Question

Chakravarti does not maintain proper books of accounts. Following information is obtained from his books for the year ended 31st March, 2008:
Cash Transactions:

	₹		₹
Received from Debtors	72,000	Staff Salary	4,500
Paid to Creditors	56,000	Wages	15,000
Drawings	5,000	Office Expenses	2,000
Received from Cash Sales	30,000	Rent	3,500
Life Insurance Premium	800	Cash in hand on 31-3-2008	16,700

Assets and Liabilities:

	1-4-2007 ₹	31-3-2008 ₹
Debtors	24,000	56,000
Creditors	30,000	40,000
Outstanding Salaries	500	450
Outstanding Wages	1,000	1,200

The Stock on 31st March, 2008 was valued at ₹ 20,000 but Chakravarti has no record of the Stock on 1st April, 2007. However, he informs you that he sells his goods at cost plus 25%.
Prepare his Cash Book, Trading and P & L A/c for the year ended 31st March, 2008 and a Balance Sheet as at that date.

Answer 1

Trading Account for the year ended March 31, 2008
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Opening Stock	46,000	Sales (Cash + Credit)	1,34,000
Purchases (Credit)	66,000	Closing Stock	20,000
Wages	15,000
Outstanding Wages	200
Gross Profit	26,800
	1,54,000		1,54,000

Profit & Loss Account for the year ended March 31, 2008
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Staff Salaries	4,500	Gross Profit	26,800
Office Expenses	2,000	Outstanding Salary	50
Rent	3,500
Net Profit	16,850
	26,850		26,850

Balance Sheet as on March 31, 2008
Dr.				Cr.
Liabilities		Amount (₹)	Assets	Amount (₹)
Capital	40,000		Cash in Hand	16,700
Less: Drawings	5,800		Debtors	56,000
Add: Net Profit	16,850	51,050	Closing Stock	20,000
Creditors		40,000
Outstanding Salary		450
Outstanding Wages		1,200
		92,700		92,700

Working Notes:

Balance Sheet as on March 31, 2007
Dr.			Cr.
Liabilities	Amount (₹)	Assets	Amount (₹)
Creditors	30,000	Debtors	24,000
Outstanding Salaries	500	Stock	46,000
Outstanding Wages	1,000	Cash	1,500
Capital (Balancing figure)	40,000
	71,500		71,500

Cash Account
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Balance b/d (Balancing Figure)	1,500	Creditors A/c	56,000
Debtors A/c	72,000	Drawings A/c	5,000
Sales A/c	30,000	Drawings A/c (Life Insurance Premium)	800
		Staff Salary	4,500
		Wages	15,000
		Office Expenses	2,000
		Rent	3,500
		Balance c/d	16,700
	1,03,500		1,03,500

Debtors Account
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Balance b/d	24,000	Cash A/c	72,000
Sales A/c	1,04,000	Balance c/d	56,000
	1,28,000		1,28,000

Creditors Account
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Cash A/c	56,000	Balance b/d	30,000
Balance c/d	40,000	Purchases A/c	66,000
	96,000		96,000

Rate of Gross Profit (on cost) = 25%

Rate of Gross Profit (on sales) = 20%

Gross Profit = 20% of (30,000 + 1,04,000) = 26,800

Gross Profit = Net Sales – Cost of Goods Sold

26,800 = 1,34,000 – Cost of Goods Sold

Cost of Goods Sold = 1,34,000 – 26,800 = ₹ 1,07,200

Cost of Goods Sold = Opening Stock + Purchases + Direct Expenses – Closing Stock

1,07,200 = Opening Stock + 66,000 + (15,000 + 200) – 20,000

Opening Stock = 1,07,200 – 66,000 – 15,200 + 20,000 = ₹ 46,000