The following trial balance is extracted from the books of M/s Ram on March 31, 2026. You are required to prepare trading and profit and loss account and the balance sheet as on date :
| Account title | Debit ₹ | Credit ₹ |
|---|---|---|
| Debtors | 12,000 | |
| Purchases | 50,000 | |
| Coal, gas and water | 6,000 | |
| Factory wages | 11,000 | |
| Salaries | 9,000 | |
| Rent | 4,000 | |
| Discount | 3,000 | |
| Advertisement | 500 | |
| Drawings | 1,000 | |
| Loan | 6,000 | |
| Petty cash | 500 | |
| Sales return | 1,000 | |
| Machinery | 5,000 | |
| Land and building | 10,000 | |
| Income tax | 100 | |
| Furniture | 9,900 | |
| Apprenticeship premium | 5,000 | |
| Loan | 10,000 | |
| Bank overdraft | 1,000 | |
| Sales | 80,000 | |
| Creditors | 13,000 | |
| Capital | 20,000 |
You're viewing a preview — the full solution, concept, methods & PYQ mapping are locked.
Start your 14-day free trial to unlock the full solution →No stock is given; the two 'Loan' figures are a loan given (asset ₹6,000) and a loan taken (liability ₹10,000), and income tax ₹100 is treated as drawings. Gross profit ₹12,000, Net profit ₹500, Balance Sheet ₹43,400.
Concept & treatment. Purchases, coal-gas-water and factory wages are direct (Trading) items. Discount ₹3,000 (debit) is discount allowed — an indirect expense. Apprenticeship premium ₹5,000 (credit) is an income. Income tax of a sole proprietor is a personal expense and is added to drawings (deducted from capital), not charged to the Profit and Loss Account.
Trading and Profit and Loss Account for the year ended March 31, 2026
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| To Purchases | 50,000 | By Sales 80,000 | |
| To Coal, gas and water | 6,000 | Less: Sales return (1,000) | 79,000 |
| To Factory wages | 11,000 | ||
| To Gross profit c/d | 12,000 | ||
| Total | 79,000 | Total | 79,000 |
| To Salaries | 9,000 | By Gross profit b/d | 12,000 |
| To Rent | 4,000 | By Apprenticeship premium | 5,000 |
| To Discount (allowed) | 3,000 | ||
| To Advertisement | 500 | ||
| To Net profit (to Capital) | 500 | ||
| Total | 17,000 | Total | 17,000 |
Balance Sheet as at March 31, 2026
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Loan (taken) | 10,000 | Debtors | 12,000 |
| Bank overdraft | 1,000 | Loan (given) | 6,000 |
| Creditors | 13,000 | Petty cash | 500 |
| Capital 20,000 | Machinery | 5,000 |
Unlock everything free for 14 days
- Full step-by-step solutions
- Concept-first explanations
- Methods, shortcuts & mistakes
- PYQ mapping + timed mock tests
Full access for 14 days. No credit card required.