Question

From the following balances of M/s Nilu Sarees as on March 31, 2017. Prepare trading and profit and loss account and balance sheet as on date.

Account Title	Debit Amount Rs	Account Title	Credit Amount Rs
Opening stock	10,000	Sales	2,28,000
Purchases	78,000	Capital	70,000
Carriage inwards	2,500	Interest	7,000
Salaries	30,000	Commission	8,000
Commission	10,000	Creditors	28,000
Wages	11,000	Bills payable	2,370
Rent and taxes	2,800
Repairs	5,000
Telephone expenses	1,400
Legal charges	1,500
Sundry expenses	2,500
cash in hand	12,000
Debtors	30,000
Machinery	60,000
Investments	90,000
Drawings	18,000

Closing stock, as on March 31, 2017 Rs 22,000.

Answer 1

Trading Account of M/s Nilu Sarees as on March 31, 2017
Dr.			Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Opening Stock	10,000	Sales	2,28,000
Purchases	78,000	Closing Stock	22,000
Carriage Inwards	2,500
Wages	11,000
Profit and Loss (Gross Profit)	1,48,500
	2,50,000		2,50,000

Note: As per solution, the Gross profit is Rs 1,48,500; however, the answer given in the book is Rs 1,56,500.

Profit and Loss Account as on March 31, 2017
Dr.			Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Salaries	30,000	Trading (Gross Profit)	1,48,500
Commission	10,000	Interest	7,000
Rent and Taxes	2,800	Commission	8,000
Repairs	5,000
Telephone Expenses	1,400
Legal Charges	1,500
Sundry Expenses	2,500
Net Profit	1,10,300
	1,63,500		1,63,500

Balance Sheet as on March 31, 2017
Liabilities					Amount Rs	Assets	Amount Rs
Capital			70,000			Machinery	60,000
		Add: Net Profit	1,10,300			Investments	90,000
			1,80,300			Debtors	30,000
		Less: Drawings	(18,000)		1,62,300	Closing Stock	22,000
						Cash in Hand	12,000
Creditors					28,000
Bills Payable					2,370
Suspense					21,330
					2,14,000		2,14,000

Note: The trial balance given in the question has an error, as the balance of the debit exceeds the credit side by an amount of Rs 21,330. Therefore, in order to match the two sides of the balance sheet, suspense account has been opened with an amount equal to the difference amount, i.e. by Rs 21,330.