Question

From the following Trial Balance extracted from the books of Mr. Karuna Sagar, prepare a Trading and Profit & Loss A/c for the year ended 31st March, 2019 and a Balance Sheet as at that date:

Dr. Balances			(₹)	Cr. Balances	(₹)
Purchases			3,30,000	Sales	5,30,000
Rent Paid			7,480	Returns	8,000
Wages			33,000	Trade Creditors	37,000
Salaries			30,800	Discount	3,000
Power			5,400	Capital	2,00,000
Stock on 1-4-2018			15,000	Miscellaneous Income	3,060
Stock on 31-3-2019			36,000
Charity			500
Debtors			53,000
Furniture			8,000
Motor Car			2,00,000
Motor Car Expenses			18,000
Insurance			3,600
Unexpired Insurance			600
Drawings			5,000
Cash Balance			34,680
			7,81,060		7,81,060

Informations:-
(i) Goods Costing ₹ 2,000 were taken away by the proprietor for his personal use and goods costing ₹ 1,500 were given away as charity.
(ii) Expenses for wages, rent and salaries are uniform throughout the year and those for March have not been paid.
(iii) Provide 10% depreciation on Furniture and 20% on Motor Car.
(iv) Provide for Manager's Commission at 10% on Net Profit after charging such Commission.

Answer 1

Financial Statements of Mr. Karuna
Trading Account for the year ended March 31, 2019
Dr.							Cr.
Particulars				Amount (₹)	Particulars	Amount (₹)
Opening Stock				15,000	Sales	5,30,000
Purchases			3,30,000
Less: Drawings			2,000
Less: Charity			1,500
Less: Return Outwards			8,000	3,18,500
Wages		33,000
Add: Outstanding (WN2)		3,000		36,000
Power				5,400
Gross Profit (Balancing Figure)				1,55,100
				5,30,000		5,30,000

Profit and Loss Account for the year ended March 31, 2019
Dr.						Cr.
Particulars			Amount (₹)	Particulars	Amount (₹)
Depreciation: (WN1)				Gross Profit	1,55,100
Furniture		800		Discount	3,000
Motor Car		40,000	40,800	Miscellaneous Income	3,060
Rent		7,480
Add: Outstanding (WN2)		680	8,160
Salaries		30,800
Add: Outstanding (WN2)		2,800	33,600
Charity (1,500 + 500)			2,000
Motor Car Expenses			18,000
Insurance			3,600
Outstanding Manager’s Commission (WN3)			5,000
Net Profit (Balancing Figure)			50,000
			1,61,160		1,61,160

Balance Sheet as on March 31, 2019
Liabilities		Amount (₹)	Assets		Amount (₹)
Capital	2,00,000		Fixed Assets
Add: Net Profit	50,000		Furniture	8,000
Less: Drawings (5,000 + 2,000)	7,000	2,43,000	Less: Depreciation	800	7,200
			Motor Car	2,00,000
Current Liabilities			Less: Depreciation	40,000	1,60,000
Trade Creditors		37,000
Outstanding Manager’s Commission		5,000	Current Assets
Outstanding Salaries		2,800	Closing Stock		36,000
Outstanding Rent		680	Debtors		53,000
Outstanding Wages		3,000	Unexpired Insurance		600
			Cash in Hand		34,680
		2,91,480			2,91,480

Working Notes:

WN1: Calculation of Amount of Depreciation

$\begin{array}{l}\mathrm{Depreciation}\mathrm{}\mathrm{on}\mathrm{}\mathrm{Furniture}\mathrm{}=8,000\mathrm{}\times \mathrm{}\frac{10}{100}\mathrm{}=\mathrm{Rs}\mathrm{}800\\ \mathrm{Depreciation}\mathrm{}\mathrm{on}\mathrm{}\mathrm{Motor}\mathrm{}\mathrm{Car}=2,00,000\mathrm{}\times \mathrm{}\frac{20}{100}\mathrm{}=\mathrm{Rs}\mathrm{}40,000\end{array}$

WN2: Calculation of Outstanding Expenses

$\begin{array}{l}\mathrm{Outstanding}\mathrm{}\mathrm{Rent}=7,480\times \mathrm{}\frac{1}{11}=\mathrm{Rs}\mathrm{}680\\ \mathrm{Outstanding}\mathrm{}\mathrm{Wages}=\mathrm{}33,000\times \mathrm{}\frac{1}{11}=\mathrm{Rs}\mathrm{}3,000\\ \mathrm{Outstanding}\mathrm{}\mathrm{Salaries}=\mathrm{}30,800\times \mathrm{}\frac{1}{11}=\mathrm{Rs}\mathrm{}2,800\end{array}$

WN3: Calculation of Manager’s Commission

$\begin{array}{l}\mathrm{Profit}\mathrm{}\mathrm{before}\mathrm{}\mathrm{Manager}\text{'}\mathrm{s}\mathrm{}\mathrm{Commission}=\mathrm{}\mathrm{Rs}\mathrm{}55,000\mathrm{}(1,61,160\mathrm{}-\mathrm{}1,06,160\mathrm{})\mathrm{}\\ \mathrm{Manager}\text{'}\mathrm{s}\mathrm{}\mathrm{Commission}\mathrm{}=55,000\times \mathrm{}\frac{10}{110}=\mathrm{Rs}\mathrm{}5,000\end{array}$