Page 192 - ISCDEBK-XI

Final Accounts—With Adjustments 20.25
Additional Information:

(i) The value of stock on 31st March, 2022, ` 30,000.
(ii) Sales include ` 5,000 for the goods sold on approval to Hemant. Goods are sold at a profit
of 25% on cost. Approval was not received till 31st March.
(iii) Furniture purchased during the year for ` 5,000 was wrongly debited to Purchases Book.

(iv) A cheque of ` 8,000 received from customers was deposited in the bank in the last week
of March. It was reported to have been dishonoured.

(v) Samples costing ` 4,000 were distributed during the year.
(vi) Write off further bad debts ` 2,000. Also create a provision for doubtful debts at 10% on
debtors.
(vii) Depreciate furniture by 10% and office machinery by 5%.

Prepare Trading and Profit & Loss Account for the year ended 31st March, 2022 and a Balance
Sheet as on that date.

Solution:
TRADING AND PROFIT & LOSS ACCOUNT OF RAMESH
Dr. for the year ended 31st March, 2022 Cr.
Particulars ` Particulars `
To Opening Stock 16,000 By Sales 2,20,000
To Purchases 90,000 Less: Sales on Approval 5,000
Less: Transferred to Furniture A/c 5,000 2,15,000
85,000 Less: Sales Return 10,000 2,05,000
Less: Samples 4,000 81,000 By Closing Stock 30,000
To Wages 33,000 By Stock with Customers
To Gross Profit c/d 1,09,000 on Approval (At Cost) 4,000
2,39,000 2,39,000
To Salaries 20,000 By Gross Profit b/d 1,09,000
To Prov. for Doubtful Debts (New) 3,600 By Interest on Loan to Ashok 1,000
Add: Bad Debts (` 10,000 + ` 2,000) 12,000 Add: Accrued Interest 600 1,600
15,600
Less: Existing Provision 8,000 7,600
To Rent, Rates and Taxes 15,000
To Advertisement 18,000
To Discount 1,000
To Samples 4,000
To Depreciation on Furniture 2,500
To Depreciation on Machinery 3,500
To Net Profit transferred to Capital A/c 39,000
1,10,600 1,10,600