Journal & Ledger for Recording Profit or Loss

Q.

A firm purchased on 1st January, 2013 a second-hand machinery for Rs.36, 000 and spent Rs.4, 000 on its installation. On 1st July in the same year, another machinery costing Rs.20, 000 was purchased. On 1st July, 2015 machinery brought on 1st January, 2013 was sold for Rs. 12, 000 and a new machine purchased for Rs. 64, 000 on the same date. Depreciation is provided annually on 31st December @ 10 % per annum on the written down value method. Show the machinery account from 2013 to 2015.

Q.

Goods worth Rs 3, 00, 000 were burnt by fire and claim of Rs
1, 80, 000 has been accepted by the insurance company. How it will be recorded in final accounts?

Q.

A machine with a cost of Rs. 1, 00, 000 & accumulated depreciation of Rs. 80, 000 & was sold at a loss of Rs. 6, 000. Bank account shall have been debited by ___

1. Rs. 26, 000

2. Rs. 14, 000

3. Rs. 6, 000

4. None of the above

Q.

Calculate gross profit, operating profit and net profit from the following.
$\begin{array}{cccc}\text{Particulars}& \text{Amt (Rs.)}& \text{Particulars}& \text{Amt (Rs.)}\\ \text{Opening Stock}& 4,00,000& \text{Commission Paid}& 4,800\\ \text{Purchases}& 38,00,000& \text{Commission Received}& 12,000\\ \text{Sales}& 50,00,000& \text{Travelling Expenses}& 9,600\\ \text{Purchases Return}& 1,40,000& \text{Office Expenses}& 7,000\\ \text{Sales Return}& 2,00,000& \text{Interest on Long-term Loans}& 44,000\\ \text{Wages}& 1,60,000& \text{Dividend on Investments}& 5,600\\ \text{Advertising}& 24,000& \text{Printing and Stationery}& 7,200\\ \text{Salaries}& 3,56,000& \text{Loss on Sale of Machinery}& 70,000\\ \text{Rent and Taxes}& 1,24,000& \text{Carriage Outwards}& 2,800\\ \text{Lighting}& 30,000& \text{Loss by Theft}& 50,200\\ & & \text{Gain on Sale of Building}& 1,00,000\end{array}$

Closing stock was valued at Rs. 5, 00, 000

Q. Original Cost = Rs. 1, 00, 000.
Salvage Value = Rs. 5, 000.
Calculate Depreciation for 2^nd year @10% p.a under WDV method ?

1. Rs. 8, 550
2. Rs. 9, 450
3. Rs. 8, 500
4. Rs. 9, 000

Q.

A company whose accounting year is the calendar year, purchased on 1st April, 2014 machinery costing Rs. 30, 000. On 1st June, 2016 one third of the machinery which was installed on 1st April, 2014 became obsolete and was sold for Rs. 3, 000. Show how the machine account would appear in the books of the company, it being given that machinery was depreciated by fixed installment at 10% per annum.

Q.

On 1st April, 2012 Manas Ltd purchased 10 machines of Rs.30, 000 each. On 30th June, 2013. 1 machine out of the 10 machines purchased on 1st April, 2012 was sold for Rs. 24, 000 and on 31st December, 2014 one more machine was sold for Rs.22, 500. A new machine was purchased on 30th September, 2015 for Rs.32, 000. The company has adopted the practice of providing depreciation at 10 % per annum on original cost of machine. The company closes its books on 31st March, every year. You are required to prepare machinery account upto 31st March, 2016.

Q.

Raghav, who keeps his books on single entry system, tell you that his capital on 31st March, 2016 is Rs 3, 74, 000 and his capital on 1st April, 2015 was 3, 84, 000. He further informs you that during the year, he withdrew for his household purpose Rs 1, 68, 400. He sold his personal investment of Rs 40, 000 a $2\%$ premium and brought that money into the business.

You are required to prepare statement of profit or loss.

Q. The loss on sale of asset is debited to account.

1. reserves
2. depreciation
3. asset
4. profit or loss

Q.

A machine was purchased on 1st April, 2014 for Rs. 10, 00, 000. On 1st October, 2014 another machine was purchased for Rs. 6, 00, 000. Estimated scrap values were Rs. 40, 000 and Rs. 20, 000 respectively. Depreciation is to be provided @ 10 % per annum on the machines under the fixed instalment method.
(i) Show the machinery account for the year ended 31st March, 2015 and 2016.
(ii) Show how the machinery account will appear in the balance sheet as at 31st March, 2016.

Q.

Shri Krishan Manufacturing Company purchased 10 machines for Rs. 75, 000 each on July 1, 2000. On October 1, 2002, one of the machines got destroyed by fire and an insurance claim of Rs. 45, 000 was admitted by the company. On the same date, another machine is purchased by the company for Rs. 1, 25, 000.

The company writes off 15 % per annum depreciation on written down value basis. The company maintains the calendar year as its financial year. Prepare the Machinery account from 2000 to 2003.

Q.

The asset has an original cost of Rs. 10, 000 and accumulated depreciation of Rs. 8, 000. We want to completely eliminate it from the accounting records, so we credit the asset account for Rs. 10, 000, debit the accumulated depreciation account for Rs. 8, 000, and debit the _____ by _____.

1. Profit or loss account by Rs. 2000

2. Disposal account by Rs. 2000

3. Depreciation account by Rs. 2000

4. Bank account by Rs. 2000

Q.

Rishant keeps incomplete records of his business. He gives you the following information; capital at the beginning of the year Rs. 8, 00, 000; capital at the end of the year Rs. 6, 20, 000, Rs. 2, 50, 000 was withdrawn by him for his personal use; as Rishant needed money for expansion of his business, he asked his wife for help, his wife allowed him to sell her ornaments and invest that amount into the business which comes to Rs. 30, 000.

You are required to calculate profit or loss made during the year.

Q.

M/s Excel Computers has a debit balance of Rs 50, 000 (original cost Rs 1, 20, 000) in Computers account on April 1, 2000. On July 1, 2000, it purchased another computer costing Rs 2, 50, 000. One more computer was purchased on January 1, 2001, for Rs 30, 000. On April 1, 2004, the computer which has purchased on July 1, 2000, became obsolete and was sold for Rs 20, 000. A new version of the IBM computer was purchased on August 1, 2004, for Rs 80, 000. Show Computers account in the books of Excel Computers for the years ended on March 31, 2001, 2002, 2003, 2004 and 2005. The computer is depreciated @ $10\%$ per annum on straight-line method basis.

Q.

A motor van was bought for Rs. 20, 000 on 1st September 2005 with a residual value of Rs. 2, 000.
Depreciation was charged at 20% by the reducing balance method on yearly basis.
It was sold for Rs. 18, 000 after three years of use on 30th September 2008.
Compute the profit on sale of asset.

1. Rs. 5, 201

2. Rs.8, 784

3. Rs. 7, 760

4. Rs. 990

Q.

A firm purchased a machine on 1st Jan 1998 for Rs. 37, 000 and spent Rs. 3, 000 on its installation. Depreciation is written off at the rate of 10% under WDV method. Accounts are closed on 31st December every year. On 30th June 2002, the machine was disposed off for Rs. 20, 000. Profit & loss account shall be ___ by ___

1. credited by Rs. 20, 000

2. credited by Rs. 4, 932

3. debited by Rs. 20, 000

4. debited by Rs. 4, 932

Q.

Calculate the amount of gross profit and operating profit on the basis of the following balances extracted from the books of M/s Rajiv and Sons for the year ended March 31, 2011.

$\begin{array}{cc}& \text{(Rs.)}\\ \text{Opening stock}& 50,000\\ \text{Net sales}& 11,00,000\\ \text{Net purchase}& 6,00,000\\ \text{Direct expenses}& 60,000\\ \text{Administration expenses}& 45,000\\ \text{Selling and distribution expenses}& 65,000\\ \text{Loss due to fire}& 20,000\\ \text{Closing stock}& 70,000\end{array}$

Q.

A company has a vehicle with a cost of Rs20, 000 and accumulated depreciation of Rs17, 000 which was sold for Rs 5, 000 cash. To record the entry for the sale of the vehicle, which of the following is correct?

1. Debit cash account Rs 5000 & credit vehicle account by Rs 2000 & Gain on sale of asset account by Rs 3000

2. Debit cash account Rs 5000 & credit vehicle account by Rs 3000 & Gain on sale of asset account by Rs 2000

3. Debit cash account Rs 2000 & credit vehicle account by Rs 2000 & Gain on sale of asset account by Rs 3000

4. Credit cash account Rs 5000 & debit vehicle account by Rs 2000 & Gain on sale of asset account by Rs 3000

Q.

Reliance Ltd purchased a second-hand machine for Rs 56, 000 on October 1, 2001, and spent Rs 28, 000 on its overhaul and installation before putting it to operation. It is expected that the machine can be sold for Rs 6, 000 at the end of its useful life of 15 years. Moreover, an estimated cost of Rs 1, 000 is expected to be incurred to recover the salvage value of Rs 6, 000. Prepare Machine account and Provision for depreciation account for the first three years charging depreciation by fixed instalment method. Accounts are closed on December 31 st every year.

Q.

A fixed asset having book value of Rs 2000 was sold for Rs 1500. Which of the following is the gain or loss on the sale of fixed asset?

1. Rs 500 gain

2. Rs 1500 gain

3. Rs 500 loss

4. Rs 1000 gain

Q.

On January 1, 2011, an asset was acquired for Rs30, 000. Its useful life was expected to be 10 years and the salvage value is expected to be Rs0. After four years of use, the company realized the asset would be useful for only three more years. (In other words, the total useful life of the asset will be seven years instead of the original 10 years.) The company uses the straight-line method of depreciation. The Depreciation Expense in each of the years 2015, 2016, and 2017 will be Rs___

1. Rs 4000

2. Rs 5000

3. Rs 3000

4. Rs 6000

Q.

“Vinod” Engineering Works purchased a machine on 1st April 2001 for Rs.1, 80, 000 and spent Rs.20, 000 on its installation.

On 1st January 2002, it purchased another machine for Rs.2, 40, 000. On 1st July 2003, the machine purchased on 1st April, 2001 was sold for Rs.1, 45, 000. On 1st October, 2003 another machine was purchased for Rs.4, 00, 000.

Prepare Machinery Account from 2001 to 2003 after charging depreciation @ 10% p.a. by diminishing balance method. Accounts are closed on 31st December every year.

Q.

Kapil Ltd purchased a machinery on July 1, 2001, for Rs 3, 50, 000. It purchased two additional machines, on April 1, 2002 costing Rs 1, 50, 000 and on October 1, 2002, costing Rs 1, 00, 000. Depreciation is provided @ $10\%$ per annum on straight lines basis. On January 1, 2003, the first machinery becomes useless due to technical changes. This machinery was sold for Rs 1, 00, 000. Prepare Machinery account for 4 years on the basis of the calendar year.

Q.

On July 1, 2000, Ashok Ltd purchased a machine for Rs. 1, 08, 000 and spent Rs 12, 000 on its installation. At the time of purchase, it was estimated that the effective commercial life of the machine will be 12 years and after 12 years its salvage value will be Rs 12, 000.

Prepare Machine account and Depreciation account in the books of Ashok Ltd. For the first three years, if depreciation is written off according to the straight-line method. The accounts are closed December 31st, every year.

Q.

From the following balances of M/s Jyoti Exports, prepare trading and profit and loss account for the year ended March 31, 2012 and balance sheet as on this date.

$\begin{array}{cccc}\text{Account Title}& \text{Amt. (Rs.)}& \text{Account Title}& \text{Amt. (Rs.)}\\ \text{Sundry Debtors}& 9,600& \text{Sundry Creditors}& 2,500\\ \text{Opening Stock}& 22,800& \text{Sales}& 72,670\\ \text{Purchases}& 34,800& \text{Purchases Return}& 2,430\\ \text{Carriage Inwards}& 450& \text{Bills Payable}& 15,600\\ \text{Wages}& 1,770& \text{Capital}& 42,000\\ \text{Office Rent}& 820& & \\ \text{Insurance}& 1,440& & \\ \text{Factory Rent}& 390& & \\ \text{Clearing Charges}& 940& & \\ \text{Salary}& 1,590& & \\ \text{Building}& 24,000& & \\ \text{Plant and Machinery}& 3,600& & \\ \text{Cash in Hand}& 2,160& & \\ \text{Gas and Water}& 240& & \\ \text{Octroi}& 60& & \\ \text{Furniture}& 20,540& & \\ \text{Patents}& 10,000& & \\ & \overline{\underset{–}{\underset{–}{1,35,200}}}& & \overline{\underset{–}{\underset{–}{1,35,200}}}\end{array}$

Closing stock Rs. 10, 000.

Additional Information:

1. The provision for bad debts is to be maintained at 5$\%$ on sundry debtors.

2. Wages amounting to Rs. 500 and salary amounting to Rs. 350 are outstanding.

3. Factory rent prepaid Rs. 100.

4. Depreciation charged on Plant and Machinery @ 5$\%$ and Building @ 10$\%$.

5. Outstanding insurance Rs. 100.

Q.

Kamal Bros purchased a machine on 1st April 2012 at a cost Rs. 16, 000 spent Rs. 4, 000 on its installation. The firm writes off depreciation @ 10% per annum by written value method. The scrap value of the machine at the end of its economic life of 4 years is expected to be Rs. 13, 122.

Show the machine account, depreciation account and provision for depreciation account for 4 years in books Kamal Bros. The book is closed on 31st March every year.

Q.

The book value of asset is Rs 5000. The asset is sold for Rs. 4000. Which of the following is correct?

1. All of these

2. Cash account: Debit 4, 000

3. Asset account: Credit 5, 000

4. Profit and loss account: Debit 1, 000

Q.

M/s ABC Enterprises purchased a machine in the start of the year amounting to Rs 10, 00, 000. But as on 31st March i.e. end of the Financial Year, the market price of the machine falls to Rs 8, 00, 000. According to Historical cost/ cost principle, at which value will the machine will be shown in the balance sheet?

1. Rs 10, 00, 000

2. Rs 10, 00, 000 - Depreciation

3. None of the above

4. Rs 8, 00, 000

Q.

M/s Saniya Sports Equipment does not keep proper records. From the following information, find out profit or loss and also prepare balance sheet for the year ended 31st December, 2016.

$\begin{array}{ccc}\text{Items}& \text{31st December,}& \text{31st December,}\\ & \text{2015 (Rs.)}& \text{2016 (Rs.)}\\ \text{Cash in Hand}& 6,000& 24,000\\ \text{Bank Overdraft}& 30,000& -\\ \text{Stock}& 50,000& 80,000\\ \text{Sundry Creditors}& 26,000& 40,000\\ \text{Sundry Debtors}& 60,000& 1,40,000\\ \text{Bills Payable}& 6,000& 12,000\\ \text{Furniture}& 40,000& 60,000\\ \text{Bills Receivable}& 8,000& 28,000\\ \text{Machinery}& 50,000& 1,00,000\\ \text{Investment}& 30,000& 80,000\end{array}$

Drawings Rs. 10, 000 per month for personal use, fresh capital introduced during the year Rs. 2, 00, 000. A bad debts Rs. 2, 000 and a provision of $5\%$ it to be made on debtors. Outstanding salary Rs. 2, 400, prepaid insurance Rs. 700, depreciation charged on furniture @ $10\%$ per annum.

Q.

Rs. 10000 depreciation transfer to Profit and Loss account. Which of the following is correct?

1. Profit & loss Account Debit 10000

2. Depreciation Account Debit 1000

3. Depreciation Account Debit 10000

4. Depreciation Account credit 1000