The following are the balances as at 31st March, 2026, extracted from the books of Ms. Priya Nandini, proprietor of Nandini Textiles. ₹ ₹ Plant and…

CA Foundation · Accounting · RTP · September 2026
The following are the balances as at 31st March, 2026, extracted from the books of Ms. Priya Nandini, proprietor of Nandini Textiles. ₹ ₹ Plant and Machinery 58,650 Bad Debts Recovered 1,350 Furniture and Fittings 30,750 Salaries 83,250 Bank Overdraft 2,40,000 Salaries Payable 7,350 Capital Account 98,100 Prepaid Rent 900 Drawings 24,000 Rent 12,900 Purchases 4,80,000 Carriage Inward 3,375 Opening Stock 96,750 Carriage Outward 4,050 Wages 36,495 Sales 6,45,900 Provision for Doubtful Debts 9,600 Advertisement Expenses 10,050 Provision for Discount on Debtors 4,125 Printing and Stationery 3,750 Sundry Debtors 3,60,000 Cash in Hand 4,350 Sundry Creditors 1,42,500 Cash at Bank 9,375 Bad Debts 3,300 Office Expenses 30,480 Interest Paid on Loan 9,000 Additional Information: Closing stock as on 31st March, 2026 was ₹ 3,75,000. Create a provision for doubtful debts @ 5% on Sundry Debtors and a provision for discount on debtors @ 2.5% on debtors (after provision for doubtful debts). Depreciation is to be provided on Plant and Machinery @ 15% p.a. and on Furniture and Fittings @ 10% p.a. Manager's commission is payable @ 5% on net profit after charging such commission. Interest on Loan is to be provided @ 8% per annum. Audit fees of ₹ 4,500 are outstanding and have not yet been accounted for. Prepare a Trading and Profit and Loss Account for the year ended 31st March, 2026, and a Balance Sheet as on that date.

Suggested Answer and Working Notes:

In the books of Ms. Priya Nandini (Nandini Textiles) Trading A/c for the year ended 31st March, 2026 Particulars ₹ Particulars ₹ To Opening Stock 96,750 By Sales 6,45,900 To Purchases 4,80,000 By Closing Stock 3,75,000 To Carriage Inward 3,375 To Wages 36,495 To Gross Profit c/d 4,04,280 10,20,900 10,20,900 Profit and Loss A/c for the year ended 31st March, 2026 Particulars ₹ Particulars ₹ To Salaries 83,250 By Gross Profit b/d 4,04,280 To Rent 12,900 By Bad Debts Recovered 1,350 To Advertisement Expenses 10,050 To Printing and Stationery 3,750 To Bad Debts 3,300 To Carriage Outward 4,050 To Provision for Doubtful Debts (WN 1) 8,400 To Provision for Discount on Debtors (WN 2) 4,425 To Depreciation (WN-4) 11,873 To Office Expenses 30,480 To Interest on Loan 9,000 To Audit Fees 4,500 To Manager's Commission (WN 3) 10,460 To Net Profit (to Capital A/c) 2,09,192 4,05,630 4,05,630 Balance Sheet at on 31st March, 2026 Liabilities ₹ Assets ₹ ₹ Capital Account 98,100 Plant and Machinery 58,650 Add: Net Profit 2,09,192 Less: Depreciation (8,798) 49,852 3,07,292 Furniture and Fittings 30,750 Less: Drawings (24,000) 2,83,292 Less: Depreciation (3,075) 27,675 Bank Overdraft 2,40,000 Closing Stock 3,75,000 Sundry Creditors 1,42,500 Sundry Debtors 3,60,000 Less: Prov. for Doubtful Debts (18,000) Salaries Payable 7,350 Less: Prov. for Discount on Debtors (8,550) 3,33,450 Manager's Commission Payable 10,460 Prepaid Rent 900 Outstanding Audit Fees 4,500 Cash in Hand 4,350 Loan (WN 5) 1,12,500 Cash at Bank 9,375 8,00,602 8,00,602 Working Notes Provision for Doubtful Debts Amount Sundry Debtors balance ₹ 3,60,000 New provision @ 5% of ₹3,60,000 ₹ 18,000 Less: Existing provision ₹ (9,600) Additional provision charged to P&L ₹ 8,400 Provision for Discount on Debtors Amount Net Debtors after provision for doubtful debts ₹ 3,42,000 New provision @ 2.5% of ₹3,42,000 ₹ 8,550 Less: Existing provision ₹ (4,125) Additional provision charged to P&L ₹ 4,425 Manager's Commission Amount Profit before manager's commission (after interest on capital) ₹ 2,19,652 Commission = 5/105 × ₹ 2,19,652 ₹ (10,460) Net Profit (transferred to Capital Account) ₹ 2,09,192 Depreciation Amount Plant and Machinery: 15% on ₹58,650 ₹ 8,798 Furniture and Fittings: 10% on ₹30,750 ₹ 3,075 Total Depreciation ₹ 11,873 Loan Amount Interest on Loan @8% 9,000 Total Loan = 9,000/8% 1,12,500

Topics: Preparation of Final Accounts of Sole Proprietors

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