Mrs. Surabhi started business on April 01, 2016 with cash of ₹50,000, furniture of ₹10,000, goods of ₹20,000 and machinery worth ₹20,000. During the year she further introduced ₹20,000 in her business by opening a bank account. From the following information extracted from her books, you are required to prepare final accounts for the year ended March 31, 2017.
| Particulars | Amount (₹) |
|---|---|
| Receipt from debtors | 57,500 |
| Cash sales | 45,000 |
| Cash purchases | 25,000 |
| Wages paid | 5,000 |
| Salaries to staff | 17,500 |
| Trade expenses | 6,500 |
| Electricity bill of factory | 7,500 |
| Drawings of Surabhi | 36,000 |
| Cash paid to creditors | 42,000 |
| Discount allowed | 1,200 |
| Discount received | 3,000 |
| Bad debts written-off | 1,300 |
| Cash balance at end of year | 20,000 |
Mrs. Surabhi used goods worth ₹2,500 for private purposes, which is not recorded in the books. Charge depreciation on furniture 10% and machinery 20% p.a. On March 31, 2017 her debtors were worth ₹70,000 and creditors ₹35,000, stock in trade was valued on that date at ₹25,000.
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Start your 14-day free trial to unlock the full solution →Opening capital ₹1,00,000, credit sales ₹1,30,000, credit purchases ₹80,000 and closing bank ₹13,000 are worked out first; the Trading and P&L Account gives gross profit ₹65,000 and net profit ₹36,500, and the Balance Sheet totals ₹1,53,000.
Books of Mrs. Surabhi — Trading and Profit and Loss Account for the year ended March 31, 2017
| Expenses/Losses | Amount (₹) | Revenues/Gains | Amount (₹) |
|---|---|---|---|
| Opening stock | 20,000 | Sales (Cash ₹45,000 + Credit ₹1,30,000) | 1,75,000 |
| Purchases (Cash ₹25,000 + Credit ₹80,000 = ₹1,05,000) less Goods used for private use ₹2,500 | 1,02,500 | Closing stock | 25,000 |
| Wages | 5,000 | ||
| Electricity bill of factory | 7,500 | ||
| Gross profit c/d | 65,000 | ||
| Total | 2,00,000 | Total | 2,00,000 |
| Expenses/Losses | Amount (₹) | Revenues/Gains | Amount (₹) |
|---|---|---|---|
| Salaries | 17,500 | Gross profit b/d | 65,000 |
| Trade expenses | 6,500 | Discount received | 3,000 |
| Discount allowed | 1,200 | ||
| Bad debts | 1,300 | ||
| Depreciation (Furniture ₹1,000 + Machinery ₹4,000) | 5,000 | ||
| Net profit (transferred to capital account) | 36,500 | ||
| Total | 68,000 | Total | 68,000 |
Balance Sheet of Mrs. Surabhi as at March 31, 2017
| Liabilities | Amount (₹) | Assets | Amount (₹) |
|---|---|---|---|
| Capital (₹1,00,000 + Net profit ₹36,500 + Additional capital ₹20,000 − Drawings ₹38,500) | 1,18,000 | Cash | 20,000 |
| Creditors | 35,000 | Bank | 13,000 |
| Stock | 25,000 | ||
| Debtors | 70,000 | ||
| Furniture (₹10,000 − Depreciation ₹1,000) | 9,000 | ||
| Machinery (₹20,000 − Depreciation ₹4,000) | 16,000 | ||
| Total | 1,53,000 | Total | 1,53,000 |
Drawings deducted from capital = Cash ₹36,000 + Goods ₹2,500 = ₹38,500.
Working Notes
(i) Total Debtors Account
| Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
|---|---|---|---|---|---|---|---|
| Balance b/d | NIL | Cash | 57,500 | ||||
| Sales (credit) (balancing figure) | 1,30,000 | Discount allowed | 1,200 | ||||
| Bad debts | 1,300 | ||||||
| Balance c/d | 70,000 | ||||||
| Total | 1,30,000 | Total | 1,30,000 |
(ii) Total Creditors Account
| Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
|---|---|---|---|---|---|---|---|
| Cash | 42,000 | Balance b/d | NIL |
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