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Question

From the following information, prepare Trading Account for the year ended 31st March, 2019:
Stock on 1st April, 2018
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, 2019
1,30,000

Net Realisable Value (Market Value) of stock as on 31st March, 2019 was ₹ 1,20,000.

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Solution

Trading Account

for the year ended March 31, 2019

Dr.

Cr.

Particulars

Amount

(₹)

Particulars

Amount

(₹)

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.


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