St.

Marys School of Management Studies Jeppiaar Educational Trust Chennai 600 119 Department of Business Administration MANAGEMENT ACCOUNTING TRADING ACCOUNT for the year ending 31.3.XXXX Dr. Particulars Amount Rs. Particulars Cr. Amount Rs.

To Opening Stock To Purchases (Less) Return Outwards To Direct Expenses To Carriage Inward To Wages & Salaries To Freight To Import duty To Gas, Fuel & Water To Royalty on production To Gross Profit

By Sales (Less) Return inwards By Loss on Fire (Claimed insurance amount) By Closing Stock By Gross Loss c\d

Dr.N.KANNAN, Assistant Professor in MBA Department.

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Dr.

PROFIT AND LOSS ACCOUNT for the year ending 31st MARCH XXXX Cr. Amount Particulars By Gross Profit b\d By cash discounts received By Interest received By Bad debts recovered By Income from investments By commission received By Rent from tenants By Interest on Debentures By interest on deposits By Accrued income of Investments By gain on sale of fixed assets By apprenticeship premium By interest on drawings By Net Loss (Transefered to capital account) Amount

Particulars To Gross Loss b\d To Office salaries and wages To Office Rent, Rates and Taxes To Office Lighting and Insurance To Printing and Stationary To Postage, Telegrams To Legal Expenses To trade expenses To Audit fees To Upkeep expenses of Motor Vans To Repairs & Maintenance To Export Expenses To Telephone expenses To General expenses To cash discounts allowed To Interest on capital To Interest on loans To Discount or Rebate on Bill of Exchange To Discount allowed To Bad debts To selling & Distribution Expenses To Travelers Salaries To packing charges of finished goods To Stores charges To Bank charges To carriage, freight, Cartage outwards To cost of samples, Catalogue Expenses To salesmens salaries, Expenses and commission To Godown Rent To Loss on Fire To Carriage Outwards To Agents Commission To Advertising expenses To Depreciation on fixed assets To loss on sale of fixed assets To net profit (transferred to capital account) Rs.

Rs.

Dr.N.KANNAN, Assistant Professor in MBA Department.

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Performa of a BALANCE SHEET as on March 31, XXXX Liabilities Current Liabilities Creditors Bills payable Bank overdraft Outstanding expenses Income received in advance Fixed Liabilities Investments (give details) Loan Mortgage Capital (+) Net Profit (+) Interest on Capital Fixed Assets Furniture and Fixtures Plant and Machinery Building Land Goodwill Rs. Assets Current Assets Cash in hand Cash at bank Stock-in-trade Debtors Bills receivable Prepaid expenses Rs.

(-) Drawings (-) Interest on Drawings ..

Rs. Rs.

Dr.N.KANNAN, Assistant Professor in MBA Department.

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DIFFERENCES BETWEEN TRIAL BALANCE AND BALANCE SHEET Trial Balance 1. It is a list of balances debit and credit-from the ledger accounts. 2. It contains balances of all personal, real and nominal accounts. 3. It is prepared before preparation of trading and profit and loss account 4. It is prepared to check the arithmetical accuracy of posting into ledger. 5. Closing stock does not appear in the trial balance. 6. Outstanding and prepaid expenses and incomes are not shown. 7. Debit and credit balances are shown side by side 1. 2. Balance Sheet It is a statement of assets and liabilities It contains balances of only those personal and real accounts, which represent assets and liabilities. It is prepared after the preparation of trading and profit and loss account. It is prepared to indicate the financial position of the business on particular date. Closing stock is shown on the assets side. Outstanding and prepaid expenses and incomes are shown in the balance sheet. Balance sheet is prepared on a T form basis, the left hand side showing liabilities while right hand side representing assets.

3. 4. 5. 6. 7.

PROBLEMS: 1. Prepare Trading and Profit and Loss Account and balance Sheet from the following balances, relating to the year ending 31st March 1998. Rs. Rs. Capital 10,000 Wages 5000 Creditors 1,200 Bank 1000 Returns Outward 500 Repairs 50 Sales 16,400 Stock (1-4-1997) 2000 Bills Payable 500 Rent 400 Plant and Machinery 4,000 Manufacturing Expenses 800 Sundry Debtors 2,400 Trade Expenses 700 Drawings 1,000 Bad Debts 200 Purchases 10,500 Carriage 150 Returns Inward 300 Fuel and Power 100 The closing Stock was valued at Rs. 1,450. Depreciate Plant and Machinery by Rs. 400 Allow 5% interest on Capital A sum of Rs. 40 is due for repairs

Dr.N.KANNAN, Assistant Professor in MBA Department.

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2: From the following Trial Balance of Shri.R.Ranjan, prepare the Trading and P&L account for the year ended 31st March 1998 and the Balance Sheet as at that date taking into account the adjustments given below : Dr. Cr. R.Ranjans Capital 29000 R.Ranjans Drawings 760 Purchases and sales 8900 15000 Sales and Purchases returns 280 450 Stock(1.4.1997) 1200 Wages 800 Building 22000 Freight and carriage 2000 Trade expenses 200 Advertisement 240 Interest 350 Taxes and Insurance 130 Debtors and Creditors 6500 1200 Bills receivable and bills payable 1500 700 Cash at Bank 1200 Cash in hand 190 Salaries 800 Rs. 46700 Adjustments: (i) (ii) (iii) (iv) 46700

Stock on 31st March 1998 was valued at Rs.1500 Insurance was prepaid to the extent of Rs.40. Outstanding liabilities were: Salaries Rs.200, Taxes Rs.130. Depreciate Building at 2% p.a.

3: From the following trial balance prepared from the books of A.Arthur on 31st December 1997, prepare trading and P&L account for the year ending 31 st December 1997 and a balance sheet as on that date: A. Arthur Drawings Rs. 10550 Bills receivable 9500 Plant and machinery 28800 Sundry Debtors (including B.Madan for dishonoured Cheque- Rs.1000) 62000 Wages (Manufacturing) 40,970 Returns Inward 2780 Purchases 256590 Rent and taxes 5620 Stock on 1st Jan 1997 89680 Salaries 11000 Travelling Expenses 1880 Insurance 400 Cash 530 A. Arthur capital Rs. 1,19,400 Loan at 6% p.a. 20,000 Sales 3,56,430 Commission received 5,640 Sundry creditors 59,630

Dr.N.KANNAN, Assistant Professor in MBA Department.

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Bank Repairs and renewals Interest on loan Interest and discount Bad Debts Fixtures and fittings

18970 3370 1000 4870 3620 8970 Rs. 5,61,000

Rs. 5,61,100

The following adjustments are to be made (a) Stock-in trade in hand on December 31,1997 Rs. 1,28,960 (b) Write off half of B.Madans cheque (c) Create a provision of 5% on Sundry debtors (d) Manufacturing wages include Rs.1,200 for erection of new machinery purchased (e) Depreciate plant and machinery by 5% p.a. and fixtures and fittings by 10% per annum. (f) Commission not earned but received amounts to Rs.600. 4: From the following Trial Balance prepare a Trading and P & L account for the year ended 31-12-95 and a balance sheet on that date: Trial balance Capital Drawings Plant and Machinery Stock on 1st Jan. Purchases and Sales Purchases and Sales returns General Expenses Rent Rates Apprentice Premium Bank Overdrafts Bad Debts Debtors and Creditors Cash on hand Bad Debts reserve Dr. Rs. 710 950 1,460 10,362 210 440 120 200 172 4,200 48 Cr. Rs. 4,250

11906 291

80 240 2000 105 18,872 18,872

Make Provision for the following: a) Depreciate Plant and Machinery at 10% p.a b) Increase bad debts reserve to 5% on Sundry Debtors c) Rent Accrued is Rs.40 d) Rates of Rs.80 are paid in advance e) Stock on hand as on 31st December is Rs.1,700. f) Apprentice premium received in advance is Rs.20. Dr.N.KANNAN, Assistant Professor in MBA Department. -6-

5: You are required to prepare Trading and P& L account & Balance sheet from the following: Particulars Purchases / Sales Cash in hand Cash in Bank Stock as on 01.01.1997 Wages Returns.. Repairs Debtors/Creditors Bad Debts Loan (12% P.A) Discounts Capital Interest on Loan Salaries Sales Tax Octroi Insurance Charity Rent Machinery Dr. (Rs.) 1,30,295 500 9500 40000 22525 2400 1675 30000 2310 800 600 8000 800 500 1000 125 2000 16000 2,69,030 2,69,030 Cr. (Rs.) 1,80,500

195 30,305 20000 530 37500

Adjustments: i) Wages include Rs.2000 for erection of new machinery installed on 1.1.1997 ii) Provide for depreciation on machinery @ 5% P.A. iii) Stock on 31.12.1997 is Rs. 40,925 iv) Salaries unpaid Rs.800. v) Further Bad debts Rs.400 vi) Make a provision of 5% on Debtors vii) Rent is paid up to 31st March 1998. viii) Un expired insurance Rs.300. 6: From the following Trial balance and additional information pertaining to Mr.Balaji, prepare Trading and Profit and Loss Account and balance Sheet.: TRIAL BALANCE as on 31st March 1998 Rs. Rs. 15,000 Sales 1,07,800 62,400 Return Outwards 2,400 10,600 Sundry creditors 32,500 1,400 Outstanding wages 1,400 -7-

Stock on 1.4.97 Purchases Wages Carriage in

Dr.N.KANNAN, Assistant Professor in MBA Department.

Plant & Machinery Coal, gas, water Trade expenses Furniture Loose tools Depreciation on Plant & Machinery Salaries Bank charges Sundry debtors Factory premises Commission Sales returns Drawings Insurance

35,000 2,500 1,500 5000 3200 2000 4500 500 15,000 100000 1000 2,800 3000 500

Capital Discount Bank Overdraft

1,00,000 1,800 20,000

2,65,900 2,65,900 Adjustments:a) Stock on 31st March 1998 is valued at Rs. 3,00,000 b) Interest on overdraft outstanding Rs.1000 c) Three months insurance paid in advance. d) Loose tools are to be valued ar Rs.2000 e) Provide 10% depreciation on furniture and 5% on factory premises.

7: From the following Trial Balance of Mr.Santhosh as at 31st March 1998, prepare Final
statements after making the necessary adjustments .Also give the closing and adjusting entries. Debit Credit Rs. Rs. Santhoshs Capital A/c 30000 Santhoshs Drawings Ac 2,600 Plant & Machinery 12,000 Stock on 1.4.1997 5,000 Purchases 35,000 Sales 50,000 Returns inward 2000 Returns Outward 1000 Sundry debtors 8000 Sundry Creditors 6000 Carriage inward 500 Carriage outward 500 Wages 3000 Salaries 2000 Factory Rent 200 Office Rent 500 Insurance 500 Discount received 600 Discount allowed 300 Furniture 2000 Bad Debts 400 Dr.N.KANNAN, Assistant Professor in MBA Department. -8-

Commission Building Bills Payable Bills receivable Cash on hand Cash at bank

300 8000 2000 6000 200 600 89,600

89,600

Adjustments : 1) closing stock Rs. 20,000. 2) Prepaid insurance Rs.200 3) Outstanding wages Rs. 300; Salary Rs.200 4) Interest on capital 5% 5) Additional bad debts Rs.400. 6) Reserve for bad debts at 5% and Reserve for discount on debtors at 5% 7) Reserve for discount on creditors at 2% 8) Interest on drawings account at 6% for 6 months only. 9) Commission earned but not received Rs.200. 10) Rent outstanding (office) Rs.400. 11) Depreciation is to be provided at 10% on Furniture and Plant & machinery. 12) Appreciation on Building at 10%.

FACULTY (Dr.N.KANNAN)

Dr.N.KANNAN, Assistant Professor in MBA Department.

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