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Question of 40
Q.

Prepare a Trading and Profit and Loss account and Balance Sheet of M/s Arjun Associates for the year ending March 31, 2022 on the basis of following balances taken from his Trial Balance and adjustments given:

Account titleAmountAccount titleAmount
Purchases50,000Sales64,000
Opening stock10,000Discount received1,000
Carriage inwards1,000Creditors4,000
Cash in hand5,000Bill payable5,000
Wages4,000Capital40,000
Insurance3,000
Investment12,000
Debtors5,000
Bills receivable2,000
Commission1,500
Interest2,500
Carriage outward3,000
Furniture15,000
Total1,14,000Total1,14,000

Adjustments

  1. Depreciate Furniture @ 10 % pa
  2. Wages outstanding ₹ 1,000
  3. Insurance prepaid ₹ 1,000
  4. Closing stock ₹ 12,000
Kerala DhseKerala DHSE Plus One Commerce Board 2022Subjective· 8mImportance★★★★★
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After adjustments (furniture depreciation ₹1,500, wages outstanding ₹1,000, insurance prepaid ₹1,000, closing stock ₹12,000): Gross Profit ₹10,000, Net Profit ₹500, and the Balance Sheet balances at ₹50,500 on both sides.

This is a full Kerala Plus One (DHSE) Accountancy final-accounts question. Commission ₹1,500 and Interest ₹2,500 appear on the debit side of the trial balance, so both are treated as expenses (commission paid, interest paid). Discount received is an income.

Trading Account for the year ending 31 March 2022

ParticularsAmount (₹)ParticularsAmount (₹)
To Opening stock10,000By Sales64,000
To Purchases50,000By Closing stock12,000
To Carriage inwards1,000
To Wages (4,000 + 1,000 o/s)5,000
To Gross Profit c/d10,000
Total76,000Total76,000

Gross Profit = 76,000 − (10,000 + 50,000 + 1,000 + 5,000) = 76,000 − 66,000 = ₹10,000.

Profit & Loss Account for the year ending 31 March 2022

ParticularsAmount (₹)ParticularsAmount (₹)
To Insurance (3,000 − 1,000 prepaid)2,000By Gross Profit b/d10,000
To Commission1,500By Discount received1,000
To Interest2,500
To Carriage outward3,000
To Depreciation on Furniture (10% of 15,000)1,500
To Net Profit (to Capital)500
Total11,000Total11,000

Net Profit = 11,000 − (2,000 + 1,500 + 2,500 + 3,000 + 1,500) = 11,000 − 10,500 = ₹500.

Balance Sheet as on 31 March 2022

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