46 Vidhi

ANALYSIS OF TRANSACTIONS

Nature of
Transa
Accounts involved accounts How affected
ction
(a) Cash A/c Real Cash is coming in
Capital A/c Personal Ramesh is the giver
(b) Cash A/c Real Cash in coming in
Loan from Nikhil A/c Personal Nikhil is the giver
(c) Furniture A/c Real Furniture is coming in
Cash A/c Real Cash is going out
(d) Furniture A/c Real Furniture is coming in
Mohan’s A/c Personal Mohan is the giver
(e) Purchases A/c Real Goods are coming in
Cash A/c Real Cash is going out
(f) Purchases A/c Real Goods are coming in
Ram’s A/c Personal Ram is the giver
(g) Cash A/c Real Cash is coming in
Sales A/c Real Goods are going out
(h) Hari’s A/c Personal Hari is the receiver
Sales A/c Real Goods are going out
(i) Cash A/c Real Cash is coming in
Hari’s A/c Personal Hari is the giver
(j) Ram’s A/c Personal Ram is the receiver
Cash A/c Real Cash is going out
(k) Bank A/c Personal Bank is the receiver
Cash A/c Real Cash is going out
(l) Drawings A/c Personal Ramesh is the receiver
Cash A/c Real Cash is going out
(m) Cash A/c Real Cash is coming in
Bank A/c Personal Bank is the giver
(n) Drawings A/c Personal Ramesh is the receiver
Bank A/c Personal Bank is the giver
(o) Cash A/c Real Cash is coming in
Shyam’s A/c Personal Shyam is the giver
(p) Salary A/c Nominal Salary is an expense
Bank A/c Personal Bank is the receiver
(q) Cash A/c Real Cash is coming in
Donation A/c Nominal Donation is a gain
(r) Ram’s A/c Personal Ram is the receiver
Bank A/c Personal Bank is the giver
(s) Salary A/c Nominal Salary is an expense
Cash A/c Real Cash is going out
(t) Rent A/c Nominal Rent is an expense
Bank A/c Personal Bank is the giver
(u) Drawing’s A/c Personal Ramesh is the receiver
Purchases A/c Real Goods are going out
Advance to Suppliers
(v) A/c Personal Suppliers are the receivers
Cash A/c Real Cash is going out
Dr/Cr

Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit

Debit
Credit
(w) Cash A/c Real Cash is coming in
Adv. from Customers
A/c Personal Customers are the givers
(x) Interest on Loan A/c Nominal Interest on loan is an
expense
Cash A/c Real Cash is going out
(y) Loan A/c Personal Lender is the receiver
Cash A/c Real Cash is going out
(z) Bank A/c Personal Bank is the receiver
Bank Interest A/c Nominal Bank Interest is a gain
Debit

Credit
Debit

Credit
Debit
Credit
Debit
Credit
33
IN THE BOOKS OF K.K. CO
Journal
Voucher
Date Particulars L.F. Rs.
No
2018
Dec. 1. Cash A/c Dr. 50,000
To Capital A/c
(Being business started with capital)
6 Bank A/c Dr. 20,000
To Cash A/c
(Being cash paid into bank)
8 Purchase A/c Dr. 4,000
To Cash A/c
(Being goods purchased for cash)
9 Ram A/c Dr. 2,000
To Cash A/c
To Discount Received A/c
(Being cash paid to Ram and discount
received Rs. 20)
10 Cash A/c Dr. 3,000
To Sales A/c
(Being goods sold for cash)
12 Cash A/c Dr. 2,000
To Sales A/c
(Being goods sold for cash)
15 Purchases A/c Dr. 4,000
To Ram A/c
(Being goods purchased from Ram)
18 Wages A/c Dr. 300
To Cash A/c
(Being wages paid)
20 Cash A/c Dr. 1,000
Discount Allowed A/c Dr. 50
To Pankaj A/c
(Being cash received from Pankaj and
allowed him discount Rs. 50)
22 Cash A/c Dr. 3,000
To Bank A/c
(Being cash withdrawn from bank)
25 Ram A/c Dr. 500
To Bank A/c
(Being paid by cheque)
31 Drawings A/c Dr. 200
To Cash A/c
(Being withdrawn for personal use)
Grand Total 90,050
 Rs.

50,000

20,000

4,000

1,980
20

3,000

2,000

4,000

300

1,050

3,000

500

200

90,050
48
Opening Journal entry.

Date Particulars L.F. Debit Credit

Amoun Amoun
t t
2018
Apr-01 Cash Account Dr. 6,000
Bank Account Dr. 17,000
Stock Account Dr. 3,000
Bills receivable Account Dr. 7,000
Debtors Account Dr. 3,000
Building Account Dr. 70,000
Investment Account Dr. 30,000
Furniture Dr. 4,000
To Bills payable Account 5,000
To Creditor’s Account 9,000
To Ram’s loan Account 13,000
To Singh’s capital 113,000
(Being the opening balances of
assets and liabilities)
140,000 140,000
56

Vouche
Date Particulars L.F. r No Dr Rs. Cr Rs.
2006
Jan. 1 Investment Account Dr. 2,000
To Cash Account 2,000
(Being purchase of shares of Tata Cotton
Mills Ltd. paid in cash)
2 No entry is passed as “placing of an order
is not a business transaction.”
3 Mr. Love’s Account Dr. 980
To Sales Account 980
(Being the entry for credit sale of goods to
Mr. Love at a trade discount of 2%)
4 Mr. Love’s Account Dr. 95
To Cash Account 95
(Being payment of freight and carriage on
behalf of Mr. Love)
5 Rent Account Dr. 150
To Sales Account 150
(Being rent paid to the landlord in the
form of goods, instead of in cash)
6 Mr. Gobind Account Dr. 700
To Sales account 700
(Being goods sold to Mr. Govind but
delivered to A. Merchants as per
instructions)
7 Cash Account Dr. 500
To Love’s Account 500
(Being in amount received in cash from
Love)
7 Purchases Account Dr. 500
To Cash Account 500
(Being entry for goods purchased from
Mr. Deepu from in cash received from
Love)
8 Cash Account Dr. 5,000
To Proprietor’s Capital Account 5,000
(Being amount invested in business out
of the sale process of the owner’s
personal car)
9 Proprietor’s Capital Account/Drawing A/c Dr. 180
To Cash Account 180
(Being the amount paid to Manpreet for
goods purchased for his personal use)
10 Cash Account Dr. 450
Bad Debts Account Dr. 250
To Gobind’s Account 700
(Being the amount received from Gobind
in full settlement of his debts)
11 Narinder Dr. 2,000
To Mohinder 2,000
(Being cash paid by Mohinder to
Narinder)
64

JOURNAL

Date Particulars L.F. Debit Credit

Amount Amount
(Rs.) (Rs.)
Cash Account Dr. 10,000
To Capital Account 10,000
(Being commencement of business)
Purchase Account Dr. 2,000
To Mohan 2,000
(Being purchase of goods on credit)
Mohan Dr. 1,000
To Cash 1,000
(Being payment of cash to Mohan)
Suresh Dr. 2,000
To Sales 2,000
(Being good sold to Suresh)
Cash Account Dr. 3,000
To Suresh 3,000
(Being cash received from Suresh)
Purchases Account Dr. 2,000
To Mohan 2,000
(Being purchase of goods from
Mohan)
Mohan Dr. 1,000
To Cash Account 1,000
(Being payment of cash to Mohan)
Suresh Dr. 2,000
To Sales Account 2,000
(Being goods sold to Suresh)
Cash Account Dr. 1,000
To Suresh 1,000
(Being cash received from Suresh)
24,000 24,000

LEDGER
CASH ACCOUNT
Dr. Cr.
Date Particular Amount Date Particular Amount
Rs. Rs.
To Capital A/c 10,000 By Mohan 1,000
To Suresh 3,000 By Mohan 1,000
To Suresh 1,00 By Balance c/d 12,000
14,000 Mar. 31 14,000
April 1 To Balance b/d 12,000

CAPITAL ACCOUNT
Dr. Cr.
 Date Particular Amount Date Particular Amount
Mar. 31 To Balance c/d 10,000 By Cash A/c 10,000
10,000 10,000
Apr. 1 By Balance b/d 10,000

PURCHASE ACCOUNT

Dr. Cr.
Date Particular Amount Date Particular Amount
To Mohan 2,000 March. 31By Balance c/d 4000
To Mohan 2,000
4,000 4000
April 1. To Balance b/d 4,000

MOHAN

Dr. Cr.
Date Particular Amount Date Particular Amount
To Cash 1,000 By Purchases 2,000
To Cash 1,000 By Purchases 2,000
To Balance c/d 2,000
4,000 4,000
Apr. 1 By Balance b/d 2,000

SURESH
Dr. Cr.
Date Particular Amount Date Particular Amount
To Sales 2,000 By Cash A/C 3,000

To Sales 2,000 By Cash A/C 1,000

4,000 4,000

SALES ACCOUNT
Dr. Cr.
Date Particular Amount Date Particular Amount
Mar-31 To Balance c/d 4,000 By Suresh 2,000
By Suresh 2,000
4,000 4,000
April. 1 By Balance b/d 4,000
 JOURNAL

Date Particulars L.F. Debit Credit

2006 Dr.
Jan. 1 Cash A/c Dr. 8,000
Bank A/c Dr. 25,000
Stock A/c Dr. 20,000
Furniture A/c Dr. 2,000
Building A/c Dr. 10,000
Vijay Dr. 2,000
Anil Dr. 1,000
Madhu Dr. 2,000
To Anand 5,000
To Bablu's Loan A/c 10,000
To Capital A/c 55,000
(Being balances brought forward from last
year)
Jan.1 Purchase A/c Dr. 4,000
To Cash A/c 3,800
To Discount A/c 200
(Being purchase of goods on discount)
Jan. 4 Cash A/c Dr. 1,980
Discount A/c Dr. 20
To Vijay 2,000
(Being cash received from Vijay, allowed
discount Rs. 20)
Jan. 6 Purchase A/c Dr. 5,000
To Bharat 5,000
(Being goods purchased)
Jan. 8 Plant A/c Dr. 5,300
To Mukesh 5,000
To Cash A/c 300
(Being plant purchased and payment of
charges of Rs. 300)
Jan. 12 Rahim Dr. 600
To Sales A/c 600
(Being sale of goods to Rahim)
Jan. 15 Cash A/c Dr. 300
Bad Debts A/c Dr. 300
To Rahim 600
(Being cash received from Rahim) 50 paise
in a rupee
Jan. 18 Cash A/c Dr. 1,000
To Sales A/c 1,000
(Being cash sale)
Jan. 20 Salary A/c Dr. 2,000
To Cash A/c 2,000
(Being salary paid)
Jan. 21 Anand Dr. 5,000
 To Cash A/c 4800
To Discount A/c 200
(Being cash paid to Anand and discount
received Rs. 200)
Jan. 26 Cash A/c Dr. 200
To interest A/c 200
(Being receipt of interest)
Jan. 28 Interest on Loan Dr. 500
To cash A/c 500
(Being payment of interest on loan)
Jan. 31 Cash A/c Dr. 500
To Sales A/c 500
(Being cash sale)
Jan. 31 Drawings A/c Dr. 200
To Purchase A/c 200
(Being goods withdrawn for personal use)

96900 96900

Ledger Posting
CASH ACCOUNT
Dr.
Date Particulars JF Amount Date
(Rs.)
2006 2006
Jan.1 To Balance b/d 8,000 Jan.1
Jan.4 To Vijay 1,980 Jan. 8
Jan.15 To Rahim 300 Jan.20
Jan.18 To Sales A/c 1,000 Jan.21
Jan. 26 To Interest A/c 200 Jan. 28
Jan. 31 To Sales A/c 500 Jan. 31
11,980
Feb. 1 To Balance b/d 580

INTEREST ACCOUNT
Dr.
Jan. 31 To Balance c/d 200 Jan. 26
200
Feb. 1

BANK ACCOUNT
Dr.
Jan. 1 To Balance b/d 25,000 Jan. 31
25,000
Feb. 1. To Balance b/d 25,000
 CASH ACCOUNT
Cr.
Particular JF Amount
(Rs.)

By Purchase A/c 3,800

By Plant A/c 300
By Salary A/c 2,000
By Anand 4,800
By Interest on loan A/c 500
By Balance c/d 580
11,980

EREST ACCOUNT
Cr
By Cash A/c 200
200
By Balance b/d 200

Cr.
By Balance c/d 25,000
25,000
 STOCK ACCOUNT
Dr.
Jan.1 To Balance b/d 20,000 Jan. 31 By Balance c/d
20,000
Feb. 1 To Balance b/d 20,000
FURNITURE ACCOUNT
Dr.
Jan. 1 To Balance b/d 2,000 Jan. 31 By Balance c/d
2,000
Feb. 1 To Balance b/d 2,000

BUILDING ACCOUNT
Dr.
Jan. 1 To Balance b/d 10,000 Jan. 31 By Balance c/d
10,000
Feb. 1 To Balance b/d 10,000
VIJAY ACCOUNT
Dr.
Jan. 1. To Balance b/d 2,000 Jan. 4 By Cash A/c
By Discount A/c
2,000

ANIL ACCOUNT
Dr.
Jan. 31 By
Jan. 1. To Balance b/d 1,000 Balance
1,000
Feb. 1 To Balance b/d 1,000
MADHU ACCOUNT
Dr.
Jan. 1. To Balance b/d 2,000 Jan. 31 By Balance c/d
2,000
Feb. 1 To balance b/d 2,000
 Cr.
20,000
20,000

Cr.
2,000
2,000

Cr.
10,000
10,000

Cr.
1,980
20
2,000

Cr.

1,000
1,000

Cr.
2,000
2,000
73- 7 - 151

TRADING ACCOUNT
FOR THE YEAR ENDED 31ST MARCH, 2016

To Opening stock 10,000 By Sales 67,500

To Purchases 42,500 Less returns 50
Less returns 200 42,300 By Closing Stock
To Manufacturing exp. 1,950
To Carriage inwards 100
To Freight and duty 5,000
To Stores consumed 200
To Power 300
To Wages 5,000
To Gross Profit transferred 14,600
to Profit & Loss A/c
TOTAL 79,450 TOTAL
67,450
12,000

79,450
80- 8 - 160

PROFIT & LOSS ACCOUNT OF M/S..............................

FOR THE YEAR ENDED 31ST MARCH, 2018
Dr. Cr.
Particular Rs. Particular Rs.
To Carriage Outward 2,500 By Gross Profit b/d 51,000
To Salaries 5,500 By Apprentice Premium 1,500
To Rent 1,100 By Discount by Creditors 800
To Fire Insurance Premium 900 By Commission 1,000
To Bad Debts 2,100
To Discount 500
To Printing & Stationary 250
To Rent & Taxes 350
To Travelling Expenses 200
To Sundry Trade Expenses 300
To Net Profit transferred to 40,600
Capital A/c

54,300 54,300
 Rs.
Gross Profit 51000 Discount (Dr.)
Carriage Outward
2500 Apprentice Premium (C
Salaries 5500 Printing & Stationary
Rent 1100 Rates & Taxes
Fire Insurance Premium
900 Travelling Expenses
Bad Debts 2100 Sundry Trade Expenses
Commission Received
1000 Discount allowed by Cr
Rs.
500
1500
250
350
200
300
800
86-9-166
TRADING & PROFIT AND LOSS A/C OF M/S KAUTILYA & CO.
FOR THE YEAR ENDED 31ST MARCH, 2018
Particulars Rs. Rs. Particulars Rs. Rs.
To Opening stock 500 By Sales 25000
To Purchases 19500 Less returns 650 24,350
Less returns 250 19,250 By Closing Stock 12,500
To Wages 1,400
To Carriage Inwards 400
To Gross Profit c/d 15,300
Total 36,850 Total 36,850

By Gross Profit b/d 15,300

To Insurance 550 By Commission 200
To Commission 400
To Interest on Capital 350
To Stationary 225
To Trade Expenses 100
To Rent and Taxes 550
To Carriage Outwards 725
To Net Profit transferred to 12,600
Capital A/c
Total 15,500 Total 15500

BALANCE SHEET OF MESSERS KAUTILYA & CO

AS ON 31ST MARCH, 2018

Liabilities Amount Amount Assets Amount Amount

(Rs.) (Rs.) (Rs.) (Rs.)
Creditors 9,825 Cash in Hand 250
Bills Payable 1,500 Cash at Bank 2,375
Capital 8950 Bill Receivable 2,250
Add Net Profit 12,600 21,550 Stock 12,500
Sundry Debtors 15,000
Office Fixtures 500
Total 32,875 Total 32,875
96 -10 - 178
TRADING & PROFIT AND LOSS A/C
FOR THE YEAR ENDED 31ST MARCH, 2006
Dr Cr
Particulars Rs. Particulars Rs.
To Opening stock 500 By Sales 3,500
To Purchases 1,500 By Closing Stock 200
To Wages 300
To Carriage Inward 100
To Power 150
To Gross Profit c/d 1,150
Total 3,700 Total 3,700
To Salaries 200 By Gross profit b/d 1,150
Add Outstanding Salaries 50 250 By Commission 50
To Carriage Inward 100
To Insurance Premium 20
Less prepaid Ins. 10 10
To Discount allowed 30
To Depreciation on:
Machinery 80
Land and Building 100 180
To Interest on Loan 72
To Interest on Capital 120
To Net Profit (Transferred to 438
capital account)
Total 1,200 Total 1,200

BALANCE SHEET AS ON 31ST MARCH 2006

Liabilities Rs. Rs. Assets Rs.

Capital 2,000 Land and Building 2,000
Add Interest on Capital 120 Less Dep. 100
Add Net profit 438 Machinery 800
2,558 Less Dep. 80
Less Drawings 100 2,458 Investments
Loan 600 Closing stock
Add Interest O/S 72 672 Bills Receivable
Sundry Creditors 750 Cash at Bank
Bills payable 300 Cash in Hand
Outstanding Salaries 50 Prepaid Insurance
Total 4,230 Total
 Rs.

1,900

720
500
200
300
500
100
10
4,230
107 -12 -260

BANK RECONCILIATION STATEMENT

Particulars + (Rs) - (Rs)

Balance as per Cash Book 5800
Add Cheques issued but not presented for payment 2000
Less Cheques sent for collection but not yet collected 1500
Less Amount wrongly debited by the Bank 200
7800 1700
Balance as per Bank Pass Book 6100
108 - 263
BANK RECONCILIATION STATEMENT
AS ON 31ST DECEMBER, 2006

Particulars +(Rs.) - (Rs.)

i) Dr. Balance as per Cash Book 3000
ii) Add Cheques issued but not yet presented for 500
payment (Rs.2,500-Rs.2,000).
iii) Add Interest collected by the bank not recorded in 400
the Cash Book
iv) Add Amount deposited by the Customer direct 250
into the bank not recorded in the Cash Book.
v) Less Cheques paid into bank but not yet credited 700
by the bank
vi) Less Cheque entered in the Cash Book but was 250
omitted to be banked upto 31st December.
vii) Less Cheque from Mohan paid into bank 200
dishonoured but not yet recorded in the Cash
Book.
viii) Less Bank charges as per Pass Book 10
4,150 1,160
Cr. Balance as per Pass Book 2,990
108-265
BANK RECONCILIATION STATEMENT

Particulars + Rs. -Rs.

(i) Bank Overdraft per the Cash Book 16,200
(ii) Add Cheque for Rs.5,000 deposited but collection 4
as per Bank statement Rs.4,996.
(iii) Add Cheque returned dishonoured as per the 530
Bank statement only.
(iv) Bill for Rs.8,000 discounted for Rs.7,960 8,015
returned dishonoured by the bank noting charges
being Rs.15.
(v) Add Cheque deposited but not collected. 2,320
(vi) Less Cheque deposited but not recorded in the 700
Cash Book.
(vii) Less Debit side of the bank column cast short. 100
(viii) Less Bills collected directly by the bank. 3,500
(ix) Less Bank charges recorded twice in the Cash 25
Book.
(x) Less Cheques issued but not yet presented for 1,250
encashment.
27,069 5,575
Bank overdraft as per the Pass Book (Dr.) 21,494
117 - 320

Under FIFO method, closing inventory includes recent

purchases at most recent prices. Hence, the value of the inventory on 31st
January will be as follows:
Units Rate Amount
Jan-28 Purchases 400 20 8000
Jan-15 Purchases 200 19 3800
11800

Here, the value of inventory as on 31st January 2018 has been

arrived as on the presupposition that the firm uses periodic inventory
system, the value of inventory would remain the same even if the
perpetual inventory system is in use. To take an example, if out of 1000
units issued, 300 units were issued on January 5, while 700 units were
issued on January 16, the valuation of inventory using perpetual inventory
system will be done as follows:

STOCK LEDGER

Date Receipts Issues Balance

Qty. Rate Amount Qty. Rate Amount Qty.
(Rs.) (Rs.)
Jan.2 500 20 10,000 0 0 0 500
Jan.3 400 21 8,400 0 0 0 900
Jan. 5 0 0 0 300 20 6000 600
Jan.l5 300 19 5,700 0 0 0 900
Jan.16 0 0 0 200 20 4000
400 21 8400
100 19 1900 200
Jan.28 400 20 8,000 0 0 0 600
Balance
Amount
(Rs.)
10,000
18,400
12,400
18,100

3,800
11,800
Under LIFO method, closing inventory includes most old
purchases remaining unissued till last date. Hence, valuation of inventory
under periodic inventory system would be as follows:

Hence, the value of the inventory on 31st January will be as follows:

Units Rate Amount
Jan. 2 Purchases 200 20 4000
Jan. 28* Purchases 400 20 8000
Rs. 12,000

*Closing entry of 600 units includes 200 units purchased on 2nd January but
remained unissued and 400 units purchased on 28th January remaining unissued
upto 31st January.

STOCK LEDGER

Date Receipts Issues Balance

Qty. Rate Amount Qty. Rate Amount Qty.
(Rs.) (Rs.)
Jan-02 500 20 10,000 0 0 0 500
Jan-03 400 21 8,400 0 0 0 900
Jan-05 0 0 0 300 21 6,300 600
Jan-15 300 19 5,700 0 0 0 900
Jan-16 0 0 0 300 19 5,700
100 21 2,100
300 20 6,000 200
Jan-28 400 20 8,000 0 0 0 600
Jan-31 0 0 0 0 0 0 600
Balance
Amount
(Rs.)
10,000 500 -300 200 -200 0
18,400 400 -300 100 -100 0
12,400
11,700 300 -300 0

4,000
12,000
12,000
122- 329
(i) FIFO Method: In case of FIFO method, earlier purchases are
charged to earlier issues and the ending inventory includes the most
recent purchases at the most recent prices. Thus, stock of 15 tonnes
include 10 tonnes @ Rs. 920 per tonne purchased on 29-4-2005 and 5
tonnes @ Rs. 900 per tonne purchased on 15-4-2005. The inventory

valuation will be as follows:

10 tonnes@ Rs. 920 per tonne Rs. 9,200

5 tonnes @ Rs. 900 per tonne Rs. 4,500
Inventory value on 30.4.05 Rs. 13,700

Weighted Average Price Method

10 tonnes@Rs. 840 8,400

100 tonnes@Rs. 850 85,000
50 [email protected] 45,000
10 tonnes@Rs. 920 9200
170 tonnes 147,600

Average price per tonne = 1,4,600/170 = 868.24

Closing inventory (30-4-05): 15 tonnes @ Rs. 868.24=Rs. 13,023.60

 Aggregate Method

Quantity Unit Price Quantity X Price LCM (Rs.)

Cost (Rs.) Net realisable Cost Net Realisable
Value (Rs.) (Rs.) Value (Rs.)
10 20 21 200 210
16 15 14 240 224
20 30 40 600 800
10 18 16 180 160
9 40 45 360 405
7 30 25 210 175
8 8 10 64 80
8 6 5 48 40
1902 2094 1902

Group Method

Group Qty Unit Price Qty X Price Lower of

Cost Net Cost Net cost or net
(Rs.) Realisable(Rs.) Realisable Realisable
Value Value value
Group A 10 20 21 200 210
16 15 14 240 224
440 434 434
Group B 20 30 40 600 800
10 18 16 180 160
780 960 780
Group C 9 40 45 360 405
7 30 25 210 175
570 580 570
Group D 8 8 10 64 80
8 6 5 48 40
112 120 112
1896

Item-by-item method

Quantity Unit Price Quantity X Price Lower of

Cost Net Cost (Rs.) Net Cost or Net
(Rs.) realisable realisable Realisable
value (Rs.) value (Rs.) Value (Rs.)
10 20 21 200 210 200
16 15 14 240 224 224
20 30 40 600 800 600
10 18 16 180 160 160
9 40 45 360 405 360
7 30 25 210 175 175
8 8 10 64 80 64
8 6 5 48 40 40
1823
12 5 - 335

Solution: Valuation of closing stock

Value of stock as on January 10, 2006 50000

Less: Purchases after 31st December 2000
Add: Cost of goods sold during first 6000
10 days of January, 2006 (75% of 8000)
Value of stock as on 31st Dec. 2005 54000
135 - 335
Dep 4000

MACHINERY ACCOUNT

Date Particulars Rs. Date Particulars Rs.

2012 To Bank 22000 Mar-31 By Depreciation 4000
Apr-01 To Bank 2000 Mar-31 By Balance C/d 21000
To Bank 1000
Total 25000 Total 25000
2013 To Balance b/d 21000 2013 By Depreciation 4000
Apr-01 Mar-31 Balance c/d 17000
21000 21000
2014 To Balance/b/c 17000 2013 By Depreciation 4000
Apr-01 Mar-31 By Balance c/d 13000
17000 17000
2015 To Balance b/c 13000 2013 By Depreciation 4000
Apr-01 Mar-31 By Balance 9000
13000 13000
2016 To Balance b/d 9000 2013 By Depreciation 4000
Apr-01 Mar-31 By Balance c/d 5000
9000 9000
137 - 359

MACHINERY ACCOUNT

Date Particulars Rs. Date Particulars Rs.

2013 To Bank 20000 2013 By Depreciation 5000
Apr. 1 Mar. 31 By Balance C/d 15000
Total 20000 Total 20000
2014 To Balance b/d 15000 2014 By Depreciation 3750
Apr.1 Mar.31 By Balance c/d 11250
Total 15000 Total 15000
2015 To Balance b/d 11250 2015 By Depreciation 2812.5
Apr-01 Mar.31 By Balance c/d 8437.5
Total 11250 Total 11250
Cost 27000
Scrap Value 3375
Life 3
Dep Rate = 0.5
140 -362 0.282012

LEASE HOLD PROPERTY ACCOUNT

Date Particulars Rs. Date Particulars Rs.

2013 To Bank 24000 2013 By Depreciation 6768.288
Apr-01
Mar-31 To interest 1200 Mar-31 By balance c/d 18431.712
Total 25200 Total 25200

2014 To balance b/d 18431.712 2014 By Depreciation 6768.288

Apr-01 Mar-31
Mar-31 To Interest 921.6 Mar-31 By Balance c/d 12585.0096
Total 19353.3 Total 19353.2976

2015 To balance b/d 12585.0096 2015 By Depreciation 6768.288

Apr-01 Mar-31
Mar-31 To Interest 629.3 Mar-31 By Balance c/d 6445.97208
Total 13214.3 Total 13214.26008

2016 To balance b/d 6445.97208 2016 By Depreciation 6768.288

Apr-01 Mar-31 By Balance c/d 0
Mar-31 To Interest 322.298604
Total 6768.270684 6768.270684

NET AMOUNT CHARGEABLE TO THE PROFIT AND LOSS ACCOUNT

Net
Depreciation Interest Charge
Year
debited Credited against
Profit
1990 6768.29 1200 5568.29
1991 6768.29 921.59 5846.7
1992 6768.29 629.25 6139.04
1993 6768.29 322.3 6445.99
Rs. 27073.16 3073.14 24000.02
142-365

JOURNAL
Date Particulars Debit Credit
1/4/2010 Lease A/c Dr. 60,000
To Bank A/c 60,000
(Being the purchase of lease)
31/3/2011 Depreciation A/c Dr. 13920.7
To Depreciation Fund A/c 13920.7
(Being annual amount of depreciation as
per sinking fund tables)
31/3/2011 Depreciation Fund Investment A/c Dr. 13920.7
To Bank A/c 13920.7
(Being purchase of the investments
against the depreciation fund)
1/4/2011 Bank A/c Dr. 696
To depreciation fund A/c 696
(Being the receipt of interest on
depreciation fund investment A/c transfer
to depreciation fund A/c
31/3/2012 Depreciation A/c Dr. 13920.7
To Depreciation Fund A/c 13920.7
(Being annual depreciation set-aside)
31/3/2012 Depreciation Fund Investment A/c Dr. 14616.7
To Bank A/c 14616.7
(Being purchase of the investments
against the depreciation fund)
1/4/2012 Bank Account Dr. 1426.9
To depreciation fund A/c 1426.9
Being receipt of interest and its transfer to depreciation fund A/c)
31/3/2013 Depreciation A/c Dr. 13920.7
To depreciation fund A/c 13920.7
(Being annual depreciation set aside)
Depreciation Fund Investment
31/3/2013 A/c Dr. 15347.6
To Bank A/c 15347.6
(Being purchase of investments)
31/3/2013 Bank A/c Dr. 2194.3
To depreciation fund A/c 2194.3
(Being receipt of interest on depreciation
fund investment)
31/3/2013 Depreciation A/c Dr. 13920.7
To depreciation A/c 13920.7
(Being annual depreciation set aside)
31/3/2013 Bank A/c Dr. 45200
To depreciation fund investment A/c 45200
(Being sale of Dep fund investment A/c)
Depreciation Fund Investment
31/3/2013 A/c Dr. 1315
To depreciation fund A/c 1315
(Being profit on sale investment
 transferred)
31/3/2013 Depreciation fund A/c Dr. 61315
To lease A/c 61315
(Being the transfer of depreciation fund
A/c to lease A/c)
31/3/2013 Lease A/c Dr. 1315
To PCL A/c 1315
(Being Balance of lease A/c transferred to
place
1.1.94 Lease A/c Dr. 70000
To Bank A/c 7000
144 -370
145 -373

MACHINERY ACCOUNT
Dr
Date Particulars Rs. Date
1.4.90 To Bank 60000 31.12.90
Oct. 1 To Bank 40000

Dec.31
TOTAL 100000

1.1.91 To Balance b/d 94500 31.12.91

Dec. 31
TOTAL 94500

1.192 To Balance b/d 85050 31.12.91

Jan. 1
Dec. 31
Dec. 31
TOTAL 85050

Note
Total written down value as on Jan. 1, 1992
Hence , WDV of 1/3rd Machine
Less - Sale Proceeds Received
Loss on Sale of Machinery
Balance WDV
Dep on Balance
RY ACCOUNT
Cr
Particulars Rs.
By Depreciation 5500
on Rs. 60000 for 9 month
on Rs. 40000 for 3 month
By Balance c/d 94500
TOTAL 100000

By Depreciation on Rs. 9450

By Balance c/d 85050

TOTAL 94500

By Bank (sale proceeds) 5000

By P&L A/C (loss on Sale) 23350

By Depreciation 5670
By Balance c/d 51030
TOTAL 85050

85050
28350
5000
23350
56700
5670
146 -375
COMPUTER ACCOUNT
Dr Cr
Date Particulars Rs. Date Particulars Rs.
1.1.93 To Bank A/c 50000 31.12.93 By Depreciation 9000
“ By Balance c/d 41000
TOTAL 50000 TOTAL 50000

1.1.94 To Balance b/d 41000 31.12.94 By Depreciation 9000

“ By Balance c/d 32000
TOTAL 41000 TOTAL 41000

1.1.95 To Balance b/d 32000 31.12.95 By Depreciation 6400

“ By Balance c/d 25600
TOTAL 32000 TOTAL 32000

1.1.96 To Balance b/d 25600 31.12.96 By Depreciation 5120

“ By Balance c/d 20480
TOTAL 25600 TOTAL 25600

Working Notes

1 Depreciation on straight line basis 9000

147 - 376
COMPUTER ACCOUNT
Dr
Date Particulars Rs. Date
1.1.95 To Balance 32000 31.12.95

Dec. 31
TOTAL 32000
1.1.96 To Balance 25600 31.12.96
“
TOTAL 25600

Working Notes
1) 1.1.1993 1.1.1993 Acquisition cost of computer 50000
31.12.93 Depreciation @ 20% p.a. on 50000 10000
1.1.94 Balance 40000
31.12.94 Depreciation @ 20% on Rs. 40000 8000
Depreciation according to WDV for 1993 and 94 18000
Less Depreciation according to straight line basis 18000
Difference 0

2) 1.1.95 Balance 32000

31.12.95 Depreciation @ 20% p.a. on 32000 6400
1.1.96 Balance 25600
31.12.96 Depreciation @ 20% on 25600 5120
31.12.96 Balance 20480
CCOUNT
Cr
Particulars Rs.
By Depreciation
Difference for earlier Years ( 1 ) 0
Current year (2) 6400

By Balance c/d 25600

TOTAL 32000
By Depreciation 5120
By Balance 20480
TOTAL 25600
Let us illustrate the journal entries for the following transactions

In the Books of M/S AV and Associates

Journal Entries
Journal Folio No -1
Date Particulars Voucher No. LF Dr.( Rs.)
1/4/2013 Cash A/C Dr. 1 750000
To Abhay’s Capital A/c 2
To Vaibhavi’s capital A/c 3
(Being capital brought in by the partners)

10/4/2013 Furniture A/c Dr. 2013/F/3 4 25000

To Cash A/c 1
(Being furniture purchased in cash)

11/4/2013 Punjab National Bank A/c Dr. 5 100000

To Cash A/c 1
(Being current account opened with
Punjab National Bank by depositing cash)

15/4/2013 Rent A/c Dr. 3 6 15000

To Punjab National Bank A/c 5
(being rent paid to Realtors Properties for
the month)

20/4/2013 Motor Car A/c Dr. M/12/7 7 450000

To Punjab National Bank A/c 5
To Loan from HDFC Bank A/c 8
(Being car purchased from Millennium
Motors by paying down payment and
loan arrangement)

25/4/2013 Punjab National Bank A/c Dr. B12/4/1 5 250000

Avon Pharma A/c Dr. 9 750000
To Consultancy Fees A/c 10
(Being amount received and revenue
recognized for fees charged)

30/4/2013 Salary A/c Dr. 11 15000

To Salary payable A/c 12
(Being the entry to record salary
obligation for the month)

Cash A/C
Dr.
Date Particulars JF Amount Date
1/4/2013 To Abhay’s Capital A/c 1 500000 10/4/2013
To Vaibhavi’s capital A/c 1 250000 11/4/2013
30/4/2013
Total 750000
1/5/2013 To Balance B/F 625000

Abhayh's Capital A/C

Dr.
ournal Folio No -1
Cr.( Rs.)

500000
250000

25000

100000

15000

50000
400000

1000000

15000

Folio - 1

Cr.
Particulars JF Amount
By Furniture A/C 1 25000
By Punjab National1Bank A/C100000
By Balance C/F 625000
Total 750000

Folio - 2

Cr.
 Date Particulars JF Amount Date
30/4/2013 To Balance C/F 500000 1/4/2013
Total 500000
1/5/2013

Vaibhavi's Capital A/C

Dr.
Date Particulars JF Amount Date
30/4/2013 To Balance C/F 250000 1/4/2013
Total 250000
1/5/2013

Furniture A/C
Dr.
Date Particulars JF Amount Date
10/4/2013 To Cash A/c 1 25000 30/4/2013
Total 25000
1/5/2013 To Balance B/F 25000

Punjab National Bank A/C

Dr.
Date Particulars JF Amount Date
11/4/2013 To Cash A/c 1 100000 15/4/2013
25/4/2013 To Consultancy Fees A/c 250000 20/4/2013
30/4/2013
Total 350000
1/5/2013 To Balance B/F 285000

Rent A/C
Dr.
Date Particulars JF Amount Date
15/4/2013 To Punjab National Bank A/c 1 15000 30/4/2013
Total 15000

Motor Car A/C

Dr.
Date Particulars JF Amount Date
20/4/2013 To Punjab National Bank A/c 1 50000 30/4/2013
20/4/2013 To Loan from HDFC Bank A/c 1 400000
Total 450000
1/5/2013 To Balance B/F 450000

Loan From HDFC Bank A/C

Dr.
Date Particulars JF Amount Date
30/4/2013 By Balance C/F 400000 20/4/2013
Total 400000
1/5/2013
 Particulars JF Amount
By Cash 1 500000
Total 500000
By Balance B/F 500000

Folio - 3

Cr.
Particulars JF Amount
By Cash 1 250000
Total 250000
By Balance B/F 250000

Folio - 4

Cr.
Particulars JF Amount
By Balance C/F 1 25000
Total 25000

Folio - 5

Cr.
Particulars JF Amount
By Rent A/C 1 15000
By Motor Car A/C 1 50000
By Balance C/F 1 285000
Total 350000

Folio - 6

Cr.
Particulars JF Amount
By Profit & Loss A/C 15000
Total 15000
Folio - 7

Cr.
Particulars JF Amount
By Balance C/F 450000

450000

Folio - 8

Cr.
Particulars JF Amount
By Motor Car A/C 1 400000
Total 400000
To Balance B/F 400000
 Avon Pharma A/c
Dr.
Date Particulars JF Amount Date
25/4/2013 To Consultancy Fees A/c 1 750000 30/4/2013
Total 750000
1/5/2013 To Balance B/F 750000

Consultancy Fees A/c

Dr.
Date Particulars JF Amount Date
25/4/2013
30/4/2013 To Profit & Loss A/C 1000000 25/4/2013
Total 1000000

Salary A/C
Dr.
Date Particulars JF Amount Date
30/4/2013 To Salary payable A/c 1 15000 30/4/2013
Total 15000

Salary Payable A/C

Dr.
Date Particulars JF Amount Date
30/4/2013 To Balance C/F 15000 30/4/2013
Total 15000
1/5/2013

Remember
1 The balances of personal and real accounts only are carried down to the next accounting period as they re
resources and obligations of the business which will continue to be used and settled respectively in future.
2 Balances of nominal accounts (which represent incomes or gains and expenses or losses) are not C/F
to the next period. These balances are taken to the Profit and Loss account (or Income statement )
prepared for the period. The net result of the P & L Account will show either net income or net loss
which will increase or decrease the owner’s equity

Trial Balance For the Period

Account name Dr Cr.

Cash A/c 625000
Abhayh's Capital A/C 500000
Vaibhavi's Capital A/C 250000
Furniture A/C 25000
Punjab National Bank A/C 285000
Rent A/C 15000
Motor Car A/C 450000
Loan From HDFC Bank A/C 400000
Avon Pharma A/c 750000
Consultancy Fees A/c 1000000
Salary A/C 15000
Salary Payable A/C 15000
Total 2165000 2165000
 Folio - 9

Cr.
Particulars JF Amount
By Balance C/F 750000
Total 750000

Folio - 10

Cr.
Particulars JF Amount
By Punjab National1Bank A/C250000
By Avon Pharma A/C1 750000
Total 1000000

Folio - 11

Cr.
Particulars JF Amount
By Profit & Loss A/C 15000
Total 15000

Folio - 12

Cr.
Particulars JF Amount
By Salary A/C 1 15000
Total 15000
To Balance B/F 15000

the next accounting period as they represent

sed and settled respectively in future.
expenses or losses) are not C/F
ccount (or Income statement )
either net income or net loss

Account name Dr
Cash A/c 625000
Share Capital
Furniture A/C 25000
Punjab National Bank A/C 285000
Rent A/C 15000
Plant & Machinery A/C 450000
Loan From HDFC Bank A/C
Sundry Debtors A/c 750000
Sales A/c
Salary A/C 15000
Salary Payable A/C
Total 2165000
 Cr.

750000

400000

1000000

15000
2165000
 Profit & Loss A/C for the month ended 30/4/2013

Dr.
Particulars Rs. Particulars
To Rent A/C 15000 By Consultancy Fees A/c
To Salary A/C 15000
To Net Profit 970000
Transferred to B/S
Total 1000000 Total

Balance Sheet As on 30 April 2013

Liabilities ( Sources of Funds ) Rs. Assets ( Application of Funds )

Partners Capital A/C 1720000 Fixed Assets

Abhayh's Capital A/C 500000 Furniture A/C
Vaibhavi's Capital A/C 250000 Motor Car A/C
Add Net Profit 970000
Debtors and OCA
Loan Funds 400000 Avon Pharma A/c
Loan From HDFC Bank A/C 400000 Punjab National Bank A/C
Cash A/c
Creditors , Advances and OCL 15000
Salary Payable A/C 15000

Total 2135000 Total

Cr.
Rs.
1000000

1000000

Rs.

475000
25000
450000

1660000
750000
285000
625000

2135000
 Preparation of Trading Account

Illustration 1.
Following are the ledger balances presented by M/s. P. Sen as on 31st March 2012.

Particulars Amount Particulars Amount

Stock (1.4.2011) 10,000 Sales 300,000
Purchase 160,000 Return Inward 16,000
Carriage Inwards 10,000 Return Outward 10,000
Wages 30,000 Royalty on Production 6,000
Freight 8,000 Gas and Fuel 2,000

Additional Information:
(1) Stock on 31.3.2012: (i) Market Price Rs. 24,000; (ii) Cost Price Rs. 20,000;
(2) Stock valued Rs.10,000 were destroyed by fire and insurance company admitted the claim to the
extent of Rs. 6,000.
(3) Goods purchased for Rs. 6,000 on 29th March, 2012, but still lying in-transit, not at all recorded in the
books.
(4) Goods taken for the proprietor for his own use for Rs. 3,000.
(5) Outstanding wages amounted to Rs.4,000.
(6) Freight was paid in advance for Rs. 1,000.
 Solution
In the books of M/s. P. Sen
Trading Account
For the year ended 31st March, 2012.
Particulars Amount Amount Particulars
To Opening Stock 10,000.00 By Sales
To Purchase 160,000.00 Less- Return Inward
Less- Return Outward 10,000.00
150,000.00 By Closing Stock
Less- Goods Taken by Add- Stock Destroyed
Propertior 3,000.00
147,000.00 Add- Goods- in Transit
Add- Goods- in transit 6000 153,000.00

To Wages 30,000.00
Add- Outstanding 4,000.00 34,000.00
ecorded in the
To, Carriage Inwards 10,000.00
To, Freight 8,000.00
Less: Prepaid 1,000.00 7,000.00
To, Royalty on production 6,000.00
To, Gas & fuel 2,000.00

To Gross Profit 98,000.00

320,000.00

Note: (a) Stock should be valued as per cost price or market price whichever is lower.
(b) The claim which was admitted by insurance company and the loss of stock, will not appear
in Trading Account.
 Amount Amount
300,000.00
16,000.00 284,000.00

20,000.00
10,000.00
30,000.00
6,000.00 36,000.00

320,000.00

will not appear

From the following particulars presented by Sri Tirlhankar for the year ended 31st March 2013, Prepare
Profit and Loss Account.
Gross Profit Rs. 1,00,000, Rent Rs. 22,000; Salaries, Rs.10,000; Commission (Cr.)Rs. 12,000; Insurance Rs. 8,000;
Interest (Cr.) Rs. 6,000; Bad Debts Rs. 2,000; Provision for Bad Debts (1.4.2012)Rs.4,000; Sundry Debtors
Rs.40,000; Discount Received Rs. 2,000; Plant & Machinery Rs. 80,000.

Adjustments:
(a) Outstanding salaries amounted to Rs. 4,000;
(b) Rent paid for 11 months;
(c) Interest due but not received amounted to Rs. 2,000
(d) Prepaid Insurance amounted to Rs. 2,000;
(e) Depreciate Plant and Machinery by 10% p.a.
(f) Further Bad Debts amounted to Rs. 2,000 and make a provision for Bad Debts @5% on Sundry
Debtors.
(g) Commissions received in advance amounted to Rs. 2,000.
 Solution
2013, Prepare In the Books of Sri Tirlhankar
Profit and Loss Account
000; Insurance Rs. 8,000; for the year ended 31st March 2013.
0; Sundry Debtors Particulars Amount Amount

To Rent 22,000.00
Add- Outstanding 2,000.00 24,000.00

To Salaries 10,000.00
Add- Outstanding 4,000.00 14,000.00

To Insurance 8,000.00
Less- Prepaird 2,000.00 6,000.00

To Bad Debts 2,000.00

Add- Further Bad Debts 2,000.00 4,000.00

To Depreciation on Plant &

Machinery @ 10% on Rs.80,000 8,000.00

To Capital A/c 66,100.00

(Net Profit Transferred)

122,100.00
 In the Books of Sri Tirlhankar
Profit and Loss Account
the year ended 31st March 2013.
Particulars
By Gross Profit b/f 100,000.00
By Commission 12,000.00
Less- Received in Advance 2,000.00 10,000.00

By Interest 2,000.00
Add- Accrued Interest 6,000.00 8,000.00

By Discount Received 2,000.00

By Provision For Bad Debts 4,000.00
Less- New Provision @5%
Rs.40,000-2,000) 1,900.00 2,100.00

122,100.00
X,Y and Z are three Partners sharing profit and Losses equally. Their capital as on 01.04.2012 were: X
Rs.80,000 ; Y Rs.60,000 and Z Rs.50,000.
They mutually agreed on the following points (as per partnership deed)
(a) Interest on capital to be allowed @ 5% P.a. (b) X to be received a salary @ Rs.500 p.m. (c) Y to be
received a commission @ 4% on net profit after charging such commission. (d) After charging all other
items 10% of the net profit to be transferred General Reserve.
Profit from Profit and Loss Account amounted to Rs.66,720. Prepare a Profit and Loss Appropriation
Account for the year ended 31st March, 2013.
012 were: X Solution

In the books of X,Y and Z

(c) Y to be Profit and Loss Appropriation Account
ging all other For the year ended 31st March, 2013
Dr.
Particulars Amount Amount
To Interest on Capital :
X 4,000.00
Y 3,000.00
Z 2,500.00 9,500.00

To Salaries :
X :Rs. (500*12) 6,000.00
To Commission
Y 1,970.00
To General Reserve 4,925.00
To Net Divisable Profit
X 14,775.00
Y 14,775.00
Z 14,775.00

44,325.00
66,720.00

Workings:
1 Net Profit before charging Y’s Commission 51,220.00
Less - Y's commission 1970
49,250.00
2 Transfer to General Reserve 4,925.00
 ooks of X,Y and Z
nd Loss Appropriation Account
e year ended 31st March, 2013
Cr.
Particulars Amount Amount
By Profit & Loss A/c 66,720.00

66,720.00

104
4
Mr. Arvindkumar had a small business enterprise. He has given the trial balance as at 31st March 2012

Particulars Debit (Rs.) Credit (Rs.)

Mr. Arvin kumar's Capital 100,000.00
Machineary 36,000.00
Depreciation machinery 4,000.00
Repairs to machinery 5,200.00
Wages 54,000.00
Salaries 21,000.00
Income tax of Mr. Arvindkumar 1,000.00
Cash In Hand 4,000.00
Land & Building 149,000.00
Depreciation On Building 5,000.00
Purchases 250,000.00
Pruchase returns 3,000.00
Sales 498,000.00
Citi Bank 7,600.00
Accrude Income 3,000.00
Salaries Outstanding 4,000.00
Bills Receivables 30,000.00
Provision For Doubtful Debts 10,000.00
Bills Payable 16,000.00
Bad Debts 2,000.00
Discount on Purchases 7,080.00
Debtors 70,000.00
Creditors 62,520.00
Opening Stock 74,000.00
Total 708,200.00 708,200.00

Additional information:
(1) Stock as on 31st March 2012 was valued at Rs.60,000
(2) Write off further Rs.6,000 as bad debt and maintain a provision of 5% on doubtful debt.
(3) Goods costing Rs.10,000 were sent on approval basis to a customer for Rs.12,000 on 30th March, 2012.
This was recorded as actual sales.
(4) Rs.2,400 paid as rent for office was debited to Landlord’s A/c and was included in debtors.
(5) General Manager is to be given commission at 10% of net profits after charging his commission.
(6) Works manager is to be given a commission at 12% of net profit before charging General Manager’s
commission and his own.
You are required to prepare final accounts in the books of Mr. Arvindkumar.

52,000.00
2,600.00
1st March 2012

Solution :

In the books of Mr. Arvindkumar

Trading Account for the year ended 31st March 2012
Dr
Particulars Amount Amount
Opening Stock
Finish goods 74,000
Purchase 250,000
Less- Purchase Returns 3,000 247,000
Wages 54,000

Gross Profit C/d 181,000

556,000

n 30th March, 2012. Profit and Loss Account for the year ended 31st Ma
Dr
Particulars Amount Amount
commission. Administrative expenses:
eneral Manager’s Salaries 21,000
Repairs to machinery 5,200
Depreciation of machinery 4,000
Depreciation of Building 5,000
Rent 2,400
Selling & Distrubution expenses :
Bad Debts (TB) 2,000
Additional Bad Debts (Adj) 6,000
Provision For Doubtful Debts (BS) 2,480
10,480
Less : Provision Opening 10,000 480
 Cr
Particulars Amount Amount
Sales 498,000
Less Sent on approval 12,000 486,000
Closing Stock
Finish goods 60,000
Add sent on Approval 10,000 70,000

556,000

nt for the year ended 31st March 2012

Cr
Particulars Amount Amount
Gross Profit b/d 181,000
Discount Received 7,080
Commission to Work Manager 18,000
Commission to General Manager 12,000
Net Profit 120,000

188,080

Balance Sheet as on 31st March 2012

Dr
Capital & Liabilities Amount Amount
Arvind Kumar's Capital 100,000.00
Less : Drawings ( income tax ) 1,000.00
Add : Net Profit for the year 120,000.00 219,000.00
Long term Liabilities :
Current Liabilities
Sundery Creditors 62,520.00
Outstanding Salaries 4,000.00
Citi Bank Overdraft 7,600.00
Bills Payable 16,000.00
Commission Payable 30,000.00

339,120.00

Notes:
(1) The closing entries are passed for the items: depreciation, accrued income, outstan
Hence, they are directly taken to the respective places in Balance sheet and P & L A/c
(2) Income tax paid for Mr. Arvindkumar will be treated as drawings.
(3) Commission payable to works manager & general manager is computed as below:
Rs.
Profit before charging any commission 150,000
Commission to works manager @ 12% on 150,000 18,000
Profit after works manager’s commission 132,000
Commission to General Manager 12,000
(132000/110 x 100)
 188,080

1st March 2012

Cr
Assets Amount Amount
Fixed Assets:
Land & Building 149,000.00
Machinery 36,000.00
Current Assets:
Stock 60,000.00
Add : Sent on approaval 10,000.00 70,000.00

Sundry Debtors 70,000.00

Less : Goods on approval 12,000.00
Less : Bad Debts 6,000.00
Less : Related to landlord 2,400.00
Less : Provision for Doubtful Debts 2,480.00 47,120.00
Bills Receivable 30,000.00
Cash in Hand 4,000.00
Accrued Income 3,000.00

339,120.00

ion, accrued income, outstanding salary.

Balance sheet and P & L A/c.
as drawings.
nager is computed as below:
1 Following figures have been extracted from the records of a company:

Year 2012-13 2013-14

Sales (Rs.) 500,000 840,000
Units Sold 10,000 14,000

Account for changes in sales value due to changes in sales quantity, selling price and both.
Solution:

Prticulars 2012-13 2013-14 Changes

Sales Value (Rs.) 500,000 840,000 340,000
Sales Units 10,000 14,000 4,000
Selling Price per Unit (Rs.) 50 60 10
[Sales Value ÷ Sales Units]

Statement showing account for changes in Sales

Rs.
1 Increase in sales due to increase in sales quantity 200,000
[Change in sales quantity x Base year’s unit selling price
= (14,000-10,000) units x `50]
2 Increase in sales due to increase in selling price 100,000
[Change in unit selling price x Base year’s sales quantity
= (`60 - `50) x 10,000 units]
3 Increase in sales due to increase in price and quantity 40,000
[Changes in unit selling price x Change in sales quantity
= (`60 - `50) x (14,000 - 10,000) units]
Increase in Sales 340,000
Note: Here, the base year is 2012-13.
 2
The following figures have been extracted from the records of a company:

Year 2012-13 2013-14

Sales (Rs.) 150,000 270,000
Cost of Goods Sold (Rs.) 100,000 180,000
Units Sold 10,000.00 15,000.00
Account for changes in profit due to changes in sales quantity, cost price and selling price.

Solution: Prticulars 2012-13 2013-14

(a) Sales (Rs.) 150,000 270,000
(b) Cost of Goods Sold (Rs.) 100,000 180,000
Gross Profit (Rs.) [a - b] 50,000 90,000
(c) Units Sold 10,000 15,000
(d) Selling Price per Unit (Rs.) [a ÷ c] 15 18
(e) Cost Price per Unit (Rs.) [b ÷ c] 10 12

Statement showing account for changes in Profit

Particulars Rs. Rs.
Changes in profit due to changes in sales:
1. Increase in profit due to increase in sales quantity 75,000
[Change in sales quantity x Base year’s unit selling price
= (15,000-10,000) units x `15]
2. Increase in profit due to increase in unit selling price 30,000
[Change in unit selling price x Base year’s sales quantity
= (`18- `15) x 10,000 units]
3. Increase in profit due to increase in price and quantity 15,000
[Changes in unit selling price x Change in sales quantity
= (`18 - `15) x (15,000 - 10,000) units]
120,000
Changes in profit due to changes in cost:
1. Decrease in profit due to increase in quantity -50,000
[Change in quantity x Base year’s unit cost price
= (15,000 - 10,000) units x `10]
2. Decrease in profit due to increase in unit cost price -20,000
[Change in unit cost price x Base year’s quantity
= (`12 - `10) x 10,000 units]
3. Decrease in profit due to increase in price and quantity -10,000
[Change in unit cost price x Change in quantity
= (`12 - `10) X (15,000 - 10,000) units] -80,000
Net Increase in Gross Profit 40,000
selling price.

Changes
120,000
80,000
40,000
5,000
3
2
 Provisional Balance Sheet of UR Pvt Ltd As On 31/3/12019
Liabilities 40000000 Assets
Equity Share Capital 5000000 Fixed Assets
Add: R&S 35000000 PPE 55000000
Intangible Assets 5000000
Long Term Loans 51500000
Bank TL 30000000 Current Assets
USL by Directors 20000000 Stock 75000000
Loans by Relatives of the director 1500000 FG 25000000
WIP 15000000
Short Term Liabilities 90000000 RM 30000000
Bank CC 35000000 PM 5000000
Creditors 40000000 Debtors 41500000
Other CL 15000000 Cash & Bank Balance 5000000

Total 181500000 Total 181500000

0
Sales 10000000 Equity 1000000
Less - Costs 8500000 Reserves & Surplus 1190000
Cost of Material Consumed 3500000 Bank TL 8000000
Employees Expenses 1000000 Current Liabilities 3100000
Repairs to Machinery Total Liabilities 13290000
- Major 650000 Total Assets 13290000
- Routine 50000 Fixed Assets 8311823
Product Registration Expenses 1500000 Current Assets 4978177
Other Expenses 1800000 Loan Principal repaid 800000
EBITDA 1500000
Less- Depreciation @ 10% 600000
EBIT 900000
Less- Interest @ 12% 1210000
EBT -310000
Less - Tax @ 33% 0
PAT -310000

Current Ratio 1.605863548

TOL/TNW 5.068493151
DSCR 0.448
 Sales 10000000
Less - Costs 6350000
Cost of Material Consumed 3500000
Employees Expenses 1000000
0 Repairs to Machinery
- Major
- Routine 50000
Product Registration Expenses
Other Expenses 1800000
EBITDA 3650000
Less- Depreciation @ 10% 1118182
EBIT 2531818
Less- Interest @ 12% 490000
EBT 2041818
Less - Tax @ 33% 673800
PAT 1368018

Current Ratio 1.32

TOL/TNW 3.04
DSCR 1.96

WDV of the assets 6000000

Other FA 2311823
Major Repairs capitalised to the PPE 650000
Product Registration Cost Capitalised 1500000
Interest Capitalised to PPE 720000
Total FA 11181823
Equity 1000000
Reserves & Surplus 2868017.859
1678017.859
Bank TL 8000000
Current Liabilities 3773800
Total Liabilities 15641817.72351817.7
Total Assets 16160000 2870000 518182
Fixed Assets 11181823 1570249
Current Assets 4978177
Loan Principal repaid 800000