UNIT II Final Account College

UNIT-II
MBA- I Sem.
FINAL ACCOUNTS OF JOINT STOCK COMPANIES
Factors of Companies Final Accounts:
Generally in the final accounts we have to prepare following accounts.
(1) Trading Account, (2) Profit & Loss Account, (3) Profit & Loss Appropriation Account,
(4) Balance Sheet
TRADING ACCOUNT
For the year ending 31st December, 20.…
PARTICULARS Amount PARTICULARS Amount
To Opening stock ××× By Sale xxx
(Balance goods at the beginning (-) Sales return (Return
xxx
of year) inward)
ToPurchase ×××× → xxx
(-) Purchase Return (Return By Goods distributed freely as
××× xxx
outward) advertisement
→ ××× xxx
By Goods burned by fire xxx
To Wages and salary ××× By Goods stolen by thieves xxx
To Productive Wages ×××
To Direct wages ×××
To Manufacturing wages ×××
To Royalty ×××
To Carriage inward ×××
To Carriage expenses ×××
To Carting charges ×××
To Expenses on purchase ×××
To Production tax ×××
To Excise duty ×××
To Octroi/entry tax ×××
To Fuel and power ×××
To Steam power ×××
To Atomic Power ×××
To Gas and water ×××
To Electric power ×××
To Coal and coke ×××
To Motive power ×××
To Factory rent ×××
To Factory expenses(manufacturing exp.) ×××
To Railway freight ×××
To Salary of factory manager ×××
To Local taxes ××× By Closing Stock xxx
(Balance goods at the end of the
To Import tax ×××
year)
Final Account of Joint Stock Company (MBA-I Sem) By. Prof. Yogesh Dhoke Page 1
To Gross Profit (Transfer to By Gross Loss (Transfer to
××× ×××
Profit & Loss A/c.) Profit & Loss A/c.)
Total ××× Total xxx
PROFIT & LOSS ACCOUNT
(For the year ending 31st December 200__)
PARTICULARS AMOUNT PARTICULARS AMOUNT
To Salary ××× By Gross Profit ×××
To Salary and wages ××× (transfer from trading A/C)
To Unproductive wages ××× By Interest received ×××
To Indirect wages ××× By Rent received ×××
To Packing expenses ××× By Discount/Rebet received ×××
To Trading expenses ××× By Commission received ×××
To General expenses ××× By Dividend received ×××
To Sundry expenses ××× By Interest received on bank balance ×××
To Miscellaneous expenses ××× By Interest on investment ×××
To Travelling expenses ××× By Dividend received on investment ×××
To Carriage outward ××× By Interest received on employees
(carriage expenses on sale) provident fund investment
To Selling expenses ×××
To Interest paid ×××
To Rent paid ×××
To Discount paid ×××
To Commission paid ×××
To Dividend paid ×××
To Goods burned by fire ×××
(net loss by fire) ×××
To Goods distributed freely
for Advertisement
To Contribution to employees ×××
Provident fund ×××
To Insurance premium ×××
To Legal expenses ×××
To Sales tax ×××
To Depreciation of any assets ×××
To Repairing and ×××
maintenance
To Commission of selling ×××
agent
To Interest given on loan taken ×××
To Allowances to Directors
To Directors fee ×××
To Office exp./Administrative ×××
exp./Management expenses
To Office rent ×××
To Printing and stationery ×××
To Postage and telegram ×××
To Lighting bill ×××
To Telephone bill ×××
To Welfare expenses ×××
To Audit fees ×××
To Export Tax ×××
To Advertisement ×××
To Old bad debts ××× ×××
(+) New bad debts ×××
(+) New bad debts reserve ××××
×××
(-) Old bad debts reserve (-) ××× ×××
To Profit ××× By Loss ×××
(Transferred to Profit & Loss (Transferred to Profit &
Adjustment Account) Loss Adjustment Account)
×××× ××××
PROFIT AND LOSS ADJUSTMENT ACCOUNT

(For the year ending 31st December 200__)
PARTICULARS AMOUNT PARTICULARS AMOUNT
Loss ××× Profit ×××

(Transferred from Profit & (Transferred from Profit & ×××
Loss Account) Loss Account)
Interest on partners Capital ××× Interest on Cash drawing ×××
Salary of Partner's ×××
Commission of Partner's ×××
Net Profit:-
Sachin ×××
Saurabh ××× ×××
TOTAL ×××× TOTAL ××××
Balance Sheet
As on ______________________
Liabilities Amount (Rs.) Assets Amount (Rs)
1. Share Capital: 1. Fixed Assets:
(With all particulars Authorized I. Goodwill XXX
Capital) XXXX II. Land & Building XXX
Issued Capital XXXX III. Freehold Leasehold
Subscribed Capital, Called Up & Property XXX
Paid up Capital XXX IV. Plant & Machinery XXX
Less: Calls in Arrears XX V. Furniture, Fixture &
XXX Fittings XXX
Add: Forfeited Shares XXX VI. Patents & Trade
(Amount originally paid up) XXXX Marks XXX
VII. Live Stock XXX
2. Reserves & Surplus: VIII. Vehicles
I. Capital Reserve XXX XXX
II. Reserve Fund XXX 2. Investments :
III. Capital Redemption Reserve XXX I. Govt. Bonds or
IV. Debenture Sinking Fund XXX Securities XXX
V. Fluctuation Reserve XXX II. Investment in Shares
VI. Share Premium XXX & Debentures XXX
VII. Other Reserve XXX XXX III. Other Investments XXX
Less: Debit Balance of XXX
P&L A/c (if any)XXX 3. Current Assets, Loans &
Advances:
VIII. Profit & Loss Appro. A/c
XXX A) Current Assets:
3. Secured Loans: XXX I. Interest Incurred on
I. Debentures Investment XXX
II. Loans from Banks II. Loose Tools XXX
III. Loans form Subsidiary XXX III. Stock in Trades XXX
Companies XXX IV. Sundry Debtors XXX
Less: Provision for Bad
4. Unsecured Loans: XXX And Doubtful Debts XXX
I. Fixed Deposits XXX
II. Short Term Loans & XXX V. Outstanding income XXX
Advances: VI. Cash in Hand XXX
a) From Banks VII. Cash at Bank XXX
b) From others XXX
XXX B) Loans & Advances:
5. Current Liabilities & Provisions:
A) Current Liabilities: I. Advances & Loans to
I. Sundry Creditors XXX Subsidiaries XXX
II. Bills Payables XXX II. Bills Receivable XXX
III. Income received in advance XXX III. Prepaid Expenses XXX
IV. Unclaimed Dividend XXX IV. Security Deposits XXX
V. Other Liabilities XXX
VI. Outstanding Expenses XXX 4. Miscellaneous
Expenditure & Losses:
B) Provisions: (to the extent not written
I. Proposed Dividend XXX off or adjusted)
II. Provision for Taxation XXX I. Preliminary Expenses XXX
III. Provision for corporate Dividend II. Underwriting
Tax XXX Commission XXX
IV. Provident fund XXX III. Discount on Issue of
V. Other Provisions XXX shares & Debenture XXX
IV. Development
6. Contingent Liabilities: XXXX Expenditure on
adjusted XXX
V. Profit & Loss A/c
(Loss - if any) XXX
XXXXX XXXXX
IMPORTANT POINTS
(1) Problem will be given in two parts. The first part will be called as a trial balance and second
will be called as a adjustment.
(2) If any item given in the trial balance there will be only one entry of that item.
(3) If any item given in adjustment there will be minimum two entries. (In some cases entry will
be more than two)
(4) There will be two entries of secret adjustments.
(5) Stock
Opening Stock Closing Stock
(Balance goods at the beginning of year) (Balance goods at the end of the year) Closing
Opening stock will be given in the trial balance stock will be given in the adjustments and
and there will be only one entry of opening there will be following two entries of closing
stock as under. stock.
1. Trading account debit. 1. Trading account credit.
2. On assets side
(6) Drawing
Cash Drawing Drawing of goods
Cash drawing will be given in trial balance and Drawing of goods will be given in the
there will be only one entry of cash drawing as adjustment and there will be two entries as
under. under.
1. On libility side deduct from capital. 1. Trading account credit.
2. On liability side deduct from capital.
(7) Interest
Interest on capital Interest on Drawing
Interest on capital always calculated for a year Interest on drawing will be calculated for six
and there will be two entries as under. month and there will be two entries as under.
1. Profit and loss adjustment account debit. 1. Profit and loss adjustment account credit.
2. On liability side add in capital. 2. On liability side deduct from capital.
(8)
(a) Employees Provident Fund ……….. On liability side.
(b) Employees Provident Fund Investment …………. On assets side.
(c) Employees Provident Fund Contribution ………….. Profit and Loss A/C Debit.
(d) Interest on employees Provident Fund Investment ……….. Profit & Loss A/C Credit.
BAD DEBT
(9) Bad debt Reserve
If bad debt and bad debt reserve given in trial If bed debt and bad debt reserve given in
balance it will be called old. And there will be adjustment it will be called new and there will
only one entry as under. be only two entries as under.
1. Profit & Loss A/C debit. 1. On assets side.
2. Profit & Loss A/C debit.
(10) If market price and cost price of closing stock is given in that case we have consider lower
price, don’t take any entry of higher price.
(11) Items to be find out. TRIAL BALANCE
Sr. No. Particulars Debit Credit

1. Purchase / Sale 50,000 (Purchase) 50,000 (Sale)
2. Returns goods 600 (Sales return) 500 (purchase return)
(return inward) (return outward)
3. Debtors / Creditors 1,000 (Debtors) 4,000 (creditors)
4. Bills 1,000 (bills receivable) 2,000 (bills payable)
5. Interest, Rent, Commission and 500 (Paid up) (Profit and 600 (received) (Profit and
Discount loss account debit) loss account credit)
6. Loan, debentures, Bonds and 5,000 (This loan given to 6,000 (This loan taken from
deposits others write down on others therefore write
assets side) down on liability side)
(12) If following items are given in adjustments entries will be as under.
Sr. No. Particulars 1st Entry 2nd Entry

1. Any Unpaid Expenses (unpaid wages, On debit side of Trading or Profit & On Liability
unpaid rent, unpaid salary) Loss Account add in respective item. side
2. Any prepaid expenses (prepaid On debit side of Trading or Profit & On Assets
wages, prepaid rent, prepaid salary) Loss Account deduct from respective side
items.
3. Any un-received income (Un- On Credit side of Profit & Loss account On Assets
received interest, un-received rent, add in respective items. side
un-received discount)
4. Any pre-received income (pre- On Credit side of Profit and Loss On Liability
received interest, pre-received rent) account deduct from respective items. side
(13) If following items given in trial balance there will be following only entry will be made.
Sr. No. Particulars Entry

1. Any unpaid expenses (unpaid wages, unpaid rent and unpaid salary) On Liability side
2. Any Prepaid expenses (prepaid wages, prepaid rent, and prepaid salary) On Assets side
3. Any Un-received Income (un-received interest, Un-received rent and un- On Assets side
received discount)
4. Any Pre-received Income (pre-received interest, pre-received rent) On Liability side
(14) Unpaid expenses, Prepaid expenses, Un-received income and pre-received income.
If above item given in the adjustment there will If above item given in trial balance there will be
be two entries of each item. As per table no. 13. only one entry of each item. As per table no. 14.
(15) Effect of adjustments:
Sr. No. Adjustments 1st Entry 2nd Entry

1. Closing stock On credit side of Trading On Assets side.
account.
2. Outstanding Expenses Add to particulars expenses Show under the head Current
on Debit side of trading or Liabilities.
P&L A/c.
3. Outstanding Income or Income Add to particular Income Show under the head Current
Accrued on Credit side of P&L A/c. Assets.
4. Pre paid Expenses Deduct from particulars Show under the head Loan
expenses on Debit side of and Advances.
P&L A/c.
5. Income Received in Advance Deduct from particulars Show under the head Current
Income on Credit side of Liabilities.
P&L A/c.
6. Depreciation Fixed Assets Show as n expenditure on Deduct from particular assets
Debit Side of P & L A/c. under the head Fixed Assets.
7. Write off Preliminary Expenses Show the amount of Reduce from Preliminary
written off as expenditure Expencess under the Head of
on Debit side of P & L A/c. Misc. Exp. & Losses.
8. Outstanding Interest on Add to Interest paid on Add to Debentures under the
Debenture or Interest accrued Debenture on Debit side of Head of Secured Loan
& due P & L A.\/c
9. Provision of Taxation Debit Side on P & L A/c. Show under the head of
Provisions
10. Commission or Remuneration Show as an expenditure on Show under the head Current
of Managing Director Debit side of P & L A/c Liabilities.
11. Wages includes installation Deduct form Wages on Add to Machinery under the
charges of Machinery Debit side of Trading A/c head Fixed Assets.
12. Provision for Corporate Debit side on P & L Appro. Show under the head of
Dividend Tax A/c Provisions.
13. Directors declared dividend or Debit side on P & L Appro. Show under the head of
Proposed Dividend A/c Provisions.
14. Provisions for Dividend Debit side on P & L Appro. Show under the head of
A/c Provisions.
Note: Dividend is always
calculated on Paid up capital.
15. Transfer to Reserve Fund/ Debit side on P & L Appro. Add to particular Reserve
Redemption Reserve/Dividend A/c under the head Reserve &
Equalization Reserve/ Surplus.
Investment Fluctuation Reserve
16. Transfer to Staff Provident Debit Side of P & L A/c Add to Staff provident Fund
Fund under the head Provisions.
17. Provisions for Bad & Doubtful Show in Debit side of P & L Deduct the new provisions
Debts A/c as under: from Debtors Under the head
Bad Debts XXX of Current Assets.
Add: Provision for Bad &
Doubtful Debts(New) XXX
XXX
Less: Existing Provision for
Bad & Doubtful Debts XXX
XXX
18. Goods purchased but not Add to purchase on Debit Add to Creditors under the
recorded side Trading A/c. head of Current liabilities
19. Forfeiture of shares not Debited to Share Capital Credited to Forfeited Share
Recorded. A/c. A/c.
III) Credited to Calls-in-Arrears
A/c.
20. Term loan from bank is secured No separate entry is to be Write as a note under
by hypothecation of fixed made. Secured Bank Loan.
assets of the Company.
21. Debtors of Rs ___________ are Classify Debtors under the Other debts
outstanding for more than Six head of current assets
months. Due for more than 6
months.
22. Market value of Investments It is shown into bracket under such investment
23. I. Workmen’s claim under
dispute
II. Discounted Bills not matured
III.Claims against the company These are Contingent Liabilities.
not acknowledged as debts.
IV.Arrears of Dividend on
Preference Shares
Problems of Company Final Account
Problem: 1. From the following balances of Paresh India Trading Co. Ltd. Prepare Trading
and Profit & Loss A/c for the year ended 31-03-2012:
Particulars (Rs.)
Opening Stock 60,000

Purchase 2,40,000
Sales 3,80,000
Purchase Return 10,000
Sales Return 20,000
Interest on Investment 12,000
Salary 20,000
Audit Fees 10,000
Wages 50,000
Director’s Fees 15,000
Printing and Stationary 12,000
Buildings 80,000
Bad Debts 10,000
Plant and Machinery 2,00,000
Insurance 25,000
General Reserve 40,000
Freight 15,000
Additional Information:
1. Closing Stock Rs. 1,20,000
2. Charge depreciation 10% on Building.
3. Transfer Rs. 20,000 to Reserve Fund.
(G.P.Rs. 1,25,000; N.P. Rs. 37,000)
Solution:
In the Books of Paresh India Trading Co. Ltd.
Trading and Profit & Loss A/c
For the year ended 31-03-2012
Particulars (Rs.) Particulars (Rs.)
To Opening Stock 60,000 By Sales
To Purchase 2,40,000 3,80,000
Less: Pur. Return 10,000 Less: Sales Return 20,000 3,60,000
2,30,000
To Wages 50,000
To Freight 15,000
To Gross Profit c/d 1,25,000 By Closing Stock 1,20,000
4,80,000 4,80,000
To Salary 20,000 By Gross Profit b/d 1,25,000
To Audit fees 10,000 By Interest on Investment 12,000
To Director’s fess 15,000
To Printing & Stationary 12,000
To Insurance 25,000
To Bad debts 10,000
To Depreciation on Building 8,000
To Net Profit (Carried to P&L
Appro. A/c) 37,000
1,37,000 1,37,000
Problem: 2. From the information, prepare Trading and Profit & Loss A/c of Hind Flour
Mills Ltd. for the year ended 31st March, 2012:
Debit Balances Amount Credit Balance Amount
Stock on 1-4-11: 95,000 Sales of Flour 55,50,000

Wheat 1,60,000 Rent 4,000
Flour 25,000 Unclaimed Dividend 9,000
Rates & Taxes 57,000 Provision for R.D.D. 10,000
Insurances 2,50,000
Miscellaneous Expenses 4,30,000
Wages & Salaries 50,000
Provident Fund Contribution 1,00,000
Staff Welfare Expenses 3,21,000
Book Debts 1,96,000
Advance Tax 40,50,000
Wheat Purchases 75,000
Power & Fuel 2,20,000
Store Consumed 2,000
Directors Fees
Managing Directors 80,000
Remuneration
Adjustments:
1. Stock on 31st March, 2012 were:
Wheat Rs. 1,49,000
Flour Rs. 2,17,000
2. Outstanding : Wages & Salaries Rs. 56,000
Miscellaneous Expenses Rs. 20,000
Rates & Taxes Rs. 5,000
3. Insurance Prepaid Rs. 7,000.
4. Make a provision for Reserve for Bad and Doubtful debts @ 5% on Book Debts.
(G. P. Rs. 8,30,000; N . P. Rs. 2,45,950)
Problem: 3. From the following figures, prepare Balance Sheet of Apurva Co. Ltd. as on 31 st
March, 2012:
Particulars Rs.
Equity Share Capital 1,50,00,000
General Reserve 16,26,000
Calls in Arrears 2,30,600
Share Premium 20,46,000
Dividend Equalisation Fund 2,50,000
Profit & Loss A/c (Cr.) 17,16,314
14% Debenture 96,00,000
Creditors 34,52,000
Debtors 37,87,000
Plant & Machinery 1,46,00,000
Furniture 10,71,000
Investments 50,36,200
Preliminary Expenses 10,16,000
Stock (31-03-2012) 96,00,000
Cash in hand and at Bank 45,38,400
I. Provide depreciation on Plant & Machinery @10% p.a. and on Furniture @ 5% p.a.
II. Reserve for Doubtful Debts is to be kept at 2% on debtors.
III. Interest on debenture due for whole year.
IV. Interest on Investment Rs. 4,02,896 is receivable for the year.
V. Provide for dividend @ 18% on paid up capital.
VI. Provide Rs. 10,00,000 for payment of Tax.
VII. Apurva Co. Ltd. has an authorized capital or Rs. 5 crores divided into 50,00,000
equity shares of Rs. 10 each.
(Total B/s Rs. 3,84,62,206)
Solution:
Balances Sheet of Apurva Co. Ltd.
As on 31st March, 2012
Liability (Rs.) Assets (Rs.)
Authorised Capital Plant & Machinery
(50,00,000 Equity 1,46,00,000
Shares of Rs. 10 Each) 5,00,00,000 Less: Dep. 14,60,000
Issued & subscribed 1,31,40,000
Capital (15,00,000 shares Furniture 10,71,000
of Rs. 10 each) 1,50,00,000 Less: Dep. 53,550
Called & Paid up capital 10,17,450
1,50,00,000 2. Investments 50,36,200
Less: Arrears 2,30,600 3. Current Assets, Loans
1,47,69,400 & Advances:
2. Reserve & Surplus: (a) Current Assets:
Share Premium 20,46,000 Debtors 37,87,000
General Reserve 16,26,000 Less: R.D.D. 75,740
Dividend Equilisation 37,11,260
fund 2,50,000 Closing Stock 96,00,000
Profit & Loss A/c 17,16,314 Cash in Hand & in Bank 45,38,400
(b) Loans & Advances:
3. Secured Loans: Interest Receivable 4,02,896
14% Debenture 96,00,000
Add: O/s. Int. 13,44,000 4. Miscellaneous
1,09,44,000 Expenditure & Losses:
4. Unsecured Loans: - Preliminary Expenses 10,16,000
5. Current Liabilities &
Provisions:
(a) Current Liability
Creditors 34,52,000
(b) Provision:
Provision For dividend 26,58,492
Provision For Tax 10,00,000
3,84,62,206 3,84,62,206
Problem: 4. Vidarbha Food Products Ltd. has an authorized capital of Rs. 10,00,000 divided
into 10,000 equity shares of Rs. 100 each. The following balances are extracted from the
books of account for the year ended 31st March, 2011:
Particulars Amount (Rs.)
Buildings 7,70,900
Furniture 48,300
Preliminary Expenses 14,000
Subscribed Capital (Rs. 100 each) 6,00,000
Provision for Taxation 1,80,600
Sundry Creditors 1,40,300
Bank Loan (unsecured) 2,00,000
Loan to Director 1,20,000
Closing Stock 2,17,400
Sundry Debtors 1,56,400
Investment in Shares 1,50,000
Cash and Bank Balances 35,300
Profit & Loss Appropriation A/c (Cr. balance) 18,900
Outstanding Expenses 27,200
Debenture 1,80,000
Unclaimed Dividend 20,000
st
Prepare Balance Sheet as on 31 March, 2011 after taking into account the following
information:
1. Depreciation upto 31st March, 2011 on Buildings amounts Rs. 1,70,500 and Furniture
Rs. 10,700.
2. On 1st July, 2010 the company issued Bonus Shares of the face value of Rs. 1,00,000
to the shareholders.
3. During the year loan was made to a Director of the company of Rs. 1,50,000 of which
he repaid Rs. 30,000 on 31st March, 2011.
4. Sundry Debtors include Rs. 2,000 for call in arrears.
(Total B/s Rs. 15,15,000)
Problem: 5.The Bajaj Mfg. Co. Ltd. was registered with a authorised capital of Rs.
30,00,000 in equity shares of Rs. 10 each. The following is the list of balances extracted
fromits books on 31st March 2012:
Particulars Amount (Rs.)
Calls in Arrears 37,500
Building 15,00,000
Plant & Machinery 16,50,000
Interim dividend paid on 1st Nov.2011 1,96,250
Opening Stock 3,75,000
Furniture 36,000
Goodwill 1,25,000
Cash in Hand 3,750
Cash at Bank 1,99,500
Purchasers 9,25,000
Direct Wages 4,19,325
Return Inwards 20,000
General Expenses 34,175
Freight &Carriage 65,575
Indirect Wages 72,500
Directors Fees 28,625
Bad Debts 10,550
Interest paid on Debentures 90,000
Share Capital (each Rs. 10) 20,00,000
12% Debentures 15,00,000
Profit & Loss Account (Cr.) 1,31,250
Bills Payable 1,85,000
Sales 20,75,000
Provision for Bad Debts (1st April, 2011) 17,500
Return Outwards 15,000
Prepare Trading and Profit & Loss A/c and Balance Sheet after making the following
adjustment:
1) Depreciate Plant & Machinery by 15%.
2) Write off Rs. 2,500 from Preliminary Expenses.
3) Provide for half years debentures interest due.
4) Make a provision for Bad & Doubtful debts at 5% on Sundry Debtors.
5) Provide for Income – Tax @ 50%.
6) Stock on 31st March, 2012 was Rs. 4,74,900.
(G. P. Rs.7,60,000; N.P. Rs. 89,950; Cr. Balance of App. A/c Rs. 24,950, Total B/s Rs.
41,72,400)
Solution:
In the Books of Bajaj. Mfg. Co. Ltd.
For the year ended 31st March, 2012
To Opening Stock 3,75,000 By Sales 20,75,000
To Purchase 9,25,000 Less: Return I/W. 20,000
Less Return O/W 15,000 20,55,000
9,10,000
To Direct Wages 4,19,325
To Freight & Carriage 65,575
To Gross Profit c/d 7,60,000 By Closing Stock 4,74,900
25,29,900 25,29,900
To General Expenses 34,175 By Gross Profit b/d 7,60,000
To Indirect Wages 72,500
To Directors Fees 28,625
To Int. on Debt, 90,000
Add: O/s Interest 90,000
1,80,000
To Depreciation on Plant &
Machinery 2,47,500
To Preliminary Expenses
written off 2,500
To Bad Debts 10,550
Add: New R.D.D. 21,750
32,300
Less: Old R.D.D. 17,500
14,800
To Provision for Income Tax
(50% of Rs. 1,79,900) 89,950
To Net Profit c/d 89,950
7,60,000 7,60,000
Profit & Loss Appropriation A/c

To Interim Dividend 1,96,250 By Balance b/f 1,31,250
To Balances carried to B/S 24,950 By Net Profit of Current year
b/d 89,950
2,21,200 2,21,200
Balance Sheet of Bajaj Mfg. Co. Ltd.
As on 31st March, 2012
Authorised Capital Goodwill 1,25,000
(3,00,000 Equity Plant & Machinery
Shares of Rs. 10 Each) 30,00,000 16,50,000
Issued & subscribed Less: Dep. 2,47,500
Capital (2,00,000 shares 14,02,500
of Rs. 10 each) 20,00,000 Building 15,00,000
Called & Paid up capital Furniture 36,000
20,00,000
Less: Arrears 37,500 2. Investments -
19,62,500 3. Current Assets, Loans &
2. Reserve & Surplus: Advances:
General Reserve 1,20,000 (c) Current Assets:
Profit & Loss A/c 24,950 Cash in hand 3,750
Cash at Bank 1,99,500
3. Secured Loans: Closing Stock 4,74,900
12% Debenture 15,00,000 Debtors 4,35,000
Add: O/s. Int. 90,000 Less: R.D.D. 21,750
15,90,000 4,13,250
4. Unsecured Loans: - (d) Loans & Advances: -
Provisions: 4. Miscellaneous
(c) Current Liability Expenditure & Losses:
Sundry Creditors 2,00,000 Preliminary Exp. 20,000
Bills Payable 1,85,000 Less: Written off 2,500
(d) Provision: 17,500
Provision For Income Tax
89,950
41,72,500 41,72,500
Problem: 6. Following is the Trial Balance of Sunny Co. Ltd. as on 31st March, 2009:-
Particulars Dr. (Rs.) Cr. (Rs.)
Stock on 31st March, 2008 55,800

8% Government Bonds 93,000
Interest on Government Bonds 3,720
Buildings 2,79,000
Interim dividend Paid 18,600
Purchase & Sales 186,000 3,34,800
Carriage inwards 2,790
Carriage Outwards 1,488
Returns 9,300 7,440
Productive Wages 37,200
Salary 9,300
Transfer Fees 1,860
Unproductive Wages 9,300
Trade Expenses 3,720
Bank Loan 1,02,300
Discount 2,232 1,860
Rent 3,069
Debentures Redemption Fund 18,600
Capital (3,720 shares of Rs. 100 each) 3,72,000
Calls in arrears 3,720
Sundry Debtors & Creditors 93,000 37,758
Profit & Loss A/c (1st April,2008) 22,320
Advertisement 1,488
Commission 2,232
10% Debenture 93,000
Interest paid on Debentures 4,650
Cash 10,416
9,97,890 9,97,890
Prepare Trading and Profit & Loss A/c for the year ended 31-03-2009 and Balance
Sheet as on that date after making the following adjustments:
(1) Stock as on 31st March, 2009 was Rs. 70,000.
(2) One month’s rent @ Rs. 3,348 p.a. was due on 31st March, 2009.
(3) Insurance was paid on 1st October, 2008 to run for one year Rs. 2,000.
(4) Provide @ 5% for discount on debtors & creditors.
(5) Transfer Rs. 5,000 to Debentures Redemption Fund.
(6) Provide depreciation on Building on @ 9% p.a.
(G. P. Rs. 1,17,430; N.P. Rs. 56,892; Cr. Balance of App. A/c Rs. 55,612, Total B/s Rs.
6,83,591)
Solution:
In the Books of Sunny Co. Ltd.
For the year ended 31st March, 2009
To Opening Stock 55,800 By Sales 3,34,800
To Purchase 1,86,000 Less: Return I/W. 9,300
Less Return O/W 7,440 3,25,500
1,78,560
To Productive Wages 37,200
To Trade Expenses 3,720
To Carriage Inward 2,790 By Closing Stock 70,000
To Gross Profit c/d 1,17,430
3,95,500 3,95,500
To Salary 9,300 By Gross Profit b/d 1,17,430
To Unproductive Wages 93,00
To Rent 3,069 By Discount 1,860
Add: O/s Rent 279 Add: Dis. Receivable 1,888
3,348 3,748
To General Exp. 10,602 By Int. on Govt. Bonds 3,720
Less: Prepaid Insurance 1,000 Add: Accrued Int. 3,720
(for 6 Months) 9,602 7,440
By Transfer fees 1,860
ToDebt. Int. paid 4,650 By Commission 2,232
Add: O/s Interest 4,650
9,300
To Depreciation on Building 25,110

To Discount 2,232
Add: Dis. payable4,650
6,882
To Carriage Outward 1,488
To Advertisement 1,488
To Net Profit c/d 89,950
1,32,710 1,32,710
Profit & Loss Appropriation A/c

To Interim Dividend 18,600 By Balance b/f 22,320
To Transfer to Debenture By Net Profit of Current year
Redemption Fund 5,000 b/d 56,892
To Balances carried to B/S 55,612
78,212 79,212
Balance Sheet of Sunny Co. Ltd.

As on 31stMarch, 2009
Authorised Capital, Building 2,79,000
Issued & subscribed - Less: Dep. 25,110
Capital 2,53,890
Called & Paid up capital Plant & Machinery 1,63,215
3,72,000
Less: Arrears 3,720 2. Investments
3,68,280 8% Government Bonds 93,000
2. Reserve & Surplus: 3. Current Assets, Loans &

Debenture Redemption Advances:
Fund 18,600 (a) Current Assets:
Add: Transfer 5,000 Closing Stock 70,000
23,600 Sundry Debtors 93,000
Profit & Loss A/c 55,612 Less: Dis. Payable 4,650
88,350
3. Secured Loans: Cash 10,416
Bank Loan 1,02,300 Accrued Interest on
10% Debenture 93,000 Government Bonds 3,720
Add: O/s. Int. 4,650
97,650 (b) Loans & Advances:
4. Unsecured Loans: - Prepaid Insurance 1,000
Provisions: 4. Miscellaneous
Sundry Creditors 37,758 Expenditure & Losses: -
Less: Dis. Rec. 1,888
35,870
Rent due 279
6,83,591 6,83,591
Problem: 7. Following is the trial balance of ABC Ltd. as on 31st March, 2012:
Land and Buildings (Cost Rs. 3,00,000) 1,40,000

Share Capital 2,00,000
Furniture (Cost Rs. 15,000) 8,000
Plant & Machinery (Cost Rs. 2,00,000) 1,00,000
Stock (31-03-2012) 1,28,000
Salaries 8,000
8% Debenture 1,00,000
Printing & Stationary 1,200
Bank Overdraft 1,500
Creditors 14,800
Share Premium 10,000
Debenture Redemption Fund 40,000
Gross Profit 1,04,000
Debtors 70,000
Profit & Loss A/c (1-4-2011) 8,500
Investments 6,000
Cash in hand 2,000
Cash at Bank 24,000
Advance Income Tax 8,000
Debenture Interest (Less tax at 30%) 2,800
Rent, Rates & Insurance 2,800
5,08,800 5,08,800
Prepare Profit & Loss A/c, Profit & Loss Appropriation A/c for the year ended 31 st
March, 2012 and the Balance Sheet as on that date after considering the following
adjustments:
1) Depreciation: Land and Buildings at 5% on cost.
Furniture, Plant and Machinery at 10% on cost.
2) Provision for Reserve for Doubtful Debts Rs. 6,000 is to be made.
3) Authorized share capital consists of 1,00,000 equity shares of Rs. 10 each of which
40,000 shares are issued and subscribed, of which Rs. 5 per share is paid.
4) Provide Rs. 2,500 for Audit fees.
5) Transfer Rs. 4,000 to General Reserve.
6) Dividend at 8% is declared on paid up capital.
7) Half of the preliminary expenses are to be written off.
8) Make a provision for Taxation Rs. 10,000.
(N.P. Rs. 23,000; Cr. Balance of App. A/c Rs. 11,500, Total B/s Rs. 4,45,500)
Problem: 8. Mahendra Co. Ltd. has an authorised capital of Rs. 5 crores divided into
50,00,000 equity shares of Rs. 10 each. Company has issued 15,00,000 shares and all the
amount on them has been called up.
Following is the Trial Balance of the company as on 31st March, 2011:
Stock (1-4-2010) 93,73,700

Purchase 2,25,00,000
Wages 70,00,000
Discount allowed and Insurance 64,400
Salary and Bonus 39,78,000
Rent 1,48,000
General Expenses 15,13,600
Preliminary Expenses 10,16,000
Debtors 37,87,000
Plant and Machinery 1,46,00,000
Furniture 10,71,000
Cash in Hand and At Bank 45,38,000
Bad Debts 15,500
Calls in Arrears 2,30,600
Inward Carting 1,00,000
Freight on Sales 50,000
Sales 4,25,00,000
Profit & Loss A/c 4,62,200
Debentures 96,00,000
Creditors 34,52,000
Dividend Equilisation Fund 2,50,000
Equity Share Capital 1,50,00,000
Reserve for Doubtful Debts 86,200
Share Premium 20,46,000
7,50,22,400 7,55,22,400
Prepare Trading and Profit & Loss Account for the year ended 31st March, 2011 and
Balance Sheet as on that date after considering the following information:
1. Closing Stock was valued at Rs. 96,00,000
2. Provide depreciation on Plant & Machinery @10% p.a. and on Furniture @ 5% p.a.
3. Reserve for Doubtful Debts is to be kept at 2% on Debtors.
4. Interest on Debenture at 14% p.a. is due for the whole year.
5. Interest on Investment Rs. 4,02,896 is receivable for the year.
6. Provide for dividend @ 18% on paid up capital.
7. Provide Rs. 10,00,000 for payment of tax.
(G. P. Rs.1,31,26,300; N.P. Rs. 39,12,606; Cr. Balance of App. A/c Rs. 17,16,314, Total
B/s Rs. 3,84,62,206)
Problem: 9. Sangam Co. Ltd., Nagpur has an authorised and subscribed capital divided into
equity shares of Rs. 100 each. The following is the trial balance of the company on 31st
March, 2013:
Following is the trial balance of the company as on 31st March 2013:
Land & Buildings 3,40,000
Loose Tools 40,000
Furniture 29,000
Cash in Hand 2,000
5% Govt. Bonds (Tax Free)(Face value Rs. 40,000) 36,000
Bills Receivable 58,000
Goodwill 36,000
Motor cars 40,000
Sundry Debtors 83,000
Interim Dividend 18,000
Repairs 3,000
Reserve Fund 60,000
Profit & Loss A/c (1-4-2012) 35,400
Purchases and Return Outwards 9,60,000 20,000
Return Inward & Sales 28,000 12,30,000
Advertisement 10,000
Audit fees 4,000
Carriage Inward 15,000
Wages 92,000
Insurance 20,000
Stock (1-4-2012) 1,90,000
6% Debentures (Rs. 1,000 each) 4,00,000
Interest on Debentures (Gross) 12,000
27,19,000 27,19,000
Prepare Trading, Profit & Loss and Profit & Loss Appropriation Account for the year
ended 31st March, 2013 and Balance Sheet as on that date taking into consideration on the
following adjustments:
1) Stock on 31st March 2013 was valued at Rs. 1,80,000.
2) Reserve for Bad Debts is to be provided at 5% on Sundry Debtors.
3) Depreciation is to provided on Plant & Machinery at 5%, on Furniture at 10%, on
Motor car at 20% and Loose Tools at 15%.
4) Prepaid Insurance Rs. 2,000.
5) Reserve Fund is to be increased by Rs. 10,000.
6) Directors declared on 31-12-2013 an Interim dividend for six months ending 30th
Sept. 1999 at the rate of 3%.
7) Wages Outstanding Rs. 3,000.
8) Provide for Interest on Debenture for 6 months.
9) Provision for Taxation is to be made at 50% on net profit.
(G. P. Rs.1,42,000; N.P. Rs. 6,975; Cr. Balance of App. A/c Rs. 8,555; Total B/s Rs.
14,73,950)
Problem: 10.The following balances appeared in the books of the Moon Light Co.Ltd. as on
31st March, 2013:

Issued, Subscribed and Paid up capital 60,000 Equity Shares
of Rs. 10 each 6,00,000
Unclaimed Dividend 6,525
Trade Creditors 36,858
Building at cost 1,50,000
Purchases 5,00,903
Sales 10,83,947
Manufacturing Expenses 3,59,000
Establishment charges 26,814
General charges 31,078
Machinery at cost 2,00,000
Motor Vehicle at cost 30,000
Furniture at cost 5,000
Opening Stock 1,72,058
Book Debts 2,23,380
Depreciation Reserve 71,000
Advance payment of Income Tax 50,000
Cash in Hand 72,240
Director’s fees 1,800
Interest on Investment (Gross) 8,544
Profit & Loss Account (1st April, 2012) 16,848
Staff Provident Fund 37,500
21,11,223 21,11,223
Balance Sheet as on that date, after making the following adjustments:
1. The stocks on 31-03-2013 were valued at Rs. 1,48,680.
2. Provided Rs. 10,000 for depreciation on fixed assets, Rs. 6,500 for Managing
Directors remuneration and Rs. 1,500 for the company’s contribution to the Staff
Provident Fund.
3. Interest accrued on Investment amounted to Rs. 2,750.
4. A provision of Rs. 60,000 for taxes in respect of the profit for 2012-13 in considered
necessary.
5. The Directors proposed a final dividend @4% after transfer to General Reserve. Rs.
50,000
6. A claim of Rs.3,000 for workmen’s compensation is being disputed by the company.
7. The market value of Investments as on 31-03-2013 amounts to Rs. 3,02,500.
8. Provide Corporate Dividend Tax @ 10%.
10,90,000)
Problem: 11. Mahesh Auto Parts Manufacturing Co. Ltd. was registered with nominal
capital of Rs. 10,00,000 divided into shares of Rs. 10 each, of which 40,000 shares had been
issued and fully called.
The following Trial Balance extracted on 31st March, 2012.
Stock (1st April, 2011) 1,86,420

Manufacturing Wages 19,240
Purchase & Sales 7,18,210 11,69,900
Machinery Repairs 8,610
Carriage Inward 4,910
Carriage Outward 9,260
Bank Loan (at 18%) 50,000
Interest on Bank Loan 4,500
Debtors and Creditors 1,64,400 92,220
Profit and Loss Account (1st April,2011) 8,640
Bank Current A/c 1,06,860
Cash in Hand 1,920
Leasehold Factory 1,64,210
Loose Tools 12,500
Electricity (Factory Rs. 14,210; Office Rs. 3,400) 17,610
Directors Remuneration 12,000
Office Salaries and Expenses 13,000
Auditors Fees 1,250
Office Furniture 5,000
Commission 8,640
Returns 12,640 9,810
Transfer Fess 40
17,30,610 17,30,610
You are required to Prepare Trading and Profit & Loss Account for the year ended 31st
March, 2012 and a Balance Sheet as on that date after taking into consideration the following
adjustments:
(1) Write off one third Preliminary Expenses.
(2) Depreciation is to be provided on Plant & Machinery @ 15% and Office Furniture @
10%.
(3) Manufacturing Wages Rs. 1,890 and Office Salaries Rs. 1,200 had accrued due.
(4) Provide for interest on Bank Loan for 6 Months.
(5) The stock was valued at Rs. 1,24,840 and Loose Tools at Rs. 10,000 on 31st March,
2012.
(6) Provide Rs. 8,500 on Debtors for Doubtful Debts.
(7) Provide further RS. 3,120 for discount on Debtors.
(8) Make a provision for income tax @ 50%.
(9) The Directors recommended Divided at 15% for the year ending 31st March, 2012,
after a transfer of 5% of net profits to General Reserve.
6,92,540)
Problem 12. Gujarat Trading Co. Ltd. was registered with nominal capital of Rs. 12,00,000
divided into equity shares of Rs. 10 each. The following are the balances extracted from its
books on 31st March, 2013:
Particulars (Rs.)
Premises 7,50,000
Interim Dividend Paid on 30-10-2012 40,000
Furniture 15,000
Goodwill 25,000
Debtors 85,000
Stock on 1-04-2012 72,000
Share Brokers Commission 6,000
Purchases 1,90,000
Carriage 15,000
Sundry Expenses 12,000
Salary 18,000
Bad Debts 2,500
Debenture Interest Paid 12,000
Subscribed and Called up Capital 8,00,000
Profit & Loss A/c (Cr. Balance) 20,000
Bills Payable 35,000
Sales 6,50,000
Creditors 22,000
Bad Debts Reserve (1-4-2012) 4,000
Cash in Hand 10,000
You are required to Prepare Trading and Profit & Loss Account for the year ended 31st
March, 2013 and a Balance Sheet as on that date after taking into consideration the following:
1) Stock on 31st March 2013 was valued at cost Rs. 1,50,000 (Market Value 1,60,000).
2) Depreciate Plant and Machinery at 10%, Premises at 5% and Furniture at 10% p.a.
3) Write off half of Share Brokers Commission.
4) Provide for bad debts at 5% on Debtors.
5) Goods distributed as free samples not recorded Rs. 10,000
6) Goods destroyed by fire Rs. 15,000. Insurance Company admitted a claim of Rs.
10,000 only.
7) Transfer Rs. 15,000 to General Reserve.
8) Directors propose to pay final dividend at 10%.
9) Make a provision for Taxation Rs. 50,000.
10) Bills discounted not yet matured Rs. 8,000.
(G. P. Rs.5,48,000; N.P. Rs. 3,08,250; Cr. Balance of App. A/c Rs. 1,94,100; Total B/s Rs.
16,53,750)
Problem 13.Following are the balances as on 31st March, 2013 in the books of Mittal
Trading Co. Ltd.
Opening Stock 95,200

Purchases 4,70,000
Land and Building 1,86,000
Machinery 3,31,200
Loose Tools 18,800
Furniture 7,200
Sales 6,01,600
Cash 1,000
5% Government Bonds 19,760
Motor 26,000
Goodwill 32,000
Debtors 41,600
Advertisement 5.080
Audit fees 2,000
Creditors 61,200
Reserve Fund 30,000
Profit & Loss A/c 17,600
Bank Overdraft (borrowed on 1-4-2013) 14,000
R.D.D 2,360
Wages and Salaries 53,800
Insurance 9,800
Repairs 1,720
Interim Dividend (30th September) 6,000
Sundry Receipts 6,000
13,32,760 13,32,760
Adjustments:
(1) Closing Stock was of Rs. 1,08,400.
(2) R.D.D. shall be 5% on debtors.
(3) Depreciate Machinery 5%, Furniture 7.5%, Loose Tools 10%, Motor 20%.
(4) Debenture interest is to be provided for.
(5) Interest @ 9% p.a. is payable on bank overdraft.
(6) Write Off Preliminary expenses in full.
(7) General Expenses outstanding are Rs. 2,400.
(8) Directors propose final dividend @6%.
Prepare Final Accounts of the company.
(G. P. Rs.91,000; N.P. Rs. 22,373; Cr. Balance of App. A/c Rs. 9,973; Total B/s Rs.
7,53,888)
Problem 14. Following balances were extracted from the books of Mahindra Ltd., for the
year ended 31st March 2010.
Particulars Dr. (in Rs.’000 ) Cr. (in Rs.’000)

Statutory Reserve (development rebate reserve) 1,350
Plant (W.D.V.) 15,000
Furniture (W.D.V.) 4,000
Lorries (W.D.V.) 8,000
Sundry Creditors 11,000
Share Forfeiture A/c 500
Selling Expenses 10,000
Rent and Taxes 8,000
Administrative Expenses 11,000
Legal Expenses 1,000
Gross Profit 54,150
Payments under V.R.S 2,000
Cash with H.O and Branches 2,500
Bank Balance 27,500
Security Deposits 4,000
Liabilities for Expenses 3,500
Secured Loans 25,000
Closing Stock 35,000
11,97,000 11,97,000
The following particulars are available:

i) Share capital comprises of 5,000 equity shares of Rs.10 each, fully called up and
500 8% preference shares of Rs. 100 each fully called up.
ii) Statutory Reserve and Profit & Loss Account balances are those of 31-3-2009.
iii) Rs. 900 is to be transferred to Statutory Reserve.
iv) Secured loans are secured by hypothecation of stock.
v) The Managing Director is entitled to receive 5% of the net business profit, prior to
charging of such commission as his commission.
vi) Charge depreciation @15 % on Plant, 10% on Furniture and 20% on Lorries.
vii) Provide Rs.7,608 for Taxation.
viii) Recommendation for payment of dividend on preference shares has been made.
You are required to Profit & Loss A/c for the year ended 31st March, 2010 and the
Balance Sheet as on that date.
(N.P. Rs. 9,297; Cr. Balance of App. A/c Rs. 5,897; Total B/s Rs. 1,60,750)
Problem 15.The following are the Trial Balance of Bosch Ltd. as on 31st March 2011:
Debit Balance Rs. Credit Balance Rs.

Stock as on 1-4-2010 75,000 Purchase Return 10,000
Purchases 2,45,000 Sales 3,40,000
Wages 30,000 Discount 3,000
Carriage 950 Profit & Loss A/c 15,000
Furniture 17,000 Share Capital 1,00,000
Salaries 7,500 Creditors 17,500
Rent 4,000 General Reserve 15,500
Sundry Trade Expenses 7,050 Bills Payable 7,000
Dividend Paid 9,000
Debtors 27,500
Plant and Machinery 29,000
Cash at Bank 46,200
Patents 4,800
5,08,000 5,08,000
the Balance Sheet as on that date after considering the following adjustments:
1) Stock as on 31st March, 2011 Rs. 88,000.
2) Provide for Income Tax at 50%.
3) Depreciate Plant & Machinery at 15%, Furniture at 10% and Patents at 5%.
4) On 31st March, 2011 Outstanding Rent amounted to Rs. 800 and Salaries Rs. 900.
5) The Board Recommends payment of a dividend @ 15% p.a.
6) Transfer Rs. 1500 to General Reserve.
7) Provide Rs. 510 for Doubtful debts.
8) Provide for managerial remuneration at 10% on profit before Tax.
9) Provide Corporate Dividend Tax @10% and 2% surcharges thereon.
(G. P. Rs.87,050; N.P. Rs. 28,069; Cr. Balance of App. A/c Rs. 25,039; Total B/s Rs.
2,10,700)
Problem 16. The Directors of Passion Co. Ltd. ask you to prepare Profit & Loss A/c for the
year ended 31st March 2013 and Balance Sheet as on that date from the following information
Plant at Cost 3,00,000 Equity Share Capital (in
Land & Building at cost 5,00,000 shares of Rs. 10 each) 5,00,000
Investment in shares 2,00,000 16% Preference Share Capital
Stock 70,000 (in shares of Rs. 100 each ) 1,00,000
Cash at Bank 62,200 Depreciation up to 31-3-2012:
Debtors 50,000 On Plant 1,00,000
Establishment Expenses 15,000 On Land Building 1,50,000
Rent & Taxes 6,000
Audit Fees (including Rs.1000 General Reserve 10,000
paid for other services) 2,500 Profit & Loss A/c 1-4-2012 25,000
Managing Director’s Creditors 30,000
Remuneration 12,000 Miscellaneous Receipts 2,300
Directors fees 2,000 Dividend (Gross) 10,000
Sundry Expenses 6,000 Trading A/c balance 3,04,000
Income tax for the previous
year not provide for 6,000
12,31,700 12,31,700
The following further information is available:

1. Depreciation is to be charged on written down value of Plant @10% and Land &
Building @ 5%.
2. The directors propose to recommend a dividend of 15% on equity shares and 16% on
preference shares.
3. Provision for Taxation is to be made @ 40%.
4. The Managing Director is entitled to 5% of the net profits subject to a minimum of
Rs. 12,000 p.a. as his remuneration.
5. A sum of Rs. 18,000 is to be transferred to General Reserve.
6. A sum of Rs. 15,000 is to be transferred to Dividend Equilisation Reserve.
(N.P. Rs. 1,41,189; Cr. Balance of App. A/c Rs. 36,189; Total B/s Rs. 8,94,700)
Problem 17. The following balances were extracted from the books of Maharashtra Cloth
Trading Co. Pvt. Ltd. for the year ending 31st March, 2013:
Particulars (Rs.)
Share Capital : Authorised, Issued and fully paid (50,000 equity shares) 5,00,000
General Reserve (as at 1-4-2012) 1,50,000
Furniture(including additions of Rs. 5000 during 2012-13) 35,000
Office Equipments (as at 1-4-2012) 22,000
Motor Car (purchase on 30-3-2013) 30,000
Sundry Debtors (unsecured) 8,50,000
Advance to staff (unsecured) 10,000
Cash in Hand 2,000
Balances with Bank of India (including fixed deposits Rs. 1,00,000) 1,40,000
Loan from Directors (unsecured) 2,00,000
Liability for Expanses and Goods Supplied 2,67,000
Provision for Taxation (as at 1-4-2012) 1,00,000
Profit & Loss A/c (as at 1-4-2012) 3,000
Advance Tax paid 1,90,000
Depreciation written off up to 31-3-2012:
(Furniture Rs. 5,000; Office Equipments Rs. 2000) 7,000
Opening Stock of Cloth 1,50,000
Legal Charges (including Rs. 3000 paid to auditors for tax representation) 10,000
Salaries to Staff 50,000
Miscellaneous Expenses 1,60,000
Travelling Expenses 40,000
Purchase of Cloth 30,39,000
Audit Fees 4,000
Interest on fixed deposits with bank 5,000
Sales 35,00,000
1) Closing Stock of Cloth Rs. 3,00,000
2) Rate of Depreciation: Furniture 10%, Office Equipments 15%, Motor Car 20%.
3) Managing Director is entitled to commission @10% on net profits subject to a
maximum of Rs. 36,000 p.a.
4) Sundry Debtors include Rs. 1,50,000 outstanding for more than 6 months. Out of this
Rs. 20,000 is considered doubtful for which provision is to be made in the accounts
for 2012-2013.
5) Tax liability for 2012-2013 is estimated at Rs. 2,00,000 for which provision is to be
made.
6) The directors have decided to transfer Rs. 50,000 out of net profits to General Reserve
and have proposed to pay dividend @6% on equity shares.
Prepare Trading and Profit & Loss A/c for the year ended 31st March, 2013 and the
Balance Sheet as on that date.
(Ans: G. Pt. 6,11,000; N. Pt. 91,400; P&L App. Cr. Bal. 14,400; Total B/s Rs. 15,46,000 )
Problem 18.The trial balance of Marigold Ltd. as on 31st March 2013 is given below:
Freehold Buildings 2,00,000 Authorised Capital:
Plant and Machinery 2,40,250 60,000 Equity Shares of Rs.
Calls in Arrears 8,000 10 each 6,00,000
Interim Dividend paid 25,000
Stock on 1-4-2012 1,90,000 Issued & Subscribed Capital 4,00,000
Furniture 5,000 8% Debenture 2,00,000
Patterns 51,500 Profit & Loss A/c 21,400
Patents 40,000 Bills Payable 93,000
Sundry Debtors 2,77,000 Sundry Creditors 1,77,000
Cash in Hand 14,500 Sales 12,35,000
Cash at Scheduled Bank 84,000 Discount Received 11,800
Security Deposits 4,000 Debenture Redemption Fund 50,000
Purchases 6,36,550 Provision for Doubtful Debts 12,500
Preliminary Expenses 8,000 Interest on Debenture
Debenture Redemption Fund Redemption Fund Investment 2,000
Investments 50,000 Sale proceeds of Machinery 20,000
Wages 2,95,000 Royalties Received 3,500
Repairs and Renewals 12,000
Factory Power 25,000
Rates and Taxes 13,500
Salaries 11,250
Travelling Expenses 10,750
Discount Allowed 10,200
Bad Debts 2,500
Interest on Debentures 8,000
22,26,200 22,26,200
1. Stock was valued at Rs. 80,750 (at cost).
2. Provision for Doubtful debts is to be maintained at 5% on sundry debtors.
3. Transfer Rs. 8,000 to Debentures Redemption Fund.
4. Write off Rs. 2,000 from Preliminary Expenses.
5. A Machine acquired on 1st April, 2011 at cost of Rs. 25,000 and depreciate every year at
10%on written down value, was sold during the year for Rs. 20,000. Its written down
value is included in the Plant & Machinery of Rs. 2,40,250.
6. Depreciate Plant & Machinery by 10%, Furniture by 15%, Patterns and Patents by 10%.
7. Make a provision for Taxation Rs. 18,250.
8. Issued & Subscribed Capital is represented by 40,000 Equity shares of Rs. 10 each fully
called up, of which the final call of Rs. 2 per share on 4,000 shares had not been received.
9. Final dividend for the year proposed to be paid at 10%.
10. Final dividend is not payable in respect of shares where there are calls in arrears.
Prepare Trading and Profit & Loss a/c for the year ended 31st March 2013 and Balance
Sheet as on that date.
(G. Pt. Rs. 1,69,200; N. Pt. Rs.50,350; P&L App. A/c Rs. 2,750; Total B/s Rs. 9,87,000 )
Problems: 19. Johnson Ltd. has an authorised capital of Rs. 10,00,000 divided into 2,000 5%
Preference Share of Rs. 100 each and 80,000 Equity Shares of Rs. 10 each. The whole of the
Preference Shares were issued and fully paid, but only 70,000 Equity Shares were issued and
fully called-up.
The following is the trial balance of the company on 31st March, 2010.
Calls in Arrears 5,000 Equity Shares Capital 7,00,000
Purchase less returns 6,00,000 5% Preference Share Capital 2,00,000
st
Stock on 1 April,2009 1,00,000 Share premium 55,000
Carriage Inward 5,000 Reserve Fund 1,20,000
Wages 25,000 Sales less returns 10,00,000
Salaries 20,000 5% Mortgage Debenture
Bad Debts 8,000 (Secured by fixed assets) 2,00,000
Directors Fees 7,000 Loans (unsecured) 1,84,500
Debenture Interest (up to 30- Depreciation upto 1-4-2009
9-09) 5,000 On Building 1,08,000
Insurance 2,300 On Machinery 3,00,000
Postage & Telegram 3,000 On Furniture 30,000
Machinery at cost 15,00,000 Debenture Redemption Fund 90,000
Building at cost 3,00,000 Unclaimed Dividend 3,000
Furniture at cost 50,000 Sundry Creditors 12,000
Goodwill 80,000 Bills Payable 5,000
Investments (market value Rs. Provision for Doubtful Debts 4,000
70,000) 60,000 Interest on Investment 3,000
Sundry Debtors 1,00,000 Transfer fees 1,000
Debenture Redemption fund Interest on Debenture
Investments 90,000 Redemption fund Investments 4,500
Bills Receivable 25,000 Profit & Loss A/c 59,000
Discount 2,000
Repairs 14,000
Managing Directors
Remuneration 20,000
Audit Fees 4,000
Discount on issue of
Debentures 7,000
Cash at Bank 40,000
30,79,000 30,79,000
Adjustments:
1. Stock on 31st March 2010 was valued at Rs. 2,00,000.
2. Salaries unpaid on 31st March 2010 Rs. 2,000.
3. Insurance paid in advance Rs. 300.
4. Provision for doubtful debts to be maintained at 5% on Debtors.
5. Provide depreciation for the year: Building Rs. 18,000; Machinery Rs. 50,000;
Furniture Rs. 5,000.
6. Provision for Taxation to be made at 50% of net profit of the company.
7. Directors decide to appropriate out of profits as under:
I) Transfer of Rs. 20,000 Reserve Fund
II) Transfer of Rs. 10,000 Debenture Redemption Fund.
III) To pay a dividend of 5% on preference Shares and Rs. 0.80 per share on
Equity Shares.
8. Rs. 2,000 to be written off from Discount on Issue of Debenture.
Prepare Trading and Profit & Loss A/c for the year ended 31st March, 2010 and Balance
(G. Pt. Rs. 4,70,000; N. Pt. Rs. 1,50,000; P&L App. A/c Rs. 1,13,000; B/s Rs. 19,35,000)
Problem 20:Gaikwad Enterprises Ltd. has an authorised capital of Rs. 15,00,000 divided into
equal number of 6% Redeemable Preference Shares and Equity Shares all of Rs. 25 each.
17,600 6% Redeemable Preference Shares and 22,000 Equity Shares were issued and fully
paid.
The following balances were extracted from the ledger of the company on 31st March, 2013:
Particulars (Rs.)
Land and Building 6,00,000

Furniture and Fixture 25,000
Leasehold premises 3,00,00
Sales 14,00,000
Return Outward 44,440
Purchases 9,48,480
Printing and Stationary 5,670
Insurance 12,340
Reserve for doubtful debts 10,000
Bad Debts 4,440
Branch profits 3,45,430
Stock at Branch on 31-3-2013 79,070
Stock on 1-4-2012 2,13,120
Salaries & Wages 1,84,810
Sundry creditors 1,26,000
Bills payable 1,95,000
Trade expenses 8,760
Cash at bank 39,260
Cash in hand 11,900
Profit & Loss A/c (cr.) 1-4-2012 20,000
Reserve fund 40,000
Advance payment of Income Tax 1,20,000
Returns inward 55,550
Freight & Duty 1,23,450
Interest on Debenture 6,000
Discount on debentures 6,000
Commission on Issue of Shares 1,800
Further information is available:
(1) Stock on 31st March 2013 was valued at Rs. 2,73,000.
(2) On 23rd March 2013 fire broke out and destroyed stock of Rs. 1,00,000. Insurance
company admitted claim for Rs. 60,000.
(3) Goods of Rs. 60,000 received on 27th March were not recorded in the Purchase day
book.
(4) Sales include Goods costing Rs. 1,200 sent on Sales or Return basis at 25% Profit on
Sales.
(5) Rs. 4,000 further bad debts to be written off 5%. Provision of doubtful debts on
sundry debtors is considered sufficient.
(6) Depreciate Land and Building at 2%, Plant and Machinery at 20% and Furniture at
5% p.a.
(7) Prepaid Insurance Rs. 2,000.
(8) Provide for taxation 50% on net profits.
(9) Transfer to reserve fund Rs. 20,000 and Debenture redemption fund Rs. 50,000.
Prepare Trading, Profit & Loss A/c for the year ended 31st March, 2013 and a Balance
(G. Pt. Rs. 4,07,680; N. Pt. Rs. 1,77,006; P&L App. A/c Rs. 1,27,600; B/s Rs. 20,01,012 )
Problem 21: On the 30th June 2012, the book of Satvik Co. Ltd., showed the following
balances:
Share Capital (Authorised, General reserve 31,078
Issued & fully paid up) 60,000 Plant & Machinery 2,00,000
Equity Shares of Rs. 10 each 6,00,000 Vehicles 15,000
General reserve 2,50,000 Stock on 1-7-2011 1,72,058
Trade creditors 36,858 Book debts 2,23,380
Unclaimed dividend 6,526 Investments 2,88,950
Building 1,00,000 Cash in hand and at bank 72,240
Purchases 5,00,903 Directors fees 1,800
Sales 9,83,947 Interim dividend 15,000
Manufacturing expenses 3,59,000 Interest (cr.) 8,544
Establishment expenses 26,814 Profit & Loss A/c (Cr. 30-6-
Furniture 5,000 2011) 16,848
Depreciation Reserve 71,000 Staff provident fund 37,500
Prepare Trading and Profit & Loss A/c and the Balance Sheet in a proper form,
keeping in view the following information:
1) Stock on 30th June, 2012 Rs, 1,48,680.
2) Interest accrued on Investments amounted to Rs. 2,750.
3) Provide Rs. 6,500 for Managing Directors commission.
4) Provide Rs. 1,500 for the company’s contribution to Staff Provident Fund.
5) Provide Rs. 10,000 for depreciation on Plant & Machinery.
6) Make a provision for taxation @ 50% net profits.
7) A claim of Rs. 2,500 for workmen’s compensation is being disputed by the company.
(G.pt. Rs. 1,00,666; N. Pt. Rs. 17,134; Cr. Bal. of App. A/c Rs. 18,982; B/s Rs. 10,56,000)
Problem 22. The trail balance of Bajaj Ltd. as on 31st March, 2013 is given below:
Share capital 40,00,000
Building 16,00,000
Loose tools 1,88,000
Furniture 72,000
Cash in hand at bank 1,10,000
Bills receivable 2,72,000
Sundry debtors 6,66,000
Repairs 17,200
General reserve 3,00,000
Purchase & purchase return 43,00,000 1,00,000
Sales return & Sales 1,40,000 65,68,900
Advertisement 50,800
Carriage inward 74,000
Insurance 98,000
Debenture interest 1,40,000
Advances 2,50,000
Land 8,50,000
Investment 1,97,600
Goodwill 3,20,000
Interim dividend 1,98,500
Sundry creditors 6,11,200
Profit & Loss A/c 1,76,000
Audit fees 20,000
Salaries 4,64,000
Stock (1-4-12) 9,52,000
14% Debentures 20,00,000
General expenses 86,000
1,37,56,100 1,37,56,100
Following additional information is available:
1) Stock as on 31-3-2013 is Rs. 8,50,000.
2) Provide for half year’s interest on debenture.
3) Provide for depreciation: Building 5%
Plant & Machinery 15%
Furniture 10%
4) The directors propose a dividend of 5% in addition to the interim dividend.
5) Provision for taxation is to be made @50% of net profits.
Prepare Trading and Profit & Loss A/c for the year ended 31st March 2013and a Balance
(G.P. Rs. 20,52,900; N. P. Rs. 2,82,700; Cr, Bal of App. A/c Rs. 61,700; B/s Rs.
75.64,100)
Problem 23. The following balances appeared in the books of Saraswati Co. Ltd. as on 31st
March 2013:
Issued, Subscribed & Paid up capital (60,000 Equity
shares of Rs. 10 each.) 6,00,000
General reserve 2,50,000
Unclaimed dividend 6,526
Trade creditors 36,858
Purchases 5,10,903
Sales 10,83,947
Establishment charges 26,814
Motor vehicle at cost 30,000
Furniture at cost 5,000
Opening stock 1,72,058
Books debts 2,23,380
Depreciation reserve 71,000
Advance payment of income tax 50,000
Cash in hand 72,240
Directors fees 1,800
Interest on investment (Gross) 8,544
Profit & Loss A/c (1-4-2012) 16,848
Staff provident fund 47,500
21,21,223 21,21,223
Prepare Trading and Profit & Loss A/c for the year ended 31st March 2013 and
Balance Sheet as on that date, after making the following adjustments:
(i) The stock on 31st March 2013 were valued at Rs. 1,68,480.
(ii) Provide Rs. 12,000 for depreciation on fixed assets.
Rs. 7,500 for Managing directors remuneration and Rs. 1,500 for the company’s
contribution to Staff provident fund.
(iii) Interest accrued on Investment amounted Rs. 2,750.
(iv) A provision of RS. 55,000 for taxes in respect of the profit for 2012-13 is
considered necessary.
(v) The directors proposed a final dividend @4% after transfer to General reserve Rs.
50,000.
(vi) A claim of Rs. 3,000 for workmen’s compensation is being disputed by the
company.
(vii) Provide corporate dividend tax @10% on dividend provided.
(G.P. Rs. 2,10,466; N.P Rs. 86,068; Cr. Bal. P&L A/c Rs. 26,516; Total B/s Rs. 11,90,800)
Problem 24. Following is the trail balances of Meshram Flour Mills Ltd. prepare Trading and
Profit & Loss A/c for the year ended 31st December, 2012 and the Balance Sheet as on that
date:
Subscribed Capital (90,000 Equity Shares of Rs. 50 each
only Rs. 40 Called up) 36,00,000
Depreciation on Building upto 31st Dec. 2011 2,00,000
st
Depreciation on Machinery upto 31 Dec. 2011 7,50,000
Dividend Equilisation fund 1,50,000
Loan from bankers (secured by stock of wheat, flour etc.) 5,00,000
Creditors for Wheat 75,000
Creditors for Coal 20,000
Unclaimed dividend 1,200
Wheat account (Purchase) 54,00,000
Coal account (Purchase) 3,15,000
Flour account (Sales) 67,60,000
Fixed deposits 1,20,000
Govt. bonds 80,000
Cash in hand 900
Cash at bank 14,495
Call at mill 1,200
Advance against future wheat contracts 15,000
Stores (Purchase) 3,45,000
Wages 4,00,000
Interest earned 4,020
Share transfer fees 750
Salaries 67,500
Rent & Rates 34,000
Income tax paid 16,000
Audit fees 2,000
Due for salaries & wages 32,000
1,26,03,195 1,26,03,195
Adjustments:
1) Depreciation on Building Rs. 40,000 and Machinery Rs. 2,00,000 is to be charged.
2) Set aside Rs. 1,50,000 towards General reserve and Rs. 1,00,000 towards Dividend
Equilisation fund.
3) The directors have resolved in their board meeting to recommend a gross dividend of
20% on the paid up capital.
4) Provide managing Agent’s commission Rs. 1,49,075.
5) Provide interest on Bank loan for 6 months @ 7% annually and allow for Rs. 1,980
accrued on Government bonds.
6) Stock on 31st December, 2012 : Wheat (at cost) Rs. 10,00,000
Coal (at cost) Rs. 15,000
Flour (at selling price) Rs. 2,40,000
Stores (at cost) Rs. 95,000
7) Provide for taxation Rs. 2,00,000.
The authorised capital of the company is 1,00,000 Equity shares of Rs. 50 each.
(G.P. Rs. 16,50,000; N.P. Rs. 8,85,675; Cr. Balance of App. A/c Rs. 6,100; Total B/S Rs.
61, 39,675)

UNIT II Final Account College

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UNIT-II

PROFIT AND LOSS ADJUSTMENT ACCOUNT

PARTICULARS AMOUNT PARTICULARS AMOUNT

Loss ××× Profit ×××

(9) Bad debt Reserve

(11) Items to be find out. TRIAL BALANCE

Sr. No. Particulars Debit Credit

(12) If following items are given in adjustments entries will be as under.

Sr. No. Particulars 1st Entry 2nd Entry

Sr. No. Particulars Entry

(15) Effect of adjustments:

Sr. No. Adjustments 1st Entry 2nd Entry

Opening Stock 60,000

Debit Balances Amount Credit Balance Amount

Stock on 1-4-11: 95,000 Sales of Flour 55,50,000

Profit & Loss Appropriation A/c

Particulars Dr. (Rs.) Cr. (Rs.)

Stock on 31st March, 2008 55,800

To Depreciation on Building 25,110

Profit & Loss Appropriation A/c

Balance Sheet of Sunny Co. Ltd.

2. Reserve & Surplus: 3. Current Assets, Loans &

Particulars Dr. (Rs.) Cr. (Rs.)

Land and Buildings (Cost Rs. 3,00,000) 1,40,000

Stock (1-4-2010) 93,73,700

Particulars Dr. (Rs.) Cr. (Rs.)

Stock (1st April, 2011) 1,86,420

Opening Stock 95,200

Share Capital 1,00,000

The following particulars are available:

Debit Balance Rs. Credit Balance Rs.

The following further information is available:

Land and Building 6,00,000

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