Question

The following information has been extracted from the trial balance of M/s Randhir Transport Corporation.

$\begin{array}{cccc}\text{Debit Balances}& \text{Amount}& \text{Credit Balances}& \text{Amount}\\ & \text{(Rs)}& & \text{(Rs)}\\ \text{Opening Stock}& 40,000& \text{Capital}& 2,70,000\\ \text{Rent}& 2,000& \text{Creditors}& 50,000\\ \text{Plant and Machinery}& 1,20,000& \text{Bills payable}& 50,000\\ \text{Land and Buildings}& 2,55,000& \text{Loan}& 1,10,000\\ \text{Power}& 3,500& \text{Discount}& 1,500\\ \text{Purchases}& 75,000& \text{Sales}& 1,50,000\\ \text{Sales Return}& 2,500& \text{Provision for bad debts}& 1,000\\ \text{Telegram and Postage}& 400& \text{General Expenses}& 50,000\\ \text{Wages}& 4,500& & \\ \text{Salary}& 2,500& & \\ \text{Insurance}& 3,200& & \\ \text{Discount}& 1,000& & \\ \text{Repair and Renewals}& 2,000& & \\ \text{Legal Charges}& 700& & \\ \text{Trade taxes}& 1,200& & \\ \text{Debtors}& 75,000& & \\ \text{Investment}& 65,000& & \\ \text{Bad debts}& 2,000& & \\ \text{Trade expenses}& 4,500& & \\ \text{Commission}& 1,250& & \\ \text{Travelling expenses}& 1,230& & \\ \text{Drawings}& 20,020& & \\ & \overline{\underset{–}{\underset{–}{6,82,500}}}& & \overline{\underset{–}{\underset{–}{6,82,500}}}\end{array}$

Adjustments :

1. Closing stock for the year was Rs 35,500.

2. Interest on drawing @ 6%, Interest on loan @ 5%, Interest on investments @ 4%.

Or

Below is given the Trial Balance of Mr. Ram as on 31st December, 2012. You are required to prepare Trading and Profit & Loss Account Sheet as on that date.

$\begin{array}{cccc}\text{Particulars}& \text{Amount}& \text{Particulars}& \text{Amount}\\ & \text{(Rs)}& & \text{(Rs)}\\ \text{Opening Stock}& 42,000& \text{Sales}& 4,10,000\\ \text{Purchases}& 2,00,000& \text{Sundry Creditors}& 20,000\\ \text{Plant}& 60,000& \text{Purchase Return}& 8,000\\ \text{Salaries}& 33,000& \text{Purchase Return}& 8,000\\ \text{Wages}& 44,000& \text{Bank}& 24,000\\ \text{Discount}& 2,000& \text{Capital}& 1,50,000\\ \text{Rent}& 27,500& \text{Interest on Investment's}& 700\\ \text{Furniture(Inclusing Furniture of}& & \text{Special Rebate}& 800\\ \text{Rs 500 Purchased on 1st July,2012)}& 20,000& & \\ \text{Carriage Inward}& 5,800& & \\ \text{Carriage Outward}& 8,200& & \\ \text{Sundry Debtors}& 1,00,000& & \\ \text{Office Expenses}& 6,600& & \\ \text{Cash in Hand}& 5,400& & \\ \text{Investments@14}\%p.a.& 10,000& & \\ \text{Insurance(Paid upto 30th April,2013)}& 1,500& & \\ \text{Stock on 31st December,2012}& 60,000& & \\ & \overline{\underset{–}{\underset{–}{6,21,000}}}& & \overline{\underset{–}{\underset{–}{6,21,000}}}\end{array}$

Adjustments :

1. Create a provision for doubtful debts @ 5% on Debtors and 2% for discount on Debtors.

2. Provide up to date interest on investments.

3. Depreciate Plant by 10% p.a. and Furniture by 20% p.a.

Answer 1

M/s Randhir Transport Corporation
Trading and Profit & Loss Account

$\begin{array}{cccccc}\text{Particulars}& & \text{Amt (Rs)}& \text{Particulars}& & \text{Amt (Rs)}\\ \text{To Opening Stock}& & 40,000& \text{By Sales}& 1,50,000& \\ \text{To Purchases}& & 75,000& \text{Less:Sales Return}& \underset{–}{2,500}& 1,47,500\\ \text{To Power}& & 3,500& \text{By Closing Stock}& & 35,000\\ \text{To Wages}& & 4,500& & & \\ \text{To Gross profit transfered to profit \& loss A/c}& & 60,000& & & \\ & & \overline{\underset{–}{\underset{–}{1,83,000}}}& & & \overline{\underset{–}{\underset{–}{1,83,000}}}\\ \text{To Rent}& & 2,000& \text{By Gross profit transferred from}& & \\ \text{To Telegram and Postage}& & 400& \text{trading account}& & 60,000\\ \text{To Salary}& & 2,500& \text{By Discount}& & 1,500\\ \text{To Insurance}& & 3,200& \text{By Interest on Investment}& & 2,600\\ \text{By Discount}& & 1,000& & & \\ \text{To Repair and renewals}& & 2,000& & & \\ \text{To Legal Charges}& & 700& & & \\ \text{To Bad Debts}& 2,000& & & & \\ \text{Less:Prov.for bad debts}& \underset{–}{1,000}& 1,000& & & \\ \text{To Travelling Expenses}& & 1,230& & & \\ \text{To Interest on loan}& & 5,500& & & \\ \text{To Trade taxes}& & 1,200& & & \\ \text{To Trade expenses}& & 4,500& & & \\ \text{To Net Profit transferred to capital A/c}& & 37,620& & & \\ & & \overline{\underset{–}{64,100}}& & & \overline{\underset{–}{64,100}}\end{array}$

Balance Sheet
As on .........

$\begin{array}{ccccc}\text{Liabilities}& & \text{Amount}& \text{Asseets}& \text{Amount}\\ & & \text{(Rs)}& & \text{(Rs)}\\ \text{Capital}& 2,70,000& & \text{Plant and Machinery}& 1,20,000\\ \text{Less:Drawing}& \underset{–}{20,020}& & \text{Land and Building}& 2,55,000\\ & 2,49,980& & \text{Debtors}& 75,000\\ \text{Add:Net Profit}& \underset{–}{37,620}& 2,87,600& \text{Investment}65,000& \\ \text{Creditors}& & 50,000& \text{Add:Int.on Investment}\underset{–}{2,600}& 67,600\\ \text{Bills Payable}& & 50,000& \text{Closing stock}& 35,500\\ \text{Loan}& 1,10,000& & & \\ \text{Add:Interest}& \underset{–}{5,500}& 1,15,500& & \\ \text{General Reserve}& & 50,000& & \\ & & \overline{\underset{–}{\underset{–}{5,53,100}}}& & \overline{\underset{–}{\underset{–}{5,53,100}}}\end{array}$

Or
Trading and P & L A/c
for the year ending 31 Dec. 2012

$\begin{array}{cccc}\text{Particular}& \text{Amount}& \text{Particulars}& \text{Amount}\\ & \text{(Rs)}& & \text{(Rs)}\\ \text{Particular}& 42,000& \text{By Sales}& 4,10,000\\ \text{To Purchases}2,00,000& & & \\ \text{Less:Returns}\underset{–}{8,000}& 1,92,000& & \\ \text{To Wages}& 44,000& & \\ \text{To Carriage Inwards}& 44,000& & \\ \text{To Gross profit c/d}& 1,26,200& & \\ & \overline{\underset{–}{\underset{–}{4,10,000}}}& & \overline{\underset{–}{\underset{–}{4,10,000}}}\\ \text{To Salaries}& 32,000& \text{By Gross profit b/d}& 1,26,200\\ \text{To Discount}& 2,000& \text{By Commission}& 7,500\\ \text{To Dep.on plant}& 6,000& \text{By Interest on Investment}700& \\ \text{To Rent}& 27,500& \text{Add:Accured interest}\underset{–}{700}& 1,400\\ \text{To Dep. on furniture}& 3,950& \text{By special rebate}& 800\\ \text{To Carriage outwards}& 3,200& & \\ \text{To Prov. of D/B}& 5,000& & \\ \text{To Office expenses}& 6,600& & \\ \text{To Insurance}1,500& & & \\ \text{Less : prepaid}\underset{–}{500}& 1,000& & \\ \text{To Net profit of to capital A/c}& 45,750& & \\ & \overline{\underset{–}{\underset{–}{1,35,900}}}& & \overline{\underset{–}{\underset{–}{1,35,900}}}\end{array}$

Balance Sheet

$\begin{array}{ccccc}\text{Particular}& \text{Amount}& \text{Particulars}& & \text{Amount}\\ & \text{(Rs)}& & & \text{(Rs)}\\ \text{Capital}1,50,000& & \text{Plant}& 60,000& \\ \text{Add:Net Profit}\underset{–}{45,750}& 1,95,750& \text{Less: Depreciation}& -\underset{–}{6,000}& 54,000\\ & & \text{Furniture}& 20,000& \\ & & \text{Less:Dep.}& 3,950& 16,050\\ \text{Creditors}& 20,000& \text{Debtors}& \overline{1,00,000}& \\ \text{Bank}& 24,000& \text{Less:Prov.}& \underset{–}{5,000}& \\ & & & 95,000& \\ & & \text{Less:Prov.for Disc.}& \underset{–}{1,900}& 93,100\\ & & \text{Cash in hand}& & 5,400\\ & & \text{Investment@14}\%& 10,000& \\ & & \text{Add:Accrued Int.}& \underset{–}{700}& 10,700\\ & & \text{Prepaid Insurance}& & 500\\ & & \text{Closing stock}& & 60,000\\ & \overline{\underset{–}{\underset{–}{2,39,750}}}& & & \overline{\underset{–}{\underset{–}{2,39,750}}}\end{array}$

Note : (1) $\text{Dep. on furniture}=19,500\times \frac{20}{100}=3,900500\times \frac{20}{100}\times \frac{6}{12}=50=3,950$

(2) Closing stock is shown in assets only as that is given in trial balance.