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Question

On 31st March, 2017 the following Trial Balance was extracted from the books of Sh. Ghanshyam Das:-
  Dr.
(₹)
Cr.
(₹)
Capital Account   2,00,000
Debtors and Creditors 40,000 25,000
Loan on Mortgage   30,000
Interest on Loan 2,250  
Discount   1,800
Stock on 1st April, 2016 20,000  
Motor Vehicle 50,000  
Cash at Bank 4,450  
Investments 16,000  
Wages 18,000  
Land and Building 2,80,000  
Bad-Debts 1,500  
Purchases and Sales 2,50,000 4,80,000
Purchases and Sales Returns 12,000 10,000
Carriage Outward 8,000  
Carriage Inward 6,500  
Salaries 7,200  
Outstanding Salaries   600
Rates, Taxes and Insurance 15,000  
Advertising 5,000  
General Expenses 6,400  
Bills Receivable and Payable 7,500 5,400
Prepaid Insurance 3,000  
  7,52,800 7,52,800
   

Prepare Trading and Profit & Loss Account for the year ended 31st March, 2017 and Balance Sheet as at that date, after making adjustments for the following matters:
1. Depreciate Land and Building at 2.5% and Motor Vehicles at 20%.
2. Interest on Loan at 15% p.a. is unpaid for six months.
3. Ghanshyam Das withdrew ₹ 2,000 for his private use. This amount was included in general expenses.
4. Interest on Investments is receivable for full year @ 10%.
5. Provide for Manager's Commission at 10% on Net Profit after charging such commission.
6. Stock in hand on 31st March, 2017 was valued at ₹ 25,000 (Realisable value ₹ 22,000).


Solution

Financial Statement of Sh. Ghanshyam Das
Trading Account 
for the year ended March 31, 2017
Dr.
 
Cr.
Particulars 
Amount
(Rs)
Particulars
Amount
(Rs)
Opening Stock
20,000
Sales
4,80,000
 
Purchases
2,50,000
 
  Less: Sales Return
12,000
4,68,000
  Less: Purchases Return
10,000
2,40,000
Closing Stock
22,000
Wages
18,000
 
 
Carriage Inwards
6,500
 
 
Gross Profit (Balancing Figure)
2,05,500
 
 
 
4,90,000
 
4,90,000
 
 
 
 
 
Profit and Loss Account 
for the year ended March 31, 2017
Dr.   Cr.
Particulars  Amount (Rs) Particulars Amount (Rs)
Depreciation: (WN1)
 
Gross Profit
2,05,500
Land & Building
7,000
 
Accrued Interest on Investment
1,600
Motor Vehicle
10,000
17,000
Discount Received
1,800
Interest on Loan
2,250
 
 
 
  Add: Outstanding (WN2)
2,250
4,500
 
 
General Expenses
6,400
 
 
 
  Less: Drawings
2,000
4,400
 
 
Bad Debts
1,500
 
 
Carriage Outwards
8,000
 
 
Salaries
7,200
 
 
Rates, Taxes and Insurance
15,000
 
 
Advertisement
5,000
 
 
Outstanding Manager’s Commission (WN3)
13,300
 
 
Net Profit (Balancing Figure)
1,33,000
 
 
 
 
 
 
 
2,08,900
 
2,08,900
 
 
 
 
 
Balance Sheet 
as on March 31, 2017
Liabilities 
Amount
(Rs)
Assets 
Amount
(Rs)
Capital
2,00,000
 
Fixed Assets
 
  Add: Net Profit
1,33,000
 
Land & Building
2,80,000
 
  Less: Drawings
2,000
3,31,000
  Less: Depreciation
7,000
2,73,000
 
 
Motor Vehicle
50,000
 
Current Liabilities
 
 Less: Depreciation 
10,000
40,000
Creditors
25,000
Investments
16,000
Outstanding Manager’s Commission
13,300
Current Assets
 
Outstanding Salaries
600
Closing Stock
22,000
Bills Payable
5,400
Bills Receivable
7,500
Loan on Mortgage
30,000
  Debtors
40,000
Outstanding Interest on Loan
2,250
32,250
Prepaid Insurance
3,000
 
 
Accrued Interest on Investment 1,600
 
 
Cash at Bank
4,450
  4,07,550  
4,07,550
 
 
 
 

Working Notes:

WN1: Calculation of Amount of Depreciation

Depreciation on  Land  &  Building=2,80,000 × 2.5100=Rs  7,000Depreciation on  Motor Vehicle=50,000 × 20100=Rs  10,000

WN2: Calculation of Outstanding Interest on Loan

Outstanding  Interest = 30,000×15100×612=Rs 2,250

WN3: Calculation of Manager’s Commission

Profit  before  Manager's  Commission= Rs  1,46,300  2,08,900 62,600 Manager's  Commission =1,46,300 × 10110=Rs  13,300

Accountancy
DK Goel (2019)
All

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