Page 172 - ISCDEBK-XI

Final Accounts—With Adjustments 20.5
(ii) Outstanding Expenses: Rent ` 500, Salary ` 600.

(iii) Prepaid Expenses: Insurance ` 250, Wages ` 400.
(iv) Goods costing ` 2,750 were taken for personal use by the owner but no entry has
been made.

(v) Depreciate Plant and Machinery and Furniture @ 10% p.a.
(vi) Write off ` 500 from debtors as bad debts and create provision for doubtful debts @ 5%
and 2% provision for discount on debtors.

Solution: TRADING AND PROFIT & LOSS ACCOUNT
Dr. for the year ended 31st March, 2022 Cr.

Particulars ` Particulars `
To Purchases (Adjusted) 1,93,500 By Sales 3,00,000
Less: Drawings 2,750 1,90,750
To Wages 23,250
Less: Prepaid 400 22,850
To Carriage on Purchases 18,000
To Gross Profit c/d 68,400
3,00,000 3,00,000
To Salaries 13,500 By Gross Profit b/d 68,400
Add: Outstanding 600 14,100 By Interest on Investment 700
To Rent and Insurance 7,750 By Cash Discount 4,500
Add: Outstanding Rent 500
8,250
Less: Prepaid Insurance on 31.3.2022 250
8,000
Add: Prepaid Insurance on 1.4.2021 625 8,625
To Bad Debts 600
Add: Further Bad Debts 500
Provision (New) 1,850
2,950
Less: Provision (Old) 2,500 450
To Provision for Discount on Debtors 703
To Depreciation:
on Plant and Machinery* 5,500
on Furniture 1,050 6,550
To Net Profit transferred to Capital A/c 43,172

73,600 73,600
*Depreciation on Plant and Machinery = ` 5,000 (i.e., ` 50,000 × 10/100) + ` 500 (i.e., ` 10,000 × 10/100 × 6/12)
= ` 5,500.