Page 176 - ISCDEBK-XI

Final Accounts—With Adjustments 20.9
The following adjustments are to be made:
(i) Included among the Debtors is ` 3,000 due from Ram and included among the Creditors
` 1,000 due to him.
(ii) Provision for Doubtful Debts be created @ 5% and for Discount @ 2% on Sundry Debtors.
(iii) Depreciation on Furniture and Fittings @ 10% shall be written off.
(iv) Personal Purchases of Hari of ` 600 had been recorded in the Purchases Book.
(v) Interest on Bank Loan shall be provided for the whole year.
(vi) A quarter of the amount of Printing and Stationery Expenses is to be carried forward to
the next year.
(vii) Credit Purchase Invoice amounted to ` 400 had been omitted from the books.
(viii) Stock on 31st March, 2022 was ` 78,600.
Prepare (a) Trading and Profit & Loss Account for the year ended 31st March, 2022 and
(b) Balance Sheet as at 31 March, 2022. [CA (Foundation) Nov., 1995, Modified]

Solution: TRADING AND PROFIT & LOSS ACCOUNT OF HARI
Dr. for the year ended 31st March, 2022 Cr.
Particulars ` Particulars `
To Opening Stock 46,800 By Sales 3,89,600
To Purchases 3,21,700 Less: Returns Inward 8,600 3,81,000
Add: Omitted Purchases 400 By Closing Stock* 78,600
Less: Drawings 600
3,21,500
Less: Returns Outward 5,800 3,15,700
To Carriage Inwards 19,600
To Gross Profit c/d 77,500
4,59,600 4,59,600
To Rent and Taxes 4,700 By Gross Profit b/d 77,500
To Salaries and Wages 9,300 By Discount Earned 4,440
To Bank Interest 1,100
Add: Outstanding 1,700 2,800
To Printing and Stationery 14,400
Less: Prepaid 3,600 10,800
To Discount Allowed 1,800
To General Expenses 11,450
To Insurance 1,300
To Postage and Telegrams 2,330
To Travelling Expenses 870
To Provision for Doubtful Debts (WN 1) 1,150
To Provision for Discount on Debtors (WN 1) 437
To Depreciation on Furniture 500
To Net Profit transferred to Capital A/c 34,503
81,940 81,940

* Closing stock is physically verified at the year end. Thus, closing stock includes goods costing ` 400, the credit
purchase invoice in respect of which has been omitted from books.