Question

The following is the Trial Balance of Pankaj as on 31st March, 2015:

Name of Account			Debit (₹)	Credit (₹)
Wages			10,000
Capital			–	43,000
Machinery			50,000	–
Vehicles			10,000	–
Sales return/Purchase return			2,000	1,000
Stock			10,000	–
Purchase & Sale			36,000	70,000
Repair			2,000	–
Rent			1,000	-
Provision for doubtful debts			–	700
Bad debts			2,400	–
Loan from Bank			–	15,000
Interest on Loan			800	–
Cash in Hand			16,000	–
Debtors & Creditors			12,000	15,300
Commission received				7,200
			1,52,200	1,52,200

Adjustment:-
(i) Closing stock was valued at ₹ 12,000.
(ii) Wages have been paid for 10 months.
(iii) Write off ₹ 500 as further bad debts and provide 5% provision for doubtful debts.
(iv) Outstanding interest on loan ₹ 700.
(v) Depreciate machinery @ 5%
(b) Does question depict any value?

Answer 1

(a)

Financial Statement of….
Trading Account for the year ended 31 March,2015
Dr.							Cr.
Particulars			Amount (Rs)	Particulars		Amount (Rs)
Opening Stock			10,000	Sales	70,000
Purchases		36,000		Less: Return Inwards	2,000	68,000
Less: Return Outwards		1,000	35,000	Closing Stock		12,000
Wages		10,000
Add: Outstanding Wages		2,000	12,000
Gross Profit (Balancing Figure)			23,000
			80,000			80,000

Profit and Loss Account for the year ended March 31,2015
Dr.					Cr.
Particulars			Amount (Rs)	Particulars	Amount (Rs)
Interest on Loan		800		Gross Profit	23,000
Add: Outstanding		700	1,500	Commission Received	7,200
Depreciation on Machinery			2,500
Old Bad Debts		2,400
Add: New Bad Debts		500
Add: New Provision for Bad Debts		575
Less: Old Provision for Bad Debts		700	2,775
Repair			2,000
Rent			1,000
Net Profit (Balancing Figure)			20,425
			30,200		30,200

Balance Sheet as on March 31, 2015
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital	43,000		Fixed Assets
Add: Net Profit	20,425	63,425	Machinery	50,000
Loan from Bank		15,000	Less: Depreciation	2,500	47,500
Current Liabilities			Vehicles		10,000
Creditors		15,300	Current Assets
Outstanding Wages		2,000	Closing Stock		12,000
Outstanding Interest on Loan		700	Debtors	12,000
			Less: New Bad Debts	500
			Less: New Provision for Bad Debts	575	10,925
			Cash in Hand		16,000
		96,425			96,425

(b) Values Involved:

(i) Matching principle has been adopted (outstanding wages and depreciation)
(ii) Prudence principle has been adopted (provision for bad and doubtful debts)