Question

From the following balances, prepare Final Accounts of Mr. Bal Gopal :-

Particulars	₹	Particulars	₹
Life Insurance Premium (self)	500	Capital	40,000
Stock (1-4-2017)	7,500	Plant and Machinery	12,500
Returns Inward	1,000	Purchases	36,000
Furniture	4,600	Sundry Debtors	10,500
Freehold Property	10,000	Coal, Gas and Water	1,000
Carriage Inwards	400	Carriage outwards	100
Advertising	200	Sales	60,000
Sundry Creditors	4,850	Discount (Dr.)	400
Returns outwards	500	Rent for Premises Sublet	500
Commission (Cr.)	600	Trade Expenses	8,650
Lighting	250	Stationery	2,000
Loan from bank	5,000	Interest Charged by Bank	450
Wages & Salaries	7,500	Cash	2,900
		Input IGST	5,000

Adjustments :-
(i) Stock on 31st March, 2018 was ₹ 10,000 and stationery unused at the end was ₹ 400.
(ii) Rent of Premises Sublet received in advance ₹ 100.
(iii) Provision for Doubtful Debts is to be created @ 10% on Debtors.
(iv) Provision for discount on Debtors is to be created @ 2%.
(v) Stock of the Value of ₹ 4,000 was destroyed by fire on 25th March, 2018. Stock was purchased paying IGST @ 12%. A Claim of ₹ 3,000 has been admitted by Insurance Co.
(vi) Bank Loan has been taken at 12% p.a. interest.

Answer 1

Trading Account for the year ended March 31, 2018
Dr.							Cr.
Particulars			Amount (Rs)	Particulars		Amount (Rs)
Opening Stock			7,500	Sales	60,000
Purchases		36,000		Less: Return Inwards	1,000	59,000
Less: Return Outwards		500		Closing Stock		10,000
Less: Goods Destroyed by Fire		4,000	31,500
Carriage Inward			400
Wages & Salaries			7,500
Coal, Gas and Water			1,000
Gross Profit (Balancing Figure)			21,100
			69,000			69,000

Profit and Loss Account for the year ended March 31, 2018
Dr.							Cr.
Particulars			Amount (Rs)	Particulars		Amount (Rs)
Discount Allowed			400	Gross Profit		21,100
Stationery		2,000		Rent for premises	500
Less: Closing Stock		400	1,600	Less: Rent received in advance	100	400
Interest		450		Commission received		600
Add: Outstanding Interest (WN1)		150	600
Provision for Doubtful Debts (WN2)			1,050
Provision for Discount on Debtors (WN3)			189
Loss by Fire* (WN4)		4,480
Less: Ins. Claim admitted		3,000	1,480
Advertisement			200
Trade Expenses			8,650
Carriage Outwards			100
Lighting			250
Net Profit (Balancing Figure)			7,581
			22,100			22,100

Balance Sheet as on March 31, 2018
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital	40,000		Fixed Assets
Add: Net Profit	7,581		Furniture		4,600
Less: Drawings (LIC)	500	47,081	Freehold Property		10,000
			Plant and Machinery		12,500
Current Liabilities			Current Assets
Creditors		4,850	Closing Stock		10,000
Bank Loan		5,000	Insurance Company		3,000
Rent received in advance		100	Stock of Stationery		400
Outstanding Interest on Bank			Input IGST(5,000-480*)		4,520
Loan		150	Debtors	10,500
			Less: Provision for Bad Debts	1,050
			Less: Provision for Discount	189	9,261
			Cash in Hand		2,900
		57,181			57,181

Working Notes:

WN1: Calculation of Outstanding Interest on Bank Loan

$\begin{array}{l}\mathrm{Interest}\mathrm{}\mathrm{on}\mathrm{}\mathrm{Bank}\mathrm{}\mathrm{Loan}\mathrm{}=\mathrm{}5,000\mathrm{}\times \mathrm{}\frac{12}{100}=600\\ \mathrm{Interest}\mathrm{}\mathrm{charged}\mathrm{}\mathrm{by}\mathrm{}\mathrm{Bank}\mathrm{}=\mathrm{}450\\ \therefore \mathrm{}\mathrm{Outstanding}\mathrm{}\mathrm{Interest}\mathrm{}=\mathrm{}\mathrm{Rs}\mathrm{}150\mathrm{}(600\mathrm{}-\mathrm{}450)\end{array}$


WN2: Calculation of Provision for Doubtful Debts

$\begin{array}{lll}\mathrm{Provision}\mathrm{}\mathrm{for}\mathrm{}\mathrm{Doubt}\mathrm{ful}\mathrm{}\mathrm{Debts}& =& \mathrm{Sundry}\mathrm{}\mathrm{Debtors}\times \frac{\mathrm{Rate}}{100}\\ & =& 10,500\times \frac{10}{100}=\mathrm{Rs}1,050\end{array}$

WN3: Calculation of Provision for Discount on Debtors

$\begin{array}{ccl}\mathrm{Provision}\mathrm{}\mathrm{for}\mathrm{}\mathrm{Discount}\mathrm{}\mathrm{on}\mathrm{}\mathrm{Debtors}& =& \left(\mathrm{Sundry}\mathrm{}\mathrm{Debtors}\mathrm{}-\mathrm{Provision}\mathrm{}\mathrm{for}\mathrm{}\mathrm{Bad}\mathrm{}\mathrm{Debts}\right)\times \frac{\mathrm{Rate}}{100}\\ & =& \left(10,500-1,050\right)\times \frac{2}{100}=\mathrm{Rs}189\end{array}$

*WN4: Adjustment Entry for goods destroyed by fire

Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
2018
Mar. 25	Loss by fire A/c	Dr.		4,480
	To Purchases A/c				4,000
	To Input IGST A/c				480
	(Goods lost in fire and effect of 12% IGST reversed)