Question

Practical Problem

From the following Trading Balance of M/s Ajay and Vijay you are required to prepared Trading and Profit and Loss Account for the year ended 31st March, 2009 and Balance Sheet as on that date

Trial Balance as on 31st March, 2009
Particulars		Debit Amount Rs	Credit Amount Rs
Capital A/cs -	Ajay		60,000
	Vijay		35,000
Purchases and Sales		46,700	85,000
Sundry Debtors and Creditors		28,000	25,000
Bills Receivable and payable		5,000	6,000
Commission		4,600	1,800
Opening stock		18,000
Wages		9,900
Investment		13,500
Postage and Telegrams		3,600
Insurance		1,200
Plant and Machinery		40,700
Furniture		18,000
Cash in hand		2,500
Carriage		3,200
Bad debts		400
Prepaid Rent		7,000
Salaries		10,500
		2,12,800	2,12,800

Adjustments:

1) The closing stock is valued at Rs 31,000.

2) Outstanding expenses were wages Rs. 1,400, salaries Rs 800.

3) Depreciate Plant and Machinery by 10%.

4) Insurance at Rs 500 is paid in advance.

5) Provide for further bad debts of Rs 1,500.

6) Commission due but not received Rs 1,200.

Answer 1

Trading Account for the year ended Mar.31,2009
Dr.						Cr.
Particulars			Amount (Rs)	Particulars	Amount (Rs)
Opening Stock			18,000	Sales	85,000
Purchases			46,700	Closing Stock	31,000
Carriage			3,200
Wages		9,900
Add: Outstanding Wages		1,400	11,300
Gross Profit (Balancing Figure)			36,800
			1,16,000		1,16,000

Profit and Loss Account for the year ended March 31, 2009
Dr.							Cr.
Particulars			Amount (Rs)	Particulars		Amount (Rs)
Commission			4,600	Gross Profit		36,800
Salaries		10,500		Commission Received	1,800
Add: Outstanding Salaries		800	11,300	Add: Accrued Commission	1,200	3,000
Postage and Telegram			3,600
Insurance		1,200
Less: Prepaid Insurance		(500)	700
Depreciation on Plant and Machinery			4,070
Bad-Debts		400
Add: Further Bad-Debts		1,500	1,900
Net Profit (Balancing Figure)
Ajay		6,815
Vijay		6,815	13,630
			39,800			39,800

Balance Sheet as on March 31, 2009
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital of Ajay	60,000		Fixed Assets
Add: Net Profit	6,815	66,815	Investment		13,500
Capital of Vijay	35,000		Furniture		18,000
Add: Net Profit	6,815	41,815	Plant and Machinery	40,700
Current Liabilities			Less: Depreciation	(4,070)	36,630
Creditors		25,000	Current Assets
Bills Payable		6,000	Closing Stock		31,000
Outstanding Wages		1,400	Debtors	28,000
Outstanding Salaries		800	Less: Further Bad-Debts	(1,500)	26,500
			Bills Receivable		5,000
			Prepaid Rent		7,000
			Accrued Commission		1,200
			Prepaid Insurance		500
			Cash in Hand		2,500
		1,41,830			1,41,830