Question No 18 Chapter No 20 – D.K Goal 11 Class

Question No 18 Chapter No 20 D.K Goal 11 Class

18. Below is given the Trial Balance of a trader as at 3 1 st March, 2018. You are required to prepare Trading and Profit & Loss Account and Balance Sheet as at that:

Dr. Balances		Cr. Balances
Opening Stock	42,000	Sales	410000
Purchases	2,00,000	Sundry Creditors	20,000
Plant	60,000	Purchases Return	8,000
Salary	33,000	Commission	7,500
wages	44,000	Bank	24,000
Discount	2,000	Capital	1,50,000
Rent	27,500	Interest on Investments	700
Furniture (Including Furniture of 5,000 purchased on 1st October, 2017)	20,000	Special Rebate	800
Carriage in	5,800
Carriage out	3,200
B/R	10,000
Sundry Debtors	1,00,000
Office Expenses	6,600
Cash in hand	5,400
Investments at 14% p.a.	10,000
Insurance	1,500
(paid to 31st July, 2018)
Stock on 31st March, 2018	50,000
	6,21,000		6,21,000

Adjustments

1. A bill for 2,000 included in Bills Receivables has been dishonoured.
2. Create a provision for doubtful debts @ 5% and for discount @ 2% on Sundry Debtors.
3. Provide upto date interest on Investments.
4. Expenses for rent, wages, salaries and office are uniform throughout the year and those for March, 2018 have not been paid.
5. Depreciate Plant by 10% p.a. and Furniture by 20% p.a.
6. Unearned Commission 1,500.

[Ans. G.P. 1,22,200 N P. 34,462, B/S Total 2,40,062]

The Solution of Question No 18 Chapter No 20 D.K Goal 11 Class:

Trading Account
Particular		Amount	Particular		Amount
To Opening stock		42,000	By Sale A/c	4,10,000
To Purchases A/c	2,00,000		Less:- Sale return	–	4,10,000
Add: Closing Stock (see WN1)	50,000		By Closing stock A/c		50,000
Less: Purchase Return	8,000	2,42,000
To Wages A/c	44,000
Add: O/s Wages (WN2)	4,000	48,000
To Carriage in A/c		5,800
To Gross Profit A/c		1,22,200
		4,60,000			4,60,000

Profit & Loss Account
Particular		Amount	Particular		Amount
To Salaries A/c	33,000		By Gross profit b/d		1,22,200
Add: O/s Salaries (WN3)	3,000	36,000	By Commission A/c	7,500
To Rent A/c	27,500		Less: Unearned Commission	1,500	6,000
Add: O/s Rent (WN4)	2,500	30,000	By Interest on Investments A/c	700
To Carriage out A/c		3,200	Add: Accrued Interest	700	1,400
To Office Expenses A/c	6,600		(10,000 X 14% = 1,400-700)
Add: O/s Office (WN5)	600	7,200	By Special Rebate		800
To Insurance A/c	1,500
Less: PrePaid Insurance (WN6)	500	1,000
To Prov. For Doubtful Debts (WN7)		5,100
To Discount A/c	2,000
To Prov. For Discount(WN8)	1,938	3,938
To Depreciation on
-Plant A/c (60000×10%)	6,000
-Furniture A/c(WN9)	3,500	9,500
To Net Profit A/c		34,462
		1,30,400			1,30,400

Balance sheet for the year ending 31st March,2018
Liabilities		Amount	Assets		Amount
Capital	1,50,000		Plant	60,000
Add: Net profit	34,462	1,84,462	Less: Depreciation	6,000	54,000
Creditors		20,000	Furniture	20,000
Bank O/D		24,000	Less: Depreciation	3,500	16,500
Outstanding Wages		4,000	B/R	10,000
Unearned Commission		1,500	Less: dishonoured	2,000	8,000
Outstanding Salaries		3,000	Debtors	1,00,000
Outstanding Rent		2,500	Add: dishonoured B/R	2,000
Outstanding Office Expenses		600	Less: New provision for D/d	5,100
			Less: New provision for Disc.	1,938	94,962
			Cash in hand		5,400
			Investments at 14% p.a.		10,000
			Stock on 31st March, 2018		50,000
			Insurance Prepaid		500
			Accrued Interest		700
		2,40,062			2,40,062

Working Notes: –

WN1. Why to add closing stock in purchase?

Becasue closing stock is given in the trail balance. When closing stock is given in the trail balance then we have to add it in the purchase account. 

The reason behind it that the amount of the closing stock is the part of purchase and opening stock which is left at the end of year if the closing stock is given in the trail balance it means the net amount of purchase(after deducting amount of closing stock) has given. 

WN.3 Calculation of amount of Outstanding Wages

Outstanding Wages	=	Total Wages	X	Numbers of months for Wages not Paid
				Number of months of Wages Paid

 

Outstanding Wages	=	44,000	X	1
				11

Outstanding Wages

=

4,000

WN.3 Calculation of amount of Outstanding Salaries

Outstanding Salaries	=	Total Salaries	X	Numbers of months for Salaries not Paid
				Number of months of Salaries Paid

 

Outstanding Salaries	=	33,000	X	1
				11

Outstanding Salaries

=

3,000

 

WN.4 Calculation of amount of Outstanding Rent

Outstanding Rent	=	Total Rent	X	Numbers of months for Rent not Paid
				Number of months of Rent Paid

 

Outstanding Rent	=	27,500	X	1
				11

Outstanding Rent

=

2,500

WN.5 Calculation of amount of Outstanding Office Expenses

Outstanding Office Expenses	=	Total Office Expenses	X	Numbers of months for Office Expenses not Paid
				Number of months of Office Expenses Paid

 

Outstanding Office Expenses	=	6,600	X	1
				11

Outstanding Office Expenses

=

600

WN.6 Calculation of amount of Prepaid Insurance

Prepaid Insurance	=	Total Insurance	X	Numbers of months for Insurance Paid extra
				Number of months of Insurance Paid

Numbers of months for Insurance Paid extra = From 01/04/2018 to 31/07/2018 i.e 4 months

Prepaid Insurance	=	1,500	X	4
				12

Prepaid Insurance

=

500

WN.7 Calculation of New Provision for Doubtful Debts

Amount of Debtors	1,00,000
Add: Bills receivable dishonoured	2,000
Closing Balance of Debtors	1,02,000

New Provision for Doubtful Debts =  Closing Balance of Debtors X Rate of Provision

= 1,02,000 X 5% 

= 5,100/-

WN.8 Calculation of New Provision for Discount

Provision for Discount on debtors =  (Closing Balance of Debtors – New provision of Doubtful debts) X Rate of Provision

= (1,02,000 – 5,100 ) X 2%

= 96,900 X 2/100

= 1,938/-

WN.9 Calculation of Depreciation on Furniture

Depreciation on opening balance=  Opeing balance of Furniture X Rate of Depreciation (Full Year)

Opeing balance of Furniture =  Closing balance – Purchase During year

= 20,000 – 5,000

= 15,000

Depreciation = 15,000 * 20% 

= 3,000/-

Depreciation on purchase during the year =  Furniture Purchase during the year X Rate of Depreciation (from the date of purchase to the end of year)

= 5,000 X 20% X 6/12

= 500

Total Amount of Depreciation = Depreciation on opening balance + Depreciation on purchase during the year

= 3,000 + 500

= 3,500/-

Also, Check out the solved question of all Chapters: –

D K Goel – New ISC Accountancy -(Class 11 – ICSE)- Solution

• Chapter 1 Evolution of Accounting & Basic Accounting Terms
• Chapter 2 Accounting Equations
• Chapter 3 Meaning and Objectives of Accounting
• Chapter 4 Double Entry System
• Chapter 5 Books of Original Entry – Journal 
• Chapter 6 Accounting for Goods and Service Tax (GST) 
• Chapter 7 Books of Original Entry – Cash Book 
• Chapter 8 Books of Original Entry – Special Purpose Subsidiary Books
• Chapter 9 Ledger
• Chapter 10 Trial Balance and Errors
• Chapter 11 Bank Reconciliation Statement
• Chapter 12 Depreciation
• Chapter 13 Bills of Exchange
• Chapter 14 Generally Accepted Accounting Principles(GAAP) 
• Chapter 15 Bases of Accounting
• Chapter 16 Accounting Standards and International Financial Reporting Standard(IFRS) (Coming soon)
• Chapter 17 Capital and Revenue
• Chapter 18 Provisions and Reserves 
• Chapter 19 Final Accounts
• Chapter 20 Final Accounts – With Adjustments
• Chapter 21 Errors and their Rectification (Coming soon)
• Chapter 22 Accounts from Incomplete Records – Single Entry System (Coming soon)
• Chapter 23 Accounts of Not-for-Profit Organisations (Coming soon)
• Chapter 24 Computerised Accounting System (Coming soon)
• Chapter 25 Introduction to Accounting Information System (Coming soon)

Check out the Accountancy Class +1 by D.K. Goal (Arya Publication) from their official Site.