The following balances were extracted from the books of M/s Panchsheel Garments on March 31, 2017.
| Account Title | Debit Amount ₹ | Account Title | Credit Amount ₹ |
|---|---|---|---|
| Opening stock | 16,000 | Sales | 1,12,000 |
| Purchases | 67,600 | Return outwards | 3,200 |
| Return Inwards | 4,600 | Discount | 1,400 |
| Carriage inwards | 1,400 | Bank overdraft | 10,000 |
| General expenses | 2,400 | Commission | 1,800 |
| Insurance | 4,000 | Creditors | 16,000 |
| Scooter expenses | 200 | Capital | 50,000 |
| Salary | 8,800 | ||
| Cash in hand | 4,000 | ||
| Scooter | 8,000 | ||
| Furniture | 5,200 | ||
| Buildings | 65,000 | ||
| Debtors | 6,000 | ||
| Wages | 1,200 | ||
| 1,94,400 | 1,94,400 |
Prepare the trading and profit and loss account for the year ended March 31, 2017 and a balance sheet as on that date.
- Unexpired insurance ₹ 1,000.
- Salary due but not paid ₹ 1800.
- Wages outstanding ₹ 200.
- Interest on capital 5%.
- Scooter is depreciated @ 5%.
- Furniture is depreciated @ 10%.
- Closing stock was ₹ 15,000.
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Start your 14-day free trial to unlock the full solution →Trading A/c gives Gross Profit ₹39,200; P&L A/c gives Net Profit ₹22,780 after interest on capital ₹2,500; the Balance Sheet totals ₹1,03,280. Bank overdraft is a current liability; unexpired insurance is a current asset.
Concept & treatment. Return inwards is deducted from sales; return outwards from purchases. Wages and carriage inwards are direct (Trading A/c). Discount and commission received are incomes (P&L credit). Outstanding salary and wages are added to the expense and shown as liabilities; unexpired insurance is deducted and shown as an asset. Interest on capital is debited to P&L and added to capital.
Trading and Profit & Loss Account for the year ended 31 March 2017
| Particulars | Amount (₹) | Particulars | Amount (₹) |
|---|---|---|---|
| To Opening Stock | 16,000 | By Sales 1,12,000 | |
| To Purchases 67,600 | Less Return inwards 4,600 | 1,07,400 | |
| Less Return outwards 3,200 | 64,400 | By Closing Stock | 15,000 |
| To Carriage inwards | 1,400 | ||
| To Wages 1,200 + Outstanding 200 | 1,400 | ||
| To Gross Profit c/d | 39,200 | ||
| Total | 1,22,400 | Total | 1,22,400 |
| To General expenses | 2,400 | By Gross Profit b/d | 39,200 |
| To Insurance 4,000 − Unexpired 1,000 | 3,000 | By Discount | 1,400 |
| To Scooter expenses | 200 | By Commission | 1,800 |
| To Salary 8,800 + Outstanding 1,800 | 10,600 | ||
| To Interest on capital | 2,500 | ||
| To Depreciation: Scooter | 400 | ||
| To Depreciation: Furniture | 520 | ||
| To Net Profit (to Capital) | 22,780 | ||
| Total | 42,400 | Total | 42,400 |
Balance Sheet as on 31 March 2017
| Liabilities | Amount (₹) | Assets | Amount (₹) |
|---|---|---|---|
| Capital 50,000 | Scooter 8,000 | ||
| Add Interest on capital 2,500 | Less Dep. 400 | 7,600 | |
| Add Net Profit 22,780 | 75,280 | Furniture 5,200 |
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