Question

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:

Particulars	Debit (Rs.)	Credit (Rs.)
Capital A/c		$14,11,400$
Purcases	$12,000$
Purchase Returns		$18,000$
Sales		$15,00,000$
Sales Returns	$24,000$
Freight Inwards	$62,000$
Carriage Outwards	$8,500$
Rent of Godown	$55,000$
Rent and Taxes	$24,000$
Salaries	$72,000$
Discount allowed	$7,500$
Discount received		$12,000$
Drawings	$20,000$
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	$16,000$
	$30,73,400$	$30,73,400$

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

Answer 1

M/s Raghuram and Associates
Trading Account for the year ended 31st March 2018

Particulars	Details	Amount	Particulars	Details	Amount
		Rs.			Rs.
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		$3,22,000$
		$18,86,000$			$18,86,000$

M/s Raghuram and Associates
Profit and Loss Account for the year ended 31st March 2018

Particulars	Details	Amount	Particulars	Details	Amount
		Rs.			Rs.
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		$8,700$
		$3,34,000$			$3,34,000$

BBalance Sheet of M/s Raghuram and Associates as at 31st March 2018

Liabilities	Details	Amount Rs.	Assets	Details	Amount 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)		$1,200$
		$14,85,200$			$14,85,200$

Working Notes
(1)

Insurance Premium	Rs.
Insurance premium as given in the trial balance	$48,000$
Less: Personal premium	($42,000$)
Less: Prepaid for 3 months $(\frac{6,000}{15}\times 3)$	$1,200$
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 $20,000$	$30,000$
Total	$80,000$

(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

Particulars	Amount Rs.	Particulars	Amount 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	$16,200$
	$26,200$		$26,200$