Question

From the following trial balance of Varshney and Sons, prepare trading account and profit and loss account for the year ending 31st December, 2016 and a balance sheet as on that date.

$\begin{array}{cccc}\text{Particulars}& \text{Amt. (Rs.)}& \text{Particulars}& \text{Amt. (Rs.)}\\ \text{Opening Stock}& 10,400& \text{Capital}& 32,000\\ \text{Purchases}& 31,000& \text{Creditors}& 4,000\\ \text{Sales Return}& 600& \text{Sales}& 40,000\\ \text{Debtors}& 8,000& \text{Commission}& 5,480\\ \text{Building}& 10,000& \text{Rent}& 4,000\\ \text{Machinery}& 7,200& & \\ \text{Furniture}& 3,200& & \\ \text{Bills Receivable}& 4,000& & \\ \text{Salaries}& 3,200& & \\ \text{Tax}& 400& & \\ \text{Insurance}& 600& & \\ \text{Carriage on Purchases}& 1,800& & \\ \text{Trade Expenses}& 600& & \\ \text{Travelling Expenses}& 880& & \\ \text{Wages}& 2,000& & \\ \text{Cash}& 1,600& & \\ & \overline{\underset{–}{85,480}}& & \overline{\underset{–}{85,480}}\end{array}$

Adjustments:

(i) Closing stock Rs. 24,000

(ii) Rent due but not received Rs. 200.

(iii) Commission to the extent of Rs. 280 received in advance.

Answer 1

Trading and Profit and Loss Account

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

$\begin{array}{cccc}\text{Particulars}& \text{Amt. (Rs.)}& \text{Particulars}& \text{Amt. (Rs.)}\\ \text{Opening Stock}& 10,400& \text{Sales}40,000& \\ \text{Purchases}& 31,000& (-)\text{Sales Returns}\underset{–}{600}& 39,400\\ \text{Carriage on Purchases}& 1,800& \text{Closing Stock}& 24,000\\ \text{Wages}& 2,000& & \\ \text{Gross Profit c/d}& 18,200& & \\ & \overline{\underset{–}{\underset{–}{63,400}}}& & \overline{\underset{–}{\underset{–}{63,400}}}\\ \text{Salaries}& 3,200& \text{Gross Profit b/d}& 18,200\\ \text{Tax}& 400& \text{Commission}5,480& \\ \text{Insurance}& 600& (-)\text{Unearned Commission}\underset{–}{280}& 5,200\\ \text{Trade Expenses}& 600& \text{Rent}4,000& \\ \text{Travelling Expenses}& 880& (+)\text{Accrued Rent}\underset{–}{200}& 4,200\\ \text{Net Profit Transferred to Capital A/c}& 21,920& & \\ & \overline{\underset{–}{27,600}}& & \overline{\underset{–}{27,600}}\end{array}$

$\text{Balance Sheet}$
$\text{as at 31st December, 2016}$
$$\begin{array}{cccc}\text{Capital and Liabilities}& \text{Amt. (Rs.)}& \text{Assets}& \text{Amt. (Rs.)}\\ \text{Creditors}& 4,000& \text{Cash}& 1,600\\ \text{Unearned Commission}& 280& \text{Bills Receivable}& 4,000\\ \text{Capital}32,000& & \text{Debtors}& 8,000\\ \text{(+) Net Profit}\underset{–}{21,920}& 53,920& \text{Closing Stock}& 24,000\\ & & \text{Accrued Rent}& 200\\ & & \text{Furniture}& 3,200\\ & & \text{Machinery}& 7,200\\ & & \text{Building}& 10,000\\ & \overline{\underset{–}{58,200}}& & \overline{\underset{–}{58,200}}\end{array}$$