The Trial Balance shows the following balances as at 31st March, 2017:-

Dr. Balances (₹) Cr. Balances (₹)

Purchases 60,000 Capital 1,13,075

Sales Returns 1,500 Sales 1,27,000

Plant and Machinery 90,000 Purchases Returns 1,275

Opening Stock 40,000 Discount Received 800

Discount Allowed 350 Sundry Creditors 20,000

Bank Charges 100 Bills Payable 5,000

Sundry Debtors 45,000

Salaries 7,000

Wages 10,000

Freight : In 1,000

Freight : Out 1,200

Rent, Rates and Taxes 2,000

Advertisements 2,000

Cash at Bank 7,000

2,67,150 2,67,150

Closing Stock was valued at ₹ 35,000. Prepare Trading and Profit and Loss Account for the year ended 31st March, 2017 and Balance Sheet as at that date.

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Solution

Trading Account

for the year ended March 31, 2017

Dr. Cr.

Particulars Amount
(Rs) Particulars Amount (Rs)

Opening Stock
40,000
Sales 1,27,000

Purchases 60,000

Less: Sales Returns
1,500 1,25,500

Less: Purchases Returns
1,275
58,725
Closing Stock 35,000

Wages
10,000

Freight inwards
1,000

Gross Profit (Balancing Figure)
50,775

1,60,500
1,60,500

Profit and Loss Account

for the year ended March 31, 2017

Dr. Cr.

Particulars Amount (Rs) Particulars Amount (Rs)

Discount Allowed 350 Gross Profit 50,775

Bank Charges 100 Discount Received 800

Salaries 7,000

Freight Outwards 1,200

Rent, Rates and Taxes 2,000

Advertisement 2,000

Net Profit 38,925

51,575 51,575

Balance Sheet

as on March 31, 2017

Liabilities Amount (Rs) Assets Amount (Rs)

Capital 1,13,075 Fixed Assets

Add: Net Profit
38,925 1,52,000 Plant & Machinery 90,000

Current Liabilities Current Assets

Sundry Creditors 20,000 Sundry Debtors 45,000

Bills Payable 5,000 Cash at Bank 7,000

Closing Stock 35,000

1,77,000 1,77,000

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Similar questions

Q. From the following Trial Balance prepare Trading and Profit & Loss Account for the year ended 31st March, 2017 and Balance Sheet as at that date:-

	Dr. (₹)	Cr. (₹)
Stock 1st April, 2016	22,300
Purchases and Purchase Return	2,30,000	5,200
Freehold Premises	1,00,000
Incidental Trade Exp.	11,200
Insurance	1,850
Audit Fees	800
Commission Received		2,700
Interest		1,400
Debtors and Creditors	32,400	24,830
Wages	30,200
Salaries	15,200
Capital		1,50,000
Drawings	12,000
Income-Tax	3,600
Investments	8,000
Discount allowed & received	7,500	4,200
Sales Return & Sales	6,400	3,17,400
B/R	5,200
Office Furniture	9,000
Rent		2,600
Cash in hand	5,080
Bank Balance	7,600
	5,08,330	5,08,330

Adjustment:-
1. Stock at 31st March 2017 is ₹ 70,000.
2. Write of 5% Depreciation on Freehold Premises and 20% on office furniture.
3. Commission earned but not received ₹ 500.
4. Interest earned ₹ 600.
5. ₹ 200 for rent have been received in advance.
6. Charge interest on Capital @ 6% and ₹ 500 on Drawings.

Q. From the following Trial Balance of Sh. Swamy Narain, prepare Trading and Profit & Loss Account for the year ended 31st March 2018 and a Balance Sheet as at that date :

Dr. Balances	₹	Cr. Balances	₹
Opening Stock	50,000	Capital	20,00,000
Purchases	5,30,000	Sales	12,50,000
General Expenses	45,000	Sundry Creditors	1,36,000
Stationery	6,000	Trade Charges due but not paid	5,000
Wages	2,15,000	Outstanding Rent	4,000
Trade Charges	25,000	Bank Balance	45,000
Rent	44,000
Charity	5,000
Advertisement Expenses	30,000
Carriage on Sales	12,000
Bills Receivables	30,000
Sundry Debtors	2,20,000
Cash Discount	16,000
Cash in Hand	22,000
Furniture	1,00,000
Advance for Furniture	40,000
Plant & Machinery	6,00,000
Building	14,50,000
	34,40,000		34,40,000

Adjustments:
(i) Stock on 31 March, 2018 was valued at ₹ 60,000.
(ii) A new machine was installed during the year costing ₹ 2,00,000 but it was not recorded in the books. Wages paid for its installation ₹ 10,000 have been debited to Wages Account.
(iii) An advance of ₹ 10,000 given alongwith purchase order was wrongly recorded in purchases.
(iv) General expenses include ₹ 20,000 paid for Wages.
(v) Wages include a sum of ₹ 50,000 spent on the erection of a Scooter Stand for employees.
(vi) Advance for Furniture is for furniture at proprietor's residence.
(vii) Depreciate Furniture at 15%, Plant & Machinery at 20% and Building at 10%.
(viii) Carry forward 2/3 of Advertisement Expenses as unexpired.
(ix) A B/R of ₹ 20,000 was discounted with bank on 15 Nov. 2017, but not yet matured.

Q. From the following Trial Balance, prepare Trading Account, Profit and Loss Account for the year ended 31^st March, 2018 and Balance Sheet as at the date:

Debit Balances	₹	Credit Balances	₹
Purchases	3,00,000	Sales	4,79,760
Drawings	3,500	Purchases Return	12,200
Plant and Machinery	1,23,000	Capital	5,90,000
Motor Vehicles	1,76,000	Creditors	11,870
Building	3,80,000	Bank Loan	33,700
Sundry Debtors	80,000
Stock in Trade (1.4.2017)	8,400
Sales Return	1,800
Wages	2,800
Carriage Inwards	890
Carriage Outwards	300
Telephone Charges	3,290
Salaries	12,000
Insurance and Taxes	31,200
Printing and Stationery Expenses	1,350
Cash in Hand	3,000
	11,27,530		11,27,530

Following adjustments are to be considered:
(i) Closing Stock ₹ 15,270.
(ii) Printing and Stationery expenses due ₹ 58,650.
(iii) Outstanding liabilities for salaries ₹ 12,000
(iv) An old machine value at ₹ 12,000 (Book Value of which was ₹ 2,000) was given in exchange for a new machine purchased on 1^st April, 2017. The machine given in exchange was not recorded in the books. Cheque issued for new machine purchased was accounted in the books of account.
(v) Depreciation @ 10% p.a. is to be provided on all fixed assets except building.

Q. From the following Trial Balance of Mr. Alok, prepare Trading and Profit & Loss Account for the year ending 31st March, 2014, and a Balance Sheet as at that date:-

Dr. Balances	(₹)	Cr. Balances	(₹)
Drawings	5,275	Capital	59,700
Bills Receivable	4,750	Loan at 8% p.a. (on.1.4.2013)	10,000
Machinery	14,400	Commission Received	2,820
Debtors (including X for dishonoured Bill of ₹ 1,000)	30,000	Creditors	29,815
Wages	20,485	Sales	1,78,215
Returns Inward	2,390
Purchases	1,28,295
Rent	2,810
Stock (1.4.2013)	44,840
Salaries	5,500
Travelling Expenses	945
Insurance	200
Cash	9,750
Repairs	1,685
Interest on Loan	500
Discount Allowed	2,435
Bad-Debts	1,810
Furniture	4,480
	2,80,550		2,80,550

The following adjustments are to be made:
(i) Stock in the shop on 31st March, 2014 was ₹ 64,480.
(ii) Half the amount of X's Bill is irrecoverable.
(iii) Create a provision of 5% on other debtors.
(iv) Wages include ₹ 600 for erection of new Machinery.
(v) Depreciate Machinery by 5% and Furniture by 10%.
(vi) Commission includes ₹ 300 being Commission received in advance.

Practical Problem

From the following Trial Balance of M/s Sanjay and Vijay, you are required to prepare Trading and Profit and Loss Account for the year ended 31st March, 2013 and Balance Sheet as on that date after taking into consideration the adjustments given below.

Trial Balance as on 31^st March, 2013
Debit Balance	Amount Rs	Credit Balance		Amount Rs
Salaries and wages	12,000	Sales		1,10,000
Postage and Telegram	1,750	Sundry Creditors		72,700
Opening Stock	23,500	Bills Payable		40,000
Plant and Machinery	70,000	10% Bank loan (Taken on 1^st Oct. 2012)		60,000
Advertisement	5,000	Outstanding Audit fees		5,900
Import duty	2,100	Capital A/c-	Sanjay	45,000
Bad debts	1,000		Vijay	45,000
Purchases	98,500
Sundry Debtors	45,800
Bills Receivable	16,700
Carriage outward	1,800
Wages and stationery* (Note 2)	14,000
Printing and stationery	4,600
Cash in hand	1,850
Leasehold Premises	80,000
	3,78,600			3,78,600

Adjustments:
1) Closing stock was valued at Rs 30,000.

2) Postage stamps of Rs 250 and stationery of Rs 400 are unused.

3) Goods of Rs 2,500 distributed as free samples.

4) Leasehold property is to be run for 10 years w.e.f. 1st October, 2012.

5) Depreciate Plant and Machinery at 10% p.a.

6) Mr. Rajan, our customer become insolvent and could not pay his debts of Rs 1,500.

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Trading Account for the year ended March 31, 2017
Dr.						Cr.
Particulars		Amount (Rs)	Particulars		Amount (Rs)
Opening Stock		40,000	Sales	1,27,000
Purchases	60,000		Less: Sales Returns	1,500	1,25,500
Less: Purchases Returns	1,275	58,725	Closing Stock		35,000
Wages		10,000
Freight inwards		1,000
Gross Profit (Balancing Figure)		50,775
		1,60,500			1,60,500

Profit and Loss Account for the year ended March 31, 2017
Dr.				Cr.
Particulars	Amount (Rs)	Particulars	Amount (Rs)
Discount Allowed	350	Gross Profit	50,775
Bank Charges	100	Discount Received	800
Salaries	7,000
Freight Outwards	1,200
Rent, Rates and Taxes	2,000
Advertisement	2,000
Net Profit	38,925
	51,575		51,575

Balance Sheet as on March 31, 2017
Liabilities		Amount (Rs)	Assets	Amount (Rs)
Capital	1,13,075		Fixed Assets
Add: Net Profit	38,925	1,52,000	Plant & Machinery	90,000

Current Liabilities			Current Assets
Sundry Creditors		20,000	Sundry Debtors	45,000
Bills Payable		5,000	Cash at Bank	7,000
			Closing Stock	35,000
		1,77,000		1,77,000