Question 23 of 26intermediate🔧 ApplyNumerical8 marks

The following is the trial balance of Manju Chawla on March 31, 2017. You are required to prepare trading and profit and loss account and a balance sheet as on date: Account Titles (Dr/Cr): Opening stock (10,000/-), Purchases and sales (40,000/80,000), Returns (200/600), Productive wages (6,000/-), Dock and Clearing charges (4,000/-), Donation and charity (600/-), Delivery van expenses (6,000/-), Lighting (500/-), Sales tax collected (-/1,000), Bad debts (600/-), Misc. incomes (-/6,000), Rent from tenants (-/2,000), Royalty (4,000/-), Capital (-/40,000), Drawings (2,000/-), Debtors and Creditors (60,000/7,000), Cash (3,000/-), Investment (6,000/-), Patents (4,000/-), Land and Machinery (43,000/-). Closing stock ₹ 2,000.

Correct Answer

Trading Account for the year ended March 31, 2017

ParticularsAmount ₹ParticularsAmount ₹
To Opening Stock10,000By Sales80,000
To Purchases40,000Less: Returns Inwards(200)
Less: Returns Outwards(600)By Closing Stock2,000
To Productive Wages6,000
To Dock and Clearing Charges4,000
To Royalty4,000
To Gross Profit c/d18,400
Total81,800Total81,800

Profit and Loss Account for the year ended March 31, 2017

ParticularsAmount ₹ParticularsAmount ₹
To Donation and Charity600By Gross Profit b/d18,400
To Delivery Van Expenses6,000By Misc. Incomes6,000
To Lighting500By Rent from Tenants2,000
To Bad Debts600
To Net Profit18,700
Total26,400Total26,400

Balance Sheet as on March 31, 2017

LiabilitiesAmount ₹AssetsAmount ₹
Capital40,000Land and Machinery43,000
Add: Net Profit18,700Patents4,000
58,700Investment6,000
Less: Drawings(2,000)Debtors60,000
56,700Cash3,000
Creditors7,000Closing Stock2,000
Sales Tax Collected1,000
Total64,700Total64,700

Answers: Gross Profit = ₹18,400; Net Profit = ₹18,700; Total Balance Sheet = ₹64,700

Exercise: Questions for Practice - Numerical Questions | Q: 8 | (Page 37)
For More Understanding

Explanation

This is a comprehensive final accounts problem from NCERT Class 11 Accountancy. The Trading Account calculates gross profit by matching direct revenues (Sales, Closing Stock) with direct expenses (Opening Stock, Purchases, Productive Wages, Dock and Clearing Charges, Royalty). The Profit and Loss Account then matches indirect incomes (Misc. Incomes, Rent from Tenants) with indirect expenses (Donation, Delivery Van Expenses, Lighting, Bad Debts) to arrive at net profit. The Balance Sheet balances by showing the adjusted capital (Capital + Net Profit - Drawings) and external liabilities against fixed and current assets.

Solution Steps

  1. Step 1: Prepare Trading Account - Calculate Gross Profit = (Sales - Returns Inwards + Closing Stock) - (Opening Stock + Purchases - Returns Outwards + Productive Wages + Dock and Clearing Charges + Royalty) = (80,000 - 200 + 2,000) - (10,000 + 40,000 - 600 + 6,000 + 4,000 + 4,000) = ₹18,400

  2. Step 2: Prepare Profit and Loss Account - Calculate Net Profit = Gross Profit + Misc. Incomes + Rent from Tenants - Donation and Charity - Delivery Van Expenses - Lighting - Bad Debts = 18,400 + 6,000 + 2,000 - 600 - 6,000 - 500 - 600 = ₹18,700

  3. Step 3: Prepare Balance Sheet - Calculate Adjusted Capital = Capital + Net Profit - Drawings = 40,000 + 18,700 - 2,000 = ₹56,700. Total Liabilities = 56,700 + 7,000 + 1,000 = ₹64,700. Total Assets = 43,000 + 4,000 + 6,000 + 60,000 + 3,000 + 2,000 = ₹64,700

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