Prepare final account from the given Trial Balance as on 31-12-2020.
| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| Stock (01-01-2020) | 14,000 | |
| Purchases | 90,000 | |
| Sales | 2,00,000 | |
| Wages | 19,000 | |
| Salary | 22,000 | |
| Carriage inwards | 8,000 | |
| Carriage outwards | 5,000 | |
| Machinery | 35,000 | |
| Debtors | 26,000 | |
| Bad debt | 3,000 | |
| Advertisement | 30,000 | |
| Capital | 60,000 | |
| Creditors | 10,000 | |
| Furniture | 18,000 | |
| Total | 2,70,000 | 2,70,000 |
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%.
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Start your 14-day free trial to unlock the full solution →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
| Adjustment | Effect |
|---|---|
| Closing stock ₹5,000 | Credit of Trading A/c; asset in Balance Sheet |
| Further bad debts ₹1,200 | Added 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 |
| Depreciation | Machinery 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 Stock | 14,000 | By Sales | 2,00,000 |
| To Purchases | 90,000 | By Closing Stock | 5,000 |
| To Wages | 19,000 | ||
| To Carriage inwards | 8,000 | ||
| To Gross Profit c/d | 74,000 | ||
| Total | 2,05,000 | Total | 2,05,000 |
| To Salary | 22,000 | By Gross Profit b/d | 74,000 |
| To Carriage outwards | 5,000 | ||
| To Bad debts (3,000 + 1,200) | 4,200 | ||
| To Advertisement (1/3 of 30,000) | 10,000 | ||
| To Depreciation on Machinery | 3,500 | ||
| To Depreciation on Furniture | 900 | ||
| To Interest on Capital | 3,600 | ||
| To Net Profit (to Capital) | 24,800 | ||
| Total | 74,000 | Total | 74,000 |
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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