The following are the balances extracted from the books of Sri Raghuram as on 31.03.2018 who carries on business under the name and style of M/s Raghuram and Associates of Chennai:
ParticularsDebit (Rs.)Credit (Rs.)
Capital A/c$$14,11,400$$
Purchase Returns$$18,000$$
Sales Returns$$24,000$$
Freight Inwards$$62,000$$
Carriage Outwards$$8,500$$
Rent of Godown$$55,000$$
Rent and Taxes$$24,000$$
Discount allowed$$7,500$$
Discount received$$12,000$$
Printing and Stationary$$6,000$$
Insurance and Premium$$48,000$$
Electricity charges$$14,000$$
General expenses$$11,000$$
Bank charges$$3,800$$
Bad debts$$12,200$$
Repairs the Motor vehicle$$13,000$$
Interest on loan$$4,400$$
Provision for Bad-debts$$10,000$$
Loan from Mr. Rajan$$60,000$$
Sundry creditors$$62,000$$
Motor vehicles$$1,00,000$$
Land and Buildings$$5,00,000$$
Office Equipment$$2,00,000$$
Furniture and Fixtures$$50,000$$
Stock as on 31.03.2017$$3,20,000$$
Sundry debtors$$2,80,000$$
Cash at Bank$$22,000$$
Cash in Hand$$16,000$$
Prepare Trading and Profit and Loss Account for the year ended 31.03.2018 and the Balance Sheet as at that date after making provision for the following:
(a) Depreciate Building by $$5$$% Furniture and Fixtures by $$10$$% Office Equipment by $$15$$% and Motor car by $$20$$%
(b) Value of stock at the close of the year was Rs. $$4,10,000$$
(c) One month rent for godown is outstanding
(d) Interest on loan from Rajan is payable @ $$10$$% per annum. This loan was taken on 01.07.2017.
(e) Reserve for bad debts is to be maintained at $$5$$% Sundry debtors
(f) Insurance premium includes Rs. $$42,000$$ paid towards proprietor's life insurance policy and the balance of the insurance charges cover the period from 01.04.2017 to 30.06.2018


M/s Raghuram and Associates
Trading Account for the year ended 31st March 2018
To opening Stock$$3,20,000$$By Sales$$15,00,000$$
To Purchases$$12,00,000$$Less: Sales Return($$24,000$$)$$14,76,000$$
Less: Purchase Returns($$18,000)$$$$11,82,000$$By Closing Stock$$4,10,000$$
To Freight$$62,000$$
To Gross Profit c/d$$3,22,000$$

M/s Raghuram and Associates
Profit and Loss Account for the year ended 31st March 2018
To Salaries$$72,000$$By Gross profit b/d$$3,22,000$$
To Rent for Godwon$$55,000$$
Add: Outstanding$$5000$$$$60,000$$By Discount received$$12,000$$
To Provision for Doubtful Debts (W.N 4)$$16,200$$
To Rent and Taxes$$24,000$$
To Discount Allowed$$7500$$
To Carriage outwards$$8,500$$
To Printing and stationary$$6,000$$
To Electricity charges$$14,000$$
To insurance premium (W.N,1)$$4,800$$
To Depreciation (W.N 2)$$80,000$$
To General expenses$$11,000$$
To Bank Charges$$3,800$$
To Interest on loan$$4,400$$
   Add: Outstanding (W.N 3)$$100$$$$4,500$$
To Motor car expenses (Repairs)$$13,000$$
To Net Profit transferred to CApital A/c$$8,700$$

BBalance Sheet of M/s Raghuram and Associates as at 31st March 2018
LiabilitiesDetailsAmount Rs.AssetsDetailsAmount Rs.
Capital$$14,11,400$$Land & building$$5,00,000$$
   Add: New Profit$$8,700$$   Less: Depreciation$$25,000$$$$4,75,000$$
   Less: Drawings($$20,000$$)Motor vehicles$$1,00,000$$
   Less: Proprietor's Insurance premium($$42,000$$)$$13,58,100$$   Less Depreciation($$20,000$$)$$80,000$$
Loan from Rajan$$60,000$$Office equipment$$2,00,000$$
   Add: Outstanding Interest$$100$$$$60,100$$   Less: Depreciation($$30,000)$$1,70,000$$
Sundry Creditors$$62,000$$Furniture & Fixtures$$50,000$$
Outstanding rent$$5,000$$    Less: Depreciation($$5,000$$)$$45,000$$
Stock in Trade$$4,10,000$$
Sundry Debtors$$2,80,000$$
      Less: Provision for doubtful debts($$14,000$$)$$2,66,000$$
Cash at hand$$22,000$$
Cash in bank$$16,000$$
Prepaid insurance (W.N1)$$1,200$$
Working Notes
Insurance PremiumRs.
Insurance premium as given in the trial balance$$48,000$$
   Less: Personal premium($$42,000$$)
   Less: Prepaid for 3 months
 $$(\cfrac{6,000}{15}\times 3)$$
Transfer to Profit and Loss A/c($$1,200$$)
(2) Depreciation
Building @ $$5$$% on $$5,00,000$$$$25,000$$
Motor Vehichles @ $$20$$% on $$1,00,000$$$$20,000$$
Furniture & Fittings @ $$10$$% on $$50,000$$$$5,000$$
Office Equipment @ $$15$$% on $$20,000$$$$30,000$$

(3) Interest on loan
Interest on Loan $$Rs. 60,000\times 10$$%$$\times 9/12$$$$=4,500$$
   Less: interest as per Trial Balance($$4,400)$$
Amount (Outstanding)$$100$$
(4) Provision for bad debts A/c
ParticularsAmount Rs.ParticularsAmount Rs.
To bad debts a/c$$12,200$$By balance b/d$$10,000$$
To balance c/d
($$5$$% of $$2,80,00$$)
$$14,000$$By P & L A/c$$16,200$$

Principles and Practice of Accounting

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