Question

Prepare Trading and Profit & Loss Account and Balance sheet from the following Trial Balance as on March 31, 2012.

Trial Balance

$\begin{array}{ccc}\text{Head of Accounts}& \text{Dr.Balance}& \text{Cr.Balance}\\ & \text{(Rs)}& \text{(Rs)}\\ \text{Purchase and Sales}& 3,20,000& 5,30,000\\ \text{Purchase Returns and Sales Returns}& 30,000& 20,000\\ \text{Opening Stock}& 40,000& -\\ \text{Wages}& 15,000& -\\ \text{Power Charges}& 30,000& -\\ \text{Salaries}& 28,000& -\\ \text{Apprenticeship Premium}& -& 15,000\\ \text{Rent}& 16,000& -\\ \text{Rent Outstanding}& -& 4,000\\ \text{October 1,2011}& 82,000& -\\ \text{Bills Receivable}& 68,000& -\\ \text{Bills payable}& -& 16,000\\ \text{Plant and Machinery}& 1,60,000& -\\ \text{Debtors and Creditors}& 90,000& 50,000\\ \text{Cash in Hand}& 11,000& -\\ \text{Cash at Bank}& 70,000& -\\ \text{Capital}& -& 3,15,000\\ & \overline{\underset{–}{9,50,000}}& \overline{\underset{–}{9,50,000}}\end{array}$

Additional Information:

(a) Closing stock is valued at Rs 25,000.
(b) Goods costing Rs 32,000 purchased from Agra are still in transit.
(c) Apprenticeship premium is for two years. For one year, it is in advance.
(d) Depreciate Plant and Machinery @ 10% and Furniture @ 20%.
(e) Wages of Rs 5,000 are outstanding.

Or

The following is the trial balance of Mr. Rajeev Gautam on 31st March, 2012.

$\begin{array}{ccc}\text{Particulars}& \text{Dr.Amount}& \text{Cr.Amount}\\ & \text{(Rs)}& \text{(Rs)}\\ \text{Cash in Hand}& 10,800& -\\ \text{Cash at Bank}& 52,600& -\\ \text{Purchases}& 8,13,500& -\\ \text{Sales}& -& 19,75,600\\ \text{Returns Outward}& -& 10,000\\ \text{Wages}& 2,09,600& -\\ \text{Fuel and Power}& 94,600& -\\ \text{Carriage Outwards}& 64,000& -\\ \text{Carriage Inwards}& 40,800& -\\ \text{Stock(1st April,2011)}& 1,15,200& -\\ \text{Building}& 6,00,000& -\\ \text{Freehold Land}& 2,00,000& -\\ \text{Machinery}& 4,00,000& -\\ \text{Salaries}& 3,00,000& -\\ \text{Patents}& 1,50,000& -\\ \text{General Expenses}& 60,000& -\\ \text{Insurance}& 12,000& -\\ \text{Capital}& -& 14,20,000\\ \text{Drawings}& 1,04,900& -\\ \text{Sundry Debtors}& 2,90,000& -\\ \text{Sundry Creditors}& \underset{–}{-}& \underset{–}{1,26,000}\\ & \underset{–}{35,31,600}& \underset{–}{35,31,600}\end{array}$

Taking into account the following adjustments, prepare Trading and Profit & Loss Account and the Balance Sheet:

(a) Stock on hand on 31st March, 2011 is Rs 1,36,000.
(b) Machinery is to be depreciated @ 10% and patents @ 20%.
(c) Salary for the month of March, 2012 amounting to Rs 30,000 were unpaid.
(d) Insurance includes a premium of Rs 1,700 due in next year.
(e) Wages include a sum of Rs 40,000 spent on the erection of cycle shed for employees and customers.
(f) A provision for bad debts is to be created to the extent of 5% on Sundry debtors.

Answer 1

Trading and Profit and Loss A/c
for the year ended March 31, 2012

$\begin{array}{cccccc}\text{Particulars}& & \text{Amount}& \text{Particulars}& & \text{Amount}\\ & & \text{(Rs)}& & & \text{(Rs)}\\ \text{To Opening stock}& & 40,000& \text{By Sales}& 5,30,000& \\ \text{To Purchase}& 3,20,000& & \text{Less:Returns}& \underset{–}{30,000}& 5,00,000\\ \text{Less: Returns}& \underset{–}{20,000}& 3,00,000& \text{By closing stock}& 25,000& \\ \text{To Wages}& 15,000& & \text{Add:Goods in transit}& \underset{–}{32,000}& 57,000\\ \text{Add: Outstanding wages}& 5,000& 20,000& & & \\ \text{To Power Charges}& & 30,000& & & \\ \text{To Gross Profit transferred}& & & & & \\ \text{to P\&L A/c}& & 1,67,000& & & \\ & & 5,57,000& & & 5,57,000\\ \text{To Salaries}& & 28,000& \text{By Gross Profit}& & \\ \text{To Rent}& & 16,000& \text{By apprenticeship}& & \\ & & & \text{Premium}& 15,000& \\ \text{To Depreciation}& & & \text{Less:Recd in Adv.}& \underset{–}{7,500}& \\ \text{Plant \&Mach.}& 15,000& & & & \\ \text{Furniture}& \underset{–}{18,000}& 33,000& & & \\ \text{To Net Profit transferred}& & & & & \\ \text{to Capital A/c}& & 97,500& & & \\ & & \overline{\underset{–}{\underset{–}{1,74,500}}}& & & \overline{\underset{–}{\underset{–}{1,74,500}}}\end{array}$

Balance Sheet
As at March, 2012

$\begin{array}{cccccc}\text{Liabilities}& & \text{Amount}& \text{Assets}& & \text{Amount}\\ & & \text{(Rs)}& & & \text{(Rs)}\\ \text{Capital}& 3,15,000& & \text{Cash in Hand}& & 11,000\\ \text{Add: Net Profit}& \underset{–}{97,500}& & \text{Cash at Bank}& & 70,000\\ & 4,12,500& & \text{Debtors}& & 90,000\\ \text{Less:Drawings}& \underset{–}{-}& 4,12,5000& \text{Plant\& Machinery}& 1,50,000& \\ \text{Rent outstanding}& & 4,000& \text{Less: Depreciation}& \underset{–}{15,000}& 1,35,000\\ \text{Creditors}& & 50,000& \text{Furniture}& 82,000& \\ \text{Bills Payable}& & 16,000& \text{Less:Depreciation}& \underset{–}{18,000}& 64,000\\ \text{Wages Outstanding}& & 5,000& \text{Bills Receivable}& & 68,000\\ \text{Adv.Apprenticeship premium}& & 7,500& \text{Closing stock}& 25,000& \\ & & & \text{Add:Goods in Transit}& \underset{–}{32,000}& 57,000\\ & & \overline{\underset{–}{\underset{–}{4,95,000}}}& & & \overline{\underset{–}{\underset{–}{4,95,000}}}\end{array}$

Or

Tradiing and Profit and Loss Account
of Mr. Rajeev Gautam
for the year ended 31st March, 2012

$\begin{array}{cccccc}\text{Particular}& & \text{Amount}& \text{Particular}& & \text{Amount}\\ & & \text{(Rs)}& & & \text{(Rs)}\\ \text{To Opening Stock}& & 1,12,500& \text{By Sales}& 19,75,600& \\ \text{To Purchases}& 8,13,500& & \text{Less:Return}& \underset{–}{13,600}& 19,62,000\\ \text{Less:Return}& \underset{–}{10,000}& 8,03,500& \text{By Closing Stock}& & 1,36,000\\ \text{To Carraige on Purchases}& & 40,800& & & \\ \text{To Wages}& 2,09,600& & & & \\ \text{Less:Erection of a}& & & & & \\ \text{cycle shed}& \underset{–}{40,000}& 1,69,600& & & \\ \text{To Fuel and Powers}& & 94,600& & & \\ \text{To Gross Profit trf. to P/L A/c}& & 8,74,300& & & \\ & & \overline{\underset{–}{\underset{–}{20,98,000}}}& & & \overline{\underset{–}{\underset{–}{20,98,000}}}\\ \text{To Carriage Outward}& & 64,000& \text{By Gross Profit transferred from}& & \\ \text{To Salaries}& 3,00,000& & \text{trading A/c}& & 8,74,300\\ \text{Add:Outstanding}& \underset{–}{30,000}& 3,30,000& & & \\ \text{To General Exp.}& & 60,000& & & \\ \text{To Insurance}& 12,000& & & & \\ \text{Less:Pre-paid Insurance}& \underset{–}{1,700}& 10,300& & & \\ \text{To Depreciation on:}& & & & & \\ \text{Machinery}& 40,000& & & & \\ \text{Patents}& \underset{–}{30,000}& 70,000& & & \\ \text{To Provision for bad debts}& & 14,500& & & \\ \text{To Net Profit}& & & & & \\ \text{transferred to Capital A/c}& & 3,25,500& & & \\ & & \overline{\underset{–}{\underset{–}{8,74,300}}}& & & \overline{\underset{–}{\underset{–}{8,74,300}}}\end{array}$

Balance Sheet of Mr. Rajeev Gautam
as on 31st March, 2012

$\begin{array}{cccccc}\text{Liabilities}& & \text{Amount}& \text{Liabilities}& & \text{Amount}\\ & & \text{(Rs)}& & & \text{(Rs)}\\ \text{Creditors}& & 1,26,000& \text{Cash in hand}& & 10,800\\ \text{Outstanding Salaries}& & 30,000& \text{Cash at Bank}& & 52,600\\ \text{Capital}& 14,20,000& & \text{Debtors}& 2,90,000& \\ \text{Add: Net Profit}& \underset{–}{3,25,500}& & \text{Less:Provision}& \underset{–}{14,500}& 2,75,500\\ & 17,45,500& & \text{Insurance Prepaid}& & 1,700\\ \text{Less: Drawings}& \underset{–}{1,04,900}& 16,40,600& \text{Closing Stock}& & 1,36,000\\ & & & \text{Building}& 6,00,000& \\ & & & \text{Add:Cost of erection of}& & \\ & & & \text{a cycle shed}& \underset{–}{40,000}& 6,40,000\\ & & & \text{Land}& & 2,00,000\\ & & & \text{Machinery}& 4,00,000& \\ & & & \text{Less: Depreciation}& \underset{–}{40,000}& 3,60,000\\ & & & \text{Patents}& 1,50,000& \\ & & & \text{Less:Depreciation}& \underset{–}{30,000}& 1,20,000\\ & & \overline{\underset{–}{\underset{–}{17,96,600}}}& & & \overline{\underset{–}{\underset{–}{17,96,600}}}\end{array}$