Final Accounts (Non-Corporate) Problems and Solutions
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Problems # 1:
From the following particulars taken out from the books of Abdul Hanan & Co. You are required to prepare Trading and Profit & Loss Account and Balance Sheet as at December 31st, 2019.
(a) Closing stock Rs, 35,000.
(b) Provision for doubtful debts at 5% of sundry debtors.
(c) Depreciation furniture and machinery by 10%.
(d) Commission of Rs. 3,600 has been earned but not received till the closing of accounts.
>>> For more detail see Final Accounts
Problems # 2:
From the following trial balance of Faris Ali Qureshi & Bros. and additional information, prepare Trading and Profit & Loss account and Balance sheet for the year ended June 30th, 2019.
- Depreciation furniture by 10% by written down method (WDM).
- A provision for doubtful debts is to be created to the extent of 5% on sundry debtors.
- Salaries for the month of June, 2019 amounting to Rs. 3,000 were unpaid which must be provided for. However, salaries included Rs. 2,000 paid in advance. Office expenses outstanding Rs. 8,000.
- Insurance amounting to Rs. 2,000 is prepaid.
- Stock use for private purpose Rs. 6,000 and closing stock Rs. 60,000.
>>> Practice Final Accounts MCQs
Problems # 3:
The following Trial Balance of Amna Mushtaq Ahmed & Brothers on June 30th, 2020, Prepare Profit and Loss Account and Balance Sheet.
- Stock at the end of year Rs. 5,200 and Three months Excise duties is due, but not paid Rs. 30.
- 5 percent depreciation to be written-off on furniture and write-off further bad debts Rs. 70.
- The provision for bad debts to be Rs. 300 and provision for discount on debtor @ 2 % to be made.
- During the year machinery was purchased for Rs. 2,000, but was debited to Purchase account.
>>> Try Final Account Quiz 1
Problems # 4:
The following are the balances taken from the books of Muhammad Zain Ammar Safdar & Co. on May 31st, 2020. You are required to prepare Trading and Profit and Profit and Loss Account / Income Statement for the year ended May 31st, 2020 and Balance Sheet as on that date.
- Depreciation furniture and machinery at 10% p.a.
- Insurance is paid in advance to the extent of Rs. 200.
- Reserve for discount is no longer required and is to be written back.
- Closing stock is valued at Rs. 100,000.
- Interest on bank loan is outstanding.
>>> Practice for more understanding Final Account Quiz 2
Problems # 5:
The following Trial Balance of Hashim & Ibrahim Enterprises as on December 31st, 2019, Prepare Financial Statement in horizontal style.
Hashim and Ibrahim share profit and loss equally, other information is given below:
- Stock at the December 31st, 2019 was Raw material Rs. 4,000 and Finished goods Rs. 12,000.
- Outstanding expenses: Salaries Rs. 1,500; Carriage Rs. 2,100.
- Insurance paid for 15 months upto March 2020.
- Write-off Bad debts of Rs. 400 and Provision for bad debts @ 5 % of debtors.
- Goods withdrawn by Hashim for personal use Rs. 2,000.
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Provision for bad debts should be in Debit in P&L but sum 5 answer showin credit side
please can you explain why
Debit bad debt provision expense P+L
Credit bad debit provision B/S
Wages include 1000rs and paid for installation of machinery it’s journal entry??
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Kindly note that if the wages are paid for the installation for machinery, then it will be included in the cost of the machine. All expenses related to acquiring and installation of a fixed asset will be included in the cost of the fixed asset. Journal entry is : Debit Machinery A/c and Credit cash/bank A/c
Really it’s worthful for the learners to have a self-assessment on understanding these final accounts.
In problem 5 – I could not understand the nature of the transaction & its effects regarding the “Reserve for discount is no longer required and is to be written back.”
Can you explain in detail?
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Why do you assume wages is part of goods sold and not expenses to be deducted from gross profit? because im sure they didn’t specify warehouse wages
1st problem, prepaid insurance is not mentioned any where, but mentioned in solution.
See where Insurance account reported in question along with adjustment in brackets.
But the date is given sir….
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Prepaid insurance is 600 not 1800 in 1st problem
I e., 2400/12 = 200 * 3months prepaid = 600
1800 is not prepaid
In that first question prepaid insurance is not mentioned any where but it mentioned in solution???
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Hlo y prepaid insurance 1800 kese ayi
the sums were useful