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प्रश्न
Why is a Trading Account prepared?
उत्तर
The Trading Account is established for the following reasons:
- It provides information about gross profit. A trading company's success can be measured by its percentage of gross earnings to sales.
- The gross profit-to-sales ratio allows traders to compare their performance over time.
APPEARS IN
संबंधित प्रश्न
What is meant by purchase returns?
Closing stock appears in the Final Accounts in the ______.
Closing stock is on the credit side of the ______ and also in ______.
The following is the trial balance of Mr. R.P. Sharma for the year ended 31st December, 2018. Compile the final accounts for him, after attending to the adjustments and thereafter also submit the required information, listed by him.
| Debit (₹) | Credit (₹) | |
| Land | 1,00,000 | |
| Freehold Premises | 60,000 | |
| Bills Receivable and Payable | 20,000 | 24,000 |
| Wages | 15,000 | |
| Rejection of Goods Including Price Adjustments | 2,500 | 3,500 |
| Personal Accounts Resulting from Credit Sales and Purchases | 31,000 | 15,000 |
| Purchase and Sales Including Cash Transactions | 40,500 | 96,000 |
| Salaries | 7,000 | |
| Insurance and Municipal Taxes | 1,500 | |
| Rentals | 2,000 | 4,500 |
| Bad Debts | 600 | |
| Carriage | 3,000 | |
| Opening Stock | 5,000 | |
| Commission Accounts | 500 | 600 |
| Vehicles | 62,000 | |
| Machinery | 85,000 | |
| Drawings and Capital Accounts | 8,000 | 1,75,000 |
| Loan from the S.F.C. | 1,25,000 | |
| 4,43,600 | 4,43,600 |
Closing stock value is ₹ 7,500.
The following is the Trial Balance of Mr. V. Iyer for the year ended 31st December, 2018. Compile the final accounts for him, after incorporating the adjustments given.
| Dr. (₹) | Cr. (₹) | |
| 10% Loan on Mortgage of Premises | 34,000 | |
| Machinery | 50,000 | |
| Debtors and Creditors | 24,000 | 21,400 |
| Loose Tools | 5,000 | |
| Premises (owner built and mortgaged) | 75,000 | |
| Capital Invested and Cash Drawn | 4,000 | 1,00,000 |
| Stock (1.1.2018) | 18,000 | |
| Sales Against Cash | 48,000 | |
| Sales Against Credit | 72,000 | |
| Salaries | 10,000 | |
| Wages | 4,000 | |
| Carriage Outward | 2,000 | |
| Bad Debts Written off | 500 | |
| Royalty (Direct Expenses) | 3,000 | |
| Cash and Bank Balances | 6,000 | |
| Rent Paid | 5,000 | |
| Commissions | 400 | 500 |
| Purchases (Cash and Credit) and Returns | 66,000 | 6,000 |
| Rates and Taxes | 3,000 | |
| Miscellaneous Expenses | 6,000 | |
| 2,81,900 | 2,81,900 |
Closing stock is valued at ₹ 50,000.
The following is the trial balance of Mr. J. Jehangir as on 31st March, 2018.
| Dr. (₹) | Cr. (₹) | |
| Stock as on 1.4.18 | 25,000 | |
| Rates and Insurance | 11,900 | |
| Factory Power & Fuel | 16,000 | |
| Machineries | 1,00,000 | |
| Loose Tools | 10,000 | |
| Commission Earnings | 2,000 | |
| Discounts Received and Allowed | 6,000 | 5,000 |
| Personal Accounts of Suppliers & Customers | 48,000 | 20,000 |
| Salaries | 25,500 | |
| Wages | 13,000 | |
| Returns (of goods traded in) | 5,000 | 3,000 |
| Carriage Inward | 2,000 | |
| Carriage Outward | 5,000 | |
| Rent | 8,300 | |
| Purchases & Sales | 1,40,000 | 2,55,000 |
| Bad Debts Finalised & Recovered | 2,000 | 200 |
| Bills Receivable & Payable | 6,000 | 3,000 |
| Investments | 80,000 | |
| Income from Above Investments | 5,000 | |
| Bank Balances | 20,000 | 10,000 |
| Cash in Hand | 500 | |
| Capital & Drawings | 15,000 | 2,36,000 |
| 5,39,200 | 5,39,200 |
Compile the final accounts for the owner.
An inventory of the godown on 31.3.2018, reflected unsold stock valued ₹ 50,000.
From the following Trial Balance of Mr. P.H. Planner as on 31.3.2019, prepare final accounts for him:
| Debit (₹) | Credit (₹) | |
| Duty, Clearing and Freight | 10,000 | |
| Stock (1.4.2018) | 30,000 | |
| Goodwill | 30,000 | |
| Salary, Bonus and Travel Allowance | 25,000 | |
| Leasehold Premises | 90,000 | |
| Purchases and Sales | 2,40,000 | 3,80,000 |
| Debtors and Creditors | 20,000 | 15,000 |
| Capital and Drawings | 20,000 | 1,60,000 |
| General Expenses | 16,000 | |
| Factory Equipment and Tools | 18,000 | |
| Bank | 5,000 | |
| Interest-free Loan from Mr. P.H. Planner for four years | 80,000 | |
| Wages and Bonus | 35,000 | |
| Cash and Petty Cash | 17,000 | |
| Plant and Machinery | 50,000 | |
| Bill Payable and Receivable | 12,000 | 8,000 |
| Professional Charges | 18,000 | |
| Returns | 7,000 | 4,000 |
| Insurance and Office Expenses | 14,000 | |
| 6,52,000 | 6,52,000 |
Closing Stock is ₹ 45,000.
Trial Balance of Mr. J. Junior as on 31.3.2019:
| Debit (₹) | Credit (₹) | |
| Factory Power | 16,000 | |
| Carriage Charges | 2,500 | |
| Salaries | 20,400 | |
| Sales & Purchases of Goods | 1,40,000 | 2,67,000 |
| Machinery | 1,20,000 | |
| Discounts Received and Allowed | 5,000 | 6,000 |
| Wages (manufacturing activity) | 18,000 | |
| Stock | 25,000 | |
| Commission | 3,800 | |
| Insurance | 8,000 | |
| Loose Tools (Fixed Asset) | 11,000 | |
| Returns of Goods | 5,000 | 6,000 |
| Debtors & Creditors | 45,000 | 18,000 |
| Carriage on Sales | 6,000 | |
| Rent & Rates | 10,800 | |
| Bad Debts Written off & Recovered | 2,000 | 1,600 |
| Investments | 80,000 | |
| Bank Accounts | 22,000 | 10,000 |
| Drawings & Capital | 15,000 | 2,37,000 |
| Bills Payable & Receivable | 6,000 | 4,000 |
| Income from Investments | 6,800 | |
| Cash | 2,500 | |
| 5,60,200 | 5,60,200 |
Compile Final Accounts:
- An inventory of the godown on 31.3.2019 reflected stock value stated as ₹ 50,000.
Prepare Trading, Profit and Loss A/c and Balance Sheet of M/s Banerjee Enterprises for the Year ended 31st March, 2010 from the following Trial Balance.
| Heads of Accounts | (Dr.) (₹) | (Cr.) (₹) |
| Opening Stock | 25,000 | - |
| Purchases and Sales | 75,000 | 2,00,000 |
| Discounts | 3,600 | 6,000 |
| Debtors and Creditors | 32,000 | 15,000 |
| Bad debts | 400 | - |
| Cash-in-Hand | 3,000 | - |
| Machinery | 50,000 | - |
| Salaries | 8,000 | - |
| Carriage Inwards | 2,000 | - |
| Wages | 6,000 | - |
| Investments | 20,000 | - |
| Land and Building | 90,300 | - |
| Bank Overdraft | - | 20,000 |
| Commissions | 1,350 | 3,510 |
| Interest on Investments | - | 2,000 |
| Electricity | 2,000 | - |
| Rent | 2,500 | - |
| Insurance | 1,800 | - |
| Capital | - | 76,440 |
| 3,22,950 | 3,22,950 |
Closing stock was ₹ 10,360.
The following is the Trial Balance of ABC Industries as on 31st December 2015.
| TRIAL BALANCE of ABC Industries as on 31.12.2015 | |||
| Particulars | Amount (Dr.) | Particulars | Amount (Cr.) |
| Salaries | 4,000.00 | Sales | 83,000.00 |
| Cash Balance | 2,000.00 | Rent Received | 2,000.00 |
| Bank Balance | 3,000.00 | Purchases Returns | 1,000.00 |
| Wages | 1,500.00 | Creditors | 7,000.00 |
| Insurance | 500.00 | Capital Account | 25,000.00 |
| Trade Expenses | 7,000.00 | ||
| Discount Allowed | 750.00 | ||
| Opening Stock (1.1.2015) | 5,000.00 | ||
| Buildings | 40,000.00 | ||
| Furniture | 15,000.00 | ||
| Sales Returns | 250.00 | ||
| Drawings | 1,000.00 | ||
| Debtors | 5,000.00 | ||
| Purchases | 30,000.00 | ||
| Legal Charges | 1,000.00 | ||
| Advertisement Expenses | 2,000.00 | ||
| 1,18,000.00 | 1,18,000.00 | ||
The closing stock was valued at ₹ 9,000.
You are required to prepare a Trading Account and a Profit and Loss Account for the year ending 31st December 2015 and a Balance Sheet as on 31st December, 2015.
