Question 28.
Following is the Trial Balance of Shri Paras on 31st March, 2018:
Following adjustments are made:
(a) Stock on 31st March, 2018 was valued at ₹ 68,000.
(b) Provision for Doubtful Debts is to be made to the extent of 5% on Sundry Debtors.
(c) Depreciate Machinery by 10%, Patents 20% and Building 5%.
(d) Wages include a sum of ₹ 20,000 spent on constructiion of a cycle shed.
(e) Salaries for the months of February and March, 2018 were not paid.
(f) Insurance includes a premium of ₹ 1,700 on a policy expiring on 30th September, 2018.
(g) General Manager is entitled to a commission of 10% on the net profit after charging his commission.
You are required to prepare Final Accounts after giving effects to the adjustments.
Answers
Trading and P&L A/c with Balance sheet as at 31.3.2018
Explanation:
In the Books of Shri Paras
Trading A/c
Particulars Amount(Rs.) Particulars Amount(Rs.)
To Opening Stock 57600 By Sales 10,00,000
To Return Inwards 19000 By Closing Stock 68000
To Purchases 406750 By Return outwards 5000
To Freight 20400
To Wages 84800
(Less:Cycle shed 20,000)
To Gross Profit 484450
To Fuel and Power 47300 By Gross Profit 484450
To Insurance 5150
(Less: 850 Prepaid)
To Salaries 180000
(Add: O/s Salaries)
To Provision for DD 7250
To Rent 10,000
To Carriage on Sales 32,000
To General Expenses 20,000
To Depreciation 51000
(W.N 1)
To Manager's Comm. 11977
To Net Profit 119773
(bal. fig.)
Balance Sheet
as at 31.3.2018
Notes to A/c Amount(Rs.)
Non-Current Assets:
Machinery 180000
Patents 60,000
Building 304000
(Add: Cycle Shed
Less: Depreciation)
Freehold Land 1,00,000
Current Assets:
Debtors 137750
(Less: Prov. for DD)
Closing Stock 68000
Cash at Bank 26300
Prepaid Insurance 850
Cash in Hand 5400
Total(A) 882300
Non-Current Liabilities:
Capital 777323
(Less:Drawings 52450
Add:NP 119773)
Current Liabilities:
Creditors 63000
O/s Salaries 30,000
Manager's Comm. Payable 11977
Total(B) 882300
*Working Notes:
1)Calculation of Depreciation
Machinery =
= Rs.20,000
Patents =
= Rs.15000
Building =
= Rs.16000