Mr. Prakash furnishes following information for his readymade garments business: (i) Receipts and Payments during 2025-26: Receipts Amount ₹…

CA Foundation · Accounting · MTP · September 2026
Mr. Prakash furnishes following information for his readymade garments business: (i) Receipts and Payments during 2025-26: Receipts Amount ₹ Payments Amount ₹ Bank Balance as on 1-4-2025 16,250 Payment to Sundry creditor 3,43,000 Received from Sundry debtor 4,81,000 Salaries 75,000 Cash sales 1,70,800 Capital brought in the business during the year 50,000 General expenses 22,500 Interest on Investment received 9,750 Rent and taxes 11,800 Drawings 96,000 Cash purchases 1,22,750 Balance at bank on 31-03-2026 36,600 Cash in hand on 31-03-2026 20,150 7,27,800 7,27,800 (ii) Particulars of other Assets and Liabilities are as follows: 1st April, 2025 (₹) 31st March, 2026 (₹) Machinery 85,000 85,000 Furniture 24,500 24,500 Trade Debtors 1,55,000 ? Trade Creditors 60,200 ? Inventory 38,600 55,700 12% Investment 85,000 85,000 Outstanding Salaries 12,000 14,000 (iii) Additional information: (1) 20% of total sales and 20% of total purchases are in cash. (2) Of the debtors, a sum of ₹ 7,200 should be written off as Bad debt and further a provision for doubtful debts is to be provided @2%. (3) Provide depreciation @10% p.a. on machinery and furniture You are required to prepare Trading and Profit & Loss Account for the year ended 31st March, 2026, and Balance Sheet as on that date.

Suggested Answer and Working Notes:

Trading Account for the year ended 31-03-2026 ₹ ₹ To Opening stock 38,600 By Sales 8,54,000 To Purchases 6,13,750 By Closing stock 55,700 To Gross profit c/d (b.f.) 2,57,350 9,09,700 9,09,700 Profit & Loss Account for the year ended 31-03-2026 ₹ ₹ To Salaries (75,000 + 14,000 - 12,000) 77,000 By Gross Profit b/d 2,57,350 To Rent and taxes 11,800 By Interest on investment 10,200 To General expenses 22,500 To Depreciation: Machinery @ 10% 8,500 Furniture @ 10% 2,450 10,950 To Bad Debts 7,200 To Provision for doubtful debts 7,000 14,200 To Balance being profit carried to Capital A/c (b.f.) 1,31,100 2,67,550 2,67,550 Balance Sheet as on 31st March, 2026 Liabilities ₹ Assets ₹ Prakash's Capital Machinery 85,000 on 1st April, 2025 3,32,150 Less: Depreciation (8,500) 76,500 Add: Fresh Capital 50,000 Furniture 24,500 Add: Profit for the year 1,31,100 Less: Depreciation (2,450) 22,050 5,13,250 Less: Drawings (96,000) 4,17,250 Inventory-in-trade 55,700 Sundry creditors 2,08,200 Sundry debtors 3,50,000 Outstanding salaries 14,000 Less: Provision for Doubtful debts (7,000) 3,43,000 Investment (including accrued interest ₹ 450) 85,450 Cash at bank 36,600 Cash in hand 20,150 6,39,450 6,39,450 Working Notes: 1. Balance Sheet as on 1-4-2025 ₹ ₹ Sundry creditors 60,200 Machinery 85,000 Capital (balancing figure) 3,32,150 Furniture 24,500 Outstanding salaries 12,000 Inventory 38,600 Sundry debtors 1,55,000 12% Investments 85,000 Bank balance (from Cash statement) 16,250 4,04,350 4,04,350 2. Total Debtors Account ₹ ₹ 1.4.25 To Balance b/d 1,55,000 31.3.26 By Cash 4,81,000 31.3.26 To Credit sales (1,70,800/20x80) 6,83,200 31.3.26 By Bad debts 7,200 By Balance c/d (Bal. Fig.) 3,50,000 8,38,200 8,38,200 3. Total Creditors Account ₹ ₹ 31.3.26 To Cash 3,43,000 1.4.25 By Balance b/d 60,200 31.3.26 To Balance c/d (Bal. Fig.) 2,08,200 31.3.26 By Credit Purchases (1,22,750/20x80) 4,91,000 5,51,200 5,51,200

Topics: Accounts from Incomplete Records

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