Question of 41
Q.
Following is the trial balance of a trader for the year ending 31st Dec. 2022.
| Particulars | Debit ₹ | Credit ₹ |
|---|---|---|
| Stock (1-1-2022) | 40,000 | |
| Purchases | 1,20,000 | |
| Sales | 3,14,000 | |
| Sales return | 4,000 | |
| Wages | 22,000 | |
| Carriage Inwards | 6,000 | |
| Salary | 30,000 | |
| Rent | 20,000 | |
| Commission received | 8,000 | |
| Debtors | 40,000 | |
| Creditors | 60,000 | |
| Cash at bank | 6,300 | |
| Furniture | 1,50,000 | |
| Capital | 60,300 | |
| Drawings | 4,000 | |
| Total | 4,42,300 | 4,42,300 |
Additional Information :
- Closing stock is valued at ₹ 40,000
- Wages outstanding ₹ 2,000
- Rent prepaid ₹ 2,000
- Provide 10% depreciation on furniture
- Provision for doubtful debt at 5% of debtors. Prepare Trading and Profit/Loss Account for the year ended 31st Dec. 2022 and a Balance Sheet as on that date.
Kerala DhseKerala DHSE Plus One Commerce Board 2023Subjective· 8mImportance★★★★★
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Start your 14-day free trial to unlock the full solution →After adjustments — closing stock ₹40,000, outstanding wages ₹2,000, prepaid rent ₹2,000, 10% depreciation on furniture (₹15,000) and 5% provision for doubtful debts (₹2,000) — the Trading Account gives Gross Profit ₹1,60,000, the P&L Account gives Net Profit ₹1,03,000, and the Balance Sheet foots to ₹2,21,300 on both sides.
Working notes
- Net sales = 3,14,000 − 4,000 (sales return) = ₹3,10,000.
- Wages = 22,000 + 2,000 outstanding = ₹24,000 (charged to Trading A/c; outstanding shown as a current liability).
- Rent = 20,000 − 2,000 prepaid = ₹18,000 (charged to P&L; prepaid shown as a current asset).
- Depreciation on furniture = 10% × 1,50,000 = ₹15,000 (P&L debit; deducted from furniture).
- Provision for doubtful debts = 5% × 40,000 = ₹2,000 (P&L debit; deducted from debtors).
Trading and Profit & Loss Account for the year ended 31 Dec 2022
| Dr — Particulars | ₹ | Cr — Particulars | ₹ |
|---|---|---|---|
| To Opening stock | 40,000 | By Sales 3,14,000 − Return 4,000 | 3,10,000 |
| To Purchases | 1,20,000 | By Closing stock | 40,000 |
| To Wages (22,000 + 2,000) | 24,000 | ||
| To Carriage inwards | 6,000 | ||
| To Gross profit c/d | 1,60,000 | ||
| Total | 3,50,000 | Total | 3,50,000 |
| To Salary | 30,000 | By Gross profit b/d | 1,60,000 |
| To Rent (20,000 − 2,000) | 18,000 | By Commission received | 8,000 |
| To Depreciation on furniture | 15,000 | ||
| To Provision for doubtful debts | 2,000 | ||
| To Net profit (to Capital) | 1,03,000 | ||
| Total | 1,68,000 | Total | 1,68,000 |
Gross profit check: Cr 3,50,000 − (40,000 + 1,20,000 + 24,000 + 6,000) = 1,60,000 ✓
Net profit check: (1,60,000 + 8,000) − (30,000 + 18,000 + 15,000 + 2,000) = 1,03,000 ✓
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