Question

Mr. Bhardwaj has kept incomplete records. He submits to you the following information:

STATEMENT OF AFFAIRS
as at 1st April, 2014

			(₹)		(₹)
Sundry Creditors			18,000	Cash at Bank	7,600
Capital			82,000	Sundry Debtors	42,400
				Stock	20,000
				Machinery	30,000
			1,00,000		1,00,000

Bhardwaj banks all receipts and makes all payments only by means of cheques. Following is the analysis of his bank transactions:

	₹
Receipt from Debtors	96,400
Payment to Creditors	62,500
Payment of Freight & Carriage	2,000
Payment of Office Expenses	10,800
Drawings	12,200

Sundry Debtors on 31st March, 2015 were ₹ 36,000 and Sundry Creditors were ₹ 25,000. No information is available regarding stock-in-trade on 31st March, 2015, but it is ascertained that Mr. Bhardwaj takes 20% profit on Sales. Prepare Bhardwaj's Bank A/c, Trading and Profit & Loss A/c and a Balance Sheet as at 31st March, 2015.

Answer 1

Trading Account for the year ended December 31, 2007
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Opening Stock	20,000	Sales (Credit)	90,000
Purchases (Credit)	69,500	Closing Stock	19,500
Freight & Carriage	2,000
Gross Profit	18,000
	1,09,500		1,09,500

Profit & Loss Account for the year ended December 31, 2007
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Office Expenses	10,800	Gross Profit	18,000
Net Profit	7,200
	18,000		18,000

Balance Sheet as on December 31, 2007
Dr.				Cr.
Liabilities		Amount (₹)	Assets	Amount (₹)
Capital	82,000		Cash at Bank	16,500
Less: Drawings	12,200		Debtors	36,000
Add: Net Profit	7,200	77,000	Stock	19,500
Closing Creditors		25,000	Machinery	30,000
		1,02,000		1,02,000

Working Notes:

Bank Account
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Balance b/d	7,600	Creditors A/c	62,500
Debtors A/c	96,400	Freight & Carriage A/c	2,000
		Office Expenses A/c	10,800
		Drawings A/c	12,200
		Balance c/d (Balancing Figure)	16,500
	1,04,000		1,04,000

Debtors Account
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Balance b/d	42,400	Bank A/c	96,400
Sales A/c	90,000	Balance c/d	36,000
	1,32,400		1,32,400

Creditors Account
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Bank A/c	62,500	Balance b/d	18,000
Balance c/d	25,000	Purchases A/c	69,500
	87,500		87,500

Rate of Gross Profit (on sales) = 20%

Gross Profit = 20% of 90,000 = 18,000

Gross Profit = Net Sales – Cost of Goods Sold

18,000 = 90,000 – Cost of Goods Sold

Cost of Goods Sold = 90,000 – 18,000 = ₹ 72,000

Cost of Goods Sold = Opening Stock + Purchases + Direct Expenses – Closing Stock

72,000 = 20,000 + 69,500 + 2,000 – Closing Stock

Closing Stock = 20,000 + 69,500 + 2,000 – 72,000 = ₹ 19,500