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Question
Following are the closing ledger balances of Deepak & Co. Prepare Trading Account and Profit & Loss Account for the year ended 31st March 2019 and Balance sheet as of that date.
Ledger Balances of Mr. Deepak and Co. as of 31st March, 2019
| Particulars | Amount (₹) | Particulars | Amount (₹) |
| Bank | 30,000 | Capital | 1,20,000 |
| Bills Payable | 7,500 | Insurance Premium | 18,000 |
| Furniture | 19,500 | (1.1.2019 to 31.12.2019) | |
| Commission Received | 3,000 | Salaries | 30,000 |
| Stock (1.4.2018) | 27,000 | Bank loan | 30,000 |
| Building | 37,500 | Sundry expenses | 7,500 |
| Wages | 7,500 | Interest paid | 1,500 |
| Creditors | 37,500 | Machinery | 25,500 |
| Bad Debts | 4,500 | Sales | 96,000 |
| R.D.D. (old) | 3,000 | Purchases | 42,000 |
| Sales Returns | 1,500 | Debtors | 31,500 |
| Purchases returns | 3,000 | ||
| Cash in hand | 16,500 |
Adjustments:
1. Closing stock was valued at ₹ 60,000
2. An amount of ₹ 3,000 is still to be received on account of commission.
3. Provision for discount on debtors and Provision for discount on Creditors are to be created 2% and 3% respectively.
4. Amount of Furniture is to reduce by ₹ 4,500 and Building by 10%.
5. Outstanding expenses Salaries ₹ 4,500 and Wages ₹ 1,500.
Solution
| In the books of Deepak & Co. | |||||
| Dr. | Trading & Profit & Loss Account for the year ended 31st March, 2019 | Cr. | |||
| Particulars | Amt. (₹) | Amt. (₹) | Particulars | Amt. (₹) | Amt. (₹) |
| To Opening Stock | 27,000 | By Sales | 96,000 | ||
| To Purchases | 42,000 | Less : Sales Return | 1,500 | 94,500 | |
| Less : Purchase Return | 3,000 | 39,000 | By Closing Stock | 60,000 | |
| To Wages | 7,500 | ||||
| Add : Outstanding | 1,500 | 9,000 | |||
| To Gross Profit c/d | 79,500 | ||||
| 1,54,500 | 1,54,500 | ||||
| To Bad debts (T) | 4,500 | By Gross Profit b/d | 79,500 | ||
| Less : Old R.D.D.(T) | 3,000 | 1,500 | By Commission Received | 3,000 | |
| To Insurance Premium | 18,000 | Add : Commission | |||
| Less : Pre-paid for 9m | 13,500 | 4,500 | Receivable | 3,000 | 6,000 |
| To Salaries | 30,000 | By Provision for Discount on creditors | 1,125 | ||
| Add : Outstanding | 4,500 | 34,500 | |||
| To Sundry Expenses | 7,500 | ||||
| To Interest paid | 1,500 | ||||
| To Provision for Discount On debtors | 630 | ||||
| To Depreciation on : | |||||
| Furniture | 4,500 | ||||
| Building | 3,750 | 8,250 | |||
| To Net Profit c/d | 28,245 | ||||
| 86,625 | 86,625 | ||||
| Balance Sheet as of 31st March 2019 | |||||
| Liabilities | Amt. (₹) | Amt. (₹) | Assets | Amt. (₹) | Amt. (₹) |
| Capital | 1,20,000 | Bank | 30,000 | ||
| Add : Net Profit | 28,245 | 1,48,245 | Furniture | 19,500 | |
| Bills Payable | 7,500 | Less : Depreciation | 4,500 | 15,000 | |
| Bank Loan | 30,000 | Building | 37,500 | ||
| Creditors | 37,500 | Less : Depreciation @ 10% | 3,750 | 33,750 | |
| Less : Provision for | Prepaid Insurance | 13,500 | |||
| Discount on Creditors @ 3 % | 1,125 | 36,375 | Machinery | 25,500 | |
| Outstanding Salaries | 4,500 | Debtors | 31,500 | ||
| Outstanding Wages | 1,500 | Less : Provision for | 630 | ||
| Discount on Debtor @ 2% | 30,870 | ||||
| Commission Receivable | 3,000 | ||||
| Cash in hand | 16,500 | ||||
| Closing Stock | 60,000 | ||||
| 2,28,120 | 2,28,120 | ||||
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Trial Balance as of 31st March 2019
| Debit balances | Amount (₹) | Credit Balances | Amount (₹) |
| Cash in hand | 4,575 | Discount | 900 |
| Cash at Bank | 15,450 | Loan from Abhay | 15,000 |
| Drawings | 18,000 | Creditors | 18,225 |
| Furniture | 6,000 | Sales | 1,95,000 |
| Plant & Machinery | 45,000 | Returns Outward | 3,000 |
| Opening Stock | 30,000 | Capital | 90,000 |
| Purchases | 1,20,000 | ||
| Salaries and Wages | 33,600 | ||
| Debtors | 30,600 | ||
| Returns Inward | 7,500 | ||
| Audit Fees | 2,250 | ||
| Rent. Rates and Taxes | 5,400 | ||
| Bad debts | 600 | ||
| Travelling Expenses | 750 | ||
| Insurance | 1,200 | ||
| Interest on Loan from Abhay | 450 | ||
| Trade Expenses | 300 | ||
| Sundry expenses | 450 | ||
| 3,22,125 | 3,22,125 |
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1. Stock on hand on 31st March 2019 valued at ₹ 60,000
2. Rent amounting to ₹ 600 Prepaid.
3. Bad Debts ₹ 600 and create a Provision for Doubtful Debts 5%
4. Depreciation on Plant & Machinery by 10% and Furniture is valued at ₹ 4,500
5. Outstanding Salaries ₹ 900
From the following Trial Balance of Rajnish & Sons and the additional information given below prepare Trading & Profit and Loss Account for the year ending on 31st March 2018 and Balance Sheet as on that date.
Trial Balance as of 31st March 2018
| Debit balances | Amount (₹) | Credit Balances | Amount (₹) |
| Stock (01.04.2017) | 1,20,000 | Capital | 6,00,000 |
| Purchases | 4,00,000 | Sales | 3,00,000 |
| Wages | 17,000 | Return outward | 8,000 |
| Carriage | 6,000 | Sudnry Creditors | 1,80,000 |
| Salaries | 60,000 | Bills Payable | 90,000 |
| Rent, Rates and Taxes | 12,000 | 8% Loan (taken on 01.10.2017) | 1,00,000 |
| Insurance | 8,000 | Bank Overdraft | 79,200 |
| Royalties | 10,000 | ||
| Discount | 4,500 | ||
| Courier charges | 5,200 | ||
| Bad Debts | 7,000 | ||
| Trade Expenses | 2,500 | ||
| Drawings | 15,000 | ||
| Machinery | 3,00,000 | ||
| Furniture | 1,50,000 | ||
| Patents | 50,000 | ||
| Sundry Debtors. | 1,90,000 | ||
| 13,57,200 | 13,57,200 |
Adjustments:
1. Closing Stock valued at ₹ 3,00,000 cost price and ₹ 3,20,000 at Market price.
2. Salaries were paid for 10 months only.
3. Insurance is paid for one year ending on 30.06.2018
4. One of the debtors Mr. Amit became insolvent, from whom ₹ 10,000 was not received.
5. 5% R.D.D. is to be maintained on Debtors.
6. Depreciate Machinery & Furniture @ 10% and 5% respectively.
From the following Trial Balance of Pushkraj, you are required to prepare Trading Account and Profit and Loss Account for the year ended 31st March 2019 and Balance Sheet as of that date.
Trial Balance as of 31st March 2019
| Debit balances | Amount (₹) | Credit Balances | Amount (₹) |
| Drawings | 2,000 | Capital | 80,000 |
| Motor Car | 30,000 | Sundry Creditors | 25,000 |
| Cash in hand | 1,000 | Dividend | 4,800 |
| Bills Receivable | 20,000 | Commission | 2,535 |
| Wages | 1,000 | 8% Loan (taken on | 13,700 |
| Discount | 235 | 1.7.2018) | |
| Rent | 300 | Purchases Returns | 400 |
| Advertisement | 2,500 | Sales | 38,680 |
| Bad Debts | 500 | ||
| Travelling expenses | 1,000 | ||
| Purchases | 27,400 | ||
| Machinery | 30,000 | ||
| Office expenses | 500 | ||
| Sales Returns | 680 | ||
| Opening Stock | 10,000 | ||
| Sundry Debtors | 35,500 | ||
| Carriage Outward | 500 | ||
| Cash at Bank | 2,000 | ||
| 1,65,115 | 1,65,115 |
Adjustments:
1. Stock on 31st March 2019 was valued at ₹ 28,000
2. Create a Provision for doubtful debts on Sundry Debtors @ 5%
3. Depreciate Motor car by 5% p.a. and Machinery by 7% p.a.
4. Outstanding expenses Rent ₹ 800 & Wages ₹ 1,000
5. Charge interest on Capital @ 3% p.a.
6. Goods of ₹ 4,000 withdrawn by the proprietor for personal use.
From the following Trial Balance of Manish Enterprise, Prepare the Trading Account and Profit and Loss Account for the year ended 31st March 2019 and Balance sheet as of that date.
Trial Balance as of 31st March 2019
| Debit balances | Amount (₹) | Credit Balances | Amount (₹) |
| Cash in hand | 5,200 | Capital | 50,000 |
| Opening stock | 10,370 | Bank Loan | 15,000 |
| Goodwill | 10,000 | Bills Payable | 8,500 |
| Patents | 4,000 | Creditors | 38,260 |
| Cash at Bank | 4,400 | General Reserve | 1,500 |
| Freight | 2,500 | Dividend | 2,000 |
| Power & Fuel | 1,500 | Interest on Fixed Deposit | 3,440 |
| Furniture | 12,000 | Sales | 40,000 |
| Purchases | 35,260 | ||
| Mobile charges | 3,200 | ||
| Factory Salaries | 2,400 | ||
| Repairs | 800 | ||
| Lighting | 1,000 | ||
| Carriage outward | 360 | ||
| Professional charges | 1,240 | ||
| Debtors | 40,000 | ||
| Plant & Machinery | 13,700 | ||
| Office Equipments | 10,000 | ||
| Carriage Inwards | 770 | ||
| 1,58,700 | 1,58,700 |
Adjustments:
1. Closing Stock was ₹ 32,000.
2. Write off 50% of patents, depreciate Plant & Machinery by 10% p.a and Office Equipment by 20%.
3. Reserve for bad debts is to be created 5% and discount on Debtors 2%.
4. Outstanding expenses Mobile charges ₹ 300 and Freight ₹ 500
5. Charge Interest on Capital @ 5%.
6. Goods of ₹ 2,000 distributed on free samples.
