From the following Trial Balance of Sh Ram Sharan, prepare Trading and Profit & Loss
Account for the year ended 31st December, 2018 and Balance Sheet as on that date:
Dr. Rs. Cr. Rs.
Purchases and Sales 3,00,000 5,00,000
Returns Inwards 15,000
Returns Outwards 9,000
Carriage 12,000
Wages and Salaries 58,000
Trade Expenses 2,800
Rent 33,000
Insurance 1,200
Audit Fees 2000
Debtors and Creditors 85,000 62,000
Bills Receivable and Bills Payable 3,300 2,300
Printing and Advertising 5,900
Commission 5,000
Opening Stock 30,000
Cash in Hand 12,800
Cash in Bank 26,800
Bank Loan 20,000
Interest on Loan 1,500
Capital 2,46,000
Drawings 21,000
Fixed Assets 3,00,000
8,77,300 8,77,300
Adjustments:-
1. Stock at the end Rs. 50,000
2. Depreciate Fixed Assets by 8%
3. Commission earned but not received amounts to Rs. 500
4. Rent received in advance Rs. 3300
5. Allow 6 % interest on Capital and charge Rs. 1000 as interest on Drawings.
Answers
Answer:
Trial Balance of Ram Sharan, prepare Trading and Profit & Loss
Explanation:
Working Notes:
WN1: Calculation of Amount of Depreciation
Depreciation on Machinery=40,000×10100=Rs 4,000Depreciationon Furniture=5,000×5100=Rs 250
WN2: Calculation of Provision for Doubtful Debts
Provision for Doubtful Debts==(Sundry Debtors−Sale on Approval Basis)×Rate100(20,600−7,200)×5100=Rs 670
Depreciation is charged on fixed assets, it is the normal wear and tear in the value of fixed asset.
Fixed Asset like plant and machinery, land and building, furniture and fittings tend to lose their utility for the business operation with the usage, with the passage of time, thus in decline of quality and quantity of fixed asset is known as deprecation.
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