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	1,600
renewals
Travelling	4,200
expenses
Postage	300
Telegram	200
expenses
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 1

Books of M/s. Rahul Sons.
Dr.	Trading Account for the year  ending December 31, 2017				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Opening Stock		50,000	By Sales	1,80,000	1,77,000
To Purchases	1,75,000	1,73,000	Less: Sales Returns	3,000
Less: Purchase Returns	2,000		By Closing Stock		32,000
To Wages		3,000	By Gross Loss c/d		17,000
		2,26,000			2,26,000

 

Dr.	Profit and Loss Account for the year ending December 31, 2017				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Gross Loss b/d		17,000	By Discount  Received		500
To Salary	8,000	9,000	By Commission  Received	4,000
Add: Outstanding Salary	1,000		Less: Advance Commission	1,000	3,000
To Discount Allowed		1,000
To Insurance	3,200	2,400	By Rent	6,000
Less: Insurance Prepaid	800		Add: Rent Receivable	2,000	8,000
To Rent Rates and Taxes		4,300	By Net Loss		43,189
To Trade Expenses		1,500
To Bad-Debts	2,000	6,089
Add: Further Bad-Debts	1,000
Add: New Provision	4,050
Add: Discount	2,500
Less: Old Provision	1,539
To Postage		300
To Telegram Expenses		200
To Depreciation on Building		6,600
To Repair and Renewals		1,600
To Travelling Expenses		4,200
To Legal Fees		500
		54,689			54,689

 

Balance Sheet for the year ending December 31, 2017
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Capital	3,00,000	2,24,811	Debtors	82,000	75,411
Less: Net Loss	43,189		Less: Further Bad-Debts	1,000
Less: Drawings	32,000		Less: New Provision	4,050
Bills Payable		22,000	Less: Discount on Debtors (on ₹ 76,950)	1,539
Loan		34,800	B/R		50,000
Advance Commission		1,000	Buildings	1,10,000	1,03,400
Outstanding Salary		1,000	Less: 6% Depreciation	6,600
			Rent Receivable		2,000
			Prepaid Insurance		800
			Closing Stock		32,000
			Fixtures and Fittings		20,000
		2,83,611			2,83,611