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Final Accounts without Adjustments | Trading Account | P&L Account | Balance Sheet

Arjun EP

Published on: July 4, 2020

Preparation of Final Accounts

Final accounts are also known as financial statements.

These statements are prepared to know about operating results and overall financial position to the company.

Joint Stock Company needs to prepare its final account at the end of every financial year.

Generally, final accounts of a manufacturing company involve the following statements:

(1) Manufacturing account

(2) Trading account

(3) Profit and loss account

(4) Profit and loss appropriation account

(5) Balance sheet

According to Company Act, annual financial statement should be prepared by the board of directors of a public limited company every year at least thirty (30) days prior to the holding of its annual general meeting.

In the case of private limited company, within the six months of the expiry of its financial year.

According to company act, financial statement involves the following statements:

(a) Balance sheet as at the last date of the accounting or financial year.

(b) Profit and loss account of the accounting or financial year.

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Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country

PROBLEM: 5

Pooja Grill Industries has following trial balance on 31^st December:

Debit balance	Dr Amount	Cr Amount
Sundry creditors	−	1,00,000
Capital	−	5,50,000
Machinery	2,70,000	−
Goodwill	52,000	−
Debtors	1,40,000	−
Investment	1,80,000	−
Account payable	−	1,00,000
Return from customers	5,000	−
Sales	−	6,52,000
Return to suppliers	−	10,000
Purchase	4,10,000	−
Railway carriage on purchase	40,000	−
Opening stock	60,000	−
Advance commission	−	5,000
Wages	20,000	−
Rent	51,000	−
Power and fuel	3,000	−
Bad debts	10,000	−
Provision for bad debts	−	7,000
Apprentice premium (office)	−	6,000
Bank overdraft	−	51,000
Cash in hand	30,000	−
Cash at bank	140,000	−
Salary	60,000	−
Interest on investment	−	10,000
General expenses	20,000
	14,91,000	14,91,000

Required: (1) Trading account; (2) Profit and loss account; (3) Balance sheet

[Answer: Gross profit = $124,000; Net profit = $6,000; Balance sheet = $812,000]

SOLUTION:

Trading Account

Pooja Grill Industries

On 31^st December 2021

Particulars		Amount	Particulars		Amount
To Opening stock		60,000	By Sales	652,000
To Purchase	410,000		Less: Return	(5,000)	647,000
Less: Return	(10,000)	400,000	By Closing stock		Nil
To Railway carriage		40,000
To Production expenses		20,000
To Power and fuel		3,000
To Gross profit c/d		124,000
		647,000			647,000

Cr 647,000 – Dr 523,000 = 124,000 GP

Profit and Loss Account

Pooja Grill Industries

On 31^st December 2021

Particulars		Amount	Particulars	Amount
To Salary paid		60,000	By Gross profit b/d	124,000
To Rent paid		51,000	By Apprentice premium	6,000
To Bad debts	10,000		By Interest on investment	10,000
Less: PBD	(7,000)	3,000
To General expenses paid		20,000
To Net profit		6,000
		140,000		140,000

Cr 140,000 – Dr 134,000 = 6,000 NP

Balance Sheet

Pooja Grill Industries

On 31^st December 2021

Liabilities + capital +profit		Amount	Assets	Amount
Capital	550,000		Cash in hand	30,000
Add: Net Profit	6,000		Cash at bank	1,40,000
Less: Drawings	Nil	556,000	Machinery	2,70,000
Sundry creditors		100,000	Goodwill	52,000
Account payable		100,000	Debtors	1,40,000
Advance commission		5,000	Investment	1,80,000
Bank overdraft		51,000
		812,000		812,000

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Problems and Answers of Final Accounts

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country

PROBLEM: 5A

VK Traders has following extracted data on 31^st December 2021:

Debit balance	Amount	Credit balance	Amount
Opening stock	50,000	Sales	486,250
Purchase	215,000	Purchase return	5,000
Sales return	2,500	Dividend received	3,500
Carriage on purchase	4,250	Miscellaneous received	750
Import duty	12,000	Transfer fee	500
Clearing charge	11,500	Discount received	1,250
Royalty for production	8,000
Factory rent	25,000
Salary	80,000
Commission paid	3,000
Coal, gas, water and fuel	13,000
Tax paid	22,000
Motive power	7,000
Depreciation on machinery	15,000
Depreciation on furniture	5,000
Audit fee	6,500
Sundry expenses	9,500

Required: Trading, profit and loss account

[Answer: Gross profit = $143,000; Net profit = $8,000]

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country

PROBLEM: 5B

MK Manufacturing Company has following extracted data on 31^st December 2021:

Debit balance	Amount	Credit balance	Amount
Opening stock	80,000	Sales	885,200
Purchase	310,000	Purchase return	5,000
Salary	170,000	Dividend received	3,500
Manufacturing expenses	25,000	Provision for bad debts	2,000
Import duty	10,000	Sublet rent received	8,000
Phone and internet expenses	12,000	Discount received	7,500
Sales return	8,000
Sales commission	7,000
Factory insurance expenses	6,000
Interest on loan	12,000
Wages	60,000
Carriage inward	18,000
Advertisement	17,000
Audit fees	8,000
Sample distribution	5,000
Office rent paid	72,000
Depreciation on equipment	6,500
Carriage outward	9,500
Selling expenses	6,200
Bad debts	4,000
Office insurance expenses	5,000

Required: Trading, profit and loss account

[Answer: Gross profit = $373,200; Net profit = $60,000]

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country

PROBLEM: 5C

BG Company (P) Ltd has following accounts balances on 31^st December 2021:

Name of ledgers	Amount	Name of ledgers	Amount
Land and building	4,00,000	Capital	616,000
Plant and machinery	2,12,000	General reserve	25,000
Motor bike	80,000	Sinking fund	12,000
Furniture and fixture	50,000	Net profit	55,000
Patent and trade mark	20,000	Capital funds	40,000
Fixed deposit into bank	70,000	Secured loan	250,000
Goodwill	30,000	Unsecured loan	35,000
Bills payable	65,000	Closing stock	69,000
Sundry creditors	30,000	Cash in hand	25,000
Outstanding expenses	16,000	Bills receivable	45,000
Advance income received	2,000	Prepaid expenses	8,000
Bank overdraft	13,000	Advance tax paid	3,000
Investment in shares	50,000	Preliminary expenses	12,000
Sundry debtors	75,000	Spare parts (loose tools)	5,000
Income receivable	5,000

Required: Balance sheet

[Answer: Balance sheet = $11,59,000]

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country

PROBLEM: 5D

BR & Company has following extracted balances on 31^st December 2021:

Name of ledgers	Amount	Name of ledgers	Amount
Goodwill	58,000	Capital	5,95,500
Plant and machinery	3,00,000	Bank loan	2,00,000
Vehicles	4,50,000	General reserve	10,000
Furniture and fixture	80,000	Sinking fund	5,000
Patent and trade mark	50,000	Capital reserve	35,000
Investment in debenture	1,00,000	Unsecured loans	2,50,000
Account payable	13,000	Cash in hand	25,000
Sundry creditors	11,000	Account receivable	6,000
Outstanding expenses	50,000	Prepaid expenses	8,000
Advance income received	18,000	Advance given to KL Traders	40,000
Assets replacement fund	76,000	Advance tax paid	3,000
Sundry debtors	75,000	Preliminary expenses	12,000
Accrued income	5,000	Investment in government bond	50,000
Cash at bank	35,600	Closing stock	60,000
Net profit for the year	94,100

Required: Balance sheet

[Answer: Balance sheet = $13,57,600]

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country

PROBLEM: 5E

Kalpana Suppliers has following trial balance on 31^st December 2021:

Debit balance	Amount	Credit balance	Amount
Salary	30,800	Bills payable	40,000
Furniture	16,800	Creditors	4,600
Wages paid	23,400	Interest on investment	3,000
Rent paid	18,000	Commission received	1,000
Direct expenses	13,000	Purchase return	5,000
Bills receivable	20,000	Sales	355,000
Debtors	3,400	Capital	110,000
Insurance expenses	1,500
Machinery	56,000
Purchase	225,200
Sales return	5,200
Cash in hand	10,400
Freight inward	5,800
Opening stock	41,200
Stationery expenses	2,200
Advertisement expenses	3,000
Bad debts	1,400
Investment	40,000
Discount allowed	1,300
	518,600		518,600