Question

Prepare Trading and Profit & Loss Account for the year ended 31st March, 2017 and Balance Sheet as at that date from the following Trial Balance:-

	Dr. (₹)	Cr. (₹)
Capital		10,000
Cash	1,500
Bank Overdraft		2,000
Purchases and Sales	12,000	15,000
Returns	1,000	2,000
Establishment Expenses	2,200
Taxes and Insurance	500
Bad-debts and Bad-debt Provision	500	700
Debtors and Creditors	5,000	2,000
Commission		500
Deposits	4,000
Opening Stock	3,000
Drawings	1,400
Furniture	600
B/R and B/P	3,000	2,500
	34,700	34,700

Adjustments:-
1. Salaries ₹ 100 and taxes ₹ 200 are outstanding but insurance ₹ 50 is prepaid.
2. Commission ₹ 100 is received in advance for next year.
3. Interest ₹ 210 is to be received on Deposits and Interest on Bank overdraft ₹ 300 is to be paid.
4. Bad-debts provision is to be maintained at ₹ 1,000 on Debtors.
5. Depreciate furniture by 10%.
6. Stock on 31st March, 2017 was valued at ₹ 4,500.

Answer 1

Trading Account for the year ended March 31, 2017
Dr.							Cr.
Particulars			Amount (Rs)	Particulars		Amount (Rs)
Opening Stock			3,000	Sales	15,000
Purchases		12,000		Less: Return Inwards	1,000	14,000
Less: Return Outwards		2,000	10,000	Closing Stock		4,500
Gross Profit (Balancing Figure)			5,500
			18,500			18,500

Profit and Loss Account for the year ended March 31, 2017
Dr.							Cr.
Particulars			Amount (Rs)	Particulars		Amount (Rs)
Depreciation on Furniture (WN)			60	Gross Profit		5,500
Establishment Charges			2,200	Commission received	500
Outstanding Salaries			100	Less: Comm. received in advance	100	400
Taxes & Insurance		500		Accrued Interest on Deposits		210
Add: Outstanding Taxes		200
Less: Prepaid Insurance		50	650
Old Bad Debts		500
Add: New Bad Debts		–
Add: New Provision		1,000
Less: Old Provision		700	800
Outstanding Interest on Bank Overdraft			300
Net Profit (Balancing Figure)			2,000
			6,110			6,110

Balance Sheet as on March 31, 2017
Liabilities		Amount (Rs)	Assets			Amount (Rs)
Capital	10,000		Fixed Assets
Add: Net Profit	2,000		Furniture	600
Less: Drawings	1,400	10,600	Less: Depreciation	60		540
Current Liabilities			Current Assets
Creditors		2,000	Closing Stock			4,500
Outstanding Salaries		100	Prepaid Insurance			50
Outstanding Taxes		200	Debtors	5,000
Bills Payable		2,500	Less: Provision for Bad Debts	1,000		4,000
Bank Overdraft		2,000	Bills Receivables			3,000
Commission received in advance		100	Deposits		4,000
Outstanding Interest on Bank Overdraft		300	Add: Accrued Interest		210	4,210
			Cash in Hand			1,500
		17,800				17,800

Working Note:

Calculation of Depreciation

$\mathrm{Depreciation}\mathrm{}\mathrm{on}\mathrm{}\mathrm{Furniture}=600\times \frac{10}{100}=60$