Q1) The following is the Trial Balance of Shri Om, as on 31st March 2009.

You are required to

prepare the Trading and P&L Account for the year ended 31st March, 2009 and balance Sheet as
on that date after making the necessary adjustment.

Particulars Dr. Cr.

Sundry debtors 5,00,000
Sundry creditors ------------ 2,00,000
Outstanding liabilities for expenses 55,000
Wages 1,00,000
Carriage outwards 1,10,000
Carriage inwards 50,000
General expenses 70,000
Cash discounts 20,000
Bad debts 10,000
Motor car 2,40,000
Printing & Stationary 15,000
Furniture & fittings 1,10,000
Advertisement 85,000
Insurance 45,000
Salesmen’s commission 87,500
Postage & telephone 57,500
Salaries 1,60,000
Rates & taxes 25,000
Drawings 20,000
Capital account --------- 14,43,000
Purchases 15,50,000
Sales ------------- 19,87,000
Stock on 1-4-2008 2,50,000
Cash at bank 60,000
Cash at hand 10,500

36,30,500 36,30,500

The following adjustments are to be made:

1) Stock on 31st March, 2009 was valued at ₹7,25,000.
2) A provision for bad and doubtful debts is to be created to the extent of 5% on debtors.
3) Depreciate:
Furniture & fittings by 10%.
Motor car by 20%.
4) Shri Om had withdrawn goods worth ₹25,000 during this year.
5) Sales include goods worth ₹75,000 sent out to Shanti & company on approval and
remaining unsold on 31st March ,2009. The cost of goods was ₹50,000.
6) The salesman was entitled to a Commission of 5% on total sales.
7) Debtors included ₹25,000 bad debts.
8) Printing expenses of ₹55,000 relating to 2007-08 had not been provided in that year but
was paid in this year by debiting outstanding liabilities.
9) Purchases include purchase of Furniture worth ₹ 50,000.
Solution:
Shri Om’s
Trading and Profit and Loss Account
For the year ended 31ST March 2009

Particulars Amt. Particulars Amt.

To Opening Stock 2,50,000 By Sales 19,87,500

To Purchases 15,50,000 Less:Goods 75,000 19,12,500
Less: Drawings 25,000 Sent on approval
1525000 By Closing Stock 7,25,000
Less:Furniture 50000 14,75,000 Add:Stock on 50,000 7,75,000
To Wages 1,00,000 Approval
To Carriage Inwards 50,000
To Gross Profit c/d 8,12,500
26,87,500 26,87,500

To Salaries 1,60,000 By Gross Profit b/d 8,12,500

To Rent And Taxes 25,000
To Postage 57,500
To Insurance 45,000
To Printing & Stationary 15,000
To General Expenses 70,000
To Depreciation 64,000
Furniture(11,000+5,000)
Motor Car 48,000
To Salesman Commission 95,625
(5% on 19,12,500)
To Advt. 85,000
To Carriage Outwards 1,10,000
To Bad Debts 10,000
+Addnl B/D 25,000
+Prov. For B/D 20,000 55,000
To Cash Discounts 20,000
To Net Profit 10,375
8,12,500 8,12,500
 Balance Sheet
As at 31.3.2009
Liabilities Amt. Assets Amt.
Capital 14,43,000 Furniture 1,10,000
Add:Net Profit 10,375 Additional furn. 50,000
14,53,375 1,60,000
Less: Drawings 45,000 Less: Deprn. 16,000 1,44,000
(20K+25K)
14,08,375 Motor Car (240K-48K) 1,92,000
Less Printing and Closing Stock
Stat. of last year 55,000 13,53,375 (7,25,000+50,000) 7,75,000
Sundry Debtors 5,00,000
Sundry Creditors 2,00,000 Less: Goods sent on
Salesman Commission 8,125 Approval 75,000
Outstanding Less: Addnl B/D 25000
(95,625-87,530) 4,00,000
Less : Prov. B/D 20,000 3,80,000
(5% on Debtors)
Cash at Bank 60,000
Cash in hand 10,500
15,61,500 15,61,500