Skip to content
Question of 41
Q.

Following is the trial balance of a trader for the year ending 31st Dec. 2022.

ParticularsDebit ₹Credit ₹
Stock (1-1-2022)40,000
Purchases1,20,000
Sales3,14,000
Sales return4,000
Wages22,000
Carriage Inwards6,000
Salary30,000
Rent20,000
Commission received8,000
Debtors40,000
Creditors60,000
Cash at bank6,300
Furniture1,50,000
Capital60,300
Drawings4,000
Total4,42,3004,42,300

Additional Information :

  1. Closing stock is valued at ₹ 40,000
  2. Wages outstanding ₹ 2,000
  3. Rent prepaid ₹ 2,000
  4. Provide 10% depreciation on furniture
  5. 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★★★★★
0% · 0/41 Questions
🔒 Locked · start free trial →

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 →

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 stock40,000By Sales 3,14,000 − Return 4,0003,10,000
To Purchases1,20,000By Closing stock40,000
To Wages (22,000 + 2,000)24,000
To Carriage inwards6,000
To Gross profit c/d1,60,000
Total3,50,000Total3,50,000
To Salary30,000By Gross profit b/d1,60,000
To Rent (20,000 − 2,000)18,000By Commission received8,000
To Depreciation on furniture15,000
To Provision for doubtful debts2,000
To Net profit (to Capital)1,03,000
Total1,68,000Total1,68,000

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 ✓

…

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.