Following balances have been extracted from the trial balance of M/s Keshav Electronics Ltd. You are required to prepare the trading and profit and loss account and a balance sheet as on December 31, 2011.
Account Title Amt.(Rs) Account Title Amt.(Rs)
Opening Stock 2,26,000 Sales 6,80,000
Purchase 4,40,000 Return Outwards 15,000
Drawings 75,000 Creditors 50,000
Buildings 1,00,000 Bills Payable 63,700
Motor Van 30,000 Interest Received 20,000
Freight Inwards 3,400 Capital 3,50,000
Sales Return 10,000
Trade Expenses 3,300
Heat and Power 8,000
Salary and Wages 5,000
Legal Expenses 3,000
Postage and Telegram 1,000
Bad Debts 6,500
Cash in Hand 79,000
Cash at Bank 98,000
Sundry Debtors 25,000
Investments 40,000
Insurance 3,500
Machinery 22,000
11,78,700 11,78,700
The following additional information is available
1. Stock on December 31, 2011 was Rs. 30,000.
2. Depreciation is to be charged on building @ 5% and @ 10%.
3. Provision for doubtful debts is to be maintained Sundry Debtors.
4. Unexpired insurance was Rs. 600.
5. The Manager is entitled to a commission @ 5% on net profit after charging such commissioin

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Solution

Trading and Profit and Loss Account
as on 31st December,2011
Dr Cr
Particulars Amt. (Rs.) Particular Amt. (Rs.)
To Opening Stock 2,26,000 By Sales 6,80,000
To Purchase 4,40,000 (-) Return Inwards 10,000
6,70,000
(-) Return Outwards 1,5000
4,25,000 By Closing Stock 30,000
To Freight Inwards 3400
To Heat and Power 8,000

To Gross Profit c/d 37,600
7,00,000 7,00,000
To Salary and Wages 5,000 By Gross Profit b/d 37,600
To Trade Expenses
3,300
By Interest Received
20,000
To Legal Expenses 3,000
To Postage and Telegram 1,000
To Bad Debts
6,500
(+)Provision 1,250
7,750
To Insurance
3,500
(-) Prepaid 600
2,900
To Depreciation on Building 5,000
To Depreciation on Motor Van
3,000
To Manager's Commission
$[26, 650 \times \frac{5}{105}]$
1,269
To Net Profit 25,381

57,600 57,600

Balance Sheet
as on 31st December, 2011
Liabilities Amt. (Rs.) Assets Amt. (Rs.)
Capital 3,00,000 Machinery 22,000
(+) Net Profit
(-) Drawings 25,381
3,75,381
3,00,381 Investments
Buildings
40,000
1,00,000
Creditors 50,000 (-) Depreciation Motor Van
5,000
30,000
95,000
Bills Payable 63,700 (-) Depreciation @10%
3,000
27,000
Manager's Commission
1,269 Cash in Hand
Cash at Bank
79,000
98,000

Sundry Debtors 25,000
(+) Provision for Bad Debts 1,250
23,750
Prepaid Insurance 600
Closing stock 30,000

4,15,350 4,15,350

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Similar questions

Following balances have been extracted from the trial balance of M/s Keshav Electronics Ltd. You are required to prepare the trading and profit and loss account and a balance sheet as on December 31, 2011.

$\begin{matrix} Account Title & Amt.(Rs) & Account Title & Amt.(Rs) Opening Stock & 2, 26, 000 & Sales & 6, 80, 000 Purchase & 4, 40, 000 & Return Outwards & 15, 000 Drawings & 75, 000 & Creditors & 50, 000 Buildings & 1, 00, 000 & Bills Payable & 63, 700 Motor van & 30, 000 & Interest Received & 20, 000 Freight Inwards & 3, 400 & Capital & 3, 50, 000 Sales Return & 10, 000 Trade Expenses & 3, 300 Heat and Power & 8, 000 Salary and Wages & 5, 000 Legal Expenses & 3, 000 Postage and Telegram & 1, 000 Bad Debts & 6, 500 Cash in Hand & 79, 000 Cash at Bank & 98, 000 Sundry Debtors & 25, 000 Investments & 40, 000 Insurance & 3, 500 Machinery & 22, 000 ¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯ 11, 78, 700 - --------- - - --------- - & ¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯ 11, 78, 700 - --------- - - --------- - \end{matrix}$

The following additional information is available

1. Stock on December 31, 2011 was Rs. 30,000.

2. Depreciation is to be charged on building @ 5% and motor van @ 10%

3. Provision for doubtful debts is to be maintained @ 5% on Sundry Debtors.

4. Unexpired insurance was Rs. 600.

5. The Manager is entitled to a commission @ 5% on net profit after charging such commissioion.

From the following balances extracted from the books of Raga Ltd. prepare a trading and profit and loss account for the year ended December 31, 2011 and a balance sheet as on that date.

$\begin{matrix} Account Title & Amt. (Rs.) & Account Title & Amt. (Rs.) Drawings & 20, 000 & Sales & 2, 20, 000 Land and Buildings & 12, 000 & Capital & 1, 01, 110 Plant and Machinery & 40, 000 & Discount & 1, 260 Carriage Inwards & 100 & Apprentice Premium & 5, 230 Wages & 500 & Bills Payable & 1, 28, 870 Salary & 2, 000 & Purchase Return & 10, 000 Sales Return & 200 Bank Charges & 200 Coal, Gas and Water & 1, 200 Purchase & 1, 50, 000 Trade Expenses & 3, 800 Stock (Opening) & 76, 800 Cash at Bank & 50, 000 Rates and Taxes & 870 Bills Receivable & 24, 500 Sundry Debtors & 54, 300 Cash in Hand & 30, 000 ¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯ 4, 66, 470 - -------- - - -------- - & ¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯ 4, 66, 470 - -------- - - -------- - \end{matrix}$

The additional information is as under:

1. Closing stock was valued at the end of the year Rs. 20,000.

2. Depreciation on plant and machinery charged @ 5% and land and building @ 10%.

3. Discount on debtors @ 3%.

4. Make a provision @ 5% on debtors for bad debts.

5. Salary outstanding was Rs. 100 and wages prepaid was Rs. 40.

6. The manager is entitled a commission of 5% on net profit after charging such commission.

Q. From the following balances extracted from the books of Raga Ltd prepare a trading and profit and loss account for the year ended December 31, 2011 and a balance sheet as on that date.

Account Title	Amt.(Rs)	Account Title	Amt.(Rs)
Drawings	20,000	Sales	2,20,000
Land and Buildings	12,000	Capital	1,01,000
Plant and Machinery	40,000	Discount	1,260
Carriage Inwards	100	Apprentice Premium	5,230
Wages	500	Bills Payable	1,28,870
Salary	2,000	Purchase Return	10,000
Sales Return	200
Bank Charges	200
Coal, Gas and Water	1,200
Purchase	1,50,000
Trade Expenses	3,800
Stock (Opening)	76,800
Cash at Bank	50,000
Rates and Taxes	870
Bills Receivable	24,500
Sundry Debtors	54,300
Cash in Hand	30,000
	4,66,470		4,66,470

The additional information is as under
1. Closing stock was valued at the end of the year Rs. 20,000.
2. Depreciation on plant and machinery charged @ 5% and land and building @ 10%.
3. Discount on debtors @ 3%.
4. Make a provision @ 5% on debtors for bad debts.
5. Salary outstanding was Rs. 100 and wages prepaid was Rs. 40.
6. The manager is entitled a commission of 5% on net profit after charging such commission.

Q. From the following information prepare trading and profit and loss account of M/s Indian sports house for the year ending December 31, 2011.

Account Title	Amt. (Rs)	Account Title	Amt. (Rs)
Drawings	20,000	Capital	2,00,000
Sundry Debtors	80,000	Return Outwards	2,000
Bad Debts	1,000	Bank Overdraft	12,000
Trade Expenses	2,400	Provision for Bad Debts	4,000
Printing and Stationaery	2,000	Sundry Creditors	60,000
Rent, Rates and Taxes	5,000	Bills Payable	15,400
Freight	4,000	Sales	2,76,000
Return Inwards	7,000
Opening Stock	25,000
Purchase	1,80,000
Furniture and Fixture	20,000
Plant and Machinery	1,00,000
Bills Receivable	14,000
Wages	10,000
Cash in Hand	6,000
Discount Allowed	2,000
Investments	40,000
Motor Car	51,000
	5,69,400		5,69,400

Adjustments
1. Closing stock was Rs. 45,000.
2. Provision for bad debts is to be maintained @ 2% on debtors.
3. Depreciation charged on furniture and fixture @ 5%, plant and machinery @ 6% and motor car @ 10%
4. A machine of Rs. 30,000 was purchased on July 1, 2011.
5. The manager is entitled to a commission of @ 10% of the net profit after charging such commission.

Q. The following balances have been extracted from the trial of M/s Haryana Chemical Ltd. You are required to prepare a trading and profit and loss account and balance sheet as on December 31, 2010 from the given information

Account Title	Amt. (Rs)	Account Title	Amt. (Rs)
Opening Stock	50,000	Sales	3,50,000
Purchase	1,25,500	Purchase Return	2,500
Sales Return	2,000	Creditors	25,000
Cash in Hand	21,200	Rent	5,000
Cash at Bank	12,000	Interest	2,000
Carriage	100	Bills Payable	1,72,700
Freehold Land	3,20,000	Capital	3,00,000
Patents	1,20,000
General Expenses	2,000
Sundry Debtors	32,500
Building	86,000
Machinery	34,500
Insurance	12,400
Drawings	10,000
Motor Vehicle	10,500
Bad Debts	2,000
Light and Water	1,200
Trade Expenses	2,000
Power	3,900
Salary and wages	5,400
Loan 15% (1.9.2010)	3,000
	8,56,200		8,56,200

Adjustments
1. Closing stock was valued at the end of the year Rs. 40,000.
2. Salary amounting Rs. 500 and trade expenses Rs. 300 a redue.
3. Depreciation charged on building and machinery are @ 4% and @ 5% respectively.
4. Make a provision of @ 5% on sundry debtors.

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Particulars	Amt. (Rs.)	Particular	Amt. (Rs.)
To Opening Stock	2,26,000	By Sales	6,80,000
To Purchase	4,40,000	(-) Return Inwards	10,000 6,70,000
(-) Return Outwards	1,5000 4,25,000	By Closing Stock	30,000
To Freight Inwards	3400
To Heat and Power	8,000

To Gross Profit c/d	37,600 7,00,000		7,00,000
To Salary and Wages	5,000	By Gross Profit b/d	37,600
To Trade Expenses	3,300	By Interest Received	20,000
To Legal Expenses	3,000
To Postage and Telegram	1,000
To Bad Debts	6,500
(+)Provision	1,250 7,750
To Insurance	3,500
(-) Prepaid	600 2,900
To Depreciation on Building	5,000
To Depreciation on Motor Van	3,000
To Manager's Commission	$[26, 650 \times \frac{5}{105}]$ 1,269
To Net Profit	25,381
	57,600		57,600

Liabilities	Amt. (Rs.)	Assets	Amt. (Rs.)
Capital	3,00,000	Machinery	22,000
(+) Net Profit (-) Drawings	25,381 3,75,381 3,00,381	Investments Buildings	40,000 1,00,000
Creditors	50,000	(-) Depreciation Motor Van	5,000 30,000 95,000
Bills Payable	63,700	(-) Depreciation @10%	3,000 27,000
Manager's Commission	1,269	Cash in Hand Cash at Bank	79,000 98,000
		Sundry Debtors	25,000
		(+) Provision for Bad Debts	1,250 23,750
		Prepaid Insurance	600
		Closing stock	30,000
	4,15,350		4,15,350