Question

From the following trial balance prepare trading account, profit and loss account, and balance sheet for the year ended 31st December, 2016.

$\begin{array}{cccc}\text{Account Title}& \text{Amt. (Rs.)}& \text{Account Title}& \text{Amt. (Rs.)}\\ \text{Capital}& 10,00,000& \text{Sundry Creditors}& 97,000\\ \text{Life Insurance Premium}& 8,000& \text{Sales}& 12,00,000\\ \text{Plant and Machinery}& 2,50,000& \text{Returns Outwards}& 10,000\\ \text{Stock in the Beginning}& 1,50,000& \text{Discount (Dr.)}& 8,000\\ \text{Purchases}& 8,72,000& \text{Discount (Cr.)}& 12,000\\ \text{Return Inwards}& 20,000& \text{Rent or Premises Sublet}& 10,000\\ \text{Sundry Debtors}& 2,10,000& \text{Lighting}& 5,000\\ \text{Furniture}& 92,000& \text{Salaries}& 2,13,000\\ \text{Freehold Property}& 4,00,000& \text{Cash}& 1,58,000\\ \text{Freight and Duty}& 20,000& \text{Loan from Bank at}10\%\text{per annum on}& \\ \text{Carriage Inwards}& 8,000& \mathrm{1.1.2016}& 1,00,000\\ \text{Carriage Outwards}& 2,000& \text{Bank Interest (Dr.)}& 9,000\\ \text{Trade Expenses}& 4,000& & \end{array}$

Adjustments:

(i) Stock on 31st December, 2016 was valued at Rs. 3,00,000.

(ii) Stock for Rs. 50,000 was burnt by fire on 25th December, 2016 and the Insurance company admitted the claim of Rs. 30,000.

(iii) Good worth Rs. 15,000 were distributed as free samples, goods worth Rs. 12,000 were used for personal purposes by the proprietor and goods worth Rs. 8,000 were given away as charity.

(iv) Use of goods in business worth Rs. 20,000.

(v) Machine worth Rs. 50,000 burnt by fire on 30th December, 2016 which was not insured.

Answer 1

$\text{Trading and Profit and Loss Account}\text{Dr.}\text{for the year ending 31st December, 2016}\text{Cr.}$

$\begin{array}{cccccc}\text{Particulars}& & \text{Amt. (Rs.)}& \text{Particulars}& & \text{Amt. (Rs.)}\\ \text{Opening Stock}& & 1,50,000& \text{Sales}& 12,00,000& \\ \text{Purchases}& 8,72,000& & (-)\text{Return Inwards}& \underset{–}{20,000}& 11,80,000\\ (-)\text{Return Outwards}& \underset{–}{10,000}& & \text{Closing Stock}& & 3,00,000\\ & 8,62,000& & & & \\ (-)\text{Loss by Fire}& \underset{–}{50,000}& & & & \\ & 8,12,000& & & & \\ (-)\text{Free Samples}& \underset{–}{15,000}& & & & \\ & 7,97,000& & & & \\ (-)\text{Drawing in Goods}& \underset{–}{12,000}& & & & \\ & 7,85,000& & & & \\ (-)\text{Charity in Goods}& \underset{–}{8,000}& & & & \\ & 7,77,000& & & & \\ (-)\text{Use in business}& \underset{–}{20,000}& 7,57,000& & & \\ \text{Freight and Duty}& & 20,000& & & \\ \text{Carriage Inwards}& & 8,000& & & \\ \text{Gross Profit c/d}& & 5,45,000& & & \\ & & \overline{\underset{–}{14,80,000}}& & & \overline{\underset{–}{14,80,000}}\\ \text{Carriage Outwards}& & 2,000& \text{Gross Profit b/d}& & 5,45,000\\ \text{Trade Expenses}& & 4,000& \text{Discount Received}& & 12,000\\ \text{Discount Allowed}& & 8,000& \text{Rent}& & 10,000\\ \text{Lighting}& & 5,000& & & \\ \text{Salaries}& & 2,13,000& & & \\ \text{Bank Interest}& 9,000& & & & \\ (+)\text{Interest Outstanding}& \underset{–}{1,000}& 10,000& & & \\ \text{Loss by Accident}& & 20,000& & & \\ \text{Free Samples}& & 15,000& & & \\ \text{Charity}& & 8,000& & & \\ \text{Loss of Machine by Fire}& & 50,000& & & \\ \text{Net Profit Transferred to Capital A/c}& & 2,32,000& & & \\ & & \overline{\underset{–}{5,67,000}}& & & \overline{\underset{–}{5,67,000}}\\ & & & & & \end{array}$

Balance Sheet

as at 31st December, 2016

$\begin{array}{cccccc}\text{Capital and Liabilities}& & \text{Amt. (Rs.)}& \text{Assets}& & \text{Amt. (Rs.)}\\ \text{Bank Loan}& 1,00,000& & \text{Cash}& & 1,58,000\\ (+)\text{Outstanding Interest}& \underset{–}{1,000}& 1,01,000& \text{Sundry Debtors}& & 2,10,000\\ \text{Sundry Creditors}& & 97,000& \text{Closing Stock}& & 3,00,000\\ \text{Capital}& 10,00,000& & \text{Insurance Company}& & 30,000\\ (+)\text{Net Profit}& 2,32,000& & \text{Furniture}& & 92,000\\ & \overline{12,32,000}& & \text{Plant and Machinery}& 2,50,000& \\ (-)\text{Life Insurance}& & & (-)\text{Loss by Fire}& \underset{–}{50,000}& 2,00,000\\ \text{Premium (Drawings)}& \underset{–}{8,000}& & \text{Freehold Property}& & 4,00,000\\ & 12,24,000& & \text{Use of Goods in Business}& & 20,000\\ (-)\text{Drawing in Goods}& \underset{–}{12,000}& 12,12,000& & & \\ & & \overline{\underset{–}{14,10,000}}& & & \overline{\underset{–}{14,10,000}}\\ & & & & & \end{array}$

Working Note:

Interest on loan=$1,00,000X\frac{10}{100}=Rs.10,000$

$\text{Already Paid}=Rs.9,000\text{Outstanding}=\overline{\underset{–}{Rs.1,000}}$