The following is the schedule of balances as on 31 st March, 2025 extracted from the books of Mr. Radhey: Particulars Dr. (₹) Cr. (₹) Advertisement…

CA Foundation · Accounting · PYQS · January 2026
The following is the schedule of balances as on 31 st March, 2025 extracted from the books of Mr. Radhey: Particulars Dr. (₹) Cr. (₹) Advertisement Expenses 13,400 - Bad Debts 4,400 - Bad Debts Recovered - 1,800 Cash at Bank 12,500 - Bank Overdraft - 3,20,000 Capital Account - 2,60,000 Carriage Inwards 4,500 - Carriage Outwards 5,400 - Cash in Hand 5,800 - Drawings 46,000 - Furniture and Fittings 41,000 - Interest paid on loan 12,000 - Administrative Expenses 40,640 - Openings Stock 1,29,000 - Plant & Machinery 80,000 - Prepaid Rent 1,200 - Printing & Stationery 5,000 - Provision for discount on Trade Receivables - 5,500 Provisions for Doubtful debts - 12,800 Purchases 6,08,800 - Rent, Rates and Taxes 17,200 - Salaries and Allowances 90,200 - Salaries Payable - 9,800 Sales - 8,44,000 Trade Payables - 1,90,000 Trade Receivables 4,80,000 - Wages and Salary 46,860 - Total 16,43,900 16,43,900 Additional information: (i) During the year Mr. Radhey has distributed free samples costing - 3,300 for publicity. (ii) A fire took place in the warehouse on 20 th March, 2025 and destroyed goods worth - 6,000/-, The Insurance company has admitted a claim of 4,500 on 31 st March, 2025. (iii) Create a provision for doubtful debts @5% and provision for discount on trade receivables @2.5%. (iv) Depreciation is to be provided on Plant and Machinery @15% per annum and on Furniture and fittings @10% per annum. (v) Bank overdraft is secured against hypothecation of stock. Bank overdraft outstanding on 31.03.2025 has been considered as 80% of real value of stock (deducting20% as margin) and after adjusting the marginal value80% of the same has been allowed to draw as an overdraft. Prepare a Trading and Profit and Loss Account for the year ended 31 st March, 2025 and a Balance Sheet as at that date.

Suggested Answer and Working Notes:

In the books of Mr. Radhey Dr. Trading Account for the year ended 31 st March, 2025 Cr. Particulars Amount ₹ Amount ₹ Particulars Amount ₹ Amount ₹ To Opening stock 1,29,000 By Sales 8,44,000 To Purchase 6,08,800 By Closing stock (WN - 3) 5,00,000 Less: Goods distributed as free sample (3, 300) Less: Goods lost by fire (6, 000) 5,99,500 To Carriage inward 4,500 To Wages and Salary 46,860 To Gross profit c/d 5,64,140 13,44,000 13,44,000 Dr. Profit and Loss for the year ended 31 st March, 2025 Cr. Particulars Amount ₹ Particulars Amount ₹ To Salaries & Allowances 90,200 By Gross profit b/d 5,64,140 To Rent, Rate and Taxes 17,200 By Bad debts recovered 1,800 To Advertisement expenses 13,400 Add: Free Sample 3,300 16,700 To Printing and stationery 5,000 To Bad debts 4,400 To Carriage outward 5,400 To Provision for doubtful debts (WN - 1) 11,200 To Provision for discount on trade receivables (WN - 2)) 5,900 To Depreciation: Plant and machinery 12,000 Furniture and fittings 4,100 16,100 To Administrative expenditure 40,640 To Interest on loan 12,000 To Loss by fire 1,500 To Net profit (Transferred to capital account) 3,39,700 5,65,940 5,65,940 Balance Sheet as at 31 st March, 2025 Liabilities ₹ Amount ₹ Assets ₹ Amount ₹ Capital account 2,60,000 Plant and machinery 80,000 Add: Net profit 3,39,700 Less: Depreciation (12, 000) 68,000 5,99,700 Furniture and fittings 41,000 Less: Drawings 46,000 5,53,700 Less: Depreciation (4, 100) 36,900 Bank overdraft 3,20,000 Closing stock 5,00,000 Salaries Payables 9,800 Trade Receivables 4,80,000 Trade Payables 1,90,000 Less: Provision for doubtful debts (24, 000) Less: Provision for discount on trade receivables (11, 400) 4,44,600 Prepaid rent 1,200 Cash in hand 5,800 Insurance claim Receivable 4,500 Cash at bank 12,500 10,73,500 10,73,500 Working Notes: 1. Provision for Doubtful Debts: Trade Receivables 4,80,000 Required provision @5% 24,000 Existing Provision (Given) (12, 800) Increase in Provision (P & L)₹ 24000-12800 11,200 2. Provision for Discount on Trade Receivables: Trade Receivables after new Provision (₹ 4,80,000-24,000) 4,56,000 Required Provision (@2.5%) 11,400 Existing Provision (Given) (5, 500) Increase in Provision (P & L)₹ 11,400-5,500 5,900 3. Calculation of Closing Stock Bank Overdraft 3,20,000 Add: Margin - 20/80 80,000 Total 4,00,000 Closing Stock - 4,00,000 * 100/80 5,00,000

Topics: Preparation of Final Accounts of Sole Proprietors

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