Are you looking for problems and solutions on hotel accounting? You are at the right place! In this article we have compiled top two problems on hotel accounting with its relevant solutions.
- Preparation of Final Accounts of a Hotel
- Preparation of Profit and Loss Account and the Balance Sheet of the Company in a Form Which Complies with the Requirements of the Companies Act, 1956
Problems on Hotel Accounting
1. Preparation of Final Accounts of a Hotel:
The following are the balances from the ledger of Sagarika Hotel, on 31st Dec. 1999:
Prepare Final Account for the year ended 31st Dec. 1999 Stock on 3.12.1999: Wines Rs. 1,197; Spirits Rs. 333; Beers Rs. 174; Minerals Rs. 357; Cigars and Cigarettes Rs. 69; Sundry Provisions and Stores Rs. 141; Coal Rs. 99.
2. Preparation of Profit and Loss Account and the Balance Sheet of the Company in a Form Which Complies with the Requirements of the Companies Act, 1956:
The Steamship Co. Ltd. has an authorised capital of 30,000 ordinary shares of Rs. 100 each.
The following balances have been extracted on 31st Dec. 1999 from the books of the company:
You are required to prepare the Profit and Loss Account and the Balance Sheet of the company in a form which complies with the requirements of the Companies Act, 1956, after taking the following information into consideration and after making necessary assumptions:
(i) The Articles of Association of the company provides as under:
(a) Depreciation @ 6% should be charged to the Profit and Loss Account on the original cost of the steamers owned by the company.
(b) Surplus, if any, of the book value of a steamer on realisation should be carried to a ‘Steamer Purchase Reserve Account’ and deficit to be charged to Profit and Loss Account.
(c) In the event of inadequacy of profits, Dividend Equalisation Reserve should be made use of to the extent it is necessary to make good the deficiency in the proposed amount of dividend.
(ii) S. S. Jalabharat was acquired at a cost of Rs. 7,00,000 on 1st May, 1999. It met with an accident on 1st Sept. 1999, and provided a total loss. The underwriters have agreed to settle the claim for Rs. 3,50,000.
(iii) The ordinary shares on which the final call was unpaid were forfeited by the Board during the year and have not been re-issued.
(iv) Furniture is to be depreciated at 10% on original cost.
(v) In the Profit and Loss Account of the year 1997, a provision of Rs. 25,000 was made in respect of a claim for damages. This claim was settled in Sept. 1999 for Rs. 17,800 and the balance of the provision is included in the item ‘Sundry Creditors’.
(vi) The directors propose to pay a dividend of Rs. 5 per share, subject to deduction of tax.