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Illustration 5


The following Trial Balance is extracted from the books of Nikesh as at 31st march 2008.

 

Debit Balance

Rs.

Credit Balance

Rs.

Stock (1.4.2007)

50000

Capital

320000

Furntiure

16000

Creditors

80000

Building

160000

Purchases Returns

2000

Debtors

60000

Commission

1000

Drawings

20000

Sales

455600

Plant and Machinery

120000

Bad Debts recovered

1400

Additions to Plant (1.10.2007)

20000

   

Wages

24000

   

Salaries

40000

   

Bad Debts

2000

   

Purchases

240000

   

Electric charges

2400

   

Telephone charges

4800

   

General Expenses

6000

   

Postage and telegram

3600

   

Sales Returns

1800

   

Insurance Premium

3000

   

Cash in Hand

6400

   

Cash at Bank

80000

   
 

860000

 

860000


Prepare a Trading Account and Profit and Loss Account for the year ending 31st March 2008 and a Balance Sheet as on that date after taking into account the following adjustments:
  1. Closing stock Rs. 14000
  2. Outstanding liabilities for wages Rs. 1200 and salaries Rs. 2800
  3. Depreciation @ 5% pa is to be provided on all fixed assets
  4. Write off bad debts Rs. 1500
  5. Insurance premium paid in advance Rs. 400
  6. Accrued commission Rs. 500

TRADING AND PROFIT AND LOSS ACCOUNT

for the year ended 31st March 2008

Particulars

Rs.

Rs.

Particulars

Rs.

Rs.

To Opening Stock

 

50,000

By Sales

455,600

 

To Purchases

240,000

 

Less: Returns

1,800

453,800

Less: Purchases Returns

2,000

238,000

 

 

 

To Wages

24,000

 

By Closing Stock

 

14,000

Add: Outstanding wages

1,200

25,200

 

 

 

To Gross Profit c/d

 

154,600

 

 

 

 

 

467,800

 

 

467,800

To Salaries

40,000

 

By Gross Profit c/d

 

154,600

 

Add: Outstanding salaries

 

2,800

 

42,800

 

By Commission

 

1,000

 

To Bad debts

2,000

 

Add: Accrued

500

1,500

Add: Further bad debts

1,500

3,500

By Bad Debts recovered

 

1,400

To Electric charges

 

2,400

 

 

 

To Telephone charges

 

4,800

 

 

 

To General Expenses

 

6,000

 

 

 

To Postage and Telegram

 

3,600

 

 

 

To Insurance Premium

3,000

 

 

 

 

Less: Prepaid (Advance)

400

2,600

 

 

 

To Depreciation:

 

 

 

 

 

Plant and Machinery(Note)

6,500

 

 

 

 

Furniture

800

 

 

 

 

Building

8,000

15,300

 

 

 

To Net Profit transferred to Capital A/c

 

76,500

 

 

 

 

 

157,500

 

 

157,500

Note:
Depreciation - Plant and Machinery
Rs. 120000*5/100 - Rs. 6000
Rs. 20000*5/100*6/12=500

On Furniture
Rs. 16000*5/100 = Rs. 800

On Building
Rs. 160000*5/100 = Rs. 8000
 

BALANCE SHEET

as at 31st March 2008

Liabilities

Rs.

Rs.

Assets

Rs.

Rs.

Current Liabilities

 

 

Current Assets

 

 

Creditors

 

80,000

Cash in Hand

 

6,400

Outstanding salary

 

2,800

Cash at Bank

 

80,000

Outstanding wages

 

1,200

Prepaid Insurance

 

400

Capital

 

 

Closing Stock

 

14,000

Opening Balance

320,000

 

Debtors

60,000

 

Add Net Profit

76,500

 

Less Bad Debts

1,500

58,500

 

396,500

 

Accrued Commission

 

500

Less Drawings

20,000

376,500

Fixed Assets

 

 

 

 

 

Machinery

140,000

 

 

 

 

Less: Depreciation

6,500

133,500

 

 

 

Furniture

16,000

 

 

 

 

Less: Depreciation

800

15,200

 

 

 

Building

160,000

 

 

 

 

Less Depreciation

8,000

152,000

 

 

 

 

 

 

 

 

460,500

 

 

460,500





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