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 title | Amount | Account title | Amount |
|---|---|---|---|
| Purchases | 50,000 | Sales | 64,000 |
| Opening stock | 10,000 | Discount received | 1,000 |
| Carriage inwards | 1,000 | Creditors | 4,000 |
| Cash in hand | 5,000 | Bill payable | 5,000 |
| Wages | 4,000 | Capital | 40,000 |
| Insurance | 3,000 | ||
| Investment | 12,000 | ||
| Debtors | 5,000 | ||
| Bills receivable | 2,000 | ||
| Commission | 1,500 | ||
| Interest | 2,500 | ||
| Carriage outward | 3,000 | ||
| Furniture | 15,000 | ||
| Total | 1,14,000 | Total | 1,14,000 |
Adjustments
- Depreciate Furniture @ 10 % pa
- Wages outstanding ₹ 1,000
- Insurance prepaid ₹ 1,000
- Closing stock ₹ 12,000
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Start your 14-day free trial to unlock the full solution →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
| Particulars | Amount (₹) | Particulars | Amount (₹) |
|---|---|---|---|
| To Opening stock | 10,000 | By Sales | 64,000 |
| To Purchases | 50,000 | By Closing stock | 12,000 |
| To Carriage inwards | 1,000 | ||
| To Wages (4,000 + 1,000 o/s) | 5,000 | ||
| To Gross Profit c/d | 10,000 | ||
| Total | 76,000 | Total | 76,000 |
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
| Particulars | Amount (₹) | Particulars | Amount (₹) |
|---|---|---|---|
| To Insurance (3,000 − 1,000 prepaid) | 2,000 | By Gross Profit b/d | 10,000 |
| To Commission | 1,500 | By Discount received | 1,000 |
| To Interest | 2,500 | ||
| To Carriage outward | 3,000 | ||
| To Depreciation on Furniture (10% of 15,000) | 1,500 | ||
| To Net Profit (to Capital) | 500 | ||
| Total | 11,000 | Total | 11,000 |
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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