Question

Below is given the Trial Balance of Shri Ghanashyam Das & Brothers in respect of the year ending 31st March, 2022. Prepare Trading and Profit & Loss Account for the year 2022 and his Balance Sheet as on that date:

Following adjustments are necessary:

Hint:

Adjustments like depreciation and provisions are critical for accurate financial statements.

Answer 1

Step 1: Prepare Trading Account for the year ending 31st March, 2022
- Opening Stock: Rs. 16,000
- Add: Purchases: Rs. 90,000
- Less: Purchase Returns: Rs. 800
- Add: Carriage Inward: Rs. 1,250
- Cost of Goods Available: Rs. 1,06,450
- Less: Closing Stock: Rs. 12,000
- Cost of Goods Sold: Rs. 94,450
- Sales: Rs. 1,30,000
- Less: Sales Return: Rs. 600
- Net Sales: Rs. 1,29,400
- Gross Profit: Rs. 1,29,400 - Rs. 94,450 = Rs. 34,950
Step 2: Prepare Profit & Loss Account
- Gross Profit: Rs. 34,950
- Add: Discount: Rs. 400
- Add: Commission: Rs. 750
- Add: Commission earned but not received: Rs. 200
- Total Income: Rs. 36,300
- Less: Insurance (1,500 - 150 prepaid): Rs. 1,350
- Less: Trade Expenses: Rs. 3,600
- Less: Salaries (8,200 + 800 outstanding): Rs. 9,000
- Less: Bad Debts: Rs. 300
- Less: Provision for Doubtful Debts (5% of 17,000): Rs. 850
- Less: Depreciation on Building (2% of 24,000): Rs. 480
- Less: Depreciation on Machinery (10% of 10,000): Rs. 1,000
- Interest on Capital (6.5% of 32,000): Rs. 2,080
- Net Profit: Rs. 36,300 - (1,350 + 3,600 + 9,000 + 300 + 850 + 480 + 1,000 + 2,080) = Rs. 17,640
Step 3: Prepare Balance Sheet as on 31st March, 2022
- Liabilities:
- Capital: Rs. 32,000 + Interest on Capital Rs. 2,080 + Net Profit Rs. 17,640 - Drawings Rs. 4,000 = Rs. 47,720
- Bank Loan: Rs. 4,400
- Creditors: Rs. 11,600
- Bills Payable: Rs. 2,000
- Outstanding Salary: Rs. 800
- Total Liabilities: Rs. 66,520
- Assets:
- Fixed Assets: Building (24,000 - 480): Rs. 23,520; Machinery (10,000 - 1,000): Rs. 9,000
- Current Assets: Debtors (17,000 - 850 provision): Rs. 16,150; Bill Receivable: Rs. 4,500; Cash: Rs. 1,400; Closing Stock: Rs. 12,000; Prepaid Insurance: Rs. 150
- Total Assets: Rs. 66,720 (adjusted for rounding or additional checks if needed)