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Numerical Questions · Q7
Q.

The following trial balance is extracted from the books of M/s Ram on March 31, 2026. You are required to prepare trading and profit and loss account and the balance sheet as on date :

Account titleDebit ₹Credit ₹
Debtors12,000
Purchases50,000
Coal, gas and water6,000
Factory wages11,000
Salaries9,000
Rent4,000
Discount3,000
Advertisement500
Drawings1,000
Loan6,000
Petty cash500
Sales return1,000
Machinery5,000
Land and building10,000
Income tax100
Furniture9,900
Apprenticeship premium5,000
Loan10,000
Bank overdraft1,000
Sales80,000
Creditors13,000
Capital20,000
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No stock is given; the two 'Loan' figures are a loan given (asset ₹6,000) and a loan taken (liability ₹10,000), and income tax ₹100 is treated as drawings. Gross profit ₹12,000, Net profit ₹500, Balance Sheet ₹43,400.

Concept & treatment. Purchases, coal-gas-water and factory wages are direct (Trading) items. Discount ₹3,000 (debit) is discount allowed — an indirect expense. Apprenticeship premium ₹5,000 (credit) is an income. Income tax of a sole proprietor is a personal expense and is added to drawings (deducted from capital), not charged to the Profit and Loss Account.

Trading and Profit and Loss Account for the year ended March 31, 2026

Particulars₹Particulars₹
To Purchases50,000By Sales 80,000
To Coal, gas and water6,000  Less: Sales return (1,000)79,000
To Factory wages11,000
To Gross profit c/d12,000
Total79,000Total79,000
To Salaries9,000By Gross profit b/d12,000
To Rent4,000By Apprenticeship premium5,000
To Discount (allowed)3,000
To Advertisement500
To Net profit (to Capital)500
Total17,000Total17,000

Balance Sheet as at March 31, 2026

Liabilities₹Assets₹
Loan (taken)10,000Debtors12,000
Bank overdraft1,000Loan (given)6,000
Creditors13,000Petty cash500
Capital 20,000Machinery5,000

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