Question

From the following, prepare Profit and Loss Account of Sohan Lal as it would appear in the 1st year that ended 31st March, 2019:

	₹		₹
Salaries and Wages	30,000	Advertising	10,000
Commission Paid	2,000	Discount Allowed	18,000
Postage and Courier	1,500	Rent Received	17,000
Insurance	3,000	Interest on Investment	15,000
Interest Paid	4,000	Bad Debts	9,000
Carriage Outwards	5,000	Brokerage Paid	950

The Gross Profit was 45% of sales, which amounted to ₹ 6,50,000.
Also, pass the Journal entries.

Answer 1

Profit and Loss Account for the year ended March 31, 2018
Dr.			Cr.
Particulars	Amount (Rs)	Particulars	Amount (Rs)
Salaries and Wages	30,000	Gross Profit (6,50,000 × 45%)	2,92,500
Commission Paid	2,000	Rent Received	17,000
Postage and Telegram	1,500	Interest on Investments	15,000
Insurance	3,000
Interest Paid	4,000
Carriage Outwards	5,000
Advertising	10,000
Discount Allowed	18,000
Bad Debts	9,000
Brokerage Paid	950
Net Profit (Balancing Figure)	2,41,050
	3,24,500		3,24,500