Question

​On 31st March, 2018 the following Trial Balance was extracted from the books of Mohan:

Particulars	Debit Balances (₹)	Credit Balances (₹)
Capital		3,00,000
Plant and Machinery	50,000
Debtors	2,00,000
Creditors		1,00,000
Loan		95,000
Interest on Loan	3,000
Cash	20,000
Provision for Doubtful Debts		7,000
Stock on 1st April, 2017	68,000
Motor Vehicles	1,00,000
Bank	35,000
Land and Building	1,20,000
Bad Debts	5,000
Purchases	6,60,000
Sales		11,00,000
Purchases Return		15,000
Sales Return	80,000
Carriage Outwards	25,000
Carriage Inwards	30,000
Salaries	90,000
Rent and Insurance	30,000
Advertising	35,000
Discount Received		5,000
General Expenses	34,000
Bills Receivable	60,000
Bills Payable		20,000
Rent Received		3,000
Total	16,45,000	16,45,000
	​

Prepare Trading and Profit and Loss Account for the year ended 31st March, 2018 and Balance Sheet as at that date after taking into account the following:
(a) Stock as at 31st March, 2018 was valued at ₹70,000.
(b) All debtors are considered good for recovery.
(c) Depreciate Motor Vehicles by 20%.
(d) Bank intimation of customer's cheque of ₹10,000 being dishonoured is not recorded in the books.
(e) Travelling expenses of ₹5,000 paid to sales person was wrongly debited to his Personal Account and was included in debtors.
(f) Amount of ₹6,000 received from Ronit was credited to his account and was included in creditors. This amount was written off as bad debt in earlier years.
(g) Drawings included an amount of ₹2,000 being amount drawn in cash. It was used by Mohan for Purchase of stationery used in business.

Answer 1

Trading Account for the year ended March 31, 2018
Dr.					Cr.
Particulars		Amount (₹)	Particulars		Amount (₹)
Opening Stock		68,000	Sales	11,00,000
Purchases	6,60,000		Less: Returns	80,000	10,20,000
Less: Returns	15,000	6,45,000	Closing Stock		70,000
Carriage Inwards		30,000
Gross Profit		3,47,000
		10,90,000			10,90,000

Profit & Loss Account for the year ended March 31, 2018
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Advertising	35,000	Gross Profit	3,47,000
Bad Debts	5,000	Bad-Debts Recovered	6,000
Carriage Outwards	25,000	Discount Received	5,000
Depreciation on Motor Vehicles	20,000	Provision for Doubtful Debts	7,000
General Expenses	34,000	Rent Received	3,000
Interest on Loan	3,000
Stationery	2,000
Salaries	90,000
Rent & Insurance	30,000
Travelling Expenses	5,000
Net Profit	1,19,000
	3,68,000		3,68,000

Balance Sheet as on March 31, 2018
Dr.					Cr.
Liabilities		Amount (₹)	Assets		Amount (₹)
Creditors (1,00,000 – 6,000)		94,000	Cash at Bank (35,000 – 10,000)		25,000
Capital	3,00,000		Cash in Hand		20,000
Less: Drawings	48,000		Motor Vehicles	1,00,000
Add: Net Profit	1,19,000	11,15,200	Less: Depreciation	20,000	80,000
Loan		95,000	Debtors	2,00,000
Bills Payable		20,000	Less: Travelling Expenses	5,000
			Add: Dishonour	10,000	2,05,000
			Closing Stock		70,000
			Land & Building		1,20,000
			Bills Receivable		60,000
		5,80,000			5,80,000