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Illustration 3


The following is the Trial Balance of Mr. Anand on 31st March 2008.

Trial Balance as at 31st March 2008

 

Particulars

Debit (Rs.)

Credit (Rs.)

Cash in Hand

3170

 

Purchases

40675

 

Sales

 

98780

Return Inwards

680

 

Wages

10480

 

Sundry Creditors

 

6300

Sundry Debtors

14500

 

Capital Accounts

 

71000

Return outwards

 

500

Power and Fuel

4730

 

Drawings

5245

 

Carriage on Sales

3200

 

Carriage on Purchases

2040

 

Stock (1st April 2007)

5760

 

Building

35000

 

Two - Wheeler

5000

 

Machinery

27000

 

Salaries

16000

 

General Expenses

3000

 

Insurance (Annual Premium paid on 1st October 2007)

600

 

Salaries Outstanding

 

500

 

177080

177080

 

Taking into consideration the following adjustments, prepare the Trading and Profit and Loss Account for the year ending 31st March 2008 and the Balance Sheet as at that date.

The two - wheeler was sold at Book Value on 1st April 2007 and the cash was used for domestic need by Mr. Anand - Account for this left unrecorded.
 

TRADING AND PROFIT AND LOSS ACCOUNT

for the year ended 31st March 2008

Particulars

Rs.

Rs.

Particulars

Rs.

Rs.

To Opening Stock

 

5,760

By Sales

98,780

 

To Purchases

40,675

 

Less: Returns

680

98,100

Less: Purchases Returns

500

40,175

 

 

 

To Wages

 

10,480

By Closing Stock (Note 2)

 

7,000

To power and fuel

 

4,730

 

 

 

To carraige on purchases

 

2,040

 

 

 

To Gross Profit c/d

 

41,915

 

 

 

 

 

105,100

 

 

105,100

To Carraige on sales

 

3,200

By Gross Profit b/d

 

41,915

To Salaries

 

16,000

 

 

 

To General Expenses

 

3,000

 

 

 

To Insurance

600

 

 

 

 

Less: Prepaid (Note 1)

300

300

 

 

 

To Depreciation on Machinery

 

2,700

 

 

 

To Net Profit transferred to Capital A/c

 

16,715

 

 

 

 

 

41,915

 

 

41,915

BALANCE SHEET

as at 31st March 2008

Liabilities

Rs.

Rs.

Assets

Rs.

Rs.

Current Liabilities

 

 

Current Assets

 

 

Creditors

 

6,300

Cash in Hand

 

3,170

Outstanding salary

 

500

Debtors

 

14,500

Capital

 

 

Prepaid Insurance

 

300

Opening Balance

71,000

 

Closing Stock

 

7,000

Less Drawigns

10,245

 

Fixed Assets

nbsp;

 

 

60,755

 

Machinery

27,000

 

Add Net Profit

16,715

77,470

Less: Depreciation

2,700

24,300

 

 

 

Buildings

 

35,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

84,270

 

 

84,270


Notes:
  1. Out of the annual premium of Rs. 600, six months premium relates to the next year.
  2. Closing stock is valued at cost or market price whichever is less.
  3. Cash drawings as per Trial Balance Rs. 5245. Sale proceeds of two – wheeler was used for personal purpose Rs. 5000. therefore total drawings is Rs. 5245+5000= Rs. 10245.
  4. An event occurring after the date of the Balance Sheet (ie., fire as on 1.4.2008) does not affect the Balance Sheet.




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