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Illustration 6


From the following balances of the year ending 31st December 2008 and additional information prepare Trading and Profit and Loss Account and Balance Sheet of M/s Ram Lal and Sons

Particulars

Rs.

Particulars

Rs.

Capital

80000

Purchases

82000

Sales

110000

Returns outwards

1000

Buildings

45000

Opening Stock

15000

Debtors

20100

Creditors

28000

Furniture

7000

Wages

1800

Rent

5100

Insurance

600

Salaries

12500

Bad Debts

200

Carriage on Purchases

200

Commission(Cr.)

1500

Cash in Hand

5000

Cash at Bank

25000

Sales Tax paid

5000

Sales tax collected

3500

Interest on Investments

500

   

Additional Information-
  1. Closing stock #9; - 20000
  2. Provide depreciation on building @ 5% and on furniture @ 10%
  3. Outstanding salaries Rs. 1000
  4. Unexpired insurance Rs. 50
  5. Accrued commission Rs. 300
  6. Provide for Manager's commission at 5% on net profit after charging such commission.

TRADING AND PROFIT AND LOSS ACCOUNT

for the year ended 31st March 2008

Particulars

Rs.

Rs.

Particulars

Rs.

Rs.

To Opening Stock

 

15,000

By Sales

 

110,000

To Purchases

82,000

 

By Closing Stock

 

20,000

 

Less: Purchases Returns

 

1,000

 

81,000

 

 

 

To Wages

 

1,800

 

 

 

To Carraige on Purchases

 

200

 

 

 

To Gross Profit c/d

 

32,000

 

 

 

 

 

130,000

 

 

130,000

To Rent

 

5,100

By Gross Profit

 

32,000

To Insurance

600

 

By Interest on Investment

 

500

Less: Unexpired insurance

50

550

By Commission

1,500

 

To Salaries

12,500

 

Add Accrued Commission

300

1,800

Add: Outstanding Salaries

1,000

13,500

 

 

 

To Bad Debts

 

200

 

 

 

To Depreciation on:

 

 

 

 

 

Building

2,250

 

 

 

 

Furniture

700

2,950

 

 

 

 

 

22,300

 

 

 

To Net Profit before Manager's Commission

 

12,000

 

 

 

 

 

34,300

 

 

34,300

To Manager's commission (5/105*12000)

 

571

By Net Profit before Manager's Commission

 

12,000

To Net Profit after Manager's Commission

 

11,429

 

 

 

 

 

12,000

 

 

12,000

 

BALANCE SHEET

as at 31st March 2008

Liabilities

Rs.

Rs.

Assets

Rs.

Rs.

Current Liabilities

 

 

Current Assets

 

 

Creditors

 

28,000

Cash in Hand

 

5,000

Outstanding salary

 

1,000

Cash at Bank

 

25,000

Manager's Commission

 

571

 

 

 

Capital

 

 

Closing Stock

 

20,000

Opening Balance

80,000

 

Debtors

 

20,100

Add Net Profit

11,429

91,429

Advance Sales Tax paid (Sales Tax paid - Sales Tax Collected)

 

1,500

 

 

 

Accrued Commission

 

300

Less Drawings

 

 

Prepaid insurance

 

50

 

 

 

Fixed Assets

 

 

 

 

 

Furniture

7,000

 

 

 

 

Less: Depreciation

700

6,300

 

 

 

Building

45,000

 

 

 

 

Less Depreciation

2,250

42,750

 

 

121,000

 

 

121,000





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