Question

Abraham is in business. The following balances were extracted from the books as on 31.12.2018. You are required to prepare a trading account and a profit and loss account for the year ended 31.12.2018 and a balance sheet as on that date. 

	Debit (₹)	Credit(₹)
Capital		32,000
Drawings	4,240
Purchases less Returns	15,610
Rates and Taxes	388
Salaries	1,612
Lighting and Heating	164
Electric Power	384
Del credere Commission	414
Insurance	206
Advertising	214
Sales less Returns		34,176
Bad Debts Written off	62
Postage, Telegrams, etc.	826
Carriage	754
Opening Stock	6,160
Wages	7,962
Land and Building	15,840
Plant and Machinery	4,034
Furniture and Fittings	378
Sundry Debtors	6,082
Sundry Creditors		4,422
Cash at Bank	5,268
	70,598	70,598

When preparing the accounts it is necessary to take the following matters into consideration: Closing stock on 31.12.2018 was ₹ 8,760.

Answer 1

In the Books of Mr. Abraham
Dr.	Trading and Profit and Loss A/c for the year ended 31st Dec, 2018		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Opening Stock	6,160	By Sales Less Return	34,176
To Purchases Less Return	15,610	By Closing Stock	8,760
To Carriage Inward	754
To Wages	7,962
To Electric Power	384
To Gross Profit	12,066
	42,932		42,932
To Rates & Taxes	388	By Gross Profit	12,066
To Lighting & Heating	164
To Salaries	1,612
To Del Credere Commission	414
To Insurance	206
To Advertising	214
To Bad debt written off	62
To Postage, telegrams etc.	826
To Net Profit	8,180
	12,066		12,066

 

Balance Sheet as on 31.12.2018
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)
Capital	32,000	35,940	Land & Buildings	15,840
Add: Net profit	888		Plant & Machinery	4,034
	40,180		Furniture & Fittings	378
Less: Drawings	(4,240)		Sundry Debtors	6,082
Sundry Creditors		4,422	Cash at bank	5,268
			Closing stock	1,430
		40,362		40,362