Question

The following balances have been extracted from the books of M/s Green House for the year ended March 31, 2017, prepare trading and profit and loss account and balance sheet as on this date.

Account Title	Amount Rs	Account Title	Amount Rs
Purchases	80,000	Capital	2,10,000
Bank balance	11,000	Bills payable	6,500
Wages	34,000	Sales	2,00,000
Debtors	70,300	Creditors	50,000
Cash in hand	1,200	Return outwards	4,000
Legal expenses	4,000
Building	60,000
Machinery	120,000
Bills receivable	7,000
Office expenses	3,000
Opening stock	45,000
Gas and fuel	2,700
Freight and Carriage	3,500
Factory lighting	5,000
Office furniture	5,000
Patent right	18,800
	4,70,500		4,70,500

Adjustments :
(a) Machinery is depreciated at 10% and buildings depreciated at 6%.
(b) Interest on capital @ 4%.
(c) Outstanding wages Rs 50.
(d) Closing stock Rs 50,000

Answer 1

Trading Account
Dr.					Cr.
Particulars			Amount Rs	Particulars	Amount Rs
Opening Stock			45,000	Sales	2,00,000
Purchases		80,000		Closing Stock	50,000
	Less: Return Outwards	4,000	76,000
Wages		34,000
	Add: Wages Outstanding	50	34,050
Gas and Fuel			2,700
Freight and Carriage			3,500
Factory Lighting			5,000
Gross Profit			83,750
			2,50,000		2,50,000

 

Profit and Loss Account
Dr.				Cr.
Particulars		Amount Rs	Particulars	Amount Rs
To Legal Expenses		4,000	By Gross Profit	83,750
To Office Expenses		3,000
To Depreciation on Machine		12,000
To Depreciation on Building		3,600
To Interest on Capital		8,400
To Net Profit*		52,750
		83,750		83,750

 

Balance Sheet
Liabilities		Amount Rs	Assets		Amount Rs
Capital	2,10,000		Bank Balance		11,000
Add: Interest on Capital	8,400		Debtors		70,300
Add: Net profit	52,750	2,71,150	Cash in Hand		1,200
			Building	60,000
Bills Payable		6,500	Less: Depreciation	3,600	56,400
Creditors		50,000	Machinery	1,20,000
Outstanding Wages		50	Less: Depreciation	12,000	1,08,000
			Bills Receivable		7,000
			Patent Right		18,800
			Office Furniture		5,000
			Closing Stock		50,000
		3,27,700			3,27,700