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Question -

From the following information prepare trading and profit and loss account of M/s Indian sports house for the year ending March 31, 2017.

Account Title

Amount

₹

Account Title

Amount

₹

Drawings

20,000

Capital

2,00,000

Sundry debtors

80,000

Return outwards

2,000

Bad debts

1,000

Bank overdraft

12,000

Trade Expenses

2,400

Provision for bad debts

4,000

Printing and Stationery

2,000

Sundry creditors

60,000

Rent Rates and Taxes

5,000

Bills payable

15,400

Freight

4,000

Sales

2,76,000

Return inwards

7,000

Opening stock

25,000

Purchases

1,80,000

Furniture and Fixture

20,000

Plant and Machinery

1,00,000

Bills receivable

14,000

Wages

10,000

Cash in hand

6,000

Discount allowed

2,000

Investments

40,000

Motor car

51,000

5,69,400

5,69,400
Adjustments
1. Closing stock was ₹ 45,000.
2. Provision for doubtful debts is to be maintained @ 2% on debtors.
3. Depreciation charged on: furniture and fixture @ 5%, plant and Machinery @ 6% and motor car @ 10%.
4. A Machine of ₹ 30,000 was purchased on October 01, 2016.
5. The manager is entitle to a commission of @ 10% of the net profit after charging such commission.



Answer -

Trading Account

Dr.

Cr.

Particulars

Amount

₹

Particulars

Amount

₹

Opening Stock

25,000

Sales

2,76,000

Purchases

1,80,000

Less: Return Inwards

7,000

2,69,000

Less: Return Outwards

2,000

1,78,000

Closing Stock

45,000

Wages

10,000

Freight

4,000

  Gross Profit

97,000

3,14,000

3,14,000

Profit and Loss Account

Dr.

Cr.

Particulars

Amount

₹

Particulars

Amount

₹

Trade Expenses

2,400

Gross Profit

97,000

Printing and Stationery

2,000

Old Provision for Bad Debts

4,000

Rent Rates and Taxes

5,000

Less: Bad Debts

1,000

Discount Allowed

2,000

Less: New Provision

1,600

1,400

Depreciation on Motor Car

5,100

Depreciation on Furniture and Fixtures

1,000

*Depreciation on P & M of ₹ 70,000

4,200

**Depreciation on P & M of ₹ 30,000

900

Net Profit Before Manager’s Commission

75,800

1,02,400

1,02,400

Manager’s Commission

6,891

Net Profit After Commission

68,909

Balance b/d

75,800

75,800

75,800

 

Balance Sheet

Liabilities

Amount

₹

Assets

Amount

₹

Capital

2,00,000

Cash in Hand

6,000

Add: Net Profit

68,909

Sundry Debtors

80,000

Less: Drawings

20,000

2,48,909

Less: New Provision

1,600

78,400

O/S Manager’s Commission

6,891

Furniture and Fixtures

20,000

Bank Overdraft

12,000

Less: Depreciation

1,000

19,000

Creditors

60,000

Bills Payable

15,400

Plant and Machinery

1,00,000

Less: Depreciation 1*

4,200

Less: Depreciation 2**

900

94,900

Bills Receivable

14,000

Investments

40,000

Motor Car

51000

Less: Depreciation

5100

45,900

Closing Stock

45,000

3,43,200

3,43,200

WorkingNotes

1. Manager’sCommission

= Net Profit before commission ×

10

110

= 75,800 ×

10

110

= ₹ 6,891

2. Out of themachinery of ₹ 1, 00,000, ₹ 30,000 worth of machinery was purchased on01/October/2016. Therefore, the depreciation on this machinery will be for 6months at 6% p.a.

*Depreciation on machinery (30,000) =

30,000 ×

6

×

6

= ₹ 900

12

100

**The rest of the machinery of ₹ 70,000 will bear depreciation at 6% p.a.

 

Depreciation on machinery (70,000) =

70,000 ×

6

= ₹ 900

12

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