Question

The following is the trial balance of Mr. Amar Chand as at 31st March, 2016:-

			Dr. (₹)	Cr. (₹)
Stock on 1st April, 2015			62,000	-
Purchases and Sales			3,15,000	4,48,000
Returns			3,700	2,500
Sundry Debtors and Creditors			80,000	43,000
Bills Receivable and Payable			12,100	4,300
Drawings and Capital			30,000	2,00,000
Cash in Hand			24,800	-
Balance with Bank of Tokyo			32,800	-
Discount			2,600	3,800
Carriage on Purchases			7,500	-
Carriage on Sales			1,200	-
Bad-Debts			2,400	-
Bad-Debts Provision			-	3,000
Furniture on 1st April, 2015			10,000	-
New Furniture purchased on 1st January, 2016			6,000	-
Rent			10,000	-
Salaries			25,000	-
Commission			-	2,400
Repairs			2,300	-
Insurance (Annual Premium paid on 1st Jan., 2016)			3,600	-
Salaries Outstanding			-	5,000
Sales Van			75,000
Sales Van Expenses			6,000
			7,12,000	7,12,000

Taking into account the following adjustments, prepare Trading and Profit & Loss Account and the Balance Sheet as at 31st March, 2016:-
1. Stock on 31st March, 2016 was valued at ₹ 46,000.
2. Depreciate Furniture at 15% p.a. and Sales Van at 20% p.a.
3. A sum of ₹ 200 is due for repairs.
4. Write off ₹ 2,000 as further bad-debts and create a provision for doubtful debts @ 5% on Debtors. Also provide 2% for discount on Debtors.
5. Rent is paid at the rate of ₹ 1,000 per month.
6. Allow 8% interest on Capital and charge ₹ 1,500 as interest on Drawings.

Answer 1

Financial Statements of Mr. Amar Chand Trading Account for the year ended March 31, 2016 Dr. Cr. Particulars Amount (Rs) Particulars Amount (Rs) Opening Stock 62,000 Sales 4,48,000 Purchases 3,15,000 Less: Return Inwards 3,700 4,44,300 Less: Return Outwards 2,500 3,12,500 Closing Stock 46,000 Carriage on Purchases 7,500 Gross Profit (Balancing Figure) 1,08,300 4,90,300 4,90,300 Profit and Loss Account for the year ended March 31, 2016
Dr.						Cr.
Particulars			Amount (Rs)	Particulars	Amount (Rs)
Depreciation: (WN1)				Gross Profit	1,08,300
Furniture		1,725		Commission Received	2,400
Sales Van		15,000	16,725	Interest on Drawings	1,500
Repairs		2,300		Discount Received	3,800
Add: Outstanding		200	2,500
Old Bad Debts		2,400
Add: Further Bad Debts		2,000
Add: New Provision (WN2)		3,900
Less: Old Provision		3,000	5,300
Discount Allowed			2,600
Provision for Discount on Debtors (WN3)			1,482
Rent		10,000
Add: Outstanding (WN4)		2,000	12,000
Insurance		3,600
Less: Prepaid (WN5)		2,700	900
Interest on Capital			16,000
Carriage on Sales			1,200
Salaries			25,000
Sales Van Expenses			6,000
Net Profit (Balancing Figure)			26,293
			1,16,000		1,16,000

Balance Sheet as on March 31, 2016
Liabilities		Amount (Rs)	Assets			Amount (Rs)
Capital	2,00,000		Fixed Assets
Add: Interest on Capital	16,000		Furniture		10,000
Add: Net Profit	26,293		Add: Additions		6,000
Less: Drawings	30,000		Less: Depreciation		1,725	14,275
Less: Interest on Drawings	1,500	2,10,793	Sales Van		75,000
			Less: Depreciation		15,000	60,000
Current Liabilities			Current Assets
Sundry Creditors		43,000	Closing Stock			46,000
Outstanding Salaries		5,000	Bills Receivable			12,100
Outstanding Repairs		200	Bank of Tokyo			32,800
Outstanding Rent		2,000	Prepaid Insurance			2,700
Bills Payable		4,300	Cash in Hand			24,800
			Sundry Debtors	80,000
			Less: Bad debts	2,000
			Less: Provision for Doubtful Debts	3,900
			Less: Provision for Discount on Debtors	1,482		72,618
		2,65,293				2,65,293

Working Notes:

WN1: Calculation of Amount of Depreciation

WN2: Calculation of Provision for Bad Debts

WN3: Calculation of Provision for Discount on Debtors

WN4: Calculation of Outstanding Rent
Rent is paid @ Rs 1,000 per month
Annual Rent = 1,000 × 12 = Rs 12,000
Rent Already Paid = Rs 10,000
Therefore, Outstanding Rent = Rs 2,000

WN5: Calculation of Prepaid Insurance