Page 178 - ISCDEBK-XI

Final Accounts—With Adjustments 20.11
You are required to provide for depreciation on Building at 5% p.a.; on Machinery at 25% p.a.;
on Furniture at 10% p.a. Provision for Doubtful Debts is to be made at 5% on Sundry Debtors.
Raman’s manager is entitled to a commission of 10% on the net profit after charging his
commission. Closing Stock was not taken on 31st March but only on 7th April.
Following transactions had taken place during the period from 1st April to 7th April: Sales
` 2,50,000; Purchases ` 1,50,000; Stock on 7th April was ` 1,80,000 and the rate of gross profit on
sales was 20%. Insurance premium mentioned in the Trial Balance was in respect of building
and machineries. Interest on mortgage loan to be provided up to 31st March, 2022.
[CA (Foundation) May, 1997, Modified]
Solution: TRADING AND PROFIT & LOSS ACCOUNT OF RAMAN
Dr. for the year ended 31st March, 2022 Cr.
Particulars ` Particulars `
To Opening Stock 1,20,000 By Sales 32,20,000
To Purchases 25,00,000 Less: Sales Return 1,20,000 31,00,000
Less: Purchases Return 1,00,000 24,00,000 By Closing Stock (WN 1) 2,30,000
To Gross Profit c/d 8,10,000
33,30,000 33,30,000
To Rent 60,000 By Gross Profit b/d 8,10,000
To Establishment Expenses 1,80,000
To Electricity Charges 15,000
To Telephone Charges 10,000
To Commission on Sales 30,000
To Insurance Premium 10,000
To Bad Debts 20,000
To Interest on Loan 45,000
To Depreciation on Building 25,000
To Depreciation on Machineries 50,000
To Depreciation on Furniture 10,000
To Provision for Doubtful Debts 25,000
To Manager’s Commission (WN 2) 30,000
To Net Profit transferred to Capital A/c 3,00,000
8,10,000 8,10,000

BALANCE SHEET OF RAMAN as at 31st March, 2022
Liabilities ` Assets `
Current Liabilities: Current Assets:
Outstanding Manager’s Commission 30,000 Cash in Hand 10,000
Sundry Creditors 4,00,000 Cash at Bank 90,000
Loans: Sundry Debtors 5,00,000
15% p.a. Loan (on Mortgage Less: Provision for Doubtful Debts 25,000 4,75,000
of Building) 3,00,000 Bills Receivable 75,000
Add: Interest due 45,000 3,45,000 Closing Stock 2,30,000
Capital Account: Fixed Assets:
Opening Balance 5,20,000 Furniture 1,00,000
Add: Net Profit 3,00,000 8,20,000 Less: Depreciation 10,000 90,000
Machineries 2,00,000
Less: Depreciation 50,000 1,50,000
Building 5,00,000
Less: Depreciation 25,000 4,75,000
15,95,000 15,95,000