Question

From the following balances extracted from the book of M/s Manju Chawla on March 31, 2017. You are requested to prepare the trading and profit and loss account and a balance sheet as on this date.

Account Title	Amount Rs	Amount Rs
Opening stock	10,000
Purchases and Sales	40,000	80,000
Returns	200	600
Wages	6,000
Dock and cleaning charges	4,000
Lighting	500
Misc. Income		6,000
Rent		2,000
Capital		40,000
Drawings	2,000
Debtors and Creditors	6,000	7,000
Cash	3,000
Investment	6,000
Patent	4,000
Land and Machinery	43,000
Donations and Charity	600
Sales tax collected		1,000
Furniture	11,300
	1,36,600	1,36,600

Closing stock was Rs 2,000.

(a) Interest on drawings @ 7% and interest on capital @ 5%.

(b) Land and Machinery is depreciated at 5%.

(c) Interest on investment @ 6%.

(d) Unexpired rent Rs 100.

(e) Charge 5% depreciation on furniture.

Answer 1

Trading Account
Dr.										Cr.
Particulars				Amount Rs	Particulars					Amount Rs
Opening Stock				10,000	Sales			80,000
Purchases			40,000			Less: Sales Return		200		79,800
	Less: Purchases Return		600	39,400	Closing Stock					2,000
Wages				6,000
Dock and Cleaning Charges				4,000
Gross Profit				22,400
				81,800						81,800

Profit and Loss Account
Dr.		Cr.
Particulars	Amount Rs	Particulars				Amount Rs
Lighting	500	Gross Profit				22,400
Donations and Charity	600	Miscellaneous Income				6,000
Interest on Capital	2,000	Rent			2,000
Depreciation on Furniture	565			Less: Unearned Rent	100	1,900
Depreciation on Land and Machinery	2,150	Interest on Drawings				140
Net Profit	24,985	Interest on Investment				360
	30,800					30,800

Balance Sheet
Liabilities			Amount Rs	Assets						Amount Rs
Capital		40,000		Debtors						6,000
	Add: Interest on Capital	2,000		Cash						3,000
	Add: Net Profit	24,985		Investment					6,000
	Less: Drawings	2,000			Add: Interest on Investment				360	6,360
	Less: Interest on Drawings	140	64,845	Patent						4,000
Creditors			7,000	Land and Machinery					43,000
Sales Tax Collected			1,000		Less: Depreciation				2,150	40,850
Unearned Rent			100
				Furniture					11,300
					Less: Depreciation				565	10,735
				Closing Stock						2,000
			72,945							72,945

Note: In the NCERT textbook, the answer provided for question number 11 is different from the solution. However, the answer should be

Gross profit = Rs 22,400 instead of Rs 21,900

Net profit = Rs 24,985 instead of Rs 25,185

Total of Balance Sheet = Rs 72,945 instead of Rs 71,185