Question

Practical Problem

From the following Trial Balance of M/s Kale and Gore, you are required to prepare Trading and Profit and Loss Account for the year ended 31st March, 2013 and Balance Sheet on that date. They share profits and losses in their capital ratio.

Trial Balance as on 31st March, 2013
Debit Balance	Amount Rs	Credit Balance		Amount Rs
Opening stock	28,000	Capital Ac-	Kale	80,000
Purchases	1,16,400		Gore	40,000
Trade Expenses	2,400	Sundry Creditors		54,000
Royalties	6,200	Sales		2,12,000
Wages and Salaries	14,800	Reserve for Doubtful Debts		1,800
Advertisement	8,200	Bills payable		36,000
Salaries	11,000
Plant and Machinery	44,000
Freehold Property	36,000
Office Rent	4,000
Motor Van	63,000
Bills Receivable	16,000
Sundry Debtors	60,000
Cash in hand	10,000
Bad debts	1,000
General expenses	2,800
	4,23,800			4,23,800

Adjustments:

1) Closing stock was valued at cost Rs 76,000 while its market price was Rs 80,000.

2) Uninsured goods worth Rs 10,000 were stolen.

3) Goods worth Rs 10,000 were sold and delivered on 31st March 2013, but on entry is passed sales book.

4) Depreciate Plant and Machinery at 10% and Motor van at 15% p.a.

5) Bills Receivable includes a dishonoured bill of Rs 4,000.

6) Create a reserve for doubtful debts at 5% on Debtors.

Answer 1

Trading Account for the year ended March 31,2013
Dr.							Cr.
Particulars			Amount (Rs)	Particulars		Amount (Rs)
Opening Stock			28,000	Sales	2,12,000
Purchases		1,16,400		Add: Additional Sale	10,000	2,22,000
Less: Goods Stolen		(10,000)	1,06,400	Closing Stock		76,000
Wages and Salaries			14,800
Trade Expenses			2,400
Royalties			6,200
Gross Profit (Balancing Figure)			1,40,200
			2,98,000			2,98,000

Profit and Loss Account for the year ended March 31, 2013
Dr.						Cr.
Particulars			Amount (Rs)	Particulars	Amount (Rs)
Advertisement			8,200	Gross Profit	1,48,800
Salaries			11,000
Depreciation on:
Plant and Machinery		4,400
Motor Van		9,450	13,850
Office Rent			4,000
Bad-Debts		1,000
Add: New Reserve for Doubtful Debts		3,700
Less: Old Reserve for Doubtful Debts		(1,800)	2,900
General Expenses			2,800
Loss of Goods			10,000
Net Profit (Balancing Figure)
Kale		58,300
Gore		29,150	87,450
			1,48,800		1,48,800

Balance Sheet as on March 31, 2013
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital of Kale	80,000		Fixed Assets
Add: Net Profit	58,300	1,38,300	Motor Van	63,000
Capital of Gore	40,000		Less: 15% Depreciation	(9,450)	53,550
Add: Net Profit	29,150	69,150	Plant and Machinery	44,000
Current Liabilities			Less: 10% Depreciation	(4,400)	39,600
Creditors		54,000	Freehold Property		36,000
Bills Payable		36,000	Current Assets
			Closing Stock		76,000
			Debtors	60,000
			Add: Additional	10,000
			Add: B/R Dishonor	4,000
			Less: Reserve for Doubtful Debts	(3,700)	70,300
			Bills Receivable (16,000-4,000)		12,000
			Cash in Hand		10,000
		2,97,450			2,97,450