Provide solutions to the following accounting problems: 1. List any four users of accounting information. 2. Write down any four objectives of a trial balance. 3. Calculate closing retained earnings.

The formula for closing retained earnings is:

$$\text{Closing Retained Earnings} = \text{Opening Retained Earnings} + \text{Net Profit for the year} - \text{Dividend paid} - \text{Profit transfer to sinking fund} - \text{Profit transfer to general reserve}$$

• Opening Retained earnings: Rs. 20,000
• Net profit for the year: Rs. 40,000
• Dividend paid: Rs. 15,000
• Profit transfer to sinking fund: Rs. 6,000
• Profit transfer to general reserve: Rs. 14,000

$$\text{Closing Retained Earnings} = \text{Rs. } 20,000 + \text{Rs. } 40,000 - \text{Rs. } 15,000 - \text{Rs. } 6,000 - \text{Rs. } 14,000$$

$$\text{Closing Retained Earnings} = \text{Rs. } 60,000 - \text{Rs. } 15,000 - \text{Rs. } 6,000 - \text{Rs. } 14,000$$ $$\text{Closing Retained Earnings} = \text{Rs. } 45,000 - \text{Rs. } 6,000 - \text{Rs. } 14,000$$ $$\text{Closing Retained Earnings} = \text{Rs. } 39,000 - \text{Rs. } 14,000$$ $$\text{Closing Retained Earnings} = \text{Rs. } 25,000$$

The closing retained earnings are:

$$\boxed{\text{Rs. } 25,000}$$

4. Prepare accounting equation of following transaction:

The accounting equation is Assets = Liabilities + Equity.

a) Business Started with cash and furniture of Rs. 20,000 and Rs.30,000 respectively.

• Cash (Asset) increases by Rs. 20,000.
• Furniture (Asset) increases by Rs. 30,000.
• Capital (Equity) increases by Rs. 20,000 + Rs. 30,000 = Rs. 50,000.

$$\text{Assets} (\text{Cash } + \text{ Furniture}) = \text{Liabilities} + \text{Equity} (\text{Capital})$$ $$\text{Rs. } 20,000 + \text{Rs. } 30,000 = \text{Rs. } 0 + \text{Rs. } 50,000$$ $$\boxed{\text{Rs. } 50,000 = \text{Rs. } 50,000}$$

b) Purchase plant of Rs, 10,000 and partial payment only Rs. 6,000

• Plant (Asset) increases by Rs. 10,000.
• Cash (Asset) decreases by Rs. 6,000.
• Accounts Payable (Liability) increases by Rs. 10,000 - Rs. 6,000 = Rs. 4,000.

$$\text{Assets} (\text{Plant} - \text{ Cash}) = \text{Liabilities} (\text{Accounts Payable}) + \text{Equity}$$ $$\text{Rs. } 10,000 - \text{Rs. } 6,000 = \text{Rs. } 4,000 + \text{Rs. } 0$$ $$\boxed{\text{Rs. } 4,000 = \text{Rs. } 4,000}$$

5. Prepare trial balance of following items.

S.N.	Particulars	Debit (Rs.)	Credit (Rs.)
1	Common stock		40,000
2	Bank loan		30,000
3	Salary payable		35,000
4	Machinery	50,000
5	Closing stock	20,000
6	Bank balance	15,000
7	Accounts receivable	20,000
8	Cash in hand	10,000
9	Sales		1,00,000
10	Purchases	70,000
11	Rent paid	5,000
12	Commission received		8,000
13	Capital		50,000
14	Drawings	10,000
	Total	2,00,000	2,63,000

The trial balance does not balance with the given figures.