Question

Following Trial Balance were extracted from the books of Ram as on 31st March, 2018:

Debit Balances	₹	Debit Balances (Contd.)	₹
Drawings	70,000	Cash at Bank	1,24,000
Purchases	8,22,100	Cash in Hand	22,100
Sales Return	18,200	Office Furniture	35,000
Stock on 1st April, 2017	1,14,600	Bad Debts	10,000
Salaries	1,61,500	Carriage Outwards	32,400
Wages	85,600	Sundry Debtors	3,89,700
Leasehold Premises	2,50,000	Credit Balances
Rent, Rates and Insurance	69,400	Capital	9,00,000
Carriage Inwards	23,100	Purchases Return	42,400
Office Expenses	95,200	Sales	14,98,400
Plant and Machinery	2,40,000	Provision for Doubtful Debts (1st April, 2017)	42,400
Light and Water (Factory)	79,500	Discount	1,800
Bills Receivable	12,400	Sundry Creditors	1,69,800

Prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at that date after taking into account the following:
(a) Depreciation is to be written off as follows: Leasehold premises 5%. Plant and Machinery 10%.
(b) Write off ₹ 5,000 as further Bad Debts and make a Provision for Doubtful Debts equal to ₹ 5,000.
(c) Wages amounted to ₹ 5,700 have become due but have not been paid.
(d) Wages include ₹ 10,000 incurred on installation of new machine. Machine was installed on 1^st April, 2017.
(e) The value of stock on 31st March, 2018 was ₹ 1,49,200.
(f) Unexpired premium amount to ₹ 6,800 is to be carried forward to the next year.

Answer 1

Financial Statement of Ram Trading Account for the year ended March 31, 2018
Dr.					Cr.
Particulars		Amount (₹)	Particulars		Amount (₹)
Opening Stock		1,14,600	Sales	14,98,400
Purchase	8,22,100		Less: Sales Return	(18,200)	14,80,200
Less: Purchases Return	(42,400)	7,79,700	Closing Stock		1,49,200
Wages	85,600
Less: Machinery A/c	(10,000)
Add: Outstanding Wages	5,700	81,300
Carriage Inwards		23,100
Light and Water		79,500
Gross Profit (Balance Figure)		5,51,200
		16,29,400			16,29,400

Profit and Loss Account for the year ended March 31, 2018
Dr.				Cr.
Particulars		Amount (₹)	Particulars	Amount (₹)
Depreciation on:			Gross Profit	5,51,200
Leasehold Premises	12,500		Discount	1,800
Plant and Machinery	25,000	37,500
Bad Debts	10,000
Add: Further Bad Debts	5,000
Add: Provision for Doubtful Debts	50,000
	65,000
Less: Existing Provision	(42,400)	22,600
Rent, Rates and Insurance	69,400
Less: Prepaid Insurance	(6,800)	62,600
Salaries		1,61,500
Office Expenses		95,200
Carriage Outwards		32,400
Net Profit (Balancing Figure)		1,41,200
		5,53,000		5,53,000

Balance Sheet as on March 31, 2018
Liabilities		Amount (₹)	Assets			Amount (₹)
Capital	90,0000		Fixed Assets
Less: Drawings	(7,0000)		Leasehold Premises	2,50,000
Add: Net Profit	14,1200	9,71,200	Less: 5% Depreciation	(12,500)		2,37,500
Current Liabilities			Plant and Machinery	2,50,000
Sundry Creditors		1,69,800	Less: 10% Depreciation	(25,000)		2,25,000
Wages Outstanding		5,700	Office Furniture			35,000
			Current Assets
			Closing Stock			1,49,200
			Sundry Debtors		38,970
			Less: Bad Debts		500
			Less: Provision for Doubtful Debts		5,000	3,34,700
			Bills Receivable			12,400
			Cash at Bank			1,24,000
			Cash in Hand			22,100
			Prepaid Insurance			6,800
		11,46,700				11,46,700

Note: Wages for installation of machinery reduces the value of wages and increase the value of machinery.