Question

Following are the ledger balances of Devi as on 31^st December, 2016.

Debit balance	₹	Credit balance	₹
Purchases	35,000	Goodwill	40,000
Salaries	11,750	Sundry debtors	20,500
Drawings	4,500	Furniture	31,000
Opening Stock	6,250	General expenses	3,250
Capital	50,000	Commission received	2,750
Sales	78,500	Loan	44,000
Carriage inwards	21,800	Cash at bank	3,100
Bad debts	600	Provision for bad debts	2,500

Prepare trading and profit and loss account for the year ended 31st December, 2016 and balance sheet as on that date.

1. Stock on 31^st December, 2016 ₹ 5,800.
2. Write off bad debts ₹ 500.
3. Make a provision for bad debts @ 5%.
4. Provide for discount on debtors @ 2%.

Answer 1

Trading and Profit & Loss A/c of Devi
for the year ended 31.12.2016

Dr.					Cr.
Particulars		₹	Particulars	₹	₹
To Opening Stock		6,250	By Sales		78,500
To Purchases		35,000	By Closing Stock		5,800
To Carriage inward		21,800
To Gross profit c/d		21,250
		84,300			84,300
To Salaries		11,750	By Gross profit b/d		21,250
To General expenses		3,250	By Commission received		2,750
To Discount on debtors		380	By Old provision	2,500	400
To Net profit c/d		9,020	Less: Bad debts-  600
			Further bad debts- 500
			New provision- 1,000	2,100
		24,400			24,400

Balance Sheet of Devi as on 31.12.2016

Liabilities	₹	₹	Assets	₹	₹
Capital	50,000	54,520	Goodwill		40,000
Add: Net profit	9,020		Sundry debtors	20,500	18,620
	59,020		Less: Bad debts	500
Less: Drawings	4,500			20,000
Loan		44,000	Less: Provision 5%	1,000
				19,000
			Less: Discount 2%	380
			Cash at bank		3,100
			Furniture		31,000
			Closing stock		5,800
		98,520			98,520