Question

From the following information prepare Trading Account for the year ended 31st March, 2018:

	₹		₹
Stock on 1st April, 2017	40,000	Returns Outward	80,000
Purchases	4,00,000	Wages and Salaries	50,000
Sales	3,80,000	Returns Inward	20,000
Carriage Inwards	20,000	Stock on 31st March, 2018	1,30,000

Net Realisable Value (Market Value) of stock as on 31st March, 2018 was ₹ 1,20,000.

Answer 1

Trading Account for the year ended March 31, 2018
Dr.							Cr.
Particulars			Amount (Rs)	Particulars		Amount (Rs)
Opening Stock			40,000	Sales	3,80,000
Purchases		4,00,000		Less: Return Inwards	(20,000)	3,60,000
Less: Return Outwards		(80,000)	3,20,000	Closing Stock		1,20,000
Carriage Inwards			20,000
Wages and Salaries			50,000
Gross Profit (Balancing Figure)			50,000
			4,80,000			4,80,000

Note: Closing Stock is taken at its Market Price (i.e. Rs 1,20,000) instead of its Cost (i.e. Rs 1,30,000). This is because, as per Principle of Conservatism, Closing stock is taken at Cost or Market Price whichever is less.