Every business firm prepares final accounts at the end of accounting year; here are the final accounts problem and solution with adjustments.
PROBLEM AND SOLUTION FINAL ACCOUNTS |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
PROBLEM: 11
Authorized capital of the Max Company Ltd is Rs 10,00,000 divided into 6,000 equity shares of Rs 100 each and 4,000; 6% preference shares of Rs 100 each. Other information is on 31st December 2019:
Name of ledgers |
Amount |
|
Name of ledgers |
Amount |
Paid up capital 5,000 shares @ Rs 100 |
5,00,000 |
|
Calls in arrears |
5,000 |
10% Debenture |
2,00,000 |
|
Sundry creditors |
50,000 |
Bills payable |
20,000 |
|
Land and building |
2,90,000 |
Plant and machinery |
2,00,000 |
|
Furniture |
1,50,000 |
Investment in government bonds |
35,000 |
|
Sundry debtors |
60,000 |
Cash at bank |
93,000 |
|
Sales |
5,80,000 |
Stock on 1st January |
150,000 |
|
Sales return |
5,000 |
Wages |
50,000 |
|
Carriage inwards |
5,000 |
Office salaries |
60,000 |
|
Rent, rates and taxes |
15,000 |
Bad debts |
1,000 |
|
Provision for bad debts |
1,000 |
Sundry expenses |
5,000 |
|
Carriage outward |
1,000 |
Audit fees |
6,000 |
|
Debenture interest |
10,000 |
Employee bonus |
10,000 |
|
bad debts recovered |
5,000 |
Discount and commission earned |
10,000 |
|
Purchase |
2,50,000 |
Advance internet expenses |
5,000 |
|
Net profit last year |
50,000 |
Discount on issue of debentures |
10,000 |
|
|
|
Additional information:
a. |
Provide 10% depreciation on plant and machinery and furniture |
b. |
A fire broke out in the factory and destroyed material worth of Rs 10,000 but the insurance company accepted claim of Rs 5,000 |
c. |
Outstanding office salaries amounted to Rs 5,000 |
d. |
Provide 5% reserve for doubtful debts |
e. |
The directors decided to transfer Rs 20,000 and Rs 15,000 on reserve fund and assets replacement fund respectively. |
f. |
Stock was valued at Rs 55,000 |
g. |
Provision for pension fund Rs 20,000 |
Required: (1) Trading account; (2) Profit and loss account; (3) Profit and loss appropriation account; (4) Balance sheet
[Answer: Gross profit = Rs 185,000; Net profit = Rs 11,000;
Surplus = Rs 30,000; Balance sheet = Rs 865,000;
SOLUTION
Trading Account
Max Company Ltd
As on 31 December 2019
Particulars |
|
Amount |
Particulars |
|
Amount |
To Stock |
|
1,50,000 |
By Sales |
580,000 |
|
To Purchase |
250,000 |
|
Less: Sales return |
(5,000) |
5,75,000 |
Less: Loss by fire |
(10,000) |
2,40,000 |
By Closing stock |
|
55,000 |
To Wages |
|
50,000 |
|
|
|
To Carriage inwards |
|
5,000 |
|
|
|
To Gross Profit c/d |
|
1,85,000 |
|
|
|
|
|
6,30,000 |
|
|
6,30,000 |
Profit and Loss Account
Max Company Ltd
As on 31 December 2019
Particulars |
|
Amount |
Particulars |
Amount |
To Office salaries |
60,000 |
|
By Gross profit b/d |
185,000 |
Add: O/s |
+ 5,000 |
65,000 |
By Discount and comm. |
10,000 |
To Bad debts |
1,000 |
|
By Provision for bad debts |
1,000 |
Add: New BD |
Nil |
|
|
|
Add: RBD |
+ 3,000 |
4,000 |
By Bad debts recovered |
5,000 |
To Sundry expenses |
|
5,000 |
|
|
To Audit fees |
|
6,000 |
|
|
To Employee bonus |
|
10,000 |
|
|
To Rent, rates and taxes |
|
15,000 |
|
|
To Carriage outward |
|
1,000 |
|
|
To Carriage outward |
|
|
|
|
To Debenture interest |
10,000 |
|
|
|
Add: O/s interest |
+10,000 |
20,000 |
|
|
To Depn on: |
|
|
|
|
Plant and machinery |
20,000 |
|
|
|
Furniture |
+15,000 |
35,000 |
|
|
To Provision for pension fund |
|
20,000 |
|
|
To Loss by fire (10,000 – 5,000) |
|
5,000 |
|
|
To Net profit |
|
15,000 |
|
|
|
|
2,01,000 |
|
201,000 |
Profit and Loss Appropriation Account
As on 31 December 2019
Particulars |
Amount |
Particulars |
Amount |
To Reserve fund |
20,000 |
By Net profit last year |
50,000 |
To Assets replacement fund |
15,000 |
By Net profit |
15,000 |
To Surplus |
30,000 |
|
|
|
65,000 |
|
65,000 |
Balance Sheet
Max Company Ltd
As on 31 December 2019
Liabilities + capital +profit |
|
Amount |
Assets |
|
Amount |
Authorized capital |
|
|
Goodwill |
|
Nil |
6,000 equity shares @ Rs 100 |
|
600,000 |
Fixed assets |
|
|
4,000; 6% P. shares @ Rs 100 |
|
400,000 |
Land and building |
|
290,000 |
Issued and paid up capital |
|
|
Plant and machinery |
200,000 |
|
3,000 Eq. shares @ Rs 100 |
300,000 |
|
Less: Depn |
(20,000) |
180,000 |
Less: calls in arrears |
(5,000) |
295,000 |
Furniture |
150,000 |
|
2,000; 6% P. shares @ Rs 100 |
|
200,000 |
Less: Depn |
(15,000) |
135,000 |
Reserve, fund and surplus |
|
|
Investment |
|
|
Reserve fund |
|
20,000 |
Investment in Govt. bond |
|
35,000 |
Assets replacement fund |
|
15,000 |
|
|
|
Surplus |
|
30,000 |
Current assets |
|
|
|
|
|
Sundry debtors |
60,000 |
|
Secured and unsecured loan |
|
|
Less: Bad debts |
Nil |
|
10% Debentures |
200,000 |
|
|
60,000 |
|
Add: O/s interest |
10,000 |
|
Less: RBD |
(3,000) |
57,000 |
|
|
|
Cash at bank |
|
93,000 |
Current liabilities |
|
210,000 |
Closing stock |
|
55,000 |
Sundry creditors |
|
|
Insurance claim receivable |
|
5,000 |
Bills payable |
|
50,000 |
Loans and Advance |
|
|
O/s salary |
|
20,000 |
Advance internet expenses |
|
5,000 |
|
|
5,000 |
Miscellaneous Expenses |
|
|
Provisions |
|
|
Discount on issue of debentures |
|
10,000 |
Provision for pension fund |
|
20,000 |
|
|
|
|
|
865,000 |
|
|
865,000 |
#####
Click on link for YouTube videos |
|
Share (Accounting for Share) |
|
Share in Nepali |
|
Debentures |
|
Final Account: Class 12 |
|
Final Account in Nepali |
|
Work Sheet |
|
Ratio Analysis (Accounting Ratio) |
|
Fund Flow Statement |
|
Cash Flow Statement |
|
Theory Accounting Xii |
|
Theory: Cost Accounting |
|
Cost Accounting |
|
LIFO−FIFO |
|
Cost Sheet, Unit Costing |
|
Cost Reconciliation Statement |
#####
PROBLEM AND ANSWERS |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
PROBLEM: 11A
The authorized capital of Everest Company Ltd is Rs 10,00,000 divided into 6,000 equity shares @ Rs 100 and 4,000; 7% preference shares @ Rs 100. 50% of both shares were issued. The trial balance at the end of December 2019 is as under:
Particulars |
Amount Dr |
Particulars |
Amount Cr |
Building |
4,50,000 |
Reserve for doubtful debts |
2,000 |
Plant and machinery |
1,40,000 |
Reserve fund |
13,000 |
Account receivable |
10,000 |
Accumulated net profit |
15,000 |
Cash at bank |
25,000 |
Account payable |
20,000 |
Beginning inventory |
10,000 |
Share capital @ Rs 100 |
3,00,000 |
Material purchase |
4,30,000 |
7% Preference shares @ Rs 100 |
2,00,000 |
Wages |
30,000 |
Sales |
7,00,000 |
Fuel and power |
5,000 |
|
|
Carriage on material purchase |
2,000 |
|
|
Sundry expenses |
8,000 |
|
|
Salaries and benefits |
1,30,000 |
|
|
Bad debts |
2,000 |
|
|
Employee bonus |
8,000 |
|
|
|
12,50,000 |
|
12,50,000 |
Additional information:
a. Appreciate building by 20% and provide depreciation on plant and machinery by 10%.
b. Provision for bad debts is to be maintained at 15%.
c. Ending inventories were valued at Rs 20,000.
d. Outstanding salaries and benefits amounted to Rs 5,000.
e. Wages include Rs 5,000 paid for installation of plant and machinery.
f. The directors decided to pay 10% dividend on paid up equity shares capital.
g. Transfer Rs 25,000 to the reserve fund.
h. Goods lost by fire Rs 15,000 and Insurance Company accepted full claim.
Required: (1) Trading account; (2) Profit and loss account
(3) Profit and loss appropriation account; (4) Balance sheet
[Answer: Gross profit = Rs 263,000; Net profit = Rs 186,000;
Surplus = Rs 132,000; Balance sheet = Rs 739,000;
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