Q.7. From the following Trial Balance and Adjustments given below, you are required to prepare Trading and Profit and Loss Account for the year ended on [tex]$31^{\text{st}}$ March, 2016[/tex] and Balance Sheet as on that date of [tex]$M/s$[/tex] Durgesh and Dinesh:

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

\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 & \multicolumn{1}{c|}{Durgesh} & 17,500 \\
Discount allowed & 450 & \multicolumn{1}{c|}{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 stationary & 600 & & \\
Purchases & 16,000 & & \\
Wages & 1,400 & & \\
Sales return & 900 & & \\
Bad debts & 325 & & [tex]$88,450$[/tex] \\
\hline
& [tex]$88,450$[/tex] & & \\
\hline
\end{tabular}

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

Question

07-08-2024
Business

Answered

Q.7. From the following Trial Balance and Adjustments given below, you are required to prepare Trading and Profit and Loss Account for the year ended on [tex]$31^{\text{st}}$ March, 2016[/tex] and Balance Sheet as on that date of [tex]$M/s$[/tex] Durgesh and Dinesh:

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

\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 & \multicolumn{1}{c|}{Durgesh} & 17,500 \\
Discount allowed & 450 & \multicolumn{1}{c|}{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 stationary & 600 & & \\
Purchases & 16,000 & & \\
Wages & 1,400 & & \\
Sales return & 900 & & \\
Bad debts & 325 & & [tex]$88,450$[/tex] \\
\hline
& [tex]$88,450$[/tex] & & \\
\hline
\end{tabular}

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

Answer :

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### Step-by-Step Solution:

#### 1. Trading Account for the year ended 31st March 2016

Particulars | ₹ | Particulars | ₹
--- | ---: | --- | ---:
To Opening Stock | 9,000 | By Sales | 23,600
To Purchases | 16,000 | Less: Sales Return | 900
Less: Purchase Return | 1,100 | Net Sales | 22,700
Net Purchases | 14,900 | By Closing Stock | 14,500
To Wages | 1,400 |
Less: Wages Paid in Advance | 600 |
Net Wages | 800 |
| | |
Total Resources | 24,700 | |
To Gross Profit c/d | 13,400 | |
| 38,100 | | 38,100

#### 2. Profit and Loss Account for the year ended 31st March 2016

Particulars | ₹ | Particulars | ₹
--- | ---: | --- | ---:
To Salaries | 650 | By Gross Profit b/d | 13,400
Add: Outstanding Salary | 350 | |
Total Salaries | 1,000 | |
To Discount Allowed | 450 | |
To Interest Paid | 425 | By Sales Return | 900
To Printing and Stationary | 600 | |
To Bad Debts | 325 | |
Add: Further Bad Debts | 500 | Less: Discount Received | 750
Total Bad Debts | 825 | |
To Depreciation: | | |
Land and Building (5%) | 1,250 | |
Plant and Machinery (10%) | 1,100 | |
Total Depreciation | 2,350 | |
| | |
Total Expenses | 5,650.0 | |
To Net Profit c/d | 7,900.0 | |
| 13,400 | | 13,400

#### 3. Balance Sheet as on 31st March 2016

Liabilities | ₹ | Assets | ₹
--- | ---: | --- | ---:
Capital: | | Cash in Hand | 1,200
Durgesh | 17,500 | |
Dinesh | 17,500 | |
Add: Net Profit | 7,900 |
Total Capital: | 42,900 |
| | Land and Building | 25,000
Sundry Creditors | 14,500 | Less: Depreciation | 1,250
| | Book Value | 23,750
Bills Payable | 3,500 | |
Bank Loan | 10,000 | Plant & Machinery | 11,000
Outstanding Salary | 350 | Less: Depreciation | 1,100
| | Book Value | 9,900
| | Furniture | 9,000
| | Sundry Debtors | 12,500
| Less: Further Bad Debts | 500
| Book Value | 12,000
| | Closing Stock | 14,500
| | Wages Paid in Advance | 600
| | |
Total Liabilities | 71,250 | Total Assets | 71,250

Therefore, the total resources, liabilities, and assets ensure that the balance sheet balances with assets matching total capital and total liabilities.