The following is the schedules of balances as on 31-03-2023 extracted from the books of M/s RM & Co. Particulars Debit Credit Bank charges Building...

Question

The following is the schedules of balances as on 31-03-2023 extracted from the books of M/s RM & Co. Particulars Debit Credit Bank charges Buildings Capital A/c Carriage Outwards Cash at bank Cash in hand Discount allowed Discount received Drawings Electricity Charges Freight on purchases Furniture & fixtures General office expenses Insurance Premium Interest on loan Loan Printing and Stationery Purchase Returns Purchases Rent for Godown Salaries Sales Sales Returns Stock on 1-4-2022 Sundry Creditors Sundry Debtors Vehicles Vehicles running expenses 24,000 9,00,000 30,000 39,000 21,000 36,000 1,80,000 33,000 18,000 3,21,000 45,000 82,500 35,000 27,000 21,30,000 82,500 1,65,000 63,000 9,30,000 12,90,000 3,00,000 54,000 19,48,000 24,000 6,00,000 39,000 35,50,000 6,45,000 TOTAL 68,06,000 68,06,000 Prepare Trading and Profit & Loss Account for the year ended 31st March 2023 and the Balance Sheet as at that date after making provision for the following: (i) Value of stock as on 31-3-2023 is ₹ 4,10,000. This includes goods re- turned by customers on 31st March, 2023 to the value of 22,000 for which no entry has been passed in the books. (ii) Purchases include furniture purchased on 1-10-2022 for 30,000. (iii) Depreciate : (1) Building by 5% (2) Furniture and Fixtures by 10% (3) Vehicles by 20% (iv) Sundry debtors include ₹ 35,000 due from Goku and Sundry creditors include 25,000 due to him. (v) Provision for bad debts is to be maintained at 4% of Sundry Debtors. (vi) Insurance premium includes ₹ 42,000 paid towards proprietor's life insurance policy and the balance of the insurance charges cover the period from 1-5-2022 to 30-4-2023. [Dec. 2023, 15 Marks]

Accepted Answer

Answer Solution: Trading & Profit & Loss A/c for the year ended 31st March, 2023 Particulars Amount Particulars Amount To Opening stock To Purchases 21,30,000 Less: Returns (39,000) Less: Purchase of Furniture (30,000) To Freight on Purchases To Gross Profit c/ d 9,30,000 20,61,000 18,000 8,66,000 By Sales 35,50,000 Less: Sales returns (63,000) Less: Not recorded (22,000) By Closing Stock 34,65,000 4,10,000 TOTAL 38,75,000 TOTAL 38,75,000 To Bank Charges To Carriage outwards To Discount allowed To Electric charges To General office expenses To Insurance Premium 82,500 Less: Drawings LIC (42,000) Less: Prepaid (3,375) To Interest on Loan To Printing To Rent of Godown To Salaries To Vehicle Running Expenses To Depreciation: On Building 45,000 On Furniture & Fix. 33,600 On Vehicles 60,000 To Provision for bad debts To Net profit 24,000 30,000 36,000 33,000 45,000 37,125 35,000 27,000 82,500 1,65,000 54,000 1,38,600 49,720 1,33,055 By Gross profit b/d By Discount Received 8,66,000 Total 8,90,000 Total 8,90,000 Balance Sheet as on 31st March, 2023 Liabilities Amount Assets Amount Capital 19,48,000 Less: Drawings (1,80,000) Less: LIC payment (42,000) Add: Net profit 1,33,055 Loan Creditors 6,45,000 Less: Due from Goku (25,000) 18,59,055 6,00,000 6,20,000 Building 9,00,000 Less: Dep. (45,000) Cash at Bank Cash in hand Furniture & Fixtures 3,21,000 Add: Purchase of Furniture 30,000 Less: Dep (1) (33,600) Debtors 12,90,000 Less: Returns not Recorded (22,000) Less: Due to Goku (25,000) Less: Prov. for bad Debts (49,720) Vehicles 3,00,000 Less: Depreciation (60,000) Closing Stock Prepaid insurance 8,55,000 39,000 21,000 3,17,400 11,93,280 2,40,000 4,10,000 3,375 Total 30,79,055 Total 30,79,055 Working Note 1: Depreciation on Furniture & Fixtures: 3,21,000 X 10% = 32,100 30,000 x 10% x ½ = 1,500 33,600

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