Illustration 1: From the following details, prepare a P & L Account for the year ending 31st

December 1998:
Stock on 1.1.1998: Rs
Raw Materials 10,000
Work-in-process 5,000
Finished goods 20,000
Stock on 31.12.1998 Rs
Raw Materials 5,000
Work-in-process 15,000
Finished goods 30,000
Purchase of Raw Materials 50,000
Direct Wages 10,000
Carriage Charges on Purchase of raw materials 5,000
Factory Power 5,000
Depreciation on Factory Machines 5,000
Purchase of Finished Goods 30,000
Cartage paid on Finished Goods purchased 2,000
Sales is Rs 2 lacs.

Illustration 2 :
From the following balance extracted from the books of M/s Rajendra Kumar
Gupta & Co., prepare a Profit and Loss Account and a Balance Sheet.

Particulars Rs Particulars Rs
Opening Stock 1,250 Plant and Machinery 6,230
Sales 11,800 Return Outwards 1,380
Depreciation 667 Cash in hand 895
Commission (Cr.) 211 Salaries 750
Insurance 380 Debtors 1,905
Carriage Inwards 300 Discount (Dr.) 328
Furniture 670 Bills Receivable 2,730
Printing Charges 481 Wages 1,589
Carriage Outwards 200 Return Inwards 1,659
Capital 9,228 Bank Overdraft 4,000
Creditors 1,780 Purchases 8,679
Bills Payable 541 Petty Cash in hand 47
Bad Debts 180
The value of stock on 31 st December, 1998 was Rs 3,700.
Illustration 3: From the following Trial Balance and additional information, you are
required to prepare Final Accounts.
Trial Balance
as on 31 st December, 1998

Particulars Dr. Amount Cr. Amount

Rs. Rs.
Capital 20,000
Sundry Debtors 5,400
Drawings 1,800
Machinery 7,000
Sundry Creditors 2,800
Wages 10,000
Purchases 19,000
Opening Stock 4,000
Bank Balance 3,000
Carriage Charges 300
Salaries 400
Rent and Taxes 900
Sales 29,000
51,800 51,800

Additional Information:
(i) Closing Stock Rs 1,200.
(ii) Outstanding Rent and Taxes Rs 100.
(iii) Charge depreciation on machinery at 10%.
(iv) Wages includes prepaid wages of Rs 400.
 Illustration 4 - From the following Trial Balance prepare the Manufacturing Account,
Trading and profit and Loss Account for the year ending 31 st March, 1999 and the Balance
Sheet as on that date:
Particulars Debit Credit
Rs Rs
Shri Banker’s capital Account 41,000
Shri Banker’s Drawing Account 6,100
Mrs. Banker’s loan Account 4,000
Sundry Creditors 45,000
Cash in hand 250
Cash at Bank 4,000
Sundry Debtors 40,500
Patents 2,000
Plant and Machinery 20,000
Land and Buildings 26,000
Purchases of Raw Materials 35,000
Raw Material : 1.4.1998 3,500
Work-in-process : 1.4.1998 2,000
Finished stock : 1.4.1998 18,000
Carriage Inwards 1,100
Wages 27,000
Salary of Works Manager 5,600
Factory Expenses 3,400
Factory Rent and Taxes 2,500
Royalties (paid on sales) 1,200
Sales (less Returns) 1,23,400
Advertising 3,000
Office Rent and Insurance 4,800
Printing and Stationery 1,000
Office Expenses 5,800
Carriage Outwards 600
Discount 1,400 2,100
Bad Debts 750
2,15,500 2,15,500

The Stock on 31 st March, 1999 was as follows:

Raw materials Rs 4000; work-in-progress Rs 4,500, finished goods Rs 28,000.
 Illustration5 The following is the Trial Balance of Shri Om, as on 31 st March, 1999. You
are requested to prepare the Trading and Profit and Loss Account for the year ended 31 st
March, 1999 and Balance sheet as on that date after making the necessary adjustment.
Particulars Debit Credit
Rs Rs
Sundry Debtors 5,00,000 …..
Sundry Creditors ….. 2,00,000
Payment of LAST YEAR’S Expense 55,000 …..
Wages 1,00,000 …..
Carriage Outwards 1,10,000 …..
Carriage Inwards 50,000 …..
General Expenses 70,000 …..
Cash Discounts 20,000 …..
Bad Debts 10,000 …..
Motor car 2,40,000 …..
Printing and Stationery 15,000 …..
Furniture and Fittings 1,10,000 …..
Advertisement 85,000 …..
Insurance 45,000 …..
Salesmen’s Commission 87,500 …..
Postage and Telephone 57,500 …..
Salaries 1,60,000 …..
Rates and Taxes 25,000 …..
Drawings 20,000 …..
Capital Account ……. 14,43,000
Purchases 15,50,000 …..
Sales …….. 19,87,500
Stock on 1.4.98 2,50,000 …..
Cash at Bank 60,000 …..
Cash in hand 10,500 …..
36,30,500 36,30,500

The following adjustments are to be made:

(1) Stock on 31st March, 1999 was valued at Rs 7,25,000.
(2) Purchases include purchase of Furniture worth Rs 50,000
(3) Depreciate:
Furniture and Fittings by 10%
Motor – Car by 20%
(4) Shri Om had withdrawn goods worth Rs 25,000 during the year.
(5) Sales include goods worth Rs 75,000 sent out to Shanti & Company on approval and
remaining unsold on 31st March, 1999. The cost of the goods was Rs 50,000.
(6) The salesmen are entitled to a Commission of 5% on total sales.
(7) Debtors include Rs 25,000 bad debts.
(8) A Provision for Bad and Doubtful Debts is to be created to the extent of 5 per cent on
Sundry Debtors.
(9) Printing and stationery expenses of Rs 55,000 relating to 1997-98 had not been charged in
that year. This expense was paid this year and trial balance shows it as an expense by
‘Payment of Last Year’s Expense’.
Illustration 6 The Trial Balance of Jagfay Corporation, New Delhi, as on
30.9.1998 is as below:
 Particulars Rs.

Capital Account (including Rs. 5,000 introduced on 1.4.1998) 22,500

Stock as on 1.10.1997:
Finished Goods 3,500
Work-in-progress 7,000
Raw Materials 3,000 13,500
Purchase of Raw Materials 70,500
Machinery 22,500
Sales 1,26,225
Carriage Inwards 750
Carriage Outwards 450
Rent (including Rs. 450 for the factory premises) 1,350
Rebates and Discounts allowed 105
Fire Insurance (for machinery) 210
Sundry Debtors 18,900
Sundry Creditors 5,100
Reserve for Bad and Doubtful Debts 60
Printing and Stationery 180
Miscellaneous Expenses 840
Advertisement 4,500
Drawings of Proprietor 1,800
Office Salaries 5,400
Manufacturing Wages 6,000
Furniture and Fixtures 2,250
Factory Power and Fuel 300
Cash on hand 600
Balance with Bank of Bikaner Ltd., Delhi (Dr.) 3,750

Adjustments:
(i) Provide for interest @ 10% per annum on Capital. (No interest on drawings need be provided.)
(ii) A motor-car purchased on 1.4.1998 for Rs. 6,000 has been included in purchases.
(iii) Provide depreciation:
Machinery @10% p.a., Motor-Car @ 20% p.a., Furniture and Fixtures @ 10% p.a.
(iv) Provision for unrealized rent in respect of a portion of the office sub-let at Rs. 50 per month
from 1.4.1998 has to be made.
(v) Sundry Debtors include bad debts of Rs. 400 which must be written off.
(vi) Provision for Bad and Doubtful Debts as on 30.9.1998 should be maintained at 10% of the
Debtors.
(vii) A sum of Rs. 2,000, transferred from the Current Account with Bank of Bikaner Ltd. to
Fixed Deposit Account on 1.2.1998, has not been passed through the books. Make suitable
adjustments and provide for accrued interest @ 6% p.a.
(viii) Stock as on 30.9.1998.
Finished goods Rs. 5,000, Raw Materials Rs. 1,000, Work-in-progress Rs. 5,500.
Prepare the Manufacturing, Trading and Profit and Loss Account for the year ended 30.9.1998 and
Balance Sheet as on that date after making the necessary adjustments. (Journal entries are not
required.)