Question

From the following balances extracted from the books of Raga Ltd. Prepare a trading and profit and loss account for the year ended March 31, 20117 and a balance sheet as on that date.

Account Title	Amount Rs	Account Title	Amount Rs
Drawings	20,000	Sales	2,20,000
Land and Buildings	12,000	Capital	1,01,110
Plant and Machinery	40,000	Discount	1,260
Carriage inwards	100	Apprentice premium	5,230
Wages	500	Bills payable	1,28,870
Salary	2,000	Purchases return	10,000
Sales return	200
Bank charges	200
Coal, Gas and Water	1,200
Purchases	1,50,000
Trade Expenses	3,800
Stock (Opening)	76,800
Cash at bank	50,000
Rates and Taxes	870
Bills receivable	24,500
Sundry debtors	54,300
Cash in hand	30,000
	4,66,470		4,66,470

The additional information is as under:
1. Closing stock was valued at the end of the year Rs, 20,000.
2. Depreciation on plant and machinery charged at 5% and land and building at 10%.
3. Discount on debtors at 3%.
4. Make a provision at 5% on debtors for doubtful debts.
5. Salary outstanding was Rs 100 and Wages prepaid was Rs 40.
6. The manager is entitled a commission of 5% on net profit after charging such commission.

Answer 1

Trading Account
Dr.								Cr.
Particulars				Amount Rs	Particulars			Amount Rs
Opening Stock				76,800	Sales		2,20,000
Purchases			1,50,000		Less: Sales Return		200	2,19,800
	Less: Purchases Return		10,000	1,40,000	Closing Stock			20,000
Carriage Inwards				100
Wages			500
	Less: Prepaid		40	460
Coal, Gas and Water				1,200
Gross Profit				21,240
				2,39,800				2,39,800

 

Profit and Loss Account
Dr.					Cr.
Particulars			Amount Rs	Particulars	Amount Rs
Salary		2,000		Gross Profit	21,240
	Add: Outstanding Salary	100	2,100	Discount	1,260
Bank Charges			200	Apprentice Premium	5,230
Trade Expenses			3,800
Rates and Taxes			870
Depreciation on Plant and Machinery			2,000
Depreciation on Land and Building			1,200
Provision for Doubtful Debts			2,715
Discount on Debtors			1,548
Net Profit			13,297
			27,730		27,730
Manager’s Commission			633	Balance b/d	13,297
Net Profit after Commission			12,664
			13,297		13,297

 

Balance Sheet
Liabilities		Amount Rs	Assets		Amount Rs
Capital	1,01,110		Cash at Bank		50,000
Add: Net Profit	12,664		Land and Building	12,000
Less: Drawings	20,000	93,774	Less: Depreciation	1,200	10,800
			Plant and Machinery	40,000
Bills Payable		1,28,870	Less: Depreciation	2,000	38,000
Outstanding Salary		100	Bills Receivable		24,500
Outstanding Manager's Commission		633	Sundry Debtors	54,300
			Less: New Provision	2,715
			Less: Discount on Debtors	1,548	50,037
			Cash in Hand		30,000
			Closing Stock		20,000
			Prepaid Wages		40
		2,23,377			2,23,377