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Question

From the following Trial Balance and other information prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at that date:
Particulars
Dr.
(₹)
Cr.
(₹)
Sundry Debtors ................................................................................
3,20,000
Stock on 1st April, 2017 ................................................................................
2,20,000
Cash in Hand ................................................................................
350
Cash at Bank ................................................................................
15,450
Plant and Machinery ................................................................................
1,75,000
Sundry Creditors ................................................................................
1,06,500
General Expenses ................................................................................
10,750
Sales ................................................................................
13,45,000
Salaries ................................................................................
22,250
Carriage Outwards ................................................................................
4,000
Rent ................................................................................
9,000
Bills Payable ................................................................................
75,000
Purchases ................................................................................
11,88,700
Discounts ................................................................................
11,000
Premises ................................................................................
3,45,000
Capital on 1st April 2017 ................................................................................
7,95,000
Total
23,21,500
23,21,500

Stock on 31st March, 2018 was ₹ 1,24,500. Rent was unpaid to the extent of ₹ 850 and ₹ 1,500 were outstanding for General Expenses; ₹ 4,000 are to be written off as bad debts out of the above debtors; and 5% is to be provided for doubtful debts. Depreciate Plant and Machinery by 10% and Business Premises by 2%.
Manager is entitled to a commission of 5% on net profit after charging his commission.

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Solution

Financial Statement

Trading Account

for the year ended March 31, 2018

Dr.

Cr.

Particulars

Amount

(Rs)

Particulars

Amount

(Rs)

Opening Stock

2,20,000

Sales

13,45,000

Purchases

11,88,700

Closing Stock

1,24,500

Gross Profit (Balancing Figure)

60,800

14,69,500

14,69,500

Profit and Loss Account

for the year ended March 31, 2018

Dr.

Cr.

Particulars

Amount

(Rs)

Particulars

Amount

(Rs)

Rent

9,000

Gross Profit

60,800

Add: Outstanding Rent

850

9,850

Net Loss (Balancing Figure)

42,750

General Expenses

10,750

Add: Outstanding General Expenses

1,500

12,250

Bad Debts

4,000

Add: Provision for Debts

15,800

19,800

Depreciation on

Plant and Machinery

17,500

Business Premises

6,900

24,400

Salaries

22,250

Carriage Outwards

4,000

Discount

11,000

1,03,550

1,03,550

Balance Sheet

as on March 31, 2018

Liabilities

Amount

(Rs)

Assets

Amount

(Rs)

Capital

7,95,000

Fixed Assets

Less: Net Loss

(42,750)

7,52,250

Plant and Machinery

1,75,000

Current Liabilities

Less: 10% Depreciation

(17,500)

1,57,500

Sundry Creditors

1,06,500

Premises

3,45,000

Bills Payable

75,000

Less: 2% Depreciation

(6,900)

3,38,100

Rent Outstanding

850

Current Assets

General Expenses Outstanding

1,500

Closing Stock

1,24,500

Sundry Debtors

3,20,000

Less: Bad Debts

(4,000)

3,16,000

Less: 5% Provision for Doubtful Debts

(15,80)

3,00,200

Cash at Bank

15,450

Cash in Hand

350

9,36,100

9,36,100

Note: In the question, Manager Commission is given as 5% on Net Profit after charging commission. But, during the year the firm had a Net Loss of Rs 42,750, therefore, manager commission is not payable.


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