Financial Statements II – Numerical Questions Solutions

This page contains the CBSE accountancy class 11 chapter 10, Financial Statements – II Numerical questions Solutions . You can find the questions/answers/solutions for the chapter 10 of CBSE class 11 accountancy in this page. So is the case if you are looking for CBSE class 11 Commerce related topic Financial Statements – I Numerical Questions
Buy Class 11 Accountancy Books Now!
This page contains solutions to numerical questions for the chapter 10, Financial Statements – II. If you’re looking for solutions theoretical questions, you can find them at Financial Statements – II
Financial Statements – II – Numerical Questions Solutions
1. Prepare a trading and profit and loss account for the year ending March 31, 2017. from the balances extracted of M/s Rahul Sons. Also prepare a balance sheet at the end of the year.
Ajustments:
1.
Commission received in advance ₹ 1,000.
2.
Rent receivable ₹ 2,000.
3.
Salary outstanding ₹ 1,000 and insurance prepaid ₹ 800.
4.
Further bad debts ₹ 1,000 and provision for doubtful debts @ 5% on debtors and discount on debtors @ 2%.
5.
Closing stock ₹ 32,000.
6.
Depreciation on building @ 6% p.a.
Watch video Solution to this problem in English हिंदी తెలుగు
Balance Sheet of M/s Rahul and Sons as on March 31, 2017
Liabilties
Amount
₹
Assets
Amount
₹
Capital
3,00,000
Building
1,10,000
Drawings
(32,000)
Depreciation3
(6,600)
1,03,400
Net Loss
(43,189)
2,24,811
Fixtures and Fittings
20,000
Loan
34,800
Prepaid Insurance
800
Advance Commission
1,000
Debtors
82,000
Bills Payable
22,000
Further Bad Debts
(1,000)
Outstanding Salary
1,000
New Provision1
(4,050)
Discount on debtors2
(1,539)
75,411
Bills Receivable
50,000
Rent Receivable
2,000
Closing Stock
32,000
2,83,611
2,83,611
Working Notes:
1. Provision for Doubtful Debts:
=
5% of (Debtors – Further Bad Debts)
=
{(₹~82,000 - ₹~1,000) × \dfrac{5}{100}}
=
{₹~81,000 × \dfrac{5}{100}}
=
₹ 4,050
2. Discount on Debtors:
=
2% of (Debtors – Provision for Doutful Debts – Further Bad Debts)
=
{(₹~82,000 - ₹~4,050 - ₹~1,000) × \dfrac{2}{100}}
=
{₹~76,950 × \dfrac{2}{100}}
=
₹ 1,539
3. Depreciation on Building:
{= ₹~1,10,000 × \dfrac{6}{100}}
= ₹ 6,600

2. Prepare a trading and profit and loss account of M/s Green Club Ltd. for the year ending March 31, 2017. from the following figures taken from his trial balance :
Ajustments:
1.
Depreciation charged on machinery @ 5% p.a.
2.
Further bad debts ₹ 1,500, discount on debtors @ 5% and make a provision on debtors @ 6%.
3.
Wages prepaid ₹ 1,000.
4.
Interest on investment @ 5% p.a.
5.
Closing stock ₹ 10,000.
Balance Sheet of M/s Green Club Ltd. as on March 31, 2017
Liabilties
Amount
₹
Assets
Amount
₹
Capital
75,000
Machinery
20,000
Net Profit
52,565
1,27,565
Depreciation
(1,000)
19,000
Creditors
10,000
Investment
23,100
Bills Payable
20,000
Interest on Investment4
1,155
24,255
Debtors
50,000
Further Bad Debts
(1,500)
Provision for
Doubtful Detbs2
(2,910)
Discount on Debtors3
(2,280)
43,310
Prepaid Wages
1,000
Cash at Bank
40,000
Cash at Hand
20,000
Closing Stock
10,000
1,57,565
1,57,565
Working Notes:
1. Depreciation on machinery:
{= ₹~20,000 × \dfrac{5}{100}}
= ₹ 1,000
2. Provision for Doubtful Debts:
=
{\text{(Debtors - Further Bad Debts)} × \dfrac{6}{100}}
=
{(₹~50,000 - ₹~1,500) × \dfrac{6}{100}}
=
{(₹~48,500) × \dfrac{6}{100}}
=
₹ 2,910
3. Discount on Debtors:
{= \text{(Debtors - Provision for Doubtful Debts - Further Bad Debts)} × \dfrac{5}{100}}
{= (₹~50,000 - ₹~2,910 - ₹~1,500) × \dfrac{5}{100}}
{= ₹~45,590 × \dfrac{2}{100}}
= ₹ 2,279.50
= ₹ 2,280
4. Interest on Investment:
{= \text{Investment} × \dfrac{5}{100}}
{= ₹~23,100 × \dfrac{5}{100}}
= ₹ 1,155

3. The following balances has been extracted from the trial of M/s Runway Shine Ltd. Prepare a trading and profit and loss account and a balance sheet as on March 31, 2017.
Adjustments:
1.
Further bad debts ₹ 1,000. Discount on debtors ₹ 500 and make a provision on debtors @ 5%.
2.
Interest received on investment @ 5%.
3.
Wages and interest outstanding ₹ 100 and ₹ 200 respectely.
4.
Depreciation charged on motor car @ 5% p.a.
5.
Closing Stock ₹ 32,500.
Balance Sheet of M/s Runway Shine Ltd. as on March 31, 2017
Liabilties
Amount
₹
Assets
Amount
₹
Capital
1,00,000
Motor Car
25,000
Net Profit
66,010
1,66,010
Depreciation3
(1,250)
23,750
Creditors
1,25,000
Investment
32,000
Bills Payable
6,040
Debtors
53,000
Outstanding Interest
100
Further Bad Debts
(1,000)
Outstanding Wages
200
New Provision1
(2,600)
Discount on Debtors
(500)
48,900
Bills Receivable
20,000
Cash at Bank
60,800
Cash in Hand
77,800
Interest Received2
1,600
79,400
Closing Stock
32,500
2,97,350
2,97,350
Working Notes:
1. Provision on Debtors:
{= \text{(Debtors - Further Bad Debts)} × \dfrac{5}{100}}
{= (₹~53,000 - ₹~1,000) × \dfrac{5}{100}}
{= ₹~53,000 × \dfrac{5}{100}}
= ₹ 2,600
2. Interest Received on Investment:
{= ₹~32,000 × \dfrac{5}{100}}
= ₹ 1,600
3. Depreciation on Motor Car:
{= ₹~25,000 × \dfrac{5}{100}}
= ₹ 1,250
4. From the following Trial Balance you are required to prepare trading and profit and loss account for the year ending March 31, 2017 and Balance Sheet on that date.
Adjustments
1.
Closing stock valued at ₹ 36,000.
2.
Private purchases amounting to ₹ 5000 debited to purchases account.
3.
Provision for doubtful debts @ 5% on debtors.
4.
Sign board costing ₹ 4,000 includes in advertising.
5.
Depreciate furniture by 10%.
Balance Sheet as on March 31, 2017
Liabilities
Amount
₹
Assets
Amount
₹
Capital
2,00,000
Furniture
16,000
Drawings1
(19,000)
Sign Board
4,000
Net Loss
(4,600)
1,76,800
Depreciation2
(2,000)
18,000
Creditors
72,500
Bulding
1,60,000
Bank Overdraft
50,000
Debtors
80,000
New Provision3
(4,000)
76,000
Closing Stock
36,000
Cash
8,900
2,98,900
2,98,900
Working Notes:
1. Total Drawings:
=
Drawings + Private Purchases
=
₹ 14,000 + ₹ 5,000
=
₹ 19,000
2. Depreciation on Furniture:
Total Furniture
=
Furniture + Sign Board
=
₹ 16,000 + ₹ 4,000
=
₹ 20,000
Depreciation
=
{₹~20,000 × \dfrac{10}{100}}
=
₹ 2,000
4. Provision for Doubtful Debts:
{= ₹~80,000 × \dfrac{5}{100}}
= ₹ 4,000

4.2 The following balances have been extracted from the trial of M/s Haryana Chemical Ltd. You are required to prepare a trading and profit and loss account and balance sheet as on March 31, 2017 from the given information.
Adjustments:
1.
Closing stock was valued at the end of the year ₹ 40,000.
2.
Salary amounting ₹ 500 and trade expense ₹ 300 are due.
3.
Depreciation charged on building and machinery are @ 4% and @ 5% respectively.
4.
Make a provision of @ 5% on sundry debtors.
Note:
●
If you do not find this problem in the text book, do not worry. This is from an old version of the text book. In the current text book, this problem is replaced with a different one (you can find it above)
●
Note: In the text book, it is giving that the Loan @ 15% (01.09.2016) (it has to be calculated for 7 months from 1-Sep-2016 to 31-Mar-2017). However, if we consider that value we’re getting the accrued interest on the loan as 262.50 which will make the Net profit as ₹ 1,85,672.50. To make it equal to the answer given in the book i.e. ₹ 1,85,560, we’ve considered that the Loan @10% (01.10.2016), which will make the acrued interest on loan as ₹ 150 and the answers for net profit and the balance sheet totals match.
Balance Sheet of M/s Haryana Chemical Ltd. as on March 31, 2017
Liabilities
Amount
₹
Assets
Amount
₹
Capital
3,00,000
Building
86,000
Net Profit
1,85,560
Depreciation1
(3,440)
82,560
Drawings
(10,000)
4,75,560
Freehold Land
3,20,000
Creditors
25,000
Patents
1,20,000
Bills Payable
1,71,700
Machinery
34,500
Outstanding Trade Expenses
300
Depreciation2
(1,725)
32,775
Outstanding Salary
500
Motor Vehicle
10,500
Loan
3,000
Interest on Loan4
150
3,150
Sundry Debtors
32,500
Provision on
(1,625)
30,875
Sundry Debtors3
(Provision for Bad Debts)
Cash at Bank
12,000
Cash in Hand
21,200
Closing Stock
40,000
6,73,060
6,73,060
Working Notes:
1. Depreciation on Building:
{= \text{Book Value} × \dfrac{4}{100}}
{= ₹~86,000 × \dfrac{4}{100}}
= ₹ 3,440
2. Depreciation on Machinery:
{= \text{Book Value} × \dfrac{5}{100}}
{= ₹~34,500 × \dfrac{5}{100}}
= ₹ 1,725
3. Provision on Sundry Debtors:
{= \text{Debtors} × \dfrac{5}{100}}
{= ₹~32,500 × \dfrac{5}{100}}
= ₹ 1,625
4. Interest on Loan (for 6 months):
{= \text{Loan} × \dfrac{10}{100} × \dfrac{6}{12}}
{= ₹~3,000 × \dfrac{10}{100} × \dfrac{6}{12}}
= ₹ 150

5. From the following information prepare trading and profit and loss account of M/s Indian sports house for the year ending March 31, 2017.
Adjustments:
1.
Closing stock was ₹ 45,000.
2.
Provision for doubtful debts is to be maintained @ 2% on debtors.
3.
Depreciation charged on : furniture and fixture @ 5%, plant and Machinery @ 6% and motor car @ 10%.
4.
A Machine of ₹ 30,000 was purchased on July 01, 2016.
5.
The manager is entitled to a commission of @ 10% of the net profit after charging such commission.
Note: In the text book answers, the gross profit is given with a typo as ₹ 1,01,000. However, as per our calculation, we got ₹ 97,000.
Balance Sheet of M/s Indian Sports House as on March 31, 2017
Liabilities
Amount
₹
Assets
Amount
₹
Capital
2,00,000
Plant and Machinery
1,00,000
Net Profit
68,909
Depreciation3
(4,200)
Drawings
(20,000)
2,48,909
(on Plant and Old Machinery)
Manager’s Commission Outstanding6
6,891
Depreciation4
(900)
94,900
Bank Overdraft
12,000
(on New Machinery)
Creditors
60,000
Furniture and Fixtures
20,000
Bills Payable
15,400
Depreciation2
(1,000)
19,000
Motor Car
51,000
Depreciation5
(5,100)
45,900
Investments
40,000
Sundry Debtors
80,000
New Provision1
(1,600)
78,400
(Provision for Doubtful Debts)
Bills Receivable
14,000
Cash in Hand
6,000
Closing Stock
45,000
3,43,200
3,43,200
Working Notes:
1. Provision for Doubtful Debts:
{= \text{Sundry Debtors} × \dfrac{2}{100}}
{= ₹~80,000 × \dfrac{2}{100}}
= ₹ 1,600
2. Depreciation on Furniture and Fixtures:
{= ₹~20,000 × \dfrac{5}{100}}
= ₹ 1,000
3. Depreciation on Plant and Old Machinery:
Cost of Old Assets
=
Book Value – Cost of New Machinery
=
₹ 1,00,000 – ₹ 30,000
=
₹ 70,000
Depreciation
=
{₹~70,000 × \dfrac{6}{100}}
=
₹ 4,200
4. Depreciation on New Machinery (for 9 months):
{= ₹~30,000 × \dfrac{6}{100} × \dfrac{6}{12}}
= ₹ 900
5. Depreciation on Motor Car:
{= ₹~51,000 × \dfrac{10}{100}}
= ₹ 5,100
6. Calculation of Manager’s Commission:
Profit Before Commission
=
₹ 98,400 – (₹ 2,400 + ₹ 2,000 + ₹ 5,000 + ₹ 1,000 + ₹ 4,200 + ₹ 2,000 + ₹ 5,100 + ₹ 900)
=
₹ 98,400 – ₹ 22,600
=
₹ 75,800
Manager’s Comission
{= ₹~75,800 × \dfrac{10}{100 + 10}}
{= ₹~75,800 × \dfrac{10}{110}}
= ₹ 6,890.90
≅ ₹ 6,891
Note:
●
The manager is entitled for the 10% commission of the net profit after charging such commission. So we need to take (100 + 10) = 110 in the denominator. If the net profit is computed before charging the manager’s commission then it would have simply be 100. But our case falls under first option.
●
In this problem, the old provision is more than the sum of bad debts and provision for doubtful debtors. So, it is considered on the Revenues/Gains side instead of the Expenses/Losses side.

6. Prepare the trading and profit and loss account and a balance sheet of M/s Shine Ltd. from the following particulars.
Adjustments:
1.
Closing stock was valued ₹ 35,000.
2.
Depreciation charged on furniture and fixture @ 5%.
3.
Further bad debts ₹ 1,000. Make a provision for bad debts @ 5% on sundry debtors.
4.
Depreciation charged on motor car @ 10%.
5.
Interest on drawing @ 6%.
6.
Rent, rates and taxes was outstanding ₹ 200.
7.
Discount on debtors 2%.
Balance Sheet of M/s Shine Ltd as on March 31, 2017
Liabilities
Amount
₹
Assets
Amount
₹
Capital
2,50,000
Investments
65,500
Net Loss
(27,482)
Furniture and Fixtures
15,500
Drawings
(13,560)
Depreciation1
(775)
14,725
Interest on Drawings4
(814)
2,08,144
Motor Car
25,000
Sundry Creditors
25,000
Depreciation3
(2,500)
22,500
Bills Payable
85,550
Sundry Debtors
1,00,000
Rent, Rates and Taxes Outstanding
200
Further Bad Debts
(1,000)
New Provision2
(Provision on Bad Debts)
(4,950)
Discount on Debtors5
(1,881)
92,169
Cash in Bank
53,000
Cash in Hand
36,000
Closing Stock
35,000
3,18,894
3,18,894
Note: The text book has a typo where in the Net Loss is given as ₹ 17,050, Net Loss as ₹ 27,344, the balance total is given as ₹ 3,19,032. However, as per our calculation, we got the gross loss as ₹ 19,300, Net Loss as ₹ 27,482 and the total of the balance sheet is ₹ 3,18,894.
Working Notes:
1. Depreciation on Furniture and Fixture:
{= ₹~15,500 × \dfrac{5}{100}}
= ₹ 775
2. Provision for Bad Debts:
{= \text{(Sundy Debtors - Further Bad Debts)} × \dfrac{5}{100}}
{= (₹~1,00,000 - ₹~1,000) × \dfrac{5}{100}}
{= ₹~99,000 × \dfrac{5}{100}}
= ₹ 4,950
3. Depreciation on Motor Car:
{= ₹~25,000 × \dfrac{10}{100}}
= ₹ 2,500
4. Interest on Drawings:
{= ₹~13,560 × \dfrac{6}{100}}
= ₹ 813.60
= ₹ 814
5. Discount on Debtors:
{= \text{(Sundry Debtors - Further Bad Debts - Provision for Bad Debts)} × \dfrac{2}{100}}
{= (₹~1,00,000 - ₹~1,000 - ₹~4,950) × \dfrac{2}{100}}
{= (₹~94,050) × \dfrac{2}{100}}
= ₹ 1,881

7. Following balances have been extracted from the trial balance of M/s Keshav Electronics Ltd. You are required to prepare the trading and profit and loss account and a balance sheet as on March 31, 2017.
Adjustments:
The following additional information is available :
1.
Stock on March 31, 2017 was ₹ 30,000.
2.
Depreciation is to be charged on building at 5% and motor van at 10%.
3.
Provision for doubtful debts is to be maintained at 5% on Sundry Debtors.
4.
Unexpired insurance was ₹ 600.
5.
The Manager is entitled to a commissiion @ 5% on net profit before after charging such commission.
Note: In the text book, it is given that the adjustment for the manager’s commission is calculated from the net profit after charging such commission. However, the provided answer can be arrived at only if we calculate the net profit after charging such commission. So, instead of “before”, we’ve considered “after” while calculating the manager’s commission.
Balance Sheet of M/s Keshav Electronics Ltd as on March 31, 2017
Liabilities
Amount
₹
Assets
Amount
₹
Capital
3,50,000
Buildings
1,00,000
Net Profit
25,381
Depreciation1
(5,000)
95,000
Drawings
(75,000)
3,00,381
Machinery
22,000
Creditors
50,000
Investments
40,000
Bills Payable
63,700
Unexpired Insurance
600
Manager’s Commission Outstanding4
1,269
Motor Van
30,000
Depreciation2
(3,000)
27,000
Sundry Debtors
25,000
New Provision3
(1,250)
23,750
(Provision for Doubtful Debts)
Cash at Bank
98,000
Cash in Hand
79,000
Closing Stock
30,000
4,15,350
4,15,350
Working Notes:
1. Depreciation on Building:
{= ₹~1,00,000 × \dfrac{5}{100}}
= ₹ 5,000
2. Depreciation on Motor Van:
{= ₹~30,000 × \dfrac{10}{100}}
= ₹ 3,000
3. Provision for Doubtful Debts:
{= ₹~25,000 × \dfrac{5}{100}}
= ₹ 1,250
4. Calculation of Manager’s Commission:
Net Profit
=
₹ 57,600 – (₹ 3,300 + ₹ 5,000 + ₹ 3,000 + ₹ 1,000 + ₹ 7,750 + ₹ 5,000 + ₹ 3,000 + ₹ 2,900)
=
₹ 57,600 – ₹ 30,950
=
₹ 26,650
Manager’s Commission
{= ₹~26,650 × \dfrac{5}{(100 + 5)}}
{= ₹~26,650 × \dfrac{5}{105}}
= ₹ 1,269.04
≅ ₹ 1,269
Note: The manager is entititle for the 10% commission of the net profit after charging such commission. So we need to take (100 + 10) = 110 in the denominator. If the net profit is computed before charging the manager’s commission then it would have simply be 100. But our case falls under first option.

8. From the following balances extracted from the books of Raga Ltd. prepare a trading and profit and loss account for the year ended March 31, 2017 and a balance sheet as on that date.
The additional information is as under :
1.
Closing stock was valued at the end of the year ₹ 20,000.
2.
Depreciation on plant and machinery charged at 5% and land and building at 10%.
3.
Discount on debtors at 3%.
4.
Make a provision at 5% on debtors for doubtful debts.
5.
Salary outstanding was ₹ 100 and Wages prepaid was ₹ 40.
6.
The manager is entitled a commission of 5% on net profit after charging such commission.
Balance Sheet of Raga Ltd as on March 31, 2017
Liabilities
Amount
₹
Assets
Amount
₹
Capital
1,01,110
Land and Building
12,000
Net Profit
12,664
Depreciation2
(1,200)
10,800
Drawings
(20,000)
93,774
Plant and Machinery
40,000
Bills Payable
1,28,870
Depreciation1
(2,000)
38,000
Outstanding Salary
100
Sundry Debtors
54,300
Manager’s Commission Outstanding5
633
New Provision3
(2,715)
(Provision for Doubtful Debts)
Discount on Debtors4
(1,548)
50,037
Bills Receivable
24,500
Prepaid Wages
40
Cash at Bank
50,000
Cash in Hand
30,000
Closing Stock
20,000
2,23,377
2,23,377
Working Notes:
1. Depreciation on Plant and Machinery:
{= ₹~40,000 × \dfrac{5}{100}}
= ₹ 2,000
2. Depreciation on Land and Building:
{= ₹~12,000 × \dfrac{10}{100}}
= ₹ 1,200
3. Provision for Doubtful Debts:
{= ₹~54,300 × \dfrac{5}{100}}
= ₹ 2,715
4. Discount on Debtors:
{= \text{(Debtors - Provision for Doubtful Debts)} × \dfrac{3}{100}}
{= (₹~54,300 - ₹~2,715) × \dfrac{3}{100}}
{= ₹~51,585 × \dfrac{3}{100}}
= ₹ 1,547.55
= ₹ 1,548
5. Calculation of Manager’s Commission:
Net Profit
=
₹ 27,730 – (₹ 2,100 + ₹ 200 + ₹ 3,800 + ₹ 870 + ₹ 2,000 + ₹ 1,200 + ₹ 2,715 + ₹ 1,548)
=
₹ 27,730 – ₹ 14,433
=
₹ 13,297
Managers Comission
{= \text{Net Profit} × \dfrac{5}{100 + 5}}
{= ₹~13,297 × \dfrac{5}{105}}
= ₹ 633.20
= ₹ 633

9. From the following balances of M/s Jyoti Exports, prepare trading and profit and loss account for the year ended March 31, 2017 and balance sheet as on this date.
Closing stock ₹ 10,000.
1.
To provision for doubtful debts is to be maintained at 5 per cent on sundry debtors.
2.
Wages amounting to ₹ 500 and salary amounting to ₹ 350 are outstanding.
3.
Factory rent prepaid ₹ 100.
4.
Depreciation charged on Plant and Machinery @ 5% and Building @ 10%.
5.
Outstanding insurance ₹ 100.
Balance Sheet of M/s Jyoti Exports as on March 31, 2017
Liabilities
Amount
₹
Assets
Amount
₹
Capital
42,000
Building
24,000
Net Profit
15,890
57,890
Depreciation3
(2,400)
21,600
Sundry Creditors
2,500
Plant and Machinery
3,600
Bills Payable
15,600
Depreciation2
(180)
3,420
Outstanding Insurance
100
Patents
10,000
Outstanding Salary
350
Furniture
20,540
Outstanding Wages
500
Sundry Debtors
9,600
New Provision1
(480)
9,120
(Provision for Doubtful Debts)
Prepaid Factory Rent
100
Cash in Hand
2,160
Closing Stock
10,000
76,940
76,940
Note: The text book has a typo for the values of the Net Profit (it is given as ₹ 15,895) and balance sheet total (it is given as ₹ 76,945). As per our calculation, the net profit is ₹ 15,890 and the balance sheet total is ₹ 76,940.
Working Notes:
1. Provision for Doubtful Debts:
{= ₹~9,600 × \dfrac{5}{100}}
= ₹ 480
2. Depreciation on Plant and Machinery:
{= ₹~3,600 × \dfrac{5}{100}}
= ₹ 180
3. Depreciation on Building:
{= ₹~24,000 × \dfrac{10}{100}}
= ₹ 2,400

10. The following balances have been extracted from the books of M/s Green House for the year ended March 31, 2017, prepare trading and profit and loss account and balance sheet as on this date.
adjustments :
(a)
Machinery is depreciated at 10% and buildings depreciated at 6%.
(b)
Interest on capital @ 4%.
(c)
Outstanding wages ₹ 50.
(d)
Closing stock ₹ 50,000.
Balance Sheet of M/s Green House as on March 31, 2017
Liabilities
Amount
₹
Assets
Amount
₹
Capital
2,10,000
Building
60,000
Interest on Capital3
8,400
Depreciation2
(3,600)
56,400
Net Profit
52,750
2,71,150
Machinery
1,20,000
Bills Payable
6,500
Depreciation1
(12,000)
1,08,000
Creditors
50,000
Patent Right
18,800
Outstanding Wages
50
Office Furniture
5,000
Debtors
70,300
Bills Receivable
7,000
Bank Balance
11,000
Cash in Hand
1,200
Closing Stock
50,000
3,27,700
3,27,700
Working Notes:
1. Depreciation on Machinery:
{= ₹~1,20,000 × \dfrac{10}{100}}
= ₹ 12,000
2. Depreciation on Building:
{= ₹~60,000 × \dfrac{6}{100}}
= ₹ 3,600
3. Interest on Capital:
{= ₹~2,10,000 × \dfrac{4}{100}}
= ₹ 8,400

11. From the following balances extracted from the book of M/s Manju Chawla on March 31, 2017. You are requested to prepare the trading and profit and loss account and a balance sheet as on this date.
Closing stock was ₹ 2,000.
(a)
Interest on drawings @ 7% and interest on capital @ 5%.
(b)
Land and Machinery is depreciated at 5%.
(c)
Interest on investment @ 6%.
(d)
Unexpired rent ₹ 100.
(e)
Charge 5% depreciation on furniture.
Balance Sheet of M/s Manju Chawla as on March 31, 2017
Liabilities
Amount
₹
Assets
Amount
₹
Capital
40,000
Land and Machinery
43,000
Interest on Capital2
2,000
Depreciation3
(2,150)
40,850
Net Profit
24,985
Investment
6,000
Drawings
(2,000)
Interest on Investment4
360
6,360
Interest on Drawings1
(140)
64,845
Patent
4,000
Creditors
7,000
Furniture
11,300
Sales Tax Collected
1,000
Depreciation5
(565)
10,735
Unearned Rent
100
Debtors
6,000
Cash
3,000
Closing Stock
2,000
72,945
72,945
Note: The text book has a typo for the values of Gross Proit (it is given as ₹ 21,900), Net Profit (it is given as ₹ 25,185) and Balance Sheet Totals (it is given as ₹ 71,185). As per our calculation we got the gross profit as ₹ 22,400, net profit as ₹ 24,985 and the balance sheet total as ₹ 72,945.
Working Notes:
1. Interest on Drawings:
{= ₹~2,000 × \dfrac{7}{100}}
= ₹ 140
2. Interest on Capital:
{= ₹~40,000 × \dfrac{5}{100}}
= ₹ 2,000
3. Depreciation on Land and Machinery:
{= ₹~43,000 × \dfrac{5}{100}}
= ₹ 2,150
4. Interest on Investment:
{= ₹~6,000 × \dfrac{6}{100}}
= ₹ 360
5. Depreciation on Furniture:
{= ₹~11,300 × \dfrac{5}{100}}
= ₹ 565

12. The following balances were extracted from the books of M/s Panchsheel Garments on March 31, 2017.
Prepare the trading and profit and loss account for the year ended March 31, 2017 and a balance sheet as on that date.
(a)
Unexpired insurance ₹ 1,000.
(b)
Salary due but not paid ₹ 1800.
(c)
Wages outstanding ₹ 200.
(d)
Interest on capital 5%.
(e)
Scooter is depreciated @ 5%.
(f)
Furniture is depreciated @ 10%.
Note: The closing stock is not provided in the given problem. However, only if we consider a closing stock equivalent of ₹ 15,000, then only the gross profit, net profit and the balance sheet totals will match. So, we’ve assumed that the closing stock is ₹ 15,000.
Balance Sheet of M/s Panchsheel Garments as on March 31, 2017
Liabilities
Amount
₹
Assets
Amount
₹
Capital
50,000
Buildings
65,000
Interest on Capital1
2,500
Scooter
8,000
Net Profit
22,780
75,280
Depreciation2
(400)
7,600
Bank Overdraft
10,000
Furniture
5,200
Creditors
16,000
Depreciation3
(520)
4,680
Outstanding Salary
1,800
Unexpired Insurance
1,000
Outstanding Wages
200
Debtors
6,000
Cash in Hand
4,000
Closing Stock
15,000
1,03,280
1,03,280
Working Notes:
1. Interest on Capital:
{= ₹~50,000 × \dfrac{5}{100}}
= ₹ 2,500
2. Depreciation on Scooter:
{= ₹~8,000 × \dfrac{5}{100}}
= ₹ 400
3. Depreciation on Furniture:
{= ₹~5,200 × \dfrac{10}{100}}
= ₹ 520
13. Prepare the trading and profit and loss account and balance sheet of M/s Control Device India on March 31, 2017 from the following balance as on that date.
Closing stock was valued ₹ 20,000.
(a)
Interest on capital @ 10%.
(b)
Interest on drawings @ 5%.
(c)
Wages outstanding ₹ 50.
(d)
Outstanding salary ₹ 20.
(e)
Provide a depreciation @ 5% on plant and machinery.
(f)
Make a 5% provision on debtors.
Balance Sheet of M/s Control Device India as on March 31, 2017
Liabilities
Amount
₹
Assets
Amount
₹
Capital
67,500
Plant and Machinery
27,000
Interest on Capital1
6,750
Depreciation3
(1,350)
25,650
Net Loss
(8,973)
Furniture
6,750
Drawings
(19,530)
Investment
41,400
Interest on Drawings2
(977)
44,770
Debtors
36,000
Creditors
58,500
New Provision4
(1,800)
34,200
Bank Overdraft
24,660
Closing Stock
20,000
Outstanding Salary
50
Outstanding Wages
20
1,28,000
1,28,000
Working Notes:
1. Interest on Capital:
{= ₹~67,500 × \dfrac{10}{100}}
= ₹ 6,750
2. Interest on Drawings:
{= ₹~19,530 × \dfrac{5}{100}}
= ₹ 977.50
≅ ₹ 977
3. Depreciation on Plant and Machinery:
{= ₹~27,000 × \dfrac{5}{100}}
= ₹ 1,350
4. Provision on Debtors:
{= ₹~36,000 × \dfrac{5}{100}}
= ₹ 1,800
14. The following balances appeared in the trial balance of M/s Kapil Traders as on March 31, 2017
₹
Sundry debtors
30,500
Bad debts
500
Provision for doubtful debts
2,000
The partners of the firm agreed to records the following adjustments in the books of the Firm: Further bad debts ₹ 300. Maintain provision for bad debts 10%. Show the following adjustments in the bad debts account, provision account, debtors account, profit and loss account and balance sheet.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2017
2017
Mar 31
Balance b/d
500
Mar 31
Balance c/d
800
(Bad Debts)
(Provision for
Mar 31
Debtors A/c
300
Doubtful Debts)
800
800
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2017
2016
Mar 31
Bad Debts A/c
800
Apr 01
Balance b/d
2,000
Debtors A/c1
3,020
(Old Provision)
(New Provision)
2017
Apr 01
Profit and Loss A/c
1,820
3,820
3,820
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2017
2017
Mar 31
Balance b/d
30,500
Mar 31
Further Bad Debts
300
Mar 31
Provision for Doubtful Debts A/c1
3,020
Mar 31
Balance c/d
27,180
30,500
30,500
Balance Sheet of M/s Kapil Traders as on March 31, 2017
*Only relevant items are shown
Liabilities
Amount
₹
Assets
Amount
₹
Debtors
30,500
Further Bad Debtors
(300)
New Provision1
(3,020)
27,180
 
 
Working Notes:
1. Provision for Bad Debts:
{= \text{(Sundry Debtors - Further Bad Debts)} × \dfrac{10}{100}}
{= (₹~30,500 - ₹~300) × \dfrac{10}{100}}
{= ₹~30,200 × \dfrac{10}{100}}
= ₹ 3,020
15. Prepare the bad debts account, provision for account, profit and loss account and balance sheet from the following information as on March 31, 2017
₹
Debtors
80,000
Bad debts
2,000
Provision for doubtful debts
5,000
Adjustments :
Bad debts ₹ 500 Provision on debtors @ 3%.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2017
2017
Mar 31
Balance b/d
2,000
Mar 31
Provision for
2,500
Mar 31
Sundry Debtors A/c
500
Doubtful Debts A/c
2,500
2,500
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2017
2016
Mar 31
Bad Debts A/c
2,500
Apr 01
Balance b/d
5,000
Mar 31
New Provision1
2,385
(Old Provision)
Mar 31
Profit and Loss A/c
(Balance)
115
5,000
5,000
Note: In the above, the expense is negative which indicates that there’re less expenses than estimated. A negative value of expense indicates gain and will add to the net profit.
Alternatively, Profit and Loss account can also be prepared as below.
Balance Sheet of M/s Kapil Traders as on March 31, 2017
Liabilities
Amount
₹
Assets
Amount
₹
Debtors
80,000
Further Bad Debtors
(500)
New Provision on Debtors1
(2,385)
77,115
 
 
Note: In this problem, the old provision is more than the sum of bad debts, further bad debts and provision for doubtful debtors. So, it is considered on the Revenues/Gains side instead of the Expenses/Losses side.
Working Notes:
1. Provision for Doubtful Debts:
{= \text{(Sundry Debtors - Further Bad Debts)} × \dfrac{3}{100}}
{= (₹~80,000 - ₹~500) × \dfrac{3}{100}}
{= ₹~79,500 × \dfrac{3}{100}}
= ₹ 2,385