Kanchan runs a business of hosiery goods. She does not maintain proper books of accounts. She only maintains a record of her bank transactions. She…

CA Foundation · Accounting · PYQS · May 2026
Kanchan runs a business of hosiery goods. She does not maintain proper books of accounts. She only maintains a record of her bank transactions. She is able to provide you with the following data of her assets and liabilities: Particulars As at 31 st March, 2025 (₹) As at 31 st March, 2026 (₹) Furniture and Fittings 58,000 47,500 Trade Debtors 34,850 ? Trade Creditors 36,500 34,775 Inventories 58,000 68,000 Bank Account 28,850 ? Kanchan's Capital Account 1,43,200 ? Details of her bank transactions during the year ended 31 st March, 2026 were as under: Sl. No. Particulars Amount (₹) 1 Collection from Trade Debtors 4,34,500 2 One Life Insurance policy of Kanchan had matured during the year and the amount was retained in the business 15,000 3 Sale of Furniture and Fittings (Book value - 20,000) 16,000 4 Paid to Trade Creditors for purchases 3,70,000 5 Expenses paid 69,250 6 Purchase of new Furniture and Fittings 18,000 7 Kanchan's personal drawings per month 2,000 Additional Information: (i) No cash transactions took place during the year. (ii) Goods are sold at 20% profit on sales. Cost of goods sold was - 3,60,000. (iii) Expenses paid include annual fire insurance premium (for business stocks) of 7,500 which was paid on 1 st January, 2026. The insurance policy is effective from the date of payment. (iv) Discount allowed to Trade Debtors and Discount received from Trade Creditors amounted to 2,350 and - 1,725 respectively for the year ended 31 st March, 2026. You are required to prepare: (1) Trading and Profit and Loss Account of Kanchan for the year ended on 31 st March, 2026; (2) Balance Sheet as at 31 st March, 2026.

Suggested Answer and Working Notes:

In the books of Ms. Kanchan Trading and Profit and Loss Account for the year ended 31 st March, 2026 Amount ₹ Amount ₹ To Opening stock 58,000 By Sales (₹ 3,60,000 ×₹ 100/80) (WN - 4) 4,50,000 To Purchases 3,70,000 By Closing stock 68,000 To Gross profit c/d (WN - 4) 90,000 5,18,000 5,18,000 To Loss on sale of furniture 4,000 By Gross profit b/d 90,000 To Discount allowed to Debtors 2,350 By Discount received from Creditors 1,725 To Expenses (WN - 5) 61,750 To Insurance Premium for the year (WN - 6) 1,875 To Depreciation on furniture & fittings (W.N.2) 8,500 To Net profit 13,250 91,725 91,725 Balance Sheet as on 31 st March, 2026 Liabilities Amount ₹ Assets Amount ₹ Capital 1,43,200 Furniture & Fittings 47,500 Add: Additional Cap (LIC matured) 15,000 Debtors (W.N.3) 48,000 Net profit 13,250 Inventories 68,000 1,71,450 Bank balance (WN - 1) 13,100 Less: Drawings (24, 000) Prepaid Expenses 5,625 1,47,450 Creditors 34,775 1,82,225 1,82,225 Working Notes: 1. Bank A/c Particulars ₹ Particulars ₹ To Balance b/d 28,850 By Creditors 3,70,000 To Debtors 4,34,500 By Expenses 69,250 To Capital Introduced (LIC Matured) 15,000 By Drawings 24,000 To Sale of furniture 16,000 By Furniture 18,000 By Balance c/d (Balancing Figure) 13,100 4,94,350 4,94,350 2. Furniture & Fittings A/c Particulars ₹ Particulars ₹ To Balance b/d 58,000 By Bank 16,000 To Bank 18,000 By Loss on sale of Furniture 4,000 By Depreciation (balancing figure) 8,500 By Balance c/d 47,500 76,000 76,000 3. Debtors A/c Particulars ₹ Particulars ₹ To Balance b/d 34,850 By Bank 4,34,500 To Sales 4,50,000 By Discount allowed 2,350 By Balance c/d (balancing figure) 48,000 4,84,850 4,84,850 4 Calculation of Sales and Gross Profit : Cost of Sales (given)₹ 3,60,000 Gross margin20% on sales - (given) ∴ Sales = 3,60,000 x (₹ 100 /80)₹ 4,50,000 ∴ Gross Profit= 4,50,000 x (₹ 20 /100)₹ 90,000 5 Calculation of Expenses: Expenses paid - 69,250 Less: Fire Insurance Premium (7, 500) Expenses - 61,750 6 Calculation of Insurance Premium: Fire Insurance Premium paid - 7,500 Less: Prepaid for9 -months = 7,500 x (9/12)₹ 5,625 Insurance for the period -01-01-26 to 31-03-261,875

Topics: Accounts from Incomplete Records

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