Page 203 - ISCDEBK-XI

20.36 Double Entry Book Keeping—ISC XI

Illustration 17.
Following is the Trial Balance of Kiran as on 31st March, 2022. Compile his Trading and Profit
& Loss Account for the year ended 31st March, 2022 and Balance Sheet as on that date, bearing
in mind the adjustments given, which must be incorporated.
Particulars Dr. (`) Particulars Cr. (`)

Drawings 24,450 Capital 3,30,000
Purchases 2,75,000 Creditors 42,000
Cash and Bank balances 19,000 Bank Overdraft 7,500
Wages 19,000 Sales 4,00,000
Printing and Stationery 2,700 Bank Loan 1,50,000
Audit Fees 1,500 General Reserve 58,000
Commission 6,000 Advertisement — Outstanding Expenses 3,000
Returns Inward 5,000 Returns Outward 4,400
Legal charges 10,600 Commission and Discounts 2,750
(Retainership fee for 2 years)
Debtors 85,000
Freight 8,400
Bank Interest 7,200
Carriage — Delivery to clients 6,500
Fixed Assets 4,50,000
Fuel and Power 13,800
Expenses prepaid in the earlier
accounting year 3,500
Advertisement expenses 15,000
Expenses for current year 45,000
9,97,650 9,97,650
Adjustments:
1. Closing Stock cost is ` 65,000 though the net realisable value (market value) is lower by ` 5,000.
2. Goods worth ` 4,000 were taken home, without recording the accounting entry.
3. Depreciation rate for assets 10% p.a.
4. Goods of the value of ` 5,000 were burnt and the insurance company admitted the claim
for ` 3,000 only. This fact is not accounted for. (ISC 1991, Modified)
Solution: Kiran
Dr. TRADING AND PROFIT & LOSS ACCOUNT for the year ended 31st March, 2022 Cr.
Particulars ` Particulars `
To Purchases 2,75,000 By Sales 4,00,000
Less: Returns Outward 4,400 Less: Returns Inward 5,000 3,95,000
2,70,600 By Goods Lost by Fire 5,000
Less: Goods used for By Closing Stock (Note 1) 60,000
personal purpose 4,000 2,66,600
To Freight 8,400
To Wages 19,000
To Fuel and Power 13,800
To Gross Profit c/d 1,52,200
4,60,000 4,60,000