Question

From the following trial balance of Hanif Lal, prepare trading and profit and loss account for the year ended 31st March, 2016 and a balance sheet as on that date.

$\begin{array}{cccc}\text{Particulars}& \text{Amt. (Rs.)}& \text{Particulars}& \text{Amt. (Rs.)}\\ \text{Opening Stock}& 40,000& \text{Sales}& 5,40,000\\ \text{Purchases}& 1,60,000& \text{Purchase Return}& 8,000\\ \text{Sales Return}& 12,000& \text{Discount}& 10,400\\ \text{Carraiage Inwards}& 7,200& \text{Sundry Creditors}& 50,000\\ \text{Carraiage Outwards}& 1,600& \text{Bills Payable}& 3,600\\ \text{Wages}& 84,000& \text{Capital}& 1,50,000\\ \text{Salaries}& 55,000& & \\ \text{Plant and Machinery}& 1,80,000& & \\ \text{Furniture}& 16,000& & \\ \text{Sundry Debitors}& 1,04,000& & \\ \text{Bills Receivable}& 5,000& & \\ \text{Cash in Hand}& 12,600& & \\ \text{Travelling Expenses}& 7,400& & \\ \text{Lighting (Factory)}& 2,800& & \\ \text{Rent and Taxes}& 14,400& & \\ \text{General Expenses}& 21,000& & \\ \text{Insurance}& 3,000& & \\ \text{Drawings}& 36,000& & \\ & \overline{\underset{–}{7,62,000}}& & \overline{\underset{–}{7,62,000}}\\ & & & \end{array}$

Adjsutments

(i) Stock on 31st March, 2016 was valued at Rs. 48,000 (market value Rs 60,000).

(ii) Wages outstanding for March, 2016 amounted to Rs. 6,000.

(iii) Salaries outstanding for March, 2016 amounted to Rs. 5,000.

(iv) Prepaid insurance amounted to Rs. 600.

(v) Provide depreciation on plant and machinery at 5% and on furniture at 20%.

Answer 1

Trading and Profit and Loss Account

$\text{Dr.}\text{for the year ending 31st March, 2016}\text{Cr.}$

$\begin{array}{cccc}\text{Particulars}& \text{Amt. (Rs.)}& \text{Particulars}& \text{Amt (Rs.)}\\ \text{Opening Stock}& 40,000& \text{Sales}5,40,000& \\ \text{Purchases}1,60,000& & (-)\text{Sales Return}\underset{–}{12,000}& 5,28,000\\ (-)\text{Purchases Return}\underset{–}{8,000}& 1,52,000& \text{Closing Stock}& 48,000\\ \text{Carriage Inwards}& 7,200& & \\ \text{Wages}84,000& & & \\ (+)\text{Outstanding Wages}\underset{–}{6,000}& 90,000& & \\ \text{Factory Lighting}& 2,800& & \\ \text{Gross Profit c/d}& 2,84,000& & \\ & \overline{\underset{–}{\underset{–}{5,76,000}}}& & \overline{\underset{–}{\underset{–}{5,76,000}}}\\ \text{Carriage Outwards}& 1,600& \text{Gross Profit b/d}& 2,84,000\\ \text{Salaries}55,000& & \text{Discount Received}& 10,400\\ (-)\text{Outstanding Salaries}\underset{–}{5,000}& 60,000& & \\ \text{Travelling Expenses}& 7,400& & \\ \text{Rent and Taxes}& 14,400& & \\ \text{General Expenses}& 21,000& & \\ \text{Insurance}3,000& & & \\ (-)\text{Prepaid Insurance}\underset{–}{600}& 2,400& & \\ \text{Depreciation on:}& & & \\ \text{Plant and Machinery}9,000& & & \\ \text{Furniture}\underset{–}{3,200}& 12,200& & \\ \text{Net Profit Transferred to Capital A/c}& 1,75,000& & \\ & \overline{\underset{–}{2,94,400}}& & \overline{\underset{–}{2,94,400}}\end{array}$

Balance Sheet

as at 31st March, 2016

$\begin{array}{cccc}\text{Capital and Liabilities}& \text{Amt. (Rs.)}& \text{Assets}& \text{Amt. (Rs.)}\\ \text{Bills Payable}& 3,600& \text{Cash in Hand}& 12,600\\ \text{Sundry Creditors}& 50,000& \text{Bills Receivable}& 5,000\\ \text{Outstanding Wages}& 6,000& \text{Sundry Debitors}& 1,04,000\\ \text{Outstanding Salaries}& 5,000& \text{Closing Stock}& 48,000\\ \text{Capital}1,50,000& & \text{Prepaid Insurance}& 600\\ (-)\text{Net Profit}1,75,400& & \text{Furniture}16,000& \\ \overline{3,25,400}& & (-)\text{Depreciation}3,200& 12,800\\ (-)\text{Drawings}\underset{–}{36,000}& 2,89,400& \text{Plant and Machinery}\overline{1,80,000}& \\ & & (-)\text{Depreciation}\underset{–}{9,000}& 1,71,000\\ & \overline{\underset{–}{3,54,000}}& & \overline{\underset{–}{3,54,000}}\\ & & & \end{array}$

Working Notes:

1. Closing stock is valued at cost or realisable value, whichever is less.

2. Depreciation on plant and machinery
= Rs. $1,80,000\times \frac{5}{100}=Rs.9,000$

Depreciation on furniture
= Rs. $16,000\times \frac{20}{100}=Rs.3,200$