 2020 Rs. 90000

2. Provide depreciation on premises at 2.5%; Plant & Machinery at 7.5% and Furniture & Fixtures
at 10%.

3. Write off Rs 800 as further bad debts

4. Provide for doubtful debts at 5% on Sundry debtors

5. Outstanding rent was Rs. 500 and Outstanding Wages Rs. 400

6. Prepaid insurance Rs. 300 and Prepaid salaries Rs. 700.

Problem – 5
Following is the balance as on 31st December 2020 0f Sri Rajan. Prepare trading and profit and
loss account for the year 2020 and a balance sheet as on that date.

Debtors Rs. Creditors Rs.

Purchases 8000 Capital 40000
Salaries 3000 Creditors 8500
Rent 1500 Sales 38000
Debtors 30000 Loan 12000
Cash 1500
Wages 2000
Bank Balance 3000
Stock on 01.04.2020 2000
Machinery 15000
Building 30000
Insurance 2500
Total 98500 Total 98500

Adjustments

1. The closing stock was Rs. 18000

2. Salary outstanding Rs. 500
3. Insurance prepaid Rs. 250
4. Depreciate machinery @ 10%
5. Create a provision for on Debtors @ 2% for bad debts.

Problem – 6

From the following Trail balance of Sri Vasan as on 31st March 2020. Prepare Trading account
and Profit and Loss account for the year ended and balance sheet as on that date.

Trail Balance of Sri Vasan as on 31st March 2020

 Particulars Rs. Rs.
Capital 60000
Drawings 12000
Machinery 30000
Furniture 4000
Sales 130000
Creditors 12000
Stock – Opening 20000
Purchases 80000
Salary & Wages 22400
Debtors 20400
Return Inwards 2000
Return Inwards 5000
Discount 600
Loan at 6% p.a. taken from Mr. Arul on 01-01-2020 10000
Insurance 800
Postages 1500
Rent, Rates and Taxes 3600
Bad debts written off 400
Trade Expenses 200
Interest on loan from Mr. Arul 150
Travelling Expenses 500
Sundry Expenses 300
Cash in hand 3050
Cash at Bank 10300
Total 214600 214600

Adjustments:

1. Closing stock: Market price Rs. 25000, Cost Price Rs. 21000.
2. Of the debtors, Rs. 400 is bad debts and should be written off. Create a reserve for
discount, on debtors 2.5%.
3. Salaries Rs. 800 for March 2020 was not paid.
4. Interest on capital is to be calculated at 6% p.a. and on drawings Rs. 330.
5. Prepaid insurance amounted to Rs. 100.
6. Depreciate furniture and fixtures by 5% and machinery by 10%.
7. Make a reserve for discount on creditors @ 2%