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Adjustments in Preparation of Financial Statements 19.13

6. Trial Balance of M/s. Taj & Co. as on 31st March, 2024 was as follows:

Particulars Dr. Balance Particulars Cr. Balance
` `
Purchases 1,62,505 Sales 2,52,400
Sundry Debtors 50,200 Provision for Doubtful Debts 5,200
Opening Stock 26,725 Sundry Creditors 30,526
Wages 23,137 Outstanding Wages 4,000
Salaries 5,575 Outstanding General Expenses 4,650
Furniture 7,250 Capital 10,000
Postage 4,226 Output CGST 2,000
Power and Fuel 1,350 Output SGST 2,000
General Expenses 5,831
Bad Debts 525
Loan to Suraj @ 10% p.a. (1st Dec., 2023) 3,000
Cash at Bank 10,000
Drawings 4,452
Input CGST 3,000
Input SGST 3,000
3,10,776 3,10,776

Prepare Trading and Profit & Loss Account for the year ended 31st March, 2024 and
Balance Sheet after considering the following information:
(i) Depreciation on Furniture @ 10% to be charged.
(ii) Debtors include an amount of ` 500 due from a customer who has become insolvent.
(iii) Provision for Doubtful Debts @ 5% on Sundry Debtors is to be maintained.
(iv) Goods costing ` 1,500 were destroyed by fire and insurance company admitted
a claim for ` 1,000.
(v) Stock on 31st March, 2024 was ` 12,550.
Solution: TRADING AND PROFIT & LOSS ACCOUNT
Dr. for the year ended 31st March, 2024 Cr.
Particulars ` Particulars `
To Opening Stock 26,725 By Sales 2,52,400
To Purchases 1,62,505 By Closing Stock 12,550
Less: Goods Lost by Fire 1,500 1,61,005
To Wages 23,137
To Power and Fuel 1,350
To Gross Profit c/d 52,733
(Transferred to Profit and Loss A/c)
2,64,950 2,64,950
To Depreciation on Furniture 725 By Gross Profit b/d 52,733
To Goods Lost by Fire (` 1,500 – ` 1,000) 500 By Provision for Doubtful Debts:
To Salaries 5,575 Existing 5,200
To Postage 4,226 Less: Bad Debts ` (525 + 500) 1,025
To General Expenses 5,831 4,175
To Net Profit transferred to Capital A/c 37,666 Less: Provision for Doubtful Debts
(5% on ` 49,700) 2,485 1,690
By Interest on Loan (` 3,000 × 10/100 × 4/12) 100
54,523 54,523