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Adjustments in Preparation of Financial Statements 19.21

Miscellaneous Expenses ................................................................................................................ 30,000 ...
Creditors ................................................................................................................ ... 3,00,000
Investments ................................................................................................................ 1,00,000 ...
Discount Received ................................................................................................................ ... 15,000
Debtors ................................................................................................................ 2,58,000 ...
Bad Debts ................................................................................................................ 15,000 ...
Provision for Doubtful Debts ................................................................................................................ ... 8,000
Building ................................................................................................................ 3,00,000 ...
Machinery ................................................................................................................ 5,00,000 ...
Furniture ................................................................................................................ 40,000 ...
Commission on Sales ................................................................................................................ 45,000 ...
Interest on Investments ................................................................................................................ ... 12,000
Insurance (up to 31st July, 2024) ................................................................................................................ 24,000 ...
Bank Balance ................................................................................................................ 1,50,000 ...
Input CGST ................................................................................................................ 6,000 ...
Input SGST ................................................................................................................ 6,000 ...
Output CGST ................................................................................................................ ... 10,000
Output SGST ................................................................................................................ ... 10,000

Total 34,65,000 34,65,000

Adjustments:
(i) Closing Stock ` 2,25,000.
(ii) Machinery of ` 45,000 plus CGST and SGST @ 6% each purchased on 1st October, 2023
was shown as Purchases. Freight paid on the Machinery was ` 5,000, which is included
in Freight on Purchases.
(iii) Commission is payable at 2½% on sales plus CGST and SGST @ 6% each.
(iv) Investments were sold at 10% profit, but the entire sales proceeds have been taken as
Sales.
(v) Write off Bad Debts ` 10,000 and create Provision for Doubtful Debts at 5% of Debtors.
(vi) Depreciate Building by 2½% p.a. and Machinery and Furniture at 10% p.a.
Prepare Trading and Profit & Loss Account for the year ended 31st March, 2024 and Balance
Sheet as at that date.
[Ans.: Gross Profit—` 7,08,000; Net Profit—` 3,80,600; Balance Sheet Total—` 14,44,600.]

[Hints:

1. Sale of Investments of ` 1,10,000 will be deducted from sales.
2. Out of Purchases, purchase of machinery worth ` 45,000 will be deducted and freight
paid on this machinery ` 5,000 will also be deducted from Freight on Purchases.
3. Machinery will appear in the Balance Sheet as follows: ` 5,00,000 + ` 45,000 (1st Oct.,
2023) + ` 5,000 (Freight) – ` 52,500 (Depreciation) = ` 4,97,500.]