Question

From the following Trial Balance of M/s Bhagat Traders, you are required to prepare Trading Profit & Loss Account for the year ended 31st March, 2010 and Balance Sheet as on that date.

Trial Balance as on 31st March, 2010
Particulars	Debit Amount Rs	Credit Amount Rs
Insurance	1,000
Discount	500	400
Postage and Telegram	1,500
Salaries	28,000
Debtors and Creditors	33,000	34,000
Wages	12,000
Opening stock	20,000
Carriage	4,500
Returns	2,800	4,600
Purchase and Sales	96,600	1,50,800
10% Bank Loan (Taken on 1-10-2009)		60,000
Plant and Machinery	20,000
Buildings	80,000
Drawings	4,000
Capital		50,000
Office rent	2,000
R.D.D.		1,000
Bad debts	600
Bank Overdraft		9,200
Cash	3,500
Total	3,10,000	3,10,000

Adjustment:

1) Stock on 31st March 2010 valued Rs 32,000

2) Depreciate Plant and Machinery at 10% Building at 5% p.a.

3) Wages include Rs 2,000 paid to worker as advance.

4) Salary Rs 2,000 and Office Rent Rs 400 were outstanding.

5) Creat R.D.D. on debtors Rs 1,400.

Answer 1

Financial Statement of M/S Bhagat Traders
Trading Account for the year ended 31st March, 2010
Dr.							Cr.
Particulars			Amount (Rs)	Particulars		Amount (Rs)
Opening Stock			20,000	Sales	1,50,800
Purchases		96,600		Less: Return Inwards	(2,800)	1,48,000
Less: Return Outwards		(4,600)	92,000	Closing Stock		32,000
Carriage			4,500
Wages		12,000
Less: Prepaid		(2,000)	10,000
Gross Profit (Balancing Figure)			53,500
			1,80,000			1,80,000

Profit and Loss Account for the year ended March 31, 2010
Dr.						Cr.
Particulars			Amount (Rs)	Particulars	Amount (Rs)
Salaries		28,000		Gross Profit	53,500
Add: Outstanding		2,000	30,000	Discount	400
Insurance			1,000
Rent		2,000
Add: Outstanding		400	2,400
Postage & Telegram			1,500
Bad Debts		600
Add: New Reserve for Doubtful Debts		1,400
Less: Old Reserve for Doubtful Debts		(1,000)	1,000
Discount			500
Interest on Bank Loan			3,000
Depreciation on:
Plant and Machinery		2,000
Building		4,000	6,000
Net Profit (Balancing Figure)			8,500
			53,900		53,900

Balance Sheet as on March 31, 2010
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital	50,000		Fixed Assets
Less:Drawings	(4,000)		Plant &Machinery	20,000
Add: Net Profit	8,500	54,500	Less:Depreciation @ 10%	(2,000)	18,000
			Building	80,000
Current Liabilities			Less:Depreciation @ 5%	(4,000)	76,000
Outstanding Salaries		2,000
Outstanding Rent		400	Current Assets
Creditors		34,000	Closing Stock		32,000
10% Bank Loan		60,000	Debtors	33,000
Interest on Loan		3,000	Less:R.D.D	(1,400)	31,600
Bank Overdraft		9,200	Prepaid Wages		2,000
			Cash		3,500
		1,63,100			1,63,100

Working Notes:

Calculation of Interest on Bank Loan: