Question

The following balances has been extracted from the trial of M/s Runway Shine Ltd. Prepare a trading and profit and loss account and a balance sheet as on March 31, 2017.

Account Title	Amount Rs	Account Title	Amount Rs
Purchases	1,50,000	Sales	2,50,000
Opening stock	50,000	Return outwards	4,500
Return inwards	2,000	Interest received	3,500
Carriage inwards	4,500	Discount received	400
Cash in hand	77,800	Creditors	1,25,000
Cash at bank	60,800	Bill payable	6,040
Wages	2,400	Capital	1,00,000
Printing and Stationery	4,500
Discount	400
Bad debts	1,500
Insurance	2,500
Investment	32,000
Debtors	53,000
Bills receivable	20,000
Postage and Telegraph	400
Commission	200
Interest	1,000
Repair	440
Lighting Charges	500
Telephone charges	100
Carriage outward	400
Motor car	25,000
	4,89,440		4,89,440

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% p.a.

5. Closing Stock Rs 32,500.

Answer 1

Trading Account
Dr.											Cr.
Particulars			Amount Rs					Particulars			Amount Rs
Opening Stock			50,000					Sales		2,50,000
Purchases		1,50,000							Less: Return Inwards	2,000	2,48,000
	Less: Return Outwards	4,500	1,45,500					Closing Stock			32,500
Carriage Inwards			4,500
Wages		2,400
	Add: Outstanding Wages	100	2,500
Gross Profit			78,000
			2,80,500								2,80,500

Profit and Loss Account
Dr.									Cr.
Particulars			Amount Rs			Particulars			Amount Rs
Carriage Outward			400			Gross Profit			78,000
Printing and Stationery			4,500			Interest Received			3,500
Discount			400			Discount Received			400
Bad Debts		1,500				Interest Received on Investment			1,600
	Add: Further Bad Debts	1,000
	Add: New Provision	2,600	5,100
Discount on Debtors			500
Insurance			2,500
Postage and Telegraph			400
Commission			200
Interest		1,000
	Add: Outstanding Interest	200	1,200
Repair			440
Lighting Charges			500
Telephone Charges			100
Depreciation on Motor Car			1,250
Net Profit			66,010
			83,500						83,500

Balance Sheet
Liabilities				Amount Rs			Assets				Amount Rs
Creditors				1,25,000			Cash in Hand			77,800
								Add: Interest Received		1,600	79,400
Bills Payable				6,040			Cash at Bank				60,800
Capital			1,00,000				Investment				32,000
		Add: Net Profit	66,010	1,66,010			Debtors			53,000
								Less: Further Bad Debts		1,000
Outstanding Interest				100				Less: New Provision		2,600
Outstanding Wages				200				Less: Discount on Debtors		500	48,900
							Motor Car			25,000
								Less: Depreciation		1,250	23,750
							Bills Receivable				20,000
							Closing Stock				32,500
				2,97,350							2,97,350