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:
(a) Closing stock on 31st March, 2022 was Rs. 12,000.
(b) Interest @6.5% p.a. on capital.
(c) Outstanding salary was Rs. 800.
(d) Insurance prepaid Rs. 150.
(e) Depreciation to be done on building at 2% \& on machinery 10%. Provision for Doubtful debt on debtors 5%, commission earned but not received Rs. 200.

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)