Question

From the following Trial Balance of M/s Kale and Gore, you are required to prepare Trading and Profit and Loss Account for the year ended 31st March, 2013 and Balance Sheet on that date. They share profits and losses in their capital ratio.

                    Trial Balance as on 31^st March, 2013

Debit Balance	Amount (₹)	Credit Balance	Amount (₹)
Opening stock	28,000	Capital A/c
Purchases	1,16,400	Kale	80000
Trade Expenses	2,400	Gore	40000
Royalties	6,200	Sundry Creditors	54000
Wages and Salaries	14,800	Sales	212000
Advertisement	8,200	Reserve for Doubtful Debts	1800
Salaries	11,000	Bills payable	36000
Plant and Machinery	44,000
Freehold Property	36,000
Office Rent	4000
Motor Van	63000
Bills Receivable	16000
Sundry Debtors	60000
Cash in hand	10000
Bad debts	1000
General expenses	2,800
	423800		423800

Adjustments:

1. Closing stock was valued at cost Rs 76,000 while its market price was Rs 80,000.
2. Uninsured goods worth Rs 10,000 were stolen.
3. Goods worth Rs 10,000 were sold and delivered on 31st March 2013, but on entry is passed sales book.
4. Depreciate Plant and Machinery at 10% and Motor van at 15% p.a.
5. Bills Receivable includes a dishonoured bill of Rs 4,000.
6. Create a reserve for doubtful debts at 5% on Debtors.

Answer 1

Dr.	Trading Account for the year ended 31st March 2013				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Opening Stock		28000	By Sales	212000	222000
To Purchases	116400	106400	Add: Additional Sale	10000
Less: Goods Stolen	10000		By Closing Stock		76000
To Wages and Salaries		14800
To Trade Expenses		2400
To Royalties		6200
To Gross Profit (Balancing Figure)		140200
		298000			298000

 

Dr.	Profit and Loss Account for the year ended 31st March 2013				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Advertisement		8200	By Gross Profit		140200
To Salaries		11000
Depreciation on:
To Plant and Machinery	4400	13850
To Motor Van	9450
To Office Rent		4000
To Bad Debts	1000	2900
Add: New Reserve for Doubtful Debts	3700
Less: Old Reserve  for Doubtful Debts	1800
To General Expenses		2800
To Loss of Goods		10000
To Net Profit (Balancing Figure)		87450
Kale	58300
Gore	29150
		140200			140200

 

Balance Sheet as on 31st March 2013
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Capital of Kale	80000	138300	Fixed Assets:
Add: Net Profit	58300		Motor Van	63000	53550
Capital of Gore	40000	69150	Less: 15% Depreciation	9450
Add: Net Profit	29150		Plant and Machinery	44000	39600
Current Liabilities:			Less: 10% Depreciation	4400
Creditors		54000	Freehold Property		36000
Bills Payable		36000	Current Assets:
			Closing Stock		76000
			Debtors	60000	70300
			Add: Additional	10000
			Add: B/R Dishonor	4000
			Less: Reserve for Doubtful Debts	3700
			Bills Receivable (16,000 − 4,000)		12000
			Cash in Hand		10000
		297450			297450