Answer 1

Trading Account for the year ended March 31, 2014
Dr.							Cr.
Particulars			Amount (Rs)	Particulars		Amount (Rs)
Opening Stock			40,000	Sales	3,80,000
Purchases		4,00,000		Less: Return Inwards	(20,000)	3,60,000
Less: Return Outwards		(80,000)	3,20,000	Closing Stock		1,20,000
Carriage Inwards			20,000
Wages and Salaries			50,000
Gross Profit (Balancing Figure)			50,000
			4,80,000			4,80,000

Note: Closing Stock is taken at its Market Price (i.e. Rs 1,20,000) instead of its Cost (i.e. Rs 1,30,000). This is because, as per Principle of Conservatism, Closing stock is taken at Cost or Market Price whichever is less.