Question

From the following balances prepare Trading, Profit and loss A/c and Balance sheet as on
31 Dec. 2001.
Trial Balance
Particulars
Amount
Particulars
Rs.
Capital B
Amount
Rs.
16,000
25,000
2,000
140
Sales
Creditors B
A Commission P
Purchases
Opening Stock
Sales Returns
Debtors
Building
Bills receivable
Asalary to
Tax & Insurance PL
General Expenses PL
Discount
Carriage on purchases P
Drawings R
Wages
16,500
4,200
300
4,300
10.600
2.000
1,600
500
600
300
240
600
1.000
400
43,140
Cash B
43,140
Adjustments :
(i) Closing stock Rs. 4,500
(1) Outstanding salary Rs. 160 outstanding wages Rs. 100
(iii) Prepaid Insurance Rs. 45
(iv) Accrued commission Rs. 60
(V) Provision for Bad debts to be created on Debtors @ 5%
(vi) Depreciate Building by 4%

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Answer 1

This account is mainly prepared to understand the profit earned by the business on the purchase of goods. Items that are seen in the debit side includes purchases, opening stock and direct expenses while credit side includes closing stock and sales. Profit and Loss A/c