Question

Prepare a trading and profit and loss account of M/s Green Club Ltd. for the year ending December 31, 2010 from the following figures taken from his trial balance

$\begin{array}{cccc}\text{Account Title}& \text{Amt. (Rs.)}& \text{Account Title}& \text{Amt. (Rs.)}\\ \text{Opening Stock}& 35,000& \text{Sales}& 2,50,000\\ \text{Purchase}& 1,25,000& \text{Purchase Return}& 6,000\\ \text{Return Inwards}& 25,000& \text{Creditors}& 10,000\\ \text{Postage and Telegram}& 600& \text{Bills Payable}& 20,000\\ \text{Salary}& 12,300& \text{Discount}& 1,000\\ \text{Wages}& 3,000& \text{Provision for Bad Debts}& 4,500\\ \text{Rent and Rates}& 1,000& \text{Interest Received}& 5,400\\ \text{Packing and Transport}& 500& \text{Capital}& 75,000\\ \text{General Expenses}& 400& & \\ \text{Insurance}& 4,000& & \\ \text{Debtors}& 50,000& & \\ \text{Cash in Hand}& 20,000& & \\ \text{Cash at Bank}& 40,000& & \\ \text{Machinery}& 20,000& & \\ \text{Lighting and Heating}& 5,000& & \\ \text{Discount}& 3,500& & \\ \text{Bad Debts}& 3,500& & \\ \text{Investment}& 23,100& & \\ & \overline{\underset{–}{\underset{–}{3,71,900}}}& & \overline{\underset{–}{\underset{–}{3,71,900}}}\end{array}$

Adjustments

1. Depreciation charged on machinery @ 5% p.a.

2. Further bad debts Rs. 1,500, discount on debtors @ 5% and make a provision on debtors @ 6%.

3. Wages prepaid Rs. 1,000.

4. Interest on investment @ 5% pa.

5. Closing stock Rs. 10,000.

Answer 1

$\begin{array}{ccc}& \text{Trading and Profit and Loss Account}& \\ \text{Dr.}& \text{as on 31st December, 2010}& \text{Cr.}\end{array}$

$\begin{array}{cccccc}\text{Particulars}& & \text{Amt. (Rs.)}& \text{Particulars}& & \text{Amt. (Rs.)}\\ \text{Opening Stock}& & 35,000& \text{Sales}& 2,50,000& \\ \text{Purchases}& 1,25,000& & \text{(-)Sales Return}& \underset{–}{25,000}& 2,25,000\\ \text{(-)Purchase}& & & \text{Closing Stock}& & 10,000\\ \text{Return}& \underset{–}{6,000}& 1,19,000& & & \\ \text{Wages}& 3,000& & & & \\ \text{(-) Prepaid wages}& \underset{–}{1,000}& 2,000& & & \\ \text{Gross Profit c/d}& & 79,000& & & \\ & & \overline{\underset{–}{\underset{–}{2,35,000}}}& & & \overline{\underset{–}{\underset{–}{2,35,000}}}\\ \text{Salary}& & 12,300& \text{Gross Profit b/d}& & 79,000\\ \text{Postage and Telegram}& & 600& \text{Accrued Interest on}& & \\ \text{Rent and Rates}& & 1,000& \text{Investment}& & 1,155\\ \text{Packing and Transport}& & 500& \text{Discount}& & 1,000\\ \text{General Expenses}& & 400& \text{interest Received}& & 5,400\\ \text{Insurance}& & 4,000& & & \\ \text{Lighting and Heating}& & 5,000& & & \\ \text{Discount}& & 3,500& & & \\ \text{Bad Debts}& 3,500& & & & \\ \text{(+)Further Bad Debts}& 1,500& & & & \\ \text{(+)New Provision}& 2,910& & & & \\ \text{(-)Old Provision}& 4,500& & & & \\ \text{(+)Discount}& \underset{–}{2,280}& 5,690& & & \\ \text{Depreciation on Machinery}& & 1,000& & & \\ \text{Net Profit}& & 52,565& & & \\ & & \overline{\underset{–}{\underset{–}{86,555}}}& & & \overline{\underset{–}{\underset{–}{86,555}}}\end{array}$

Balance Sheet
as on 31st December, 2010

$\begin{array}{cccccc}\text{Capital and Liabilities}& & \text{Amt. (Rs.)}& \text{Assets}& & \text{Amt. (Rs.)}\\ \text{Capital}& 75,000& & \text{Investment}& 23,100& \\ \text{(+)Net Profit}& \underset{–}{52,565}& 1,27,565& \text{Accrued Interest}& \underset{–}{1,155}& 24,255\\ & & & \text{Closing Stock}& & 10,000\\ \text{Creditors}& & 10,000& \text{Prepaid Wages}& & 1,000\\ \text{Bills Payable}& & 20,000& \text{Machinery}& 20,000& \\ & & & \text{(-)Depreciation}@5\%& \underset{–}{1,000}& 19,000\\ & & & \text{Cash in Hand}& & 20,000\\ & & & \text{Cash in Bank}& & 40,000\\ & & & \text{Debtors}& 50,000& \\ & & & \text{(-)Bad Debts}& \underset{–}{1,500}& \\ & & & & 48,500& \\ & & & \text{(-)New Provision}& \underset{–}{2,910}& \\ & & & & 45,590& \\ & & & \text{(-)Discount}& \underset{–}{2,280}& \underset{–}{43,310}\\ & & \overline{\underset{–}{\underset{–}{1,57,565}}}& & & \underset{–}{\underset{–}{1,57,565}}\end{array}$

Working Note

$\begin{array}{cc}\text{Sundry Debtors}& 50,000\\ \text{(-) Further Bad Debts}& \underset{–}{1,500}\\ & 48,500\\ \text{(-) Provision (6)}\%& \underset{–}{2,910}\\ & 45,590\\ \text{(-) Discount (5)}\%& \underset{–}{2,280}\\ & Rs.43,310\end{array}$