Question 4 (a)
Club restaurant: profit as per the Restaurant Trading Account
3 marks
- Time to write
- About 6 minutes
From an older CBCS paper
Question
Question 4 (a) · 3 marks7.HIMALAYA CLUB, which also runs a Restaurant, gives you the information below:
- BALANCES, OPENING AND CLOSING
| Particulars | As on 1.4.2020 ₹ | As at 31.3.2021 ₹ |
|---|---|---|
| Furniture | 3,30,000 | ? |
| Sports Equipment | 3,30,000 | ? |
| China Glass, Cutlery etc., | 37,500 | ? |
| 6% Govt. Securities [Face value ₹ 4,50,000] | 3,75,000 | ? |
| Stock of Sports Materials | 4,500 | 750 |
| Advances to Suppliers of Sports Materials | 1,500 | 750 |
| Due to Suppliers of Sports Materials | 4,500 | 2,700 |
| Stock of Stationery | 3,000 | ? |
| Unpresented cheques (payment for stationery) | 1,350 | 450 |
| Subscription Outstanding | 7,125 | 5,250 |
| Subscription Received-in-Advance | 2,100 | 3,900 |
| Outstanding Miscellaneous Expenses | 7,125 | 5,250 |
| Miscellaneous Expenses paid in advance | 2,100 | 3,900 |
| Outstanding Wages | 7,500 | 6,000 |
| Cash Balance | 15,000 | 45,000 |
| Bank Balance (as per Pass Book) | 7,50,000 | ? |
| Stock of Provisions | 45,000 | 5,70,000 |
| Debtors for Provisions | 45,000 | 60,000 |
| Creditors for Provisions | 1,50,000 | 75,000 |
PAYMENTS: Suppliers of Sports Materials ₹ 16,200,Miscellaneous Expenses ₹ 1,11,675,Wages ₹ 76,500,Stationery ₹ 2,400, Furniture (Purchased on 1.10.2020) ₹ 2,25,000,Sports Equipment (purchased on 1.10.2020) ₹ 2,25,000,8% R.B.I Tax Free Bonds (bought on 1.1.2021) [Face Value ₹ 1,50,000] ₹ 1,18,800,Creditors for Provisions ₹ 15,75,000,Cash Purchases of Provisions – 1/11th of all Purchases.
RECEIPTS: Subscription ₹ 1,11,675,Interest on 6% Govt. Securities (After T.D.S. @ 10%) ₹ 12,150,Collection from Debtors for Provisions ₹ 13,35,000,Cash Sales of Provisions –10% of all Sales
4.Other Information:Rates of Depreciation:On China Glass & Cutlery, 20%, On Furniture, 10% p.a., and On Sports Equipment, 10%. The boarding expenses cost ₹ 41,250(₹ 30,000 of it for Restaurant staff).. Furniture with a book value of ₹ 30,000 as on 1.4.2020 was then sold, at a loss of 20%, on 31.12.2020.Write off 25% of Stationery.
Answer:
- For the year ending on March 31, 2021, calculate the amount of Profit/Loss as per the Restaurant Trading Account.[3 Marks]
[Note:Financial Statements in detail need not be prepared.]
Reworded from the university paper: names and figures differ, the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.
Before you write
Read off the question and its marks
Read from the question
- calculateFormula first, then the working, then the answer with its unit (₹, %, units).
What the paper leaves open
- The boarding expenses for restaurant staff are charged to the restaurant.
- Stationery: 25% of the stationery available is written off as consumed; the unpresented cheques are payments already in the cash book, and the bank balance at the year end is reconciled from the pass book.
- "7." before the club's name is kept as printed.
Write it in this order
- 1 Purchases and sales of provisions 1½ marks 3 min
- 2 Restaurant trading result 1½ marks 3 min
Try it first. About 6 minutes for 3 marks. Write it out, then open the solution.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
A club's trading activity, such as a bar or restaurant, is shown in a separate trading account whose result is carried to the Income and Expenditure Account, which records only the revenue items of the year.
Purchases and sales of provisions
| Item | Working | ₹ |
|---|---|---|
| Credit purchases | paid 15,75,000 + closing creditors 75,000 − opening creditors 1,50,000 | 15,00,000 |
| All purchases (cash purchases 1/11, so credit purchases 10/11) | 15,00,000 × 11/10 | 16,50,000 |
| Credit sales | collected 13,35,000 + closing debtors 60,000 − opening debtors 45,000 | 13,50,000 |
| All sales (cash sales 10%, so credit sales 90%) | 13,50,000 ÷ 0.9 | 15,00,000 |
Boarding. No payment for boarding is listed, so the ₹41,250 is taken as provisions used to feed the staff: the restaurant staff's ₹30,000 stays in the restaurant's cost (paper note), and the club staff's ₹11,250 is transferred out to the Income and Expenditure Account.
Restaurant Trading Account for the year ended 31 March 2021
| Dr | ₹ | Cr | ₹ |
|---|---|---|---|
| To Opening stock of provisions | 45,000 | By Sales of provisions | 15,00,000 |
| To Purchases of provisions | 16,50,000 | By Closing stock of provisions | 5,70,000 |
| To Profit (transferred to the I&E Account) | 3,86,250 | By Boarding of club staff (transferred to I&E) | 11,250 |
| 20,81,250 | 20,81,250 |
| Dr | ₹ |
|---|---|
| To Opening stock of provisions | 45,000 |
| To Purchases of provisions | 16,50,000 |
| To Profit (transferred to the I&E Account) | 3,86,250 |
| 20,81,250 | |
| Cr | ₹ |
| By Sales of provisions | 15,00,000 |
| By Closing stock of provisions | 5,70,000 |
| By Boarding of club staff (transferred to I&E) | 11,250 |
| 20,81,250 |
Restaurant profit: ₹3,86,250. The other readings. If the boarding were a separate restaurant expense of ₹30,000, not met from the provisions, the profit would be ₹3,45,000; if, further, the wages (₹75,000 for the year) and the depreciation on china, glass and cutlery (₹7,500) were also charged to the restaurant, it would be ₹2,62,500. The question attaches neither to the restaurant.
Where the 3 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Purchases and sales of provisions | 1.5 |
| 2 | Restaurant trading result | 1.5 |
| Total | 3 |
Report a problemopens an email to admin@getkunji.com with the question IDFAH21-Q4aalready filled in.