EXERCISE NO.

1: From the following trial balance of ABC limited, prepare trading, profit &
loss account and balance sheet on 31st March 2010
Particulars Debit(Rs) Credit (Rs)
Capital 40,500
Purchase 45,000
Purchase return 3,000
Sales 72,000
Sales return 2,000
Stock on 1 April
st 15,000
Cash in hand 2,200
Salaries 3,050
Rent 1,250
Commission received 700
Discount received 300
Wages 1,500
Carriage inwards 500
Sundry creditors 6,000
Sundry debtors 9,000
Machinery 3,000
Furniture 10,000
Land and building 30,000
Total 1,22,500 1,22,500
Additional information:
1. Stock on 31.03.2009 was Rs.21,000
 TRADING AND PROFIT & LOSS ACCOUNT AS ON 31.03.2010

Particulars Amount Amount Particulars Amount Amount

To opening stock 15,000 By sales 72,000
To purchases 45,000 Less: sales return 2,000 70,000
Less: purchase return 3,000 42,000 By closing stock 21,000
To carriage inwards 500
To wages 1,500
To gross profit 32,000
91,000 91,000
To salaries 3,050 By gross profit 32,000
To rent 1,250 By commission received 700
To net profit 28,700 By discount received 300
33,000 33,000
ABC LIMITED BALANCE SHEET AS 31.03.2010
Liabilities Amount Amount Assets Amount Amount
Capital 40,500 Cash in hand 2,200
Add Net profit 28,700 69,200 Sundry debtors 9,000
Sundry creditors’ 6,000 Machinery 3,000
Furniture 10,000
Land and building 30,000
Closing stock 21,000
75,200 75,200
2. The following is the trial balance of Kamal enterprises for the year ended 31st March
2016. You are required to prepare a trading, profit and loss account and balance
sheet after taking into account the adjustment given below:
Debit balances Rs. Credit balances Rs.
Cash in hand 500 Sales 1,50,300
Cash at bank 1,200 Purchase returns 5,000
Office furniture 6,000 Accounts payable 12,000
Accounts receivables 15,000 Bills payable 8,000
Commission 1,200 Discount received 1,000
Sundry debtors 3,500 Dividend received 2,000
Power and fuel 6,000 Recent received 3,500
Plant and machinery 24,000 Capital 27,000
Office expenses 2,000
Carriage inwards 1,200
Carriage outwards 3,500
Rent, rates and taxes 1,700
Leasehold premises 25,000
Wages 30,000
Salaries 7,000
Opening stock 12,000
Sales returns 2,000
Purchases 60,000
Drawings 7,000
Total 2,08,800 Total 2,08,800
Adjustments:
1. Closing Inventory as on 31.03.2016 Rs.18,000
2. Depreciate Plant and Machinery at 10%.
3. Salaries outstanding Rs.1,000; Power and fuel outstanding, Rs.2,000.
4. Rs.5,000 was spent on erection of plant and machinery, but wrongly
included under wages.
5. Provide for bad and doubtful debts for Rs.1,500.
6. Discount earned but not received Rs.100.
7. Commission due but not recorded Rs.200.
8. Rent received includes Rs.500 received in advance.
 BOOKS OF KAMAL ENTERPRISES
Trading and Profit and Loss account for the year ended 31-03-2016
Particulars Rs Rs Particulars Rs Rs
To Opening stock 12,000
To purchases 60,000 By sales 1,50,300
Less : purchase return 5,000 55,000 Less: sales returns 2,000 1,48,300
To carriage inwards 1,200 By closing stock 18,000
To wages 30,000
Less: Erection charges 5,000 25,000
To power and fuel 6,000
Add: Outstanding 2,000 8,000
To Gross Profit c/d 65,000
1,66,300 1,66,300
To carriage outwards 3,500 By Gross profit 65,000
b/d
To commission 1,200 By discount reived 1,000
Add: outstanding 200 1,400 Add : outstanding 100 1,100
To office expenses 2,000 By dividend reived 2,000
To salaries 7,000 By rent received 3,500
Add: Outstanding 1,000 8,000 Less adv received. 500 3,000
To rent rates and taxes 1,700
To depreciation on 2,900
plant
To provision for bad 1,500
debt
To Net profit c/f to 50,200
capital
71,200 71,200
Balance Sheet as on 31.03.2016
Capital 27,000 Plant and Machinery 24,000
Add: Net Profit 50,200 Add: Erection charge 5,000
Less: Drawings 7,000 70,200 Less: Depreciation 2,900 26,100
Accounts payable 12,000 Cash in hand 500
Bills payable 8,000 Cash at bank 1,200
Rent received in 500 Bills receivable 3,500
advance
O/S Salaries 1,000 Sundry Debtors 15,000
O/S Power and fuel 2,000 Less: provision for 1,500 13,500
O/S Commission 200 3,200 bad debt
Furniture 6,000
Closing inventory 18,000
O/S receible discou 100
Leasehold premises 25,000
Total 93,900 Total 93,900
 3. From the following list of balances, prepare trading, profit & loss account and
balance sheet on 31st March 2010
Particulars Amount
David’capital 60000
Drawings 2000
Land and building 36000
Salaries 4000
Printing & stationery 600
Wages 4000
Rent & rates 600
Purchases 40000
Insurance 600
Sales 62000
Fuel and power 1700
Debtors 21000
Sales returns 1500
Commission received 400
Bills Receivables 1000
Cash 2000
Opening stock 10000
Carriage inwards 400
Loan from A 5000
Creditors 10000
Machinery 10000
Purchases returns 1200
Furniture 200
Discount(dr) 1200
Additional information
1. Closing stock Rs.12000.
2. Provide 2% interest on capital.
3. Prepaid insurance Rs.150.
4. Outstanding wages Rs.400 and salaries Rs.250.
5. Commission receivable Rs.200.
6. Write off bad debts Rs.1000 and create 5% reserve for bad & doubtful debts
and 2.5% discount on debtors.
7. Depreciate 10% on machinery & 5% on furniture.
 Solution
TRADING AND PROFIT & LOSS ACCOUNT AS ON 31.03.2010
Particulars Amount Amount Particulars Amount Amount
To opening stock 10000 By sales 62000
To purchase 40000 (-)returns 1500 60500
(-)returns 1200 38800 By closing stock 12000
To wages 4000
(+)Outstanding wages 400 4400
To fuel & power 1700
To carriage inwards 400
To gross profit C/D 17200
72500 72500
Profit and loss account
To salaries 4000 By gross profit B/D 72500
(+) O/S 250 4250 By commission 400
To printing & stationery 600 (+) accrued 200 600
To rent & rates 600
To insurance 600
(-) prepaid 150 450
To discount allowed 1200
To interest on capital 1200
To bad debts 1000
To prov. for B&D debts 1000
To prov.for discount on BD 475
To dep.on machinery 1000
To dep. On furniture 100
To net profit 5925
17800 17800
BALANCE SHEET AS ON 31.03.2010
Liabilities Assets
Capital 60000 Land and building 36000
(+)int. on capital 1200 Debtors 21000
61200 (-) bad debts 1000
(-) drawings 2000 20000
59200 (-) bad & doubtful debts 1000
(+) net profit 5925 65125 19000
Creditors 10000 (-) reserve for discount 475 18525
Loan 5000 Bills receivables 1000
O/S Wages 400 Cash 2000
O/S salaries 250 Furniture 2000
(-) Dep. 100 1900
 Machinery 10000
(-) dep 1000 9000
Closing stock 12000
Prepaid insurance 150
Accrued commission 200
80775 80775
 EXERCISE NO.4.The following is the trial balance of Shri.Ragavh for the period ending on
31st March 2011. Prepare trading and profit and loss account and balance sheet:
Particulars Rs. Rs.
Capital a/c 1,80,000
Drawing a/c 12,960
Land & building a/c 50,000
Plant & machinery a/c 28,540
Furniture a/c 2,500
Carriage inward a/c 8,740
Wages a/c 42,940
Salary a/c 9,340
Bad reserve a/c 4,940
Sales a/c 1,82,460
Sales return a/c 3,520
Bank expense a/c 280
Coal, gas and water a/c 1,440
Rent and tax a/c 1,680
Discount received a/c 240
Purchases a/c 84,320
Purchases return a/c 16,920
Bills Receivables a/c 2,540
Trading expenses a/c 3,980
Debtors a/c 75,600
Creditors a/c 25,340
Opening Stock a/c 52,840
Fire insurance premium a/c 980
Cash at bank a/c 26,000
Cash in hand a/c 1,700
Total 4,09,900 4,09,900
While preparing final accounts, the following adjustments are the be taken into
consideration:
1. Charge depreciation @ 2.5% on land and building; 10% on plant and machinery and
10% on furniture.
2. Create Bad debt Reserve by 5% on debtors.
3. Rs.250 for fire insurance premium, Rs.480 for rent and tax is to be carried forward
for next year.
4. Charge 5% interest on capital.
5. Closing stock Rs.58780.
 TRADING AND PROFIT & LOSS ACCOUNT For the year ending On 31st March 2011
Particulars Rs. Rs. Particulars Rs. Rs.
To Opening Stock a/c 52,840 By sales a/c 1,82,460
To purchases a/c 84,320 Less: returns a/c 3,520 1,78,940
Less: returns a/c 16,920 67,400 By closing stock a/c 58,780
To carriage a/c 8,740
To wages a/c 42,940
To coal & gas a/c 1,440
To gross profit c/d 64,360
Total 2,37,720 Total 2,37,720
To rates & taxes a/c 1,200 By gross profit b/d 64,360
To insurance a/c 730 By discount received a/c 240
To salaries a/c 9,340 By provision for BD reserve 4,940
To bank charges a/c 280
To trade expenses a/c 3,980
To depreciation:
Buildings a/c 1,250
Plant & machinery 2,854
Furniture a/c 250
To interest on capital a/c 9,000
To New Provision for
BDR 3,780
To net profit transferred
to capital a/c 36,876
Total 65,760 Total 65,760
BALANCE SHEET (as on 31 March 2011)
st

Liabilities Rs. Rs. Assets Rs. Rs.

Sundry creditors a/c 25,340 Cash in hand a/c 1,700
Capital a/c 1,80,000 Cash at bank a/c 26,000
Add: net profit a/c 36,867 Bills Receivables a/c 2,540
Add: interest a/c 9,000 Sundry debtors a/c 75,600
2,25,876 Less: bad debt reserve a/c 3,780 71,820
Less: drawings a/c 12,960 2,12,916 Closing Stock a/c 58,780
Prepaid expense a/c 730
Furniture a/c 2,500
Less: dep. a/c 250 2,250
Plant & machinery a/c 28,540
Less: dep. a/c 2,854 25,686
Building a/c 50,000
Less: dep. a/c 1,250 48,750
Total 2,38,256 Total 2,38,256
EXERCISE NO.5:From the following trial balance Mr.A. Anbalagan as at 31st March 2010,
you are required to prepare a Trading and Profit and loss account for the year ended 31 st
March 2010 and a Balance Sheet as on that date after making the necessary adjustment.
Debit Credit
Particulars (Rs) (Rs)
A.Anbalagan’s Capital - 80,000
A.Anbalagan’s drawings A/c 6,000 -
Machinery (Balanced 1 April 2010)
st 20,000 -
Machinery (additional on 1 October 2010)
st 5,000 -
Stock on 1 April 2010
st 15,000 -
Purchases 82,000 -
Return inwards 2,000 -
Sundry debtors 20,600 -
Furniture & fixtures 5,000 -
Freight and duty 2,000 -
Carriage outwards 5,00 -
Rent 4,600 -
Printing & Stationery 800 -
Trade Expenses 400 -
Sundry Creditors - 10,000
Sales - 1,20,000
Return Outwards - 1,000
Postage and telegrams 800 -
Provision for doubtful debts - 400
Discounts - 800
Rent of premises sublet for the year upto 30 September 2010
th 700 -
Insurance charges 700 -
Salaries and wages 21,300 -
Cash in hand 6,200 -
Cash at bank 20,500 -
Total 2,13,400 2,13,400
Adjustments:
1. Stock on 31st March 2010 was valued at Rs. 14,600.
2. Write off Rs.600 as bad debts.
3. The provision for doubtful debts is to be maintained at 5% on sundry debtors.
4. Create a provision for discount on debtors and on creditors at 2%.
5. Provide for depreciation on furniture and fixtures @ 5% and on machinery @ 20%
p.a.
6. Insurance prepaid was Rs.100.
7. A fire occurred on 25th March 2010 in the godown and stock of the value of
Rs.5,000 was destroyed, It was fully insured and the insurance company
admitted the claim in full.
 TRADING AND PROFIT & LOSS ACCOUNT as on 31.03.2010
Particulars Amount Amount Particulars Amount Amount
To opening stock 23,800 By sales 1,20,000
To purchases 82,000 (-)returns 2,000 1,18,000
(-)returns 1,000 81,000 By closing stock 14,600
To Freight and duty 2,000 By Loss by Fire 5,000
To gross profit c/d 39,600
1,37,600 1,37,600
To Rent 4,600 By Gross profit b/d 39,600
To Salaries and wages 21,300 By Discount 800
To carriage outwards 500 By Rent 1,200
To printing and stationery 800 (-) Rent Received in advnce 600 600
By Dis.on Crs 2%@
To Trade expenses 400 10,000) 200
To postage and telegram 800
To insurance 700
(-) Prepaid 100 600
To Dep. On Furniture 250
To Dep. On
machinery(4,000+500) 4,500
To Bad debts written off 600
To Reserve for BD (1,000-400) 600
To Discount on debtors
(2% on 19,000) 380
To Net profit c/d to capital 5,870
41,200 41,200
BALANCE SHEET of A. Anbalagan as on 31.12.1990
Liabilities Amount Amount Asset Amount Amount
Rent received in advance 600 Cash in hand 6,200
Creditors 10,000 Cash in bank 20,500
(-) Discount on creditors 200 9,800 Debtors 20,600
(-) Bad debts 600
Capital 80,000 (-) Reserve for bad debts 1,000
(+) Net profit 5,870 (-) Dis. On debtors 380 18,620
85,870 Closing stock 14,600
(-)Drawings 6,000 79,870 Insurance Claim 5,000
Prepaid insurance 100
Furniture 5,000
(-) Depreciation 250 4,750
Machinery 20,000
(+) Additions 5,000
(-) Depreciation 4,500 20,500
 90,270 90,270

Exercise :6: Ambika Stores has extracted the following balances from its books as on 31st
March 2015.
Particulars Debit(Rs) Credit (Rs)
Petty cash balance 900
Bills receivable 6,000
Machinery 40,000
Bank 8,000
Opening Stock 40,000
Salaries 11,000
Debtors and creditors 50,000 80,000
Manufacturing wages 40,000
Carriage and duty 12,000
Capital 90,000
Rent and insurance 12,000
Power 8,000
Factory lighting 4,000
Office lighting 5,000
Purchase 2,05,000
Sales 3,00,000
Discount 8,100
Drawings 20,000
Total 4,70,000 4,70,000
Adjustments:
1. Stock on 31st March 2015 is valued at Rs. 65,000
2. On 25th March 2015 stock of the value of Rs.3,000 was lost by fire for which
insurance company admitted a claim of Rs.2,400 only.
3. Manager is entitled to a commission of 5% on the net profit after charging
such commission.
4. Salary is uniform throughout the year and that for June has not been paid
5. Provide interest on capital at 5%
Prepare Trading and Profit and loss account for the year ending 31st March 2015 and a
Balance sheet as on that date
 Trading and Profit & Loss for the Year ending 31st March 2015
Particulars Amount Amount Particulars Amount Amount
To opening stock 40,000 By sales 3,00,000
To purchases 2,05,000 By closing stock 65,000
By Loss of stock by
To Manufacturing wages 40,000 fire 3,000
To power 8,000
To Factory lighting 4,000
To carriage and duty 12,000
To Gross profit c/d 59,000
3,68,000 3,68,000
To Salaries 11,000 By Gross profit b/d 59,000
(+) Outstanding 1,000 12,000
To Rent and insurance 12,000
To office lighting 5,000
To Discount 8,100
To Loss of Stock by fire 600
To Interest on capital 4,500
To Manager’s
commission
[16,800 *5/105] 800
To Net profit c/dto capital 16,000
59,000 59,000
BALANCE SHEET of Ambika Stores as on 31.03.2015
Liabilities Amount Amount Asset Amount Amount
O/S expenses: Salary 1,000 Petty cash in hand 900
Comm. To manager 800 Cash in bank 8,000
Creditors 80,000 Closing stock 65,000
Capital 90,000 Debtors 50,000
Add: Int. on Capital 4,500 Insurance Claim 2,400
Add: Net Profit 16,000 Bills receivable 6,000
Less : Drawings 20,00 90,500 Machinery 40,000
1,72,300 1,72,300