Question 7.
Following balances are taken from the books of Mr. Niranjan. You are required to prepare Trading and Profit and Loss Account and Balance Sheet for the year ended 31st March, 2018:
Adjustments:
(i) Closing Stock ₹ 75,000.
(ii) Depreciate Machinery by 10% and Furniture by 20%.
(iii) Wages ₹ 5,000 and salaries ₹ 2,000 are outstanding.
(iv) Write off ₹ 5,000 as further Bad Debts and create 5% Provision for Doubtful Debts.
(v) Investments were made on 1st July, 2017 and no interest has been received so far.
Answers
Trading and P&L A/c with Balance Sheet as at 31.3.2018
Explanation:
In the Books of Mr.Niranjan
Trading and P&L A/c
Particulars Amount(Rs.) Particulars Amount(Rs.)
To Opening Stock 45000 By Sales 435000
To Return Inwards 7000 By Return outwards 4000
To Purchases 295000 By Closing Stock 75000
To Wages 40,000
(Add:O/s wages)
To Gross Profit 122000
To Rent 5000 By Gross Profit 122000
To Salaries 26000 By Interest Accrued 2250
(Add:O/s salaries) on Investments
To Advt. Expenses 6000 ()
To Bad debts 7750 By Misc. Receipts 1200
(+5000+1750)
To Insurance 1500
To Trade expenses 2000
To Reserve for Disct. 665
To Depreciation:
Mach. 2400
Furniture 300
To Net Profit 73835
(bal. fig.)
Balance Sheet
as at 31.3.2018
Notes To A/c Amount(Rs.)
Non-Current Assets:
Plant and Machinery 21600
Furniture 1200
Investments(Assumed long term) 52250
Patents 4800
Current Assets:
Closing Stock 75000
Debtors 32585
Cash 12200
Total(A) 199635
Non-Current Liabilities:
Capital 172835
Current Liabilities:
Creditors 19000
O/s Wages 5000
O/s Salaries 2000
Bills Payables 800
Total(B) 199635