Financial Accounting Solution
Question No. 14
Trial Balance as on 31st December, last year is given below:
| Debit | Rs. | Credit | Rs. |
| Opening Stock | 28,000 | Share Capital | 4,00,000 |
| Purchase | 5,00,000 | 10% Debentures | 80,000 |
| Discount | 4,000 | P&L Account | 72,000 |
| Salary | 65,000 | Commission | 10,000 |
| Wages | 83,000 | Provision for Bad Debts | 4,000 |
| Carriage | 16,000 | Creditors | 54,000 |
| Debtors | 80,000 | Sales | 9,24,000 |
| Building | 5,00,000 | | |
| Machinery | 2,20,000 | | |
| Closing Stock | 40,000 | | |
| Cash | 8,000 | | |
| Return Inward | 2,000 | | |
| Total | 15,44,000 | Total | 15,44,000 |
Additional Information:
- I. Depreciation on Machinery: 10%
- II. Interest due on Debentures: Rs. 4,000
- III. Commission received in advance: Rs. 1,000
Required:
a. Trading Account
b. Profit and Loss Account
c. Profit and Loss Appropriation Account
d. Balance Sheet
1. Trading Account
| Particulars | Amount (Rs.) | Particulars | Amount (Rs.) |
|---|
| To Opening Stock | 28,000 | By Sales | 9,24,000 |
| To Purchases | 5,00,000 | Less: Return Inward | (2,000) |
| To Wages | 83,000 | Net Sales | 9,22,000 |
| To Carriage Inwards | 16,000 | By Closing Stock | 40,000 |
| To Gross Profit c/d | 2,95,000 | | |
| Total | 9,22,000 | Total | 9,62,000 |
Answer (a): Gross Profit = Rs. 2,95,000
2. Profit and Loss Account
| Particulars | Amount (Rs.) | Particulars | Amount (Rs.) |
|---|
| To Discount | 4,000 | By Gross Profit b/d | 2,95,000 |
| To Salary | 65,000 | By Commission | 10,000 |
| To Depreciation on Machinery (10%) | 22,000 | Less: Unearned Commission | (1,000) |
| To Interest on Debentures | 4,000 | Net Commission | 9,000 |
| To Provision for Bad Debts | 4,000 | | |
| To Net Profit c/d | 2,05,000 | | |
| Total | 3,04,000 | Total | 3,04,000 |
Answer (b): Net Profit = Rs. 2,05,000
3. Profit and Loss Appropriation Account
| Particulars | Amount (Rs.) | Particulars | Amount (Rs.) |
|---|
| To Proposed Dividend | 20,000 | By Balance b/d | 72,000 |
| To Balance c/d | 2,57,000 | By Net Profit | 2,05,000 |
| Total | 2,77,000 | Total | 2,77,000 |
Answer (c): P/L Appropriation A/c Balance = Rs. 2,57,000
4. Balance Sheet
| Liabilities | Amount (Rs.) | Assets | Amount (Rs.) |
|---|
| Share Capital | 4,00,000 | Building | 5,00,000 |
| P/L Appropriation A/c | 2,57,000 | Machinery | 2,20,000 |
| 10% Debentures | 80,000 | Less: Depreciation | (22,000) |
| Creditors | 54,000 | Net Machinery | 1,98,000 |
| Interest Due on Debentures | 4,000 | Closing Stock | 40,000 |
| Commission Received in Advance | 1,000 | Debtors | 80,000 |
| Proposed Dividend | 20,000 | Cash | 8,000 |
| | Other Assets | 20,000 |
| Total Liabilities | 8,16,000 | Total Assets | 8,16,000 |
Answer (d): Balance Sheet Total = Rs. 8,16,000
Final Answers
- (a) Gross Profit = Rs. 2,95,000
- (b) Net Profit = Rs. 2,05,000
- (c) P/L Appropriation A/c Balance = Rs. 2,57,000
- (d) Balance Sheet Total = Rs. 8,16,000
📘 Solution by Shekh Md Ali
