Financial Statements 1 - Class 11 Commerce Accountancy - Extra Questions

An account which is prepared on the basis of direct expenses and direct incomes to ascertain or find out gross profit or gross loss made in the business done in the accounting year is called a Trading Account.

Operating profit = (Net Profit + non-operating Expenses - Non-operating Income)
Hence, Net Profit = (Opening Profit + Non-operating Income - Non-operating Expenditure)
Operating profit (Given) = Rs. 17,00,000
Non-operating income = Rs. 1,50,000
Non-operating expenses = Rs. 3,75,000
Hence, Net profit = 17,00,000+1,50,000 - 3,75,000 = Rs. 14,75,000

Cost of goods sold is the cost incurred for the direct material and direct labour/expenses that are used in the production/manufacture of goods sold. 

Trading account is prepared to find out gross result of the business done in the accounting year i.e., gross profit or gross loss of the business.

Goods which are returned by customers are called return inwards or sales return. These are shown as deduction from total sales and the computed amount is known as net sales.

Goods which are returned to suppliers are called as purchases return. It is shown by way of deduction from purchases and the computed amount is known as net purchases.

Wages refer to remuneration which is paid to the workers who are directly engaged in factory for loading, unloading and production of goods. These are debited to trading account.

Opening stock is the stock of goods left with the firm at the beginning of the accounting year. It is the stock of goods which was carried forward from previous year and remains unchanged during the year. It also appears in the trial balance. It also forms a part of cost of goods sold for the current year.

The creditor's name is Mr.Peace and the amount payable to him is Rs.1,50,000.

The Debtor's name is Mr.Ravi and the amount receivable from him is Rs.1,00,000.

Answer : 
Dr                                Debtor's Account                        Cr

Date	Particulars	JF	Amt.(Rs)	Date	Particulars	JF	Amt. (Rs)
	To Balance b/d (Balancing figure)		$$54,000$$		By Discount Allowed		$$2,500$$
	To Bills Receivable (Dishonoured)		$$3,500$$		By Bills Receivable (Received)		$$75,000$$
	To Sales Credit		$$3,15,000$$		By Cash A/c		$$2,20,000$$
					By Balance c/d		$$75,000$$
			$$3,72,500$$				$$3,72,500$$

Dr                                              Creditor's Account                                 Cr

Date	Particulars	JF	Amt.(Rs)	Date	Particulars	JF	Amt.(Rs)
	To Discount Received		$$1,500$$		By Balance b/d		$$50,000$$
	To Cash A/c		$$1,35,000$$		By Purchases (credit)		$$2,95,000$$
	To Bills Receivable (Acceptance)		$$30,000$$
	To Balance c/d (Balancing figure)		$$1,78,500$$
			$$3,45,000$$				$$3,45,000$$

Note : It is assumed that all purchase is credit purchase.
Working Note
Computation of Credit Sales
Sales = Cost of goods sold + Gross profit
Cost of goods sold = Opening stock + Purchases - Closing stock
                             = $$30,000 + 2,95,000 - 25,000 = 3,00,000$$
When the cost of goods sold is Rs $$3,00,000$$.
Sales will be (Total) = $$3,00,000$$ + 25\%$$ Gross Profit
Gross profit is calculated on sales hence to calculate it on cost of goods sold. The formula will be
                 = $$[Cost of goods \times \frac{25}{100-25}]$$
                 = $$[3,00,000 \times \frac{25}{75}]$$
Total Sales = $$3,00,000 + 1,00,000 = Rs.4,00,000$$
As we know that cash sales is Rs $$85,000$$
So credit sales will be = $$4,00,000 - 85,000 = Rs 3,15,000$$

Credit Purchases are recorded in books through purchase day book and cash purchases are recorded through cash book. The goods which are purchased may have some default and need to be returned to the supplier. It is called purchases returns.