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Question

On 31st March, 2017 the following Trial Balance was extracted from the books of Mohan:-
  Dr.
(₹)
Cr.
(₹)
Capital   30,000
Drawings 5,000  
Debtors and Creditors 20,000 10,000
Bank Loan   9,500
Interest on Loan 300  
Cash 2,000  
Provision for Bad-Debts   700
Stock 1-4-2016 6,800  
Motor Vehicles 10,000  
Bank 3,500  
Land and Buildings 12,000  
Bad-Debts 500  
Purchases and Sales 66,000 1,10,000
Returns 8,000 1,500
Carriage Outward 2,500  
Carriage Inward 3,000  
Salaries 9,000  
Rent and Insurance 3,000  
Advertising 3,500  
Discount   500
General Expenses 3,400  
B/R and B/P 6,000 2,000
Rent received   300
  1,64,500 1,64,500
   

Prepare Trading and Profit & Loss Account for the year ended 31st March, 2017 and Balance Sheet as at that date after taking into account the following:-
(a) Private purchases amounting to ₹ 4,000 have been debited to Purchases Account.
(b) Depreciate Land and Buildings at 212% and Motor Vehicles at 20%.
(c) Salaries outstanding ₹ 200.
(d) Prepaid Insurance ₹ 200.
(e) Provision for Doubtful Debts is to be maintained at 5% on Debtors.
(f) Stock on 31st March, 2017 was valued at ₹ 7,000.


Solution

Trading Account 
for the year ended March 31, 2017
Dr.
 
Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Opening Stock
6,800
Sales
1,10,000
 
Purchases
66,000
  Less: Return Inwards
8,000
1,02,000
Less: Return Outwards
1,500
  Closing Stock
7,000
Less: Drawings
4,000
60,500
   
Carriage Inward
3,000
   
Gross Profit (Balancing Figure)
38,700
   
 
1,09,000
 
1,09,000
 
 
 
 
 
Profit and Loss Account 
for the year ended March 31, 2017
Dr.
 
Cr.
Particulars  Amount (Rs) Particulars Amount
(Rs)
Depreciation: (WN1)   Gross Profit
38,700
Land & Building
300
  Discount received
500
Motor Vehicle
2,000
2,300
Rent received
300
Salary
9,000
     
  Add: Outstanding
200
9,200
   
Rent & Insurance
3,000
     
  Less: Pre-paid
200
2,800
   
Old Bad Debts
500
     
  Add: New Bad Debts
     
  Add: New Provision (WN2)
1,000
     
  Less: Old Provision
700
800
   
Interest on Bank Loan
300
   
Carriage Outward
2,500
   
Advertisement
3,500
   
General Expenses
3,400
   
Net Profit (Balancing Figure)
14,700
 
 
 
39,500
 
39,500
 
 
 
 

 

Balance Sheet 
as on March 31, 2017
Liabilities 
Amount
(Rs)
Assets 
Amount
(Rs)
Capital
30,000
  Fixed Assets  
  Add: Net Profit
14,700
  Land & Buildings
12,000
 
  Less: Drawings (5,000 + 4,000)
9,000
35,700
  Less: Depreciation
300
11,700
    Motor Vehicles
10,000
 
Current Liabilities     Less: Depreciation
2,000
8,000
Creditors
10,000
   
Outstanding Salaries
200
Current Assets  
Bank Loan
9,500
Closing Stock
7,000
Bills Payable
2,000
Prepaid Insurance
200
    Debtors
20,000
 
      Less: Provision for Bad Debts
1,000
19,000
    Bills Receivables
6,000
    Cash at Bank
3,500
 
 
Cash in Hand
2,000
 
57,400
 
57,400
 
 
 
 


Working Notes:

WN1: Calculation of Depreciation



WN2: Calculation of Provision for Doubtful Debts

 


Accountancy
DK Goel (2019)
All

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