Prepare the trading and profit and loss account and balance sheet of M/s Control Device India on March 31, 2017 from the following balance as on that date.
| Account Title | Debit Amount ₹ | Credit Amount ₹ |
|---|---|---|
| Drawings and Capital | 19,530 | 67,500 |
| Purchase and Sales | 45,000 | 1,12,500 |
| Salary and Commission | 25,470 | 1,575 |
| Carriage | 2,700 | |
| Plant and Machinery | 27,000 | |
| Furniture | 6,750 | |
| Opening stock | 42,300 | |
| Insurnace premium | 2,700 | |
| Interest | 7,425 | |
| Bank overdraft | 24,660 | |
| Rent and Taxes | 2,160 | |
| Wages | 11,215 | |
| Returns | 2,385 | 1,440 |
| Carriage outwards | 1,485 | |
| Debtors and Creditors | 36,000 | 58,500 |
| General expenses | 6,975 | |
| Octroi | 530 | |
| Investment | 41,400 | |
| 2,73,600 | 2,73,600 |
Closing stock was valued ₹ 20,000.
- Interest on capital @ 10%.
- Interest on drawings @ 5%.
- Wages outstanding ₹ 50.
- Outstanding salary ₹ 20.
- Provide a depreciation @ 5% on plant and machinery.
- Make a 5% provision on debtors.
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Start your 14-day free trial to unlock the full solution →Trading A/c gives Gross Profit ₹29,760, but heavy indirect expenses (including interest on capital ₹6,750) turn the year into a Net Loss of ₹8,973; the Balance Sheet totals ₹1,28,000. The net loss and interest on drawings both reduce capital in the Balance Sheet.
Concept & treatment. "Carriage" (no suffix) is treated as carriage inwards (Trading A/c); carriage outwards is a selling expense (P&L). Salary & commission is an expense; commission ₹1,575 and interest ₹7,425 on the credit side are incomes. Interest on capital (charge) is debited to P&L and added to capital; interest on drawings (gain) is credited to P&L and deducted from capital along with drawings. When the P&L debit exceeds its credit, the balancing figure is a Net Loss, deducted from capital.
Trading and Profit & Loss Account for the year ended 31 March 2017
| Particulars | Amount (₹) | Particulars | Amount (₹) |
|---|---|---|---|
| To Opening Stock | 42,300 | By Sales 1,12,500 | |
| To Purchases 45,000 | Less Return inwards 2,385 | 1,10,115 | |
| Less Return outwards 1,440 | 43,560 | By Closing Stock | 20,000 |
| To Carriage (inwards) | 2,700 | ||
| To Wages 11,215 + Outstanding 50 | 11,265 | ||
| To Octroi | 530 | ||
| To Gross Profit c/d | 29,760 | ||
| Total | 1,30,115 | Total | 1,30,115 |
| To Salary & Commission 25,470 + O/s 20 | 25,490 | By Gross Profit b/d | 29,760 |
| To Insurance premium | 2,700 | By Interest | 7,425 |
| To Rent and Taxes | 2,160 | By Commission | 1,575 |
| To Carriage outwards | 1,485 | By Interest on drawings | 977 |
| To General expenses | 6,975 | By Net Loss (to Capital) | 8,973 |
| To Depreciation: Plant & Machinery | 1,350 | ||
| To Provision for doubtful debts | 1,800 | ||
| To Interest on capital | 6,750 | ||
| Total | 48,710 | Total | 48,710 |
Balance Sheet as on 31 March 2017
| Liabilities | Amount (₹) | Assets | Amount (₹) |
|---|---|---|---|
| Capital 67,500 | Plant and Machinery 27,000 | ||
| Add Interest on capital 6,750 | Less Dep. 1,350 | 25,650 | |
| Less Drawings 19,530 | Furniture | 6,750 | |
| Less Interest on drawings 977 | Investment | 41,400 |
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