The following is the Trial Balance of M/s Thomas & Associates on 31st March, 2025: Dr. Cr. Particulars ₹ Capital - 45,00,000 Drawings 5,25,000 -…

CA Foundation · Accounting · RTP · September 2025
The following is the Trial Balance of M/s Thomas & Associates on 31st March, 2025: Dr. Cr. Particulars ₹ Capital - 45,00,000 Drawings 5,25,000 - Fixed Assets (Opening) 10,50,000 - Fixed Assets (Additions01.10.2024) 15,00,000 - Opening Stock 4,50,000 - Purchases 1,20,00,000 - Purchases Returns - 5,17,500 Sales - 1,65,00,000 Sales Returns 7,42,500 - Debtors 18,75,000 - Creditors - 16,50,000 Expenses 4,80,000 - Fixed Deposit with Bank 15,00,000 - Interest on Fixed Deposit - 1,50,000 Bank Overdraft - 60,000 Suspense A/c - 15,000 Rent (17 months upto 31.8.2025) 1,27,500 - Investments12% (01.8.2024) 18,75,000 - Bank Balance 12,67,500 - 2,33,92,500 2,33,92,500 Stock on 31st March, 2025 was valued at 7,50,000. Depreciation is to be provided at 10% per annum on fixed assets purchased during the year. A scrutiny of the books of account revealed the following matters: (i) ₹ 1,50,000 drawn from bank was debited to Drawings account, but out of this amount withdrawn - 90,000 was used in the business for day-to-day expenses. (ii) Purchase of goods worth - 1,20,000 was not recorded in the books of account upto 31.03.2025, but the goods were included in stock. (iii) Purchase returns of 7,500 was recorded in Sales Return Journal and the amount was correctly posted to the Party’s A/c on the correct side. (iv) Expenses include - 45,000 in respect of the period after 31st March, 2025. Give the necessary Journal Entries in respect of (i) to (iv) and prepare the Final Accounts for the year ended 31st March, 2025.

Suggested Answer and Working Notes:

Journal Entries Particulars Dr. (₹) Cr. (₹) (i) Expenses A/c Dr. 90,000 To Drawings (Entry for the amount wrongly debited to the latter A/c, now corrected) 90,000 (ii) Purchase A/c Dr. 1,20,000 To Creditors (Entry for purchases not recorded) 1,20,000 (iii) Suspense A/c Dr. 15,000 To Purchase Returns 7,500 To Sales Returns (Rectification entry for amount wrongly entered in Sales Journal) 7,500 (iv) Prepaid Expenses A/c Dr. 45,000 To Expenses (Prepaid expenses adjusted) 45,000 Trading, Profit and Loss Account of M/s Thomas & Associates for the year ending 31st March, 2025 Dr. ₹ Cr. ₹ To Opening Stock 4,50,000 By Sales 1,65,00,000 To Purchases 1,20,00,000 Less: Sales Return (₹ 7,42,500 - 7,500) 7,35,000 Add: Amount not recorded 1,20,000 1,57,65,000 1,21,20,000 By Closing Stock 7,50,000 Less: Purchases Returns (₹ 5,17,500 +7,500) 5,25,000 1,15,95,000 To Gross Profit c/f 44,70,000 1,65,15,000 1,65,15,000 To Expenses (₹ 4,80,000 - 45,000 +90,000) 5,25,000 By Gross Profit 44,70,000 To Rent (₹ 1,27,500 - 37,500) 90,000 By Interest on Fixed Deposit 1,50,000 To Depreciation 1,05,000 Add: Further Depreciation 75,000 1,80,000 By Interest on Investments 1,50,000 To Net Profit 39,75,000 47,70,000 47,70,000 Balance Sheet as on 31st March, 2025 Liabilities ₹ Assets ₹ Capital 45,00,000 Fixed Assets 10,50,000 Add: Net Profit 39,75,000 Additions 15,00,000 Less: Drawings (₹ 5,25,000 - 90,000) (₹ 4,35,000) 80,40,000 Less: Depreciation (₹ 1,80,000) 23,70,000 Creditors 16,50,000 Stock 7,50,000 Add: Purchases not recorded 1,20,000 17,70,000 Debtors 18,75,000 Overdraft 60,000 Investments 18,75,000 Interest accrued 1,50,000 Bank fixed deposit 15,00,000 Prepaid Expenses (₹ 45,000+37,500) 82,500 Bank 12,67,500 98,70,000 98,70,000

Topics: Preparation of Final Accounts of Sole Proprietors

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