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 & Stationery | 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 | | | TOTAL | 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. (v) Provide for interest payable on Bank Loan and interest receivable on investments and deposits. (vi) Make provision for doubtful debts at 5% on the balance under sundry debtors. (vii) Insurance premium includes 18,000 paid towards proprietor's life insurance policy. [Jan. 2025, 15 Marks]

Accepted Answer

Option : Correct Option. Solution: In the Books of Mr. Piyush Trading and Profit & Loss A/c for the year ended 31st March, 2024 | Particulars | Amount (₹) | Amount (₹) | Particulars | Amount (₹) | Amount (₹) | | :--- | :---: | ---: | :--- | :---: | ---: | | To Opening stock | | 3,86,000 | By Sales | 29,86,000 | | | To Purchases | 24,95,000 | | Less: Sales Return Not Recorded | (25,000) | | | Less: Furniture | (10,000) | | Less: Returns Inward | (1,10,000) | 28,51,000 | | Less: Return Outwards | (1,38,000) | 23,47,000 | By Closing Stock | | 7,65,000 | | To Carriage inwards | | 1,26,000 | | | | | To Gross profit c/d | | 7,57,000 | | | | | TOTAL | | 36,16,000 | TOTAL | | 36,16,000 | | To Rent | 66,000 | | By Gross profit b/d | | 7,57,000 | | Add: Outstanding | 6,000 | 72,000 | By Interest received | 28,500 | | | To Salaries | 1,15,000 | | Add: Accrued Interest (1) | 6,000 | 34,500 | | Add: Outstanding | 12,000 | 1,27,000 | By Discount received | | 24,600 | | To Interest paid | 12,500 | | | | | | Add: Outstanding | 3,000 | 15,500 | | | | | To Advertisements | | 40,300 | | | | | To Printing & Stationery Expenses | | 32,200 | | | | | To Electricity Charges | | 57,700 | | | | | To Discount allowed | | 55,200 | | | | | To Bad Debts | 18,500 | | | | | | Add: Provision for Bad debts | 10,500 | 29,000 | | | | | [5% on 2,10,000] | | | | | | | To General expenses | | 36,800 | | | | | To Motor Car Expenses | | 8,500 | | | | | To Insurance Prem | 30,000 | | | | | | Less: Personal Exp. | (18,000) | 12,000 | | | | | To Travelling Expenses | | 21,800 | | | | | To Postage & Courier | | 8,100 | | | | | To Depreciation on furniture (2) | | 2,750 | | | | | To Net Profit | | 2,97,250 | | | | | TOTAL | | 8,16,100 | TOTAL | | 8,16,100 |
Balance Sheet as on 31st March, 2024 | Liabilities | Amount (₹) | Amount (₹) | Assets | Amount (₹) | Amount (₹) | | :--- | :---: | ---: | :--- | :---: | ---: | | Capital | 8,85,000 | | Cash in Hand | | 18,500 | | Add: Net Profit | 2,97,500 | | Cash at Bank | | 73,500 | | Less: Drawings | (78,000) | | Investments | | 50,000 | | Less: Personal Life insurance | (18,000) | 10,86,250 | Deposits | | 3,00,000 | | Sundry Creditors | | 1,37,500 | Sundry Debtors | 2,35,000 | | | Bank Loan | | 2,00,000 | Less: Sales Return | (25,000) | | | Rent Outstanding | | 6,000 | | 2,10,000 | | | Salary Outstanding | | 12,000 | Less: 5% Provision for Bad debts | (10,500) | 1,99,500 | | Interest on Loan Outstanding | | 3,000 | Furniture | 25,000 | | | | | | Add: Additions | 10,000 | | | | | | Less: Dep. | (2,750) | 32,250 | | | | | Stock | | 7,65,000 | | | | | Interest accrued on Investments & deposits (1) | | 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 - Total: 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 - Total: 2,750

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Depreciation

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