The following are the balances as at 31st March, 2025 extracted from the books of Mr. Govind. ₹ ₹ Plant and Machinery 1,17,300 Bad debts recovered…

CA Foundation · Accounting · MTP · April 2025
The following are the balances as at 31st March, 2025 extracted from the books of Mr. Govind. ₹ ₹ Plant and Machinery 1,17,300 Bad debts recovered 2,700 Furniture and Fittings 61,500 Salaries 1,35,300 Bank Overdraft 4,80,000 Salaries payable 14,700 Capital Account 3,90,000 Prepaid rent 1,800 Drawings 48,000 Rent 25,800 Purchases 9,60,000 Carriage inward 6,750 Opening Stock 1,93,500 Carriage outward 8,100 Wages 72,990 Sales 12,41,800 Provision for doubtful debts 19,200 Advertisement Expenses 20,100 Provision for Discount on Debtors 8,250 Printing and Stationery 7,500 Cash in hand 8,700 Sundry Debtors 7,20,000 Cash at bank 18,750 Sundry Creditors 2,85,000 Office Expenses 60,960 Bad debts 6,600 Interest paid on loan 18,000 Additional Information:1. Purchases include sales return of 15,450 and sales include purchases return of 10,350.2. Goods withdrawn by Mr. Govind for own consumption - 21,000 included in purchases.3. Create a provision for doubtful debts @5% and provision for discount on debtors @2.5%.4. Free samples distributed for publicity costing - 4,950.5. Wages paid in the month of April for installation of plant and machinery amounting to 2,700 were included in wages account.6. Bank overdraft is secured against hypothecation of stock. Bank overdraft outstanding as on 31.3.2025 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.7. Depreciation is to be provided on plant and machinery @15% p.a. and on furniture and fittings @10% p.a. Prepare a Trading and Profit and Loss Account for the year ended 31st March, 2025 and a Balance Sheet as on that date.

Suggested Answer and Working Notes:

Trading and Profit and Loss Account of Mr. Govind for the year ended 31st March, 2025 Dr. Amount ₹ Cr. Amount ₹ To Opening stock 1,93,500 By Sales 12,81,450 To Purchases 9,18,600 Less: Sales return 15,450 12,66,000 Less: Purchases return 10,350 9,08,250 By Closing stock 7,50,000 To Carriage inward 6,750 To Wages 70,290 To Gross profit c/d 8,37,210 20,16,000 20,16,000 To Salaries 1,35,300 By Gross profit b/d 8,37,210 To Rent 25,800 By Bad debts recovered 2,700 To Advertisement expenses 25,050 To Printing and stationery 7,500 To Bad debts 6,600 To Carriage outward 8,100 To Provision for doubtful debts 5% of 7,20,000 36,000 Less: Existing provision 19,200 16,800 To Provision for discount on debtors 2.5% of 6,84,000 17,100 Less: Existing provision 8,250 8,850 To Depreciation: Plant and machinery 18,000 Furniture and fittings 6,150 24,150 To Office expenses 60,960 To Interest on loan 18,000 To Net profit (Transferred to capital account) 5,02,800 8,39,910 8,39,910 Balance Sheet of Mr. Govind as on 31st March, 2025 Liabilities ₹ Amount ₹ Assets ₹ Amount ₹ Capital account 390,000 Plant and machinery 1,20,000 Add: Net profit 5,02,800 Less: Depreciation 18,000 1,02,000 8,92,800 Furniture and fittings 61,500 Less: Drawings 69,000 8,23,800 Less: Depreciation 6,150 55,350 Bank overdraft 480,000 Closing stock 7,50,000 Sundry creditors 285,000 Sundry debtors 720,000 Payable salaries 14,700 Less: Provision for doubtful debts 36,000 Provision for bad debts 17,100 6,66,900 Prepaid rent 1,800 Cash in hand 8,700 Cash in bank 18,750 16,03,500 16,03,500

Topics: Preparation of Final Accounts of Sole Proprietors

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