Question

Sanjiv Sondhi started business on 1^st April, 2017 with a capital of ₹ 3,00,000. Following Trial Balance was drawn up from his books at t he end of the year:

Heads of Accounts	₹	Heads of Accounts	₹
Drawings	45,000	Capital	4,00,000
Plant and Fixtures	80,000	Sales	16,00,000
Purchases	11,60,000	Sundry Creditors	1,20,000
Carriage Inwards	20,000	Bills Payable	90,000
Returns Inward	40,000
Wages	80,000
Salaries	1,00,000
Printing and Stationery	8,000
Advertisement	12,000
Trade Charges	6,000
Rent and Taxes	14,000
Sundry Debtors	2,50,000
Bills Receivable	50,000
Investments	1,50,000
Discount	5,000
Cash at Bank	1,60,000
Cash in Hand	30,000
	22,10,000		22,10,000

Value of Stock as on 31st March, 2018 was ₹ 2,60,000. You are required to prepare his Trading and Profit and Loss Account for the year ended 31^st March 2018 and Balance Sheet as at that date after taking the following facts into account:
(a) Plant and Fixtures are to be depreciated by 10%.
(b) Salaries outstanding on 31^st March, 2018 amounted to ₹ 35,000.
(c) Accrued Interest on investment amounted to ₹ 7,500.
(d) ₹ 5,000 are Bad Debts and a Provision for Doubtful Debts is to be created at 5% of the balance of debtors.

Answer 1

Financial Statement of Sanjiv Sondhi Trading Account for the year ended March 31, 2018
Dr.					Cr.
Particulars	Amount (Rs)	Particulars			Amount (Rs)
Purchase	11,60,000	Sales		16,00,000
Carriage Inwards	20,000	Less: Return Inwards		(40,000)	15,60,000
Wages	80,000	Closing Stock			2,60,000
Gross Profit (Balancing Figure)	5,60,000
	18,20,000				18,20,000

Profit and Loss Account for the year ended March 31, 2018
Dr.					Cr.
Particulars			Amount (Rs)	Particulars	Amount (Rs)
Depreciation on Plant and Fixture			8,000	Gross Profit	5,60,000
Salaries		1,00,000		Accrued Interest on Investment	7,500
Add: Outstanding		35,000	1,35,000
Printing and Stationery			8,000
Advertisement			12,000
Trade Charges			6,000
Rent and Taxes			14,000
Bad Debts		5,000
Add: Provision for Doubtful Debts		12,250	17,250
Discount			5,000
Net Profit (Balancing Figure)			3,62,250
			5,67,500		5,67,500

Balance Sheet as on the year ended March 31, 2018
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital	4,00,000		Plant and Fixtures	80,000
Less: Drawings	(45,000)		Less: 10% Depreciation	(8,000)	72,000
Add: Net Profit	3,62,250	7,17,250	Investment	1,50,000
Sundry Creditors		1,20,000	Add: Accrued Interest	7,500	1,57,500
Bills Payable		90,000	Closing Stock		2,60,000
Salaries Outstanding		35,000	Sundry Debtors	2,50,000
			Less: Bad Debts	(5,000)
				2,45,000
			Less: 5% Provision for Doubtful Debts	(12,250)	2,32,750
			Bills Receivable		50,000
			Cash at Bank		1,60,000
			Cash in Hand		30,000
		9,62,250			9,62,250