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Practice Session - PL

The document provides a trial balance for A. Atmaram as of June 30, 2001 and instructions to prepare a profit and loss statement for the year ended on that date using the provided accounts. It lists debit and credit accounts with their balances and includes notes on inventory values, bad debts write-off, and provisions to create. Adjustment notes require calculating depreciation and addressing insurance claims. The trial balance and adjustments are to be used to prepare the profit and loss statement for the period.

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Divyansh Pandey
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57 views

Practice Session - PL

The document provides a trial balance for A. Atmaram as of June 30, 2001 and instructions to prepare a profit and loss statement for the year ended on that date using the provided accounts. It lists debit and credit accounts with their balances and includes notes on inventory values, bad debts write-off, and provisions to create. Adjustment notes require calculating depreciation and addressing insurance claims. The trial balance and adjustments are to be used to prepare the profit and loss statement for the period.

Uploaded by

Divyansh Pandey
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Exercise: From the Trial Balance of A.

Atmaram as at 30th
June,2001,you are required to prepare Profit and Loss
Account for the year ended 30th June,2001.
Dr.     Cr.
  Rs.   Rs.
A. Atmaram's Drawing's
Account 6000 A.Atmaram's Capital Account 80000

Plant and Machinery(balance


as on 1st Jan,2000) 20000 Accounts payable 10000

Plant and Machinery(balance 12000


as on 1st Jan,2001) 5000 Sales 0
Inventory on 1st Jan,2000 15000 Return outwards 1000
Purchases 82000 Provision for doubtful debts 400
Return inwards 2000 Discounts 800

Rent of premises sub-let for the


Accounts receivable 20600 year up to 31st December,2001 1200
Furniture and fittings 5000   1  
Freight and Duty 2000    
Carriage outwards 500   

Rent, Rates and Taxes 4600   

Printing and Stationary 800   

Trade expenses 400   

Postage and Telegrams 800   

Insurance charges 700   

Salaries and Wages 21300   

Cash in hand 6200   

Cash at Bank 20500   

 Total 213400  213400


2
Adjustments:

1. Inventory on 30th June,2001 was valued at


Rs.14600.
2. Write-off Rs.600 as bad debts.
3. The provision for doubtful debts is to be maintained
at 5% on Sundry Debtors.
4. Create a provision for Discounts on Accounts
Receivables and Reserve for Discounts on Accounts
Payable at 2%.

3
Adjustments:

1. Provide for depreciation on Furniture and Fittings at 5% per


annum, and on Plant and Machinery at 20% per annum.
2. Insurance prepaid was Rs.100
3. A fire occurred on 25th June,2001 in the godown and stock of
the value of Rs.5000 was destroyed.

4
Exercise: Fairdealer is the proprietor of a large business of
cotton goods. The following Trial Balance was prepared from
his books as on 30th June,2001.

Dr.     Cr.
  Rs.   Rs.
Land & Buildings 40000Sales 468100
Purchases 326700Income from investment 990

12% bank loan secured on


fixed assets(no
movements during the
Returns inward 2500 year) 40000
Mr. Fairdealer's capital
Travelling Expenses 6900 A/C 80000
Printing & Stationary 1600Bills Payable 2600
Cash At Bank 30795Accounts Payable 63100
Discount Allowed 1800Returns outward 3700
Miscellaneous Expenses 18620Discount Received 1200
5
Accounts Receivables 64000   
Postage 800   
Furniture 8000   
Cash in hand 5900   
Motor car 16000   
Investment(Market value
Rs.14000) 12000   
Drawings 10000   
Bills receivable 4800   
Inventory(1-07-2000) 63680   
Interest on Bank Loan 3000   
Salaries(Including advance
Rs.1500) 22000   
Establishment Expenses 1595   
Carriage Inwards 3000   
Advertisements 16000   
TOTAL 659690  659690
6
The following information was obtained.

1. Inventory as on 30th June,2001 was Rs.120000.


2. Accounts receivables include a sum of Rs.3000 due from B and
Accounts Payable include a sum of Rs.4000 due to B. The
Reserve for doubtful receivables is to be maintained at 10% on
Accounts Receivables and reserves for discount on receivables
and discount on payables are to be created at 5%.
3. Bills receivable include a dishonored bill from B for Rs.600.
4. Inventory worth Rs.10000 destroyed by fire on 25-06-2001 in
respect of which the insurance company admits claim for only
Rs.7500.

*(Accounts Receivable Rs.64000 – Rs.3000 due from B + Rs.600 Bill


Dishonored)
Accounts Payable of Rs.63100 – Rs.3000 due from B

7
6. The manager of Fairdealer is entitled to a
commission of 10% of Net Profit calculated after
charging such commission.
7. ¾ of the Advertisement Expenses is to be carried
forward.
8. 2.5% of the Net Profit is to be carried to Reserve
Fund.

8
9. Depreciation is to be charged on:
i. Land and Building at 2.5%
ii. Furniture at 10%
iii. Motor Car at 20%.

You are required to prepare the Statement of income


and expenditure for the year ended 30th June,2001.

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