Question

From the following Trial Balance, extracted from the books of Raga Ltd., prepare a Profit and Loss Account for the year ended 31st March, 2019 and a Balance Sheet as at that date:

Debit Balances	(₹)	Credit Balances	(₹)
Drawings Account	20,000	Sales	2,20,000
Land & Building	12,000	Capital	1,01,110
Plant and Machinery	40,000	Discount	1,260
Carriage Inward	100	Commission	5,230
Wages	500	Bills Payable	1,28,870
Salary	2,000	Purchase Return	10,000
Sales Return	200
Bank charges	200
Coal, gas and water	1,200
Purchases	1,50,000
Trade Expenses	3,800
Stock (Opening)	76,800
Cash at Bank	50,000
Rates and Taxes	870
Bills Receivable	24,500
Sundry Debtors	54,300
Cash in hand	30,000
	4,66,470		4,66,470

The additional informations are as under:
(i) Closing stock was valued at the end of the year at ₹ 20,000.
(ii) Depreciation on Plant and Machinery charged at 5% and on Land and Building at 10%.
(iii) Make a provision for discount on debtors at 3%.
(iv) Make a provision at 5% on debtors for Bad-debts.
(v) Salary outstanding was ₹ 100 and Wages prepaid were ₹ 40.
(vi) The manager is entitled to a Commission of 5% on Net Profit after charging such Commission.

Answer 1

Financial Statements of Raga Ltd.
Trading Account for the year ended March 31, 2019
Dr.							Cr.
Particulars			Amount (₹)	Particulars		Amount (₹)
Opening Stock			76,800	Sales	2,20,000
Purchases		1,50,000		Less: Sales Return	200	2,19,800
Less: Purchases Return		10,000	1,40,000	Closing Stock		20,000
Wages		500
Less: Prepaid		40	460
Carriage Inward			100
Coal, Gas and Water			1,200
Gross Profit (Balancing Figure)			21,240
			2,39,800			2,39,800

Profit and Loss Account for the year ended March 31, 2019
Dr.												Cr.
Particulars				Amount (₹)		Particulars				Amount (₹)
Depreciation: (WN1)						Gross Profit				21,240
Plant & Machinery		2,000				Discount Received				1,260
Land & Building		1,200		3,200		Apprentice Premium				5,230
Salaries		2,000
Add: Outstanding		100		2,100
Provision for Doubtful Debts (WN2)				2,715
Provision for Discount on Debtors (WN3)				1,548
Bank Charges				200
Trade Expenses				3,800
Rates & Taxes				870
Outstanding Manager’s Commission (WN4)				633
Net Profit (Balancing Figure)				12,644
				27,730						27,730
Balance Sheet as on March 31, 2019
Liabilities					Amount (₹)		Assets				Amount (₹)
Capital			1,01,110				Fixed Assets
Add: Net Profit			12,664				Plant & Machinery		40,000
Less: Drawings			20,000		93,774		Less: Depreciation		2,000		38,000
							Land & Building		12,000
Current Liabilities							Less: Depreciation		1,200		10,800
Outstanding Manager’s Commission					633
Bills Payable					1,28,870		Current Assets
Outstanding Salaries					100		Closing Stock				20,000
							Prepaid Wages				40
							Bills Receivable				24,500
							Cash at Bank				50,000
							Debtors	54,300
							Less: Provision for Bad Debts	2,715
							Less: Provision for Discount	1,548			50,037
							Cash in Hand				30,000
					2,23,377						2,23,377

Working Notes:

WN1: Calculation of Amount of Depreciation


WN2: Calculation of Provision for Doubtful Debts

WN3: Calculation of Provision for Discount on Debtors

WN4: Calculation of Manager’s Commission