Question

The following are the balances extracted from the books of Raghunath Ji as on 31st March, 2017. From these balances, prepare his Trading and Profit & Loss Account and Balance Sheet as at that date:

	Dr. (₹)	Cr. (₹)
Opening Stock	12,000
Purchases	40,000
Sales		86,000
Discount		400
Sales Return	6,000
Buildings	50,000
Debtors	16,000
Salaries	2,400
Office Expenses	1,200
Wages	10,000
Purchase Return		4,000
Interest		800
Travelling Expenses	400
Fire Insurance Premium	800
Machinery	20,000
Carriage on Purchases	700
Commission	400
Cash in hand	2,300
Rent and Taxes	1,800
Capital		62,000
Creditors		10,800
	1,64,000	1,64,000

Adjustment:-
1. Closing Stock was valued at ₹ 16,000.
2. Wages ₹ 2,000 and salaries ₹ 1,200 are outstanding.
3. Rent for two months at the rate of ₹ 500 per month is outstanding.
4. Depreciate Buildings by 5% and machinery by 10%.
5. Prepaid Insurance ₹ 200.

Answer 1

Financial Statements of Raghunath Ji
Trading Account for the year ended March 31, 2017
Dr.							Cr.
Particulars			Amount (Rs)	Particulars		Amount (Rs)
Opening Stock			12,000	Sales	86,000
Purchases		40,000		Less: Sales Return	6,000	80,000
Less: Purchases Return		4,000	36,000	Closing Stock		16,000
Carriage			700
Wages		10,000
Add: Outstanding		2,000	12,000
Gross Profit (Balancing Figure)			35,300
			96,000			96,000

Profit and Loss Account for the year ended March 31, 2017
Dr.						Cr.
Particulars			Amount (Rs)	Particulars	Amount (Rs)
Depreciation: (WN)				Gross Profit	35,300
Machinery		2,000		Discount	400
Building		2,500	4,500	Interest	800
Salaries		2,400
Add: Outstanding		1,200	3,600
Insurance		800
Less: Prepaid		200	600
Rent & Taxes		1,800
Add: Outstanding		1,000	2,800
Office Expenses			1,200
Travelling Expenses			400
Commission			400
Net Profit (Balancing Figure)			23,000
			36,500		36,500

Balance Sheet as on March 31, 2017
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital	62,000		Fixed Assets
Add: Net Profit	23,000	85,000	Machinery	20,000
			Less: Depreciation	2,000	18,000
Current Liabilities			Building	50,000
Creditors		10,800	Less: Depreciation	2,500	47,500
Outstanding Wages		2,000
Outstanding Salaries		1,200	Current Assets
Outstanding Rent		1,000	Closing Stock		16,000
			Prepaid Insurance		200
			Debtors		16,000
			Cash in Hand		2,300
		1,00,000			1,00,000

Working Note:

Calculation of Depreciation

$\begin{array}{l}\mathrm{Depreciation}\mathrm{}\mathrm{on}\mathrm{}\mathrm{Building}=50,000\times \frac{5}{100}=2,500\\ \mathrm{Depreciation}\mathrm{}\mathrm{on}\mathrm{}\mathrm{Machinery}\mathrm{}=20,000\times \frac{10}{100}=2,000\end{array}$