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Question
From the trial balance of Sumathi and the adjustments prepare the trading and profit and loss account for the year ended 31st March, 2016, and a balance sheet as on that date.
| Particulars | Debit ₹ | Credit ₹ |
| Stock on April 1, 2015 | 900 | |
| Purchases | 2,000 | |
| Sales | 4,000 | |
| 10% Loan | 2,000 | |
| Carriage on purchases | 200 | |
| Rent from tenant | 250 | |
| Interest on loan | 100 | |
| Machinery | 400 | |
| Postage | 100 | |
| Salary | 650 | |
| Commission received | 200 | |
| Cash in hand | 75 | |
| Furniture | 4,000 | |
| Capital | 1,975 | |
| 8,425 | 8,425 |
Adjustments
(a) Six months interest on the loan is outstanding.
(b) Two months rent is due from the tenant, the monthly rent being ₹ 25.
(c) Salary for the month of March 2016, ₹ 75 is unpaid.
(d) Stock in hand on March 31, 2016, was valued at ₹ 1,030.
Solution
Trading and Profit & Loss A/c of Sumathi
for the year ended 31st March 2016
| Dr. | Cr. | |||||
| Particulars | ₹ | ₹ | Particulars | ₹ | ₹ | |
| To Opening stock | 900 | By Sales | 4,000 | |||
| To Purchases | 2,000 | By Closing Stock | 1,030 | |||
| To Carriage on purchases | 200 | |||||
| To Gross profit c/d | 1,930 | |||||
| 5,030 | 5,030 | |||||
| To Interest on loan | 100 | 200 | By Gross profit b/d | 1,930 | ||
| Add: Outstanding | 100 | By Rent from tenant | 250 | 300 | ||
| To Postage | 100 | Add: Accrued rent (25 × 5) | 50 | |||
| To Salary | 425 | 500 | By Commission received | 200 | ||
| Add: Unpaid salary | 75 | |||||
| To selling expenses | 225 | |||||
| To Net profit c/d | 1,405 | |||||
| 2,430 | 2,430 | |||||
Balance Sheet of Sumathi
as on 31.03.2016
| Liabilities | ₹ | ₹ | Assets | ₹ |
| Capital | 1,975 | Cash in hand | 75 | |
| Add: Net profit | 1,405 | 3,380 | Furniture | 4,000 |
| Loan @ 10% | 2,000 | 2,100 | Machinery | 400 |
| Add: Outstanding interest | 100 | Accrued rent | 50 | |
| Salary unpaid | 75 | Closing stock | 1,030 | |
| 5,555 | 5,555 |
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Pass adjusting entries for the following:
- The closing stock was valued at ₹ 5,000
- Outstanding salaries ₹ 150
- Insurance prepaid ₹ 450
- ₹ 20,000 was received in advance for commission.
- Accrued interest on investments is ₹ 1,000.
The following are the extracts from the trial balance.
| Particulars | Debit ₹ | Credit ₹ |
| Sundry debtors | 50,000 | |
| Discount on debtors | 2,000 | |
| Bad debts | 3,000 |
Additional information:
(a) Create a provision for doubtful debts @ 10% on sundry debtors.
(b) Create a provision for discount on debtors @ 5% on sundry debtors.
You are required to pass necessary adjusting entries and show how these items will appear in the final accounts.
Prepare trading account of Archana for the year ending 31st December 2106 from the following information.
| Debit balance | ₹ | Credit balance | ₹ |
| Opening stock | 80,000 | Purchases returns | 10,000 |
| Purchases | 8,60,000 | Sales returns | 3,16,000 |
| Freight inwards | 52,000 | Import duty on purchases | 30,000 |
| Wages | 24,000 | Sales | 14,40,000 |
Adjustments:
(a) Closing stock ₹ 1,00,000
(b) Wages outstanding ₹ 12,000
(c) Freight inwards paid in advance ₹ 5,000
Prepare profit and loss account of Manoj for the year ending on 31st March 2016
| Particulars | ₹ | Particulars | ₹ |
| Gross profit | 25,000 | Travelling expenses | 500 |
| Salaries | 5,600 | Stationery | 75 |
| Insurance | 200 | Rent | 650 |
| Discount allowed | 400 | Interest on loan | 225 |
| Discount received | 300 | Repairs | 125 |
| Commission received | 100 | Office expenses | 55 |
| Advertisement | 450 | General expenses | 875 |
| Printing charges | 375 | Postage | 175 |
Adjustments:
(a) Salary outstanding ₹ 400
(b) Rent paid in advance ₹ 50
(c) Commission receivable ₹ 100
From the following information prepare trading and profit and loss account and balance sheet of Kumar for the year ending 31st December 2017.
| Debit balance | ₹ | Credit balance | ₹ |
| Purchases | 14,500 | Sales | 20,100 |
| Coal and fuel | 600 | Bills payable | 400 |
| Carriage inwards | 750 | Rent received | 2,500 |
| Advertisement | 500 | Creditors | 2,000 |
| Carriage outwards | 400 | Capital | 5,000 |
| Bank | 1,200 | ||
| Furniture | 8,000 | ||
| Debtors | 2,250 | ||
| Bills receivable | 300 | ||
| Stock on 1st January, 2017 | 1,500 | ||
| 30,000 | 30,000 |
Adjustments:
- The closing stock on 31st December 2017 was valued at ₹ 3,900.
- Carriage inwards prepaid ₹ 250
- Rent received in advance ₹ 100
- Manager is entitled to receive commission @ 5% of net profit after providing such commission.
From the following information, prepare trading and profit and loss account and balance sheet in the books of Sangeetha for the year ending 31st March, 2018.
| Particulars | ₹ | Particulars | ₹ |
| Capital | 20,000 | Salaries | 6,600 |
| Bills receivable | 8,000 | Establishment expenses | 4,500 |
| Bills payable | 10,500 | Advertisement | 2,300 |
| Purchases | 75,000 | Furniture | 10,000 |
| Sales | 95,000 | Cash at bank | 3,200 |
| Opening stock | 12,000 | Miscellaneous receipts | 600 |
| Drawings | 4,500 |
Adjustments:
- Stock on 31st March, 2018 ₹ 14,200
- Income tax of Sangeetha paid ₹ 800
- Charge interest on drawings @ 12% p.a.
- Provide managerial remuneration @ 10% of net profit before charging such commission.
