How to Prepare Profit and Loss Account by qjn14978


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									                                         FINANCIAL ACCOUNTING                         MARKS : 100


I    Prepare Trading and Profit & Loss Account for the year ended 31st March 2005 and a Balance Sheet
     as on that date after considering the given additional information.

                                                              DR [RS.]    CR [RS.]

     Stock as on 1.4.2004                                         20000
     Sundry Debtors                                               28000
     Sundry Creditors                                                        18000
     Purchases                                                    40000
     Sales                                                                   70000
     Bills Payable                                                           12600
     Advances received                                                        3500
     Advances given                                                 500
     Discount allowed                                               500
     Wages                                                         8500
     Salaries                                                      2700
     Carriage outward                                              2000
     Insurance                                                     1300
     Plant and Machinery                                          30000
     Rent (for 11 months)                                          2200
     Travelling expenses                                            500
     Return inward                                                 3500
     Land and building                                            44800
     Investment                                                    4000
     Bad debts                                                     2000
     Cash in hand                                                  5100
     Drawings                                                      2400
     Capital                                                                 82400
     Bank overdraft                                                          11500
                                                                198000      198000

     Additional information :
     1. Make provision for wages Rs. 1000 and unpaid salaries Rs. 500.
     2. Write off bad debts RS. 3000.
     3. Closing stock as on 31.3.2005 Rs. 25500.
     4. Depreciate Land and building by 5% and Plant & Machinery by 10%
     5. Investment purchased on 1.10.2004 on which interest received is 10 p.c.p.a.
     6. Insurance is paid for 13 months.

II   Pass Journal entries for the following :

     2006 March
             1 Commenced business with Rs. 15000 of which rs. 5000 was borrowed from his wife as loan @12p.c.p.a
             4 Purchased office equipments for RS. 12000 from SS.Corp.
             6 Bought goods from Ajay at one month's credit for Rs. 6000 of which half were invoiced to Mr. Narain
               at 30% above. Cost.
               8   Paid carriage charges on cartage of goods sold to Mr. Narayan on his behalf Rs. 40
              10   Office rent Rs. 240 for the month was paid to the landlord.
              13   Purchased 20 shares of BCD ltd. @ Rs. 20/share.
              14   Sold goods to Ambar for Rs. 1290
              16   Ramesh invoiced goods to us Rs. 1940
              18   Sent goods to Vijay against his pending order.
              20   Paid salaries to clerk Rs. 2000 and advertising expenses Rs. 1800
              22   Ambar became insolved and a dividend of 50 paise in a rupee is received.
              28   Paid monthly charges to the Housing Society for his own residence Rs. 350

III   Write short notes on any three :

      1. Types of accounts and Rules of Debit and Credit.
      2. Requirements of Schedule VI of Companies Act w.r.t. Fixed Assets
      3. Capital & Revenue expenditure
      4. Concepts of Gross Profit and Net Profit.

IV.   Enter the following transactions in a double column cash book having cash and discount columns.

              1    Opening balance Rs. 11000
              2    Sold goods to Sharad Rs. 3000 and received half the amount in cash after allowing 5% cash discount.
              7    Purchased goods for cash Rs. 2700.
              9    Paid office rent for November RS. 600.
             15    Cash on account of sale of machinery Rs. 3000.
             16    Paid to Madhur Rs. 180 and received discount of Rs. 20.
             19    Received from Payal Rs. 290 after allowing her discount of RS. 10.
             25    Received for cash sales Rs. 2000
             29    Settled Madan's account Rs. 3000 after adjusting discount @10%
             30    Deposited in bank cash in excess of Rs. 100.

V     State with reasons whether True or False.
      1. Bank account is a real account
      2. If closing balance appears on the debit side of an account, it is said to have a credit balance.
      3. A business transaction is entered directly into the ledger.
      4. Balance sheet is an account.
      5. Balances of assets and liabilities are carried forward to next year.
      6. A Debit Note is a note sent by the seller to the purchaser informing latter of the reduction in the amount
         due from him.
      7. A company should be consistent while following certain accounting policies and methods.
      8. Goodwill is never depreciated.
      9. The written down value of an asset depreciated on Reducing Balance Method can never become zero
      10. A trial balance is a list of the balances in the ledger.
  MARKS : 100


5 and a Balance Sheet

wed from his wife as loan @12p.c.p.a.

h half were invoiced to Mr. Narain
his behalf Rs. 40

 discount columns.

sh after allowing 5% cash discount.

a credit balance.

the reduction in the amount

and methods.

d can never become zero

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