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Q.

Prepare final account from the given Trial Balance as on 31-12-2020.

ParticularsDebit (₹)Credit (₹)
Stock (01-01-2020)14,000
Purchases90,000
Sales2,00,000
Wages19,000
Salary22,000
Carriage inwards8,000
Carriage outwards5,000
Machinery35,000
Debtors26,000
Bad debt3,000
Advertisement30,000
Capital60,000
Creditors10,000
Furniture18,000
Total2,70,0002,70,000

Additional Information :

(1) Closing Stock ₹ 5,000.

(2) Bad debt ₹ 1,200.

(3) 2/3rd of advertisement carry forward to next year.

(4) Depreciation : Machinery – 10%, Furniture – 5%.

(5) Interest on capital 6%.

Kerala DhseKerala DHSE Plus One Commerce Board 2024Subjective· 8mImportance★★★★★
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Prepare the Trading and Profit & Loss Account for the year ended 31-12-2020 and the Balance Sheet as on that date. Apply all five adjustments — closing stock ₹5,000, further bad debts ₹1,200, 2/3 of advertisement (₹20,000) carried forward as prepaid, depreciation (Machinery 10% = ₹3,500, Furniture 5% = ₹900) and interest on capital 6% = ₹3,600. Result: Gross Profit ₹74,000, Net Profit ₹24,800, Balance Sheet total ₹98,400.

Adjustment working

AdjustmentEffect
Closing stock ₹5,000Credit of Trading A/c; asset in Balance Sheet
Further bad debts ₹1,200Added to Bad debts in P&L; deducted from Debtors
2/3 of Advertisement ₹30,000 carried forward₹20,000 prepaid (asset); only ₹10,000 (1/3) charged to P&L
DepreciationMachinery 10% × 35,000 = ₹3,500; Furniture 5% × 18,000 = ₹900
Interest on capital 6% × 60,000₹3,600 to P&L; added to Capital

Trading and Profit & Loss Account for the year ended 31-12-2020

Particulars₹Particulars₹
To Opening Stock14,000By Sales2,00,000
To Purchases90,000By Closing Stock5,000
To Wages19,000
To Carriage inwards8,000
To Gross Profit c/d74,000
Total2,05,000Total2,05,000
To Salary22,000By Gross Profit b/d74,000
To Carriage outwards5,000
To Bad debts (3,000 + 1,200)4,200
To Advertisement (1/3 of 30,000)10,000
To Depreciation on Machinery3,500
To Depreciation on Furniture900
To Interest on Capital3,600
To Net Profit (to Capital)24,800
Total74,000Total74,000

Gross Profit check: Credit side ₹2,05,000 − debit side items ₹1,31,000 (14,000+90,000+19,000+8,000) = ₹74,000. Net Profit check: Gross Profit ₹74,000 − total P&L expenses ₹49,200 = ₹24,800.

Balance Sheet as on 31-12-2020

| Liabilities | ₹ | Assets | ₹ |

|---|---|---|---| …

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