The following is the Trail Balance of a trader as at 31st December, 2001
| Debit Balances | Rs. | Credit Balances | Rs. |
| Stock (1-1-2001) Sales returns Purchases Freight and carriage Rate, rent etc. Salaries and wages Sundry debtors Bank Interest Printing and advertisement Cash at Bank Investments Furniture and fittings Discounts General expense Audit Fees Insurance Travelling expenses Postage and telegrams Cash in hand Deposit with plan Drawing Account | 46,800 8,600 2,43,100 18,600 5,700 9,300 24,000 900 14,600 8,000 5,000 1,800 7,540 3,910 700 600 2,330 870 380 30,000 10,000 | Neeru’s Capital account Sales Purchase returns Sundry creditors Bank loan at 6% Income from investments Discounts | 1,08,090 2,89,600 5,800 14,800 20,000 250 4,190 |
| 4,42,730 | | 4,42,730 |
Adjustments:
(i) Stock at the end was Rs.78,600
(ii) Included amongst the debtors is Rs. 3,000 due from Zeenat and included amongst the creditors is Rs.1,000 due to her.
(iii) The effect of advertising not yet expired, a quarter of the amongst ‘Printing and advertising’ is to be carried forward to the next year.
(iv) Reserve 2 per cent for discount on Debtors and create a bad debts reserve at 5 per cent.
(v) A depreciation of 10% p.a. is to be written off Furniture and fittings.
(vi) Wages owing on 31st December, 2001 is Rs.300, salaries owing Rs.500 and carriage owing Rs.100.
(vii) Prepaid insurance is Rs.80.
(viii) Furniture which stood at Rs.600 in books 1st January, 2001 was deposited of at Rs.290 on June, in part exchange for new furniture costing Rs.520. A net invoice at Rs.230 was passed through the purchase – day book.
(ix) Purchase Invoice amounting to Rs.400 has been omitted from the books.
(x) A Neon – sign costing Rs.100 is included in Advertising.
(xi) Two dishonored cheQ. For Rs.200 and Rs.300 respectively has not been entered in the cast book. The first for Rs.200 is known to be bad. In the case of a second cheque for Rs. 300, it is expected that 75% of it would be realized.
(xii) Private purchase amounting to Rs.600 has been included in the Purchase Day book.
(xiii) Charge full year’s interest on Deposit with Pran at 7% p.a.
(xiv) Provide for interest on Bank loan for the amount due.
Prepare Final Accounts.
Ans. Trading A/c
| To Opening stock | | 46800 | | | |
| To Purchase: | 243100 | | By Sales | 289600 | |
| As per TB | 5800 | | Less: Sales Returns | 8600 | 281000 |
| Less: Purchase Returns | 400 | | Receivable Bad Debts | | 225 |
| Add: Unbooked | 600 | | By closing stock | | 78600 |
| Less: Drawings | 230 | | | | |
| Less: Pay for furniture | | 236870 | | | |
| | | | | | |
| To Fright and Carriages | | | | | |
| As per TB | 18600 | | | | |
| Add O/S | 100 | 18700 | | | |
| | | | | | |
| To P&L Account (Gross Profit) | | 57455 | | | |
| | Total | 359825 | | Total | 359825 |
Profit and Loss A/c
| | | | By Trading Account | 57488 |
| To Postage | | 870 | By Income from Investments | 250 |
| To Travelling Expenses | | 2330 | By Discount | 4190 |
| To Rent, Rates, & Taxes | | 5700 | By Outstanding Interest on Deposit with Pran | 2100 |
| To Dep. On Furniture | | 172 | | |
| To Salaries & Wages: | | | | |
| As per TB Add O/S Salaries Add O/S Wages | 9300 500 300 | 10100 | | |
| To Printing & Adult As per TB Less: Prepaid (146001000x1/4) | 14600 3400 | 11200 | | |
| To Insurance Less: Prepaid | 600 80 | 520 | | |
| To Discount | | 7540 | | |
| To Bank Interest As Per TB O/S Interest | 900 300 | 1200 | | |
| To general expenses | | 3910 | | |
| To Audit Fees | | 700 | | |
| To bad & Doubtful Debts B.D. Prov. For B.D Prov. For B.D | 200 75 1148 | 1423 | | |
| To Prov. For Discount | | 436 | | |
| To Loss on Furniture Sales (600-290) | | 310 | | |
| To Capital (net Profit) | | 17584 | | |
| | Total | 63995 | Total | 63995 |
Balance Sheet
| Capital: As per TB Add: Net Profit Less: Drawings Less:Private Purchases | 108090 17584 10000 600 | 115074 | Furniture & Fitting: As per TB Less: Sold Add: Purchase Less: depreciation @ 10% | 1800 600 520 172 | 1720 1548 |
| | | | Investments | | 5000 |
| | | | Deposit with Plan Add: Interest O/S @ 7% | 30000 2100 | 32100 |
| Bank load @ 6% | | 20000 | Sundry Debtors: | | |
| Sundry Creditors: As per TB Less: Zeenat Add: Unbooked | 14800 1000 400 | 14200 | As per TB Less: Zeenat Less B: Debt Add: Receivable Less: Prov for BD | 24000 1000 200 225 75 | |
| | | | Less: Prov: for Bad debt | 1148 | |
| Outstanding | | | Less: Discount @ 5% Res. | 436 | 78600 |
| Salaries | 500 | | Prepaid Printing & Audit | | 3400 |
| Wages | 300 | | Prepaid Insurance | | 80 |
| Carriage | 100 | | Cash at bank | | 8000 |
| Bank Interest | 300 | 1200 | Cash in hand | | 380 |
| | Total | 150474 | | Total | 150474 |
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