Question

# Prepare trading account and profit and loss account from the following particulars for the  year ended 31st December, 2015. ParticularsAmt. (Dr.)Amt (Cr.)Cash in Hand    7,600Cash at Bank   16,218Purchases and Sales3,16,0006,50,000Return Inwards    5,000Return Outwards    3,600Carriage on Purchases    2,000Carriage on Sales       600Fuel and Power    7,800Stock 1.1.2015   56,420Building1,64,000Machinery2,25,000Debtors and Creditors1,44,000   44,000Investments1,00,000Interest on Investments    2,000Loan from Narayan on 1.7.2015 @ 10% per annum   40,000Repairs    8,562General Expenses   40,800Provision for Bad Debts    4,200Wages and Salaries   39,440Miscellaneous Receipts    9,040Interest on Mr. Narayan's Loan    1,400Capital4,00,000Drawings   18,000¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯11,52,840¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯11,52,840 Adjustments: (i) Bad Debts Rs. 2,000. (ii) Provision for doubtful debts is to be maintained at 5% on sundry debtors. (iii) Provision for 2% discount on debtors and creditors. (iv) Manager is entitled to get the commission at 10% on net profit after changing such commission. (v) Closing stock was valued at Rs. 60,000. (vi) Allow interest on capital @ 10%. (vii) Charge Rs. 1,000 as interest on drawings.

Solution

## Trading and Profit and Loss Account                                                                     Dr.                                                     for the year ended 31st December, 2015                                                                Cr. ParticularsAmt. (Rs.ParticularsAmt. (Rs. Opening Stock   56,420 Sales                                                      6,50,000 Purchases                                             3,16,000(−) Returns Inwards                                  5,000–––––––––6,45,000(−)Returns Outwards                               3,600 ––––––––––3,12,400 Closing Stock   60,000 Carriage on Purchases    2,000 Fuel and Power    7,800 Wages and Salaries   39,440 Gross Profit c/d2,86,940¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯7,05,000––––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯7,05,000–––––––––– Carriage on Sales       600 Gross Profit b/d2,86,940 Repairs    8,562 Interest on Investments    2,000 General Expenses   40,800 Miscellaneous Receipts    9,040 Further Bad Debts                                          2,000 Provision for Discount on Creditors        880(+) New Provision                                           7,100–––––––––– Interest on Drawings     1,000                                                                           9,100(−) Old Provision                                            4,200––––––––––     4,900 Interest on Narayan's Loan                           1,400(+) Outstanding Interest                                   600––––––––     2,000 Provision for Discount on Debtors     2,698 Interest on Capital (4,00,000×10%)   40,000 Manager's Commission (Outstanding)   18,209 Net Profit Transferred to Capital A/c1,82,091¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯2,99,860––––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯2,99,860–––––––––– Working Note Manager's commission=(2,99,860-99,560)=2,00,300×10110=Rs 18,209 Interest on loan= Rs. 40,000×10100×612=Rs. 2,000                                                          (−) Already Paid=1,400        Outstanding=¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯Rs. 600–––––––––

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