From the following schedule of balances extracted from the books of Mr. Piyush, prepare Trading and Profit and Loss Account for the year ended 31 M...

Question

From the following schedule of balances extracted from the books of Mr. Piyush, prepare Trading and Profit and Loss Account for the year ended 31 March, 2024 and the Balance Sheet as on that date after making the necessary adjustments: Particulars Debit Credit Capital Account 8,85,000 Stock on 1.4.2023 3,86,000 Cash in hand 18,500 Cash at Bank 73,500 Investments (at 9%) as on 1.4.2023 50,000 Deposits (at 10%) as on 1.4.2023 3,00,000 Drawings 78,000 Purchase 24,95,000 Sales 29,86,000 Return Inwards 1,10,000 Return outwards 1,38,000 Carriage inwards 1,26,000 Rent 66,000 Salaries 1,15,000 Sundry Debtors 2,35,000 Sundry Creditors 1,37,500 Bank Loan (at 12%) as on 1.10.2023 2,00,000 Furniture as on 1.4.2023 25,000 Interest paid 12,500 Interest received 28,500 Advertisement 40,300 Printing & Statioriery 32,200 Electricity Charges 57,700 Discount Allowed 55,200 Discount received 24,600 Bad debts 18,500 General expenses 36,800 Motor Car Expenses 8,500 Insurance Premium 30,000 Travelling Expenses 21,800 Postage & Courier 8,100 43,99,600 43,99,600 Adjustments: (i) The value of stock as on 31 March, 2024 is 7,65,000. This includes goods returned by customers on 31st March, 2024 to the value of 25,000 for which no entry has been passed in the books. (ii) Purchases include one furniture item purchased on 1st January, 2024 for 10,000. Depreciation @ 10% p.a. is to be provided on furniture. (iii) One months' rent is outstanding and 12,000 is payable towards salary. (iv) Interest paid includes 9,000 paid against Bank loan and Interest received pertains to Investments and Deposits. (iii) Provide for interest payable on Bank Loan and interest receivable on investments and deposits. (iv) Make provision for doubtful debts at 5% on the balance under sundry debtors. (v) Insurance premium includes 18,000 paid towards proprietor's, life insurance policy. [Jan. 2025, 15 Marks]

Accepted Answer

Answer Solution: In the Books of Mr. Piyush Trading and Profit & Loss A/ c for the year ended 31st March, 2024 Particulars Amount Particulars Amount To Opening stock To Purchases 24,95,000 Less: Furniture (10,000) Less: Return Outwards (1,38,000) To Carriage inwards To Gross profit c / d 3,86,000 23,47,000 1,26,000 7,57,000 By Sales 29,86,000 Less: Sales Return Not Recorded (25,000) Less: Returns Inward (1,10,000) By Closing Stock 28,51,000 7,65,000 Total 36,16,000 Total 36,16,000 To Rent 66,000 Add: Outstanding 6,000 To Salaries 1,15,000 Add: Outstanding 12,000 To Interest paid 12,500 Add: Outstanding 3,000 To Advertisements To Printing & Stationery Expenses To Electricity Charges To Discount allowed 72,000 1,27,000 15,500 40,300 32,200 57,700 55,200 By Gross profit b/d By Interest rece. 28,500 Add: Accrued Interest (1) 6,000 By Discount received 7,57,000 34,500 24,600 To Bad Debts 18,500 Add: Provision for Bad debts 10,500 [5% on 2,10,000] To General expenses To Motor Car Expenses To Insurance Prem 30,000 Less: Personal Exp. 18,000 To Travelling Expenses To Postage & Courier To Depreciation on furniture (2) To Net Profit 29,000 36,800 8,500 12,000 21,800 8,100 2,750 2,97,250 TOTAL 8,16,100 TOTAL 8,16,100 Balance Sheet as on 31st March, 2024 Liabilities Amount Assets Amount Capital 8,85,000 Add: Net Profit 2,97,500 Less: Drawings (78,000) Less: Personal Life insurance (18,000) Sundry Creditors Bank Loan Rent Outstanding Salary Outstanding Interest on Loan Outstanding 10,86,250 1,37,500 2,00,000 6,000 12,000 3,000 Cash in Hand Cash at Bank Investments Deposits Sundry Debtors 2,35,000 Less: Sales Return (25,000) Less: 5% Provision for Bad debts Furniture 25,000 Add: Additions 10,000 Less: Dep. (2,750) Stock Interest accrued on Investments & deposits (1) 18,500 73,500 50,000 3,00,000 2,10,000 (10,500) 32,250 7,65,000 6,000 Total 14,44,750 Total 14,44,750 Working Notes: 1. Calculation of interest accrued Interest on Investment = 50,000 x 9% = 4,500 Interest on Deposit = 3,00,000 x 10% = 30,000 34,500 Less: Interest received (28,500) Interest accrued 6,000 2. Depreciation. on. Furniture = 25,000 x 10% = 2,500 = 10,000 x 10/100 x 3/12 = 250 2,750

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