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Illustration 4


The Trial Balance of a business as on 31st March 2008 is given below:

Debit Balance

Rs.

Credit Balance

Rs.

Stock (1.4.2007)

25000

Sales

227800

Furniture

8000

Commission

500

Plant and Machinery

140000

Return outwards

1000

Additions to Plant and Machinery

10000

Creditors

40000

Debtors

30000

Capital

150000

Wages

12000

   

Salaries

20000

   

Bad Debts

1000

   

Purchases

120000

   

Electric charges

1200

   

Telephone charges

2400

   

General Expenses

3000

   

Postage and telegram

1800

   

Return inwards

900

   

Insurance premium

1500

   

Cash in Hand

2500

   

Cash at bank

40000

   
 

419300

 

419300

 

Prepare a Trading Account and a Profit and Loss Account for the year ended March 2008 and a Balance Sheet as on that date after taking into account the following adjustments:
  1. Closing Stock valued at Rs. 7000
  2. Outstanding liabilities for wages Rs. 600 and salaries Rs. 1400
  3. Depreciation is to be provided @ 5% pa on all fixed assets
  4. Insurance premium paid in advance Rs. 200

TRADING AND PROFIT AND LOSS ACCOUNT

for the year ended 31st March 2008

Particulars

Rs.

Rs.

Particulars

Rs.

Rs.

To Opening Stock

 

25,000

By Sales

227,800

 

To Purchases

120,000

 

Less: Returns

900

226,900

Less: Purchases Returns

1,000

119,000

 

 

 

To Wages

12,000

 

By Closing Stock (Note 2)

 

7,000

Add: Outstanding wages

600

12,600

 

 

 

To Gross Profit c/d

 

77,300

 

 

 

 

 

233,900

 

 

233,900

To Salaries

20,000

   

By Gross Profit c/d

 

77,300

Add: Outstanding salaries

1,400

21,400

By Commission

 

500

To Bad debts

 

1,000

 

 

 

To Electric charges

 

1,200

 

 

 

To Telephone charges

 

2,400

 

 

 

To General Expenses

 

3,000

 

 

 

To Postage and Telegram

 

1,800

 

 

 

To Insurance Premium

1,500

 

 

 

 

Less: Prepaid (Advance)

200

1,300

 

 

 

To Depreciation:

 

 

 

 

 

Plant and Machinery(Note)

7,250

 

 

 

 

Furniture

400

7,650

 

 

 

To Net Profit transferred to Capital A/c

 

38,050

 

 

 

 

 

77,800

 

 

77,800

Note: Depreciation on Plant = (5% of Rs. 1,40,000 )+ (5/100*Rs. 10,000 * 6/12) = Rs. 7250

BALANCE SHEET
as at 31st March 2008

Liabilities

Rs.

Rs.

Assets

Rs.

Rs.

Current Liabilities

 

 

Current Assets

 

 

Creditors

 

40,000

Cash in Hand

 

2,500

Outstanding salary

 

1,400

Cash at Bank

 

40,000

Outstanding wages

 

600

Prepaid Insurance

 

200

Capital

 

 

Closing Stock

 

7,000

Opening Balance

150,000

 

Debtors

 

30,000

Add Net Profit

38,050

188,050

Fixed Assets

 

 

 

 

 

Machinery

140,000

 

 

 

 

Add: Addition

10,000

 

 

 

 

 

150,000

 

 

 

 

Less: Depreciation

7,250

142,750

 

 

 

Furniture

8,000

 

 

 

 

Less: Depreciation

400

7,600

 

 

230,050

 

 

230,050





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