The following are the balances as at 31 st March, 2024 extracted from the books of Mr. Chauhan. Particulars ₹ Particulars ₹ Plant and Machinery…

CA Foundation · Accounting · MTP · June 2024
The following are the balances as at 31 st March, 2024 extracted from the books of Mr. Chauhan. Particulars ₹ Particulars ₹ Plant and Machinery 39,100 Bad debts recovered 900 Furniture and Fittings 20,500 Salaries 45,100 Bank Overdraft 1,60,000 Salaries payable 4,900 Capital Account 1,30,000 Prepaid rent 600 Drawings 16,000 Rent 8,600 Purchases 3,20,000 Carriage inward 2,250 Opening Stock 64,500 Carriage outward 2,700 Wages 24,330 Sales 4,30,600 Provision for doubtful debts 6,400 Advertisement Expenses 6,700 Provision for Discount on debtors 2,750 Printing and Stationery 2,500 Sundry Debtors 2,40,000 Cash in hand 2,900 Sundry Creditors 95,000 Cash at bank 6,250 Bad debts 2,200 Office Expenses 20,320 Interest paid on loan 6,000 Additional Information: 1. Purchases include sales return of 5,150 and sales include purchases return of 3,450. 2. Free samples distributed for publicity costing - 1,650. 3. Wages paid in the month of April for installation of plant and machinery amounting to 900 were included in wages account. 4. Create a provision for doubtful debts @ 5% and provision for discount on debtors @ 2.5%. 5. Depreciation is to be provided on plant and machinery @ 15% p.a. and on furniture and fittings @ 10% p.a. 6. Closing stock as on 31 st March, 2024 is 2,50,000. Prepare a Trading and Profit and Loss Account for the year ended 31 st March, 2024, and a Balance Sheet as on that date.

Suggested Answer and Working Notes:

Trading and Profit and Loss Account of Mr. Chauhan for the year ended 31st March, 2024 Dr. Cr. Particulars Amount (₹) Particulars Amount (₹) To Opening stock 64,500 By Sales 4,27,150 To Purchases 3,13,200 Less: Sales return 5,150 Less: Purchases return 3,450 3,09,750 4,22,000 To Carriage inward 2,250 By Closing stock 2,50,000 To Wages 23,430 To Gross profit c/d 2,72,070 6,72,000 6,72,000 To Salaries 45,100 By Gross profit b/d 2,72,070 To Rent 8,600 By Bad debts recovered 900 To Advertisement expenses 8,350 To Printing and stationery 2,500 To Bad debts 2,200 To Carriage outward 2,700 To Provision for doubtful debts 5% of 2,40,000 12,000 Less: Existing provision 6,400 5,600 To Provision for discount on debtors 2.5% of 2,28,000 5,700 Less: Existing provision 2,750 2,950 To Depreciation: Plant and machinery 6,000 Furniture and fittings 2,050 8,050 To Office expenses 20,320 To Interest on loan 6,000 To Net profit (Transferred to capital account) 1,60,600 2,72,970 2,72,970 Balance Sheet of Mr. Chauhan as on 31st March, 2024 Liabilities Amount (₹) Amount (₹) Assets Amount (₹) Amount (₹) Capital account 1,30,000 Plant and machinery 40,000 Add: Net profit 1,60,600 Less: Depreciation 6,000 34,000 2,90,600 Furniture and fittings 20,500 Less: Drawings 16,000 2,74,600 Less: Depreciation 2,050 18,450 Bank overdraft 1,60,000 Closing stock 2,50,000 Sundry creditors 95,000 Sundry debtors 2,40,000 Payable salaries 4,900 Less: Provision for doubtful debts 12,000 Less: Provision for bad debts 5,700 2,22,300 Prepaid rent 600 Cash in hand 2,900 Cash at bank 6,250 5,34,500 5,34,500

Topics: Preparation of Final Accounts of Sole Proprietors

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