Question

From the following balances extracted from the books of Raga Ltd prepare a trading and profit and loss account for the year ended December 31, 2011 and a balance sheet as on that date.

Account Title	Amt.(Rs)	Account Title	Amt.(Rs)
Drawings	20,000	Sales	2,20,000
Land and Buildings	12,000	Capital	1,01,000
Plant and Machinery	40,000	Discount	1,260
Carriage Inwards	100	Apprentice Premium	5,230
Wages	500	Bills Payable	1,28,870
Salary	2,000	Purchase Return	10,000
Sales Return	200
Bank Charges	200
Coal, Gas and Water	1,200
Purchase	1,50,000
Trade Expenses	3,800
Stock (Opening)	76,800
Cash at Bank	50,000
Rates and Taxes	870
Bills Receivable	24,500
Sundry Debtors	54,300
Cash in Hand	30,000
	4,66,470		4,66,470

The additional information is as under
1. Closing stock was valued at the end of the year Rs. 20,000.
2. Depreciation on plant and machinery charged @ 5% and land and building @ 10%.
3. Discount on debtors @ 3%.
4. Make a provision @ 5% on debtors for bad debts.
5. Salary outstanding was Rs. 100 and wages prepaid was Rs. 40.
6. The manager is entitled a commission of 5% on net profit after charging such commission.

Answer 1

Trading and Profit and Loss Account
as on 31st December,2011
Dr Cr

Particulars	Amt. (Rs.)	Particular	Amt. (Rs.)
To Opening Stock	76,800	By Sales	2,20,000
To Purchase	1,50,000	(-) Sales Return	200 2,19,800
(-) Purchase Return	10,000 1,40,000	By Closing Stock	20,000
To Carriage Inwards	100
To Wages (-) Prepaid	500 40 460
To Gas, Coal and Water	12,00
To Gross Profit c/d	21,240 2,39,800		2,39,800
To Salary	2,000	By Gross Profit b/d	21,240
(+) Outstanding	100 2,100	By Discount	1,260
To Bank Charges	200	By Apprentice	1,260
To Trade Expenses	3,800
To Rates and Taxes	870
To Depreciation on Plant and Machinery	2,000
To Depreciation on Land and Building	1,200
To Provision for Doubtful Debts	2,715
To Discount Allowed	1,548
To Manager's Commission	633 $[13,297\times \frac{5}{205}]$
To Net Profit	12,664
	27,730		27,730

Balance Sheet
as on 31st December, 2011

Liabilities	Amt. (Rs.)	Assets	Amt. (Rs.)
Capital	1,01,110	Land and Building (-)Depreciation	12,000 1,200 10,800
(+) Net Profit (-) Drawings	12,664 1,13,774 20,000 93,774	Cash at Bank	50,000
Bills Payable	1,28,870	Plant and Machinery	40,000
Outstanding Salary	100	(-) Depreciation	2,000 38,000
Outstanding Manager's Commission	633	Bills Receivable	24,500
		Sundry Debtors	54,300
		(-) Provision (-) Discount	2,715 1,548 50,037
		Cash in Hand	30,000
		Closing Stock	20,000
		Prepaid Wages	40
	2,23,377		2,23,377