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Question -

Prepare a trading and profit and loss account for the year ending December 31, 2017 from the balances extracted of M/s Rahul Sons. Also prepare a balance sheet at the end of the year.

Account Title

Amount

₹

Account Title

Amount

₹

Stock

50,000

Sales

1,80,000

Wages

3,000

Purchases return

2,000

Salary

8,000

Discount received

500

Purchases

1,75,000

Provision for doubtful debts

2,500

Sales return

3,000

Capital

3,00,000

Sundry Debtors

82,000

Bills payable

22,000

Discount allowed

1,000

Commission received

4,000

Insurance

3,200

Rent

6,000

Rent Rates and Taxes

4,300

Loan

34,800

Fixtures and fittings

20,000

Trade expenses

1,500

Bad debts

2,000

Drawings

32,000

Repair and renewals

1,600

Travelling expenses

4,200

Postage

300

Telegram expenses

200

Legal fees

500

Bills receivable

50,000

Building

1,10,000

5,51,800

5,51,800
Adjustments
1. Commission received in advance ₹ 1,000.
2. Rent receivable ₹ 2,000.
3. Salary outstanding ₹ 1,000 and insurance prepaid ₹ 800.
4. Further bad debts ₹ 1,000 and provision for doubtful debts @ 5% on debtors and discount on debtors @ 2%.
5. Closing stock ₹ 32,000.
6. Depreciation on building @ 6% p.a.



Answer -

Books of M/s. Rahul Sons.

Trading Account for the year ending December 31, 2017

Dr.

Cr.

Particulars

Amount

₹

Particulars

Amount

₹

Opening Stock

50,000

Sales

1,80,000

Purchases

1,75,000

Less: Sales Returns

3,000

1,77,000

Less: Purchase Returns

2,000

1,73,000

Closing Stock

32,000

Wages

3,000

Gross Loss

17,000

2,26,000

2,26,000

Profit and Loss Account for the year ending December 31, 2017

Dr.

Cr.

Particulars

Amount

₹

Particulars

Amount

₹

Gross Loss

17,000

Discount Received

500

Salary

8,000

Commission Received

4,000

Add: Outstanding Salary

1,000

9,000

Less: Advance Commission

1,000

3,000

Discount Allowed

1,000

Insurance

3,200

Rent

6,000

Less: Insurance Prepaid

800

2,400

Add: Rent Receivable

2,000

8,000

Rent Rates and Taxes

4,300

Trade Expenses

1,500

Net Loss

43,189

Bad-Debts

2,000

Add: Further Bad-Debts

1,000

Add: New Provision

4,050

Less: Old Provision

2,500

4,550

Discount on Debtors

1,539

Postage

300

Telegram Expenses

200

Depreciation on Building

6,600

Repair and Renewals

1,600

Travelling Expenses

4,200

Legal Fees

500

54,689

54,689

 

Balance Sheet for the year ending December 31, 2017

Liabilities

Amount

₹

Assets

Amount

₹

Capital

3,00,000

Debtors

82,000

Less: Net Loss

43,189

Less: Further Bad-Debts

1,000

Less: Drawings

32,000

2,24,811

Less: New Provision

4,050

Bills Payable

22,000

Less: Discount on Debtors (on ₹ 76,950)

1,539

75,411

Loan

34,800

B/R

50,000

Advance Commission

1,000

Buildings

1,10,000

Outstanding Salary

1,000

Less: 6% Depreciation

6,600

1,03,400

Rent Receivable

2,000

Prepaid Insurance

800

Closing Stock

32,000

Furniture and Fittings

20,000

2,83,611

2,83,611

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