Answered

From the following Trial Balance and Adjustments given below, prepare the Trading and Profit and Loss Account for the year ended on [tex]$31^{\text{st}}$[/tex] March, 2016 and Balance Sheet as of that date for M/s Durgesh and Dinesh:

Trial Balance as on [tex]$31^{\text{st}}$[/tex] March, 2016

\begin{tabular}{|l|r|l|r|}
\hline
\multicolumn{1}{|c|}{Debit Balance} & \begin{tabular}{c}
Amount \\
(₹)
\end{tabular} & \multicolumn{1}{|c|}{Credit Balance} & \begin{tabular}{c}
Amount \\
(₹)
\end{tabular} \\
\hline
Opening stock & 9,000 & Capital A/c's & \\
Cash in hand & 1,200 & Durgesh & 17,500 \\
Discount allowed & 450 & Dinesh & 17,500 \\
Salaries & 650 & Sales & 23,600 \\
Land and building & 25,000 & Sundry creditors & 14,500 \\
Furniture & 9,000 & Bills payable & 3,500 \\
Plant and machinery & 11,000 & Bank loan & 10,000 \\
Sundry debtors & 12,500 & Discount received & 750 \\
Interest paid & 425 & Purchase return & 1,100 \\
Printing and stationery & 600 & & \\
Purchases & 16,000 & & \\
Wages & 1,400 & & \\
Sales return & 900 & & \\
\hline
\end{tabular}

Adjustments:
1. The stock on hand on [tex]$31^{\text{st}}$[/tex] March, 2016 was valued at ₹ 14,500.
2. Outstanding salary was ₹ 350.
3. Wages paid in advance to workers ₹ 600.
4. Depreciate land and building at [tex]$5\%$[/tex] p.a. and plant and machinery at [tex]$10\%$[/tex] p.a.
5. Write off ₹ 500 for further bad debts.



Answer :

GinnyAnswer
Let's break down the problem step-by-step to prepare the Trading and Profit and Loss Account as well as the Balance Sheet for M/s Durgesh and Dinesh.

### 1. Prepare the Trading Account

Trading Account for the year ending 31st March, 2016:

#### Dr. Side (Debit):
- Opening Stock: ₹ 9,000
- Purchases: ₹ 16,000
- Less: Purchase Return: ₹ 1,100
- Net Purchases: ₹ 14,900
- Wages: ₹ 1,400
- Less: Advance Wages: ₹ 600
- Net Wages: ₹ 800

#### Cr. Side (Credit):
- Sales: ₹ 23,600
- Less: Sales Return: ₹ 900
- Net Sales: ₹ 22,700
- Closing Stock: ₹ 14,500

Trading Account:
```
Dr. Side (Debits) | Cr. Side (Credits)
---------------------------------------------------------------------
Opening Stock 9,000 | Sales (Net) 22,700
Purchases (Net) 14,900 | Closing Stock 14,500
Wages (Net) 800
-----------------------
--------------------------------- Total: 37,200
Total: 24,700
---------------------------------------------------------------------
Gross Profit =(Cr. Total - Dr. Total) = ₹ 37,200 - ₹ 24,700 = ₹ 12,500
```

### 2. Prepare the Profit and Loss Account

Profit and Loss Account for the year ending 31st March, 2016:

#### Dr. Side (Debit):
- Salaries: ₹ 650
- Add: Outstanding Salary: ₹ 350
- Total Salaries: ₹ 1,000
- Discount Allowed: ₹ 450
- Interest Paid: ₹ 425
- Printing and Stationery: ₹ 600
- Depreciation:
- Land and Building: 5% of ₹ 25,000 = ₹ 1,250
- Plant and Machinery: 10% of ₹ 11,000 = ₹ 1,100
- Total Depreciation: ₹ 1,250 + ₹ 1,100 = ₹ 2,350
- Bad Debts Written Off: ₹ 500

#### Cr. Side (Credit):
- Gross Profit: ₹ 12,500
- Discount Received: ₹ 750

Profit and Loss Account:
```
Dr. Side (Debits) | Cr. Side (Credits)
---------------------------------------------------------------------
Salaries 1,000 | Gross Profit 12,500
Discount Allowed 450 | Discount Received 750
Interest Paid 425
Printing and Stationery 600
Depreciation:
- Land & Building 1,250
- Plant & Machinery 1,100
Bad Debts 500
----------------------------
Total: 5,325 Total: 13,250
---------------------------------------------------------------------
Net Profit (Cr. Total - Dr. Total) = ₹ 13,250 - ₹ 5,325 = ₹ 7,925
```

### 3. Prepare the Balance Sheet

Balance Sheet as on 31st March, 2016:

Liabilities:
- Sundry Creditors: ₹ 14,500
- Bills Payable: ₹ 3,500
- Bank Loan: ₹ 10,000
- Outstanding Salary: ₹ 350
- Capital Accounts:
- Durgesh: ₹ 17,500
- Dinesh: ₹ 17,500
- Add: Net Profit: ₹ 7,925 (distributed equally as ₹ 3,962.5 for each partner)
- Adjusted Capitals:
- Durgesh: ₹ 17,500 + ₹ 3,962.5 = ₹ 21,462.5
- Dinesh: ₹ 17,500 + ₹ 3,962.5 = ₹ 21,462.5

Assets:
- Cash in Hand: ₹ 1,200
- Sundry Debtors: ₹ 12,500
- Less: Bad Debts Written Off: ₹ 500
- Net Sundry Debtors: ₹ 12,000
- Land and Building:
- ₹ 25,000 - ₹ 1,250 (Depreciation) = ₹ 23,750
- Plant and Machinery:
- ₹ 11,000 - ₹ 1,100 (Depreciation) = ₹ 9,900
- Furniture: ₹ 9,000
- Closing Stock: ₹ 14,500
- Printing and Stationery: ₹ 600
- Wages Paid in Advance: ₹ 600

Liabilities:
```
Liabilities | Amount (₹)
-----------------------------------------------------
Sundry Creditors | 14,500
Bills Payable | 3,500
Bank Loan | 10,000
Outstanding Salary | 350
Capital Account:
- Durgesh | 21,462.5
- Dinesh | 21,462.5
-----------------------------------------------------
Total Liabilities | 71,275
```

Assets:
```
Assets | Amount (₹)
-----------------------------------------------------
Cash in Hand | 1,200
Sundry Debtors (Net) | 12,000
Land and Building (Net) | 23,750
Plant and Machinery (Net) | 9,900
Furniture | 9,000
Closing Stock | 14,500
Printing and Stationery | 600
Wages Paid in Advance | 600
-----------------------------------------------------
Total Assets | 71,275
```

In this way, we have prepared the Trading and Profit and Loss Account, and the Balance Sheet for M/s Durgesh and Dinesh as on 31st March, 2016.

Other Questions