Question

Following balances were extracted from the books of Modern Traders on 31^st March, 2018:

Particulars	₹	Particulars	₹
Captial	8,50,000	Sales	12,00,000
Drawings	50,000	Postage and Telegrams	8,000
Plant and Machinery	4,00,000	Bad Debts	4,000
Accumulated Depreciation	90,000	Provision for Doubtful Debts	8,000
Stock on 1st April, 2017	1,50,000	Discount Received	4,000
Purchases	8,20,000	Rent Revenue	12,000
Sundry Debtors	2,06,000	Insurance	7,000
Furniture	50,000	Salaries	2,00,000
Freight Inwards	20,000	Wages	13,000
Carriage Outwards	5,000	Cash in Hand	62,000
Rent, Rates and Taxes	46,000	Cash at Bank	2,55,000
Printing and Stationery	8,000	General Reserve	50,000
Sundry Creditors	95,000	Input IGST	20,000
Input CGST	15,000	Output IGST	45,000
Input SGST	15,000

Prepare Profit and Loss Account for the year ended 31st March, 2018 and the Balance Sheet as at that date giving effect to the following:
(a) Closing Stock was ₹ 1,50,000.
(b) Wages Outstanding were ₹ 5,000.
(c) Provision for Doubtful Debts is to be maintained at 5% of Sundry Debtors.
(d) Depreciate Plant and Machinery by 10% and Furniture by 5% on Straight Line Method.
(e) Sundry Creditors include ₹ 10,000 due to Nayak who is also included in Sundry Debtors at ₹ 15,000.
(f) New furniture for ₹ 12,000 was purchased on 1st April, 2017. Old furniture valued at ₹ 2,000 was exchanged and balance was paid by cheque. Purchase of furniture was recorded at the net value of furniture, i.e., ₹ 10,000. The firm had purchased this furniture paying IGST @ 18%.
(g) A fire occurred on 27th March, 2018 destroying stock costing ₹ 10,000, which were purchased paying CGST and SGST @ 9% each. Insurance company conveyed acceptance of claim of ₹ 7,500 on 10th April, 2018. Final accounts were prepared on 1st July, 2018.

Answer 1

Financial Statement of Modern Traders Trading Account for the year ended March 31, 2017
Dr.				Cr.
Particulars		Amount (Rs)	Particulars	Amount (Rs)
Opening Stock		1,50,000	Sales	12,00,000
Purchases		8,20,000	Closing Stock	1,50,000
Freight Inwards		20,000
Wages	13,000
Add: Outstanding Wages	5,000	18,000
Gross Profit (Balancing Figure)		3,42,000
		13,50,000		13,50,000

Profit and Loss Account for the year ended March 31, 2017
Dr.				Cr.
Particulars		Amount (Rs)	Particulars	Amount (Rs)
Postage and Telegrams		8,000	Gross Profit	3,42,000
Bad Debts	4,000		Discount Received	4,000
Add: Provision for Doubtful Debts	10,300		Rent Revenue	12,000
Less: Existing Provision	(8,000)	6,300
Carriage Outwards		5,000
Rent, Rates and Taxes		46,000
Insurance	7,000
Less: Prepaid Insurance	(1,000)	6,000
Salaries		2,00,000
Printing and Stationery		8,000
Depreciation on:
Machinery	45,000
Furniture	2,500	47,500
Net Profit (Balancing Figure)		31,200
		3,58,000		3,58,000

Balance Sheet as on March 31, 2017
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital	9,00,000		Plant and Machinery	4,50,000
Less: Drawings	(50,000)		Less: Accumulated Depreciation (90,000 + 45,000)	(1,35,000)	3,15,000
Add: Net Profit	31,200	8,81,200	Furniture	50,000
Reserve Fund		50,000	Less: 5% Depreciation	(2,500)	47,500
Sundry Creditors		90,000	Closing Stock		1,50,000
Wages Outstanding		5,000	Sundry Debtors	2,06,000
			Less: Provision for Doubtful Debts	(10,300)	1,95,700
			Prepaid Insurance		1,000
			Cash at Bank		2,55,000
			Cash in Hand		62,000
		10,26,200			10,26,200

Note: Advance paid by proprietor for Plant and Machinery out of his personal bank account will increase the Capital A/c and Plant & Machinery A/c balance by Rs 50,000. And also increase in the amount of depreciation by Rs 5,000.