Following is the Trial Balance of Geeta Enterprises. You are required to prepare Trading and Profit & loss Account for the year ended 31st March, 2019 and balance Sheet as on that date after taking into accounts the additional information provided to you.

Trial Balance as on 31st march, 2019  

Particulars	Debit Amount	Credit Amount
Capital A/c		50,000
Drawings	1,750
Opening Stock	8,000
Purchases & Sales	16,500	22,500
Returns	625	750
Carriages Outward	425
Wages – Productive	1,000
Unproductive	600
Salaries	1,000
Travelling expenses	1,125
Trade Expenses	325
Fuel and Coal	250
Discount	460	550
Sundry expenses	225
Bad debts	200
Plant machinery	20,000
Furniture	5,500
Packing expenses	175
Sundry Debtors & Creditors	10,090	6,750
Cash in hand	2,200
Investments	10,250
Reserve for doubtful debts		150
	80,700	80,700

Additional Information:

1. Closing stock of goods on 31st March, 2019 valued at 7,100 at cost price and 7,500/- as market price.

2. Travelling expenses include 125 spent on personal travelling.

3. 175 are to be written off as bad debts which were due from Mr. Ashok, a debtor and 5% R.D.D. is to be maintained on debtors

4. Reserve for discount on debtors as well as on creditors is to be maintained at 2% and 3% respectively.

5. Provide 10% depreciation on Plant & Machinery and Furniture.

Solution:

In the books of Geeta Enterprises Final Account. 

Trading account and Profit & Loss Account for the year ended 31st March, 2019

Particulars	Amount	Amount	Particulars	Amount	Amount
To Opening Stock		8,000
To Purchases	16,500		By Sales	22,500
(-) Return	(750)	15,750	(-) Return	(625)	21,875
To Wages Productive		1,000
To Fuel & Coal		250	By Closing Stock		7,100
To Gross Profit c/d		3,975
		28,975			28,975

To Bad debts    (T)	200		By Gross Profit b/d		3,975
(+) Bad debts    (A)	175
(+) R.D.D. New (A)	496
	871
(-) R.D.D. Old (T)	(150)	721
To Carriage Outward		425	By Discount		550
To Wages Unproductive		600	By Bad debts (T)	200
			(+) Bad debts (A)	175
			(-) R.D.D.C       (A)	(203)	578
To Bad debts   (T)	200
(+) Bad debts   (A)	175
(+) R.D.D.D       (A)	189	564
To Salaries		1,000
To Traveling Expenses	1,125
(-) Drawings	125	1,000
To Discount		460
To Sundry expenses		225
To Package expense		175
To Depreciation on
Machinery	2,000
Furniture	550	2,550
To Trade expenses		325
			By Net Loss		2,942
		8,045			8,045

Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Bills Overdraft		22,000	Plant and Machinery		50,000
Capital	1,40,000		Debtors	44,000
(-) Drawings	(24,700)		(-) Bad debts	(2000)
	1,15,300			42,000
(+) Interest on capital	14,000		(-) R.D.D @5%	(2,100)	39,900
(+) Net Profit	1,29,300
	2,02,800
Bills Payable		8,400	Buildings		58,000
Creditors		76,000	Motor Van	40,000
			(-) Depreciation @ 10%	(4,000)	36,000
Outstanding Exp.			Furniture	20,000
Salaries			(-) Depreciation @ 5%	(1,000)	19,000
wages	4,000
			Premises		81,000
			Loose Tools		20,400
			Cash		71,000
			Bills Receivable		5,600
			Prepaid Advertisement		4,000
			Closing Stock		60,000
		4,44,900			4,44,900

 
Explanation and Calculation: 

 
 

1. Closing Stock of goods on 31st March, 2019 valued at 7,100 at cost price and 7,500/- as market price. 

In the Books Closing Stock is always valued at the lesser price. 

Student must remember Closing Stock is always valued at the price which ever is less. 

whether it is cost price or market price. 

 
 

2. 175 are to be written off as bad debts which were due from Mr. Ashok, a debtor and 5% R.D.D. is to be maintained on debtors. 

Mr. Ashok due recorded as bad debts. 

 
 

Reserve for discount on debtors as well as on creditors is to be maintained at 2% and 3% respectively. 

Here, Reserve for discount is on debtors as well as on creditor debtors. Reserve for doubt full debts on creditors(R.D.D.C.) must be less from creditors and post on Profit & Loss Account Credit side by deducting from Bad debts.