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Question

The following balances have been extracted from the books of M/s Green House for the year ended March 31, 2017, prepare trading and profit and loss account and balance sheet as on this date.

Account Title

Amount

Rs

Account Title

Amount

Rs

Purchases

80,000

Capital

2,10,000

Bank balance

11,000

Bills payable

6,500

Wages

34,000

Sales

2,00,000

Debtors

70,300

Creditors

50,000

Cash in hand

1,200

Return outwards

4,000

Legal expenses

4,000

Building

60,000

Machinery

120,000

Bills receivable

7,000

Office expenses

3,000

Opening stock

45,000

Gas and fuel

2,700

Freight and Carriage

3,500

Factory lighting

5,000

Office furniture

5,000

Patent right

18,800

4,70,500

4,70,500

adjustments :

(a) Machinery is depreciated at 10% and buildings depreciated at 6%.

(b) Interest on capital @ 4%.

(c) Outstanding wages Rs 50.

(d) Closing stock Rs 50,000.

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Solution

Trading Account

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Opening Stock

45,000

Sales

2,00,000

Purchases

80,000

Closing Stock

50,000

Less: Return Outwards

4,000

76,000

Wages

34,000

Add: Wages Outstanding

50

34,050

Gas and Fuel

2,700

Freight and Carriage

3,500

Factory Lighting

5,000

Gross Profit

83,750

2,50,000

2,50,000

Profit and Loss Account

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

To Legal Expenses

4,000

By Gross Profit

83,750

To Office Expenses

3,000

To Depreciation on Machine

12,000

To Depreciation on Building

3,600

To Interest on Capital

8,400

To Net Profit*

52,750

83,750

83,750

Balance Sheet

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital

2,10,000

Bank Balance

11,000

Add: Interest on Capital

8,400

Debtors

70,300

Add: Net profit

52,750

2,71,150

Cash in Hand

1,200

Building

60,000

Bills Payable

6,500

Less: Depreciation

3,600

56,400

Creditors

50,000

Machinery

1,20,000

Outstanding Wages

50

Less: Depreciation

12,000

1,08,000

Bills Receivable

7,000

Patent Right

18,800

Office Furniture

5,000

Closing Stock

50,000

3,27,700

3,27,700


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