Question 23.
From the following balances, prepare Trading and Profit and Loss Account and the Balance Sheet:
Closing Stock was of ₹ 70,000 but its net realisable value was estimated at ₹ 60,000.
Answers
Trading and P&L A/c with Balance sheet as at 31/03/20XX
Explanation:
Trading and P&L A/c
Particulars Amount(Rs.) Particulars Amount(Rs.)
To Opening 2,00,000 By Sales 14,50,000
Stock
To Carriage 15,000 By Closing Stock 60,000
To Wages 5,00,000 By Gross Loss 1,55,000
To Purchases 9,50,000 (Bal. fig.)
16,65,000 16,65,000
To Gross Loss 1,55,000 By Commission 10,000
Received
To Rent 45,000 By Net Loss 2,20,000
To Sundry Expenses 20,000 (Bal. fig.)
To Bad Debts 10,000
2,30,000 2,30,000
Balance Sheet
as at 31.03.20XX
Particulars Notes To A/cs Amount(Rs.)
Non-Current Assets:
Buildings - 1,50,000
Machinery - 2,00,000
Current Assets:
Debtors - 2,70,000
Bank - 1,50,000
Closing Stock - 60,000
Total(A) 8,30,000
Non-Current Liabilities:
Capital Rs.10,00,000 6,90,000
Less: Net Loss (Rs.2,20,000)
Drawings (Rs.90,000)
Current Liabilities:
Creditors 1,40,000
Total(B) 8,30,000
Notes: 1) As per the provisions of Accounting Standard 2(Valuation of Inventories),Closing stock or inventory should be valued at Cost or NRV(Net realisable value) whichever is lower.
In the given case,Closing stock was valued at a cost of Rs.70,000 but its NRV was Rs.60,000.
Therefore,Closing stock has been valued at NRV i.e Rs.60,000.