Question

Question 7.
From the following information prepare Trading Account for the year ended 31st March, 2018:

Net Realisable Value (Market Value) of stock as on 31st March, 2018 was ₹ 1,20,000.

Answer 1

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Answer 2

Trading Account for the given Transactions

Explanation:

                                      Trading A/c

                                         as at 31.3.2018

Particulars               Amount(Rs.)         Particulars      Amount(Rs.)

To Opening Stock    40,000           By Sales              3,80,000

To Purchases           4,00,000        By Return outwards 80,000

To Carriage Inwards  20,000         By Closing Stock    1,20,000

To Wages and            50,000

Salaries

To Return Inwards      20,000

To Gross Profit            50,000

(Bal. fig.)

                                                                                                                 

                                5,80,000                                        5,80,000

                                                                                                                       

Notes: As per the provisions of Accounting Standard 2 Valuation of Inventories,Closing stock or inventory should be valued at Cost or NRV whichever is lower.

Therefore,the value of inventory should be Rs.1,20,000 and not 1,30,000.