Question

From the following Trial Balance extracted from the books of S. Sujan Singh, prepare a Trading and Profit & Loss Account for the year ended 31st March, 2016 and a Balance Sheet as at that date:

	Dr. (₹)	Cr. (₹)
Capital Account		90,000
Drawings Account	6,480
Land and Buildings	25,000
Plant & Machinery	14,270
Furniture & Fixtures	1,250
Carriage (Inwards)	4,370
Wages	21,470
Salaries	4,670
Bad-Debts Provision (as on 1st April, 2015)		2,470
Sales		91,230
Sales Returns	1,760
Bank Charges	140
Coal, Gas and Water	720
Rates & Taxes	840
Discount Account (Balance)		120
Purchases	42,160
Purchases Returns		8,460
Bills Receivable	1,270
Trade Expenses	1,990
Sundry Debtors	37,800
Sundry Creditors		12,170
Stock (1st April, 2015)	26,420
Miscellaneous Receipt		500
Fire Insurance	490
Cash at Bank	13,000
Cash in Hand	850
	2,04,950	2,04,950

Adjustments:-
1. Carry forward the following unexpired amounts:-

(i) Fire Insurance	₹ 125
(ii) Rates and Taxes	₹ 240

2. Transfer to Building Account ₹ 3,000 from purchases and ₹ 2,000 from wages, representing cost of material and labour spent on additions to Building made during the year.
3. Charge Depreciation on Land and Buildings at 2.5% and on Plant & Machinery at 10%.
4. Make a Provision of 5% on Sundry Debtors for Bad-debts.
5. Charge 5% Interest on Capital but not on Drawings.
6. The value of Stock as on 31st March, 2016 was ₹ 29,390.

Answer 1

Financial Statements of S. Sujan Singh Trading Account for the year ended March 31, 2016 Dr. Cr. Particulars Amount (Rs) Particulars Amount (Rs) Opening Stock 26,420 Sales 91,230 Purchases 42,160 Less: Sales Return 1,760 89,470 Less: Purchases Return 8,460 Closing Stock 29,390 Less: t/f to Building 3,000 30,700 Wages 21,470 Less: t/f to Building 2,000 19,470 Carriage 4,370 Coal, Gas and Water 720 Gross Profit (Balancing Figure) 37,180 1,18,860 1,18,860 Profit and Loss Account for the year ended March 31, 2016 Dr. Cr. Particulars Amount (Rs) Particulars Amount (Rs) Depreciation: (WN1) Gross Profit 37,180 Plant & Machinery 1,427 Miscellaneous Receipts 500 Land & Building 750 2,177 Discount 120 Fire Insurance 490 Old Provision 2,470 Less: Unexpired 125 365 Less: New Provision (WN2) 1,890 580 Interest on Capital 4,500 Rates & Taxes 840 Less: Unexpired 240 600 Salaries 4,670 Trade Expenses 1,990 Bank Charges 140 Net Profit (Balancing Figure) 23,938 38,380 37,980 Balance Sheet as on March 31, 2016
Liabilities		Amount (Rs)	Assets			Amount (Rs)
Capital	90,000		Fixed Assets
Add: Interest on Capital	4,500		Land & Building (25,000 + 3,000 + 2,000)		30,000
Add: Net Profit	23,938		Less: Depreciation		750	29,250
Less: Drawings	6,480	1,11,958	Plant & Machinery		14,270
			Less: Depreciation		1,427	12,843
Current Liabilities			Furniture & Fixtures			1,250
Creditors		12,170
			Current Assets
			Closing Stock			29,390
			Unexpired Fire Insurance			125
			Unexpired Rates & Taxes			240
			Bills Receivables			1,270
			Cash at Bank			13,000
			Debtors	37,800
			Less: Provision for Doubtful Debts	1,890		35,910
			Cash in Hand			850
		1,24,128				1,24,128

Working Notes:
WN1: Calculation of Amount of Depreciation

$\begin{array}{l}\mathrm{Depreciation}\mathrm{}\mathrm{on}\mathrm{}\mathrm{Land}\mathrm{}\&\mathrm{Buildings}=30,000\times \frac{2.5}{100}=\mathrm{Rs}750\\ \mathrm{Depreciation}\mathrm{}\mathrm{on}\mathrm{}\mathrm{Plant}\mathrm{}\&\mathrm{Machinery}=14,270\times \frac{10}{100}=\mathrm{Rs}1,427\end{array}$

WN2: Calculation of Provision for Doubtful Debts
$\begin{array}{ccl}\mathrm{Provision}\mathrm{}\mathrm{for}\mathrm{}\mathrm{Doubtful}\mathrm{}\mathrm{Debts}& =& \left(\mathrm{Sundry}\mathrm{}\mathrm{Debtors}-\mathrm{Further}\mathrm{}\mathrm{Bad}\mathrm{}\mathrm{Debts}\right)\times \frac{\mathrm{Rate}}{100}\\ & =& \left(37,800-0\right)\times \frac{5}{100}=\mathrm{Rs}\mathrm{}1,890\end{array}$