Question

The following balances have been extracted from the books of M/s Green House for the years ended December 31, 2010, prepare trading and profit and loss account and balance sheet as on this date.

$\begin{array}{cccc}\text{Account Title}& \text{Amt. (Rs)}& \text{Account Title}& \text{Amt. (Rs)}\\ \text{Purchases}& 80,000& \text{Capital}& 2,10,000\\ \text{Bank Balance}& 11,000& \text{Bills Payable}& 6,500\\ \text{Wages}& 34,000& \text{Sales}& 2,00,000\\ \text{Debtors}& 70,300& \text{Creditors}& 50,000\\ \text{Cash in Hand}& 1,200& \text{Return Outwards}& 4,000\\ \text{Legal Expenses}& 4,000& & \\ \text{Building}& 60,000& & \\ \text{Machinery}& 1,20,000& & \\ \text{Bills Receivable}& 7,000& & \\ \text{Office Expenses}& 3,000& & \\ \text{Opening Stock}& 45,000& & \\ \text{Gas and Fuel}& 2,700& & \\ \text{Freight and Carriage}& 3,500& & \\ \text{Factory Lighting}& 5,000& & \\ \text{Office Furniture}& 5,000& & \\ \text{Patent Right}& 18,800& & \\ & \overline{\underset{–}{\underset{–}{4,70,500}}}& & \overline{\underset{–}{\underset{–}{4,70,500}}}\end{array}$

Adjustments

(a) Machinery is depreciated @ 10$\%$ and buildings depreciated @ 6$\%$.

(b) Interest on capital @ 4$\%$.

(c) Outstanding wages Rs. 50.

(d) Closing stock Rs. 50,000.

Answer 1

Trading and Profit and Loss Account

as on 31st December, 2010

$\begin{array}{cccccc}\text{Particulars}& & \text{Amt.(Rs)}& \text{Particulars}& & \text{Amt.(Rs)}\\ \text{Opening Stock}& & 45,000& \text{Sales}& & 2,00,000\\ \text{Purchases}& 80,000& & \text{Closing Stock}& & 50,000\\ (-)\text{Return Outwards}& \underset{–}{4,000}& 76,000& & & \\ \text{Gas and Fuel}& & 2,700& & & \\ \text{Freight and Carriage}& & 3,500& & & \\ \text{Wages}& 34,000& & & & \\ (+)\text{Outstanding Wages}& \underset{–}{50}& 34,050& & & \\ \text{Factory Lighting}& & 5,000& & & \\ \text{Gross Profit}& & 83,750& & & \\ & & \overline{\underset{–}{\underset{–}{2,50,000}}}& & & \overline{\underset{–}{\underset{–}{2,50,000}}}\\ \text{Legal Expenses}& & 4,000& \text{Gross Profit}& & 83,750\\ \text{Office Expenses}& & 3,000& & & \\ \text{Interest on Capital}& & 8,400& & & \\ \text{Depreciation on Building}& & 3,600& & & \\ \text{Depreciation on Machinery}& & 12,000& & & \\ \text{Net profit}& & 52,750& & & \\ & & \overline{\underset{–}{\underset{–}{83,750}}}& & & \overline{\underset{–}{\underset{–}{83,750}}}\end{array}$

Balance Sheet

as on 31st December, 2010

$\begin{array}{cccccc}\text{Capital and Liabilities}& & \text{Amt. (Rs.)}& \text{Assets}& & \text{Amt. (Rs.)}\\ \text{Capital}& 2,10,000& & \text{Bank}& & 11,000\\ (+)\text{Interest on Capital}& 8,400& & \text{Debtors}& & 70,300\\ & \overline{2,18,400}& & \text{Office Furniture}& & 5,000\\ (+)\text{Net Profit}& \underset{–}{52,750}& 2,71,150& \text{Cash in Hand}& & 1,200\\ \text{Bills Payable}& & 6,500& \text{Building}& 60,000& \\ \text{Creditors}& & 50,000& (-)\text{Depreciation}& & \\ \text{Outstanding Wages}& & 50& @6\%& 3,600& 56,400\\ & & & \text{Machinery}& \overline{1,20,000}& \\ & & & (-)\text{Depreciation}@10\%& \underset{–}{12,000}& 1,08,000\\ & & & \text{Bills Receivable}& & 7,000\\ & & & \text{Patent Right}& & 18,800\\ & & & \text{Closing Stock}& & 50,000\\ & & \overline{\underset{–}{\underset{–}{3,27,700}}}& & & \overline{\underset{–}{\underset{–}{3,27,700}}}\end{array}$