Question

Vardhman commenced business on 1st April, 2018, with a capital of ₹ 50,000. He immediately purchased furniture of ₹ 20,000. During the year he received from his uncle a gift of ₹ 3,000 and he borrowed from his father a sum of ₹ 5,000. He had withdrawn ₹ 600 per month for his household expenses. He had no Bank account and all dealings were in cash. He did not maintain any books but following information is given :

	₹
Sales (including cash sales ₹ 30,000)	1,00,000
Purchases (including cash purchases ₹ 10,000)	75,000
Carriage inwards	700
Wages	300
Discount allowed to debtors	800
Salaries	6,200
Bad-Debts written off	1,500
Trade expenses	1,200
Advertisements	2,200

He used goods worth ₹ 1,300 for personal purposes and paid ₹ 500 to his son for examination and college fees.
On 31st March, 2019, his Debtors were worth ₹ 21,000 and Creditors ₹ 15,000. Stock in trade was valued at ₹ 10,000. Furniture to be depreciated by 10% p.a.
Prepare Trading and Profit and Loss Account for the year ended on 31st March, 2019, and Balance Sheet as at 31st March, 2019.

Answer 1

Trading Account for the year ended March 31, 2019
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Purchases (Cash + Credit – Drawings)	73,700	Sales (Cash + Credit)	1,00,000
Carriage Inwards	700	Closing Stock	10,000
Wages	300
Gross Profit	35,300
	1,10,000		1,10,000

Profit & Loss Account for the year ended March 31, 2019
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Discount Allowed	800	Gross Profit	35,300
Salaries	6,200
Bad Debts	1,500
Trade Expenses	1,200
Advertisement	2,200
Depreciation on Furniture	2,000
Net Profit	21,400
	35,300		35,300

Balance Sheet as on March 31, 2019
Dr.				Cr.
Liabilities		Amount (₹)	Assets	Amount (₹)
Capital	50,000		Cash in Hand	36,400
Gift from Uncle	3,000		Debtors	21,000
Less: Drawings (12 × 600 + 1,300 + 500)	9,000		Closing Stock	10,000
Add: Net Profit	21,400	65,400	Furniture (Less Depreciation)	18,000
Creditors		15,000
Loan from Father		5,000
		85,400		85,400

Working Notes:

Debtors Account
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Sales A/c	70,000	Discount Allowed A/c	800
		Bad Debts A/c	1,500
		Cash A/c	46,700
		Balance c/d	21,000
	2,24,400		2,24,400

Creditors Account
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Cash A/c	50,000	Purchases A/c	65,000
Balance c/d	15,000
	65,000		65,000

Cash Account
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Capital A/c	50,000	Furniture A/c	20,000
Gift from Uncle	3,000	Drawings A/c (12×600+500)	7,700
Loan from Father A/c	5,000	Purchases A/c	10,000
Sales A/c	30,000	Carriage Inwards A/c	700
Debtors A/c	46,700	Wages A/c	300
		Salaries A/c	6,200
		Trade Expenses A/c	1,200
		Advertisement A/c	2,200
		Creditors A/c	50,000
		Balance c/d	36,400
	1,34,700		1,34,700