Question of 41
Q.
From the following Ledger balances of Mr. Akash Singh, prepare Trading and Profit and Loss A/c for the year ended on 31st March, 2017 and Balance Sheet as on that date after making the necessary adjustments:
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| Trade Expenses | 800 | Purchase | 82,000 |
| Freight Duty | 2,000 | Stock (1st April, 2016) | 15,000 |
| Carriage Outward | 500 | Plant and Machinery (1st April, 2016) | 20,000 |
| Sundry Debtors | 20,600 | Plant and Machinery (Additions on 1st October, 2016) | 5,000 |
| Furniture and Fixtures | 5,000 | Drawings | 6,000 |
| Returns Inward | 2,000 | Capital | 80,000 |
| Printing and Stationery | 400 | Provision for Doubtful Debts | 800 |
| Rent, Rates and Taxes | 4,600 | Rent for Premises sublet | 1,600 |
| Sundry Creditors | 10,000 | Insurance Charges | 700 |
| Sales | 1,20,000 | Salaries and Wages | 21,300 |
| Returns Outward | 1,000 | Cash in Hand | 6,200 |
| Postage and Telegram | 800 | ||
| Cash at Bank | 20,500 |
Adjustments/Other Information:
- Closing stock on 31st March, 2017 was ₹14,000.
- Write off ₹600 as bad debts.
- Provision for Doubtful Debts is to be maintained @ 5% on Sundry Debtors.
- Provision for Depreciation on Furniture and Fixtures @ 5% p.a. and on Plant and Machinery @ 20% p.a.
- Insurance prepaid was ₹100.
- A fire occurred in the godown and stock of the value of ₹5,000 was destroyed. Insurance Company admitted the claim of ₹3,000 only.
West Bengal WbchseWBCHSE West Bengal Class-XI Commerce Board 2018Subjective· 10mImportance★★★★★est
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Start your 14-day free trial to unlock the full solution →Gross Profit = Rs 39,000, Net Profit = Rs 4,050, and the Balance Sheet totals Rs 88,050.
Working notes:
- WN1 Debtors & provision: Debtors 20,600 - bad debts 600 = 20,000; new provision @ 5% = 1,000; charge to P&L = bad debts 600 + new provision 1,000 - old provision 800 = 800. Debtors in Balance Sheet = 20,000 - 1,000 = 19,000.
- WN2 Depreciation: Furniture 5,000 x 5% = 250; Plant & Machinery 20,000 x 20% = 4,000, plus additions 5,000 x 20% x 6/12 = 500, total 4,500. Furniture carried at 4,750; Plant & Machinery at 25,000 - 4,500 = 20,500.
- WN3 Insurance: 700 - 100 prepaid = 600 charged; prepaid 100 is an asset.
- WN4 Fire: stock lost Rs 5,000 credited to Trading A/c; claim admitted Rs 3,000 is an asset (insurance claim receivable); uninsured Rs 2,000 charged to P&L.
- 'Salaries and Wages' is an indirect expense (P&L); 'Freight Duty' is a direct expense (Trading).
Trading and Profit & Loss Account for the year ended 31 March 2017:
| Particulars | Rs | Particulars | Rs |
|---|---|---|---|
| To Opening Stock | 15,000 | By Sales 1,20,000 less Returns Inward 2,000 | 1,18,000 |
| To Purchases 82,000 less Returns Outward 1,000 | 81,000 | By Closing Stock | 14,000 |
| To Freight Duty | 2,000 | By Loss of Stock by Fire (cost) | 5,000 |
| To Gross Profit c/d | 39,000 | ||
| 1,37,000 | 1,37,000 | ||
| To Trade Expenses | 800 | By Gross Profit b/d | 39,000 |
| To Carriage Outward | 500 | By Rent (premises sublet) | 1,600 |
| To Printing & Stationery | 400 | ||
| To Rent, Rates & Taxes | 4,600 | ||
| To Postage & Telegram | 800 | ||
| To Insurance (700 - 100 prepaid) | 600 | ||
| To Salaries & Wages | 21,300 | ||
| To Depreciation (Furniture 250 + Plant & Mach. 4,500) | 4,750 | ||
| To Provision for Doubtful Debts (600 + 1,000 - 800) | 800 |
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