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Question
The insurance premium is paid for the year ending 1st September 2019 amounted to ₹ 1,500. Calculate prepaid insurance assuming that the year ending is 31st March 2019.
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Solution
We have to find the prepaid insurance amount for the 5 months period from 31st Mar, 2019 to 1st Sep, 2019.
An insurance premium paid for the 12 months = ₹ 1500
∴ Prepaid Insurance premium for the period of 5 months
= `1500 × 5/12` = ₹ 625
∴ Prepaid insurance for the year ending is 31st March 2019 is ₹ 625.
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RELATED QUESTIONS
Surekha and Sangita decided to undertake a venture jointly. They agreed to share profits and losses in the ratio of 3 : 2. Surekha supplied from her own stock goods worth Rs. 4,00,000 and paid Rs. 9,900 for freight and Rs. 2,400 for insurance. Sangita purchased goods of Rs. 3,90,000 for the venture and paid Rs 14,000 for selling expenses. Sangita accepted a bill for 3 months of Rs. 1,90,000 drawn by Surekha as an advance. The bill was discounted immediately by Surekha for Rs. 1,84,000 and the amount of discount was charged to Joint Venture Account. Sangita sold all the goods for Rs. 10,00,000. At end of the venture, the accounts were settled. Give journal entries in the books of Surekha.
Rohan and Roshan are partners in ‘Shan Traders’ sharing profits and losses in the ratio of 2:1. From the following Trial Balance and adjustments prepare Trading and Profit and Loss Account for the year ended 31st March, 2011 and Balance Sheet as on that date
| Trial Balance as on 31st March, 2011 | |||
| Particulars | Amount (₹) | Particulars | Amount (₹) |
| Opening stock | 32,000 | Sales | 1,93,500 |
| Purchases | 64,000 | Sundry Creditors | 15,000 |
| Plant and Machinery | 30,000 | Unpaid Wages | 1,500 |
| Furniture | 18,500 | Return outward | 2,500 |
| Carriage | 1,500 | Capital A/c: | |
| Wages and Salaries | 35,000 | Rohan | 90,000 |
| Bills Receivable | 5,000 | Roshan | 50,000 |
| Sundry Debtors | 32,000 | ||
| Conveyance | 4,000 | ||
| Rent, Rates and Taxes | 2,000 | ||
| Return Inward | 3,500 | ||
| Cash in hand | 14,750 | ||
| Land and Building | 83,500 | ||
| Bad debts | 1,750 | ||
| Patents | 25,000 | ||
| 3,52,500 | 3,52,500 | ||
Adjustments:
- Closing stock: Cost price Rs 25,000 and market price Rs 30,000.
- An amount of Rs 3,500 spent for repairs to Building is debited to Building account.
- Depreciate plant and Machinery and Building at 5% p.a.
- Goods of Rs 750 taken by Roshan for this personal use.
- Included in wages advances given to workers Rs 3,000.
- Provide Rs 1,500 for bad and doubtful debts on Debtors.
Given below is the Trial Balance of M/s Roma and Mona partnership firm. Prepare Trading and Profit and Loss Account for the year ended 31st March, 2012 and Balance Sheet as on that date
Trial Balance as on 31st March, 2012
| Debit Balance |
Amount
Rs
|
Credit Balance |
Amount
Rs
|
| Stock on 1st April, 2011 | 52000 | Provident fund | 50000 |
| Sundry Debtors | 84000 | Interest on P.F. Investment | 2800 |
| Bad debts | 3000 | Sundry Creditors | 84000 |
| Premises | 78000 | Rent received | 9600 |
| Salaries | 28000 | Reserve for Doubtful Debts | 2000 |
| Motor Vehicles | 50000 | Discount received | 3600 |
| Purchases | 176000 | Sales | 320000 |
| Provident Fund Investment | 50,000 | Capital A/c- | |
| Provident Fund contribution | 5500 | Roma | 50000 |
| Wages | 22000 | Mona | 50000 |
| Rent (for 10 months) | 16,000 | ||
| Office Expenses | 5,000 | ||
| Discount allowed | 2,500 | ||
| 572000 | 572000 |
Adjustments:
1) Stock on 31st March, 2012 was valued at Rs 80,000.
2) Goods of Rs 6,000 were sold and despatched on 27th March, 2012, but no entry was made in the books of accounts.
3) Write off Bad debts of Rs 4,000 and provide for R.D.D. at 5% on sundry debtors.
4) Provide reserve for discount on debtors at 2% and on creditors at 3%.
5) Outstanding wages Rs 4,000 and outstanding salaries Rs 3,066.
6) Depreciate Motor Vehicle at 5% p.a.
Given below is the Trial Balance of M/s Seeta and Geeta as on 31st March, 2010. You are required to prepare Trading and Profit and Loss Account for the year ended 31st March, 2010 and Balance Sheet on that date.
Trial Balance as on 31st March, 2010
| Debit Balance |
Amount
(Rs)
|
Credit Balance |
Amount
(Rs)
|
| Current A/c- | Capital A/c- | ||
| Geeta | 4000 | Seeta | 120000 |
| Opening stock | 88,000 | Geeta | 120000 |
| Purchases | 1,76,000 | Current A/c- Seeta | 5000 |
| Wages | 23,500 | Sundry Creditors | 103000 |
| Salaries | 15,000 | Bank overdraft | 60000 |
| Office Expenses | 8000 | Sales | 308000 |
| Bank Charges | 2600 | ||
| Legal Charges | 3000 | ||
| Machinery | 90000 | ||
| Land and building | 130000 | ||
| Interest | 3600 | ||
| Export Duty | 3800 | ||
| Bad -Debts | 4000 | ||
| Sundry Debtors | 82000 | ||
| Travelling Expenses | 3200 | ||
| Electricity charges | 2300 | ||
| Furniture | 37000 | ||
| 8% Debentures (Purchased on 1.10.2009) |
40000 | ||
| 716000 | 716000 |
Adjustments:
1) Stock on hand on 31st March, 2010 was valued at Rs 80,000.
2) Goods costing Rs 16,000 destroyed by fire and Insurance Company admitted a claim of Rs 13,000.
3) Provide for outstanding expenses: Salaries Rs 3,000, Wages Rs 2,400.
4) Depreciate Machinery at 10% p.a. Land and Building at 5% p.a.
5) Create Reserve for Bad and doubtful debts at 5% on Sundry Debtors.
6) Legal charges paid in advance Rs 1,200.
7) Provide interest on capital at 8% p.a.
Mohini and Rohini are in partnership firm sharing profits and losses equally. From the following Trial Balance and adjustments given below, you are required to prepare Trading and Profit and Loss Account for the year ended 31st March, 2010 and Balance Sheet as on that date.
Trial Balance as on 31st March, 2010
| Particulars | Debit Amount Rs. | Credit Amount Rs |
| Partner’s Capital A/c- | ||
| Mohini | 120000 | |
| Rohini | 90000 | |
| Purchases and Sales | 220000 | 430000 |
| Sundry Debtors and Creditors | 45000 | 35000 |
| Bills Receivable and Bills Payable | 45000 | 50000 |
| Discount | 4000 | 3500 |
| Opening stock | 25000 | |
| Wages and Salaries | 23000 | |
| Manufacturing Expenses | 9,000 | |
| Factory Insurances |
5,000 |
|
| Factory Building | 1,40,000 | |
| Plant and Machinery |
75,000 |
|
| Advertisement (for 2years w.e.f. 1st Jan. 2010) | 10,000 | |
| Salaries and Wages |
45,000 |
|
| Warehouse rent |
6,000 |
|
| Import duty |
11,500 |
|
| Cash in hand | 5,000 | |
| 10% Government Bond (Purchased on 1st July 2009) | 60000 | |
| 728500 | 728500 |
Adjustments:
1) Closing stock was valued at market price Rs 92,000 which is 15% above its cost price.
2) Goods costing Rs 3,000 purchased and received on 31st March, 2010 were not recorded in purchase book.
3) Depreciate Machinery at 10% p.a.
4) Outstanding Wages were Rs 2,500.
5) Goods of Rs 2,000 were taken by Mohini for personal use but no entry was made in the books of account.
6) Maintain R.D.D at 5% on Sundry Debtors.
Ashok and Sangmesh are in partnership sharing profit and losses in the ratio of 2 : 1. From the following trial balance and adjustments given below, you are required to prepare Trading and Profit and Loss Account for the year ended on 31st March 2016 and Balance sheet as on that date:
| Trial Balance as on 31st March 2016 | ||
| Particulars | Debit Amount (₹) |
Credit Amount (₹) |
| Prepaid insurance | 3,200 | |
| Insurance | 8,000 | |
| R.D.D. | 4,000 | |
| Discount | 3,200 | |
| Postage and telephone | 12,800 | |
| Debtors and creditors | 2,64,000 | 2,72,000 |
| Salaries | 2,24,000 | |
| Wages | 96,000 | |
| Opening stock | 1,92,000 | |
| Carriage | 4,000 | |
| Purchased and sales | 7,72,800 | 12,06,400 |
| Return inward/Outward | 22,400 | 36,800 |
| Bank Overdraft | 4,83,200 | |
| Plant and Machinery | 96,000 | |
| Land and Building | 7,04,000 | |
| Partner's Capital accounts: | ||
| Ashok | 2,08,000 | |
| Sangmesh | 1,92,000 | |
| 24,02,400 | 24,02,400 | |
Adjustment:
- Write off Rs. 8,000 for bad debts and provide R.D.D. @ 5% on debtors.
- Goods worth Rs. 16,000 were distributed as free samples.
- Closing stock on 31st March 2016 was valued at the cost of Rs. 2,24,000 while its market price was Rs. 2,40,000.
- The salaries were outstanding at Rs. 8,000.
- Depreciation: Land and Building @ 5% p.a. and Plant and Machinery @ 10 % p.a.
A ______ is an intangible asset.
Write the word/phrase/term, which can substitute the following sentence.
Expenses which are paid before they are due.
Write the word/phrase/term, which can substitute the following sentence.
An asset which can be converted into cash easily.
Write the word/phrase/term, which can substitute the following sentence.
Order in which fixed assets are recorded first in the Balance Sheet.
Write the word/phrase/term, which can substitute the following sentence.
The account in which selling expenses of the business are recorded.
State whether the following statement is True or False with reasons.
Profit and Loss Account is a Real Account.
State whether the following statement is True or False with reasons.
Carriage inward is a carriage on purchase.
State whether the following statement is True or False with reasons.
Depreciation is not calculated on Current Assets.
State whether the following statement is True or False with reasons.
Net profit is a debit balance of Profit and Loss Account.
Find odd one
Find odd one.
Partners are _____ liable for the debts of the firm.
The withdrawal by partner for personal use from the firm is ________ to his account.
Cash receipts which are recurring in nature are called as__________ Receipts.
Expenses which are paid before due date are called as _____.
Answer in one sentence only.
What do you mean by indirect incomes?
Answer in one sentence only.
Why partners capital is treated as long-term liability of business?
Do you agree/disagree with the following statement:
Amount borrowed by partner from his business will be debited to Current Account.
Do you agree/disagree with the following statement:
Carriage Inward is a selling and distribution overhead.
Do you agree/disagree with the following statement:
Free distribution of goods is debited to the trading account.
From the following Trial Balance of M/S Mitesh and Mangesh, you are required to prepare Trading and Profit and Loss Account for the year ended 31st March 2019, and Balance Sheet as on that date.
Trial Balance as on 31st March 2019
| Debit Balance | Amount (₹) | Credit Balance | Amount (₹) |
| Stock as on (1/4/2018) | 25,000 | Sundry Creditors | 38,000 |
| Building | 48,500 | Sales | 1,75,000 |
| Carriage | 1,780 | Capital: | |
| Factory Insurance | 2,700 | Mitesh | 1,50,000 |
| Postage | 1,600 | Mangesh | 50,000 |
| Bills Receivable | 13,700 | Outstanding Salaries | 2,000 |
| Sundry Debtors | 52,200 | Bills Payable | 18,000 |
| Return Inward | 1,600 | Return outword | 1,800 |
| Purchases | 68,900 | ||
| Audit fees | 1,800 | Current A/c: | |
| Loose tools | 32,000 | Mitesh | 3,000 |
| Manufacturing Expenses | 1,820 | Mangesh | 2,000 |
| Electricity Charges | 2,600 | ||
| General Expenses | 3,400 | ||
| Export duty | 1,000 | ||
| Cash in hand | 75,000 | ||
| Bank Balance | 29,000 | ||
| Conveyance | 4,100 | ||
| Furniture | 64,000 | ||
| Salaries | 2,000 | ||
| Rent, Rate & Taxes | 3,700 | ||
| Drawings: | |||
| Mitesh | 1,200 | ||
| Mangesh | 2,200 | ||
| 4,39,800 | 4,39,800 |
Adjustments :
1) Mitesh and Mangesh are sharing Profit and losses in the ratio 3: 1.
2) Partners are entitled to get Commission @ 1% each on Gross Profit.
3) The closing stock is valued at ₹ 23,700.
4) Outstanding Expenses - Audit fees ₹ 400; carriage ₹ 600.
5) The building is valued at ₹ 46,500.
6) Furniture is depreciated by 5%.
7) Provide Interest on Partner's capital at 2.5% pa.
8) Goods of ₹ 900 were taken by Mangesh for his personal use.
9) Write off ₹ 1,000 as Bad Debts and maintain R.D.D at 3% on Sundry Debtors.
Sucheta and Gayatri are Partners sharing Profit and Loss in the ratio 3:2. From the following Trial Balance and additional information, you are required to prepare Trading and Profit and Loss Account for the year ended 31st March 2019 and Balance Sheet as of that date.
Trial Balance as on 31st March 2019
| Particulars | Debit ₹ | Credit ₹ |
| Purchases and Sales | 65,000 | 1,85,500 |
| Works Manager's Salary | 2,300 | |
| Capital: | ||
| - Sucheta | 75,000 | |
| - Gayatri | 40,000 | |
| Opening Stock | 18,700 | |
| Debtors and Creditors | 47,500 | 35,000 |
| Wages and Salaries | 4,000 | |
| Bills Receivable | 22,000 | |
| Bills Payable | 27,300 | |
| Discount | 400 | |
| Motive Power | 1,350 | |
| Custom duty | 1,500 | |
| Interest | 1,300 | |
| Unproductive Wages | 3,000 | |
| Audit fees | 2,500 | |
| Rent | 1,800 | |
| Conveyance | 2,000 | |
| Goodwill | 25,000 | |
| Copyrights | 20,000 | |
| Building | 88,000 | |
| Partner (Sucheta's) Loan | 6,150 | |
| Investments | 40,000 | |
| Cash at Bank | 26,000 | |
| 3,70,650 | 3,70,650 |
Adjustments:
- Stock on 31st March 2019 was valued at ₹ 19,700.
- Goods costing ₹ 3,000 distributed as a free sample.
- Motive Power includes ₹ 500 paid for the deposit of the Power Meter.
- Depreciate Building @ 5%.
- Write of ₹ 2,000 for Bad debts and maintain R.D.D at 3% on Debtors.
- Bills Receivable included dishonored of Bill of ₹ 4,000.
Kshipra and Manisha are Partners sharing Profit and Loss in their Capital Ratio. You are required to prepare Trading Account and Profit and Loss Account for the year ended 31st March 2019 and Balance Sheet as on that date.
| Trial Balance as on 31st March 2019 | |||
|
Debit Balance |
Amount (₹) |
Credit Balance |
Amount (₹) |
|
Sundry Debtors |
28,000 |
Sales |
1,20,000 |
|
Purchases |
55,000 |
Rent |
1,800 |
|
Furniture |
38,500 |
Sundry Creditors |
38,500 |
|
Plant & Machinery |
60,000 |
Purchase Return |
1,000 |
|
Wages |
800 |
Discount |
500 |
|
Salaries |
3,500 |
Bills Payable |
9,000 |
|
Discount |
800 |
Capital A/c: |
|
|
Bills Receivable |
14,400 |
Kshipra |
90,000 |
|
Carriage Outward |
1,000 |
Manisha |
30,000 |
|
Postage |
500 |
Current A/c: |
|
|
Sales Return |
500 |
Kshipra |
5,000 |
|
Cash in Hand |
4,000 |
Manisha |
3,000 |
|
Cash at Bank |
47,000 |
||
|
Insurance |
2,000 |
||
|
Opening Stock |
17,800 |
||
|
Trade Expenses |
1,500 |
||
|
Warehouse Rent |
2,500 |
||
|
Advertisement |
1,000 |
||
|
Building |
20,000 |
||
|
2,98,800 |
2,98,800 |
||
Adjustments:
- Stock on 31st March 2019 was at ₹37,000.
- Sales include the sale of machinery of ₹ 2,000, which is sold on 1st April 2018.
- Depreciation on fixed assets @ 5%.
- Each Partners is entitled to get Commission at 1% of Gross Profit and Interest on Capital 5% p.a.
- Outstanding Expenses Wages ₹ 200 & Salaries ₹ 500.
- Create provision for doubtful debts @ 3% on Sundry Debtors.
Borrowed loan from Bank of Maharashtra ₹ 2,00,000 on 1st October 2019 at a rate of 15% p.a. Calculate Interest on Bank Loan for the year 2019-20 assuming that the financial year ends on 31st March, every year.
Asha and Nisha are partners sharing profits and losses in equal ratio. From the following Trial Balance and adjustments you are required to prepare Final Accounts:
| Trial Balance as on 31st March, 2019 | |||
| Debit Balance | Amount (₹) | Credit Balance | Amount (₹) |
| Purchases | 48,000 | Capital accounts: | |
| Salaries | 7,500 | Asha | 80,000 |
| Wages | 2,800 | Nisha | 40,000 |
| Advertisement (2 years) | 4,000 | Bank Overdraft | 34,000 |
| Sales Return | 8,000 | Sales | 1,48,000 |
| Motor Van | 63,000 | R.D.D. | 1,200 |
| Stock (1. 4. 2018) | 94,500 | Purchase Return | 6,000 |
| Sundry Debtors | 62,800 | ||
| Coal, Gas and Fuel | 1,000 | ||
| Plant and Machinery | 17,600 | ||
| 3,09,200 | 3,09,200 | ||
Adjustments:
- Closing stock is valued at cost ₹ 88,000 and market price ₹ 90,000.
- Asha and Nisha withdrew goods from business ₹ 3,000 and ₹ 2,000 respectively for their personal use.
- Depreciate Motor Van by 5% and Plant and Machinery by 7%.
- Reserve for Doubtful debts on Debtors at 5% is to be created.
- Outstanding Wages ₹ 800.
From the following information, calculate Current Assets:
Debtors ₹ 60,000, Creditors ₹ 30,000, Bills payable ₹ 20,000, Stock ₹ 30,000, Loose tools ₹ 10,000, Bank overdraft ₹ 10,000.
Varsha and Harsha are partners sharing profits and losses in their capital ratio. You are required to prepare Trading Account, Profit and Loss Account for the year ending 31st March, 2020 and Balance sheet as on that date:
| Trial Balance as on 31st March, 2020 | |||
| Debit Balance | Amount ₹ | Credit Balance | Amount ₹ |
| sundry Debtors | 56,000 | Sales | 2,40,000 |
| Purchases | 1,10,000 | Sundry Creditors | 99,600 |
| Plant & machinery | 1,60,000 | Purchases Return | 2,000 |
| Furniture | 1,05,800 | Capital accounts | |
| Salaries | 8,600 | Varsha | 1,80,000 |
| Sales return | 1,000 | Harsh | 60,000 |
| Cash in hand | 1,02,000 | Current Accounts: | |
| Opening stock | 35,600 | Varsha | 10,000 |
| Rent, Rates & Taxes | 9,000 | Harsha | 6,000 |
| Advertisement | 9,600 | ||
| 5,97,600 | 5,97,600 | ||
Adjustments:
- Stock on 31st March, 2020 was valued at ₹ 74,000.
- Depreciation on Plant and Machinery @ 5% p.a.
- Partners are entitled to get Interest on Capital at 5% p.a.
- Outstanding expenses: Salaries ₹ 700.
- Provide further Bad debts of ₹ 1,680 on Sundry debtors.
State whether the following statement is True or False with reason:
Carriage Inward is carriage on purchases.
A ______ is an Intangible Asset.
Find odd one.
Complete the following Table:
| Creditors | Bills Payable | Third-Party Liabilities |
| 16,000 | 12,000 | ? |
Find odd one.
Find the odd one:
Building, capital, reserve fund, bank loan
Undervaluation of closing stock by 10%, closing stock was of ₹ 54,000. Find out the value of closing stock.
Zalak and Kalpana are partners sharing Profit and Losses in their Capital ratio. You are required to prepare Trading Account and Profit and Loss Account for the year ended 31st March, 2023 and Balance Sheet as on that date.
| Trial Balance as on 31st March, 2023 | |||
| Debit Balance | Amount (₹) | Credit Balances | Amount (₹) |
| Sundry Debtors | 56,000 | Sales | 2,40,000 |
| Purchases | 1,10,000 | Rent | 3,600 |
| Furniture | 77,000 | Sundry Creditors | 77,000 |
| Plant and Machinery | 1,20,000 | Purchase Return | 2,000 |
| Wages | 1,600 | Discount | 1,000 |
| Salaries | 7,000 | Bills Payable | 18,000 |
| Discount | 1,600 | Capital A/c: | |
| Bills Receivable | 28,800 | Zalak | 1,80,000 |
| Carriage Outward | 2,000 | Kalpana | 60,000 |
| Postage | 1,000 | Current A/c: | |
| Sales Return | 1,000 | Zalak | 10,000 |
| Cash in Hand | 8,000 | Kalpana | 6,000 |
| Cash at Bank | 94,000 | ||
| Insurance | 4,000 | ||
| Opening Stock | 35,600 | ||
| Trade Expenses | 3,000 | ||
| Warehouse Rent | 5,000 | ||
| Advertisement | 2,000 | ||
| Building | 40,000 | ||
| 5,97,600 | 5,97,600 | ||
Adjustments:
(1) Stock on 31st March, 2023 was at ₹ 74,000.
(2) Sales includes, sale of machinery of ₹ 4,000, which is sold on 1st April, 2022.
(3) Depreciation on fixed assets @ 5%.
(4) Each partner is entitled to get commission at 1 % of Gross profit and interest on Capital 5 % p.a.
(5) Outstanding Expenses: Wages ₹ 400 and Salaries ₹ 1,000.
6) Create provision for Doubtful debts @ 3 % on Sundry Debtors.
Find the odd one:
Provident fund amount is a ______ for the firm.
Find an odd one.
Mama and Kaka are partners in partnership firm sharing profits and losses equally. You are required to prepare Profit and Loss Account for the year ended 31st March, 2019 and Balance Sheet as on that date:
| Trial Balance as on 31st March, 2019 | |||
| Debit Balances | Amount (₹) | Cebit Balances | Amount (₹) |
| Insurance | 30,000 | Capital Accounts: | |
| Land and Building ((Addition of ₹ 40,000 wef. 1st July, 2018)) | 1,00,000 | Mama | 1,00,000 |
| Salaries | 10,000 | Kaka | 1,00,000 |
| Export duty | 5,000 | 10% Bank Loan (taken on1st Oct. 2018) | 60,000 |
| Interest | 2,000 | Interest | 3,000 |
| Furniture | 80,000 | Bills payable | 16,000 |
| Debtors | 52,000 | - | |
| 2,79,000 | 2,79,000 | ||
Adjustment:
- Gross profit amounted to ₹ 69,000.
- Prepaid insurance ₹ 7,500.
- Depreciate Land and Building at 10% p.a. and Furniture 5% p.a.
- Write ₹ 2,000 for bad debts and maintain R.D.D. at 5% on sundry debtors.
- Closing stock is valued at ₹ 69,000.
Find odd one.
Find odd one.
