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Illustration 1


From the following Trial Balance of Sri. R Rajan, prepare the Trading and Profit and Loss Account for the year ended 31st March 2008 and the Balance Sheet as on that date after taking into account the adjustments given below:

 

Particulars

Debit (Rs.)

Credit (Rs.)

R Rajan's capital

 

2,90,000

R Rajan's Drawings

7600

 

Purchases and Sales

89000

150000

Sales and Purchases Returns

2800

4500

Stock (1st April 2007)

12000

 

Wages

8000

 

Building

220000

 

Freight and Carriage

20000

 

Trade Expenses

2000

 

Advertisement

2400

 

Interest

 

3500

Taxes and Insurance

1300

 

Debtors and Creditors

65000

12000

Bills Receivable and Bills Payable

15000

7000

Cash at Bank

12000

 

Cash in Hand

1900

 

Salaries

8000

 

Total

467000

467000

 

Adjustments -
  1. Stock on 31st March 2008 was valued at Rs. 15000
  2. Insurance was prepaid to the extent of Rs. 400
  3. Outstanding liabilities were salaries Rs. 2000, Taxes Rs. 1300
  4. Depreciate Building @ 2% pa.
Solution:

 

TRADING AND PROFIT AND LOSS ACCOUNT

for the year ended 31st March 2008

Particulars

Rs.

Rs.

Particulars

 

Rs.

To Opening Stock

 

12,000

By Sales

150,000

 

89,000

Less: Returns

2,800

147,200

To Purchases

4,500

 

By Closing Stock

 

15,000

Less: Returns

 

84,500

 

To Wages

 

8,000

 

 

 

To Freight and carriage

 

20,000

 

 

 

To Gross Profit c/d

 

37,700

 

 

 

 

 

162,200

 

 

162,200

To Trade expenses

 

2,000

By Gross Profit B/d

 

37,700

To advertisement

 

2,400

By Interest

 

3,500

To Taxes and insurance

1,300

 

 

 

 

Add: Unpaid taxes

1,300

 

 

 

 

 

2,600

 

 

 

 

Less: Prepaid insurance

400

2,200

 

 

 

To Salaries

8,000

 

 

 

 

Add: Unpaid salaries

2,000

10,000

 

 

 

To depreciation on Building

 

4,400

 

 

 

To Net profit transferred to Capital A/c

 

20,200

 

 

 

 

 

41,200

 

 

41,200

BALANCE SHEET

as at 31st March 2008

Liabilities

Rs.

Rs.

Assets

Rs.

Rs.

Current Liabilities

 

 

Current Assets

 

 

Creditors

 

12,000

Cash in Hand

 

1,900

Bills Payable

 

7,000

Cash at Bank

 

12,000

Outstanding liabilities

 

 

Bills Receivable

 

15,000

Taxes

1,300

 

Debtors

 

65,000

 

Salaries

 

2,000

 

3,300

 

Prepaid Insurance

 

 

400

Capital

 

 

Closing Stock

 

15,000

Opening Balance

290,000

 

Fixed Assets

 

 

Add Net Profit

20,200

 

Building

220,000

 

 

310,200

 

Less: Depreciation

4,400

215,600

Less Drawings

7,600

302,600

 

 

 

 

 

324,900

 

 

324,900





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