To create the necessary financial statements for Kumbhar and Maroti, we will prepare the Trading and Profit and Loss Account for the year ended 31st March 2020, and a Balance Sheet as on that date.
### 1. Trading Account for the year ended 31st March 2020
Dr. | Trading Account | Cr.
---|---|---
Particulars | ₹ | Particulars | ₹
To Opening Stock | 35,000 | By Sales | 3,30,000
To Purchases | 2,25,200 |
To Wages | 12,000 |
To Factory Expenses | 8,000 |
| | |
Total | 2,80,200 | Total | 3,30,000
| | By Gross Profit c/d to Profit & Loss A/c | 49,800
Total | 3,30,000 | Total | 3,30,000
### 2. Profit and Loss Account for the year ended 31st March 2020
Dr. | Profit and Loss Account | Cr.
---|---|---
Particulars | ₹ | Particulars | ₹
To Salaries and Wages | 4,200 | By Gross Profit b/d | 49,800
To Sundry Expenses | 13,600 | By Discount | 4,000
To Travelling Expenses | 2,000 | By Interest on Investment | 8,000
To Bad Debts | 3,000 |
| | |
Total | 22,800 | Total | 61,800
| | By Net Profit transferred to Capital A/c | 39,000
Total | 61,800 | Total | 61,800
### 3. Balance Sheet as on 31st March 2020
Liabilities | ₹ | Assets | ₹
---|---|---|---
Creditors | 20,000 | Cash | 10,000
Bank Overdraft | 10,000 | Bills Receivable | 6,000
Kumbhar: Capital | 60,000 |
Maroti: Capital | 40,000 |
Add: Net Profit | 39,000 |
| | |
Total Liabilities | 1,29,000 | Total Assets | 16,000
### Explanation of the Statements
1. Trading Account:
- We start with the opening stock of ₹35,000.
- Add purchases of ₹2,25,200, wages of ₹12,000, and factory expenses of ₹8,000.
- The total cost of goods available for sale thus becomes ₹2,80,200.
- Subtract this amount from sales which are ₹3,30,000.
- The resulting Gross Profit is ₹49,800.
2. Profit and Loss Account:
- We transfer the gross profit obtained from the trading account.
- Account for additional incomes like discount (₹4,000) and interest on investment (₹8,000).
- Deduct all operating expenses, namely salaries and wages, sundry expenses, traveling expenses, and bad debts.
- This results in a Net Profit of ₹39,000.
3. Balance Sheet:
- On the liability side, we include creditors (₹20,000), the bank overdraft (₹10,000), and the capital contributions along with the net profit.
- The asset side includes cash and bills receivable.
- The total assets balance out the total liabilities, maintaining the accounting equation.
Dr. | Complete Balance Sheet Prepared | Cr.
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