Question

From the following Trial Balance of M/S Meera and Madhav. Prepare Trading and Profit and Loss Account for the year ended 31st March 2019 and Balance Sheet as on that date. 

Trial Balance as on 31^st March 2019

Debit Balance	Amount ₹	Credit Balance	Amount ₹
Stock (1/4/2018)	25,000	Bank overdraft	5,000
Debtors	80,500	Bills Payable	12,500
Bills Receivable	10,000	Creditors	68,000
Purchases	2,08,500	Sales	3,25,000
Returns	1,000	Outstanding Rent	2,000
Carriage Inward	3,000	Unpaid Wages	1,500
Carriage Outwards	4,500	Capital :
Motor Vehicle	55,000	Meera	75,000
General Expenses	1,800	Madhav	75,000
Export Duty	900	Purchase Return	1000
Advertisement	4,800
(For 3 years from 1/10/2018)
Printing & Stationery	1,200
Drawings :
Meera	3,500
Madhav	2,000
Leasehold Premises	1,10,000
Cash at Bank	45,000
Furniture	8,300
	5,65,000		5,65,000

Adjustments :

1) Closing Stock is valued at  ₹32,000.

2) Provide Provision for Doubtful Debts ₹ 2,000.

3) Create reserve for Discount on Debtors @ 3%.

4) Valued of Leasehold Premises on 31st March 2019 ₹1,00,000.

5) Outstanding Expenses Printing & Stationary ₹500.

Answer 1

Dr.	In the books of M/s Meera and Madhav Trading and Profit and Loss Account for the year ended on 31st March 2019						Cr.
Particulars		Amount ₹	Amount ₹	Particulars	Amount ₹	Amount ₹
To Opening Stock			25,000	By Sales	3,25,000
To Purchase		2,08,500		Less: Sales Return	1,000	3,24,000
Less: Purchase Return		1,000	2,07,500	By Closing Stock		32,000
To Carriage Inward			3,000
To Gross Profit c/d			1,20,500
			3,56,000			3,56,000
To Carriage Outward			4,500	By Gross Profit b/d		1,20,500
To General Expenses			1,800
To Export Duty			900
To Advertisement		4,800
Less: Prepaid Advt.		4,000	800
To Printing & Stationery		1,200
Add : O/s Printing & Stationery		500	1,700
To Written off Leasehold Premises			10,000
To Provision for Doubtful debts (New)			2,000
To R.D.D. (New)			2,355
To Net Profit (Transferred to Capital A/c)
Meera		48,223
Madhav		48,222	96,445
			1,20,500			1,20,500

 

Balance Sheet as on 31st March 2019
Liabilities	Amount ₹	Amount ₹	Assets	Amount ₹	Amount ₹
Capital Account: Meera			Motor Vehicle		55,000
Opening Balance	75,000		Prepaid Advt. Expense		4,000
Add: Net Profit	48,223		Leasehold Premises	1,10,000
Less: Drawings	3,500	1,19,723	Less: Written off	10,000	1,00,000
Capital Account: Madhav			Closing Stock		32,000
Opening Balance	75,000		Debtors	80,500
Add: Net Profit	48,222		Less: Provision for Doubtful Debts	2,000
Less: Drawings	2,000	1,21,222		78,500
Bank Overdraft		5,000	Less : R.D.D. (New)	2,355	76,145
Bills Payable		12,500	Bills Receivable		10,000
Creditors		68,000	Cash at Bank		45,000
O/s Rent		2,000	Furniture		8,300
Unpaid Wages		1,500
O/s Stationery & Printing		500
		3,30,445			3,30,445

Working Notes: 

(1) Advertisement expenses written off to Profit and Loss account during the year 2018 – 19 for six months i.e from 1/10/18 to 31/03/19 

Advertisement expenses W/off

= (Advertisement bill paid) x`1/3xx6/12`

=`4800xx1/3xx6/12`

= ₹ 800

Prepaid advertisement = 4,800 – 800 =  ₹ 4,000

.(2) Reserve for Discount on Debtors

= 3% (Balance in debtors)

= `3/100 (80,500 – 2,000)`

= `3/100 xx 78,500`

=  ₹ 2,355.

(3) The difference of opening balance (₹ 1,10,000) and closing balance (₹ 1,00,000) for leasehold premises to be considered as written off on leasehold premises.