CLASS 11 COMMERCE ACCOUNTANCY(PART – II) CHAPTER – 1 Financial Statements – 1

Financial Statements – 1

1. From the following balances taken from the books of Simmi and Vimmi Ltd. for the year ending March 31, 2017, calculate the gross profit.

  • Closing stock 2,50,000
  • Net sales during the year 40,00,000
  • Net purchases during the year 15,00,000
  • Opening stock 15,00,000
  • Direct expenses 80,000

Answer :

The gross profit is calculated below:

Trading Account as on March 31, 2017
Dr.Cr.
ParticularsAmountParticularsAmount
Opening Stock15,00,000Net Sales40,00,000
Net Purchases15,00,000Closing Stock2,50,000
Direct Expenses80,000
Gross Profit11,70,000
42,50,00042,50,000

Therefore, the Gross Profit is ₹ 11, 70,000.

2. From the following balances extracted from the books of M/s Ahuja and Nanda. Calculate the amount of:

(a) Cost of goods available for sale

(b) Cost of goods sold during the year

(c) Gross Profit

  • Opening stock 25,000
  • Credit purchases 7,50,000
  • Cash purchases 3,00,000
  • Credit sales 12,00,000
  • Cash sales 4,00,000
  • Wages 1,00,000
  • Salaries 1,40,000
  • Closing stock 30,000
  • Sales return 50,000
  • Purchases return 10,000

Answer :

a) Cost of Goods Sold Available for Sales

Or

Cost of Goods Manufactured = Opening Stock + Net Purchases + Wages

= 25,000 + 10, 40,000 + 1, 00,000

= ₹ 11, 65,000

(b) Cost of Goods Sold = Opening Stock + Net Purchases + Wages – Closing Stock

= 25,000 + 10, 40,000 + 1, 00,000 – 30,000

= ₹ 11, 35,000

Or

Cost of Goods Sold = Net Sales – Gross Profit

= 15, 50,000 – 4, 15,000

= ₹ 11, 35,000

(c)

Trading Account
Dr.Cr.
Particulars AmountParticularsAmount
Opening Stock25,000Sales
PurchasesAdd: Credit Sales12,00,000
Add: Credit Purchases7,50,000Add: Cash Sales4,00,000
Add: Cash Purchases3,00,00016,00,000
10,50,000Less: Sales Return(50,000)15,50,000
Less: Purchases Return(10,000)10,40,000
Wages1,00,000Closing Stock30,000
Gross Profit4,15,000
15,80,00015,80,000

3. Calculate the amount of gross profit and operating profit on the basis of the following balances extracted from the books of M/s Rajiv and Sons for the year ended March 31, 2017.

  • Opening stock 50,000
  • Net sales 11,00,000
  • Net purchases 6,00,000
  • Direct expenses 60,000
  • Administration expenses 45,000
  • Selling and distribution expenses 65,000
  • Loss due to fire 20,000
  • Closing stock 70,000

Answer :

The solution is as follows:

Trading Account as on March 31, 2017
Dr.Cr.
ParticularsAmountParticularsAmount
Opening Stock50,000Net Sales11,00,000
Net Purchases6,00,000Closing Stock70,000
Direct Expenses60,000
Gross Profit4,60,000
11,70,00011,70,000
Operating Profit=Sales – (Opening Stock + Net Purchases + Direct Expenses + Administration Expenses +Selling and Distribution Expenses) + Closing Stock
=11,00,000 – (50,000 + 6,00,000 + 60,000 + 45,000 + 65,000) + 70,000
=₹ 3,50,000

4. Operating profit earned by M/s Arora and Sachdeva in 2016-17 was ₹ 17, 00,000. Its non-operating incomes were ₹ 1, 50,000 and non-operating expenses were ₹ 3, 75,000. Calculate the amount of net profit earned by the firm.

Answer :

Net Profit = Operating Profit + Non-operating Income – Non-operating Expenses

= 17, 00,000 + 1, 50,000 – 3, 75,000

= ₹ 14, 75,000

Net profit earned by M/S Arora and Sachdeva in 2016–17 is ₹ 14, 75,000

5. The following are the extracts from the trial balance of M/s Bhola and Sons as on March 31, 2017

Account titleDebitCredit
Opening Stock2,00,000
Purchases8,10,000
Sales10,10,000
10,10,00010,10,000

(Only relevant items)

Closing Stock as on date was valued at ₹ 3, 00,000.

You are required to record the necessary journal entries and show how the above items will appear in the trading and profit and loss account and balance sheet of M/s Bhola and Sons.

Answer :

Books of M/s Bhola and SonsJournal
DateParticularsL.F.DebitAmountCredit Amount ₹
2017
Mar.31Trading A/cDr.10,10,000
To Opening Stock A/c2,00,000
To Purchases A/c8,10,000
(Balances from Purchases Account and Stock Accounttransferred to Trading Account)
Mar.31Sales A/cDr.10,10,000
Closing Stock A/c3,00,000
To Trading A/c13,10,000
(Balance from sales and closing stock transferredto Trading Account)
Mar.31Trading A/cDr.3,00,000
To Profit and Loss (Gross Profit) A/c3,00,000
(Balance of Trading Account (gross profit) transferredto Profit and Loss Account)
Trading Account as on March 31, 2017
Dr.Cr.
ParticularsAmountParticularsAmount
Opening Stock2,00,000Sales10,10,000
Purchases8,10,000Closing Stock3,00,000
Profit and Loss A/c – Gross Profit3,00,000
13,10,00013,10,000
Balance Sheet as on March 31, 2017
LiabilitiesAmountAssetsAmount
Closing Stock3,00,000

6. Prepare trading and profit and loss account and balance sheet, as on March 31, 2017:

Account TitleAmountAccount TitleAmount
Machinery27,000Capital60,000
Sundry debtors21,600Bills payable2,800
Drawings2,700Sundry creditors1,400
Purchases58,500Sales73,500
Wages15,000
Sundry expenses600
Rent and taxes1,350
Carriage inwards450
Bank4,500
Openings stock6,000

Closing stock, as on March 31, 2017 ₹ 22,400

Answer :

Trading and profit and loss account and balance sheet is prepared as follows:

Trading Account as on March 31, 2017
Dr.Cr.
ParticularsAmountParticularsAmount
Opening Stock6,000Sales73,500
Purchases58,500Closing Stock22,400
Wages15,000
Carriage Inwards450
Profit and Loss (Gross Profit)15,950
95,90095,900
Profit and Loss Account as on March 31, 2017
Dr.Cr.
ParticularsAmountParticularsAmount
Sundry Expenses600Trading (Gross Profit)15,950
Rent and Taxes1,350
Net Profit14,000
15,95015,950
Balance Sheet as on March 31, 2017
LiabilitiesAmountAssetsAmount
Capital60,000Fixed Assets 
Add: Net Profit14,000Machinery27,000
74,000
Less: Drawings2,70071,300Current Assets 
Bank4,500
Sundry Creditors1,400Closing Stock22,400
Bills Payable2,800Sundry Debtors21,600
75,50075,500

7. The following trial balance is extracted from the books of M/s Ram on March 31, 2017. You are required to prepare trading and profit and loss account and the balance sheet as on date:

Account titleAmountAccount titleAmount ₹
Debtors12,000Apprenticeship premium5,000
Purchases50,000Loan10,000
Coal, gas and water6,000Bank overdraft1,000
Factory wages11,000Sales80,000
Salaries9,000Creditors13,000
Rent4,000Capital20,000
Discount3,000
Advertisement500
Drawings1,000
Loan6,000
Petty cash500
Sales return1,000
Machinery5,000
Land and building10,000
Income tax100
Furniture9,900

Answer :

Trading and profit and loss account and balance sheet is prepared as follows:

Trading Account as on March 31, 2017
Dr. Cr.
ParticularsAmountParticularsAmount
Purchases50,000Sales80,000
Coal, Gas and Water6,000Less: Sales Return1,00079,000
Factory Wages11,000
Profit and Loss (Gross Profit)12,000
79,00079,000
Profit and Loss Account as on March 31, 2017
Dr.Cr.
ParticularsAmountParticularsAmount
Salaries9,000Trading (Gross Profit)12,000
Rent4,000Apprenticeship Premium5,000
Discount3,000
Advertisement500
Net Profit500
17,00017,000
Balance Sheet as on March 31, 2017
LiabilitiesAmountAssetsAmount
Capital20,000Machinery5,000
Add: Profit and Loss (Net Profit)500Land and Building10,000
20,500Furniture9,900
Less: Drawings(1,000)Loan (Given)6,000
Less: Income Tax(100)19,400Debtors12,000
Petty Cash500
Loan (Taken)10,000
Creditors13,000
Bank Overdraft1,000
43,40043,400

8. The following is the trial balance of Manju Chawla on March 31, 2017. You are required to prepare trading and profit and loss account and a balance sheet as on date:

Account titleDebit Amount ₹Credit Amount ₹
Opening stock10,000
Purchases and sales40,00080,000
Returns200600
Productive wages6,000
Dock and Clearing charges4,000
Donation and charity600
Delivery van expenses6,000
Lighting500
Sales tax collected1,000
Bad debts600
Misc. incomes6,000
Rent from tenants2,000
Royalty4,000
Capital40,000
Drawings2,000
Debtors and Creditors6,0007,000
Cash3,000
Investment6,000
Patents4,000
Land and Machinery43,000

Closing stock ₹ 2,000.

Answer :

Trading and profit and loss account and balance sheet is prepared as follows:

Trading Account as on March 31, 2017
Dr.Cr.
ParticularsAmountParticularsAmount
Opening Stock10,000Sales80,000
Purchases40,000Less: Sales Returns(200)79,800
Less: Purchases Returns(600)39,400
Productive Wages6,000Closing Stock2,000
Dock and Clearing Charges4,000
Royalty4,000
Profit and Loss (Gross Profit)18,400
81,80081,800
Profit and Loss Account as on March 31, 2017
Dr.Cr.
ParticularsAmountParticularsAmount
Donation and Charity600Trading (Gross Profit)18,400
Delivery Van Expenses6,000Misc. Incomes6,000
Lighting500Rent from Tenants2,000
Bad Debts600
Net Profit18,700
26,40026,400
Balance Sheet as on March 31, 2017
LiabilitiesAmountAssetsAmount
Capital40,000Patents4,000
Add: Profit and Loss (Net Profit)18,700Land and Machinery43,000
58,700Investment6,000
Less: Drawings(2,000)56,700Debtors6,700
Cash3,000
Sales Tax Collected1,000Closing Stock2,000
Creditors7,000
64,70064,700

9. The following is the Trial Balance of Mr. Deepak as on March 31, 2017. You are required to prepare trading account, profit and loss account and a balance sheet as on date:

Account titleDebit Amount ₹Account titleCredit Amount ₹
Drawings36,000Capital2,50,000
Insurance3,000Bills payable3,600
General expenses29,000Creditors50,000
Rent and taxes14,400Discount received10,400
Lighting (factory)2,800Purchases return8,000
Travelling expenses7,400Sales4,40,000
Cash in hand12,600
Bills receivable5,000
Sundry debtors1,04,000
Furniture16,000
Plant and Machinery1,80,000
Opening stock40,000
Purchases1,60,000
Sales return6,000
Carriage inwards7,200
Carriage outwards1,600
Wages84,000
Salaries53,000

Closing stock ₹ 35,000.

Answer :

The trading account, profit and loss account and a balance sheet are prepared below:

Trading Account as on March 31, 2017
Dr.Cr.
ParticularsAmountParticularsAmount
Opening Stock40,000Sales4,40,000
Purchases1,60,000Less: Sales Return6,0004,34,000
Less: Purchases Return(8,000)1,52,000Closing Stock35,000
Lighting (Factory)2,800
Carriage Inwards7,200
Wages84,000
Profit and Loss (Gross Profit)1,83,000
4,69,0004,69,000
Profit and Loss Account as on March 31, 2017
Dr.Cr.
ParticularsAmountParticularsAmount
Insurance3,000Trading (Gross Profit)1,83,000
General Expenses29,000Discount Received10,400
Rent and Taxes14,400
Travelling Expenses7,400
Carriage Outwards1,600
Salaries53,000
Net Profit85,000
1,93,4001,93,400
Balance Sheet as on March 31, 2017
LiabilitiesAmountAssetsAmount
Capital2,50,000Plant and Machinery1,80,000
Add: Net Profit85,000Furniture16,000
3,35,000Sundry Debtors1,04,000
Less: Drawings(36,000)2,99,000Closing Stock35,000
Bills Receivable5,000
Creditors50,000Cash in Hand12,600
Bills Payable3,600
3,52,6003,52,600

10. Prepare trading and profit and loss account and balance sheet from the following particulars as on March 31, 2017.

Account TitleDebit Amount ₹Credit Amount ₹
Purchases and Sales3,52,0005,60,000
Return inwards and Return outwards9,60012,000
Carriage inwards7,000
Carriage outwards3,360
Fuel and power24,800
Opening stock57,600
Bad debts9,950
Debtors and Creditors1,31,20048,000
Capital3,48,000
Investment32,000
Interest on investment3,200
Loan16,000
Repairs2,400
General expenses17,000
Wages and salaries28,800
Land and buildings2,88,000
Cash in hand32,000
Miscellaneous receipts160
Sales tax collected8,350

Closing stock ₹ 30,000.

Answer :

Trading and profit and loss account and balance sheet for the question is posted below:

Trading Account as on March 31, 2017
Dr.Cr.
ParticularsAmountParticularsAmount
Opening Stock57,600Sales5,60,000
Purchases3,52,000Less: Return Inwards(9,600)5,50,400
Less: Return Outwards(12,000)3,40,000Closing Stock30,000
Carriage Inwards7,000
Fuel and Power24,800
Wages and Salaries28,800
Profit and Loss (Gross Profit)1,22,200
5,80,4005,80,400
Profit and Loss Account as on March 31, 2017
Dr.Cr.
ParticularsAmountParticularsAmount
Carriage Outwards3,360Trading (Gross Profit)1,22,200
Bad Debts9,950Interest on Investment3,200
Repairs2,400Miscellaneous Receipts160
General Expenses17,000
Net Profit92,850
1,25,5601,25,560
Balance Sheet as on March 31,2017
LiabilitiesAmountAssetsAmount
Capital3,48,000Land and Building2,88,000
Add: Net Profit92,8504,40,850Investment32,000
Debtors1,31,200
Loan16,000Closing Stock30,000
Creditors48,000Cash in Hand32,000
Sales Tax Collected8,350
5,13,2005,13,200

11. From the following trial balance of Mr. A. Lal, prepare trading, profit and loss account and balance sheet as on March 31, 2017.

Account TitleDebit Amount ₹Credit Amount ₹
Stock as on April 01, 201616,000
Purchases and Sales67,6001,12,000
Returns inwards and outwards4,6003,200
Carriage inwards1,400
General expenses2,400
Bad debts600
Discount received1,400
Bank over draft10,000
Interest on bank overdraft600
Commission received1,800
Insurance and taxes4,000
Scooter expenses200
Salaries8,800
Cash in hand4,000
Scooter8,000
Furniture5,200
Building65,000
Debtors and Creditors6,00016,000
Capital50,000

Closing stock ₹ 15,000.

Answer :

Trading and profit and loss account and balance sheet for the question is posted below:

Trading Account as on March 31, 2017
Dr.Cr.
ParticularsAmountParticularsAmount
Opening Stock16,000Sales1,12,000
Purchases67,600Less: Sales Return Inwards(4,600)1,07,400
Less: Return Outwards(3,200)64,400Closing Stock15,000
Carriage Inwards1,400
Profit and Loss (Gross Profit)40,600
1,22,4001,22,400
Profit and Loss Account as on March 31, 2017
Dr.Cr.
ParticularsAmountParticularsAmount
General Expenses2,400Trading (Gross Profit)40,600
Bad Debts600Discount Received1,400
Interest on Bank Overdraft600Commission Received1,800
Insurance and Taxes4,000
Scooter Expenses200
Salaries8,800
Net Profit27,200
43,80043,800
Balance Sheet as on March 31, 2017
LiabilitiesAmountAssetsAmount
Capital50,000Building65,000
Add: Net Profit27,20077,200Furniture5,200
Scooter8,000
Creditors16,000Debtors6,000
Bank Overdraft10,000Closing Stock15,000
Cash in Hand4,000
1,03,2001,03,200

12. Prepare trading and profit and loss account and balance sheet of M/s Royal Traders from the following balances as on March 31, 2017.

Debit balancesAmount ₹Credit balancesAmount ₹
Stock20,000Sales2,45,000
Cash5,000Creditors10,000
Bank10,000Bills payable4,000
Carriage on purchases1,500Capital2,00,000
Purchases1,90,000
Drawings9,000
Wages55,000
Machinery1,00,000
Debtors27,000
Postage300
Sundry expenses1,700
Rent4,500
Furniture35,000

Closing stock ₹ 8,000.

Answer :

Trading and profit and loss account and balance sheet is prepared below:

Trading Account as on March 31, 2017
Dr.Cr.
ParticularsAmountParticularsAmount
Opening Stock20,000Sales2,45,000
Purchases1,90,000Closing Stock8,000
Carriage on Purchases1,500Profit and Loss (Gross Loss)13,500
Wages55,000
2,66,5002,66,500
Profit and Loss Account as on March 31, 2017
Dr.Cr.
ParticularsAmountParticularsAmount
Trading (Gross Loss)13,500
Postage300
Sundry Expenses1,700
Rent4,500Net Loss20,000
20,00020,000
Balance Sheet of M/s Royal Traders as on March 31, 2017
LiabilitiesAmountAssetsAmount
Capital2,00,000Machinery1,00,000
Less: Net Loss(20,000)Furniture35,000
Less: Drawings(9,000)1,71,000Debtors27,000
Closing Stock8,000
Creditors10,000Bank10,000
Bills Payable4,000Cash5,000
1,85,0001,85,000

13. Prepare trading and profit and loss account from the following particulars of M/s Neema Traders as on March 31, 2017.

Account TitleDebit Amount
Account TitleCredit Amount
Buildings23,000Sales1,80,000
Plant16,930Loan8,000
Carriage inwards1,000Bills payable2,520
Wages3,300Bank overdraft4,720
Purchases1,64,000Creditors8,000
Sales return1,820Capital2,36,000
Opening stock9,000Purchases return1,910
Machinery2,10,940
Insurance1,610
Interest1,100
Bad debts250
Postage300
Discount1,000
Salaries3,000
Debtors3,900

 Stock on March 31, 2017 ₹ 16,000.

Answer :

Trading and profit and loss account and balance sheet is prepared below:

Trading Account as on March 31, 2017
Dr.Cr.
LiabilitiesAmountAssetsAmount
Opening Stock9,000Sales1,80,000
Purchases1,64,000Less: Sales Return(1,820)1,78,180
Less: Purchases Return(1,910)1,62,090Closing Stock16,000
Carriage Inwards1,000
Wages3,300
Profit and Loss (Gross Profit)18,790
1,94,1801,94,180
Profit and Loss Account as on March 31, 2017
Dr.Cr.
ParticularsAmountParticularsAmount
Insurance1,610Trading (Gross Profit)18,790
Interest1,100
Bad Debts250
Postage300
Discount1,000
Salaries3,000
Net Profit11,530
18,79018,790
Balance Sheet as on March 31, 2017
LiabilitiesAmountAssetsAmount
Capital2,36,000Building23,000
Add: Net Profit11,5302,47,530Plant16,930
Machinery2,10,940
Loan8,000Debtors3,900
Creditors8,000Closing Stock16,000
Bills Payable2,520
Bank Overdraft4,720
2,70,7702,70,770

14. From the following balances of M/s Nilu Sarees as on March 31, 2017. Prepare trading and profit and loss account and balance sheet as on date.

Account TitleDebit Amount ₹Account TitleCredit Amount
Opening stock10,000Sales2,28,000
Purchases78,000Capital70,000
Carriage inwards2,500Interest7,000
Salaries30,000Commission8,000
Commission10,000Creditors28,000
Wages11,000Bills payable2,370
Rent and taxes2,800
Repairs5,000
Telephone expenses1,400
Legal charges1,500
Sundry expenses2,500
cash in hand12,000
Debtors30,000
Machinery60,000
Investments90,000
Drawings18,000

Closing stock, as on March 31, 2017 ₹ 22,000.

Answer :

Trading Account of M/s Nilu Sarees as on March 31, 2017
Dr.Cr.
ParticularsAmountParticularsAmount
Opening Stock10,000Sales2,28,000
Purchases78,000Closing Stock22,000
Carriage Inwards2,500
Wages11,000
Profit and Loss (Gross Profit)1,48,500
2,50,0002,50,000
Profit and Loss Account as on March 31, 2017
Dr.Cr.
ParticularsAmountParticularsAmount
Salaries30,000Trading (Gross Profit)1,48,500
Commission10,000Interest7,000
Rent and Taxes2,800Commission8,000
Repairs5,000
Telephone Expenses1,400
Legal Charges1,500
Sundry Expenses2,500
Net Profit1,10,300
1,63,5001,63,500
Balance Sheet as on March 31, 2017
LiabilitiesAmountAssetsAmount
Capital70,000Machinery60,000
Add: Net Profit1,10,300Investments90,000
1,80,300Debtors30,000
Less: Drawings(18,000)1,62,300Closing Stock22,000
Cash in Hand12,000
Creditors28,000
Bills Payable2,370
Suspense21,330
2,14,0002,14,000

15. Prepare trading and profit and loss account of M/s Sports Equipments for the year ended March 31, 2017 and balance sheet as on that date:

Account TitleDebit Amount
Credit Amount
Opening stock50,000
Purchases and sales3,50,0004,21,000
Sales returns5,000
Capital3,00,000
Commission4,000
Creditors1,00,000
Bank overdraft28,000
Cash in hand32,000
Furniture1,28,000
Debtors1,40,000
Plants60,000
Carriage on purchases12,000
Wages8,000
Rent15,000
Bad debts7,000
Drawings24,000
Stationery6,000
Travelling expenses2,000
Insurance7,000
Discount5,000
Office expenses2,000

Closing stock as on March 31, 2017 ₹ 2,500

Answer :

Trading and profit and loss account and balance sheet is prepared below:

Trading Account as on March 31, 2017

Dr. Cr.
ParticularsAmountParticularsAmount
Opening Stock50,000Sales4,21,000
Purchases3,50,000Less: Sales Return5,0004,16,000
Carriage on Purchases12,000Closing Stock2,500
Wages8,000Profit and Loss (Gross Loss)1,500
4,20,0004,20,000

Profit and Loss Account as on March 31, 2017

Dr.Cr.
ParticularsAmountParticularsAmount
Trading (Gross Loss)1,500Commission4,000
Rent15,000Net Loss41,500
Bad Debts7,000
Stationery6,000
Travelling Expenses2,000
Insurance7,000
Discount5,000
Office Expenses2,000
45,50045,500

Balance Sheet as on March 31, 2017

LiabilitiesAmountAssetsAmount
Capital3,00,000Plants60,000
Less: Net Loss(41,500)Furniture1,28,000
Less: Drawings(24,000)2,34,500Debtors1,40,000
Closing Stock2,500
Creditors1,00,000Cash in Hand32,000
Bank Overdraft28,000
3,62,5003,62,500