Question

From the following information prepare trading and profit and loss account and balance sheet of Kumar for the year ending 31^st December 2017.

Debit balance	₹	Credit balance	₹
Purchases	14,500	Sales	20,100
Coal and fuel	600	Bills payable	400
Carriage inwards	750	Rent received	2,500
Advertisement	500	Creditors	2,000
Carriage outwards	400	Capital	5,000
Bank	1,200
Furniture	8,000
Debtors	2,250
Bills receivable	300
Stock on 1st January, 2017	1,500
	30,000		30,000

Adjustments:

1. The closing stock on 31st December 2017 was valued at ₹ 3,900.
2. Carriage inwards prepaid ₹ 250
3. Rent received in advance ₹ 100
4. Manager is entitled to receive commission @ 5% of net profit after providing such commission.

Answer 1

Trading and Profit & Loss Account of
Kumar for the year ended 31.12.2017

Dr.						Cr.
Particulars		₹	₹	Particulars	₹	₹
To Opening Stock			1,500	By Sales		20,100
To Purchases			14,500	By Closing Stock		3,900
To Coal and Fuel			600
To Carriage inwards		750	500
Less: Prepaid		250
To Gross profit c/d			6,900
			24,000			24,000
To Advertisement			500	By Gross profit b/d		6,900
To Carriage outwards			400	By Rent received	2,500	2,400
To Commission (9,300 - 900 = 8400 × 5/105)			400	Less: Rent received in advance	100
To Net profit c/d			8,000
			9,300			9,300

Balance Sheet of Kumar as on 31.12.2017

Liabilities	₹	₹	Assets	₹
Capital	5,000	13,000	Bank	1,200
Add: Net profit	8,000		Debtors	2,250
Creditors		2,000	Bill receivable	300
Rent received in advance		100	Furniture	8,000
Bills payable		400	Carriage inward prepaid	250
Commission unpaid		400	Closing Stock	3,900
		15,900		15,900