From the following Trail Balance of Nandini & Co. as on 31st March 2019. Prepare Final Accounts after considering the adjustments given below.

Particulars	Debit Amount (₹)	Credit Amount (₹)
Loose Tools	1,10,000
Furniture & Fixtures	81,000
Bad Debts	1,400
Sundry Debtors	81,600
Stock (31st March 2018)	52,000
Purchases	77,000
Sales Cash		21,000
Sales Credit		81,000
Returns	400	600
Advertisements	4,800
Rate taxes & Insurances	6,000
Salaries (2/3rd for factory)	1,200
Rent (Paid for 11 months)	18,000
Machinery (includes ₹24,000)	2,200
Purchased on 1st Oct, 2018	84,000
Capital		3,60,000
R.D.D.		8,000
Sundry Creditors		70,000
Drawings	14,000
Interest		1,200
Dividend		2,800
Bank Balance	4,000
Royalty	6,000
9% Bank loan (30th Sept 2018)		40,000
Carriage Outwards	4,000
Discount	1,000
	5,84,600	5,84,600

Adjustments:

1. Closing Stock valued at 1,00,000.
2. Write off 2,000 as bad debts and create a provision for doubtful debts @5% on Sundry Debtor.
3. Depreciate Machinery by 10% p.a. and loose tools is valued at 1,00,000
4. Charges Interest on Capital @2% p.a.

Solution:

In the Books of Nandini & Co.  Final Account.

  Trading A/c And Profit & Loss A/c for the year ended 31st march, 2019 

Particulars	Amount	Amount	Particulars	Amount	Amount
To Opening Stock		52,000	By Sales Cash	21,000
			(+) Sales Credit	81,000	1,01,600
			(-) Return	(400)
To Purchase	77,000
(-) Return	(600)	76,400
To Royalties		6,000	By Closing Stock		1,00,000
To Factory		12,000
To Gross Profit c/d		55,200
		2,01,600			2,01,600

To Bad debts	1,400		By Gross Profit b/d		55,200
(+) Bad debts     (A)	2,000
(+) R.D.D.           (A)	3,980
(-) R.D.D.            (T)	(8,000)	620
To Advertisements		4,800	By R.D.D.		620
To Rate taxes & Insurance		6,000	By Interest		1,200
To Repairs & Maintenance		1,200	By Dividend		2,800
To Salaries	18,000
(-) Factory	(12,000)	6,000
To Rent	2,200
(+) Paid for 11 months	(200)	2,400
To carriage Outwards		4,000
To Discount		1,000
To Interest on Bank loan		1,800
To Depreciation on Machinery and Loose tools	7,200
	10,000	17,200
To Interest on Capital		7200
To Net Profit		8,220
		59,820			59,820

  Balance Sheet as on 31st March, 2019.

Liabilities	Amount	Amount	Assets	Amount	Amount
Capital	3,60,000		Loose Tools	1,10,000
(+) Interest on Capital	7,200		(-) Depreciation	(10,000)	1,00,000
	3,67,200	.	Furniture & Fixture		81,000
(-) Drawings	(14,000)
	3,53,200
(+)NetProfit	8,220	3,61,420
			Debtors         (T)	81,600
			(-) Bad Debts   (A)	(2,000)
				79,600
			(-) R.D.D.     (A)	(3,980)	75,620
9% Bank loan	40,000		Machinery	84,000
(+) Interest	(1,800)	41,800	(-) Depreciation	(7,200)	76,800
Creditors		70,000	Bank Balance		40,000
Outstanding rent		200	Closing Stock		1,00,000
		4,73,420			4,73,420

Explanations and Calculation:

1. Sales Cash and Sales Credit are to be Added because in the Trail Balance the Total Sales incurred in the Financial year are to be recorded whether they are Credit Sales or Cash Sales.

2. Salaries (2/3rd for factory)

18,000*2/3 = 12,000

12,000/- are to be recorded as factory in the Trail Balance.

3. Rent ( Paid for 11th Months)

2,200/11 Months = 200 for 1 month

ஃ 1 Month Rent is Outstanding and it`s must be added to Rent and On Liability side in Balance Sheet.  

4. Depreciation On Machinery ( Including 24,000 purchased on 1st October 2018)

Total Machinery value 84,000

(-) purchased on 1st October (84,000-24,000) = 60,000/-

60,000*10/100 = 6,000

24,000*10/100 *6/12 = 1,200 
ஃ Depreciation On Machinery (6,000 + 1,200) = 7,200/-

5. 9% Bank Loan

40,000*9/100 *6/12 = 1,800