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Illustration 2


The following Trial Balance is prepared on 31st March 2008 from a trader's books:

 

Particulars

Dr. Rs.

Cr. Rs.

Cash in Hand

8000

 

Cash in Bank

12000

 

Wages

20000

 

Sales

 

500000

Machinery

212000

 

Bills receivable

40000

 

Opening Stock

84000

 

Creditors

 

40000

Purchases

330000

 

Sales Returns

6000

 

Salaries

32000

 

Debtors

86000

 

Taxes and Insurance

22000

 

Bad Debts

6000

 

Freight on Purchases

4800

 

Commission

 

2800

Capital

 

320000

 

862800

862800

 

Taking into consideration the following adjustments, prepare the Trading and Profit and Loss Accounts for the year ending 31st March 2008 and a Balance sheet on that date.
  1. Closing stock Rs. 90000
  2. Outstanding salaries Rs. 3200 and outstanding wages 2000
  3. Prepaid Insurance Rs. 900 and Accrued commission Rs. 1200
  4. Charge depreciation on Machinery 10% pa.

TRADING AND PROFIT AND LOSS ACCOUNT

for the year ended 31st March 2008

Particulars

Rs.

Rs.

Particulars

Rs.

Rs.

To Opening Stock

 

84,000

By Sales

500,000

 

To Purchases

 

330,000

Less: Returns

6,000

494,000

To Freight on purchases

 

4,800

By Closing Stock

 

90,000

To Wages

20,000

 

 

 

 

Add: Outstanding

2,000

22,000

 

 

 

To Gross Profit c/d

 

143,200

 

 

 

 

 

584,000

 

 

584,000

To Salaries

32,000

 

By Gross Profit b/d

 

143,200

Add: Outstanding

3,200

35,200

By Commission

2,800

 

To Taxes and Insurance

22,000

 

Add: Accrued

1,200

4,000

Add: Prepaid

900

21,100

 

 

 

To Bad Debts

 

6,000

 

 

 

To Depreciation on Machinery (212000810/100)

 

21,200

 

 

 

To Net Profit transferred to Capital A/c

 

63,700

 

 

 

 

 

147,200

 

 

147,200

BALANCE SHEET

as at 31st March 2008

Liabilities

Rs.

Rs.

Assets

Rs.

Rs.

Current Liabilities

 

 

Current Assets

 

 

Creditors

 

40,000

Cash in Hand

 

8,000

Outstanding salary

 

3,200

Cash at Bank

 

12,000

Outstanding wages

 

2,000

Bills Receivable

 

40,000

Capital

 

 

Debtors

 

86,000

Opening Balance

320,000

 

Prepaid Insurance

 

900

Add Net Profit

63,700

383,700

Closing Stock

 

90,000

 

 

 

Accrued Commission

 

1,200

 

 

 

Fixed Assets

 

 

 

 

 

Machinery

212,000

 

 

 

 

Less: Depreciation

21,200

190,800

 

 

428,900

 

 

428,900





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