Question

From the following trial balance of mahindra traders, prepare final accounts for the year ending 31.3.2019​

Answer 1

Answer:

From the following Trial Balance of Mahindra Traders, Prepare Final Accounts for the Year ended 31.12.2019 Particulars Debit Rs. Credit Rs. Capital 32,000 Salaries 1,000 Purchases 20,000 Purchase Returns 400 Sales 25,000 Cash 5,000 Wages 1,200 Factory Rent 200 Insurance 750 Carriage 400 Office expenses 800 Carriage outwards 200 Machinery 10,000 Furniture 7,000 Discount allowed 450 Discount received 1,600 Goodwill 5,000 Opening stock 2,000 Debtors 9,000 Creditors 4,000 Total 63,000 63,000 Adjustments:- 1. value of closing stock Rs. 2,500 2. Prepaid Insurance Rs. 250 3. outstanding salaries Rs. 300

Answer 2

Answer:

1) Gross Profit for the year ending 31st December, 2019= ₹3900
2) Net Profit for the year ending 31st December, 2019= ₹2450
3) Total of the Balance Sheet as at  31st December, 2019= ₹38750

Explanation:

Given adjustments:

1) Value of closing stock is ₹2500.
2) Prepaid Insurance amounts to ₹250.
3) Outstanding salaries amount to ₹300.

Now, we will take these additional information into consideration and prepare working notes:

1) Salaries given= ₹1000
Outstanding salaries= ₹300
∴ Final amount of salaries to be shown in P&L A/c= 1000+ 300
= ₹1300

2) Insurance given in the trial balance= ₹750
Prepaid Insurance= ₹250
∴ Final amount of Insurance to be shown in the P&L A/c= 750-250
= ₹500

3) Closing stock will be recorded on the credit side of the Trading A/c as well as on the assets side of the Balance Sheet.

Now, taking the above adjustments into consideration, we proceed to prepare the Trading and P&L A/c and Balance Sheet for the firm.

On preparing the final accounts, we came to know the following details:

1) Gross Profit of the firm= ₹3900
2) Net Profit of the firm= ₹2450

∴ Capital of the firm= 32000+ 2450
= ₹34450
3) Total of the Balance Sheet= ₹38750

(Refer the attached files for clear understanding)