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Numerical Questions · Q12
Q.

The following balances were extracted from the books of M/s Panchsheel Garments on March 31, 2017.

Account TitleDebit Amount ₹Account TitleCredit Amount ₹
Opening stock16,000Sales1,12,000
Purchases67,600Return outwards3,200
Return Inwards4,600Discount1,400
Carriage inwards1,400Bank overdraft10,000
General expenses2,400Commission1,800
Insurance4,000Creditors16,000
Scooter expenses200Capital50,000
Salary8,800
Cash in hand4,000
Scooter8,000
Furniture5,200
Buildings65,000
Debtors6,000
Wages1,200
1,94,4001,94,400

Prepare the trading and profit and loss account for the year ended March 31, 2017 and a balance sheet as on that date.

  1. Unexpired insurance ₹ 1,000.
  2. Salary due but not paid ₹ 1800.
  3. Wages outstanding ₹ 200.
  4. Interest on capital 5%.
  5. Scooter is depreciated @ 5%.
  6. Furniture is depreciated @ 10%.
  7. Closing stock was ₹ 15,000.
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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

ParticularsAmount (₹)ParticularsAmount (₹)
To Opening Stock16,000By Sales 1,12,000
To Purchases 67,600Less Return inwards 4,6001,07,400
Less Return outwards 3,20064,400By Closing Stock15,000
To Carriage inwards1,400
To Wages 1,200 + Outstanding 2001,400
To Gross Profit c/d39,200
Total1,22,400Total1,22,400
To General expenses2,400By Gross Profit b/d39,200
To Insurance 4,000 − Unexpired 1,0003,000By Discount1,400
To Scooter expenses200By Commission1,800
To Salary 8,800 + Outstanding 1,80010,600
To Interest on capital2,500
To Depreciation: Scooter400
To Depreciation: Furniture520
To Net Profit (to Capital)22,780
Total42,400Total42,400

Balance Sheet as on 31 March 2017

LiabilitiesAmount (₹)AssetsAmount (₹)
Capital 50,000Scooter 8,000
Add Interest on capital 2,500Less Dep. 4007,600
Add Net Profit 22,78075,280Furniture 5,200

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