From the following balances extracted from the books of Mrs. Meena as on 31st March 2024, prepare the Trading and Profit and Loss Account for the year ended 31st March 2024 and the Balance Sheet as on that date. Closing Stock was valued at ₹42,000.

| Particulars | Debit (₹) | Cr

Question

From the following balances extracted from the books of Mrs. Meena as on 31st March 2024, prepare the Trading and Profit and Loss Account for the year ended 31st March 2024 and the Balance Sheet as on that date. Closing Stock was valued at ₹42,000.

| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| Opening Stock | 38,000 | |
| Purchases / Sales | 2,60,000 | 4,20,000 |
| Sales Returns / Purchase Returns | 5,000 | 5,000 |
| Carriage Inward | 7,000 | |
| Salaries | 35,000 | |
| Discount Received | | 3,000 |
| Sundry Debtors / Sundry Creditors | 75,000 | 55,000 |
| Machinery | 90,000 | |
| Cash at Bank | 1,25,000 | |
| Drawings | 12,000 | |
| Capital | | 1,64,000 |
| **Total** | **6,47,000** | **6,47,000** |

Accepted Answer

**Step 1 — Trading Account.** Purchase Returns of ₹5,000 reduces Purchases; Sales Returns of ₹5,000 reduces Sales.

Net Purchases = 2,60,000 − 5,000 = ₹2,55,000. Net Sales = 4,20,000 − 5,000 = ₹4,15,000.

| Dr. Trading Account for the year ended 31.03.2024 | ₹ | Cr. | ₹ |
|---|---|---|---|
| To Opening Stock | 38,000 | By Sales | 4,20,000 |
| To Purchases | 2,60,000 | Less: Sales Returns | (5,000) |
| Less: Purchase Returns | (5,000) | | 4,15,000 |
| | 2,55,000 | By Closing Stock | 42,000 |
| To Carriage Inward | 7,000 | | |
| To Gross Profit c/d | 1,57,000 | | |
| **Total** | **4,57,000** | **Total** | **4,57,000** |

Gross Profit = 4,15,000 + 42,000 − 38,000 − 2,55,000 − 7,000 = **₹1,57,000**.

**Step 2 — Profit and Loss Account:**

| Dr. Profit and Loss Account for the year ended 31.03.2024 | ₹ | Cr. | ₹ |
|---|---|---|---|
| To Salaries | 35,000 | By Gross Profit b/d | 1,57,000 |
| To Net Profit (to Capital A/c) | 1,25,000 | By Discount Received | 3,000 |
| **Total** | **1,60,000** | **Total** | **1,60,000** |

Net Profit = 1,57,000 + 3,000 − 35,000 = **₹1,25,000**.

**Step 3 — Balance Sheet as on 31.03.2024:**

| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Capital | 1,64,000 | Machinery | 90,000 |
| Add: Net Profit | 1,25,000 | Closing Stock | 42,000 |
| | 2,89,000 | Sundry Debtors | 75,000 | …

Particulars	Debit (₹)	Credit (₹)
Opening Stock	38,000
Purchases / Sales	2,60,000	4,20,000
Sales Returns / Purchase Returns	5,000	5,000
Carriage Inward	7,000
Salaries	35,000
Discount Received		3,000
Sundry Debtors / Sundry Creditors	75,000	55,000
Machinery	90,000
Cash at Bank	1,25,000
Drawings	12,000
Capital		1,64,000
Total	6,47,000	6,47,000

Dr. Trading Account for the year ended 31.03.2024	₹	Cr.	₹
To Opening Stock	38,000	By Sales	4,20,000
To Purchases	2,60,000	Less: Sales Returns	(5,000)
Less: Purchase Returns	(5,000)		4,15,000
	2,55,000	By Closing Stock	42,000
To Carriage Inward	7,000
To Gross Profit c/d	1,57,000
Total	4,57,000	Total	4,57,000

Dr. Profit and Loss Account for the year ended 31.03.2024	₹	Cr.	₹
To Salaries	35,000	By Gross Profit b/d	1,57,000
To Net Profit (to Capital A/c)	1,25,000	By Discount Received	3,000
Total	1,60,000	Total	1,60,000

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