Page 194 - ISCDEBK-XI

Final Accounts—With Adjustments 20.27
Additional Information:

(i) Closing Stock at market price as at 31st March, 2022 was ` 61,500. However, its cost was
` 80,000.
(ii) Provide for depreciation on Plant and Machinery @ 10% p.a.
(iii) Goods costing ` 10,000 were destroyed due to fire on 30th March, 2022. The Insurance
Company accepted claim to the extent of 60% only and paid the claim money on
10th April, 2022.

(iv) Goods worth ` 10,000 were sent to a customer on approval basis and have been accounted
in the books as actual sale. These goods remained unapproved on 31st March, 2022. The
cost of such goods was ` 8,000.

(v) Received credit purchase invoice of ` 10,500 on 27th March, 2022 and recorded in the
books but the goods were not received till the end of the accounting year.
(vi) Manager is entitled to a commission of 5% of net profit after charging the commission.

Solution:
TRADING AND PROFIT & LOSS ACCOUNT
Dr. for the year ended 31st March, 2022 Cr.
Particulars ` Particulars `
To Opening Stock 54,000 By Sales A/c 1,65,000
To Purchases 84,000 Less: Sales Return 5,000
Less: Purchases Return 4,000 80,000 Goods Sent for Approval 10,000 1,50,000
To Freight Inwards 5,000 By Loss of Stock due to Fire 10,000
To Wages and Salaries 1,000 By Closing Stock (Note 1) 61,500
To Gross Profit c/d 1,00,000 Add: Goods Sent for Approval 8,000
Goods in Transit (Note 3) 10,500 80,000
2,40,000 2,40,000
To Bad Debts 5,000 By Gross Profit b/d 1,00,000
To Freight Outwards 7,000 By Commission 3,000
To Rent 3,000 By Interest 3,000
To Interest 2,500 By Rent Received 4,000
To Commission 4,000 By Bad Debts Recovered 26,450
To Discount 2,000 By Discount 1,000
To Office and Administrative Expenses 6,000
To Selling and Distribution Expenses 10,000
To Depreciation on Plant and Machinery 11,000
To Loss of Stock due to Fire 10,000
Less: Insurance Claim admitted 6,000 4,000
To Manager’s Commission (Note 4) 3,950
5/105 of ` 82,950 (i.e., ` 1,37,450 – ` 54,500)
To Net Profit transferred to Capital A/c 79,000
1,37,450 1,37,450