The balance sheet of Suraj on 1st April, 2025 was as follows: Particulars Amount (₹) Particulars Amount (₹) Trade Payables 19,50,000 Furniture and…

CA Foundation · Accounting · MTP · May 2026
The balance sheet of Suraj on 1st April, 2025 was as follows: Particulars Amount (₹) Particulars Amount (₹) Trade Payables 19,50,000 Furniture and Fixtures 19,50,000 Expenses Payable 2,25,000 Vehicle 8,25,000 Capital 66,00,000 Trade Receivable 33,00,000 Cash at Bank 14,25,000 Inventories 12,75,000 87,75,000 87,75,000 During 2025 -26, his profit and Loss Account revealed a net profit of 20,10,000. This was after allowing for the following: (i) Commission paid to selling agent - 1,95,000 (ii) Discount received from creditors - 2,25,000 (iii) Purchased a vehicle of 1,50,000 on 31st March, 2026 (iv) Depreciation on Furniture and Fixtures @10% and on Vehicle @20% (v) A provision for doubtful debts @3% of the trade receivables as at 31st March, 2026 But while preparing the Profit and Loss Account he had forgotten to provide for (1) prepaid expenses - 45,000 and (2) outstanding commission - 1,05,000. His current assets and liabilities on 31st March, 2026 were: Inventories - 19,50,000 . Trade Receivables - 39,00,000 (before provision for doubtful debts), cash at Bank - 16,50,000 and Trade Payables - 4,38,000. During the year he introduced further capital of 9,00,000 into the business. You are required to prepare the balance sheet as at March, 31,2026.

Suggested Answer and Working Notes:

Balance Sheet of Suraj as on 31 st March, 2026 Liabilities ₹ Assets ₹ Capital 66,00,000 Cash at Bank 16,50,000 Add: Net Profit (WN.1) 19,50,000 Trade receivables (WN.2) 37,83,000 85,50,000 Vehicles (WN.3) 8,10,000 Add: Introduction of capital 9,00,000 Furniture & Fixtures (WN.4) 17,55,000 94,50,000 Inventories 19,50,000 Outstanding commission 1,05,000 Prepaid expenses 45,000 Trade payables 4,38,000 99,93,000 99,93,000 Working Note 1 Profit and Loss Account (Revised) Particulars ₹ Particulars ₹ To Outstanding Commission 1,05,000 By Balance b/d 20,10,000 To Net profit 19,50,000 By Prepaid expenses 45,000 20,55,000 20,55,000 Working Note 2 Trade Receivables Particulars ₹ Particulars ₹ To Balance b/d 39,00,000 By Provision for Doubtful Debts 1,17,000 By Balance c/d (b/f) 37,83,000 39,00,000 39,00,000 Working Note 3 Vehicles A/c Particulars ₹ Particulars ₹ To Balance b/d 8,25,000 By Depreciation 1,65,000 To Bank a/c 1,50,000 By Balance c/d (b/f) 8,10,000 9,75,000 9,75,000 Working Note 4 Furniture & Fixtures A/c Particulars ₹ Particulars ₹ To Balance b/d 19,50,000 By Depreciation 1,95,000 By Balance c/d (b/f) 17,55,000 19,50,000 19,50,000

Topics: Preparation of Final Accounts of Sole Proprietors

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