Question

Following balances are taken from the books of Mr. Niranjan. You are required to prepare Trading and Profit and Loss Account and Balance Sheet for the year ended 31st March, 2018:

Particulars	₹	Particulars	₹
Capital	1,20,000	Drawings	21,000
Opening Stock	45,000	Plant and Machinery	24,000
Furniture	1,500	Purchases	2,95,000
Sales	4,35,000	Insurances	1,500
Purchases Return	4,000	Sales Return	7,000
Rent	5,000	Trade Expenses	2,000
Salaries	24,000	Wages	40,000
Bad Debts	1,000	6% Investments	50,000
Sundry Debtors	40,000	Sundry Creditors	19,000
Bills Payable	800	Cash	12,200
Advertisement Expenses	6,000	Miscellaneous Receipts	1,200
Patents	4,800

Adjustments:
(i) Closing Stock ₹ 75,000.
(ii) Depreciate Machinery by 10% and Furniture by 20%.
(iii) Wages ₹ 5,000 and salaries ₹ 2,000 are outstanding.
(iv) Write off ₹ 5,000 as further Bad Debts and create 5% Provision for Doubtful Debts.
(v) Investments were made on 1st July, 2017 and no interest has been received so far.

Answer 1

Financial statements of Mr. Niranjan
Trading Account for the year ended March 31, 2018
Dr.					Cr.
Particulars		Amount (₹)	Particulars		Amount (₹)
Opening Stock		45,000	Sales	4,35,000
Purchases	2,95,000		Less: Sales Return	(7,000)	4,28,000
Less: Purchases Return	(4,000)	2,91,000	Closing Stock		75,000
Wages	40,000
Add: Outstanding wages	5,000	45,000
Gross Profit (Balancing Figure)		1,22,000
		5,03,000			5,03,000

Profit and Loss Account for the year ended March 31, 2018
Dr.						Cr.
Particulars			Amount (₹)	Particulars	Amount (₹)
Rent			5,000	Gross Profit	1,22,000
Salaries		24,000
Add: Outstanding Salaries		2,000	26,000
Bad Debts		1,000		Interest Accrued on Investment
Add: Further Bad Debts		5,000		(50,000 × 6% × 9/12)	2,250
Add: Provision for Doubtful Debts		1,750	7,750	Miscellaneous Receipts	1,200
Advertisement expenses			6,000
Provision for discount on debtors			665
Insurances			1,500
Trade Expenses			2,000
Depreciation on:
Machinery		2,400
Furniture		300	2,700
Net Profit (Balancing Figure)			73,835
			1,25,450		1,25,450

Balance Sheet as on March 31, 2018
Liabilities		Amount (₹)	Assets		Amount (₹)
Capital	1,20,000		Fixed Assets
Less: Drawings	(21,000)		Patents		4,800
Add: Net Profit	73,835	1,72,835	Plant and Machinery	24,000
Current Liabilities			Less: 10% Depreciation	(2,400)	21,600
Sundry Creditors		19,000	Furniture	1,500
Wages Outstanding		5,000	Less: 20% Depreciation	(300)	1,200
Salaries Outstanding		2,000	6% Investment	50,000
Bills Payable		800	Add: Accrued Interest	2,250	52,250
			Current Assets
			Closing Stock		75,000
			Debtors	40,000
			Less: Further Bad Debts	(5,000)
			Less: Provision for Doubtful Debts	(1,750)
				33,250
			Less: Provision for Discount	(665)	32,585
			Cash		12,200
		1,99,635			1,99,635