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Question

Sonam keeps his books on single entry and provides you with the following information:
31-12-2017 31-12-2018
₹ ₹
Furniture and Fitting 50,000 60,000
Stock 30,000 10,000
Sundry Debtors 60,000 70,000
Sundry Creditors 20,000 NIL
Prepaid Expenses NIL 2,000
Outstanding Expenses 6,000 10,000
Cash in hand 11,000 3,000
Receipts and Payments in 2018:
Receipts from Debtors 2,10,000
Paid to Creditors 1,00,000
Cartage 20,000
Drawings 1,20,000
Sundry Expenses 1,60,000
Furniture Purchased for Cash 10,000

Prepare Trading and Profit & Loss Account for the year ended 31 December, 2018 after providing for bad debts at 10%.
There was a considerable amount of Cash Sales.

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Solution

Trading Account
for the year ended 31 December, 2018
Dr.
Cr.
Particulars
Amount
(₹)
Particulars
Amount
(₹)
Opening Stock
30,000
Sales (Cash + Credit)
4,12,000
Purchases (Credit)
80,000
Closing Stock
10,000
Cartage
20,000
Gross Profit
2,92,000
4,13,000
4,13,000
Profit & Loss Account
for the year ended 31 December, 2018
Dr.
Cr.
Particulars
Amount
(₹)
Particulars
Amount
(₹)
Sundry Expenses
1,60,000
Gross Profit
2,92,000
Provision for Bad Debts
7,000
Prepaid Expenses
2,000
Outstanding Expenses
4,000
Net Profit
1,23,000
2,94,000
2,94,000
Balance Sheet
as on 31 December, 2018
Dr.
Cr.
Liabilities
Amount
(₹)
Assets
Amount
(₹)
Capital
1,25,000
Furniture & Fittings
60,000
Less: Drawings
1,20,000
Stock
10,000
Add: Net Profit
1,23,000
1,28,000
Debtors (70,000 – 7,000)
63,000
Outstanding Expenses
10,000
Prepaid Expenses
2,000
Cash in hand
3,000
1,38,000
1,38,000
Working Notes:
Balance Sheet
as on 31 December, 2017
Dr.
Cr.
Liabilities
Amount
(₹)
Assets
Amount
(₹)
Creditors
20,000
Furniture & Fittings
50,000
Outstanding Expenses
6,000
Stock
30,000
Capital (Balancing figure)
1,25,000
Debtors
60,000
Cash in hand
11,000
1,51,000
1,51,000
Cash Account
Dr.
Cr.
Particulars
Amount
(₹)
Particulars
Amount
(₹)
Balance b/d
11,000
Creditors A/c
1,00,000
Debtors A/c
2,10,000
Cartage A/c
20,000
Sales A/c (Balancing Figure)
1,92,000
Drawings A/c
1,20,000
Sundry Expenses A/c
1,60,000
Furniture A/c
10,000
Balance c/d
3,000
4,13,000
4,13,000
Debtors Account
Dr.
Cr.
Particulars
Amount
(₹)
Particulars
Amount
(₹)
Balance b/d
60,000
Cash A/c
2,10,000
Sales A/c
2,20,000
Balance c/d
70,000
2,80,000
2,80,000
Creditors Account
Dr.
Cr.
Particulars
Amount
(₹)
Particulars
Amount
(₹)
Cash A/c
1,00,000
Balance b/d
20,000
Purchases A/c
80,000
1,00,000
1,00,000

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