Illustration 1
From the following Trial Balance of Mr. Shubham Traders, prepare Trading and Profit & loss A/c for the
year ended 31st March 2025 and Balance sheet as on that date.
Trial Balance as on 31st March, 2025
Particulars Amount Particulars Amount
Land & building 30,000 Sundry Creditors 45,000
Sundry Debtors 45,000 Reserve for doubtful debt 1,000
Computer 25,000 Unpaid wages 1,000
Purchases 48,000 Sales 134,100
Stock on 01 -04-2024 25,000 Discount 2,500
Wages 4,800 Capital 40,000
Carriage Inward 1,300 12 % Bank Loan (taken on 10,000
Insurance charges 1,200 01/12/2024)
Carriage Outward 1,700
Office expenses 30,500
Bad debts 800
Furniture 3,000
Drawings 5,000
Cash in hand & at bank 9,300
Advertisement 3,000
2,33,600 2,33,600
Adjustments:
1. Closing stock at the end of the year was Rs. 18,000
2. Goods worth Rs. 3,000 taken over by Mr. Shubham for gifting his wife on anniversary. (drawings)
3. Goods worth Rs. 1500 were distributed as free sample to all the female residents in his housing society.
4. Pummy Aunty to whom the sale was made on credit basis (debtor) of Rs. 1,000, denied to make the
payment(bad debt)
5. Also there are chances that some of the debtors might not make the payment. Hence there is need to
create a reserve for bad debts @ 5 % on debtors.
6. Insurance premium is paid on 1st October 2024 for one year.
Page 1 of 9
Illustration 2:
The following is the Trial Balance of Shri. Madhukar as on 31st March, 2025. You are requested to prepare
the Trading and Profit and Loss Account for the year ended 31st March 2025 and Balance sheet as on that date after
making the necessary adjustments
Particulars Debit Credit
Rs. Rs.
Sundry Debtors 500,000 -
Sundry Creditors - 2,00,000
Wages 1,00,000 -
Carriage Outwards 1,10,000 -
Carriage Inwards 50,000 -
General Expenses 70,000 -
Cash Discounts 20,000 -
Bad Debts 10,000 -
Motor Car 2,40,000 -
Printing & Stationery 15,000 -
Furniture & Fittings 1,10,000 -
Advertisement 85,000 -
Insurance 45,000 -
Salesman’s Commission 87,500 -
Postage & Telephone 57,500 -
Salaries 1,60,000 -
Rates & Taxes 25,000 -
Drawings 20,000 -
Capital Account - 1,443,000
Purchases 15,50,000 -
Sales - 19,87,500
Stock on 01.04.2024 2,50,000 -
Cash at Bank 115,000 -
Cash in hand 10,500 -
36,30,500 36,30,500
The following adjustments are to be made:
1. Physical Stock in godown on 31st March, 2025 was valued at Rs. 725,000.
2. Sales include goods worth Rs. 75,000 sent out to Rishi & Company on approval and remaining
unsold on 31st March, 2025. The cost of the goods was Rs. 50,000.
3. The sales representatives are entitled to a commission of 5% on total sales.
4. Debtors include Rs. 25,000 bad debts.
5. Purchases include purchase of Furniture worth Rs. 50,000
6. A provision for Bad & Doubtful Debts is to be created to the extent 5% on Sundry Debtors.
7. Depreciate: Furniture & Fittings by 10% p.a. ,Motor Car by 20% p.a.
Page 2 of 9
Illustration 3:
From the following Trial Balance prepare the Manufacturing Account, Trading and Profit & Loss Account for
the year ending 31st March 2025 and Balance Sheet as on that date:
Particulars Debit Credit
(Rs.) (in’000) (Rs.) (in ‘000)
Madhav Singh's Capital Account 41,000
Madhav Singh's Drawing Account 6,100
Mrs. Singh's Loan Account 4,000
Sundry Creditors 45,000
Cash in Hand 250
Cash at Bank 4,000
Sundry Debtors 40,500
Patents 2,000
Plant & Machinery 20,000
Land & Buildings 26,000
Purchase of Raw Materials 35,000
Raw Material: 01.04.2021 3,500
Work-in-process: 01.04.2021 2,000
Finished Stock: 01.04.2021 18,000
Carriage Inwards 1,100
Wages 27,000
Salary of Works Manager 5,600
Factory Expenses 3,400
Factory Rent & Taxes 3,700
Sales less Returns 123,400
Advertising 3,000
Office Rent and Insurance 4,800
Printing & Stationery 1,000
Office Expenses 5,800
Carriage Outwards 600
Discounts 1,400 2,100
Bad Debts 750
215,500 215,500
Adjustment : (in’000)
The Stock on 31st March 2025 was as follows:
Raw Materials Rs 4,000 ; Work-in-process Rs 4,500; Finished Goods Rs.28,000
Depreciate plant and machinery and Land & building at 10% p.a.
Page 3 of 9
Illustration 4:
Prepare Manufacturing account, Trading & Profit and loss account for year ending 31/03/25 and Balance
sheet basis the trial balance of Jagfay Corporation, as on 31.03.2025 is as below:
Particulars Amount (Rs.)
(in ‘000)
Capital Account (including Rs. 5,000 introduced on 30.09.21) 22,500
Stock as on 01.04.24
Finished Good 3,500
Work-in-Progress 7,000
Raw material 3,000
Purchase of Raw material 70,500
Plant and Machinery 22,500
Sales 1,26,225
Rent (including Rs.450 of the factory premises) 1,350
Rebates and discount allowed 105
Fire Insurance of machinery 210
Sundry Debtors 18,900
Sundry Creditors 5,100
Reserve for bad and doubtful asset 60
Printing and stationery 180
Miscellaneous expenses 840
Advertisement 4,500
Proprietors drawing 1,800
Office salaries 5,400
Manufacturing wages 6,000
Furniture and fixture 2,250
Factory Power and fuel 300
Cash in hand 1,800
Balance with Bank of Bikaner 3,750
ADJUSTMENTS: (in’000)
1. A motor car purchased on 30.09.2021 for Rs. 20,000 was included in purchases. Depreciation rate
is 10 % p.a on all Fixed Assets.
2. Rent of Rs. 50 pm in respect of the portion of the office which is sub-let to other business from
01.10.24 is not realized in the current year.
3. A sum of Rs. 2,000 was transferred from current account with Bank of Bikaner to
Fixed Deposit Account on 01.08.24, has not been passed through the books. Make suitable adjustments and
provide for accrued interest @ 6% pa.
4. Sundry Debtors include bad debt of Rs. 400. Also provision for bad and doubtful debt to maintained
@ 10% on Debtors.
5. Closing Stock as on 31.03.2025 :
Finished Goods Rs. 5,000, Raw material Rs.1,000, Work-in- Progress Rs. 5,500
Page 4 of 9
Illustration 5
From the given particulars of Mr. Philip, Prepare the Manufacturing, Trading and Profit & Loss Account for the year
ended 31.03.2025 and Balance Sheet as at that date after making necessary adjustments:
Particulars Amount Rs.
Capital as at 01.04.2024 65,000
Drawings 7,000
Sundry Creditors 1,000
Discount Received 702
Allahabad Bank (Cr.) 4,000
Reserve for Bad and Doubtful Debts 600
Purchase Returns 530
Sales 52,410
Sales Returns 86
Finished Stock as on 01.04.2024 9,000
Plant & Machinery 17,000
Furniture 1,500
Buildings 15,000
Sundry Debtors 11,000
Manufacturing Wages 6,000
Manufacturing / factory Expenses 5,000
Carriage Inwards 400
Carriage Outwards 420
Bad Debts 150
Salaries 2,800
Bank charges (Dr.) 126
Discount allowed 150
Insurance (Dr.) 300
State Bank of Bikaner & Jaipur (Dr.) 140
Cash on hand 30
Raw material on 01.04.24 350
Purchase of raw material 38,730
Work-in-progress on 01.04.24 200
Salary of Works manager 560
Bank Loan 7,000
Interest paid on above 300
Investment 15000
1. Stock as at 31.03.2025:
Raw material Rs. 400
Work in progress Rs. 450
Finished good stock Rs. 7,550
2. Loan bears interest @12% p.a. The loan was taken on 1st June, 2024. One installment of Rs.1,000 (excluding
interest) was repaid and recorded on 1st December, 2024.
3. Cash received from a customer Rs. 10,000 on 31stMarch, 2024 as Security Deposit has been embezzled by an
employee. There was no insurance cover taken to cover loss due to employee theft.
4. Investments include shares of X Ltd. purchased for Rs. 5,000 and it was decided to write off this investment as
the company is under liquidation.
5. A fire occurred on 23rd March, 2022 and goods costing Rs. 10,000(selling price Rs. 15,000) were destroyed.
The insurance company accepted claim for 60% only on 31st March 2022 and paid the claim money on 10th
April, 2022.
Page 5 of 9
Self-Practice
Illustration 6:
From the following Trial Balance of Alpha Enterprises, prepare Trading and Profit and Loss Account for
the year ended 31st March, 2022 and Balance Sheet as at that date.
Trial Balance as on 31st March, 2022
Credit
Particulars Debit (₹) (₹)
Capital A/c 2,73,150
Stock On 1.4.2021 50,000
Sales 8,00,000
Purchase 7,70,000
Return Outward 25,000
Wages 5,000
Rent 1,25,000
Loan From Bank of Baroda 1,45,000
7% Fixed Deposit on 1.10.2021 1,50,000
12% Bonds On 1.12.2021 25,000
Interest Received 5000
Furniture 1,00,000
Discount Allowed 10,000
Discount Received 22,250
Freight Inward 5,500
Debtors 5,40,000
Creditors 6,60,000
Interest Paid on Loan 4,500
Carriage Outward 6,000
Advertisement 17,000
Cash 1,20,000
Bad Debts 4,500
Provision For Bad Debts 3,000
Pre-Paid Insurance 900
Total 19,33,400 19,33,400
Adjustments:
1) Closing stock valued at ₹4,00,000, however the net realisable value was ₹3,75,000.
2) Prepaid insurance was recorded in last financial year, which was supposed to be incurred in the
next year.
3) Interest Received represents 1000 from debtors (due to delay in payment) and balance on Fixed
deposits and Bonds.
4) Depreciation is to be provided on fixed Asset at 10% p.a.
5) Sale of furniture was wrongly recorded as sale of goods on cash basis. Furniture was purchased on
1/12/2019 for ₹30,000 and is sold for ₹ 23000 on 31st January 2022.
6) Create Provision for bad and doubtful debt @2% on Debtors. (Midterm 2022-23)
Page 6 of 9
Illustration 7:
Following is the Trial Balance as on 31st March, 2021 extracted from the books of M/s Mohan Enterprise
Particulars Debit (Rs.) Credit (Rs.)
Capital 3,00,000
Drawing 12,500
Furniture 50,000
Plant & Machinery 70,000
Opening Stock 45,000
Sundry Debtors 1,40,000
Sundry Creditors 1,60,000
Purchases 2,00,000
Sales 3,75,000
Carriage Inward 2,500
Carriage Outward 1,250
Wages 55,000
Prepaid Rent 6,000
Outstanding Salaries 5,000
Cash in Hand & at Bank 2,57,750
10% Investment 54,000
Interest on investment 3,000
Commission received 5,000
Insurance (for 1 year, upto 30th June,2021) 5,000
st
10% Loan from Mr.X (sanctioned on 1 Aug,2020) 51,000
Total 8,99,000 8,99,000
Additional Information:
1. Market value of closing stock is Rs.75,000. The cost per unit of product is Rs.12 which is lower
than market price by Rs.3.
2. Wages paid Rs.2,000 were wrongly recorded as installation charges on plant & machinery.
3. An advance of Rs.5,000 to a supplier was wrongly included in the list of sundry debtors.
4. Depreciation is charged on plant and machinery at 15% p.a. and on furniture at 10% p.a.
5. One fifth of commission amount, is in respect of the work to be done next year.
6. Cash found short by Rs.10,000 at the time of cash counting on 31 st March 2021.
7. Create reserve for doubtful debt @ 5%
Prepare Trading, Profit & Loss A/c and Balance Sheet of the firm for the year ended 31 st March 2021, after
considering the above adjustments.
(Re- Midterm 2022-23)
Page 7 of 9
Illustration 8:
From the following trial balance extracted from the books of M/s Lake enterprises, prepare a Trading
account , Profit & loss Account for the year ended 31st March 2023 and a balance sheet as at that date:
Particulars Amount Particulars Amount
Interest receivable on Sea
Enterprise's Loan 5,000 Capital 14,80,000
Building 14,60,000 Creditors 4,20,200
Debtors 3,40,000 Sales 8,20,000
Purchases 2,70,000 Interest on Sea Enterprise's Loan 9,000
Wages 10,000 Rent received 18,000
Cash at Bank 2,75,200
Salaries 80,000
Repairs 17,000
Opening stock 18,000
Rent 45,000
Bad debts 50,000
Carriage inward 15,000
Life insurance premium of
proprietor 50,000
12% Loan to Sea Enterprise 1,00,000
Insurance premium 12,000
27,47,200 27,47,200
Adjustments:
1. Salaries are outstanding for the month of February and March 2023. Assume per month salary to
be constant.
2. Closing stock value is ₹20,000.
3. Loan was given to Sea enterprises on 1st March 2020.
4. Provide for Manager’s commission at 10% on Net profit after charging such commission.
5. Building extension was constructed and was ready for use from 1st December 2022 by incurring a
cost of ₹2, 40,000 and the same has been recorded.
6. Provide depreciation on all Fixed Assets @ 10% p.a.
(Midterm 2023-24)
Page 8 of 9
Illustration 9:
From the following trial balance extracted from the books of M/s Ambani, prepare a Manufacturing
Account , Trading account , Profit & loss Account for the year ended 31st March 2023 and a Balance sheet
as at that date taking into account the below mentioned adjustments.
Particulars Amount Particulars Amount
Stock on 1st April 2022: Sundry Creditors 2,25,000
Raw Materials 2,10,000 Sale of Scrap 25,000
Work in Progress 95,000 Commission Received 4,500
Finished goods 3,05,000 Provision for doubtful debts 16,500
Sundry Debtors 2,40,000 Capital 48,31,500
Carriage Inward 15,000 Sales 16,72,000
Wages 1,30,000 Bank Overdraft 85,000
Salaries 1,00,000 10 % Bank loan (1st Sept 2022) 2,00,000
Insurance 10,000
Investments 80,000
Cash at bank 1,70,000
Repairs to Plant 11,000
Purchase of material 8,50,000
Plant and Machinery 45,00,000
Rent 60,000
Office Lighting 13,500
Depreciation on Plant & 2,50,000
machinery
Mr. Tripathi 20,000
70,59,500 70,59,500
Adjustments:
1. Closing Stock on 31st March 2023 : Raw Material Rs.1,62,000 ; Finished goods Rs.1,81,000 and
Work in Progress Rs.78,000
2. Office Premises occupy ¼ of the total area.
3. Above Investments were sold at a loss of 10% but the entire sales proceeds have been recorded as
sales.
4. Provision for doubtful debts is to be provided @ 2% of sales.
5. Salary of ₹ 20,000 paid to Mr. Tripathi, a temporary employee , stands debited to his personal
account
(Re- Midterm 2023-24)
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