The following is the Trial Balance of Mr. Shekhar on 31 st March, 2024 : Dr. ₹ Cr. ₹ Capital - 6,00,000 Drawings 70,000 - Fixed Assets (Opening)…

CA Foundation · Accounting · RTP · September 2024
The following is the Trial Balance of Mr. Shekhar on 31 st March, 2024 : Dr. ₹ Cr. ₹ Capital - 6,00,000 Drawings 70,000 - Fixed Assets (Opening) 1,40,000 - Fixed Assets (Additions01.10.2024) 2,00,000 - Opening Stock 60,000 - Purchases 16,00,000 - Purchases Returns - 69,000 Sales - 22,00,000 Sales Returns 99,000 - Debtors 2,50,000 - Creditors - 2,20,000 Expenses 50,000 - Fixed Deposit with Bank 2,00,000 - Interest on Fixed Deposit - 20,000 Cash - 8,000 Suspense A/c - 2,000 Depreciation 14,000 - Rent (17 months upto 31.8.2024) 17,000 - Investments12% (01.8.2023) 2,50,000 - Bank Balance 1,69,000 - Total 31,19,000 31,19,000 Stock on 31 st March, 2024 was valued at 1,00,000. Depreciation is to be provided at 10% per annum on fixed assets purchased during the year. A scrutiny of the books of account revealed the following matters : (i) ₹ 20,000 drawn from bank was debited to Drawings account, but out of this amount withdrawn - 12,000 was used in the business for day-to-day expenses. (ii) Purchase of goods worth - 16,000 was not recorded in the books of account upto 31.03.2024, but the goods were included in stock. (iii) Purchase returns of 1,000 was recorded in Sales Return Journal and the amount was correctly posted to the Party’s A/c on the correct side. (iv) Expenses include - 6,000 in respect of the period after31 st March, 2024. Give the necessary Journal Entries in respect of (i) to (iv) and prepare the Final Accounts for the year ended 31 st March, 2024 .

Suggested Answer and Working Notes:

Journal Entries Particulars Dr. (₹) Cr. (₹) (i) Expenses A/c Dr. 12,000 To Drawings A/c 12,000 (Being entry for the amount wrongly debited to the latter A/c, now corrected) (ii) Purchase A/c Dr. 16,000 To Creditors A/c 16,000 (Being entry for purchases not recorded) (iii) Suspense A/c Dr. 2,000 To Purchase Returns A/c 1,000 To Sales Returns A/c 1,000 (Being rectification entry for amount wrongly entered in Sales Journal) (iv) Prepaid Expenses A/c Dr. 6,000 To Expenses A/c 6,000 (Being prepaid expenses adjusted) Trading, Profit and Loss Account of Mr. Shekhar for the year ending 31st March, 2024 Dr. Cr. Particulars ₹ ₹ To Opening Stock 60,000 By Sales 22,00,000 To Purchases 16,00,000 Less: Sales Return Add: Amount not recorded 16,000 (₹ 99,000 -1,000) 98,000 16,16,000 21,02,000 Less: Purchases Returns By Closing Stock 1,00,000 (₹ 69,000+1,000) 70,000 15,46,000 To Gross Profit c/d 5,96,000 22,02,000 22,02,000 To Expenses (₹ 50,000 - 6,000 +12,000) 56,000 By Gross Profit b/d 5,96,000 To Rent (₹ 17,000 - 5,000) 12,000 By Interest on Fixed Deposit 20,000 To Depreciation 14,000 By Interest on Investments 20,000 Add: Further Depreciation 10,000 24,000 To Net Profit 5,44,000 6,36,000 6,36,000 Balance Sheet as on 31st March, 2024 Liabilities ₹ Assets ₹ Capital 6,00,000 Fixed Assets 1,40,000 Add: Profit 5,44,000 Additions 2,00,000 3,40,000 Less: Drawings (₹ 70,000 - 12,000) 58,000 10,86,000 Less: Depreciation 10,000 3,30,000 Creditors 2,20,000 Stock 1,00,000 Add: Purchases not recorded 16,000 2,36,000 Debtors 2,50,000 Overdraft 8,000 Investments 2,50,000 Interest accrued on Investment 20,000 Bank fixed deposit 2,00,000 Prepaid Expenses (₹ 6000+5000) 11,000 Bank 1,69,000 13,30,000 13,30,000

Topics: Preparation of Final Accounts of Sole Proprietors

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