Tag: preparation of trial balance

Questions Related to preparation of trial balance

In the trial balance are shown Debtors Rs. 2400, Bad Debts Rs 221, Bad Debts Reserve Rs 324. For creating a Reserve for Doubtful Debts @ $10\%$ on debtors, the P & L A/c will be debited by :

elements of accounts trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

  1. 137

  2. 240

  3. 343

  4. 9

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Correct Option: A
Explanation:
New reserve to be created = 2,400 x 10/100
                                              = RS-240.
P & L A/c to be debited ;-
= New reserve - (Old reserve - Bad debts)
= 240 - (324 - 221)
= 240 - 103
= Rs-137. 

On 1st January 1999, the balances on different accounts in the books of Bhushan were as follows: Stock on hand Rs. 3,500; Investments Rs. 3,000; Loans from Ramji Rs. 3,500; Owing by debtors Rs. 2,500; Owing to creditors Rs. 1,500; Plant and Machinery Rs. 3,000; Bills payable Rs. 1,250; Cash at bank Rs. 2,000.
The amount of capital of Bushan on this date was.

elements of accounts trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

  1. Rs. 750

  2. Rs. 1,750

  3. Rs. 2,750

  4. Rs. 7,750

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Correct Option: D
Explanation:
Capital fund = Total assets - Total liabilities (WN 1)
                     = 14,000 - 6,250
                     = RS-7,750.

Working note:-
Total assets :- 
= stock + investments + debtors + plant and machinery + cash 
= 3,500 + 3,000 + 2,500 + 3,000 + 2,000
= RS-14,000.

Total liabilities :-
= Loans from Ramji + Creditors + Bills payable 
= 3,500 + 1,500 + 1,250
= RS-6,250. 

Carriage outwards appearing in the Trial balance are shown________________.

elements of accounts trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

  1. on the debit side of Profit and Loss Account

  2. on the debit side of Trading Account

  3. on the liabilities side of the Balance Sheet

  4. on the credit side of P&L A/c

Show answer
Correct Option: A
Explanation:

Carriage outwards is the seller's expense to transfer the goods to the customer. It is selling expense and therefore an indirect expense. Hence, carriage outwards appearing the trial balance will appear on the debit side of P & L A/c.

C's Trial Balance contains the following information: Bad debts Rs. 8,000, Provision for Doubtful debts Rs. 6,000, Sundry debtors Rs. 25,000.It is desired to create a provision for bad debts at 10% on Sundry debtors at the end of the year. Sundry debtors (after provision) will appear in Balance Sheet at a figure of :

elements of accounts trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

  1. Rs.22,500

  2. Rs.21,000

  3. Rs.18,000

  4. Rs.15,500

Show answer
Correct Option: A
Explanation:
Sundry debtors after provision = Sundry debtors before provision - Provision
                                                    = 25,000 - 10% of 25,000
                                                    = RS-22,500.

Wages and salaries appearing in Trial Balance are shown_____________.

elements of accounts trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

  1. on the debit side of Profit and Loss Account

  2. on the debit side of Trading Account

  3. on the liabilities side of the Balance Sheet

  4. None of these

Show answer
Correct Option: B
Explanation:

Wages and salaries appearing in trial balance are expenses made on wages and salaries by the company during the year. They are to be shown in the debit side of Trading account as all expenses and losses are debited.

 Wages and salaries is the remuneration paid to factory workers and hence, is to shown in Trading account. 

P's trial balance contains the following information:
Bad debts Rs.3,000
Provision for bad debts Rs.3,500
It is desired to make a provision of Rs. 4,000 at the end of the year. the amount to be debited to profit and loss a/c is_________.

elements of accounts trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

  1. Rs.4,000

  2. Rs.5,000

  3. Rs. 6,500

  4. Rs. 3,500

Show answer
Correct Option: D
Explanation:
Amount to be debited to P & L A/c :-
= new provision + bad debts - old provision 
= Rs-4,000 + Rs-3,000 - Rs-3,500
= Rs-3,500.