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Question

Following is the Trial Balance of Mr. Gautam as at 31st March, 2017:
Dr. Balances (₹) Cr. Balances (₹)
Goodwill 30,000 Purchase Returns 2,650
Land & Buildings 60,000 Capital A/c 2,03,000
Plant & Machinery 40,000 Bills Payable 13,800
Loose Tools 3,000 Sundry Creditors 30,000
Bills Receivable 2,000 Sales 1,15,000
Stock 1st April, 2016 40,000
Purchases 51,000
Wages 20,000
Carriage Inwards 1,200
Coal & Gas 5,600
Salaries 4,000
Rent 2,700
Discount allowed 1,500
Cash at Bank 25,000
Cash in hand 1,400
Sundry Debtors 45,000
Repairs 1,800
Printing & Stationery 600
Bad-debts 1,200
Advertisements 3,500
Furniture and Fixtures 1,200
General Expenses 250
Investments 5,000
Drawings 15,000
Carriage Outwards 1,500
Sales Returns 2,000
3,64,450 3,64,450

You are required to prepare Final Accounts after taking into account the following adjustments:
(a) Closing Stock on 31st March, 2017 was ₹ 60,000.
(b) Depreciate Plant and Machinery at 5%, Loose Tools at 15% and Furniture and fixtures at 5%.
(c) Provide 212% for discount on Sundry Debtors and also provide 5% for Bad and Doubtful Debts on Sundry Debtors.
(d) Only three quarter's rent has been paid, the last quarter's rent being outstanding.
(e) Interest earned but not received ₹ 600.
(f) Write off 14th of Advertisement expenses.

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Solution

Financial Statements of Mr. Gautam
Trading Account
for the year ended March 31, 2017
Dr.
Cr.
Particulars
Amount
(Rs)
Particulars
Amount
(Rs)
Opening Stock
40,000
Sales
1,15,000
Purchases
51,000
Less: Sales Return
2,000
1,13,000
Less: Purchases Return
2,650
48,350
Closing Stock
60,000
Wages
20,000
Carriage Inwards
1,200
Coal and Gas
5,600
Gross Profit (Balancing Figure)
57,850
1,73,000
1,73,000
Profit and Loss Account
for the year ended March 31, 2017
Dr. Cr.
Particulars Amount (Rs) Particulars Amount (Rs)
Depreciation: (WN1) Gross Profit 57,850
Plant & Machinery 2,000 Accrued Interest 600
Loose Tools 450
Furniture 60 2,510
Rent 2,700
Add: Outstanding Rent (WN2) 900 3,600
Bad Debts 1,200
Add: New Provision (WN3) 2,250 3,450
Discount Allowed 1,500
Provision for Discount on Debtors (WN4) 1,069
Advertisement Expenses written-off 875
Salaries 4,000
Repairs 1,800
Printing & Stationery 600
General Expenses 250
Carriage Outwards 1,500
Net Profit (Balancing Figure) 37,296
58,450 58,450
Balance Sheet
as on March 31, 2017
Liabilities
Amount
(Rs)
Assets
Amount
(Rs)
Capital
2,03,000
Fixed Assets
Add : Net Profit
37,296
Plant & Machinery
40,000
Less: Drawings
15,000
2,25,296
Less: Depreciation
2,000
38,000
Loose Tools
3,000
Current Liabilities
Less: Depreciation
450
2,550
Creditors
30,000
Furniture & Fixtures
1,200
Bills Payable
13,800
Less: Depreciation
60
1,140
Outstanding Rent
900
Investments
5,000
Land & Building
60,000
Goodwill
30,000
Current Assets
Closing Stock
60,000
Accrued Interest
600
Advertisement Expenditure
2,625
Bills Receivable
2,000
Cash at Bank
25,000
Debtors
45,000
Less: Provision for Bad Debts
2,250
Less: Provision for Discount
1,069
41,681
Cash in Hand
1,400
2,69,996
2,69,996

Working Notes:

WN1: Calculation of Depreciation

Depreciation on Plant & Machinery =40,000 × 5100=Rs 2,000Depreciation on Furniture & Fixtures= 1,200× 5100=Rs 60Depreciation on Loose Tools = 3,000× 15100=Rs 450

WN2: Calculation of Outstanding Rent

Rent paid for 3 quarters = 2,700Rent per quarter = 2,7003=Rs 900 = Outstanding Rent

WN3: Calculation of Provision for Doubtful Debts

Provision for Doubtful Debts =Sundry Debtors × Rate100=45,000 × 5100=Rs 2,250

WN4: Calculation of Provision for Discount on Debtors

Provision for Discount on Debtors=Sundry Debtors Provision for Bad Debts × Rate100=45,000 2,250 × 2.5100=Rs 1,068.75 or 1,069

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Similar questions
Q. Following is the Trial Balance obtained from the books of Mr. Vishwanath on 31st March, 2018:
Heads of Accounts
Dr.
(₹)
Cr.
(₹)
Computers ............................................................
37,000
Plant and Machinery ............................................................
1,60,000
Motor Van ............................................................
2,20,000
Cash in Hand ............................................................
6,330
Cash at Bank ............................................................
50,000
Stock on 1st April, 2017 ............................................................
8,100
Debtors ............................................................
65,300
Creditors ............................................................
29,500
Purchases ............................................................
2,74,685
Sales ............................................................
5,21,870
Returns Inwards ............................................................
2,300
Returns Outwards ............................................................
2,100
Rent ............................................................
6,700
Salaries ............................................................
35,000
Bank Loan taken on 1st April, 2017 @ 10% p.a ............................................................
2,00,000
Carriage Outwards ............................................................
3,100
Wages ............................................................
54,755
Interest ............................................................
10,000
Electric Charges ............................................................
4,200
General Expenses ............................................................
24,000
Capital ............................................................
2,10,000
Input IGST ............................................................
10,000
Output CGST ............................................................
4,000
Output SGST ............................................................
4,000
Total
9,71,470
9,71,470
You are required to prepare Mr. Vishwanath’s Trading and Profit and Loss Account for the year ended 31st March, 2018 and his Balance Sheet as at that date after taking into account the following adjustments:
(a) Stock on 31st March, 2018 was ₹ 15,600.
(b) Depreciate Motor Van and Plant and Machinery by 10% p.a. and Computers @ 20% p.a.
(c) Create Provision for Doubtful Debts @ 5%
(d) General Expenses include ₹ 2,000 paid of wages.
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