Page 179 - ISCDEBK-XI

20.12 Double Entry Book Keeping—ISC XI

Working Notes:
1. Calculation of Closing Stock on 31st March, 2022: `
(a) Stock as on 7th April, 2022 1,80,000
(b) Add: Cost of Goods sold between 1st April, 2022 to 7th April, 2022 (80% of ` 2,50,000) 2,00,000
(c) Less: Cost of Purchases between 1st April, 2022 to 7th April, 2022 1,50,000
Value of stock as on 31st March, 2022 2,30,000
2. Manager’s Commission:
Profit before charging commission = ` 3,30,000
Manager’s Commission = ` 3,30,000 × 10/110 = ` 30,000.
Illustration 6.
Following is the Trial Balance of Arihant as at 31st March, 2022:
Particulars Dr. (`) Cr. (`)
Capital................................................................................................................................................................................... ... 14,00,000
Drawings.............................................................................................................................................................................. 75,000 ...
Opening Stock ................................................................................................................................................................... 80,000 ...
Purchases ............................................................................................................................................................................ 16,20,000 ...
Freight on Purchases ....................................................................................................................................................... 15,000 ...
Wages ................................................................................................................................................................................... 1,10,000 ...
Sales ...................................................................................................................................................................................... ... 25,00,000
Salaries ................................................................................................................................................................................. 1,00,000 ...
Travelling Expenses ......................................................................................................................................................... 23,000 ...
Miscellaneous Expenses ................................................................................................................................................ 35,000 ...
Printing and Stationery .................................................................................................................................................. 27,000 ...
Advertisement Expenses ............................................................................................................................................... 25,000 ...
Postage and Telegrams .................................................................................................................................................. 13,000 ...
Discounts Allowed ........................................................................................................................................................... 7,600 ...
Discount Received ........................................................................................................................................................... ... 14,500
Bad Debts written off (after adjusting recovery of bad debts of ` 6,000 written off during 2020–21) .. 14,000 ...
Building ................................................................................................................................................................................ 10,00,000 ...
Machinery ........................................................................................................................................................................... 75,000 ...
Furniture .............................................................................................................................................................................. 40,000 ...
Debtors ................................................................................................................................................................................ 1,50,000 ...
Provision for Doubtful Debts ....................................................................................................................................... ... 19,000
Creditors .............................................................................................................................................................................. ... 1,60,000
12% Investments (Purchased on 1st January, 2022) ........................................................................................... 6,00,000 ...
Bank Balance ...................................................................................................................................................................... 83,900 ...
Total 40,93,500 40,93,500
Adjustments:
(i) Closing Stock ` 2,50,000. Its Net Realisable Value (Market Value) was ` 2,25,000.
(ii) Goods worth ` 5,000 were taken for personal use, but no entry was made in the books.
(iii) Machinery worth ` 35,000 purchased on 1st April, 2019 was wrongly written off to
Profit & Loss Account. This asset is to be brought into account on 1st April, 2021 charging
depreciation at 10% p.a. by Straight Line Method up to 31st March, 2022.
(iv) Depreciate Building @ 2½% p.a., Machinery @ 10% p.a. and Furniture @ 10% p.a.
(v) Provision for Doubtful Debts should be 6% on Debtors.
(vi) The Manager is entitled to a commission of 5% of Net Profit after charging his commission.
Prepare Trading and Profit & Loss Account for the year ended 31st March, 2022 and Balance
Sheet as at that date.