TS Grewal Class 11 Accountancy Solutions Chapter 15 – Financial Statements of Sole Proprietorship 2023

TS Grewal Class 11 Accountancy Solutions Chapter 15 – Financial Statements of Sole
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Question 1:

State whether the following expenses are capital or revenue in nature:
(i) Expenses on whitewashing and painting of a building purchased to make it ready for use.
(ii) ₹ 10,000 spent on constructing a platform for a new machine.
(iii) Repair expenses of ₹ 25,000 incurred for the whitewashing of the factory building.
(iv) Insurance premium paid as renewal premium.
(v) Purchased a new car.

ANSWER:

(1) Capital Expenditure: Paid to make an asset ready to use

(2) Capital Expenditure: Paid to make an asset ready to use

(3) Revenue Expenditure: Made for the maintenance of asset

(4) Revenue Expenditure: Part of normal operating cost

(5) Capital Expenditure: Used in business for a number of years

Question 2:

State with reasons whether the following are Capital or Revenue Expenses:
(i) Excise duty paid on the purchase of the new machine.
(ii) Wages paid to install a machine.
(iii) Repairs carried out on the existing car.
(iv) Office block of building repainted for ₹ 50,000.
(v) Paid telephone bill ₹ 2,500.

ANSWER:

(1) Capital Expenditure: Paid for the acquisition of a new asset

(2) Capital Expenditure: Paid to make the asset ready to use

(3) Revenue Expenditure: Paid for the running and maintenance of the car

(4) Revenue Expenditure: Paid for the maintenance of the Building

(5) Revenue Expenditure: Part of normal operating cost

Question 3:

From the following information determine Gross Profit for the year ended 31st March, 2018

	₹		₹
Opening Stock (1st April 2017)	25,000	Goods purchased during the year	1,40,000
Freight and Packing	10,000	Closing Stock (31st March 2018)	30,000
Sales	1,90,000	Packing Expenses on Sales	6,000

ANSWER:

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

Alternatively,

Trading Account for the year ended March 31, 2018
Dr.			Cr.
Particulars	Amount (Rs)	Particulars	Amount (Rs)
Opening Stock	25,000	Sales	1,90,000
Purchases	1,40,000	Closing Stock	30,000
Freight and Packing	10,000
Gross Profit (Balancing Figure)	45,000
	2,20,000		2,20,000

Note: Packing Expenses (Rs 6,000) on Sales is an Indirect Expense, therefore it is not considered to compute the amount of Gross Profit.

Question 4:

Calculate Closing Stock from the following details:
 

	₹		₹
Opening Stock	20,000	Purchases	70,000
Cash Sales	60,000	Credit Sales	40,000
		Rate of Gross Profit on Cost 3313%3313%

ANSWER:

Calculation of amount of Closing StockGross Profit=3313% on cost =13rd on cost∴Gross Profit on sales =14th on salesAnd, Sales = Cash Sales + Credit Sales = 60,000+40,000 = Rs 1,00,000So, Gross Profit =1,00,000×14=Rs 25,000Cost of Goods Sold=Sales−Gross Profit                               =1,00,000−25,000=Rs 75,000Cost of Goods Sold=Opening Stock+Purchases+Direct Expenses−Closing Stock75,000=20,000+70,000+0−Closing StockClosing Stock=Rs 15,000

Question 5:

Prepare Trading Account from the transactions given below:
 

	₹		₹
Opening Stock	23,000	Purchases Return	2,400
Purchases	29,000	Closing Stock	47,700
Sales Return	500	Carriage Inwards	100
Sales	25,400	Depreciation	2,000

Also, pass the Journal entries.

ANSWER:

Trading Account
Dr.							Cr.
Particulars			Amount (Rs)	Particulars		Amount (Rs)
Opening Stock			23,000	Sales	25,400
Purchases		29,000		Less: Sales Return	(500)	24,900
Less: Purchases Return		(2,400)	26,600	Closing Stock		47,700
Carriage Inwards			100
Gross Profit (Balancing Figure)			22,900
			72,600			72,600

Note: Depreciation is an Indirect Expense, therefore it is not shown in the Trading Account.
 

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (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
	(Transfer of balances to the debit side of Trading A/c)
	Sales A/c	Dr.		25,400
	Purchase Return A/c	Dr.		2,400
	To Trading A/c				27,800
	(Transfer of balances to the credit side of Trading A/c)
	Closing Stock A/c	Dr.		47,700
	To Trading A/c				47,700
	(Recording of Closing Stock)
	Trading A/c	Dr.		22,900
	To Profit & Loss A/c				22,900
	(Transfer of gross profit to the Profit & Loss A/c)

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