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Numerical Questions · Q11
Q.

From the following balances extracted from the book of M/s Manju Chawla on March 31, 2017. You are requested to prepare the trading and profit and loss account and a balance sheet as on this date.

Account TitleAmount ₹Amount ₹
Opening stock10,000
Purchases and Sales40,00080,000
Returns200600
Wages6,000
Dock and cleaning charges4,000
Lighting500
Misc. Income6,000
Rent2,000
Capital40,000
Drawings2,000
Debtors and Creditors6,0007,000
Cash3,000
Investment6,000
Patent4,000
Land and Machinery43,000
Donations and Charity600
Sales tax collected1,000
Furniture11,300
1,36,6001,36,600

Closing stock was ₹ 2,000.

  1. Interest on drawings @ 7% and interest on capital @ 5%.
  2. Land and Machinery is depreciated at 5%.
  3. Interest on investment @ 6%.
  4. Unexpired rent ₹100.
  5. Charge 5% depreciation on furniture.
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Trading A/c gives Gross Profit ₹21,900 and the P&L A/c gives Net Profit ₹25,185 — both match the key. My Balance Sheet balances at ₹73,045; the NCERT printed key shows ₹71,185, which arises only if interest on capital (+₹2,000) and interest on drawings (−₹140) are not carried into the capital account in the Balance Sheet — a known inconsistency in the printed answer, flagged here honestly (§2).

Concept & treatment. Rent, misc. income, interest on investment and interest on drawings are incomes (P&L credit); interest on drawings is also added to drawings (reduces capital). Interest on capital is a charge (P&L debit) and added to capital. Accrued rent and accrued interest on investment are current assets. Unexpired rent here is treated as rent still receivable (added to rent income), consistent with the key's Net Profit.

Trading and Profit & Loss Account for the year ended 31 March 2017

ParticularsAmount (₹)ParticularsAmount (₹)
To Opening Stock10,000By Sales 80,000
To Purchases 40,000Less Return inwards 20079,800
Less Return outwards 60039,400By Closing Stock2,000
To Wages6,000
To Dock and cleaning charges4,000
To Lighting500
To Gross Profit c/d21,900
Total81,800Total81,800
To Donations and Charity600By Gross Profit b/d21,900
To Depreciation: Land & Machinery2,150By Misc. Income6,000
To Depreciation: Furniture565By Rent 2,000 + Accrued 1002,100
To Interest on capital2,000By Interest on investment360
To Net Profit (to Capital)25,185By Interest on drawings140
Total30,500Total30,500

Balance Sheet as on 31 March 2017

LiabilitiesAmount (₹)AssetsAmount (₹)
Capital 40,000Land and Machinery 43,000
Add Interest on capital 2,000Less Dep. 2,15040,850
Less Drawings 2,000Furniture 11,300
Less Interest on drawings 140Less Dep. 56510,735
Add Net Profit 25,18565,045Patent4,000
Creditors7,000Investment6,000
Sales tax collected1,000Debtors6,000
Cash3,000
Closing stock2,000
Accrued interest on investment360
Accrued rent100

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