RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

UNIT-V
INTRODUCTION TO FINANCIAL ACCOUNTING & PREPARATION OF FINAL
ACCOUNTS
Introduction to Financial Accounting
Financial accounting is a specialized branch of accounting that keeps track of a company's
financial transactions. Using standardized guidelines, the transactions are recorded,
summarized, and presented in a financial report or financial statement such as an income
statement or a balance sheet.
Companies issue financial statements on a routine schedule. The statements are
considered external because they are given to people outside of the company, with the
primary recipients being owners/stockholders, as well as certain lenders. If a corporation's
stock is publicly traded, however, its financial statements (and other financial reporting’s)
tend to be widely circulated, and information will likely reach secondary recipients such as
competitors, customers, employees, labour organizations, and investment analysts.
It's important to point out that the purpose of financial accounting is not to report the value of
a company. Rather, its purpose is to provide enough information for others to assess the value
of a company for themselves.
Because external financial statements are used by a variety of people in a variety of ways,
financial accounting has common rules known as accounting standards and as generally
accepted accounting principles (GAAP).

Definition: Acc to American Institute of Certified Public Accountants (AICPA) in 1941,

accounting is the art of recording, classifying and summarizing in a significant manner and in
terms of money, transactions and events which are in part at least of a financial character and
interpreting the results thereof.

Significance of Financial Accounting:

Accounting is very important for every business organization. It helps

(a)To maintain its own records of business.

(b)To monitor the business activities.

(c)To calculate profit or loss for a given period.

(d) To fulfill legal obligations.

(e)To show financial position for a given period.

(f)To communicate the information to the interested parties.

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Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Define Double Entry System? Write its Advantages and Disadvantages?

At the heart of financial accounting is the system known as double entry book keeping (or
"double entry accounting"). Each financial transaction that a company makes is recorded by
using this system.
Bookof entry system was invented by an Italian Merchant named as Luca Pacioli in the year
1494. This is most common system of keeping accounting records and universally accepted
system of accounting. In 1749, this system was further developed by Advert Jones as a
named as Double Entry System.Under this System, in every transaction have two aspects.
One is benefit receiving and another one is benefit giving aspect. In procedure of recording
receiving aspect has to be debited and giving aspect has to be credited. The principle of
double entry system is “For every debit is equal to every credit and vice-versa. This system is
followed by all business units whether big or small.

Advantages:
The following are the advantages of Double Entry System.

(a) It supplies complete information relating to all business transactions.

(b) It shows arithmetical accuracy of books of accounts.

(c) It ascertained true profit of the business firm.

(d) It shows actual financial position of the firm.
(e)It is helpful to prevent frauds and errors while recording the business activities.

Disadvantages:
(a) In this system, number of books are required and to be maintained.

(b)It is very costly one, small business units not able to bear the amount.
(c)It is not applicable all types of business units.

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Write Various Types of Accounts and Rules Governing the Each Account?
orAccounting Standards or Generally Accepted Accounting Principles (GAAP)
If financial accounting is going to be useful, a company's reports need to be credible, easy to
understand, and comparable to those of other companies. To this end, financial accounting
follows a set of common rules known as accounting standards or generally accepted
accounting principles (GAAP, pronounced "gap").

Acc to Double Entry System all the business transactions are classified into following
accounts.
(A) Personal Accounts
(B) Real Accounts

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RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

(C) Nominal Accounts

(A)Personal Accounts: Personal account relating to persons and firms. Persons may be
Natural persons (Rama, Krishna, Seetha, Geetha etc.), and artificial persons (Lakshmi
General Stores, Andhra Bank, Kumar and Bro’s etc.).
Rule of Personal Account:“Debit the Receiver and Credit the Giver”.

(B)Real Accounts: Assets are related account is called real account. These are different
types. Tangible assets and intangible assets. Tangible assets are visible and touchable. For
Ex:fixed assets such as land & buildings, plant & machinery, furniture & fixers, Current
assets such as cash, goods or stock and Intangible assets such as Goodwill, Patents,
trademarks etc.

Rule of Real Account:“Debit, What Comes in and Credit, What Goes Out”.

(C) Nominal Accounts: It relating to expenses, losses, incomes and gains or profits. In this
items not visible and touchable. For Ex:salaries, rent, rates & taxes, interest, commission,
discounts etc.

Rule of Nominal Account:“Debit all Expenses and Losses and Credit all incomes and
gains”.

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What are the Business Concepts- Explain?

GAAP is based on some basic underlying principles orassumptions or conditions and

concepts and which is the science of accounting. The following are the important concepts.

[A] Business Entity Concept: According to this concept, which makes only business affairs
are recorded in the books of accounts but not makes the personal or private or proprietor
affairs.

[B] Money Measurement Concept: According to this concept, accounting records only
those transactions which can be expressed in terms of money.

[C] Cost Concept: Acc to concept, assets acquired or other transactions recorded in the
books at cost or actual value or book value. In this concept, the market cannot be considered.

[D] Going Concern Concept: This concept assumes that the business will continue for a
long time to come. So the business transactions are recorded in the books in view of going
concern concept of the business firm.

[E] Dual Concept: Acc to this concept, every business transactions should have two aspects,
one is benefit receiving and another one is benefit giving aspect. It is also called as Double
entry Concept.

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RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

[F] Accounting Period Concept: Acc to this concept, at the end of each accounting period
an income statements and a balance sheet are prepared.

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Write Short Notes on (A) Accounting Cycle (B) Journal (C) Ledger (D) Trail Balance

[A] An Accounting Cycle is a complete sequence beginning with the recording of

transactions and ending with calculation of profit or loss and showing financial position.
They include the process of preparing journal, ledger, trail balance and final accounts.

Steps involved in Accounting Cycle:

Recording → Classifying → Summerizing → Analyzing Results
(Journal) (Ledger) (Trail Balance) (Final Accounts)

[B] Journal: In every business firm all the business transactions are required to record first in
the book called as journal on permanent basis. Journal is derived from the French word
“Jour” which means a day. So the business transactions are recorded in the chronological
order (date wise) in a journal according to the three accounting principles (personal, real and
nominal account rules) i.e. known as journalizing. Journal is also called as first book or
primary book or day book or book of original entry.

Ruling of Journal:

Date L.F Particulars Debit (Rs.) Credit (Rs.)

[C] Ledger: After recording the all business transaction in the journal, the next stage is
transfer of transactions into their respective accounts opened in the ledger. Ledger means a
set of accounts of the business firm like Personal Accounts, Real Accounts, and Nominal
Accounts. So it is the Book of Secondary Entry or Final Entry or Principle Book.

The form of Ledger Account is as under:

Dr Name of the Account Cr

Date L.F Particulars Amount Date L.F Particulars Amount
(Rs.) (Rs.)

[D] Trail Balance: Preparation of Trail Balance is third step in the process of accounting. All
the business transactions are properly entered, totaled, balanced in the journal and ledger then
the trail balance is prepared at the end of the year. It shows equal totals both debit and credits.

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RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Definition: The Trail Balance is a statement containing the balances of all ledger accounts,
as at any given date in the form of debit and credit columns placed side by side and prepared
for the purpose of checking the arithmetic accuracy of the ledger posting.

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How and Why is Preparing the Final Accounts?

Final Accounts of Sole Trading firm are Prepared as under:

[A] Trading Account: Trading Account prepared during an accounting period to know the
gross profit or gross loss of the business. This account prepares on the basis of Nominal
account principle. It is actually part of profit & loss account, so the gross profit will be
transferred to profit & loss account.

In trading account, in debit side opening stock, purchases, all direct expenses and in credit
side closing stock and sales are considered. Following equations shows how the gross profit
is ascertained.

Gross Profit = Sales – Cost of Goods Sold

Cost of Goods Sold = Opening Stock + Purchases less returns + All Direct Expenses –
Closing Stock (or) Sales – Gross Profit.

[B] Profit & Loss Account: it is the second step in final accounts. This account starts with
Gross Profit or Loss was taken from trading account. It prepares on the basis of nominal
account principle. In this account all the incomes are to be credited and indirect expenses are
to be debited. It is prepared to calculate net results of the business firm i.e. net profit or loss is
to be transferred to capital account.

[C] Balance Sheet: it is final step in final accounts. Which is not an account; it is a statement
containing assets and liabilities of business firm but it looks like an account having two sides.
The left hand side is known as liabilities such as capital, outsides liabilities and credit
balances in personal account and right hand side is known as assets includes current assets,
fixed assets, and intangible assets. It is prepared to know the financial position of the business
on a particular date. Balance sheet shows equal totals both assets and liabilities sides.

The following equations give better information about the balance sheet.
Total Assets = Total Liabilities
Total Liabilities = Capital + Outside Liabilities
Capital = Total Assets – Outside Liabilities

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What are the objectives or importance or advantages and limitations of the Final
Accounts?

Introduction: Final Accounts have two main objectives are to find profit made by the
business and to ascertain the financial position of the business on a given date.

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Importance (or) Advantages of Final Accounts:

[1] To reveals financial results of the business i.e. profit or loss.
[2] To reveals financial position of the business i.e. assets and liabilities.
[3] To understand liquidity and solvency of the business.
[4] To helps in tax calculation.
Limitations (or) Disadvantages of Final Accounts:
[1] True profit or loss of the firm cannot be calculated.
[2] Assets and liabilities values also not accurate.
[3] Window dressing is possible in preparing final accounts.
[4] Personal opinions of accountants or owners will influence final accounts to some extent.

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ACCOUNTING EQUATION
Accounting Equation
An Accounting Equation is also called the Balance Sheet Equation. We all know that we
record all the business transactions using the Dual Aspect concept. This means that each debit
has an equal credit and vice-versa.
This approach classifies the accounts as follows:
(1) Assets Accounts: Assets are the properties, possessions or economic resources of a
business which help in business operations and in earning revenues. These are measurable in
terms of money. However, assets of a firm may be tangible or intangible. Also, we can
classify the assets as Fixed Assets and Current Assets. For example, land, building, furniture
and fixtures, plant and machinery, vehicles, debtors, bills receivable, bank balance, cash,
stock, etc.
(2) Liabilities Accounts: Liabilities are the amounts that an entity owes to the outsiders or
the obligations or the debts payable by the entity. We can also classify the liabilities as Long-
term and Current. For example, debentures, bank loans, creditors, bills payable, rent
outstanding, short-term loans, bank overdraft, etc.
(3) Capital Accounts: Capital or Owner’s Equity is the money that the owner brings into the
business. The owner can bring Capital in the form of cash or assets. It is an obligation of the
business and the business has to pay back this amount to the owner as business is a separate
entity from its owner. Therefore, we show the Capital on the liabilities side of the Balance
Sheet. Also, we show Capital account after deducting the Drawings by the owner. Drawings
are the amount of cash, goods or assets that the owner takes for personal use from the
business. Also, the profits increase the Capital and losses decrease it.
The Accounting Equation is:
Assets = Liabilities + Capital (Owner’s Equity)OrCapital = Assets – Liabilities
It is to be noted here that the Accounting Equation shall remain balanced every time. As we
know that each transaction has a Dual aspect. Thus, each debit has an equal credit.
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Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

PROBLEMS ON ACCOUNTING EQUATION

Q-1 What will be effect of the following on the Accounting Equation?
(i) Started business with cash ₹ 45,000
(ii) Opened a Bank Account with a deposit of ₹ 4,500
(iii) Bought goods from M\s. Sun & Co. for ₹ 11,200

Therefore, Liabilities = 11,200, Capital = 45,000

Assets = Liabilities + Capital
= 45,000 + 11,200 = 56,200
Q-2 Show the Accounting Equation for the following transactions:
(i) Gopinath started business with cash Rs.25,000
(ii) Purchased goods from Shyam Rs.10,000
(iii) Sold goods to Sohan (costing ₹ 1,800) Rs.1,500
(iv) Gopinath withdrew from business Rs.5,000

Here,Liabilities = 10,000, Capital = 19,700Assets = 10,000 + 19,700 = 29,700

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RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Q-3 Show the effect of the following transactions on the Accounting Equation:
(i) Started business with cash ₹ 50,000.
(ii) Salaries paid ₹ 2,000.
(iii) Wages Outstanding ₹ 200.
(iv) Interest due but not paid ₹ 100.
(v) Rent paid in advance ₹ 150.

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Q-4 Analyze the following transactions under the Accounting Equation Approach.
(a) Commenced business with cash ₹500000
(b) Purchased goods ₹25000
(c) Paid salary ₹10000
(d) Sold goods costing ₹20000 at a profit of 25% on the cost
(e) Paid salary in advance ₹2000
(f) Introduced additional capital ₹10000
(g) Purchased computer ₹15000
(h) Deposited ₹50000 into the bank

Summary of transactions using the Accounting Equation (Assets = Liabilities + Capital)

Particulars Assets Liabilities Capital
Cash Stock Computer Prepaid Bank
(a) 5,00,000 5,00,000
Commenced
business
(b) Purchased (25,000) 25,000
goods
(c) Paid salary (10,000) (10,000)
(d) Sold goods 25,000 (20,000) 5,000
(e) Paid salary (2000) 2000
in advance
(f) additional 10,000 10,000
capital
(g) Purchased (15,000) 15,000
computer
(h) Deposited (50,000) 50,000
into bank
4,33,000 5,000 15,000 2,000 50,000 5,05,000
5,05,000 5,05,000

Q-5 Show that the accounting equation is satisfied after taking into consideration each of the
following transactions in the books of Mr. Naresh.
(1) Started business with capital Rs.1,00,000
(2) Bought furniture Rs.25,000
(3) Bought goods for cash Rs.20,000
(4) Bought goods from Ram on Credit Rs.5,000
(5) Sold goods for cash for Rs.15,000
(6) Sold goods to Shyam on credit Rs.8,000
(7) Paid cash to Ram Rs.4,000
(8) Received cash from Shyam Rs.5,000
(9) Paid Cash into Bank Rs.25,000
(10) Withdrawn from bank Rs.10,000

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Summary of transactions using the Accounting Equation (Assets = Liabilities + Capital)

Particulars Assets Liabilities Capital
Cash Furniture Stock Debtors Bank Creditors
(1) Started 1,00,000 1,00,000
business
(2) Bought (25,000) 25,000
furniture
(3) Bought (20,000) 20,000
goods for cash
(4) Bought 5,000 5,000
goods from
Ram on credit
(5) Sold goods 15,000 (15,000)
for cash
(6) Sold goods (8,000) 8,000
to syam on
credit
(7) Paid cash (4,000) (4,000)
to Ram
(8) Received 5,000 (5,000)
cash from
syam
(9) Paid into (25,000) 25,000
bank
(10) Cash 10,000 (10,000)
withdrawn
from bank
56,000 25,000 2,000 3,000 15,000 1,000 1,00,000
1,01,000 1,01,000

Q-6 Following are the accounting transactions relating to Mr. Prakash Bro’s. Use the
accounting equation to show their effect on his assets, liabilities and capital.
(1) Commenced business with a Capital of Rs.50,000
(2) Bought Machinery for cash Rs.10,000
(3) Purchased goods for cash Rs.15,000
(4) Purchased goods from A on credit Rs.5,000
(5) Sold goods for cash Rs.10,000
(6) Paid to A Rs.2,000
(7) Sold goods to B on credit Rs.3,000
(8) Paid into Bank Rs.6,000
(9) Paid to A by cheque Rs.1,000
(10) Received from B a cheque for Rs.2,000

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Summary of transactions using the Accounting Equation (Assets = Liabilities + Capital)

Particulars Assets Liabilities Capital
Cash Machiner Stock Debtors Bank Creditors
y
(1) 50,000 50,000
Commenced
business
(2) Bought (10,000) 10,000
machinery
(3) Purchased (15,000) 15,000
goods for cash
(4) Purchased 5,000 5,000
goods from A
on credit
(5) Sold goods 10,000 (10,000)
for cash
(6) Paid to A (2,000) (2,000)
(7) Sold goods (3,000) 3,000
to B on credit
(8) Paid into (6,000) 6,000
Bank
(9) Paid to A (1,000) (1,000)
by cheque
(10) Received (2,000) 2,000
from B a
cheque
27,000 10,000 7,000 1,000 7,000 2,000 50,000
52,000 52,000

Q-7 Habib UllahSadiq is wholesale trader; following transactions are record in Accounting
Equation?
(i) Commence business with cash Rs. 200,000 and Land Rs. 50,000.
(ii) Bought merchandising for cash Rs. 80,000.
(iii) Cash sales of worth Rs. 25,000.
(iv) Bought goods on credit from Salman of worth Rs. 50,000.
(v) Sales on account to Ali Raza Rs. 12,000.
(vi) Purchase furniture of the value of Rs. 5,000 by cash.
(vii) Received cash form Ali Raza of Rs. 10,000.
(viii) Return defective furniture of worth Rs. 1,500.
(xi) Paid wages Rs. 1,000, Rent 2,000 and Electricity Bill Payable Rs. 1,500.

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Summary of transactions using the Accounting Equation (Assets = Liabilities + Capital)

Particulars Assets Liabilities Capital
Cash Fixed Stock Debtors Bank Outstandin
Assets g
(i) 2,00,000 50,000 2,50,000
Commenced
business
(ii) Bought (80,000) 80,000
machinery
(iii) Cash sales 25,000 (25,000)
(iv) Bought 50,000 50,000
goods on
credit from
Salman
(v) Sales on (12,000) 12,000
account to Ali
Raza
(vi) Purchase (5,000) 5,000
furniture
(vii) Received 10,000 (10,000)
cash form Ali
Raza
(viii) Return 1,500 (1,500)
defective
furniture
(ix) Paid (3,000) (3,000)
wages, rent 1,500 (1,500)
and electricity
bill payable
1,48,500 1,33,500 13,000 2,000 51,500 2,45,500
2,97,000 2,97,000

(Q-1) Muhammad Faizan Abid had the following transactions. Use accounting equation to
show their effect on his Assets, Liabilities and Capital?
(a) Invested Rs. 15,000 in cash.
(b) Purchased securities for cash Rs. 7,500.
(c) Purchased a home for Rs. 15,000: giving Rs. 5,000 in cash and the balance through
loan account.
(d) Sold securities costing Rs. 1,000 for Rs. 1,500.
(e) Purchase an old car for Rs. 2,800 cash.
(f) Received cash as salary Rs. 3,600.
(g) Paid cash Rs.500 for loan and Rs. 300 for interest.
(h) Paid cash for expenses Rs. 300.
(i) Received cash for dividend on securities Rs.200.

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Summary of transactions using the Accounting Equation (Assets = Liabilities + Capital)

Particulars Assets Liabilities Capital
Cash Securities Home Old Car Bank Outstandin
g
(a) Invested 15,000 15,000
Rs. 15,000 in
cash
(b) Purchased (7,500) 7,500
securities for
cash
(c) Purchased (5,000) 15,000 10,000
a home
(d) Sold 1,500 (1,000) 500
securities
(e) Purchase (2,800) 2,800
an old car
(f) Received 3,600 3,600
cash as salary
(g) Paid cash (800) (800)
Rs.500 for
loan and Rs.
300 for
interest.
(h) Paid cash (300) (300)
for expenses
(i) Received 200 200
cash for
dividend on
securities
3,900 6,500 15,000 2,800 10,000 18,200
28,200 28,200

EXERCISE PROBLEMS
(Q-1) Selected Transactions from Shah Transport Services began on June 1, 2016 by Zahid
Shah as? (Ans: 6,30,600)
(a) Zahid Shah invested Rs. 600,000.
(b) Truck was Purchase by business for Rs. 430,000.
(c) Equipment purchased on credit for Rs. 9,000.
(d) A bill of Rs. 7,200 for transporting goods was sent to Mr. Ashraf Abbasi, a
customer.
(e) Cash of Rs. 6,000 is received from the customer who was billed in d.
(f) Received Rs. 22,300 is cash for transporting goods.
(g) A payment of Rs. 5,000 was made on the equipment purchased in c.
(h) Paid expenses of different types for Rs. 1,700 in cash.
(i) Equipment of Rs. 1,200 was withdrawn from business for Zahid Shah’s personal
use.

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RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

(Q-2) Prove that the Accounting Equation is satisfied in all following transactions of
WajeehaEjaz owner of business enterprises? (Ans: 5,05,500)

I. Started business with cash value of Rs. 500,000.

II. Rent paid in advance for a year Rs. 6,000.
III. Purchased merchandising inventory for cash Rs. 80,000 and on account Rs. 20,000
from Mr. Tahir.
IV. Purchased Marketable securities for cash Rs. 100,000.
V. Cash Sales Rs. 30,000 (cost 20,000).
VI. During the period rent expires Rs. 2,000.
VII. Commission paid during the trading was Rs. 1,000.
VIII. Received cash dividend Rs. 4,000 on marketable securities.
IX. Paid to Rs. 19,500 to Mr. Tahir in full settlement.
X. Withdrew inventory for personal purpose by owner of worth Rs. 6,000.

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PROBLEMS ON JOURNAL ENTRIES

(1) Journalize the following transactions and post them into Ledger
2013, Sep 1 Ali commenced business with cash Rs.17, 000
Sep 2 Paid into Bank Rs.7,000
Sep 3 Purchase goods for cash Rs.100
Sep 4 Bought furniture for Office Rs.700
Sep 5 Drew from Bank cash for office Rs.4, 000
Sep 6 Goods sold to Khanna Rs.800
Sep 7 Bought goods from Arvind Rs.500
Sep 8 Paid Trade Expenses Rs.100
Sep 9 Paid to Ali on account Rs.300
Sep10 Received Cash from Khanna Rs.500
Sep11 Paid Rent Rs.100
Sep 12 Cash Sales Rs.18, 000
Solution:

Journalise in the Books of Ali

Date LF Particulars Dr, Rs. Cr, Rs.
2013 Sept-1 Cash A/c Dr 17,000 -
To Capital A/c - 17,000
(Being Ali commenced business)
Sept-2 Bank A/c Dr 7,000 -
To Cash A/c - 7,000
(Being Paid into Bank)
Sept-3 Purchase A/c Dr 100 -
To Cash A/c 100
(Being Purchase goods for cash)

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RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Sept-4 Furniture A/c Dr 700 -

To Cash A/c - 700
(Being Bought furniture for Office)
Sept-5 Cash A/c Dr 4,000 -
To Bank A/c - 4,000
(Being Drew from Bank cash for office)
Sept-6 Kanna A/c Dr 800 -
To Sales A/c - 800
(Being Goods sold to Khanna)
Sept-7 Purchases A/c Dr 500 -
To Arvind A/c - 500
(Being Bought goods from Arvind)
Sept-8 Trade Expenses A/c Dr 100 -
To Cash A/c - 100
(Being Paid Trade Expenses)
Sept-9 Ali A/c Dr 300 -
To Cash A/c - 300
(Being Amount Paid to Ali)
Sept-10 Cash A/c Dr 500 -
To Kanna A/c - 500
(Being Received Cash from Khanna)
Sept-11 Rent A/c Dr 100 -
To Cash A/c - 100
(Being Paid Rent)
Sept-12 Cash A/c Dr 18,000 -
To Sales A/c - 18000
(Being Cash Sales)

Dr Cash Account Cr
Date Particulars Rs. Date Particulars Rs.
2013 To Capital A/c 17,000 2013 By Bank A/c 7,000
Sept-1 Sept-2
Sept-5 To Bank A/c 4,000 Sept-3 By Purchases A/c 100
Sept-10 To Kanna A/c 500 Sept-4 By Furniture A/c 700
Sept-12 To Sales 18,000 Sept-8 By Trade Expenses 100
Sept-9 By Ali A/c 300
Sept-11 By Rent A/c 100
Sept-30 By Balance C/d → 31,200
39,500 39,500

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

(2) Journalize the following transactions and Post them into Ledger
(i) Ram invested Rs.10,000 in cash
(ii) He bought goods worth Rs.2000 from Shyam
(iii) He bought a machine for Rs.5000 from Lakshman on account
(iv) He paid to Lakshman Rs.2000
(v) He sold goods for cash Rs.3000
(vi) He sold goods to Anusha on account for Rs.4000
(vii) He paid to Shyam Rs. 1000
(viii) He received amount from Anusha Rs.2000.

Solution:

Journalise in the Books of Ram

Date LF Particulars Dr, Rs. Cr, Rs.
(i) Cash A/c Dr 10,000 -
To Capital A/c - 10,000
(BeingRaminvested in business)
(ii) Purchase A/c Dr 2,000 -
To Shyam A/c - 2,000
(Being bought goods from shyam)
(iii) Machinery A/c Dr 5,000 -
To Lakshman A/c 5,000
(Being Bought Machine from Lakshman)
(iv) Lakshman A/c Dr 2,000 -
To Cash A/c - 2,000
(Being Paid to Lakshman)
(v) Cash A/c Dr 3,000 -
To Sales - 3,000
(Being Sold goods for Cash)
(vi) Anusha A/c Dr 4,000 -
To Sales A/c - 4,000
(Being Goods sold to Khanna)
(vii) Shyam A/c Dr 1,000 -
To Cash A/c - 1,000
(Being Paid to Shyam)
(viii) Cash A/c Dr 2,000 -
To Anusha A/c - 2,000
(Being Paid Trade Expenses)

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Ledger Accounts:

Dr Cash Account Cr
Date Particulars Rs. Date Particulars Rs.
(i) To Capital A/c 10,000 (iv) By Lakshman A/c 2,000
(v) To Sales A/c 3,000 (vii) By Shyam A/c 1,000
(viii) To Anusha A/c 2,000
By Balance C/d → 12,000
15,000 15,000

Dr Syam Account Cr
Date Particulars Rs. Date Particulars Rs.
(vii) To Cash A/c 1,000 (ii) By Purchases A/c 2,000
To Balance C/d → 1,000
2,000 2,000
Dr Lakshman Account Cr
Date Particulars Rs. Date Particulars Rs.
(iv) To Cash A/c 2,000 (iii) By Machinery A/c 5,000
To Balance C/d → 3,000
5,000 5,000

Dr Anusha Account Cr
Date Particulars Rs. Date Particulars Rs.
(vi) To Sales A/c 4,000 (viii) By Cash A/c 2,000
By Balance C/d → 2,000
4,000 4,000

(3) Identify the recording process of Journal Entry in a systematic manner?

01-07-2016 Business Commenced with a cash Rs.10,00,000

03-07-2016 Deposited in Bhuvaneswari Bank Ltd Rs.8,00,000

08-07-2016 Goods Purchased from Hindu Heritage Ltd. Rs.50,00,000

12-07-2016 Sold Goods to Amaravathi Infra Ltd. Rs.75,00,000

18-07-2016 Salaries & Rent Paid through bank Rs.8,00,000

25-07-2016 Received a Bank Cheque From Amaravathi Infra Ltd Rs.30,00,000

28-07-2016 Paid to Hindu Heritage Ltd. Rs.25,00,000

31-07-2016 Paid Office Expenses through bank Rs.5,00,000

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Solution:

Journalise in the Books of ------

Date LF Particulars Dr, Rs. Cr, Rs.
01-07-2016 Cash A/c Dr 10,00,000 -
To Capital A/c - 10,00,000
(BeingBusiness Commenced)
03-07-2016 Bhuvaneswari Bank Ltd A/c Dr 8,00,000 -
To Cash - 8,00,000
(Being Deposited in Bhuvaneswari Bank)
08-07-2016 Purchases A/c Dr 50,00,000 -
To Hindu Heritage Ltd A/c 50,00,000
(Being Goods Purchased from Hindu
Heritage Ltd)
12-07-2016 Amaravathi Infra Ltd A/c Dr 75,00,000 -
To Sales A/c - 75,00,000
(Being Sold Goods to Amaravathi Infra)
18-07-2016 Salaries & Rent A/c Dr 8,00,000 -
To Bank A/c - 8,00,000
(Being Sold goods for Cash)
25-07-2016 Bank A/c Dr 30,00,000 -
To Amaravathi Infra Ltd A/c - 30,00,000
(Being Received a Bank Cheque From
Amaravathi Infra Ltd)
28-07-2016 Hindu Heritage Ltd A/c Dr 25,00,000 -
To Cash A/c - 25,00,000
(Being Paid to Hindu Heritage Ltd)
31-07-2016 Office Expenses A/c Dr 5,00,000 -
To BankA/c - 5,00,000
(Being Paid Office Expenses)

(4) Journalize the following transactions and post them into ledger
2015 Jan1 Shyam started business with cash Rs.40,000
2015 Jan 4 Goods purchased from Gopi Rs.23,000
2015 Jan 6 Goods sold to Rahim Rs. 16,000
2015 Jan 8 Goods returned to Gopi Rs.5,000
2015 Jan10 Goods returned by Rahim Rs. 800
2015 Jan 13 Deposited into bank Rs.3,000
2015 Jan 15 Interest Received Rs.50
2015 Jan 31 Salaries Paid Rs. 5,000

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Solution:
Journal entries in the Books of Shyam
Date LF Particulars Dr, Rs. Cr, Rs.
01-01-2015 Cash A/c Dr 40,000 -
To Capital A/c - 40,000
(Being Shyam started business)
04-01-2015 Purchases A/c Dr 23,000 -
To Gopi - 23,000
(Being Goods purchased from Gopi)
06-01-2015 Rahim A/c Dr 16,000 -
To Sales A/c 16,000
(Being Goods sold to Rahim)
08-01-2015 Gopi A/c Dr 5,000 -
To Purchase Returns A/c - 5,000
(Being Goods returned to Gopi)
10-01-2015 Sales Returns A/c Dr 800 -
To Rahim A/c - 800
(Being Goods returned by Rahim)
13-01-2015 Bank A/c Dr 3000 -
To Cash A/c - 3000
(Being Deposited into bank
15-01-2015 Cash A/c Dr 50 -
To Interest A/c - 50
(Being Interest Received)
31-01-2015 Salaries A/c Dr 5000 -
To Cash A/c - 5000
(Being Paid Salaries)

Ledger Accounts:

Dr Cash Account Cr
Date Particulars Rs. Date Particulars Rs.
Jan-1, 05 To Capital A/c 40,000 Jan-13 By Bank A/c 3,000
Jan-15 To Interest A/c 50 Jan-31 By Salaries A/c 5,000

Jan-31 By Balance C/d → 35,050

40,050 40,050

Dr Gopi Account Cr
Date Particulars Rs. Date Particulars Rs.
Jan-8 To P Returns A/c 5,000 Jan-04 By Purchases A/c 23,000
Jan-31 To Balance C/d → 18,000
23,000 23,000

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Dr RahimAccount Cr
Date Particulars Rs. Date Particulars Rs.
Jan-6 To Sales A/c 16,000 Jan-10 By Sales Returns A/c 800
Jan-31 To Balance C/d → 15,200
16,000 16,000

(5) Journalise the following transactions.

2003 Jan.1 ABCfirm commenced business withRs.40,000
Jan.2 Deposited into bankRs.30,000
Jan.3 Bought goods worth Rs.48,000 from Kamala
Jan.4 Sold goods worth Rs.60,000

Solution:

Journal entries in the Books of ABC Firm

Date LF Particulars Dr, Rs. Cr, Rs.
01-01-2003 Cash A/c Dr 40,000 -
To Capital A/c - 40,000
(Being ABC firm commenced business)
02-01-2003 Bank A/c Dr 30,000 -
To Cash A/c - 30,000
(Being Deposited into bank)
03-01-2003 Purchases A/c Dr 48,000 -
To Kamala A/c 48,000
(Being Bought goods from Kamala)
04-01-2003 Cash A/c Dr 60,000 -
To Sales A/c - 60,000
(Being Sold goods)

(6) Prepare ledger posting for the following transactions.

2003 Jan.5 Paid rentRs.4, 000
Jan.6 Sold goods worth Rs.50, 000 to Suresh
Jan.7 Bought goodsfrom Devi Rs.14, 000
Jan.8 Paid salariesRs.1, 000

Solution:

Journal Entries
Date LF Particulars Dr, Rs. Cr, Rs.
Jan-5, 2003 Rent A/c Dr 4,000 -
To Cash A/c - 4,000
(Being Rent Paid)
Jan-6, 2003 Suresh A/c Dr 50,000 -
To Sales A/c - 50,000
(Being Goods sold to Suresh )
Jan-7, 2003 Purchases A/c Dr 14,000 -
To Devi A/c 14,000

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

(Being Bought goods from Devi)

Jan-8, 2003 Salaries A/c Dr 1,000 -
To Cash A/c - 1,000
(Being Paid Salaries)

Ledger Accounts:

Dr Cash Account Cr
Date Particulars Rs. Date Particulars Rs.
Jan-5 By Rent A/c 4,000
Jan-8 By Salaries A/c 1,000

Jan-31 To Balance C/d → 5,000

5,000 5,000

Dr Suresh Account Cr
Date Particulars Rs. Date Particulars Rs.
Jan-6 To Sales 50,000
Jan-31 By Balance C/d → 50,000
50,000 50,000

Dr Devi Account Cr
Date Particulars Rs. Date Particulars Rs.
Jan-7 By Purchases A/c 14,000
Jan-31 To Balance C/d → 14,000
14,000 14,000

Dr Purchase Account Cr
Date Particulars Rs. Date Particulars Rs.
Jan-7 To Devi A/c 14,000
Jan-31 BY Balance C/d → 14,000
14,000 14,000

Dr Sales Account Cr
Date Particulars Rs. Date Particulars Rs.
Jan-7 By Suresh A/c 50,000
Jan-31 To Balance C/d → 50,000
50,000 50,000

(7) Journalize the following Transactions from the books of Miss. Madhuri?
a) Madhuri Commenced business with a capital of Rs.1, 00,000/-
b) Purchased furniture Rs.3,000/-
c) Sold Goods worth Rs.3,500/-
d) Paid Salaries Rs.10,000/-

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

e) Office Expenses paid Rs.800/-

f) Cash deposited into bank Rs.30,000/-
g) Purchased good on credit basis from Miss. Shreya Rs.40,000/-
h) Cash withdraw from bank Rs.15,000/-

Solution:
Journal Entries in the Books of Madhuri
Date LF Particulars Dr, Rs. Cr, Rs.
(a) Cash A/c Dr 1,00,000 -
To Capital A/c - 1,00,000
(Being Madhuri Commenced business)
(b) Furniture A/c Dr 3,000 -
To Cash A/c - 3,000
(Being Purchased furniture)
(c) Cash A/c Dr 3,500 -
To Sales A/c 3,500
(Being Sold Goods)
(d) Salaries A/c Dr 10,000 -
To Cash A/c - 10,000
(Being Paid Salaries)
(e) Office Expenses A/c Dr 800 -
To Cash A/c - 800
(Being Office Expenses paid)
(f) Bank A/c Dr 30,000 -
To Cash A/c - 30,000
(Being Deposited into bank
(g) Purchase A/c Dr 40,000 -
To Miss. Shreya A/c - 40,000
(Being Purchased goods on credit from Miss.
Shreya)
(h) Cash A/c Dr 15,000 -
To Bank A/c - 15,000
(Being Cash withdraw from bank)

(8) Journalize the following transactions for March 31, 2020:

March 1 Vamsi started business with a capital of Rs.20,000

3 Paid cash to Madan Rs.2,000
5 Sold goods to Samuel Rs.4,000
6 Rent Paid Rs.500

Solution:

Journal Entries in the Books of Vamsi

Date LF Particulars Dr, Rs. Cr, Rs.
March-1, 2020 Cash A/c Dr 20,000 -
To Capital A/c - 20,000
(Being Vamsi started business)
March-3 Madan A/c Dr 2,000 -
To Cash A/c - 2,000
(BeingPaid cash to Madan)
March-5 Samuel A/c Dr 4,000 -
To Sales A/c 4,000

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

(Being Sold goods to Samuel)

March-6 Rent A/c Dr 500 -
To Cash A/c - 500
(Being Rent Paid)

(9) Journalise the following transactions in the books of Khan and Co.
2018
Jan 2 Started the business with Rs.8,00,000
Jan 3 Bought furniture for Rs.1,20,000
Jan 4 Bought stationery for Rs.5,000
Jan 5 Purchased goods for cash atRs. 2,00,000
Jan 6 Sold goods for cash worth Rs.50,000
Jan 7 Sold to R.Desai goods worth Rs.1,00,000
Jan 9 Bought goods from Mundra Bros atRs. 80,000
Jan 12 Paid office cleaning charges Rs.1,500
Jan 13 Bought goods from Hari worth Rs.1,00,000
Jan 15 Sold to Sharma and Co; good worthRs. 60,000
Jan 20 Received Cash from R.Desai Rs.50,000
Jan 23 Paid to Hari Rs.90,000
Jan 25 Bought typewriter for Rs.80,000
Jan 26 Paid house rent of Rs.7,500
Jan 28 Paid light charges of Rs.5,000
Jan 29 Paid salary accounting to Rs.50,000
Jan 31 Received commission to Rs.15,000
Journalise in the Books of Khan and Co
Date LF Particulars Dr, Rs. Cr, Rs.
2018 Cash A/c Dr 8,00,000 -
Jan-2 To Capital A/c - 8,00,000
(Being Khan and Co started business)
Jan-3 Furniture A/c Dr 1,20,000 -
To Cash A/c - 1,20,000
(Being Bought furniture)
Jan-4 Stationery A/c Dr 5,000 -
To Cash A/c 5,000
(BeingBought stationery)
Jan 5 Purchases A/c Dr 2,00,000 -
To Cash A/c - 2,00,000
(Being Purchased goods for cash)
Jan 6 Cash A/c Dr 50,000 -
To Sales A/c - 50,000
(Being Sold goods for cash)
Jan 7 R. Desai A/c Dr 1,00,000 -
To Sales A/c - 1,00,000
(BeingGoods Sold to R. Desai)
Jan 9 Purchase A/c Dr 80,000 -
To Mundra Bros A/c - 80,000
(Being Bought goods from Mundra Bros)
Jan 12 Cleaning Charges A/c Dr 1,500 -

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

To Cash A/c - 1,500

(Being Paid office cleaning charges)
Jan 13 Purchases A/c Dr 1,00,000
To Hari 1,00,000
(Being Bought goods from Hari)
Jan 15 Sharma & Co A/c Dr 60,000
To Sales 60,000
(Being Sold to Sharma and Co)
Jan 20 Cash A/c Dr 50,000
To R. Desai A/c 50,000
(BeingCash Received from R. Desai)
Jan 23 Hari A/c Dr 90,000
To Cash A/c 90,000
(Being Paid to Hari)
Jan 25 Typewriter A/c Dr 80,000
To Cash A/c 80,000
(Being Bought typewriter)
Jan 26 House Rent A/c Dr 7,500
To Cash A/c 7,500
(Being Paid house rent)
Jan 28 Light Charges Dr 5,000
To Cash A/c 5,000
(Being Paid light charges)
Jan 29 Salary A/c Dr 50,000
To Cash A/c 50,000
(Being Paid salary)
Jan 31 Cash A/c Dr 15,000
To Commission A/c 15,000
(BeingReceived Commission)
(10) Journalize the following transactions.
2021,
January 1. Commenced business with a capital of Rs. 1,00,000
,, 2. Cash deposited into bank Rs. 9000
,, 3. Bought Furniture for cash Rs. 3,000
,, 4. Bought goods for cash from ‘B’ Rs. 5000
,, 5. Sold goods for cash to ‘A’ Rs. 2,000
,, 6. Purchased goods from ‘C’ on credit Rs.2000
,, 7. Goods sold to ‘D’ on credit Rs. 1500
,, 20. Received interest Rs. 500
,, 31. Paid rent Rs. 4000
,, 31. Paid salary to ‘P’ Rs.10,000

Solution:

Journal Entries
Date LF Particulars Dr, Rs. Cr, Rs.
2021 Cash A/c Dr 1,00,000 -
January 1 To Capital A/c - 1,00,000
(Being Commenced business)
Bank A/c Dr 9,000 -
January 2 To Cash A/c - 9,000
(Being Purchased furniture)

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Furniture A/c Dr 3,000 -

January 3 To Cash A/c 3,000
(Being Purchased furniture)
PurchasesA/c Dr 5,000 -
January 4 To Cash A/c - 5,000
(Being Bought goods for cash from ‘B’)
Cash A/c Dr 2,000 -
January 5 To Sales A/c - 2,000
(Being Sold goods for Cash to ‘A’)
Purchases A/c Dr 2,000 -
January 6 To ‘C’ A/c - 2,000
(Purchased goods from ‘C’ on credit)
‘D’ A/c Dr 1,500 -
January 7 To Sales A/c - 1,500
(Being Goods sold to ‘D’ on credit)
Cash A/c Dr 500 -
January 20 To Interest A/c - 500
(Being Received interest)
Rent A/c Dr 4,000 -
January 31 To Cash A/c - 4,000
(BeingPaid Rent)
Salary A/c Dr 10,000 -
January 31 To Cash - 10,000
(BeingPaid Salary)

(11) Journalize the following transactions:

June 1.2021 Commenced with Cash Rs. 10,00,000
June 3,2021 Purchased Goods worth Rs.2,00,000
Jan 8,2021 Sold goods to Mr.Raghu Rs.1,00,000
June 30,2021 Salaries Paid Rs. 20,000
June 30,2021 Rent Paid Rs. 10,000

Solution:
Journal Entries
Date LF Particulars Dr, Rs. Cr, Rs.
01-06-2021 Cash A/c Dr 10,00,000 -
To Capital A/c - 10,00,000
(Being Commenced Business)
Purchases A/c Dr 2,00,000 -
03-06-2021 To Cash A/c - 2,00,000
(BeingPurchased Goods)
Mr.RaghuA/c Dr 1,00,000 -
08-06-2021 To Sales A/c 1,00,000
(Being Sold goods to Mr.Raghu)
Salaries A/c Dr 20,000 -
30-06-2021 To Cash A/c - 20,000
(Being Salaries Paid)
Rent A/c Dr 10,000
30-06-2021 To Cash A/c 10,000
(Being Rent Paid)

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

(12) Post the following transactions in ledger accounts:

April-1, 2021 Sold goods for cash Rs.8,000
April-5 Paid cash to Uma Rs.2,000
April-7Bought furniture Rs.2,000
April-20 Paid salaries Rs.3,000

Solution:
Ledger Accounts:
Dr Cash Account Cr
Date Particulars Rs. Date Particulars Rs.
01-04-2021 To Sales A/c 8,000 05-04-2021 By Uma A/c 2,000
07-04-2021 By Furniture A/c 2,000
20-04-2021 By Salaries A/c 3,000
30-04-2021 By Balance C/d → 1,000
8,000 8,000

(13) Enter the following transactions in Krishna account and bring down the balances?
2019 January 1 Sold Goods Krishna Rs.21, 000
2019 January 3 Purchased Goods fromKrishna Rs.11, 400
2019 January 10 Paid Cash to Krishna Rs.12, 000
2019 January 15 Sold Goods to Krishna Rs.4,000
2019 January 15 Received Cash fromKrishna Rs. 2,400

Solution:

Ledger Accounts:
Dr Krishna Account Cr
Date Particulars Rs. Date Particulars Rs.
01-01-2019 To Sales A/c 21,000 03-01-2019 By Purchases A/c 11,400
10-01-2019 To Cash A/c 12,000 01-01-2019 By Cash A/c 2,400
15-01-2019 To Sales A/c 4,000
30-04-2021 By Balance C/d → 23,400
37,000 37,000

(14) Enter the following transactions in proper subsidiary books of Ram

2021August 1 Sold goods to Ramesh 5250
August -1 Bought from Hari Ram 7800
August -2 Ramesh returned goods 750

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

August -2 Sold to Dev 5500

August -2 Purchased goods from Mangal 7000
August -4 Return goods to Mangal 1000
August -4 Bought from Devi dayal 3250
August -4 Sold to Zakeer 3500
August -5 Zakeer returned goods 450
August -6 Sold to Ram Saran 5000
August -6 sold to Gyan 3000
August -7 Ram Saran returned goods 500
August -7 Bought from Devi dayal 7000
August -8 Return goods to Devi dayal 750
August -9 Purchased goods from Raghu subject to trade discount of 10% 10,000
August -10 Sold to Rajaram goods subject to trade discount of 5% 5,000

Solution:

Proper Subsidiary Books of Ram

Sales Book
Date Invoice Particulars Amount
Number (Rs.)
1-8-2021 Ramesh 5,250
2-8-2021 Dev 5,500
2-8-2021 Zakeer 3,500
6-8-2021 Ram Saran 5,000
6-8-2021 Gyan 3,000
10-8-2021 Rajaram (5,000 - 5,000 x 5%) 4,750
Total 27,000

Purchase Book
Date Invoice Particulars Amount
Number (Rs.)
1-8-2021 Hari Ram 7,800
2-8-2021 Mangal 7,000
4-8-2021 Devi dayal 3,250
7-8-2021 Devi dayal 7,000
9-8-2021 Raghu (10,000 – 10,000 x 10%) 9,000
Total 30,050

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Sales Returns Book

Date Debit Particulars Amount
Note (Rs.)
2-8-2021 Ramesh 750
5-8-2021 Zakeer 450
7-8-2021 Ram Saran 500
Total 1,700

Purchase Returns Book

Date Credit Particulars Amount
Note (Rs.)
4-8-2021 Mangal 1,000
8-8-2021 Devi dayal 750
Total 1,750

(15) Preparing Trail Balance for the following:

Capital Rs.20,000, Cash Rs.18,500, Purchases Rs.8,000, Sales Rs.8,000, Furniture Rs.2,000,
X account of Rs.4,000, Y account Rs.3,000 and Rent Rs.500.

Solution:

Dr Trail Balance Cr
Debit Balances Rs. Credit Balances Rs.
Cash 18,500 Capital 20,000
Purchases 8,000 Sales 8,000
Furniture 2,000 X A/c (Creditors) 4,000
Rent 500
Y A/c (Debtors) 3,000
32,000 32,000

(16) Following are the extracts from the Trial Balance of a firm as at 1st March 2017

Particulars Dr. Rs Cr. Rs

Sundry Debtors 2,05,000 -
Provision for doubtful debts - 10,000
Bad Debts 3,000 -

Additional information: Additional bad debts Rs.5,000.Maintain the provision for doubtful
debts @ 10% on debtors. Show the relevant accounts.

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Solution:

Dr Profit & Loss Account Cr

Particulars Rs. Particulars Rs.
To Bad Debts 3,000
Add: Additional 5,000 8,000
To Provisional Doubtful Debts 10,000
(New – Old) 20,000 – 10,000)

Balance Sheet
Liabilities Rs. Assets Rs.
Sundry Debtors 2,05,000
Less: Addl. Bad debts 5,000
2,00,000
Less: Provision for Doubtful 20,000
Debts (2, 00,000 x 10%)
1,80,000

&&&&&

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Proforma for Trail Balance

Dr Trail Balance of ---------------for the year ended ---------- Cr

Particulars Amount Particulars Amount
(Rs.) (Rs.)
Opening Stock xxx Sales xxx
Purchases xxx Purchase returns (outward) xxx
Sales returns(inward) xxx Received Interest xxx
Carriage inwards xxx Received Commission xxx
wages xxx Received Discount xxx
Factory: Coal, Fuel, water, xxx Received Dividend xxx
Motive power, Electricity & Gas,
Factory Rent, & Insurance,
Lighting, & Heating
Export Duty xxx Bad debt reserve xxx
Freight on Purchases xxx Appreciation on Assets xxx
Salaries xxx Profit of Sale on Asset xxx
Rent, Taxes, & Insurance xxx Capital xxx
Trading Expenses xxx Creditors xxx
General Expenses xxx Bills Payable xxx
Carriage Outwards xxx Bank overdraft xxx
Freight on Sales xxx Outstanding expenses xxx
Discount xxx Debentures xxx
Bank Charges xxx Long term loans xxx
Advertisement xxx Apprentice premium xxx
Printing & Stationery xxx
Repairs xxx
Bad debts xxx
Travelling expenses xxx
Interest xxx
Depreciation xxx
Land & Buildings xxx
Plant & Machinery xxx
Furniture & Fixtures xxx
Equipment xxx
Investments xxx
Premises xxx
Motor Vehicle xxx
Other Fixed Assets xxx
Cash in hand xxx
Cash at bank xxx
Debtors xxx
Bills receivable xxx
Prepaid expenses xxx
Accrued Income xxx
Drawings xxx
XXX XXX

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

PROBLEMS ON TRAIL BALANCE

(1) Prepare Trail Balance of Kamala for the year ended March 31,2022.

Plant and machinery-Rs.1,60,000 Purchases-Rs.1,36,000

Sales returns- Rs.2,000 Opening stock- Rs.60,000
Discount allowed- Rs.700 Capital account- Rs.2,00,000
Bank charges- Rs.150 Sundry debtors- Rs.90,000
Salaries- Rs.13,600 Purchase returns- Rs.6,550
Wages- Rs.20,000 Sales- Rs.2,50,000
Freight- Rs.1,500 Carriages outwards- Rs.2,400
Rent and rates- Rs.4,000 Advertisements- Rs.4,000
Discount received- Rs.1,600 Cash in hand- Rs.13,800
Sundry creditors- Rs.50,000

Ans:
Dr----------Trial Balance of Kamala as on March 31,2022 --------- Cr
Debit Balances Amount Credit Balances Amount
(Rs.) (Rs.)
Plant and machinery 1,60,000 Capital account 2,00,000
Purchases 1,36,000 Sales 2,50,000
Sales returns 2,000 Purchase returns 6,550
Opening stock 60,000 Discount received 1,600
Discount allowed 700 Sundry creditors 50,000
Bank charges 150
Sundry debtors 90,000
Salaries 13,600
Wages 20,000
Freight 1,500
Carriages outwards 2,400
Rent and rates 4,000
Advertisements 4,000
Cash in hand 13,800
5,08,150 5,08,150

&&&&&
(2) Prepare trail balance as on December-31, 2022.
Sundry debtors-Rs.64,000 Stock(1.1.2022)- Rs.44,000
Cash in hand- Rs.70 Sales- Rs.2,65,000
Cash at bank- Rs.3,090 Plant and machinery- Rs.35,000
Sundry creditors- Rs.25,300 Trade expenses- Rs.2,150
Salaries- Rs.4,450 Carriage outwards- Rs.800
Rent- Rs.1,800 Bills payable- Rs.15,000
Purchases - Rs.2,37,740 Discount- Rs.2,200
Capital- Rs.1,59,000 Land and buildings- Rs.69,000

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Ans:

Dr Trail Balance as on 31-12-2022 Cr

Debit Balances Rs. Credit Balances Rs.
Sundry debtors 64,000 Sales 2,65,000
Stock(1.1.2002) 44,000 Sundry creditors 25,300
Cash in hand 70 Bills payable 15,000
Cash at bank 3,090 Capital 1,59,000
Plant and machinery 35,000
Trade expenses 2,150
Salaries 4,450
Carriage outwards 800
Rent 1,800
Purchases 2,37,740
Discount 2,200
Land and buildings 69,000
4,64,300 4,64,300

&&&&&
(3) Prepare Trail Balance for the year ending 31.12.2022 from the following balances.
Sales-Rs.1,25,000 Purchases- Rs.78,000
Sales returns- Rs.2,700 Purchases returns- Rs.3,600
Discount received- Rs.1,250 Discount allowed- Rs.1,850
Opening stock- Rs.6,675 Salaries- Rs.23,000
Electricity and gas- Rs.1,500 Rent and rates- Rs.1,000
Sundry expenses- Rs.2,350 Premises- Rs.50,000
Equipment- Rs.15,000 Vehicle- Rs.10,750
Debtors- Rs.11,420 Bank overdraft- Rs.425
Cash- Rs.60 Creditors- Rs.7,750
Capital- Rs.55,000 Drawings- Rs.5,220
Long term loan- Rs.16,500

Ans:

Trail Balance for the year ended 31.12.2022

Particulars Dr. Rs. Cr. Rs.
Sales - 1,25,000
Purchases 78,000 -
Sales returns 2,700 -
Purchases returns - 3,600
Discount received - 1,250
Discount allowed 1,850 -
Opening stock 6,675 -
Salaries 23,000 -
Electricity and gas 1,500 -
Rent and rates 1,000 -

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Sundry expenses 2,350 -

Premises 50,000 -
Equipment 15,000 -
Vehicle 10,750 -
Debtors 11,420 -
Bank overdraft - 425
Cash 60 -
Creditors - 7,750
Capital - 55,000
Drawings 5,220 -
Long term loan - 16,500
2,09,525 2,09,525

&&&&&
(4) From the following data prepare trial balance in the books of Srikrishna & Co., for the
year 31.12.2000.
Machinery-Rs.3,67,000 Opening stock-Rs.1,16,800
Purchases-Rs.8,00,000 Sales-Rs.9,52,000
Returns (dr)-Rs.16,800 Returns-Rs.15,200
General expenses-Rs.40,000 Stationary-Rs.4,000
Loan from Andhra bank-Rs.2,76,200 Cash-Rs.25,300
Apprentice premium-Rs.6,400 12% loan-Rs.20,000
Bad debts-Rs.13,600 Debtors-Rs.2,56,000
Creditors-Rs.80,000 Provision for bad debts-Rs.8,000
Interest-Rs.300 Sri Krishna Capital-Rs.2,82,000

Ans:
Trail Balance for the year 31.12.2000
Particulars Dr. Rs. Cr. Rs.
Machinery 3,67,000 -
Opening stock 1,16,800 -
Purchases and sales 8,00,000 9,52,000
Returns 16,800 15,200
General expenses 40,000 -
Stationary 4,000 -
Loan from Andhra bank - 2,76,200
Cash 25,300 -
Apprentice premium - 6,400
12% loan - 20,000
Bad debts 13,600 -
Debtors & creditors 2,56,000 80,000
Provision for bad debts - 8,000
Interest 300 -
Sri Krishna Capital - 2,82,000
16,39,800 16,39,800
&&&&&

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

(5) From the following information, prepare Trail Balance.

Purchases-Rs.15,000 Sales- Rs.35,000
Return inward- Rs.700 Returns outward- Rs.800
Opening Stock- Rs.10,000 Wages- Rs.500
Salaries- Rs.700 Depreciation- Rs.1000
Rent Received- Rs.5,000 Building- Rs.15,000
Capital- Rs.30,000 Debtors- Rs.10,000
Creditors- Rs.7,000 Bank overdraft- Rs.5,000
Cash- Rs.29,900
Ans:
----------Trail Balance------
Particulars Dr. Rs. Cr. Rs.
Purchases 15,000 -
Sales - 35,000
Returns 700 800
Opening Stock 10,000 -
Wages 500 -
Salaries 700 -
Depreciation 1000 -
Rent Received - 5,000
Building 15,000 -
Capital - 30,000
Debtors 10,000 -
Creditors - 7,000
Bank overdraft - 5,000
Cash 29,900 -
82,800 82,800

(6) Prepare Trial Balance as on 31-12-2012 from the following balances of Shiva Co Ltd.,
Creditors- Rs. 3,903 Purchases-Rs.25,200
Furniture-Rs. 1,600 Wages-Rs. 3,500
Sales- Rs. 61,604 Machinery-Rs. 20,000
Opening Stock-Rs. 17,525 Sales Returns-Rs. 1,200
Capital- Rs. 35,000 Debtors-Rs. 10,400
Freight on purchase-Rs. 200 Salaries-Rs. 10,600
Freight on sales-Rs. 503 Purchase Returns- Rs. 222
Rent and Taxes-Rs. 2001 Cash at bank-Rs. 8000

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Ans:

Dr Trail Balance of Shiva Co. Ltd as on 31-12-2012 Cr

Debit Balances Amount Credit Balances Amount
(Rs.) (Rs.)
Purchases 25,200 Sales 61,604
Furniture 1,600 Capital 35,000
Wages 3,500 Creditors 3,903
Machinery 20,000 Purchase Returns 222
Opening Stock 17,525
Sales Returns 1,200
Debtors 10,400
Freight on purchase 200
Salaries 10,600
Freight on sales 503
Rent and Taxes 2001
Cash at bank 8000
1,00,729 1,00,729

&&&&&
(7) From the following data of Evergreen Company Limited, prepare Trial Balance.
Cash in hand-Rs.2,400 Purchases- Rs.2,40,000
Capital- Rs.2,00,000 Stock on 1-1-2012- Rs.70,000
Debtors- Rs.1,00,000 Bills Payable- Rs.44,000
Plant & Machinery- Rs.1,20,000 Furniture- Rs.30,000
Bills Receivable- Rs.40,000 Sales- Rs.4,00,000
Rent & Taxes- Rs.20,000 Wages- Rs.32,000
Salaries- Rs.37,600 Creditors- Rs.48,000
Ans:

Trial Balance of Evergreen Company Limited

Particulars Dr. Rs. Cr. Rs.
Cash in hand 2,400 -
Purchases 2,40,000 -
Stock on 1-1-2012 70,000 -
Debtors 1,00,000 -
Plant & Machinery 1,20,000 -
Furniture 30,000 -
Bills Receivable 40,000 -
Rent & Taxes 20,000 -
Wages 32,000 -
Salaries 37,600 -
Capital - 2,00,000
Bills Payable - 44,000
Creditors - 48,000
Sales - 4,00,000
6,92,000 6,92,000

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

&&&&&
(8) The following are the balances extracted from the books of Rakesh; prepare trail balance
on 31st March 2015.
Rakesh Capital-Rs.30,000 Rakesh Drawings-Rs.5,000
Furniture and fixtures-Rs.2,600 Opening Stock-Rs.22,000
Debtors-Rs. 18,000 Rent from tenants-Rs.1,000
Purchases-Rs.1,10,000 Sales-Rs.1,50,000
Electricity Charges-Rs.1,100 Sales Returns-Rs.2,000
Discount (Dr) -Rs.1,600 Bank overdraft-Rs.4,200
Creditors-Rs.13,800 Discount (Cr)-Rs. 2,000
Tax & Insurance-Rs.2,000 General Expenses-Rs.4,000
Salaries-Rs.9,000 Commission (Dr)-Rs. 2,200
Carriage on purchases-Rs.1,800 Bad debts-Rs.800

Ans:

Trail Balance of Rakesh as 31st March 2015

Particulars Dr, Rs. Cr, Rs.
Rakesh Capital - 30,000
Rakesh Drawings 5,000
Furniture and fixtures 2,600
Opening Stock 22,000
Debtors 18,000
Rent from tenants - 1,000
Purchases 1,28,900
Sales - 1,50,000
Electricity Charges 1,100
Sales Returns 2,000
Discount (Dr) 1,600
Bank overdraft - 4,200
Creditors - 13,800
Discount (Cr) - 2,000
Tax & Insurance 2,000
General Expenses 4,000
Salaries 9,000
Commission (Dr) 2,200
Carriage on purchases 1,800
Bad debts 800
2,01,000 2,01,000

&&&&&

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

(9) From the following balances taken from Margo Ltd. Prepare a Trial Balance for the year
ending 31st December 2022.

Stock on 1-1-2022-Rs.2,000 Purchase-Rs.20,000

Sales-Rs.30,000 Returns inward-Rs.2,000
Returns outward-Rs.1,000 Carriage inward-Rs.1,000
Carriage outward-Rs.1,000 Rent-Rs. 1,000
Interest Received-Rs.2,000 Salaries-Rs. 5,000
General Expenses-Rs.1,000 Discount (Cr) -Rs.500
Insurance-Rs.500

Ans:

Trail Balance of Margo Ltd as 31st December 2022.

Particulars Dr. Rs. Cr, Rs.
Stock on 1-1-2022 2,000 -
Purchase and Sales 20,000 30,000
Returns 2,000 1,000
Carriage inward 1,000 -
Carriage outward 1,000 -
Rent 1,000 -
Interest Received - 2,000
Salaries 5,000 -
General Expenses 1,000 -
Discount - 500
Insurance 500 -
33,500 33,500

&&&&&
(10) From the following balances prepare a Trial Balance of Murthy Bro’s as on 31st
December 2012.

Stock on 1.1.2012:
-Raw materials-Rs.20,000
-Work-in-progress-Rs.50,000
-Finished Goods-Rs.1,00,000

Manufacturing wages-Rs.1,00,000 Purchasing of Raw materials-Rs.3,00,000

Factory Rent-Rs.50,000 Carriage of Raw materials-Rs.30,000
Salary of the works managers-Rs.20,000 Office Rent-Rs.20,000
Printing and stationary-Rs.10,000 Bad debts-Rs.10,000
Sales-Rs.6,00,000 Land and Buildings-Rs.3,00,000
Plant and Machinery-Rs.2,00,000 Depreciation on Plant-Rs.20,000
Sundry Debtors-Rs.50,000 Sundry Creditors-Rs.3,00,000
Cash in hand-Rs.50,000 Capital-Rs.4,30,000

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Trial Balance of Murthy Bro’s as on 31-12-2012

Particulars Dr. Rs. Cr. Rs.
Stock on 1.1.2012
Raw materials 20,000 -
Work-in-progress 50,000 -
Finished Goods 1,00,000 -
Manufacturing wages 1,00,000 -
Purchasing of Raw materials 3,00,000 -
Factory Rent 50,000 -
Carriage of Raw materials 30,000 -
Salary of the works 20,000 -
managers
Office Rent 20,000 -
Printing and stationary 10,000 -
Bad debts 10,000 -
Sales - 6,00,000
Land and Buildings 3,00,000 -
Plant and Machinery 2,00,000 -
Depreciation on Plant 20,000 -
Sundry Debtors 50,000 -
Sundry Creditors - 3,00,000
Cash in hand 50,000 -
Capital - 4,30,000
13,30,000 13,30,000

&&&&&

EXERCISE PROBLEMS
(1) From the following balances, prepare Trail Balance as on 31st March 2015.
(Ans.1,28,000)
Capital-Rs.20,000 Purchases-Rs.29,000
Sales-Rs.55,000 Carriage Inwards-Rs.5,000
Wages outstanding-Rs.2,000 Plant-Rs.20,000
Depreciation on plant-Rs.4,000 Rent received-Rs.1,000
Salaries and Wage-Rs.3,000 Reserve for bad and doubtful debts-Rs.1,000
Bad debts-Rs.2,000 Interest-Rs.5,000
Premises-Rs.20,000 Interest Paid-Rs.5,000
Creditors-Rs.6,000 Opening stock-Rs.25,000
Loans-Rs.38,000 Debtors-Rs.15,000

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

(2) From the following balance extracted from the books of RKC Co. prepare a trail balance.
(Ans: 28,940)

Particulars Amt. (Rs.) Particulars Amt (Rs.)

Opening Stock 1,250 Plant & Machinery 6,230
Sales 11,800 Returns outwards 1,380
Depreciation 667 Cash in hand 895
Commission (Cr) 211 salaries 750
Insurance 380 Debtors 1,905
Carriage Inwards 300 Discount (Dr) 328
Furniture 670 Bills Receivable 2,730
Printing Charges 481 Wages 1,589
Carriage outwards 200 Returns Inward 1,659
Capital 9,228 Bank overdraft 4,000
Creditors 1,780 Purchases 8,679
Bills Payable 541 Petty cash in hand 47
Bad Debts 180

(3) Following data of Ram Chandra on 31st March, 2014. Draw the trail balance.
(Ans: 6,91000)
Particulars Amount
(Rs.)
Capital 1,50,000
Stock on 1-4-2013 30,000
Cash at Bank 10,000
Cash in hand 5,000
Machinery 1,00,000
Furniture 13,000
Purchases 2,00,000
Wages 50,000
Carriage Inwards 33,000
Salaries 70,000
Discount received 1,000
Advertising 50,000
Other expenses 40,000
Sales 5,00,000
Sundry debtors 90,000
Sundry Creditors 40,000

(4) Prepare Trail Balance of Jagathi as at 31st March, 2014 from the following balances:

Particulars Amt. (Rs.) Particulars Amt (Rs.)

Capital (Cr) 36,000 Salaries 600
Machinery 700 General expenses 200
Sales 8,200 Rent 500
Purchases 4,000 Purchase Return 50
Sales Returns 100 Debtors 3,000
Stock on 1st April, 2013 1,000 Cash 400

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Drawings 400 Carriage outwards 200

Wages 1,000 Advertising 200
Carriage Inwards 50 Creditors 500

(5) Prepare M/s. Gupta and Sons Trail Balances for the year ending 31st December, 2020
from the following information.
Stock (1-1-2020)-Rs.2,00,000 Purchases-Rs.2,55,000
Wages-Rs.1,00,000 Carriage-Rs.5,000
Purchase Returns-Rs.13,250 Export duty-Rs.9,000
Sales-Rs.5,75,000 Coal and Coke-Rs.25,000
Sales returns-Rs.10,000 Printing and Stationary-Rs.2,250
Salaries-Rs.30,000 Rent & Taxes-Rs.12,000
Depreciation-Rs.3,020 Repairs-Rs.6,000
Discount allowed-Rs.12,505 Bad debts-Rs.9,000
Advertisement-Rs.2,500 Gas and Water-Rs.1,500
Factory lighting-Rs.2,500 General expenses-Rs.4,000

(6) From the following balances taken from the books of Hari and Co., prepare Trail Balance
as at that date.

Particulars Amt. (Rs.) Particulars Amt (Rs.)

Capital 3,50,000 Salaries 11,100
Building 1,87,500 Discount allowed 2,000
Machinery 92,500 Stock (01-04-2013) 1,65,000
Debtors 70,000 Bills Payable 50,000
General expenses 8,000 Sales 6,35,000
Rent Paid 37,100 Purchases 4,68,500
Drawings 6,500 Wages 25,000
Electricity charges 1,900 Cash in hand 18,000
Carriage Inwards 8,500 Sundry Creditors 1,00,000
Cash at Bank 30,000 Return inward 4,500
Returns outward 1,100

(7) There are several Mistakes in the Umer & Brothers (Pvt.) Ltd. Trial Balance. You are
requested to identify Errors and make corrected Trial Balance?

Particulars Dr. Rs. Cr. Rs.

Cash in hand 4,500 -
Purchases - 10,500
Sales - 15,000
Returns Inward - 2,000
Returns Outward 500 -
Opening Stock 5,000 -
Carriage Inwards 1,000 -
Bad Debts - 1,000
Rent 4,000 4,000

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Commission 1,000 2,000

Discount 2,000 1,500
Machinery 10,000 -
Debtors - 9,000
Interest 1,000 3,000
Creditors 1,000 -
Capital - 23,000
Provision for Bad Debts - 1,000

(8) From the following balances of SKML Tent House, prepare Trail Balance as on 31st
December, 2013.
Capital-Rs. 10,000 Plant and Machinery-Rs. 14,000
Furniture and Fixtures-Rs. 200 Debtors-Rs. 2,400
Drawings-Rs. 1,000 Purchases-Rs. 10,500
Creditors-Rs. 1,700 Wages-Rs. 5,000
Cash in Hand-Rs. 200 Cash at Bank-Rs. 800
Stock (1-1-2013) -Rs. 2,000 Returns outwards-Rs. 500
Rates and Taxes-Rs. 400 Depreciation-Rs. 420
Sales-Rs. 26,800 Manufacturing Expenses-Rs. 800
Travelling Expenses-Rs. 100 Sundry Expenses-Rs. 400
Bad Debts-Rs. 150 Printing and Stationery-Rs. 50
Carriage-Rs. 130 Returns inward-Rs. 400
Repairs-Rs. 50

(9) From the following, prepare Trail balance as on 31-3-2013 of Miss. Srilekha& Co.

Particulars Amt. (Rs.) Particulars Amt (Rs.)

Sales 40,000 Furniture 60,000
Capital 50,000 Rent 800
Land 15,000 Sundry Debtors 40,000
Opening Stock 15,000 Carriage Inwards 500
Wages 2,500 Bad debts 1,000
Purchases 10,000 Carriage outwards 600
Returns Inwards 1,000 Salaries 900
Returns Outwards 1,500 Rent (Credit) 5,000
Interest 700 Buildings 70,000
Bills Payable 66,500 Bank overdraft 50,000
Sundry Creditors 60,000 Bills Receivables 50,000

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

(10) Prepare Trail Balance as on 31st March 2014 from the following Balance of XYZ Co.
Ltd.

Particulars Amount Rs.

Furniture 6,500
Plant and Machinery 60,000
Buildings 75,000
Capital 1,25,000
Bad debts 1,750
Reserve for Bad debts 3,000
Sundry Debtors 40,000
Sundry Creditors 24,000
Stock (1-1-2001) 34,600
Purchases 54,750
Sales 1,54,500
Bank overdraft 28,500
Sales Returns 2,000
Purchase Returns 1,250
Advertising 4,500
Interest 1,180
Commission Received 3,750
Cash in Hand 6,500
Salaries 33,000
General expenses 9,000
Car expenses 7,820
Taxes and insurance 3,500

&&&&&

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Proforma for Final Accounts

Dr Trading, Profit & Loss Account of ----------for the year ended ---------- Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Opening Stock xxx By Sales xxx
To Purchases xxx Less:Returns xx xxx
Less:Returns xx xxx By Closing Stock xxx
To Carriage inwards xxx
To wages xxx
Add:Outstanding xx xxx
To All Manufacture/Factory
Expenses:
Coal, Fuel, water, Motive power,
Electricity & Gas, Factory Rent,
& Insurance, Lighting, & Heating xxx
To Export Duty xxx
To Freight on Purchases xxx
ToGross Profit c/d → XXX
XXXX XXXX
To Salaries xxx By Gross Profit B/d→ XXX
Add:Outstanding xx xxx By Received Interest xxx
To Rent, Taxes, & Insurance xx Add:Receivable xx xxx
Less: Prepaid xx xxx By Received Commission xxx
To Trading Expenses xxx By Received Discount xxx
To General Expenses xxx By Received Dividend xxx
To Carriage Outwards xxx By Profit of Sale on Asset xxx
To Freight on Sales xxx By Bad debt reserve xxx
To Discount xxx By Appreciation on Assets xxx
To Bank Charges xxx
To Advertisement xxx
To Printing & Stationery xxx
To Repairs xxx
To Bad debts xxx
Add:Additional xx xxx
To Travelling expenses xxx
To Interest xxx
To Depreciation xxx
To Net Profit(Transferred to
Capital Account) → XXX
XXXX XXXX

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Balance Sheet of ----------as on 31-12--------------

Liabilities A.Rs Assets A.Rs.
Creditors xxx Land & Buildings xxx
Bills Payable xxx Less:Depreciation xx xxx
Bank overdraft xxx Plant & Machinery xxx
Outstanding expenses xxx Add:Appreciation xx xxx
Debentures xxx Furniture & Fixtures xxx
Long term loans xxx Equipment xxx
Capital xxx Investments xxx
Add: Additional Capital xxx Premises xxx
Add: Interest on Capital xxx Motor Vehicle xxx
xxx Other Fixed Assets xxx
Less:Drawings xxx Cash in hand xxx
Add: Net Profit xxx xxx Cash at bank xxx
Debtors xxx
Less:Bad debts xx
xxx
Less:Bad debt reserve xx xxx
Bills receivable
Prepaid expenses
Accrued Income
Closing Stock xxx
XXX XXX
Adjustments: These must appear in two times, firstly, it appear in Trading, Profit & Loss
Account and Second time appear in Balance Sheet.

Some of the important adjustments and their signing explained as follows:

(1) Closing stock: First appear in credit side of Trading account and secondly on assets side of balance
sheet.

(2) Outstanding (+) added t related item its appear either Trading or P&L A/c Debit side and second time
appear in Liability Side.

(3) Prepaid (-) less from related item in Trading or P&L A/c Debit side and second time appear in Assets
Side.

(4) Receivable or Accrued Income (+) added to related item and it’s appear either Trading or P&L A/c
Credit side and second time appear in Assets Side.

(5) Depreciation (-) less from related assets in assets side and second time appear in Debit side of Profit &
Loss Account.

(6) Appreciation (+) added to related assets in assets side and secondly appear in Credit side of Profit &
Loss Account.

(7) Bad Debts (-) less from Debtors in assets side and second time appear in Debit side of P&L Account.

(8) Bad doubtful debts (-) less from Debtors in assets side and second time appear in Debit side of P&L
Account.

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

(1)From the following balances, taken from the Trial Balance of SCo Ltd. Prepare a trading
and Profit and Loss account for the year ending 31st December 2020
Particulars Dr. Rs. Cr, Rs.
Stock on 1-1-2020 2,000 -
Purchase and Sales 20,000 30,000
Returns 2,000 1,000
Carriage inwards 1,000 -
Carriage outwards 1,000 -
Rent 1,000 -
Interest Received - 2,000
Salaries 5,000 -
General Expenses 1,000 -
Discount - 500
Insurance 500 -
33,500 33,500

The closing stock on 31st December 2020 is Rs.5, 000.

.Solution:
DrTrading, Profit & Loss A/c of SCo Ltd for the year ended 31st Dcm 2020 Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Opening Stock 2,000 By Sales 30,000
To Purchases 20,000 Less:Returns 2,000 28,000
Less:Returns 1,000 19,000 By Closing Stock 5,000
To Carriage inwards 1,000
ToGross Profit c/d → 11,000
33,000 33,000
To Salaries 5,000 By Gross Profit B/d → 11,000
To Carriage outwards 1,000 By Received Interest 2,000
To Rent 1,000 By Received Discount 500
To General Expenses 1,000
To Insurance 500
To Net Profit
(Transferred to Capital A/c)→ 5,000
13,500 13,500

&&&&&

(2) Prepare Profit and Loss Account, from the following balances of Mr. X for the year
ending 31.03.2014.
Particulars Amount Rs.
Office Rent 3,000
Printing expenses 2,200
Tax and Insurance 1,400
Discount Received 400
Advertisement 3,600
Salaries 8,000
Stationary 2,400
Discount allowed 600
Travelling expenses 2,600
Gross Profit transferred from the Trading 25,000
Account

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Solution:

DrTrading, Profit & Loss A/c of Mr. X for the year ended 31st March, 2014Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Office Rent 3,000 By Gross Profit B/d → 25,000
To Printing expenses 2,200 To Discount Received 400
To Tax and Insurance 1,400
To Advertisement 3,600
To Salaries 8,000
To Stationary 2,400
To Discount allowed 600
To Travelling expenses 2,600

To Net Profit
(Transferred to Capital A/c) → 1,800
25,400 25,400

&&&&&
(3) Prepare Trading and Profit and Loss Account of M/s. Gupta and Sons for the year ending
31st December, 2020 from the following information.

Particulars Amount (Rs.)

Stock (1-1-2020) 2,00,000
Purchases 2,55,000
Wages 1,00,000
Carriage 5,000
Purchase Returns 13,250
Export duty 9,000
Sales 5,75,000
Coal and Coke 25,000
Sales returns 10,000
Printing and Stationary 2,250
Stock (31-12-2020) 3,00,000
Salaries 30,000
Rent & Taxes 12,000
Depreciation 3,020
Repairs 6,000
Discount allowed 12,505
Bad debts 9,000
Advertisement 2,500
Gas and Water 1,500
Factory lighting 2,500
General expenses 4,000

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Solution:
DrTrading, P & L A/c of M/s. Gupta for the year ended31st December, 2020 Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Opening Stock 2,00,000 By Sales 5,75,000
To Purchases 2,55,000 Less:Returns 10,000 5,65,000
Less:Returns 13,250 2,41,750 By Closing Stock 3,00,000
To Carriage inwards 5,000
To wages 1,00,000
To Export duty 9,000
To Coal and Coke 25,000
To Factory lighting 2,500
ToGross Profit c/d → 2,81,750
8,65,000 8,65,000
To Printing and Stationary 2,250 By Gross Profit B/d → 2,81,750
To Salaries 30,000
To Rent & Taxes 12,000
To Depreciation 3,020
To Repairs 6,000
To Discount allowed 12,505
To Bad debts 9,000
To Advertisement 2,500
To General expenses 4,000
To Net Profit(Transferred to Capital
Account) → 2,00,475
2,81,750 2,81,750

&&&&&

(4) From the following balance extracted from the books of RKC Co. Prepare a trading and
Profit and Loss account and Balance Sheet.

Particulars Amt. (Rs.) Particulars Amt (Rs.)

Opening Stock 1,250 Plant & Machinery 6,230
Sales 11,800 Returns outwards 1,380
Depreciation 667 Cash in hand 895
Commission (Cr) 211 salaries 750
Insurance 380 Debtors 1,905
Carriage Inwards 300 Discount (Dr) 328
Furniture 670 Bills Receivable 2,730
Printing Charges 481 Wages 1,589
Carriage outwards 200 Returns Inward 1,659
Capital 9,228 Bank overdraft 4,000
Creditors 1,780 Purchases 8,679
Bills Payable 541 Petty cash in hand 47
Bad Debts 180

The value of Stock on 31st December 2021 was Rs.3,700

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Solution:
DrTrading, Profit & Loss A/c of RKC Co. for the year ended31st Dec 2021 Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Opening Stock 1,250 By Sales 11,800
To Purchases 8,679 Less:Returns 1,659 10,141
Less:Returns 1,380 7,299 By Closing Stock 3,700
To Carriage inwards 300
To wages 1,589
ToGross Profit c/d → 3,403
13,841 13,841
To Salaries 750 By Gross Profit B/d → 3,403
To Depreciation 667 By Commission (Cr) 211
To Insurance 380
To Printing Charges 481
To Carriage outwards 200
To Bad Debts 180
To Discount (Dr) 328
To Petty cash in hand 47
To Net Profit(Transferred to Capital
Account) → 581
3,614 3,614

Balance Sheet of RKC Co. as on 31-12-2020

Liabilities A.Rs Assets A.Rs.
Creditors 1,780 Furniture 670
Bills Payable 541 Plant & Machinery 6,230
Bank overdraft 4,000 Cash in hand 895
Capital 9,228 Debtors 1,905
Add: Net Profit 581 9,809 Bills Receivable 2,730
Closing Stock 3,700
16,130 16,130

&&&&&

(5) Following is the Trial Balance of Ram Chandra on 31st March, 2021 Draw the final accounts from the
balances there from trial balance. Value of closing stock as on 31st March 2021 was Rs. 50,000.

Particulars Dr. Rs. Cr. Rs.

Capital - 1,50,000
Stock on 1-4-2020 30,000 -
Cash at Bank 10,000 -
Cash in hand 5,000 -
Machinery 1,00,000 -
Furniture 13,000 -
Purchases 2,00,000 -
Wages 50,000 -
Carriage Inwards 33,000 -
Salaries 70,000 -
Discount 4,000 5,000
Advertising 50,000 -
Other expenses 40,000 -
Sales - 5,00,000
Sundry debtors 90,000 -
Sundry Creditors - 40,000
6,95,000 6,95,000

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Solution;
DrTrading, P & L A/c of Ram Chandra for the year ended 31st March, 2021Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Stock on 1-4-2020 30,000 By Sales 5,00,000
To Purchases 2,00,000 By Closing Stock 50,000
To Carriage inwards 33,000
To wages 50,000
ToGross Profit c/d → 2,37,000
5,50,000 5,50,000
To Salaries 70,000 By Gross Profit B/d → 2,37,000
To Discount 4,000 By Discount 5,000
To Advertising 50,000
To Other expenses 40,000
To Net Profit(Transferred to Capital
Account) → 78,000
2,42,000 2,42,000

Balance Sheet of Ram Chandra as on31st March, 2021

Liabilities A.Rs Assets A.Rs.
Creditors 40,000 Cash at Bank 10,000
Capital 1,50,000 Cash in hand 5,000
Add: Net Profit 78,000 2,28,000 Machinery 1,00,000
Furniture 13,000
Sundry debtors 90,000
Closing Stock 50,000
2,68,000 2,68,000

&&&&&

(6) Prepare Trading and Profit and Loss Account and Balance Sheet of Jagat Shah as at 31st
March, 2019 from the following balances:

Particulars Amt. (Rs.) Particulars Amt (Rs.)

Capital (Cr) 3,600 Salaries 600
Machinery 700 General expenses 200
Sales 8,200 Rent 500
Purchases 4,000 Purchase Return 50
Sales Returns 100 Debtors 3000
Stock on 1st April, 2018 1,000 Cash 400
Drawings 400 Carriage outwards 200
Wages 1,000 Advertising 200
Carriage Inwards 50 Creditors 500

The closing stock was valued Rs. 2000.

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Solution:
DrTrading, P & L A/c ofJagat Shah for the year ended 31st March, 2019Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Stock on 1st April, 2018 1,000 By Sales 8,200
To Purchases 4,000 Less: Returns 100 8,100
Less: Returns 50 3,950 By Closing Stock 2000
To wages 1,000
To Carriage Inwards 50
ToGross Profit c/d → 4,100
10,100 10,100
To Salaries 600 By Gross Profit B/d → 4,100
To General Expenses 200
To Rent 500
To Carriage outwards 200
To Advertising 200
To Net Profit(Transferred to Capital
Account) → 2,400
4,100 4,100

Balance Sheet of Jagat Shah as on31st March, 2019

Liabilities A.Rs Assets A.Rs.
Creditors 500 Debtors 3,000
Capital 3,600 Cash 400
Less: Drawings 400 Closing Stock 2000
3,200 Machinery 700
Add: Net Profit 2,400 5,600

6,100 6,100

&&&&&

(7) From the following balances taken from the books of Hari and Co., prepare Trading and
Profit and Loss Account for the year ended 31st March, 2014 and Balance Sheet as at that
date.

Particulars Amt. (Rs.) Particulars Amt (Rs.)

Capital 3,50,000 Salaries 11,100
Building 1,87,500 Discount allowed 2,000
Machinery 92,500 Stock (01-04-2013) 1,65,000
Debtors 70,000 Bills Payable 50,000
General expenses 8,000 Sales 6,35,000
Rent Paid 37,100 Purchases 4,68,500
Drawings 6,500 Wages 25,000
Electricity charges 1,900 Cash in hand 18,000
Carriage Inwards 8,500 Sundry Creditors 1,00,000
Cash at Bank 30,000 Return inward 4,500
Returns outward 1,100

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Closing stock was Rs. 1,82,100.

Solution:
DrTrading, P & L A/c of Hari and Co for the year ended 31st March, 2014Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Stock (01-04-2013) 1,65,000 By Sales 6,35,000
To Purchases 4,68,500 Less: Returns 4,500 6,30,500
Less: Returns 1,100 4,67,400 By Closing Stock 1,82,100
To wages 25,000
To Carriage Inwards 8,500
ToGross Profit c/d → 1,46,700
8,12,600 8,12,600
To General expenses 8,000 By Gross Profit B/d → 1,46,700
To Rent Paid 37,100
To Electricity charges 1,900
To Salaries 11,100
To Discount allowed 2,000
To Net Profit(Transferred to Capital
Account) → 86,600
1,46,700 1,46,700

Balance Sheet of Hari and Co as on 31st March, 2014

Liabilities A.Rs Assets A.Rs.
Creditors 1,00,000 Building 1,87,500
Bills Payable 50,000 Machinery 92,500
Capital 3,50,000 Debtors 70,000
Less: Drawings 6,500 Cash at Bank 30,000
3,43,500 Cash in hand 18,000
Add: Net Profit 86,600 4,30,100 Closing Stock 1,82,100

5,80,100 5,80,100

&&&&&

(8) The following is the Trial Balance of ABC Co. Ltd., was prepared on 31st March 2014.
Prepare Trading and Profit& Loss Account and Balance Sheet.
Particulars Dr. Rs. Cr. Rs.
Capital - 22,000
Opening Stock 10,000 -
Debtors and Creditors 8,000 12,000
Machinery 20,000 -
Cash at Bank 2,000 -
Bank overdraft - 14,000
Returns 4,000 8,000
Trade expenses 12,000 -
Purchase and Sales 26,000 44,000
Wages 10,000 -
Salaries 12,000 -
Bills Payable - 10,600
Bank deposits 6,600 -
1,10,600 1,10,600

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Closing Stock was valued at Rs.60, 000

Solution:
DrTrading, P & L A/c of ABC Co. Ltd for the year ended 31st March, 2014Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Stock (01-04-2013) 10,000 By Sales 44,000
To Purchases 26,000 Less: Returns 4,000 40,000
Less: Returns 8,000 18,000 By Closing Stock 60,000
To wages 10,000
ToGross Profit c/d → 62,000
1,00,000 1,00,000
To Trade expenses 12,000 By Gross Profit B/d → 62,000
To Salaries 12,000
To Net Profit(Transferred to Capital
Account) → 38,000
62,000 62,000

Balance Sheet of ABC Co. Ltd as on 31st March, 2014

Liabilities A.Rs Assets A.Rs.
Creditors 12,000 Machinery 20,000
Bank overdraft 14,000 Bank deposits 6,600
Bills Payable 10,600 Debtors 8,000
Capital 22,000 Cash at Bank 2,000
Add:Net Profit 38,000 60,000 Closing Stock 60,000

96,600 96,600

&&&&&

(9) From the following Trail Balance prepare Trading, Profit & Loss A/c for the year ended
31-03-2017 and Balance sheet as on that data.
Debit Balances Amount Credit Balances Amount
(Rs.) (Rs.)
Sundry Debtors 52,000 Sundry Creditors 22,000
Cash in hand 1,592 Sales 2,92,000
Motor Car 22,000 Capital 70,000
Furniture 3,500
Purchases 1,95,000
Sales Returns 2,600
Patents 8,420
Opening Stock 7,000
Motor Car expenses 11,400
Rent, Rates and Taxes 6,108
Insurance Premium 2,400
Machinery 24,000
Wages 23,600
General expenses 2,680
Carriage Inwards 2,040
Carriage Outwards 1,130
Discount 500
Fuel 6,430
Drawings 8,000
3,80400 3,84,000 3,84,000

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Closing stock: Rs.35,000.

Solution:
DrTrading, P & L A/c for the year ended 31st March, 2017 Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Stock (01-04-2013) 7,000 By Sales 2,92,000
To Purchases 1,95,000 Less: Returns 2,600 2,89,400
To wages 23,600 By Closing Stock 35,000.
To Carriage Inwards 2,040
To Fuel 6,430
ToGross Profit c/d → 90,330
3,24,400 3,24,400
To Motor Car expenses 11,400 By Gross Profit B/d → 90,330
To Rent, Rates and Taxes 6,108
To Insurance Premium 2,400
To General expenses 2,680
To Carriage Outwards 1,130
To Discount 500
To Net Profit(Transferred to Capital
Account) → 66,112
90,330 90,330

Balance Sheet as on 31st March, 2017

Liabilities A.Rs Assets A.Rs.
Creditors 22,000 Sundry Debtors 52,000
Capital 70,000 Cash in hand 1,592
Less: Drawings 8,000 Motor Car 22,000
62,000 Furniture 3,500
Add:Net Profit 66,112 1,28,112 Patents 8,420
Machinery 24,000
Closing Stock 35,000.
Suspense Account → 3,600
(Trail Balance Difference)
1,50,112 1,50,112

&&&&&
(10)From the following information, prepare trading, profit and loss account and balance
sheet.
Particulars Dr. Rs. Cr. Rs.
Purchases 30,000 -
Sales - 70,000
Returns 1,400 1,600
Opening Stock 20,000 -
Wages 1,000 -
Salaries 1,400 -
Depreciation 2,000 -
Rent Received - 10,000
Buildings 30,000 -
Capital - 60,000
Debtors 21,800 -
Creditors - 14,000
Bank OD - 10,000
Cash 58,000 -
1,65,600 1,65,600

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Adjustments: Closing Stock was valued at Rs.30,000, Outstanding Wages Rs.1,000 and Appreciation on
Buildings @ 10%.
Solution:
Dr-----------------------Trading, P & L A/c for the year ended ------------------------------------------Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Stock (01-04-2013) 20,000 By Sales 70,000
To Purchases 30,000 Less: Returns 1400 68,600
Less: Returns 1,600 28,400 By Closing Stock 30,000
To wages 1,000
Add: Outstanding 1,000 2,000
ToGross Profit c/d → 48,200
98,600 98,600
To Salaries 1,400 By Gross Profit B/d → 48,200
To Depreciation 2,000 By Rent Received 10,000
By Appreciation on Machinery 3,000
To Net Profit(Transferred to Capital
Account) → 57,800
61,200 61,200

----------Balance Sheet as on--------

Liabilities A.Rs Assets A.Rs.
Outstanding Wages 1,000 Buildings 30,000
Creditors 14,000 Add: Appreciation@10% 3,000 33,000
Bank OD 10,000 Debtors 21,800
Capital 60,000 Cash 58,000
Add:Net Profit 57,800 1,17,800 Closing Stock 30,000
1,42,800 1,42,800

&&&&&
(11) From the following balances of SKML Tent House, prepare Trading and Profit and Loss
Account and Balance Sheet as on 31st December, 2013.
Particulars Dr. Rs. Cr. Rs.
Capital - 10,000
Plant and Machinery 14,000 -
Furniture and Fixtures 200 -
Debtors and Creditors 2,400 1,700
Drawings 1,000 -
Purchases 10,500 -
Wages 5,000 -
Cash in Hand 200 -
Cash at Bank 800 -
Stock (1-1-2013) 2,000 -
Returns outwards - 500
Rates and Taxes 400 -
Depreciation 420 -
Sales - 26,800
Manufacturing Expenses 800 -
Travelling Expenses 100 -
Sundry Expenses 400 -
Bad Debts 150 -
Printing and Stationery 50 -
Carriage 130 -
Returns inward 400 -

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Repairs 50 -
39,000 39,000

Solution:
Dr----Trading, P & L A/c of SKML Tent House, for the year ended31st December, 2013Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Stock (01-01-2013) 2,000 By Sales 26,800
To Purchases 10,500 Less: Returns 400 26,400
Less: Returns 500 10,000 By Closing Stock ----
To wages 5,000
To Manufacturing Expenses 800
To Carriage 130
ToGross Profit c/d → 8,470
26,400 26,400
To Rates and Taxes 400 By Gross Profit B/d → 8,470
To Depreciation 420
To Travelling Expenses 100
To Sundry Expenses 400
ToBad Debts 150
To Printing and Stationery 50
To Repairs 50
To Net Profit(Transferred to Capital
Account) → 6,900
8,470 8,470

----------Balance Sheet of SKML Tent House, as on 31st December, 2013

Liabilities A.Rs Assets A.Rs.
Creditors 1,700 Plant and Machinery 14,000
Bank OD Furniture and Fixtures 200
Capital 10,000 Debtors 2,400
Less: Drawings 1,000 Cash in Hand 200
9,000 Cash at Bank 800
Add:Net Profit 6,900 15,900 Closing Stock ---
17,600 17,600

&&&&&
(12) Prepare (i) Trading Account and (ii) Profit and Loss Account for the information given which is related to
Sai& Co for the year ended 31-12-18. Stock on 31-12-18 was valued at Rs. 1800.

Particulars Dr. Rs. Cr. Rs.

Capital - 7,610
Cash in hand 30 -
Purchases 8,990 -
Sales - 11,060
Cash at bank 885 -
Fixtures and fittings 225 -
Lighting and Heating 65 -
Freehold Premises 1,500 -
Bills Receivables 825 -
Returns inwards 30 -
Salaries 1,075 -
Creditors - 1,950
Debtors 5,700 -
Stock on 31-12-17 3,000 -
Printing 225 -
Bills Payables - 1,875
Rent, Rates 190 -

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Discount 200 445

22,940 22,940

Solution:
Dr ----Trading, P & L A/c of Sai & Co, for the year ended 31st December, 2018Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Stock on 31-12-17 3,000 By Sales 11,060
To Purchases 8,990 Less: Returns 30 11,030
To Lighting and Heating 65 By Closing Stock 1,800
ToGross Profit c/d → 775
12,830 12,830
To Salaries 1,075 By Gross Profit B/d → 775
To Printing 225 By Discount 445
To Rent, Rates 190
To Discount 200
To Net Loss(Transferred to 470
Capital Account)
→
1,690 1,690

----------Balance Sheet of Sai & Co as on 31st December, 2018

Liabilities A.Rs Assets A.Rs.
Creditors 1,950 Cash in hand 30
Bills Payable 1,875 Cash at bank 885
Capital 7,610 Fixtures and fittings 225
Less:Net Loss 470 7,140 Freehold Premises 1,500
Bills Receivables 825
Debtors 5,700
Closing Stock 1,800
10,965 10,965

&&&&&

(13)From the following Trail balance, prepare Trading account, Profit and loss account and
Balance sheet as on 31-3-2013 of Miss. Srilekha& Co.

Particulars Amt. (Rs.) Particulars Amt (Rs.)

Sales 40,000 Furniture 60,000
Capital 50,000 Rent 800
Land 20,000 Sundry Debtors 40,000
Opening Stock 15,000 Carriage Inwards 500
Wages 2,500 Bad debts 1,000
Purchases 10,000 Carriage outwards 600
Returns Inwards 1,000 Salaries 900
Returns Outwards 1,500 Rent (Credit) 5,000
Interest 700 Buildings 70,000
Bills Payable 66,500 Bank overdraft 50,000
Sundry Creditors 60,000 Bills Receivables 50,000

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Adjustments: 1. Closing stock Rs. 60,000 2. Bad-debts on debtors Rs 1000.

Solution:
Dr ----Trading, P & L A/c of Miss. Srilekha& Co for the year ended 31-3-2013 Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Opening Stock 15,000 By Sales 40,000
To Purchases 10,000 Less: Returns 1,000 39,000
Less: Returns 1,500 8,500
To Wages 2,500 By Closing Stock 60,000
To Carriage Inwards 500
ToGross Profit c/d → 72,500
99,000 99,000
To Rent 800 By Gross Profit B/d → 72,500
To Interest 700 By Rent (Credit) 5,000
To Bad debts 1,000
Add:Additional 1,000 2,000
To Carriage outwards 600
To Salaries 900
To Net Profit(Transferred to 72,500
Capital Account) →
77,500 77,500

----------Balance Sheet of Miss. Srilekha& Co as on 31-3-2013

Liabilities A.Rs Assets A.Rs.
Creditors 60,000 Land 20,000
Bills Payable 66,500 Furniture 60,000
Bank overdraft 50,000 Sundry Debtors 40,000
Capital 50,000 Less:Bad Debts 1,000 39,000
Add:Net Profit72,500 1,22,500 Buildings 70,000
Bills Receivables 50,000
Closing Stock 60,000

2,99,000 2,99,000

&&&&&

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

(14) The Trial Balance of Kamala as at March 31,2012 revealed the following balances:
Debit Balances Amount Credit Balances Amount (Rs.)
(Rs.)
Plant and machinery 1,60,000 Capital account 2,00,000
Purchases 1,36,000 Sales 2,50,000
Sales returns 2,000 Purchase returns 6,550
Opening stock 60,000 Discount received 1,600
Discount allowed 700 Sundry creditors 50,000
Bank charges 150
Sundry debtors 90,000
Salaries 13,600
Wages 20,000
Freight 1,500
Carriages outwards 2,400
Rent and rates 4,000
Advertisements 4,000
Cash in hand 13,800
5,08,150 5,08,150
Adjustments:
(a) Closing stock was valued at Rs.70,000
(b) Provide depreciation on debtors @ 4%.
(c) Provide for depreciation on plant @10% per annum.
(d) Salaries yet to be paid Rs.500
Find Gross profit, Net profit and Balance Sheet Total.

.Solution:
Dr ----Trading, P & L A/c of Kamalafor the year ended March 31,2012 Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Opening Stock 60,000 By Sales 2,50,000
To Purchases 1,36,000 Less: Returns 2,000 2,48,000
Less: Returns 6,550 1,29,450
To Wages 20,000 By Closing Stock 70,000
To Freight 1,500
ToGross Profit c/d → 1,07,050
3,18,000 3,18,000
To Depreciation on Plant 16,000 By Gross Profit B/d → 1,07,050
To Discount allowed 700 By Discount received 1,600
To Bank charges 150
ToBad debts 3,600
To Salaries 13,600
Add: Outstanding 500 14,100
To Carriages outwards 2,400
To Rent and rates 4,000
To Advertisements 4,000
To Net Profit(Transferred to Capital A/c) 63,700
→
1,08,650 1,08,650

----------Balance Sheet of Kamala as on March 31,2012

Liabilities A.Rs Assets A.Rs.
Outstanding Salary (Yet to be paid) 500 Plant and machinery 1,60,000
Sundry creditors 50,000 Less: Depreciation@10% 16,000 1,44,000
Capital 2,00,000 Sundry Debtors 90,000
Add:Net Profit 63,700 2,63,700 Less:Bad Debts@4% 3,600 86,400
Cash in hand 13,800
Closing Stock 70,000
3,14,200 3,14,200

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

(15) From the following trail balance as at September 30,2020, prepare trading, profit and loss account for the
year ended Dec. 31,2020 and a balance sheet as on that date.

Debit Balances Rs. Credit Balances Rs.

Sundry debtors 64,000 Sales 2,65,000
Stock(1.1.2020) 44,000 Sundry creditors 25,300
Cash in hand 70 Bills payable 15,000
Cash at bank 3,090 Capital 1,59,000
Plant and machinery 35,000
Trade expenses 2,150
Salaries 4,450
Carriage outwards 800
Rent 1,800
Purchases 2,37,740
Discount 2,200
Land and buildings 69,000
4,64,300 4,64,300
Also adjusts the following:
a) Stock as on December 31, 2002 amounted to Rs.24, 900.
b) RentoutstandingRs.170.
c) Trade expenses yet to be paid Rs.300.
d) Write off bad debts Rs.800.
e) Provide 5% for doubtful debts.
f) Depreciate plant and machinery@10% per annum.

Solution:
Dr-----------------------Trading, P & L A/c for the year ended Dec. 31,2020 -----------------------Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Stock(1.1.2020) 44,000 By Sales 2,65,000
To Purchases 2,37,740 By Closing Stock 24, 900
ToGross Profit c/d → 8,160
2,89,900 2,89,900
To Depreciation on Plant & Machinery 3,500 By Gross Profit B/d → 8,160
To Trade expenses 2,150
Add: Outstanding 300 2,450
To Salaries 4,450
To Carriage outwards 800
To Rent 1,800
Add: Outstanding 170 1,970
To Discount 2,200
ToBad Debts 800
ToBad doubtful debt reserve 3,160 By Net Loss→ 11,270

19,430 19,430

----------Balance Sheet as on Dec. 31,2020

Liabilities A.Rs Assets A.Rs.
Outstanding Trade expenses 300 Sundry debtors 64,000
Outstanding Rent 170 Less: Bad debts 800
Sundry creditors 25,300 63,200
Bills payable 15,000 Less: Doubtful Debts@5% 3,160 60,040
Cash in hand 70
Capital 1,59,000 Cash at bank 3,090
Less:Net Loss 11,270 1,47,730 Plant and machinery 35,000
Less: Depreciation@10% 3,500 31,500
Land and buildings 69,000
Closing Stock 24, 900
1,88,500 1,88,600

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

(16) Prepare trading and profit and loss account for the year ending 31.12.2020 and a balance sheet as on the
date from the following trial balance.

Particulars Dr. Rs. Cr. Rs.

Sales - 1,25,000
Purchases 78,000 -
Sales returns 2,700 -
Purchases returns - 3,600
Discount received - 1,250
Discount allowed 1,850 -
Opening stock 6,675 -
Salaries 23,000 -
Electricity and gas 1,500 -
Rent and rates 1,000 -
Sundry expenses 2,350 -
Premises 50,000 -
Equipment 15,000 -
Vehicle 10,750 -
Debtors 11,420 -
Bank overdraft - 425
Cash 60 -
Creditors - 7,750
Capital - 55,000
Drawings 5,220 -
Long term loan 16,500
2,09,525 2,09,525

Adjust the following:

a) Closing stock Rs. 15,000
b) Outstanding salaries Rs.2000
c) Prepaid rent and rates Rs.1000
d) Provide depreciation on equiqment@10%per annum

Solution:
Dr -----------------------Trading, P & L A/c for the year ended 31.12.2020 -----------------------
Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Stock(1.1.2020) 6,675 By Sales 1,25,000
To Purchases 78,000 Less: Returns 2,700 1,22,3000
Less: Returns 74,400
3,600
To Electricity and gas 1,500 By Closing Stock 15,000
ToGross Profit c/d → 54,725
1,37,300 1,37,300
To Discount allowed 1,850 By Gross Profit B/d → 54,725
To Salaries 23,000 By Discount received 1,250
Add: Outstanding 2,000 25,000
To Rent and Taxes 1,000
Less: Prepaid 1,000 0
To Sundry expenses 2,350
To Depreciation on Equipment 1,500
To Net Profit→ 25,275
55,975 55,975
----------Balance Sheet as on 31.12.2020---------

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Liabilities A.Rs Assets A.Rs.

Outstanding Salaries 2,000 Premises 50,000
Bank overdraft 425 Equipment 15,000
Creditors 7,750 Less: Depreciation@10% 1500 13,500
Long term loan 16,500 Vehicle 10,750
Capital 55,000 Debtors 11,420
Less:Drawings 5,220 Cash 60
49,780 Prepaid Rent & Taxes 1,000
Add: Net Profit 25,275 75,055 Closing Stock 15,000
1,01,730 1,01,730

&&&&&

(17) ) From the following trial balance taken from the books of Srikrishna &Co., prepare
trading and profit and loss account for the year 31.12.2020 and a balance sheet as on that
date.

Particulars Dr. Rs. Cr. Rs.

Machinery 3,67,000 -
Opening stock 1,16,800 -
Purchases and sales 8,00,000 9,52,000
Returns 16,800 15,200
General expenses 40,000 -
Stationary 4,000 -
Loan from Andhra bank - 2,76,200
Cash 25,300 -
Apprentice premium - 6,400
12% loan - 20,000
Bad debts 13,600 -
Debtors & creditors 2,56,000 80,000
Provision for bad debts - 8,000
Interest 300 -
Sri Krishna Capital - 2,82,000
16,39,800 16,39,800
Adjustments:
a) Purchases include Rs.8, 000 being the value of machinery purchased in January, 2020
b) Provide 5%per annum as interest on capital

c) Provide 10% depreciation on machinery

d) Value of stock on 31.12.2020 was Rs. 68,000

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Solution

Dr---Trading, P & L A/c of Srikrishna &Co., for the year ended Dec. 31,2020----Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Opening stock 1,16,800 By Sales 9,52,000
To Purchases 8,00,000 Less: Returns 16,800 9,35,200
Less: Machinery value 8,000 By Apprentice premium 6,400
Less: Returns 15,200 7,76,800 By Closing Stock 68,000
ToGross Profit c/d → 1,16,000
10,09,600 10,09,600
To Depreciation on Machinery 37,500 By Gross Profit B/d → 1,16,000
To General expenses 40,000 By Provision for bad debts 8,000
To Stationary 4,000
To Bad debts 13,600
To Interest 300
To Interest on Capital 14,100
To Net Profit→ 14,500
1,24,000 1,24,000

----------Balance Sheet of Srikrishna &Co., as on Dec. 31,2020------

Liabilities A.Rs Assets A.Rs.
Loan from Andhra bank 2,76,200 Machinery 3,67,000
12% loan 20,000 Add:Include Purchases 8000
Creditors 80,000 3,75,000
Capital 2,82,000 Less:Depreciation37,500 3,37,500
Add:Interest@5% 14,100 Cash 25,300
Add:Net Profit 14,500 3,10,600 Debtors 2,56,000
Closing Stock 68,000
6,86,800 6,86,800

&&&&&

(18) From the following information, prepare Final Accounts?

Particulars Dr. Rs. Cr. Rs.

Purchase 15,000 -
Sales - 35,000
Returns 700 800
Opening Stock 10,000 -
Wages 500 -
Salaries 700 -
Depreciation 1000 -
Rent Received - 5,000
Building 15,000 -
Capital - 30,000
Debtors 10,000 -
Creditors - 7,000
Bank overdraft - 5,000
Cash 29,900 -
82,800 82,800

Adjustments:
(a) Closing Stock was valued Rs.15,000/-
(b) Outstanding wages Rs.500/-
(c) Appreciation on Building @ 10%.

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Solution:

Dr-----------------------------Trading, P & L A/c --------------------------------------Cr

Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Opening stock 10,000 By Sales 35,000
To Purchases 15,000 Less: Returns 700 34,300
Less: Returns 800 14,200 By Closing Stock 15,000
To wages 500
Add: outstanding 500 1,000
ToGross Profit c/d → 24,100
49,300 49,300
To Depreciation 1000 By Gross Profit B/d → 24,100
To Salaries 700 By Rent Received 5,000
To Net Profit→ 28,900 By Appreciation on Building 1500
30,600 30,600

----------Balance Sheet ------

Liabilities A.Rs Assets A.Rs.
Outstanding wages 500 Building 15,000
Creditors 7,000 Add: Appreciation@10%1500 16,500
Bank overdraft 5,000 Debtors 10,000
Capital 30,000 Cash 29,900
Add:Net Profit 28,900 58,900 Closing Stock 15,000
71,400 71,400

&&&&&

(19) Prepare Trading, Profit and Loss Account and Balance Sheet as on 31-12-2018 from the
Trial Balance of Shiva Co Ltd.,

Debit Balances Amount Credit Balances Amount

(Rs.) (Rs.)
Purchases 25,200 Sales 61,604
Furniture 1,600 Capital 35,000
Wages 3,500 Creditors 3,903
Machinery 20,000 Purchase Returns 222
Opening Stock 17,525
Sales Returns 1,200
Debtors 10,400
Freight on purchase 200
Salaries 10,600
Freight on sales 503
Rent and Taxes 2001
Cash at bank 8000
1,00,729 1,00,729

Adjustments: i) Closing Stock Rs. 16,800 ii) Outstanding Salaries Rs. 400 iii) Prepaid Rent
& Taxes Rs. 201 iv) Provide for Bad Debts Reserve @ 5% v) Depreciation on Machinery @
10% vi) Calculate Interest on Capital @ 5%..

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Solution:
Dr----------------------Trading, P & L A/c of Shiva Co Ltd for the year ended 31-12-2018 ---------Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Opening stock 17,525 By Sales 61,604 60,404
To Purchases 25,200 Less: Returns 1,200
Less: Returns 222 24,978 By Closing Stock 16,800
To wages 3500
To Freight on purchase 200
ToGross Profit c/d → 31,001
77,204 77,204
To Depreciation on Machinery 2,000 By Gross Profit B/d → 31,001
ToBad debt Reserve 520
To Salaries 10,600
Add:Outstanding 400 11,000
To Freight on sales 503
To Rent and Taxes 2001
Less: Prepaid 201 1,800
To Interest on Capital 1,750
To Net Profit→ 13,428
31,001 31,001

Balance Sheetof Shiva Co Ltd as on 31-12-2018

Liabilities A.Rs Assets A.Rs.
Outstanding Salaries 400 Furniture 1,600
Creditors 3,903 Machinery 20,000
Capital 35,000 Less: Depreciation@10% 2,000 18,000
Add:Interest@5% 1,750 Debtors 10,400
Add:Net Profit 13,428 50,178 Less: Bad debt Reserve@5% 520 9,880
Cash at bank 8000
Prepaid Rent and Taxes 201
Closing Stock 16,800
54,481 54,481

&&&&&
(20) From the following Trial Balance prepare Final Accounts of Evergreen and Company Ltd.
Particulars Dr. Rs. Cr. Rs.
Cash in hand 2,400 -
Purchases 2,40,000 -
Stock on 1-1-2019 70,000 -
Debtors 1,00,000 -
Plant & Machinery 1,20,000 -
Furniture 30,000 -
Bills Receivable 40,000 -
Rent & Taxes 20,000 -
Wages 32,000 -
Salaries 37,600 -
Capital - 2,00,000
Bills Payable - 44,000
Creditors - 48,000
Sales - 4,00,000
6,92,000 6,92,000

Adjustments: i) Closing inventory as on 31-12-2019: Rs. 50,000 ii) Outstanding wages: Rs. 5,000 iii) Prepaid
Rent and Taxes Rs1000

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Solution:
Dr---------Trading, P & L A/c of Evergreen Company Ltd for the year ended 31-12-2019 ---------Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Opening stock on 1-1-2019 70,000 By Sales 4,00,000
To Purchases 2,40,000 By Closing Stock 50,000
To wages 32,000
Add: Outstanding 5,000 37,000
ToGross Profit c/d → 1,03,000
4,50,000 4,50,000
To Rent and Taxes 20,000 By Gross Profit B/d → 1,03,000
Less: Prepaid 1,000 19,000
To Salaries 37,600
To Net Profit→ 46,400
1,03,000 1,03,000

Balance Sheetof Evergreen Company Ltd as on 31-12-2019

Liabilities A.Rs Assets A.Rs.
Outstanding Wages 5,000 Cash in hand 2,400
Bills Payable 44,000 Debtors 1,00,000
Creditors 48,000 Plant & Machinery 1,20,000
Capital 2,00,000 Furniture 30,000
Add:Net Profit 46,400 2,46,400 Bills Receivable 40,000
Prepaid Rent and Taxes 1,000
Closing Stock 50,000
3,43,400 3,43,400

&&&&&

(21) The following are the balances extracted from the books of Rakesh on 31st March 2015.
Particulars Amount (Rs.)
Rakesh Capital 30,000
Rakesh Drawings 5,000
Furniture and fixtures 2,600
Opening Stock 22,000
Debtors 18,000
Rent from tenants 1,000
Purchases 1,10,000
Sales 1,50,000
Electricity Charges 1,100
Sales Returns 2,000
Discount (Dr) 1,600
Bank overdraft 4,200
Creditors 13,800
Discount (Cr) 2,000
Tax & Insurance 2,000
General Expenses 4,000
Salaries 9,000
Commission (Dr) 2,200
Carriage on purchases 1,800
Bad debts 800

Adjustments: (a) Closing stock at the end was Rs 20,060; (b) Depreciate furniture and fixtures by Rs 550.
Prepare Trading, Profit and Loss account and Balance Sheet for the year ended 31st March 2015 after taking the
above adjustments.

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Solution:
Dr---------Trading, P & L A/c of Rakesh for the year ended 31st March 2015---------Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Opening stock 22,000 By Sales 1,50,000
To Purchases 1,10,000 Less: Returns 2,000 1,48,000
To Electricity Charges 1,100
To Carriage on purchases 1,800 By Closing Stock 20,060
ToGross Profit c/d → 33,160
1,68,060 1,68,060
To Depreciation on Furniture & fixtures 550 By Gross Profit B/d → 33,160
To Discount (Dr) 1,600 By Rent from tenants 1,000
To Tax & Insurance 2,000 By Discount (Cr) 2,000
To General Expenses 4,000
To Salaries 9,000
To Commission (Dr) 2,200
To Bad debts 800
To Net Profit→ 16,010
36,160 36,160

Balance Sheetof Rakesh as on 31st March 2015

Liabilities A.Rs Assets A.Rs.
Bank overdraft 4,200 Furniture and fixtures 2,600
Creditors 13,800 Less: Depreciation 550 2050
Capital 30,000 Debtors 18,000
Less: Drawings 5,000 Closing Stock 20,060
Add:Net Profit 16,010 41,010 Suspense Account 18,900
(Trail Balance Different Amount)

59,010 59,010

&&&&&

(22)From the following prepare Trading, Profit and loss and Balance Sheet as on 31-03-2015.
Particulars Dr. Rs. Cr. Rs.
Capital - 20,000
Purchases 29,000 -
Sales - 55,000
Carriage Inwards 5,000 -
Wages outstanding - 2,000
Plant 20,000 -
Depreciation on plant 4,000 -
Rent received - 1,000
Salaries and Wages 3,000 -
Reserve for bad and doubtful debts - 1,000
Bad debts 2,000 -
Interest - 5,000
Premises 20,000 -
Interest Paid 5,000 -
Creditors - 6,000
Opening stock 25,000 -
Loans - 38,000
Debtors 15,000 -
1,28,000 1,28,000

Adjustment: (a) Closing stock at the end: Rs 40,000 (b) Depreciate Plant at the rate of 15% per annum.

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Solution:
Dr---------Trading, P & L A/c for the year ended 31st March 2015---------Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Opening stock 25,000 By Sales 55,000
To Purchases 29,000 By Closing Stock 40,000
To Carriage Inwards 5,000

ToGross Profit c/d → 36,000

95,000 95,000
To Depreciation on plant 4,000 By Gross Profit B/d → 36,000
Add:Additional Depreciation 3,000 7,000 By Rent received 1,000
To Salaries and Wages 3,000 By Reserve for bad doubtful debts 1,000
ToBad debts 2,000 By Interest 5,000
To Interest Paid 5,000
To Net Profit→ 26,000
43,000 43,000

Balance Sheetas on 31st March 2015

Liabilities A.Rs Assets A.Rs.
Wages outstanding 2,000 Plant 20,000
Creditors 6,000 Less: Depreciation@15% 3,000 17,000
Loans 38,000 Premises 20,000
Capital 20,000 Debtors 15,000
Add:Net Profit 26,000 46,000 Closing Stock 40,000
92,000 92,000

&&&&&

(23) Prepare final accounts for Priyank for the year ended 31st March, 2020 from the following information.
Particulars Dr. Rs. Cr. Rs.
Cash in hand 4,500 -
Purchases 10,500 -
Sales - 15,000
Returns 2,000 500
Opening Stock 5,000 -
Carriage Inwards 1,000 -
Bad Debts 1,000 -
Rent 4,000 4,000
Commission 1,000 2,000
Discount 2,000 1,500
Machinery 10,000 -
Debtors 9,000 -
Interest 1,000 3,000
Creditors - 1,000
Capital - 23,000
Provision for Bad Debts - 1,000
51,000 51,000
Adjustments:
1. Closing stock is Rs. 15,000
2. Depreciate machinery at 10%
3. Further Bad debts are Rs. 1,000
4. Make a provision for Bad Debts at 10% on debtors.

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Solution:

Dr---------Trading, P & L A/c of Priyank for the year ended 31st March 2020---------Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Opening stock 5,000 By Sales 15,000
To Purchases 10,500 Less: Returns 2,000 13,000
Less: Returns 500 10,000 By Closing Stock 15,000
To Carriage Inwards 1,000
ToGross Profit c/d → 12,000
28,000 28,000
To Bad Debts 1,000 By Gross Profit B/d → 12,000
Add:Additional Bad debts 1,000 2,000 By Rent 4,000
To Provision for Bad Debts 800 By Commission 2,000
To Rent 4,000 By Discount 1,500
To Commission 1,000 By Provision for Bad Debts 1,000
To Discount 2,000 By Interest 3,000
To Depreciation on Machinery 1,000
To Interest 1,000
To Net Profit→ 11,700
23,500 23,500

Balance Sheet of Priyank as on 31st March 2020

Liabilities A.Rs Assets A.Rs.
Creditors 1,000 Cash in hand 4,500
Capital Debtors 9,000
23,000
Add:Net Profit 11,700 34,700 Less: Bad debts 1,000
Less:Provision for Bad Debts800 7,200
(9000-1000 = 8000 x 10%)
Machinery 10,000
Less: Depreciation@10% 1,000 9,000
Closing Stock 15,000
35,700 35,700

&&&&&

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

(24) Prepare Trading and Profit and Loss Account for the year ended 31st March 2021 and
Balance sheet as at that date from the following trail Balance of India & Co.,

Debit Balances Amount Credit Balances Amount

(Rs.) (Rs.)
Drawings 45,000 Capital 1,60,000
Goodwill 80,000 Bills payable 33,800
Land and Buildings 60,000 Creditors 70,000
Plant and Machinery 40,000 Purchase returns 2,650
Loose Tools 3,000 Sales 4,18,000
Bills Receivables 3,000 Capital 1,60,000
Stock (1-4-2020) 40,000
Purchases 2,51,000
Wages 20,000
Carriage outwards 500
Carriage Inwards 1,000
Coal 5,800
Salaries 35,000
Rent, Rates & Taxes 2,800
Discount 1,500
Cash at bank 25,000
Cash in hand 400
Sundry debtors 45,000
Repairs 1,800
Printing & stationary 500
Bad debts 1,200
Advertisements 3,500
Sales returns 2,000
Furniture 11,200
General Expenses 5,250
6,84,450 6,84,450

Adjustments
(i) Closing stock on 31.03.2013 was Rs.35,000
(ii) Provide 5% on debtors against bad debts and 2% against discount on creditors
(iii) Provide Rs.1,500 for wages
(iv) Advertisements prepaid Rs.500
(v) Depreciate plant & machinery, Tools and furniture by 10% and Land & Buildings by 5%

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Solution

Dr---------Trading, P & L A/c of India & Co for the year ended 31st March 2021--Cr
Particulars Amount Particulars Amount
(Rs.) (Rs.)
To Opening stock 40,000 By Sales 4,18,000
To Purchases 2,51,000 Less: Returns 2,000 4,16,000
Less: Returns2,650 2,48,350 By Closing Stock 35,000
To Wages 20,000
Add: Outstanding 1,500 21,500
To Carriage Inwards 1,000
To Coal 5,800

ToGross Profit c/d → 1,34,350

4,51,000 4,51,000
To Depreciation: By Gross Profit B/d → 1,34,350
Machinery 3,000 By Discount on Creditors 1,400
Plant and Machinery 4,000
Loose Tools 300
Furniture 1,120
To Carriage outwards 500
To Salaries 35,000
To Rent, Rates & Taxes 2,800
To Discount 1,500
ToBad debts (1200 +2250) 3,450
To Repairs 1,800
To Printing & stationary 500
To Advertisements 3,500
Less: Prepaid 500 3,000
To General Expenses 5,250

To Net Profit→ 73,530

1,35,750 1,35,750

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid
RAJIV GANDHI UNIVERSITY OF KNOWLEDGE TECHNOLOGIES – A.P.

Balance Sheet of India & Co as on 31st March 2021

Liabilities A.Rs Assets A.Rs.
Outstanding Wages 1,500 Goodwill 80,000
Bills payable 33,800 Land and Buildings 60,000
Creditors 70,000 Less: Depreciation@5% 3,000 57,000
Less: Discount@2% 1,400 68,600 Plant and Machinery 40,000
Less: Depreciation@10% 4,000 36,000
Capital 1,60,000 Loose Tools 3,000
Less: Drawings45,000 Less: Depreciation@10% 300 2,700
Add:Net Profit 73,530 1,88,530 Closing Stock
Bills Receivables 3,000
Cash at bank 25,000
Cash in hand 400
Sundry debtors 45,000
Less: Bad debts@5% 2,250 42,750
Prepaid Advertisement 500
Furniture 11,200
Less: Depreciation@10% 1,120 10,080
Closing Stock 35,000
2,92,430 2,92,430

&&&&

Prepared By: Dr.N.Suresh Babu, Asst. Professor (C), Dept.of Management, RGUKT-Nuzvid