Page 159 - debkxi

Adjustments in Preparation of Financial Statements 19.19

Taking into account the following adjustments, prepare Trading and Profit & Loss Account
and Balance Sheet as at 31st March, 2024:
(a) An old machine valued at ` 20,000 was given in exchange of new machine purchased on
1st October, 2023. As the Cheque was issued for ` 2,00,000 it was recorded in the books
at this value. The machine given in exchange was personal asset of Prem Prakash and
entry for it was not passed.
(b) Depreciation 5% p.a. on Plant and Machinery and 10% p.a. on Fixtures and Fittings.
(c) Provision for Doubtful Debts @ 2½% on Sundry Debtors.
(d) Rent Outstanding for March, 2024 ` 1,500.
(e) Insurance unexpired on 31st March, 2024 ` 700.
(f) Outstanding Wages and Salaries were ` 8,000 and ` 3,500 respectively.
(g) Stock on 31st March, 2024 ` 1,65,800.
[Ans.: Gross Profit—` 1,82,660; Net Profit—` 30,040; Balance Sheet Total—` 12,18,160.]
[Hints: 1. Plant and Machinery and also capital will be increased by ` 20,000.
2. Depreciation on Plant and Machinery of ` 2,20,000 will be provided for
6 months.
3. Depreciation for the year ` 23,000.]
3. From the following Trial Balance of Ashok, prepare Trading and Profit & Loss Account for
the year ended 31st March, 2024 and Balance Sheet as on that date after making necessary
adjustments:
Particulars Dr. Balances Cr. Balances
` `

Opening Stock .............................................................................................................................. 30,000 ...
Ashok’s Capital .............................................................................................................................. ... 2,00,000
Ashok’s Drawings .............................................................................................................................. 10,000 ...
Plant and Machinery .............................................................................................................................. 1,20,000 ...
Freehold Property .............................................................................................................................. 75,000 ...
Purchases .............................................................................................................................. 2,25,000 ...
Sales .............................................................................................................................. ... 5,00,000
Salaries .............................................................................................................................. 35,000 ...
Office Expenses .............................................................................................................................. 5,000 ...
Office Furniture .............................................................................................................................. 25,000 ...
Discount .............................................................................................................................. 5,000 ...
Loan to Anwar @10% p.a. on 1st April, 2023 ................................................................................................. 30,000 ...
Wages .............................................................................................................................. 8,000 ...
Postage and Courier .............................................................................................................................. 2,000 ...
Insurance .............................................................................................................................. 5,000 ...
Gas and Fuel .............................................................................................................................. 50,000 ...
Bad Debts .............................................................................................................................. 15,000 ...
Freight .............................................................................................................................. 3,000 ...
Rent .............................................................................................................................. 7,000 ...
Loose Tools .............................................................................................................................. 15,000 ...
Provision for Doubtful Debts .............................................................................................................................. ... 20,000
Interest on Loan from Anwar .............................................................................................................................. ... 1,000