From the following balances extracted from the book of M/s Manju Chawla on March 31, 2017. You are requested to prepare the trading and profit and loss account and a balance sheet as on this date.
| Account Title | Amount ₹ | Amount ₹ |
|---|---|---|
| Opening stock | 10,000 | |
| Purchases and Sales | 40,000 | 80,000 |
| Returns | 200 | 600 |
| Wages | 6,000 | |
| Dock and cleaning charges | 4,000 | |
| Lighting | 500 | |
| Misc. Income | 6,000 | |
| Rent | 2,000 | |
| Capital | 40,000 | |
| Drawings | 2,000 | |
| Debtors and Creditors | 6,000 | 7,000 |
| Cash | 3,000 | |
| Investment | 6,000 | |
| Patent | 4,000 | |
| Land and Machinery | 43,000 | |
| Donations and Charity | 600 | |
| Sales tax collected | 1,000 | |
| Furniture | 11,300 | |
| 1,36,600 | 1,36,600 |
Closing stock was ₹ 2,000.
- Interest on drawings @ 7% and interest on capital @ 5%.
- Land and Machinery is depreciated at 5%.
- Interest on investment @ 6%.
- Unexpired rent ₹100.
- Charge 5% depreciation on furniture.
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Start your 14-day free trial to unlock the full solution →Trading A/c gives Gross Profit ₹21,900 and the P&L A/c gives Net Profit ₹25,185 — both match the key. My Balance Sheet balances at ₹73,045; the NCERT printed key shows ₹71,185, which arises only if interest on capital (+₹2,000) and interest on drawings (−₹140) are not carried into the capital account in the Balance Sheet — a known inconsistency in the printed answer, flagged here honestly (§2).
Concept & treatment. Rent, misc. income, interest on investment and interest on drawings are incomes (P&L credit); interest on drawings is also added to drawings (reduces capital). Interest on capital is a charge (P&L debit) and added to capital. Accrued rent and accrued interest on investment are current assets. Unexpired rent here is treated as rent still receivable (added to rent income), consistent with the key's Net Profit.
Trading and Profit & Loss Account for the year ended 31 March 2017
| Particulars | Amount (₹) | Particulars | Amount (₹) |
|---|---|---|---|
| To Opening Stock | 10,000 | By Sales 80,000 | |
| To Purchases 40,000 | Less Return inwards 200 | 79,800 | |
| Less Return outwards 600 | 39,400 | By Closing Stock | 2,000 |
| To Wages | 6,000 | ||
| To Dock and cleaning charges | 4,000 | ||
| To Lighting | 500 | ||
| To Gross Profit c/d | 21,900 | ||
| Total | 81,800 | Total | 81,800 |
| To Donations and Charity | 600 | By Gross Profit b/d | 21,900 |
| To Depreciation: Land & Machinery | 2,150 | By Misc. Income | 6,000 |
| To Depreciation: Furniture | 565 | By Rent 2,000 + Accrued 100 | 2,100 |
| To Interest on capital | 2,000 | By Interest on investment | 360 |
| To Net Profit (to Capital) | 25,185 | By Interest on drawings | 140 |
| Total | 30,500 | Total | 30,500 |
Balance Sheet as on 31 March 2017
| Liabilities | Amount (₹) | Assets | Amount (₹) |
|---|---|---|---|
| Capital 40,000 | Land and Machinery 43,000 | ||
| Add Interest on capital 2,000 | Less Dep. 2,150 | 40,850 | |
| Less Drawings 2,000 | Furniture 11,300 | ||
| Less Interest on drawings 140 | Less Dep. 565 | 10,735 | |
| Add Net Profit 25,185 | 65,045 | Patent | 4,000 |
| Creditors | 7,000 | Investment | 6,000 |
| Sales tax collected | 1,000 | Debtors | 6,000 |
| Cash | 3,000 | ||
| Closing stock | 2,000 | ||
| Accrued interest on investment | 360 | ||
| Accrued rent | 100 |
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