Question

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

$\begin{array}{cccc}\text{Particulars}& \text{Amt. (Rs.)}& \text{Particulars}& \text{Amt. (Rs.)}\\ \text{Opening Stock}& 10,000& \text{Sales}& 5,20,000\\ \text{Purchases}& 3,00,000& \text{Purchases Returns}& 10,000\\ \text{Debtors}& 1,40,000& \text{Creditors}& 1,00,000\\ \text{Drawings}& 20,000& \text{Provision for Bad Debts}& 4,000\\ \text{Sales Returns}& 16,000& \text{Bills Payable}& 30,000\\ \text{Wages}& 24,000& \text{Bank Overdraft}& 20,000\\ \text{Salaries}& 40,000& \text{Capital}& 7,20,000\\ \text{Repairs}& 12,000& & \\ \text{Bad Debts}& 8,000& & \\ \text{Carriage}& 4,000& & \\ \text{Discount}& 6,000& & \\ \text{Land and Building}& 4,00,000& & \\ \text{Plant and Machinery}& 3,00,000& & \\ \text{Furniture and Fixtures}& 80,000& & \\ \text{Cash}& 4,000& & \\ \text{Goodwill}& 40,000& & \\ & \overline{\underset{–}{14,04,000}}& & \overline{\underset{–}{14,04,000}}\end{array}$

Adjustments:

(i) Closing stock Rs. 40,000

(ii) Further bad debts Rs. 6,000.

(iii) Create a provision for doubtful debts @ 5%.

(iv) Create a provision for discount on debtors and creditors @ 2%.

(v) Change depreciation on plant and machinery and furniture and fixtures @ 10% per annum.

Answer 1

Trading and Profit and Loss Account

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

$\begin{array}{cccc}\text{Particulars}& \text{Amt. (Rs.)}& \text{Particulars}& \text{Amt. (Rs.)}\\ \text{Opening Stock}& 10,000& \text{Sales}5,20,000& \\ \text{Purchases}3,00,000& & (-)\text{Sales Returns}\underset{–}{16,000}& 5,04,000\\ (-)\text{Purchase Returns}\underset{–}{10,000}& 2,90,000& \text{Closing Stock}& 40,000\\ \text{Wages}& 24,000& & \\ \text{Carriage}& 4,000& & \\ \text{Gross Profit c/d}& 2,16,000& & \\ & \overline{\underset{–}{5,44,000}}& & \overline{\underset{–}{5,44,000}}\\ \text{Salaries}& 40,000& \text{Gross Profit b/d}& 2,16,000\\ \text{Repairs}& 12,000& \text{Provision for Discount on Creditors}& 2,000\\ \text{Discount Allowed}& 6,000& & \\ \text{Bad Debts}8,000& & & \\ (+)\text{Further Bad Debts}\underset{–}{6,000}& & & \\ 14,000& & & \\ (+)\text{Provision for Doubtful Debts}\underset{–}{6,700}& & & \\ 20,700& & & \\ (-)\text{Old Provision}\underset{–}{(4,000)}& 16,700& & \\ \text{Provision for Discount on Debtors}& 2,546& & \\ \text{Depreciation on Plant and Machinery}& 30,000& & \\ \text{Depreciation on Furniture and Fixtures}& 8,000& & \\ \text{Net Profit tranferred to Capital A/c}& 1,02,754& & \\ & \overline{\underset{–}{2,18,000}}& & \overline{\underset{–}{2,18,000}}\end{array}$