The following is the trial balance of Manju Chawla on March 31, 2026. You are required to prepare trading and profit and loss account and a balance sheet as on date :
| Account title | Debit ₹ | Credit ₹ |
|---|---|---|
| Opening stock | 10,000 | |
| Purchases and sales | 40,000 | 80,000 |
| Returns | 200 | 600 |
| Productive wages | 6,000 | |
| Dock and Clearing charges | 4,000 | |
| Donation and charity | 600 | |
| Delivery van expenses | 6,000 | |
| Lighting | 500 | |
| Sales tax collected | 1,000 | |
| Bad debts | 600 | |
| Misc. incomes | 6,000 | |
| Rent from tenants | 2,000 | |
| Royalty | 4,000 | |
| Capital | 40,000 | |
| Drawings | 2,000 | |
| Debtors and Creditors | 6,0000 | 7,000 |
| Cash | 3,000 | |
| Investment | 6,000 | |
| Patents | 4,000 | |
| Land and Machinery | 43,000 |
Closing stock ₹ 2,000.
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Start your 14-day free trial to unlock the full solution →Reading debtors as ₹6,700 (the value that balances the trial balance and matches the official key), Gross profit ₹18,400, Net profit ₹18,700, and the Balance Sheet totals ₹64,700.
Concept & treatment. Royalty is a direct expense (on production) and goes to the Trading Account. Return (Dr. ₹200) is sales return; Return (Cr. ₹600) is purchase return. Sales tax collected ₹1,000 is a liability, not an income. Donation & charity, delivery-van expenses, lighting and bad debts are indirect (Profit and Loss) items; misc. incomes and rent from tenants are incomes.
Trading and Profit and Loss Account for the year ended March 31, 2026
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| To Opening stock | 10,000 | By Sales 80,000 | |
| To Purchases 40,000 | Less: Return (200) | 79,800 | |
| Less: Return (600) | 39,400 | By Closing stock | 2,000 |
| To Productive wages | 6,000 | ||
| To Dock and clearing charges | 4,000 | ||
| To Royalty | 4,000 | ||
| To Gross profit c/d | 18,400 | ||
| Total | 81,800 | Total | 81,800 |
| To Donation and charity | 600 | By Gross profit b/d | 18,400 |
| To Delivery van expenses | 6,000 | By Misc. incomes | 6,000 |
| To Lighting | 500 | By Rent from tenants | 2,000 |
| To Bad debts | 600 | ||
| To Net profit (to Capital) | 18,700 | ||
| Total | 26,400 | Total | 26,400 |
Balance Sheet as at March 31, 2026
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Sales tax collected | 1,000 | Land and Machinery | 43,000 |
| Creditors | 7,000 | Patents | 4,000 |
| Capital 40,000 | Investment | 6,000 | |
| Less: Drawings (2,000) | Cash | 3,000 | |
| Add: Net profit 18,700 | 56,700 | Debtors | 6,700 |
| Closing stock | 2,000 | ||
| Total | 64,700 | Total | 64,700 |
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