Page 190 - ISCDEBK-XI

Final Accounts—With Adjustments 20.23
The following adjustments are to be made:
(i) Stock on 31st March, 2022 was valued at ` 7,25,000.
(ii) A provision for Doubtful Debts is to be created to the extent of 5% on Sundry Debtors.
(iii) Depreciate Furniture and Fittings by 10% and Motor Car by 20%.
(iv) Samar had withdrawn goods worth ` 25,000 during the year.
(v) Sales include goods worth ` 75,000 sent out to Chand on approval and remain unsold on
31st March, 2022. The cost of the goods was ` 50,000.
(vi) The salesmen were entitled to a commission of 5% on total sales.
(vii) Debtors include ` 25,000 bad debts.
(viii) Printing and Stationery expenses of ` 55,000 relating to 2020–21 had not been provided
in that year but were paid in 2021–22 by debiting outstanding liabilities.
(ix) Purchases include purchase of furniture worth ` 50,000.
Solution: TRADING AND PROFIT & LOSS ACCOUNT OF SAMAR
Dr. for the year ended 31st March, 2022 Cr.
Particulars ` Particulars `
To Opening Stock 2,50,000 By Sales: 19,87,500
To Purcahses 15,50,000 Less: Goods sent on approval
Less: Drawings 25,000 basis (at selling price) 75,000 19,12,500
Purchases of Furniture 50,000 14,75,000 By Closing Stock 7,25,000
To Wages 1,00,000 Add: Stock on approval basis
To Carriage Inwards 50,000 (at cost) 50,000 7,75,000
To Gross Profit c/d 8,12,500
26,87,500 26,87,500
To Salaries 1,60,000 By Gross Profit b/d 8,12,500
To Postage and Telephone 57,500
To Insurance 45,000
To Rates and Taxes 25,000
To General Expenses 70,000
To Printing and Stationery 15,000
To Depreciation:
on existing furniture 11,000
on additional furniture 5,000
on motor car 48,000 64,000
To Salesmen’s Commission 87,500
Add: Outstanding Commision
(5% of ` 19,12,500 – ` 87,500)
(` 95,625 – ` 87,500) 8,125 95,625
To Advertisement 85,000
To Carriage Outwards 1,10,000
To Bad Debts 10,000
Add: Further Bad Debts 25,000
Required provision for
Doubtful Debts
(5% of ` 4,00,000) 20,000 55,000
To Discount 20,000
To Net Profit transferred to Capital A/c 10,375
8,12,500 8,12,500