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Harshit Traders are carrying on the retail business of electrical goods. They keep their books of account under single entry system. The Balance Sheet as on 31st March, 2023 was as follows: Liabilities Amount Assets Amount Capital A/c Trade Creditors Salary payable 6,05,000 75,200 9,000 Motor Vehicle Furniture Stock in Trade Trade debtors 6% investments Cash in hand & at bank 1,10,000 73,500 1,70,800 1,45,400 60,000 1,29,500 6,89,200 6,89,200 The summary of Cash and Bank Book for the year ended 31st March, 2024 was given as below: Receipts Amount Payments Amount Cash in hand & at bank on 1st April, 2023 Cash Sales Receipts from Trade Debtors Interest on investments 1,29,500 10,22,400 85,52,000 3,600 Cash Purchases Payment to trade creditors Salaries Rent & Taxes Sundry expenses Drawings Cash in hand & at bank 31st March, 2024 9,48,400 75,45,000 4,12,800 2,51,600 1,38,400 2,40,000 1,71,300 97,07,500 97,07,500 Additional Information: (i) Gross Profit ratio of 12.5% on Sale is maintained throughout the year. (ii) During the year, discount allowed to Trade debtors was for 62,500 and discount received from Trade Creditors amounted to * 35,000. (iii) As on 31st March, 2024, the closing balance of Trade Debtors and Trade Creditors were 2,20,500 and 1,05,600 respectively. (iv) On 31st March, 2024 an amount of 14,800 was outstanding towards Salary. (v) Depreciation @ 10% p.a. to be charged on Motor Vehicle and Furniture. You are required to prepare Trading and Profit & Loss account for the year ended 31st March 2024, and Balance Sheet as on that date. [June 2024, 8 Marks]

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Detailed Solution & Explanation

Trading & Profit & Loss A/ c for the year ended 31st March, 2024 Particulars Amount Particulars Amount To Opening Stock To Purchases (9,48,400 + 76,10,400) To Gross profit c/d (97,12,000 x 12.5%) 1,70,800 85,58,800 12,14,000 By Sales (10,22,400 + 86,89,600 By Closing Stock (Bal. fig.) 97,12,000 2,31,600 Total 99,43,600 Total 99,43,600 To Salary (4,12,800 – 9,000 + 14,800) To Rent & Taxes To Sundry Expenses To Discount Allowed To Depreciation Motor vehicle Furniture To Net Profit 4,18,600 2,51,600 1,38,400 62,500 11,000 7,350 3,63,150 By Gross profit b/d By Discount Received By Interest on Investment 12,14,000 35,000 3,600 12,52,600 12,52,600 Balance Sheet as on 31st March, 2024 Liabilities Amount Assets Amount Capital 6,05,000 Add: Net Profit 3,63,150 Less: Drawings (2,40,000) Trade Creditors Salary Payable 7,28,150 1,05,600 14,800 Motor Vehicles (1,10,000 - 11,000) Furniture (73,500 -7,350) Stock in Trade Trade Debtors 6% Investments Cash in hand & Bank 99,000 66,150 2,31,600 2,20,500 60,000 1,71,300 8,48,550 8,48,550 Working Note:- Debtors A/c Particulars Amount Particulars Amount To Balance b / d To Sales (Bal. fig.) 1,45,400 86,89,600 By Bank A/c By Discount Allowed By Balance c/ d 85,52,000 62,500 2,20,500 88,35,000 88,35,000 Creditors A/c Particulars Amount Particulars Amount To Bank A/c To Discount Received To Balance c/ d 75,45,000 35,000 1,05,600 By Balance b/ d By Purchases (Bal. fig.) 75,200 76,10,400 76,85,600 76,85,600

About This Chapter: Final Accounts

Paper

Paper 1: Accounting

Weightage

25-30%

Key Topics

Sole Proprietor, NPO, Manufacturing

This chapter covers Sole Proprietor, NPO, Manufacturing and is part of Paper 1: Accounting in the CA Foundation exam.

View Official ICAI Syllabus

Exam Strategy Tip

This topic carries 25-30% weightage. Focus on understanding core concepts rather than memorizing.

Key Concepts to Understand

Depreciation

Allocation of the cost of a tangible fixed asset over its useful life due to wear and tear, efflux of time, or obsolescence.

Balance Sheet

A statement showing the financial position of a business at a particular date, listing all assets on one side and all liabilities and capital on the other side. It is not an account but a statement.

Gross Profit

The profit earned from the core trading activities of a business, calculated as Net Sales minus Cost of Goods Sold (COGS). It reflects how efficiently a company uses its direct resources.

Related Comparison Tables

Revenue Expenditure vs Capital Expenditure: AccountsTrading Account vs P&L Account: Final Accounts ExplainedSLM vs WDV Depreciation: CA Foundation Accounts

More Questions from Accounts from Incomplete Records

From the following income and expenditure account of a Club for the year-ending 31 March, 2024, you are required to prepare receipt and payment account for the year ending 31 March, 2024 and Balance Sheet as on 1 April, 2023. INCOME AND EXPENDITURE ACCOUNT For the year ending 31st March, 2024 Expenditure Amount Income Amount To Lawn Maintenance To General Expenses To Stationery (depreciation) To Depreciation on Sports Material To Honorarium To excess of income over expenditure 42,000 13,000 1,500 22,000 10,400 44,500 By Subscription By Admission Fees By Sports Material (sale of 2nd Hand Material) By Entertainment 1,05,000 12,000 2,400 14,000 1,33,400 1,33,400 Additional information 1/04/2023 31/03/2024 Cash at bank 60,000 - Stock of sports material 30,000 - Tournament Fund (after deducting tournament expenses of 14,000) - 6,000 Donations for club Building - 1,40,000 Subscription Due 10,000 15,000 Stationery Stock 4,000 - Stationery was depreciated by 25% and Sports material by 50%, [Jan. 2025, 10 Marks]

Statement of Affairs and Balance Sheet.

Single Entry System & Double Entry System

In net worth method profit or loss of the business is calculated by preparing trading and profit & loss account.

As per Companies Act, 2013, a company may prepare its records under single entry system.

Closing Capital means Opening Capital + Additional Capital + Drawings Profit.

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