1. Prepare Profit and Loss Account, from the following balances of Mr.Kandan for the year ending 31.12.

2017
Office rent Rs.30,000 Salaries Rs.80,000
Printing expenses Rs.2,000 Stationeries Rs.3,000
Tax, Insurance Rs.4,000 Discount allowed Rs.6,000
Advertisement Rs.36,000 Travelling expenses Rs.26,000
Gross Profit Rs.2,50,000 Discount received Rs.4,000

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31.12.2017

To office rent 30,000 by Gross Profit b/d 250000
To Printing expenses 2,000 By Disocunt received 4,000
To tax, insurance 4,000
To Advertisement 36,000
To Salaries 80,000
To Stationeries 3,000
To Discount allowed 6,000
To Travelling expenses 26,000
To Net Profit 67,000
254000 254000

3. From the following information prepare balance sheet of Mrs.Nasreen Khan as at 31st Dec. 2017
Goodwill Rs.10,000 Sundry debtors Rs.25,000
Capital Rs.90,000 Drawings Rs.15,000
Cash in hand Rs.10,000 Land & Buildings Rs.30,000
Investment Rs.500 Bank Rs.10,000
Net profit Rs.46,900 Creditors Rs.31,500

BALANCE SHEET AS ON 31.12.2017

LIABILITIES RS ASSETS RS
capital 90000 goodwill 10000
add:Net Profit 46900 cash in hand 10000
less:drawings 15000 121900 investment 78400
creditors 31500 s.debtors 25000
land 30000
bank 10000
total 153400 total 153400

T Dr= TRADING DEBIT SIDE

T CR= TRADIN CREDIT SIDE
P DR= P & LDEBIT SIDE
P CR= p&l CREDIT
A= ASSET
L= LIABILITY
KINDLY REFER ADJUSTMENT DOCUMENT SENT IN GROUP BEFORE LAST CLASS
EXPLANATION TO ADJUSTMENT NOT GIVEN IN SOLUTION

5. The following were extracted from the books of Suraj on 31.12.2018.

Capital L 15,000 Sales tax(cr) 50,000
Drawings L- 2,700 Discounts received P Cr 300
Stock, 1-1-2018 T DR 11,000 Office expenses P Dr 750
Purchases T DR 35,000 Bills Payable L 4,500
Sales T CR 62,000 Plant and Machinery A 15,000
Return inwards T 1,200 Provision for Bad Debts P Dr 1,000
Returns outwards T 800 Debtors A 58,000
Wages T DR 5,740 Creditors L 19,800
Salaries P Dr 8,200 Cash in hand A 700
Electric charges P Dr 1,120 Cash at Bank A 12,800
 Discounts paid P Dr 770 Bills Receivable A 420
Insurance P Dr 3000 Commission received P Cr 3000
1. The value of the closing stock on 31.12.2018 was Rs. 13,500
2. Depreciate ant by 10%
3. Write off ₹500 as bad debt and Provision for doubtful debt 5% on debtor
4. Salaries for the month of March amounting to RS.3,000 were unpaid. However salaries included Rs.2,000
paid in advance
5. Insurance amounting to₹2,000 prepaid
6. Provide for outstanding office expenses ₹8,000
7. Stock used for private purpose ₹6,000
8. Loss of goods by fire ₹2,500(uninsured)
TRADING & PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31.12.2018
to opening stock 11,000 by Sales 62,000
To Purchases 35,000 Less:r.Inwards 1,200 60,800
less: R.Outwards 800 by closing stock 13,500
less: drawings 6,000 28,200 by loss of goods by fire 2500
To wages 5,740
To gross profit c/d 31,860

total 76,800 total 76,800

To salaries 8,200 By Gross Profit b/d 31,860
(+) outstanding 3,000 By Commission received 3000
(-) prepaid 2,000 9,200 By Discount received 300
To electric charges 1,120
To Discount paid 770
To office exps 750
(+) Outstanding 8,000 8,750
To Depreciation 1,500
To Insurance 3,000
(-) prepaid 2,000 1,000
To loss of goods by fire 2,500
To Bad debt 500
(+) RBD 2875
(58000-500)x5% 3375
(-) ORBD 1000 2,375
To Net Profit 7,945
total 35160 total 35,160

BALANCE SHEET AS ON 31.12.2018

LIABILITIES RS ASSETS RS
capital 15,000 Plant 15,000
less: drawings 2,700 Less: Depreciation 1,500 13,500
add: Net profit 7,945 debtors 58,000
less:Drawings 6,000 14245 Less: bad debt 500
sales tax 50000 Less: RBD 2875 54625
bills payable 4500 cash in hand 700
Creditors 19800 cash at bank 12800
o/s salaries 3000 bills receivable 420
o/s office expenses 8000 stock 13500
prepaid salaries 2000
prepaid insurance 2000
total 99,545 total 99,545
9. From the following particulars prepare Trading and Profit and Loss Account of Mr R for the year ended 31-03-
2016 and a Balance Sheet as on 31-03-2016.
Dr. Rs. Cr.Rs.
Buildings A 5,00,000 ----
Machineries A 2,00,000 ----
Furniture A 1,00,000 ----
Cash at Bank A 90,000 -----
Cash on Hand A 10,000 ----
18% p.a. loan obtained by Mr R on 01-06-2015 on ----
mortgage of his building L 3,00,000
R’s Capital L ----- 5,20,000
Sundry Debtors A / Sundry Creditors L 5,00,000 4,00,000
Stock on 1-4-2015 T dr 1,20,000 ------
Purchases T dr / Sales T Cr 25,00,000 32,20,000
Sales Returns T Cr / Purchases Returns T dr 1,20,000 1,00,000
Rent P dr 60,000 ----
Establishment Expenses P dr 1,80,000 ----
Electricity Charges P dr 15,000 ----
Telephone Charges P dr 10,000 -----
Commission on Sales P dr 30,000 ----
Insurance Premium P dr 10,000 -----
Bad Debts P dr 20,000 ----
Bills Receivables A 75,000 -----
45,40,000 45,40,000
You are required to provide for depreciation on building at 5% p.a, on machinery at 25% p.a., on furniture at
10% p.a, Provision for bad and doubtful debts is to be made at 5% on Sundry debtors. Mr R’s Manager is entitled
to a commission of 10% on the net profit after charging his commission. Closing Stock was not taken on 31-03-
2016 but only on 07-04-2016. Following transactions had taken place during the period from 01-04-2016 to
7thApril 2016, Sales Rs. 2,50,000, Purchases Rs. 1,50,000, Stock on 7th April 2016 was Rs. 1,80,000 and the rate of
gross profit on sales was 20%, Insurance Premium mentioned in the trial balance was in respect of building and
machines. Interest on mortgage loan to be provided up to 31-03-2016.
calculation of closing stock
TRADING ACCOUNT FOR THE period 7-4-2016
to opening stock (bal fig) 230,000 by sales 250,000
to purchases 150,000 by closing stock 180,000
to gross profit 50,000
430,000 430,000
TRADING & PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31.03.2016
to opening stock 120,000 by Sales 32,20,000
To Purchases 25,00,000 Less:r.Inwards 1,20,000 3,100,000
less: R.Outwards 1,00,000 2,400,000 by closing stock 230,000
To gross profit c/d 810,000
total 3,330,000 total 3,330,000
To rent 60,000 By Gross Profit b/d 810,000
To Establishment expneses 180,000
to Elctricity charges 15,000
To Telephone charges 10,000
to commission on sales 30,000
to insurance premium 10,000
to bad debts 20,000
(+)RBD 25,000 45,000
to depreciation
buiding 25,000
machinery 50,000
furniture 10,000 85,000
to interest on loan o/s 45,000
to manager's commission
(330000x10/110) 30,000
To Net Profit 300,000
 total 810,000 total 810,000

BALANCE SHEET AS ON 31.03.2016

LIABILITIES RS ASSETS RS
capital 5,20,000 buildings(5,00,000-25,000) 475,000
Add: net Profit 3,00,000 820,000 machinery(2,00,000-50000) 150,000
18%Mortgage loan 300,000 furniture(1,00,000-10,000) 90,000
creditors 400,000 cash at bank 90,000
manager's commissiom 30,000 cash in hand 10,000
o/s Interest on loan 45,000 debtors 475,000
stock 230,000
bills receivable 75000
total 1,595,000 total 1,595,000
10. From the following balances and information, prepare Trading and Profit and Loss Account of Mr X for the
year ended 31st March 2017 and a Balance Sheet as on that date:
Dr. Rs. Cr.Rs.
X’s Capital Account L ---- 10,000
Plant and Machinery A 3,600 ----
Depreciation on Plant and Machinery P dr 400 ----
Repairs to Plant P dr 520 ---
Wages T Dr 5,400 ---
Salaries P dr 2,100 ---
Income Tax of Mr X L - 100 ---
Cash in Hand and at Bank A 400 ---
Land and Building A 14,900 ---
Depreciation on Building P dr 500 ---
Purchases T Dr 25,000 ---
Purchases Return T Dr --- 300
Sales T Cr --- 49800
Bank Overdraft L --- 760
Accrued Income A 300 ---
Salaries Outstanding L --- 400
Bills Receivable A 3000
Provision for Bad Debts P dr --- 1,000
Bills Payable L --- 1,600
Bad Debts P dr 200 ---
Discount on Purchases P Cr --- 708
Debtors A 7,000 ---
Creditors L ---- 6,252
Opening Stock T dr 7,400 ----
70,820 70,820
INFORMATION:
i) Stock on 31st March 2017 was Rs. 6,000.
ii) Write off further Rs. 600 for Bad debts and maintain a provision for Bad Debts at 5% on Debtors
iii) Goods costing Rs. 1000 were sent to customer for Rs. 1,200 on 30th March 2017 on Sale or return basis. This
was recorded as actual loss
iv) Rs. 240 paid as rent of the office were debited to Landlord Account and were included in the list of debtors.
v) General Manager is to be given commission at 10% of net profit after charging the commission of the works
manager and his own.
vi) Works Manager is to be given commission at 12% of net profit before charging the commission of General
Manger and his own
 TRADING & PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31.03.2016
to opening stock 7,400 By sales(49800-1200) 48600
to purchases (25000-300) 24,700 by closing stock(6000+1000) 7,000
To Wages 5,400
To Gross Profit c/d 18,100

total 55,600 total 55,600

To Repairs to plant 520 By Gross Profit b/d 18,100
To salaries 2100 By discount on purchases 708
to bad debt 200
(+)bad debt 600
(+)NRBD 248
(7000-240-1200-600)x5%
(+)ORBD 1000 48
ToRent 240
to depreciation
machinery 400
building 500 900
To Work manager commission 1,800
(15000x12%)
To G.M Commission 1,200
(15000-1800=13200X10/110)
To Net Profit 12,000
total 18,808 total 18,808

BALANCE SHEET AS ON 31.03.2016

LIABILITIES RS ASSETS RS
capital 10,000 plant 3,600
(+)net profit 12,000
(-) income tax(drawing) 100 21,900 cash in hand 400
bank overdraft 760 land 14,900
bills payable 1,600 bills receivables 3,000
GM commission 1,800 debtors 7000
WM commission 1,200 (-) bad debt 600
creditors 6252 (-)goods sent on app 1,200
o/s salary 400 (-)landlord 240
(-)RBD 248 4712
Stock 7000
Accrued income 300
total 33,912 total 33,912

11. Bansali submitted to you the following Trial Balance, which he has not been able to agree. Rewrite the Trial
Balance and Prepare Trading and Profit and Loss Account for the year ended 31-12-2017 and a Balance Sheet
on that date after giving effect to the under mentioned adjustments :- (tulsian-20th prob)
Dr. Rs. CrRs.
Capital L ----- 16,000
Opening Stock T Dr 17,500 -----
Closing Stock T Cr ---- 18,790
Drawings L- 3305 -----
Returns Inward T cr ----` 550
Carriage Inward T Dr 1240 ----
Deposit with X A ------ 1400
Returns Outward T Dr 840 -----
Carriage Outward P Dr ---- 725
Rent Paid P Dr 800 ----
Rent Outstanding L 150` ---
Purchases T Dr 13000 ----
 Sundry Debtors A 5000 -----
Sundry Creditors L ---- 4000
Furniture A 1500 ----
Sales T Cr --- 29000
wages T Dr 850 ---
Cash A 1370 ---
Goodwill A 1800 ---
Advertisement P Dr 950 ----
48305 70465
ADJUSTMENTS:-
1. Write Off Rs. 600 as Bad debts and make Reserve for Bad Debts on Sundry Debtors at 5%
2. Stock valued at Rs. 2000 was destroyed by fire on 25th December 2017, but Insurance Company admittedp
a claim for Rs. 1500 only and paid the sum in January 2018.
TRADING & PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31.12.2017
To opening stock 17,500 by sales(29000-550) 28450
To purchase (13000-840) 12,160 By Stock lost by fire 2,000
To wages 850 By Closing Stock 18,790
To Carriage inward 1,240
To Gross Profit c/d 17,490
total 49,240 total 49,240
To Carriage outward 725 By Gross Profit b/d 17,490
To Rent 800 By discount on purchases
To Advertisement 950
To Bad debts 600
(+)RBD 220 820
To Loss of stock by fire 500
To Depreciation-furniture 150
To Net Profit 13,545
total 17,490 total 17,490

BALANCE SHEET AS ON 31.12.2017

LIABILITIES RS ASSETS RS
capital goodwill 1,800
opg bal: 16000 furniture(1500-150) 1,350
(+)net profit 13545 deposit with X 1,400
(-)Drawings 3305 26,240 clsoing stock 18,790
creditors 4,000 debtors 5000
o/s rent 150 (-)Bad debt 600
(-)RBD 220 4,180
Insurance claim Recoverable 1,500
cash 1370

total 30,390 total 30,390

 12. From the following trial balance of a trader you are required to prepare trading and profit and loss account
for the year ending 31st December, 2017, and a balance sheet as on that date.
Dr. Cr.
Cash in hand A 1,000
Stock T Dr 3,500
Creditors L 3,900
Debtors A 19,200
Drawings L- 5,130
Sales T Cr 92,800
Purchases T Dr 81,200
Wages T Dr 7,200
General expenses P Dr 5,170
Furniture A 4,000
Goodwill A 3,000
Capital L 32,700
1,29,4 1,29,400
1) Furniture (book value on January 1, Rs. 400) was sold on 30th June for Rs. 450 and was passed through the
sales book.
2) Depreciate furniture at 10% p.a
3) Private purchases amounting to Rs.100 were passed through the Purchase Day Book.
4) Sales book was overcast by Rs. 50.
5) Wage outstanding Rs.50, though included in the wages account, was not included in the trial balance.
6) Stock at the end was valued at Rs.4,500. In view of the constant fall in prices, it has been decided to write off
stock by 10%.
TRADING & PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31.12.2017
To opening stock 3,500 by sales 92300
To purchase (81200-100) 81,100 (92800-450-50)
To wages 7,200 By Closing Stock(4500-10%) 4,050
To Gross Profit c/d 4,550
total 96,350 total 96,350
To general Expenses 5,170 By Gross Profit b/d 4,550
To Depreciation-furniture By profit on sale of furniture 70
(4000-400=3600x10%)= 360 (450-(400-20)
SOLD 400 x 10% x 6/12 20 380 By net loss 930
total 5,550 total 5,550
BALANCE SHEET AS ON 31.12.2017
LIABILITIES RS ASSETS RS
capital cash 1,000
opg bal: 32700 debtors 19,200
(-) net loss 930 Furniture 3,240
(-)Drawings 5130 (4000-400-360)
(-)Drawings 100 26,540 closing stock 4,050
o/s wages 50 goodwill 3,000
creditors 3900
total 30,490 total 30,490

13. From the following Ledger Balances extracted at the close of trading year ended 31 st March 2017 prepare a
Trading Account, P and L Account and Balance Sheet at that date, after giving effect to the under mentioned
adjustment :
Rs. Rs.
Capital on 1-4-2017 L 50000 Business premises A 55000
Stock on 1-4-2017 T Dr 8000 Furniture and Fixtures A 2500
Purchases T Dr 20000 Bills Receivables A 3500
Sales T Cr 80000 Bills Payable L 2500
Return Inwards T Cr 1500 Sundry Debtors A 20000
Return Outwards T Dr 400 Sundry Creditors L 15800
Wages T Dr 6900 Packing Machinery A 4500
Advertisement P Dr. 5500 Smith’s Loan (Dr.) @10% on 1-4-2017 L 5000
 Apprenticeship Premium P Cr 1200 Investment A 12400
Interest on Smith’s Loan P Dr 300 Cash in Hand A 250
Proprietor’s withdrawals L - 3000 Cash at Bank A 3500
Office Expenses P Dr 8050
Adjustments to be made for the current period are:
1) Stock in Hand at 31st March 2017 Rs.7000
2) Apprenticeship Premium is for three years, paid in advance on 1st April 2017,
3) Interest on Capital to be allowed at 5% for the year.
4) Interest on Drawings to be charged to him as ascertained for the year Rs.80.
5) Rs. 5000 out of the Advertisement Expenses are to be carried forward.
6) Stock valued at Rs. 3000 destroyed by fire on 25-3-2017 but the Insurance Co admitted a claim of Rs. 2000
only and pad it on 25-4-2017.
7) The Manager is entitled to a commission of 10% of the Net Profit calculated after charging such commission.
8) Included in sales is an amount of Rs. 10000 representing goods on “Sales or return” the customer still having
the right to return the goods. The goods were invoiced charging a profit of 20% on sales.
9) The stock includes materials worth Rs. 1000 for which bill had not been received and therefore, not yet
accounted for.
10) Bill Receivables Rs. 500 not yet due was discounted on 31st March
11) Rent receivable Rs.200

TRADING AND PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31-3-2017
To opening stock 8,000 By sales 80,000
To purchase 20,000 (-) RETURN INWARDS 1,500
(-) returns outward (400) (-) Price of sale or return basis(ADJ 8) 10,000 68,500
(+) Additional (ADJ 8) 1,000 20,600
To wages 6,900 By closin stock 7,000
To Gross Profit c/d 51,000 (+)cost of sales or return basis (ADJ 8)
10,000 – 20% OF 10,000=(10,000-2000) 8,000 15,000
By loss of stock by fire ADJ 6 3,000
TOTAL 86,500 TOTAL 86,500
To Advertisment 5,500 BY gross profit b/d 51,000
(-)carry forward (ADJ 5) 5,000 500 By Apprenticeship prem 1,200
(-) recd in advance (ADJ2) 800 400
To int on smith loan 300 (3 yrs -1,200
(+)OUTSTANDING 2yrs - ?)
(5000*10%-300) 200 500 by interest on drawing (ADJ 4) 80
To office expenses 8,050 by rent receivable (ADJ 11) 200
To interest on capital (ADJ3) 2,500
(50,000x5%)
To loss by fire(3000-2000) 1,000
(ADJ 6)
To managers commission
(51,680-500-500-8050-2500-
1000) 3557
(39130 x 10/110)
To net profit (Bal fig) 35,573
51,680 51,680
Balance sheet as on 31-3-2017
Liabilities Assets
capital 50000 50,000 b.premises 55,000
(+) net profit 35,573 35,573 furniture 2,500
(-) drawings 3000 3,000 B/R (3500-500) (ADJ 10) 3,000
(-) int on drawing 80 80 debtors 10,000
(+)int on capital 2500 2500 84,993 machinery 4,500
b/p 2,500 cash 250
creditors(15800+1000) 16,800 Bank(3500+500) (ADJ 10) 4000
smith loan 5,000 closing stock (7000+8000) 15,000
o/s int on loan 200 claim receivable 2,000
ap.prem recd in advance 800 prepaid advt exp 5,000
manager commission 3,557 investment 12,400
Rent reveivable (ADJ 11) 200
113,850 1,13,850