Question

Prepare a Trading and Profit and Loss account for year ending December 31, 2010 from the balances extracted to M/s Rahul Sons. Also prepare a balance sheet at the end of the year.

Account Title	Amt. (Rs.)	Account Title	Amt. (Rs.)
Stock	50,000	Sales	1,80,000
Wages	3,000	Purchase Return	2,000
Salary	8,000	Discount Received	500
Purchase	1,75,000	Provision for Bad Debts	2,500
Sales Return	3,000	Capital	3,00,000
Sundry Debtors	82,000	Bills Payable	22,000
Discount Allowed	1,000	Commission Received	4,000
Insurance	3,200	Rent	6,000
Rent, Rates and Taxes	4,300	Loan	34,800
Fixtures and Fittings	20,000
Trade Expenses	1,500
Bad Debts	2,000
Drawings	32,000
Repair and Renewals	1,600
Travelling Expenses	4,200
Postage	300
Telegram Expenses	200
Legal Fees	500
Bills Receivable	50,000
Building	1,10,000
	5,51,800		5,51,800

Adjustments
1. Commission received in advance Rs. 1,000.
2. Rent received Rs. 22,000.
3. Salary outstanding Rs. 1,000 and insurance prepaid Rs. 800.
4. Further bad debts Rs. 1,000 and provision for bad debts @ 5% on debtors and discount on debtors @ 2%.
5. Closing stock Rs. 32,000.
6. Depreciation on building @ 6% pa.

Answer 1

Trading and Profit and Loss Account
as on 31st December, 2010
Dr Cr

Particulars	Amt. (Rs.)	Particulars	Amt.(Rs.)
To Opening Stock	50,000	By Sales	1,80,000
To purchase	1,75,000	(-) Sales Return	3,000 1,77,000
(-) Purchase		By Closing Stock	32,000
Return	2,000 1,73,000	By Gross Loss c/d	17,000
To Wages	3,000 2,26,000		2,26,000
To Gross Loss b/d	17,000	By Discount Received	500
To Salary	8,000	By Commission	4,000
(+) Outstanding		(-) Advance	1,000 3,000
Salary	1,000 9,000	By Rent	6,000
To Discount Allowed	1,000	(+) Accrued Rent	2,000 8,000
To Insurance	3,200	By Net Loss	43,189
(-) Prepaid
Insurance	800 2,400
To Rent, Rates and Taxes	4,300
To Trade Expenses	1,500
To Bad Debts	2,000
(+) Further Bad
Debts	1,000
(+) New Provision	4,050
(+) Discount	1,539
(-) Old Provision	2,500 6,089
To Postage	300
To Telegram Expenses	200
To Repair and Renewals	1,600
To Travelling Expenses	4,200
To Legal Fees	500
To Depreciation on Building	6,600
	54,689		54,689

Balance Sheet
as on 31st December, 2010

Liabilities	Amt. (Rs.)	Assets	Amt. (Rs.)
Capital	3,00,000	Sundry Debtors	82,000
(-) Net Loss	43,189 2,56,811	(-) Further Bad Debts	1000
(-) Drawings	32,000 2,24,811	(-) New Provision	4,050
Bills Payable	22,000	(-) Discount	1,539 75,411
Loan	34,800	Bills Receivable	50,000
Advance Commission	1,000	Fixtures and Fitting	20,000
Outstanding Salary	1,000	Prepaid Insurance Building (-) Depreciation @ 6% Rent (Accrued) Closing Stock	800 1,10,000 6,600 1,03,4000 2,000 32,000
	2,83,611		2,83,611

Working Note
Sundry Debtors 82,000
(-) Further Bad Debts 1,000
81,000
(-) Provision(5%) 4,050
76,950
(-) Discount (2%) 1,539
Rs. 75,411