accounts lectures updated

8/8/2019 Accounts Lectures Updated

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Types of Accounts

Real Debit what comes in Credit what goes out

Personal Debit the receiver Credit the giver

Nominal Debit all expenses and los Credit all income and gains

Examples

Printing and Stationery Nominal

Long term asset RealDiscount allowed Nominal

Capital Account Personal

Wages Personal

Prepaid Insurance Personal

Loan Personal

Investment Real

Stocks Real

Tools Real

Stores and Spares Real

Copyright, Goodwill RealOctroi Nominal

State government securiti Real

Debentures Real

Royalty Nominal

Bills Received Amount Real

Employee Provident fund Personal


2/40

Q.1

1) Rajan invested in business

Cash R Dr

Capital P Cr

Cash A/c Dr 20000

To Capital A/c 20000

2) Opened an account with bank of india by depositing cash

Bank Acc R Dr

Cash R Cr

Bank A/c Dr 10000

To Cash A/c 10000

3) Purchased goods for cash

Goods R DrCash R Cr

Purchase Dr 500

To cash A/c 500

4) Purchased machinery for cash

Machiner R Dr

Cash R Cr

Machiner Dr 800To cash A/c 800

5) Cash purchase of goods

Goods R Dr

Cash R Cr

Purchase Dr 300

To cash A/c 300

6) Cash sales (of goods)

Cash R Dr

Sales (go R Cr

Cash A/c Dr 900

To sales A/c 900

7) Withdraw cash for personal use

Drawings P Dr

Cash R Cr


3/40

Drawings Dr 200

To Cash A/c 200

8) Purchased goods from Pritam on credit

Goods R Dr

Pritam's P Cr

Purchase dr 600

To Pritam's account a/c 600

9) Received cash on account from Ramanand

Ramanan P Cr

Cash R Dr

Cash a/c Dr 350

To Ramanand's A/c 350

10) Paid Cash to Minakshi Bros

Cash R Cr

Minakshi' P Dr

Minakshi' Dr 250

To Cash A/c 250

11) Paid Rent

Cash R Cr

Rent N Dr

Rent A/c Dr 125

To Cash A/c 125

12) Received commision

CommmisN Cr

Cash R Dr

Cash A/c Dr 175

To commision A/c 175

13) Ram returned goods

Goods R Dr

Ram's accP Cr

Goods A/cDr 100

Ram's account A/c 100


4/40

Q.2

1) Receievd Cash from Father in law and deposited in business

Cash A/c Dr 10000

To capital A/c

2) Took loan from Shalini

Cash A/c Dr 5000

To Shalini's A/c

3) Paid rent to landlord in advance

Advance rent A/c Dr 75

Cash A/c

4) received rent from sub tenant

Cash A/c Dr 100

To rent A/c

5) Paid for postal stamps

Stationery A?c Dr 10

To Cash A/c

6) Commision Due from gupta

Commision ReceivablDr 40

To Commision A/c

7) Old typewriter stolen

Loss by theft A/c Dr 1000

To Typewriter(Assets) A/c

8) Paid commision to Radhika

Commision (radhika' Dr 80

To Cash A/c

9) purchased securities (rs 60/- Brokerage)

Asset (Securities) Dr 2060

To Cash A/c

10) Paid for Mantri's Club Bill


5/40

Drawings A/c Dr 600

To cash A/c

11) Gave Charity

Donation (Charity) Dr 300

To cash A/c

12) Sold private scooter and invested in Business

Cash A/c dr 2000

To Capital A/c

13) Bought Equity shares of Bharat Fertilizers

Bharat fertilizer shar Dr 900

To cash A/c

14) Invested in National Saving Certificate

NSE A/c Dr 100

To Cash A/c

15) Paid for carraige on machinery

Machinery A/c Dr 200

To Cash A/c

16) Cash Sales

Cash A/c Dr 500

To sales A/c

17) Paid Income tax

Income tax A/c Dr 200

To Cash A/c

18) Bought Typewriter

Typewriter A/c Dr 1000

To Cash A/c

Ledger Account


6/40

Dr Cash A/c Cr

To Capital A/c 10000 By Advance rent 75

To Shalini's A/c 5000 By stationery 10

To rent A/c 100 By commision 80

To Capital A/c 2000 By securities 2060

To sales A/c 500 By drawings 600

By donations 300

By Bharat Fertilizers Shar 900By NSE 100

By Machinery 200

By Income Tax 200

By typewriter 1000

By balance c/d 12075

17600 17600

Dr Capital A/c Cr

To Balance C/d 12000 By Cash A/c 10000

By Cash A/c 2000

12000 12000

Dr Shalini's A/c Cr

To balance c/d 5000 by cash A/c 5000

Dr Advance Rent Cr

To cash a/c 75 By balance c/d 75

Dr Rent A/c Cr

to balance c/d 100 By cash A/c 100

Dr Stationery A/c Cr

To Cash a/c 10 By balance c/d 10

Dr Commision receivable A/ Cr

To commision earned 40 By balance c/d 40

Dr Commision earned A/c Cr

To balance c/d 40 By commision receivable 40

Dr Loss by theft a/c Cr

To typewriter 1000 By balance c/d 1000

Dr Typewriter Cr

To Cash 1000 By loss of theft 1000

Dr Commision Cr

To Cash 80 By balance c/d 80


7/40

Dr Securities Cr


Dr Drawings Cr


Dr Donation CrTo Cash 300 By balance c/d 300

Dr Bharat fertilizers shares Cr


Dr NSE Cr


Dr Machinery Cr


Dr Sales Cr

To balance c/d 500 By cash 5

Dr Income tax Cr


Trial Balance

Dr Cr

Cash 12075 Capital 12000Advance rent 75 Shalini 5000

Commision receivabl 40 Rent 100

Loss by theft 1000 Commision Earned 40

Commision 80 Sales 500

Stationery 10

Securities 2060

Drawings 600

Donation 300

Bharat Shares 900

NSE 100

Machinery 200

Income tax 200

17640 17640

P/L Account

Dr Cr

Stationery 10 Rent 100

Loss by theft 1000 Sales 500


8/40

Commision 80 Commision 40

Donation 300 P/L loss 950

Income tax 200

1590 1590

Balance Sheet

Liabilities Assets

Capital 12000 Cash 12075

Shalini 5000 Securities 2060

P/L A/c -950 Advance rent 75

Drawings -600 Commision receivable 40

Bharat shares 900

NSE 100

Machinery 200

15450 15450


9/40

10000

5000

75

100

10

40

1000

80

2060


10/40

600

300

2000

900

100

200

500

200

1000


11/40


12/40


13/40


14/40

Given:

Trading account

Dr Cr

To opening stock 45000 By Sales 2000000

To purchases (net) 1500000 - Ret 5000

1995000

By Closing stock 70000

To carriage 5000

To wages 30000

To gross profit c/d 485000

Total 2065000 Total 2065000

P/L account

To salary 40000 By Gross Profit b/d 485000

To office rent 15000 By int on investmen 5000To rates and taxes 12000

To travelling expenses 2000

To insurance 2000

To advertising 10000

To bad debts 15000

To discount 5000

To general expenses 20000

To postage 14000

To depreciation (plant and machinery) 3000

To depreciation (furniture) 1000To audit fees 11000

To loss and sale of furniture 3000

To taxes 55000

To net profit c/d 282000

Total 490000 Total 490000

Solution:

Vertical form of P/L Amt Amt Amt

Gross sales 2000000

Less returns -5000

Net sales 1995000

Less: cost of goods sold

Opening stock 45000

Add:

Puchase 1500000

Carraige 5000


15/40

Wages 30000

Depreciation on Plant and Machinery 3000

1583000

Less:

Closing stock -70000

1513000

Gross profits 482000

Less: operating expenditure

A) Administrative exp

Salaries 40000

Office rent 15000

Rates and Taxes 12000

Insurance 2000

General ledger 20000

Postage 14000

Depreciation on Furniture 1000

Audit fees 11000115000

B) Selling and Distribution Exp

Travelling 2000

Advertising 10000

Bad debts 15000

Discount 5000

32000

C) Financial Exp NIL 147000 Sum of A)

Operating profit 335000 Profits - E

Less : Non operating exp

Loss on sale of furniture 3000

332000

Add: Non operating income

Int. on invetsment 5000

Profit before tax 337000

Less: tax -55000

Profit after tax 282000


16/40


17/40

, B) and C)

penses


18/40

Given:

Balance Sheet

Liabilities Assets

Share Capital 750000 Goodwill 125000

Capital Reserve 1500 Land 129000

General reserve 120410 Premises 150000

Lease Hold redemption fun 42500 Plant 234395

P/L account 18777 Furniture 8575

5% Debentures 157500 3% GP Notes 71400

Sundry Creditors 73900 Srocks 196770

Proposed dividend 75000 Debtors 203942

Provision for taxation 25000 Cash and Bank 120280

Advanced Tax 23675

Preliminary expense 1550

Total 1264587 Total 1264587

Solution:

I) Source of funds Amt Amt

Shareholders funds

Share Capital 750000

Capital reserve 1500

General reserve 120410

Leashold redemption fund 42500

P and L A/c 18777

933187

Less: Fictitious AssetsPreliminary exp -1550

931637

Loan Funds

5% Debentures 157500

Total Sources of Funds 1089137

II) Application of Funds

A) Fixed Assets

Goodwill 125000land 129000

premises 150000

Plant 234395

Furniture 8575

646970

B) Investments

3% GP Notes 71400


19/40

C) Net current Assets (Working Capital)

Current Assets

Stock 196770

Debtors 203942

Cash and bank 120280

Advance Tax 23675

544667

Less: Current Liabilities

Creditors 73900

Proposal Dividend 75000

Provision for Tax 25000

173900

370767

Total Application of Funds 1089137


20/40

April 15, 1992 Machinery bought 90000

Transportation cos 10000

Depreciation on return down value method at 10%

March 25, 1995 machinery sold 70000

Pass all journal entries for 3 years and show P and L account taking into accoutn deprecia

Date Particular Amt Amt

4/15/1992 Machinery A/c Dr 100000

To Cash A/c 100000

3/31/1993 Depreciation A/c D 10000

To machinery A/c 10000

3/31/1993 P/L A/c Dr 10000

To Depreciation A/c 10000



3/31/1994 P/L A/c Dr 9000To Depreciation A/c 9000



3/31/1995 P/L A/c Dr 8100


3/25/1995


Machinery A/c

3/31/1993

Dr Cr

To Cash A/c 100000 By Depreciatio 10000

By Balance c/d 90000

100000 100000

3/31/1994

Dr Cr

To Balance b/d 90000 By Depreciatio 9000

By Balance c/d 81000

90000 90000

3/31/1995

Dr Cr

To Balance b/d 81000 By Depreciatio 8100

By P/L A/c 2900

Cash A/c DrP/L A/c Dr

700002900


21/40

By Cash A/c 70000

81000 81000

Depreciation A/c

3/31/1993

Dr Cr

To Machinery A/c 10000 By P/L A/c 10000

10000 10000

3/31/1994


9000 9000

3/31/1995


8100 8100

Balance Sheet

Liabilities Assets

Cash 100000 Machinery 90000

- P/L 10000

90000 90000


22/40

tion Provision For Depreciation

Date Particular Amt Amt

4/15/1992 Machinery A/c Dr 100000

To Cash A/c 100000

3/31/1993 Depreciation A/c Dr 10000

To Prov. For Depreciation A/c 10000

3/31/1993 P/L A/c Dr 10000




3/31/1994 P/L A/c Dr 9000To Depreciation A/c 9000



3/31/1995 P/L A/c Dr 8100


3/31/1995 Prov for Depreciation A 27100


3/25/1995


Machinery A/c

3/31/1993

Dr Cr

To Cash A/c 100000 By Balance c/d 100000

100000 100000

3/31/1995

Dr Cr

To Balance b/d 100000 By Prov. For Deprecia 27100

By P/L A/c 2900

By Cash A/c 70000

100000 100000


700002900


23/40

Depreciation A/c

3/31/1993

Dr Cr

To Prov. For Depreciation A 10000 By P/L A/c 10000

10000 10000

3/31/1994


9000 9000

3/31/1995


8100 8100

To Prov. For Depreciation A/c

3/31/1993

Dr Cr

To bal c/d 10000 By Depreciation A/c 10000

10000 10000

3/31/1994

To bal c/d By Bal b/d 10000By Depreciation A/c 9000

19000 19000

3/31/1995

27100 By Bal b/d 19000

By Depreciation A/c 8100

27100 27100

19000/9000

To bal c/d Machinery


24/40

4/10/1992 Machinery A/c Dr 100000

To Cash A/c ###



3/31/1993 P/L A/c Dr 10000


3/31/1994 Depreciation A/c Dr 9000To Prov. For Depreciation A/c 9000

3/31/1994 P/L A/c Dr 9000




3/31/1995 P/L A/c Dr 8100


3/31/1995 Prov for Depreciation A/c 27100


3/25/1995


Depreciation A/c

3/31/1993

Dr Cr


10000 10000

3/31/1994


9000 9000

3/31/1995


8100 8100

To Prov. For Depreciation A/c3/31/1993

Dr Cr

To bal c/d 10000 By Depreciation A/ 10000

10000 10000

3/31/1994

To bal c/d 19000 By Bal b/d 10000

By Depreciation A/ 9000


700002900


25/40

19000 19000

3/31/1995

To bal c/d 27100 By Bal b/d 19000

By Depreciation A/ 8100

27100 27100


26/40

From the following balance sheet of A ltd. Prepare

a) statement of changes in working capital

b) funds flow statement

BALANCE SHEET OF A LTD.

LIABILITIES 1989 1990 ASSETS

equity share capital 300000 400000 goodwill

8% redemmbale pref share 150000 100000 land and buil

general reserve 40000 70000 plantprofit and loss a/c 30000 48000 debtors

proposed dividend 42000 50000 stock

creditors 55000 83000 bills recievab

bills payable 20000 16000 bank

provision for taxation 40000 50000 cash

TOTAL 677000 817000 TOTAL

ADDITIONAL INFORMATION :

1) Depreciation to the extent of 10000 & 20000 provided on plant, land and building in 19

2) An interim dividend of 20000 has been paid in 1990

3) income tax of 35000 paid during 1990

SOLUTION :

statement for change in A/C increase in W/C decrease in W/C

CURRENT ASSETSdebtors 40000

stocks 32000

bills recievables 10000

bank 5000

cash 2000

CURRENT LIABILITIES

creditors 28000

bills payable 4000

TOTAL 86000 35000

CHANGE IN WORKING CAPITAL = INCREASE - DECREASE IN WORKING CAPITAL

therefore, change in working capital is : 51000

ADJUSTED P & L A/C

TO depreciaction on plant 10000 By balance brought down 30000


27/40

land and building 20000

to interim dividend 20000 by funds from operations 218000

to provision for tax 45000 (balancing figure)

To proposed dividend 50000

To goodwill w/off 25000

To balance carried down 48000

to general reserve 30000

248000 248000

PROVISION FOR TAX

To cash 35000 by bal bd 40000

by p & l a/c 45000

To bal cd 50000 (balancing figure)

85000 85000

PLANT A/C

To bal BD 80000 by depriciation 10000

To cash 130000

by balance cd 200000

210000 210000

FUNDS FLOW STATEMENT

SOURCES OF FUNDS :

Issue at equity capital

sale of land and building

fund from operation

APPLICATION OF FUNDS :

redemption of preferance shares

purchase of plant

payment of dividend


28/40

payment of interim

payment of tax

increase in working capital


29/40

1989 1990

115000 90000

ing 200000 170000

80000 200000160000 200000

77000 109000

les 20000 30000

15000 10000

10000 8000

677000 817000

0


30/40

LAND AND BUILDING

To bal cd 200000 by depriciation 20000

by sale of asset 10000


200000 200000

100000

10000

218000

328000

50000

130000

42000


31/40

20000

35000

277000

51000


32/40

BALANCE SHEET OF A LTD.

LIABILITIES 1989 1990 ASSETS

equity share capital 300000 400000 goodwill

8% redemmbale pref share 150000 100000 land and buil

general reserve 40000 70000 plant

profit and loss a/c 30000 48000 debtors

proposed dividend 42000 50000 stock

creditors 55000 83000 marketable secbills payable 20000 16000 cash & ban

provision for taxation 40000 50000

TOTAL 677000 817000 TOTAL

ADDITIONAL INFORMATION :

1) Depreciation to the extent of 10000 & 20000 provided on plant, land and building in 192) An interim dividend of 20000 has been paid in 1990

3) income tax of 35000 paid during 1990

ADJUSTED P & L A/C

TO depreciaction on plant 10000 By balance brought down 30000

land and building 20000

to interim dividend 20000 by funds from operations 218000

to provision for tax 45000 (balancing figure)

To proposed dividend 50000To goodwill w/off 25000

To balance carried down 48000

to general reserve 30000

248000 248000

PROVISION FOR TAX

To cash 35000 by bal bd 40000

by p & l a/c 45000To bal cd 50000 (balancing figure)

85000 85000

PLANT A/C

To bal BD 80000 by depriciation 10000

To cash 130000


33/40


210000 210000

LAND AND BUILDING

To bal cd 200000 by depriciation 20000

by sale of asset 10000


200000 200000

CASH FLOW STATEMENT

1) CASH FROM OPERATING ACTIVITIES:Closing balance of P & L A/C

less: opening balance of P & L A/C

Add: Proposed dividend

add: Interim dividend

add: transfer to General Reserve

add: provision for taxation

net profit before tax and extra ordinary items

add: depreciationadd: goodwill written off

OPERATING PROFIT before change in working capital

ADD: decrease in C.A & increase in C.L

creditors

stock

LESS: increase in C.A & decrease in C.L

bills payable

debtorsCash generated from operating activities

LESS: Tax paid (net & refund)

1) CASH FROM OPERATING ACTIVITIES

2) CASH FROM INVESTING ACTIVITIES:

Add: sale of land and building

less: purchase of plant


34/40

2) CASH FLOW FROM INVESTING ACTIVITIES

3) CASH FROM FINANCING ACTIVITIES:

add: issues of equity shares

less: preference shares redeemed

less: interim dividend paid

less: dividend paid

3) CASH FROM FINANCING ACTIVITIES

4) NET CHANGE IN CASH AND CASH EQUIVALENTS

5) CASH AND CASH EQUIVALENT AT THE BEGINNING OF THE PERIOD

cash and bank

mareketable securities

6) CASH AND CASH EQUIVALENT AT THE END OF THE PERIOD

cash and bankmarketable securities

answer: 6) = 5) + 4)


35/40

1989 1990

115000 90000

ing 200000 170000

80000 200000

160000 252000

97000 87000

rities 15000 10000k 10000 8000

677000 817000

0


36/40

AMOUNT AMOUNT

we add back all non operating and non cash activi48000

-30000

50000

20000

30000 from p&l a/c

45000 from prov for taxation a/c

163000

3000025000 55000

218000

28000

10000 38000

-4000

-92000 -96000160000

-35000

125000

10000

-130000


37/40

-120000

100000

-50000

-20000 from additional information

-42000 last years proposed diviend is paid during this ye

-12000

-7000 1) + 2) + 3)

10000

15000 25000

800010000 18000


38/40


39/40

ties


40/40

r.. It is from balance sheet 1989

accounts lectures updated

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