Question

From the following Trial Balance and additional information of Mr. Gaurav, a proprietor, prepare Trading and Profit and Loss Account for the year ended 31st March, 2019 and Balance Sheet as at that date:

Particulars		Dr. Balance (₹)	Cr. Balance (₹)
Building		1,60,000	…
Wages		26,000	…
Machinery		16,000	…
Salaries and Wages		41,600	…
Debtors		38,700	…
Capital		…	2,23,100
Purchases		56,500	…
Sales		…	1,00,700
Creditors		…	12,500
Income Tax		2,000	…
Drawings		500	…
Input CGST A/c		10,000	…
Input SGST A/c		10,000	…
Output CGST A/c		…	12,500
Output SGST A/c		…	12,500
	Total	3,61,300	3,61,300

Closing Stock at cost ₹ 1,00,000 but its market value is ₹ 88,500.

Answer 1

Financial Statement of Mr. Gaurav
Trading Account for the year ended March 31, 2019
Dr.					Cr.
Particulars		Amount (₹)	Particulars	Amount (₹)
Purchases		56,500	Sales	1,00,700
Wages		26,000	Closing Stock	88,500
Gross Profit (Balancing Figure)		1,06,700
		1,89,200		1,89,200

Profit and Loss Account for the year ended March 31, 2019
Dr.					Cr.
Particulars		Amount (₹)	Particulars	Amount (₹)
Salaries and Wages		41,600	Gross Profit	1,06,700
Net Profit (Balancing Figure)		65,100
		1,06,700		1,06,700

Balance Sheet as on March 31, 2019
Liabilities		Amount (₹)	Assets	Amount (₹)
Capital	2,23,100		Fixed Assets
Add: Net Profit	65,100		Building	1,60,000
Less: Drawings	(500)		Machinery	16,000
Less: Income Tax	(2,000)	2,85,700	Current Assets
Current Liabilities			Closing Stock	88,500
Creditors GST Payable (WN 1)		12,500 5,000	Debtors	38,700
		3,03,200		3,03,200

Working Notes:
(1) GST Set off
First: Output CGST-Input CGST= 12,500-10,000=2,500
Second: Output SGST-Input SGST= 12,500-10,000=2,500

GST Payable=Output CGST+Output SGST=2,500+2,500=5,000

(2) Closing Stock has been taken at its Market Price (i.e. Rs 88,500) and not on its Cost. This is because, as per the Principle of Conservatism, Closing Stock is taken at Cost or Market Price whichever is less.