Question

From the following Trial Balance prepare Trading and Profit & Loss Account for the year ended 31st March, 2019 and Balance Sheet as at that date:-

	Dr. (₹)	Cr. (₹)
Stock 1st April, 2018	22,300
Purchases and Purchases Return	2,30,000	5,200
Freehold Premises	1,00,000
Incidental Trade Exp.	11,200
Insurance	1,850
Audit Fees	800
Commission Received		2,700
Interest		1,400
Debtors and Creditors	32,400	24,830
Wages	30,200
Salaries	15,200
Capital		1,50,000
Drawings	12,000
Income-Tax	3,600
Investments	8,000
Discount allowed & received	7,500	4,200
Sales Return & Sales	6,400	3,17,400
B/R	5,200
Office Furniture	9,000
Rent		2,600
Cash in hand	5,080
Bank Balance	7,600
	5,08,330	5,08,330

Adjustments:-
1. Stock at 31st March 2019 is ₹ 70,000.
2. Write off 5% Depreciation on Freehold Premises and 20% on office furniture.
3. Commission earned but not received ₹ 500.
4. Interest earned but not received ₹ 600.
5. ₹ 200 for rent have been received in advance.
6. Charge interest on Capital @ 6% and ₹ 500 on Drawings.

Answer 1

Trading Account for the year ended March 31, 2019
Dr.							Cr.
Particulars			Amount (₹)	Particulars		Amount (₹)
Opening Stock			22,300	Sales	3,17,400
Purchases		2,30,000		Less: Sales Return	6,400	3,11,000
Less: Purchases Return		5,200	2,24,800	Closing Stock		70,000
Wages			30,200
Gross Profit (Balancing Figure)			1,03,700
			3,81,000			3,81,000

Profit and Loss Account for the year ended March 31, 2019
Dr.							Cr.
Particulars			Amount (₹)	Particulars		Amount (₹)
Depreciation: (WN1)				Gross Profit		1,03,700
Freehold Premises		5,000		Interest on Drawings		500
Furniture		1,800	6,800	Commission	2,700
Interest on Capital (WN2)			9,000	Add: Accrued	500	3,200
Incidental Trade Expenses			11,200	Rent	2,600
Insurance			1,850	Less: Rent received in advance	200	2,400
Audit Fees			800	Interest	1,400
Salaries			15,200	Add: Accrued	600	2,000
Discount Allowed			7,500	Discount Received		4,200
Net Profit (Balancing Figure)			63,650
			1,16,000			1,16,000

Balance Sheet as on March 31, 2019
Liabilities		Amount (₹)	Assets		Amount (₹)
Capital	1,50,000		Fixed Assets
Add: Interest on Capital	9,000		Freehold Premises	1,00,000
Add: Net Profit	63,650		Less: Depreciation	5,000	95,000
Less: Drawings	12,000		Office Furniture	9,000
Less: Interest on Drawings	500		Less: Depreciation	1,800	7,200
Less: Income Tax	3,600	2,06,550	Investments		8,000
Current Liabilities			Current Assets
Creditors		24,830	Closing Stock		70,000
Rent received in advance		200	Accrued Interest		600
			Accrued Commission		500
			Debtors		32,400
			Bills Receivable		5,200
			Cash at Bank		7,600
			Cash in Hand		5,080
		2,31,580			2,31,580

Working Notes:

WN1: Calculation of Depreciation

$\begin{array}{l}\mathrm{Depreciation}\mathrm{}\mathrm{on}\mathrm{}\mathrm{Freehold}\mathrm{}\mathrm{Premises}=1,00,000\times \frac{5}{100}=5,000\\ \mathrm{Depreciation}\mathrm{}\mathrm{on}\mathrm{}\mathrm{Office}\mathrm{}\mathrm{Furniture}=9,000\times \frac{20}{100}=1,800\end{array}$

WN2: Calculation of Interest on Capital

$\mathrm{Interest}\mathrm{}\mathrm{on}\mathrm{}\mathrm{Capital}\mathrm{}=1,50,000\times \frac{6}{100}=9,000$