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Worksheet: Long Question and Solution (Comprehensive Worksheet)

Arjun EP

Published on: February 9, 2021

Comprehensive Worksheet

worksheet long question and answer is the exam based comprehensive question and solution. It covers large topic of the chapter.

Procedure of Worksheet

Step 1: Write the debit balance of ledgers on the debit side and the credit balance of ledgers on the credit side.

Step 2: Write adjustment entries two times i.e. one entry on the debit side and another entry on the credit side.

Step 3: Now, unadjusted trial balance and adjustments are added or subtracted to the adjusted trial balance.

Step 4: both debit and credit sides are added to find out equal.

Here, debit and debit	= add Dr 100 + Dr 80	= Dr 180
Credit and credit	= add Cr 50 + Cr 40	= Cr 90
Debit and credit = write more amount as debit or credit Dr 80 and Cr 30 = Dr 50
Credit and debit = write more amount as debit or credit Cr 70 and Dr 40 = Cr 30

Step 5: From adjusted trial balance, transfer amount into income statement, P&L appropriation and balance sheet respectively,

Step 6: After transferring the entire amount into a related place, find out net profit or net loss from the income statement,

Step 7: Transfer net profit into credit side of P&L appropriation account (if a net loss, transfer into the debit side)

Step 8: After transferring the net profit or net loss, find out surplus or deficit from P&L appropriation account,

Step 9: Transfer surplus into liabilities side of the balance sheet (deficit into assets side of the balance sheet),

Step 10: Do the sum of the balance sheet. Assets and liabilities must be equal.

Keep in Mind (KIM)

We should prepare 12 columns worksheet on the following conditions:

When profit and loss appropriation account, net profit last year, provision for tax last year, interim dividend etc are given in the trial balance

Proposed dividend, general reserve etc are given in adjustment,

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Journal Entries for Adjustments

Journal Entries for Adjustment

Bad debts on debtors or credit sales		Amortization/write off on Intangible assets
Bad debts account	Dr	Amortization/ write off account		Dr
To Debtors (B/R, A/R) account		To Intangible assets account
(Being – bad debts on debtors)		(Being – intangible/fictitious assets write off)
Provision for bad debts		Advance income received		Dr
Provision for bad debts account	Dr	Income^{^} (by name) account
To Debtors (B/R, A/R) account		To Advance income^{^} account
(Being – provision for bad debts on debtors)		(Being – income received in advance)
Bad debts received which was written off		Expenses expired from advance
Cash/bank account	Dr	Expenses expired account		Dr
To Bad debt (recovered) account		To Advance expenses account
(Being – bad debts received from debtors)		(Being – expenses expired from advance)
Depreciation charged on assets		Goods lost by fire or theft
Depreciation account	Dr	Insurance claim account		Dr
To Assets (by name) account		Profit and loss account		Dr
(Being – depreciation charged on assets)		To Purchase account
		(Being – goods destroyed by fire)
Appreciation on assets		Closing stock
Assets (by name) account	Dr	Closing stock account		Dr
To Appreciation account		To Trading account
(Being – appreciation on assets)		(Being – closing stock recorded)
Expenses outstanding, payable or due		Proposed dividend
Expenses* (by name) account	Dr	P&L appropriation account	Dr
To Outstanding expenses* account		To Proposed dividend account
(Being – expenses due, payable, outstanding)		(Being – proposed dividend payable)
Prepaid/advance expenses paid		Provision for tax
Prepaid expenses^# account	Dr	P&L account	Dr
To Expenses^#		To Provision for tax account
(Being – expenses paid in advance)		(Being – tax payable)
Accrued income (income earned but not received)		Transfer to reserve and fund
Accrued Income⁺ account	Dr	P&L appropriation account	Dr
To Income⁺ account		To General/capital reserve
(Being – income earned but not received)		(Being – transferred to reserve and fund)

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

PROBLEM: 3A

The trial balance of Apex Company Ltd as on 31 December 2020 is given below:

Particulars	Amount Dr	Particulars	Amount Cr
Opening stock	25,000	Sales revenue	6,25,000
Purchase	4,27,000	Equity share capital (2,500 @ Rs100)	2,50,000
Import duty	20,000	Debenture	2,00,000
Salaries	65,000	Creditors	65,000
Sundry debtors	55,000	Advance commission received	7,000
Fixed assets	2,50,000	P&L appropriation account	24,000
Pattern and design	1,50,000
General expenses	45,000
Prepaid insurance	4,000
Cash at bank	1,25,000
Interim dividend	5,000
	11,71,000		11,71,000

Additional information:

a. Depreciate fixed assets by 10%.

b. Provision for bad debts 5%.

c. Prepaid insurance expired Rs 2,000.

d. The 50% of the advance commission received is earned.

e. Transfer to general reserve Rs 15,000.

f. Proposed dividend 5% on paid-up capital.

g. Closing stock Rs 30,000.

Required: (a) Journal entries for adjustments; (b) Worksheet; (c) Income statement; (d) Balance sheet

[Answer: (b) Adjustment = Rs 90,750; Adjusted TB = Rs 12,28,500;

Net profit = Rs 46,750; Surplus = Rs 38,250; Balance sheet = Rs 584,250;

(c) Closing retained earning = Rs 38,250; (d) Balance sheet = Rs 503,250]

SOLUTION:

Journal Entries

Date	Particulars		LF	Amount	Amount
a.	Depreciation account	Dr		25,000
	To Fixed assets account				25,000
	(Being: depreciation charged in fixed assets.)
b.	Bad debts account	Dr		2,750
	To Sundry debtors account				2,750
	(Being: bad debts provided on sundry debtors)
c.	Insurance account	Dr		2,000
	To Prepaid insurance account				2,000
	(Being: prepaid insurance expired.)
d.	Advance commission account	Dr		3,500
	To Commission account				3,500
	(Being: 50% advance commission received as earned)
e.	P&L Appropriation account	Dr		15,000
	To General reserve account				15,000
	(Being: amount transferred to general reserve)
f.	P&L Appropriation account	Dr		12,500
	To Proposed dividend account				12,500
	(Being: amount transferred to proposed dividend)
g.	Closing stock account	Dr		30,000
	To Trading account				30,000
	(Being: closing stock adjusted to trading account)

Twelve Columns Worksheet

Particulars	Part 1		Part 2		Part 3		Part 4		Part 5		Part 6
	Trial balance		Adjustments		Adjusted TB		Income statement		P&L Appⁿ A/c		Balance sheet
	Dr	Cr.	Dr	Cr.	Dr	Cr.	Dr	Cr.	Dr	Cr.	Dr	Cr.
Sales		6,25,000				6,25,000		6,25,000
Import duty	20,000				20,000		20,000
Opening stock	25,000				25,000		25,000
Purchase	427,000				427,000		427,000
Salaries	65,000				65,000		65,000
Equity share capital		250,000				250,000						250,000
Debenture		200,000				200,000						200,000
Sundry debtors	55,000			2,750^b	52,250						52,250
Fixed assets	250,000			25,000^a	225,000						225,000
Pattern and design	150,000				150,000						150,000
General expenses	45,000				45,000		45,000
Prepaid insurance	4,000			2,000^c	2,000						2,000
Creditors		65,000				65,000						65,000
Adv comm. recd		7,000	d. 3,500			3,500						3,500
Cash at bank	125,000				125,000						125,000
P&L appn A/c		24,000				24,000				24,000
Interim dividend	5,000				5,000				5,000
	11,71,000	11,71,000
Depreciation			25,000^a		25,000		25,000
PBD			2,750^b		2,750		2,750
Prepaid Ins, expired			2,000^c		2,000		2,000
Commission earned				3,500^d		3,500		3,500
General reserve			15,000^e	15,000^e	15,000	15,000			15,000			15,000
Proposed dividend			12,500^f	12,500^f	12,500	12,500			12,500			12,500
Closing stock			30,000^g	30,000^g	30,000	30,000		30,000			30,000
Net profit c/d							46,750			46,750
Surplus c/d									38,250			38,250
Total			90,750	90,750	12,28,500	12,28,500	6,58,500	6,58,500	70,750	70,750	5,84,250	5,84,250

Income Statement

Apex Company Ltd

For the year ended 2020

Particulars	Amount	Amount
Sales revenue (net)		625,000
Less: Cost of goods sold*		(422,000)
Gross profit/margin		203,000
Less: Operating expenses:
Import duty	20,000
Salaries	65,000
General expenses	45,000
Depreciation	25,000
Provision for bad debts	2,750
Insurance expired	2,000	(159,750)
Less: Selling and distribution expenses:	−
Bad debts	Nil
Discount allowed	Nil	Nil
Less: Non-operating expenses:	−
Interest		Nil
Operating profit/income		43,250
Add: Non-operating incomes:
Commission received		3,500
Income before tax		46,750
Less: Provision for income tax		Nil
Net profit/income after tax		46,250
Add: Opening retained earnings (P&L Appⁿ)		24,000
Less: General reserve		15,000
Less: Dividend (5,000 + 12,500)		17,500
Closing retaining earning		38,250

Cost of goods sold (COGS):

= Opening stock + Net purchase – Closing stock

= 25,000 + 427,000 – 30,000

= 422222

Balance Sheet

Apex Company Ltd

For the year ended 2020

Particulars	Amount	Amount
SOURCES OF FUND:
Owners fund (insiders’ equity):
Equity share capital	250,000
Retained earnings	38,250
General reserve	15,000
Preference share capital	Nil	303,250
Loan fund (outsiders’ equity):
Debenture and loan (secured loan)	200,000
Long term loan (unsecured loan)	Nil	200,000
Total liabilities		503,250
APPLICATION OF FUNDS:
Fixed assets (non-current assets):
Fixed assets	225,000
Patents and design	150,000	375,000
Current assets:
Closing stock	30,000
Account receivable	52,250
Cash and bank balance	125,000
Prepaid expenses	2,000	209,250
Less: Current liabilities and provisions:
Creditors	65,000
Advance commission	3,500
Proposed dividend	12,500
Outstanding expenses	Nil	(81,000)
Total application of fund		250,000
Less: Preliminary expenses		Nil
Total assets		503,250

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

PROBLEM: 3B

The trial balance of HK Company Ltd on 31^st March 2021 is given below:

Debit balance	Amount	Credit balance	Amount
Purchase	5,00,000	Paid up capital:
Opening stock	40,000	5,000 shares of Rs 100 each	5,00,000
Wages paid	140,000	Sales	8,16,000
Salaries	100,000	6% Debentures	2,00,000
Discount	5,000	Sundry creditors	1,35,000
Sundry debtors	50,000	Short term loan	95,000
Plant and machinery	340,000	P&L appropriation account	76,500
Land and building	450,000
Furniture	40,000
Advance Income tax	10,000
Bank balance	60,000
Carriage inwards	15,000
Sundry expenses	30,000
Interest on debenture	12,000
Rent and rates	30,500
	18,22,500		18,22,500

Additional information:

1. Value of closing stock Rs 245,000.

2. Appreciate land by 5%.

3. Depreciate plant and machinery and furniture by 10%.

4. Provision for bad debts to be maintained at 5%.

5. Transfer Rs 40,000 to general reserve.

6. Provide 10% dividend on paid up capital.

7. Wages outstanding Rs 5,000.

Required: (a) Twelve column worksheet; (b) Trading and profit and loss account

[Answer: Adjustment = Rs 203,000; Adjusted TB = Rs 21,85,500;

Net profit = Rs 165,500; Surplus = Rs 152,000;

Balance sheet = Rs 11,77,000]

−

Gross profit = 361,000; Net profit = 165,500;

Surplus = 152,000; BS = Rs 11,77,000]

SOLUTION:

Twelve Columns Worksheet

Particulars	Part 1		Part 2		Part 3		Part 4		Part 5		Part 6
	Trial balance		Adjustments		Adjusted TB		Income statement		P&L Appn A/c		Balancer sheet
	Dr	Cr	Dr	Cr	Dr	Cr	Dr	Cr	Dr	Cr	Dr	Cr
Purchase	5,00,000				5,00,000		5,00,000
Opening stock	40,000				40,000		40,000
Wages paid	1,40,000		5,000^G		1,45,000		1,45,000
Salaries	1,00,000				1,00,000		1,00,000
Discount	5,000				5,000		5,000
Sundry debtors	50,000			2,500^D	47,500						47,500
Plant and machinery	3,40,000			34,000^C	3,06,000						3,06,000
Land and building	4,50,000		22,500^B		4,72,500						4,72,500
Furniture	40,000			4,000*	36,000						36,000
Advance income tax	10,000				10,000						10,000
Bank balance	60,000				60,000						60,000
Carriage inward	15,000				15,000		15,000
Sundry expenses	30,000				30,000		30,000
Interest on debenture	12,000				12,000		12,000
Rent and rates	30,500				30,500		30,500
Paid up capital		5,00,000				5,00,000						5,00,000
Sales		8,16,000				8,16,000		816,000
6% debenture		2,00,000				2,00,000						2,00,000
Sundry creditors		1,35,000				1,35,000						1,35,000
Short term loan		95,000				95,000						95,000
P&L Appn account		76,500				76,500				76,500
	18,22,500	18,22,500
Closing stock			2,45,000^A	2,45,000^A	2,45,000	2,45,000		2,45,000			2,45,000
Appreciate land				22,500^B		22,500		22,500
Depn on P&M			34,000^C		34,000		34,000
Depn on furniture			4,000*		4,000		4,000
Prov. for bad debts			2,500^D		2,500		2,500
General reserve			40,000^E	40,000^E	40,000	40,000			40,000			40,000
Proposed dividend			50,000^F	50,000^F	50,000	50,000			50,000			50,000
Outstanding wages				5,000^G		5,000						5,000
Net profit c/d							1,65,500			1,65,500
Surplus c/d									1,52,000			1,52,000
Total			2,03,000	2,03,000	21,85,500	21,85,500	10,83,500	10,83,500	2,42,000	2,42,000	11,77,000	11,77,000

Trading, Profit and Loss Account

HK Company Ltd

On 31^st March 2021

Particulars		Amount	Particulars	Amount
To Opening stock		40,000	By Sales	8,16,000
To Purchase		5,00,000	By Closing stock	2,45,000
To Carriage inward		15,000
To Wages paid Add: Outstanding	140,000 + 5,000	1,45,000
To Gross profit c/d		3,61,000
		10,61,000		10,61,000
To Salaries		1,00,000	By Gross Profit b/d	3,61,000
To Discount		5,000	By Appreciate land	22,500
To Sundry expenses		30,000
To Interest on debenture		12,000
To Rent and rates		30,500
To Depreciate on:
Plant and machinery	34,000
Furniture	+ 4,000	38,000
To Provision for bad debts		2,500
To net profit c/d		1,65,500
		3,83,500		3,83,500

Profit and Loss Appropriation Account

Particulars	Amount	Particulars	Amount
To General reserve	40,000	By Balance b/d	76,500
To Proposed dividend	50,000	By Net profit b/d	165,500
To Balance c/d (surplus)	152,000
	242,000		242,000

Balance Sheet

HK Company Ltd

On 31^st March 2021

Capital + Liabilities	Amount	Assets		Amount
Authorized capital:	??	Goodwill		Nil
		Fixed assets:
Issued and paid up capital:		Land and building	450,000
5,000 Equity shares @ Rs 100	5,00,000	Add: Appreciation	+ 22,500	4,72,500
Reserve, fund and surplus:		Plant and machinery	340,000
General reserve	40,000	Less: depreciation	34,000	3,06,000
Surplus	1,52,000	Furniture	40,000
Secured and Unsecure Loan:		Less: Depreciation	̶ 4,000	36,000
6% debenture	2,00,000	Investment:		Nil
Unsecured loan	Nil	Current assets:
Current liabilities:		Sundry debtors	50,000
Sundry Creditors	1,35,000	Less: Bad debts	̶ 2,500	47,500
Short term loan	95,000	Bank balance		60,000
Outstanding wages	5,000	Closing stock		2,45,000
Provisions:		Loans and advance:		.
Proposed dividend	50,000	Advance income tax		10,000
		Miscellaneous Expenditures		Nil
	11,77,000			11,77,000

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PROBLEMS AND ANSWERS

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

PROBLEM: 3A

An unadjusted trial balance of AD Company Ltd is given below:

Particulars	Amount Dr	Particulars	Amount Cr
Cash	2,00,000	Capital	5,00,000
Bank	3,54,000	Creditors	50,000
Discount allowed	5,000	Discount received	10,000
Furniture	1,20,000	Sales	4,00,000
Purchase	2,00,000	10% Bank loan	1,00,000
Debtors	85,000
Interest on loan	6,000
Salary	60,000
Rent	30,000
	10,60,000		10,60,000