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Numerical Questions · Q9
Q.

From the following balances of M/s Jyoti Exports, prepare trading and profit and loss account for the year ended March 31, 2017 and balance sheet as on this date.

Account TitleDebit Amount ₹Account TitleCredit Amount ₹
Sundry debtors9,600Sundry creditors2,500
Opening stock22,800Sales72,670
Purchases34,800Purchases returns2,430
Carriage inwards450Bills payable15,600
Wages1,770Capital42,000
Office rent820
Insurance1,440
Factory rent390
Cleaning charges940
Salary1,590
Building24,000
Plant and Machinery3,600
Cash in hand2,160
Gas and Water240
Octroi60
Furniture20,540
Patents10,000
1,35,2001,35,200

Closing stock ₹10,000.

  1. To provision for doubtful debts is to be maintained at 5 per cent on sundry debtors.
  2. Wages amounting to ₹ 500 and salary amounting to ₹ 350 are outstanding.
  3. Factory rent prepaid ₹ 100.
  4. Depreciation charged on Plant and Machinery @ 5% and Building @ 10%.
  5. Outstanding insurance ₹100.
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Trading A/c gives Gross Profit ₹23,250 (matches the key). Cleaning charges, gas & water, factory rent and octroi are factory/direct costs. The P&L A/c gives Net Profit ₹15,890 and the Balance Sheet balances at ₹76,940. The NCERT key states ₹15,895 / ₹76,945 — a ₹5 arithmetic slip in the printed key; my figures are internally consistent (an honest note, §2).

Concept & treatment. Factory-linked expenses (wages, carriage inwards, factory rent, cleaning charges, gas & water, octroi) are debited to the Trading A/c. Outstanding expenses are added and shown as liabilities; prepaid/unexpired amounts are deducted and shown as assets. A new provision for doubtful debts is created at 5% of debtors, debited to P&L and deducted from debtors.

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

ParticularsAmount (₹)ParticularsAmount (₹)
To Opening Stock22,800By Sales72,670
To Purchases 34,800By Closing Stock10,000
Less Purchases returns 2,43032,370
To Carriage inwards450
To Wages 1,770 + Outstanding 5002,270
To Factory rent 390 − Prepaid 100290
To Cleaning charges940
To Gas and Water240
To Octroi60
To Gross Profit c/d23,250
Total82,670Total82,670
To Office rent820By Gross Profit b/d23,250
To Insurance 1,440 + Outstanding 1001,540
To Salary 1,590 + Outstanding 3501,940
To Provision for doubtful debts480
To Depreciation: Building2,400
To Depreciation: Plant & Machinery180
To Net Profit (to Capital)15,890
Total23,250Total23,250

Balance Sheet as on 31 March 2017

LiabilitiesAmount (₹)AssetsAmount (₹)
Capital 42,000Building 24,000
Add Net Profit 15,89057,890Less Dep. 2,40021,600
Sundry creditors2,500Plant and Machinery 3,600
Bills payable15,600Less Dep. 1803,420
Salary outstanding350Furniture20,540
Insurance outstanding100Patents10,000
Wages outstanding500Closing stock10,000
Sundry debtors 9,600
Less Provision 4809,120

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