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# T. S. Grewal Solution for Class 11 Commerce Accountancy Chapter 18 - Financial Statements of Sole Proprietorship

Exercise/Page

## T. S. Grewal Solution for Class 11 Commerce Accountancy Chapter 18 - Financial Statements of Sole Proprietorship Page/Excercise 18.60

Solution PQ 1

 Expenditure Reason (i) Capital Expenditure Paid to make an asset ready to use (ii) Capital Expenditure Paid to make an asset ready to use (iii)Revenue Expenditure Made for the maintenance of asset (iv)Revenue Expenditure Part of normal operating cost (v) Capital Expenditure Used in business for a number of years

Solution PQ 2

 Expenditure Reason (i) Capital Expenditure Paid for the acquisition of new asset (ii) Capital Expenditure Paid to make the asset ready to use (iii)Revenue Expenditure Paid for the running and maintenance of car (iv)Revenue Expenditure Paid for the maintenance of Building (v) Revenue Expenditure Part of normal operating cost

Solution PQ 3

 Gross Profit = Sales + Closing Stock - (Opening Stock + Goods Purchased + Freight and Packing) = 1,90,000 + 30,000 - (25,000 +1,40,000 + 10,000) = 2,20,000 - 1,75,000 = Rs.45,000

Note: Packing Expenses on sales (Rs.6,000) is not a Direct Expense. Thus, it not considered while computing the amount of Gross Profit.

Solution PQ 4

Calculation of amount of Closing Stock

Gross Profit on cost = 33%.

Cost =rd.

Gross Profit on sales =

And, Sales = Cash Sales + Credit Sales = 60,000+40,000 = Rs.1,00,000

So, Gross Profit = = Rs.25,000

Cost of Goods Sold = Sales - Gross Profit = 1,00,000 - 25,000 =Rs.75,000

Cost of Goods Sold = Opening Stock + Purchases- Closing Stock

75,000 = 20,000 + 70,000 - Closing Stock

Closing Stock =Rs.15,000

Solution PQ 5

 Trading Account Dr. Cr. Particulars Rs. Particulars Rs. To Opening Stock 23,000 By Sales 25,400 To Purchases 29,000 Less : Sales Return (500) 24,900 Less :Purchases Return (2,400) 26,600 By Closing Stock 47,700 To Carriage Inwards 100 To Gross Profit c/d (Bal. Fig.) 22,900 72,600 72,600

Note: Depreciation is not a Direct Expense. Thus, it not shown in the Trading Account.

 Journal Date Particulars L.F. Dr. Rs. Cr. Rs. Trading A/c Dr. 52,600 --------To Opening Stock A/c 23,000 --------To Purchases A/c 29,000 --------To Carriage Inwards A/c 100 --------To Sales Return A/c 500 (Being transfer of balances to debit side of trading account) Sales A/c Dr. 25,400 Purchases Return A/c Dr. 2,400 --------To Trading A/c 27,800 (Being transfer of balances to credit side of trading account) Closing Stock A/c Dr. 47,700 --------To Trading A/c 47,700 (Being recording of closing stock) Trading A/c Dr. 22,900 --------To Profit and Loss A/c 22,900 (Being transfer of gross Profit to the Profit and Loss account)

## T. S. Grewal Solution for Class 11 Commerce Accountancy Chapter 18 - Financial Statements of Sole Proprietorship Page/Excercise 18.61

Solution PQ 6

 Trading Account Dr. Cr. Particulars Rs. Particulars Rs. To Opening Stock 2,00,000 By Sales 14,07,000 To Purchases 8,50,000 By Closing Stock 1,80,000 To Carriage on Purchases 23,000 To Gross Profit c/d (Balancing Fig.) 5,14,000 15,87,000 15,87,000

Note: Carriage on Sales and Office Rent are not a Direct Expense. Thus, it is not considered while computing the amount of Gross Profit.

Solution PQ 7

 Trading Account For the year ended March 31,2018 Dr. Cr. Particulars Rs. Particulars Rs. To Opening Stock 40,000 By Sales 3,80,000 To Purchases 4,00,000 Less: Return Inwards (20,000) 3,60,000 Less: Return Outwards (80,000) 3,20,000 By Closing Stock 1,20,000 To Carriage Inwards 20,000 To Wages and Salaries 50,000 To Gross Profit c/d (Bal. Fig.) 50,000 4,80,000 4,80,000

Note: According to the Principle of Conservatism, closing stock is valued at Cost or Market Price, whichever is less. Hence, closing stock is valued at Market Price (i.e., Rs.1,20,000)

Solution PQ 8

 Trading Account For the year ended March 31,2018 Dr. Cr. Particulars Rs. Particulars Rs. To Purchases (Adjusted) 6,60,000 By Sales 7,44,000 To Freight and Carriage Inwards 3,600 To Wages 6,000 To Gross Profit c/d (Bal. Fig.) 74,400 7,44,000 7,44,000

Note :

1. Freight and Carriage Outwards are not a Direct Expense. Thus, it is not recorded in the trading Account.
2. Adjusted Purchases = Opening Stock + Net Purchases - Closing Stock

Therefore, Closing Stock (Rs.50,400) is not considered while preparing Trading Account.

Solution PQ 9

 Trading Account For the year ended March 31,2018 Dr. Cr. Particulars Rs. Particulars Rs. To Opening Stock By Sales 7,00,000 Raw Materials 80,000 Less: Return Inwards (6,000) 6,94,000 Finished Goods 1,40,000 2,20,000 By Closing Stock To Purchases 3,60,000 Raw Materials 70,000 Less: Return Outwards (10,000) 3,50,000 Work-in-progress 20,000 To Freight Inwards 20,000 Finished Goods 1,10,000 2,00,000 To Wages 1,30,000 To Factory Expenses 90,000 To Gross Profit c/d (Bal. Fig.) 84,000 8,94,000 8,94,000

Note :

Freight Outwards are not a Direct Expense. Thus, it is not recorded in the Trading Account.

Solution PQ 10

 Trading Account For the year ended March 31,2018 Dr. Cr. Particulars Rs. Particulars Rs. To Purchases (Adjusted) 5,50,000 By Sales 6,25,000 To Freight and Carriage Inwards 3,000 To Wages 7,000 To Gross Profit c/d (Bal. Fig.) 65,000 6,25,000 6,25,000

Note :

1. Freight and Carriage Outwards are not a Direct Expense. Thus, it is not recorded in the Trading Account.
2. Adjusted Purchases = Opening Stock + Net Purchases - Closing Stock

Therefore, Closing Stock (Rs.50,000) is not considered while preparing Trading Account.

## T. S. Grewal Solution for Class 11 Commerce Accountancy Chapter 18 - Financial Statements of Sole Proprietorship Page/Excercise 18.62

Solution PQ 11

Calculation of Operating Profit

Operating Profit = Net Profit - Rent Received - Gain of sales of Machine + Interest on Loan + Donation

= 1,00,000 - 10,000 - 15,000 + 20,000 + 2,000 = Rs.97,000

Operating Profit = Rs.97,000

Solution PQ 12

 Profit and Loss Account For the year ended March 31,2018 Dr. Cr. Particulars Rs. Particulars Rs. To Salaries and Wages 30,000 By Gross Profit b/d (6,50,000 × 45%) 2,92,500 To Commission Paid 2,000 By Rent Received 17,000 To Postage and Telegram 1,500 By Interest on Investments 15,000 To Insurance 3,000 To Interest Paid 4,000 To Carriage Outwards 5,000 To Advertising 10,000 To Discount allowed 18,000 To Bad debts 9,000 To Brokerage Paid 950 To Net Profit c/d (Bal. Fig.) 2,41,050 3,24,500 3,24,500

Solution PQ 13

 Profit and Loss Account For the year ended March 31,2018 Dr. Cr. Particulars Rs. Particulars Rs. To Rent 5,000 By Gross Profit b/d 1,20,000 To Salary 35,000 By Interest Received 8,000 To Commission Paid 19,000 By Discount Received 6,000 To Interest on Loan 5,000 To Advertisement 8,000 To Printing and Stationery 4,000 To Legal Charges 10,000 To Bad Debts 2,000 To Loss by Fire 6,000 To Depreciation 4,000 To Net Profit c/d (Bal. Fig.) 36,000 1,34,000 1,34,000

Solution PQ 14

 Balance Sheet as on March 31,2018 Liabilities Rs. Assets Rs. Capital 4,00,000 Plant 1,00,000 Less: Drawings (44,000) Furniture 37,000 Add: Net Profit 16,600 3,72,600 Closing Stock 1,48,000 General Reserve 10,000 Debtors 64,000 Creditors 42,000 Cash at Bank 72,000 Cash in Hand 3,600 4,24,600 4,24,600

## T. S. Grewal Solution for Class 11 Commerce Accountancy Chapter 18 - Financial Statements of Sole Proprietorship Page/Excercise 18.63

Solution PQ 15

 (I) Balance sheet in Order of permanence Balance Sheet as on March 31,2018 Liabilities Rs. Assets Rs. Capital 1,80,000 Goodwill 20,000 Less: Drawings (30,000) Land and Building 60,000 Add: Net Profit 92,600 2,42,600 Plant and Machinery 40,000 Sundry Creditors 63,000 Furniture 16,000 Bills Payable 10,700 Investment 20,000 Liabilities for Expenses 1,200 Closing Stock 80,000 Sundry Debtors 50,000 Less: Provision for Doubtful Debts (2,500) 47,500 Bills Receivable 13,000 Bank 20,000 Cash in Hand 1,000 3,17,500 3,17,500

 (II) Balance Sheet in Order of Liquidity Balance Sheet as on March 31,2018 Liabilities Rs. Assets Rs. Liabilities for Expenses 1,200 Cash in Hand 1,000 Bills Payable 10,700 Bank 20,000 Sundry Creditors 63,000 Bills Receivable 13,000 Capital 1,80,000 Sundry Debtors 50,000 Less: Drawings (30,000) Less: Provision for Doubtful Debts (2,500) 47,500 Add: Net Profit 92,600 2,42,600 Closing Stock 80,000 Investment 20,000 Furniture 16,000 Plant and Machinery 40,000 Land and Building 60,000 Goodwill 20,000 3,17,500 3,17,500

Solution PQ 16

i. Calculation of Fixed Asset

Fixed Assets =Land + Plant + Furniture + Goodwill

= 20,000 + 32,000 + 8,000 + 20,000 =Rs.80,000

ii. Calculation of Current Assets

Current Assets =Stock + Debtors + Prepaid Expenses

= 48,000 + 36,000 + 400 =Rs.84,400

iii. Calculation of Current Liabilities

Current Liabilities =Creditors + Expenses Accrued + Bank Overdraft + Interest on Loan

= 42,000 + 3,200 +4,800 + 1,000  = Rs.51,000

iv. Calculation of Working Capital

Working Capital = Current Assets - Current Liabilities

= 84,400 - 51,000 = Rs.33,400

Solution PQ 17

 Financial Statements of Jagat Shah Trading Account For the year ended 31st March 2018 Dr. Cr. Particulars Rs. Particulars Rs. To Opening Stock 1,00,000 By Sales 8,20,000 To Purchases 4,00,000 Less : Sales Return (10,000) 8,10,000 Less : Purchases Return (5,000) 3,95,000 By Closing Stock 2,00,000 To Wages 1,00,000 To Carriage Inwards 5,000 To Gross Profit c/d (Balancing Fig.) 4,10,000 10,10,000 10,10,000

 Profit and Loss Account For the year ended 31st March 2018 Dr. Cr. Particulars Rs. Particulars Rs. To Salaries 60,000 By Gross Profit b/d 4,10,000 To General Expenses 20,000 To Rent 50,000 To Carriage outwards 20,000 To Advertising 20,000 To Net Profit c/d (Balancing Fig.) 2,40,000 4,10,000 4,10,000

 Balance sheet as on 31st March 2018 Liabilities Rs. Assets Rs. Capital 3,60,000 Fixed Assets Less : Drawings (40,000) Machinery 70,000 Add : Net Profit 2,40,000 5,60,000 Current Assets Current Liabilities Closing Stock 2,00,000 Creditors 50,000 Debtors 3,00,000 Cash 40,000 6,10,000 6,10,000

## T. S. Grewal Solution for Class 11 Commerce Accountancy Chapter 18 - Financial Statements of Sole Proprietorship Page/Excercise 18.64

Solution PQ 18

 Trading Account Dr. Cr. Particulars Rs. Particulars Rs. To Opening Stock 2,00,000 By Sales 14,50,000 To Purchases 9,50,000 By Closing Stock 30,000 To Wages 5,00,000 By Gross Loss c/d (Balancing Fig.) 1,85,000 To Carriage 15,000 16,65,000 16,65,000

 Profit and Loss Account Dr. Cr. Particulars Rs. Particulars Rs. To Gross Loss b/d 1,85,000 To Rent 45,000 By Net Loss c/d (Balancing Fig.) 2,50,000 To Sundry Expenses 20,000 2,50,000 2,50,000

 Balance Sheet Liabilities Rs. Assets Rs. Capital 10,00,000 Fixed Assets Less : Drawings (90,000) Machinery 3,50,000 Less :Net Loss (2,50,000) 6,60,000 Current Assets Current Liabilities Closing Stock 30,000 Creditors 1,40,000 Debtors 2,70,000 Bank 1,50,000 8,00,000 8,00,000

Solution PQ 19

 Financial Statement of Dass Trading Account For the year ended March 31,2018 Dr. Cr. Particulars Rs. Particulars Rs. To Stock 1,76,000 To Purchase 6,83,000 By Sales 9,20,000 Less : Return Outwards (22,000) 6,61,000 Less: Return Inwards (13,000) 9,07,000 To Carriage Inwards 24,000 By Closing Stock 2,40,000 To Gross Profit c/d (Balancing Fig.) 2,86,000 11,47,000 11,47,000

 Profit and Loss Account For the year ended March 31,2018 Dr. Cr. Particulars Rs. Particulars Rs. To Rent, Rates and Taxes 22,000 By Gross Profit b/d 2,86,000 To Discount 37,500 To Printing 7,200 To Insurance 5,000 To Travelling Expenses 14,000 To Postage and telegram 6,200 To Miscellaneous Expenses 9,000 To Bad Debts 4,000 To Net Profit c/d (Balancing Fig.) 1,81,100 2,86,000 2,86,000

 Balance Sheet as on March 31,2018 Liabilities Rs. Assets Rs. Capital 5,25,000 Fixed Assets Less : Drawings (19,100) Business Premises 3,90,000 Add : Net Profit 1,81,100 6,87,000 Office Furniture 15,000 Loan from Sahil 50,000 Current Assets Current Liabilities Closing Stock 2,40,000 Creditors 1,28,000 Debtors 2,20,000 8,65,000 8,65,000

Solution PQ 20

 Financial Statement of Anand Trading Account For the year ended March 31,2018 Dr. Cr. Particulars Rs. Particulars Rs. To Opening Stock 99,450 By Sales