Question

The following balances has been extracted from the trial balance of M/s Runway Shine Ltd. Prepare a trading and profit and loss account and a balance sheet as on December 31, 2010.

$\begin{array}{cccc}\text{Account Title}& \text{Amt. (Rs.)}& \text{Account Title}& \text{Amt. (Rs)}\\ \text{Purchase}& 1,50,000& \text{Sales}& 2,50,000\\ \text{Opening Stock}& 50,000& \text{Return Outwards}& 4,500\\ \text{Return Inwards}& 2,000& \text{Interest Received}& 3,500\\ \text{Carriage Inwards}& 4,500& \text{Discount Received}& 400\\ \text{Cash in Hand}& 77,800& \text{Creditors}& 1,25,000\\ \text{Cash at Bank}& 60,800& \text{Bills Payable}& 6,040\\ \text{Wages}& 2,400& \text{Capital}& 1,00,000\\ \text{Printing and Stationery}& 4,500& & \\ \text{Discount}& 400& & \\ \text{Bad Debts}& 1,500& & \\ \text{Insurance}& 2,500& & \\ \text{Investment}& 32,000& & \\ \text{Debtors}& 53,000& & \\ \text{Bills Receivable}& 20,000& & \\ \text{Postage and Telegraph}& 400& & \\ \text{Commission}& 200& & \\ \text{Interest}& 1,000& & \\ \text{Repair}& 440& & \\ \text{Lighting Charges}& 500& & \\ \text{Telephone Charges}& 100& & \\ \text{Carriage Outward}& 400& & \\ \text{Motor Car}& 25,000& & \\ & \overline{\underset{–}{\underset{–}{4,89,440}}}& & \overline{\underset{–}{\underset{–}{4,89,440}}}\end{array}$

Adjustments-

1. Further bad debts Rs. 1,000. Discount on debtors Rs. 500 and make a provision on debtors @ 5%.

2. Interest received on investment @ 5%.

3. Wages and interest outstanding Rs. 100 and Rs. 200 respectively.

4. Depreciation charged on motor car @ 5% pa.

5. Closing stock Rs. 32,500.

Answer 1

$\begin{array}{ccc}& \text{Trading and Profit and Loss Account}& \\ \text{Dr.}& \text{as on 31st December, 2010}& \text{Cr.}\end{array}$

$\begin{array}{cccccc}\text{Particulars}& & \text{Amt. (Rs.)}& \text{Particulars}& & \text{Amt. (Rs.)}\\ \text{Opening Stock}& & 50,000& \text{Sales}& 2,50,000& \\ \text{Purchase}& 1,50,000& & \text{(-)Return}& & \\ \text{(-)Purchase Return}& \underset{–}{4,500}& 1,45,500& \text{Inwards}& \underset{–}{2,000}& 2,48,000\\ \text{Carriage Inwards}& & 4,500& \text{Closing Stock}& & 32,500\\ \text{Wages}& 2,400& & & & \\ \text{(+)Outstanding}& & & & & \\ \text{Wages}& \underset{–}{100}& 2,500& & & \\ \text{Gross Profit c/d}& & 78,000& & & \\ & & \overline{\underset{–}{\underset{–}{2,80,500}}}& & & \overline{\underset{–}{\underset{–}{2,80,500}}}\\ \text{Carriage Outwards}& & 400& \text{Gross Profit b/d}& & 78,000\\ \text{Lighting Charges}& & 500& \text{Interest}& 3,500& \\ & & & \text{Received}& & \\ \text{Repair}& & 440& \text{(+) Interest on}& & \\ \text{Printing and Stationery}& & 4,500& \text{investment}& \underset{–}{1,600}& 5,100\\ \text{Discount}& & 400& \text{Discount Received}& & 400\\ \text{Insurance}& & 2,500& & & \\ \text{Bad Debts}& 1,500& & & & \\ \text{(+)Further Bad Debts}& 1,000& & & & \\ \text{(+)New Provision}& 2,600& & & & \\ \text{(+)Discount}& \underset{–}{500}& 5,600& & & \\ \text{Postage and Telegraph}& & 400& & & \\ \text{Commission}& & 200& & & \\ \text{Interest}& 1,000& & & & \\ \text{(+)Outstanding Interest}& \underset{–}{200}& 1,200& & & \\ \text{Telephone Charges}& & 100& & & \\ \text{Depreciation on Motor Car}& & 1,250& & & \\ \text{Net Profit}& & 66,010& & & \\ & & \overline{\underset{–}{\underset{–}{83,500}}}& & & \overline{\underset{–}{\underset{–}{83,500}}}\end{array}$

Balance Sheet

$\begin{array}{cccccc}\text{Liabilities}& & \text{Amt.(Rs)}& \text{Assets}& & \text{Amt.(Rs)}\\ \text{Capital}& 1,00,000& & \text{Cash in Hand}& & 77,800\\ \text{(+)Net Profit}& \underset{–}{66,010}& 1,66,010& \text{Cash at Bank}& & 60,800\\ \text{Creditors}& & 1,25,000& \text{Investment}& 32,000& \\ \text{Bills Payable}& & 6,040& \text{(+)Interest on}& & \\ \text{Outstanding Wages}& & 100& \text{Investment}& \underset{–}{1,600}& 33,600\\ \text{Outstanding Interest}& & 200& \text{Debtors}& 53,000& \\ & & & \text{(-)Bad Debts}& \underset{–}{1,000}& \\ & & & & 52,000& \\ & & & \text{(-)Provision}& 2,600& \\ & & & \text{(-)Discount}& \underset{–}{500}& 48,900\\ & & & \text{Bills Receivable}& & 20,000\\ & & & \text{Motor Car}& 25,000& \\ & & & \text{(-)Depreciation}& \underset{–}{1,250}& 23,750\\ & & & \text{Closing Stock}& & 32,500\\ & & \overline{\underset{–}{\underset{–}{2,97,350}}}& & & \overline{\underset{–}{\underset{–}{2,97,350}}}\end{array}$