Page 167 - DEBK-XI(2020)

Adjustments in Preparation of Financial Statements 19.19

Taking into account the following adjustments, prepare Trading and Profit and Loss Account
and Balance Sheet as at 31st March, 2020:
(a) An old machine valued at ` 20,000 was given in exchange of new machine purchased on
1st October, 2019. As the Cheque was issued for ` 2,00,000 it was recorded in the books
at this value. The machine given in exchange was personal asset of Prem Prakash and
entry for it was not passed.
(b) Depreciation 5% p.a. on Plant and Machinery and 10% p.a. on Fixtures and Fittings.
(c) Provision for Doubtful Debts @ 2½% on Sundry Debtors.
(d) Rent Outstanding for March, 2020 ` 1,500.
(e) Insurance unexpired on 31st March, 2020 ` 700.
(f) Outstanding Wages and Salaries were ` 8,000 and ` 3,500 respectively.
(g) Stock on 31st March, 2020 ` 1,65,800.
[Gross Profit—` 1,82,660; Net Profit—` 30,040; Balance Sheet Total—` 12,18,160.]
[Hints: 1. Plant and Machinery and also capital will be increased by ` 20,000.
2. Depreciation on Plant and Machinery of ` 2,20,000 will be provided for
6 months.
3. Depreciation for the year ` 23,000.]
3. From the following Trial Balance of Ashok, prepare Trading and Profit and Loss Account for
the year ended 31st March, 2020 and Balance Sheet as on that date after making necessary
adjustments:

Particulars Dr. Balances Cr. Balances
` `
Opening Stock ....................................................................................................... 30,000 ...
Ashok’s Capital ....................................................................................................... ... 2,00,000
Ashok’s Drawings ....................................................................................................... 10,000 ...
Plant and Machinery ....................................................................................................... 1,20,000 ...
Freehold Property ....................................................................................................... 75,000 ...
Purchases ....................................................................................................... 2,25,000 ...
Sales ....................................................................................................... ... 5,00,000
Salaries ....................................................................................................... 35,000 ...
Office Expenses ....................................................................................................... 5,000 ...
Office Furniture ....................................................................................................... 25,000 ...
Discount ....................................................................................................... 5,000 ...
Loan to Anwar @10% p.a. on 1st April, 2019............................................................................... 30,000 ...
Wages ....................................................................................................... 8,000 ...
Postage and Courier ....................................................................................................... 2,000 ...
Insurance ....................................................................................................... 5,000 ...
Gas and Fuel ....................................................................................................... 50,000 ...
Bad Debts ....................................................................................................... 15,000 ...
Freight ....................................................................................................... 3,000 ...
Rent ....................................................................................................... 7,000 ...
Loose Tools ....................................................................................................... 15,000 ...
Provision for Doubtful Debts ....................................................................................................... ... 20,000
Interest on Loan from Anwar ....................................................................................................... ... 1,000