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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.

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Solution

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

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