Question

Prepare trading and profit and loss account for the year ended 31st March, 2016 and a balance sheet as on that date from the following trial balance.

$\begin{array}{cccc}\text{Name of Accounts}& \text{Amt(Rs)}& \text{Name of Accounts}& \text{Amt (Rs)}\\ \text{Stock on 1st April, 2015}& 16,000& \text{Sales Less Returns}& \text{1,10,000}\\ \text{Purchases Less Returns}& 38,000& \text{Sundry Creditors}& 15,000\\ \text{SP Kumar}& 1,500& \text{Capital}& 33,900\\ \text{Wages}& 7,700& \text{Mortgage and Interest to Date}& 7,800\\ \text{Carriage Inwards}& 1,300& \text{Rent Outstanding}& 500\\ \text{Carriage Outwards}& 750& & \\ \text{Salaries}& 20,000& & \\ \text{Advertisements}& 4,500& & \\ \text{Trade Expenses}& 2,400& & \\ \text{Rent}& 6,000& & \\ \text{Establishment}& 2,700& & \\ \text{Stable Expenses}& 1,050& & \\ \text{Mortgage Interest}& 300& & \\ \text{Sundry Debtors}& 20,000& & \\ \text{Cash in Hand}& 1,250& & \\ \text{Machinery}& 43,750& & \\ & \overline{\underset{–}{\underset{–}{1,67,200}}}& & \overline{\underset{–}{\underset{–}{1,67,200}}}\end{array}$

Additional Adjustments:

(i) Closing stock was Rs. 23,000.

(ii) Provision for doubtful debts be created on sundry debtors @ $5\%$ and a provision for discount on sundry debtors at $2\%$.

(iii) Salary of Rs. 1,500 paid to SP Kumar an employee of the firm, stands debited to his personal account and it is to be corrected.

(iv) A stationery bill for Rs. 100 remains unpaid and unrecorded.

(v) Write-off one third of advertisement expenses.

(vi) Sundry creditors include Rs. 5,000 loan taken from Mr. Sudhir on 1st September, 2015 bearing interest @ $12\%$ per annum.

Answer 1

$\text{Trading and Profit and Loss Account}\text{Dr.}\text{for the year ending 31st March, 2016}\text{Cr.}\begin{array}{ccccc}\text{Particualrs}& & \text{Amt. (Rs.)}& \text{Particualrs}& \text{Amt. (Rs.)}\\ \text{Opening Stock}& & 16,000& \text{Sales Less Returns}& 1,10,000\\ \text{Purchases Less Returns}& & 38,000& \text{Closing Stock}& 23,000\\ \text{Wages}& & 7,700& & \\ \text{Carriage Inwards}& & 1,300& & \\ \text{Gross Profit c/d}& & 70,000& & \\ & & \overline{\underset{–}{\underset{–}{1,33,000}}}& & \overline{\underset{–}{\underset{–}{1,33,000}}}\\ \text{Carriage Outwards}& & 750& \text{Gross Profit b/d}& 70,000\\ \text{Salaries}& 20,000& & & \\ \text{(+) Salary to P Kumar}& \underset{–}{1,500}& 21,500& & \\ \text{Advertisements}& & 1,500& & \\ \text{Trade Expenses}& & 2,400& & \\ \text{Rent}& & 6,000& & \\ \text{Establishment}& & 2,700& & \\ \text{Stable Expenses}& & 1,050& & \\ \text{Mortgage Interest}& & 300& & \\ \text{Provision for Doubtful Debts}& & 1,000& & \\ \text{Provision for Discount on Debtors}& & 380& & \\ \text{Stationery}& & 100& & \\ \text{Outstanding Interest on Sudhir's Loan}& & 350& & \\ \text{Net Profit Transferred to Capital A/c}& & 31,970& & \\ & & \overline{\underset{–}{\underset{–}{70,000}}}& & \overline{\underset{–}{\underset{–}{70,000}}}\end{array}$