You are required to prepare a Profit & Loss Account” for the year ending 31st December, 2007 and the Balance sheet on that date.

You are required to prepare a Profit & Loss Account” for the year ending 31^st December, 2007 and the Balance sheet on that date. The Trial Balance of XYZ Ltd. For the year ended 31^st December 2007 & as follows:-

Sol.

MANUFACTURING ACCOUNT        Dr.                                              For the year ended 31st Dec,2007                                               Cr.                       Particulars Amount                          Particulars Amount To work in progress            As on 31st Dec,2006 To Material Used To cost of labour To Depreciation  :-      Plant and Machinery To Maintenance:-      Plant and machinery To Wages To Heat, Light, Power To Experimental & Lab    50,000 3,50,000 1,50,000       1,250     12,500     15,000     15,000     10,000 By sale of scrap By work in progress         As on 31st Dec,2007 By cost of goods     Transfer to Trading A/c     100 35,000 5,68,650 6,03,750 6,03,750

TRADING ACCOUNT      Dr.                                               For the year ended 31st Dec,2007                                                 Cr.                   Particulars  Amount                         Particulars Amount To Manufacturing A/c To Carriage To Gross profit transferred  to  profit and loss account 5,68,650      3,300  3,27,690 By Sales                9,18,000 Less:-sale tax            18,360 8,99,640 8,99,640 8,99,640

               

                                         

                                                                 Profit & Loss A/C

Dr.                                                      For the year ended 31^st Dec,2007                                              Cr.   

Particulars	Amount	Particulars	Amount
To Salaries To Provision:-       Taxation       Dividend To Depreciation:-      Office machinery         300       Motor car                 1,625       Furniture                     175 To Maintenance:-        Building To Director Remuneration To Insurance Workmen’s Compensation To Canteen Expenses To Staff Welfare To Motor Expenses To Professional Charges To Postage To Books To Sundry Expenses To Discounts To General, fire etc To Director’s Life insurance To Rent & Rates To Manager’s commission To Net Profit	75,000 75,000   3,300    2,100    1,000  50,000    1,500     5,000     2,500   12,500     2,800     3,500   11,000   10,000     5,000     2,000     1,500    20,000    21,190      32,550	By Gross Profit b/d By Rent Received By Discounts By Recovered against Fire claim	3,27,690 2,000 2,750 5,000
	337440		337440

                                                         BALANCE SHEET

                                                  For the year ended 31^st Dec,2007

Liabilities	Amount	Assets	Amount
Capital                33,000 Add: Net Profit   32,550 Provision for Taxation 1,05,000 Add:-current year’s         75,000 Creditors Profit & Loss Provision for Dividend  Manager’s commission  Sale Tax o/s	65,550 1,80,000 1,56,000    13,750       3,300     21,190       3,360	Bank Plant and Machinery  12,500                            Less:- 1,250 Office Machinery         3,000                     Less:-           300 Furniture & Fixture      3,500                     Less:-           175 Motor Car                      6,500                      Less:-        1,625 Freehold Property Debtors                     1,78,000 Less:-Deposited as           Security              10,000 Security against Government Contract Closing Stock(35,000+1,20,000)	38,000 11,250      2,700         3,325         4,875      50,000 1,68,000       10,000 1,55,000
	4,43,150		4,43,150

You are required to prepare the Profit & Loss Account for 2006-07 and the Balance Sheet as on 31st march 2007 from the following Trial Balance of XYZ Ltd.

You are required to prepare the Profit & Loss Account for 2006-07 and the Balance Sheet as on 31^st march 2007 from the following Trial Balance of XYZ Ltd.

            Trial Balance of XYZ Ltd as on 31^st March 2007

           

            Particulars                                               Debit                 Credit

                                                                  (Rs.)                (Rs.)

Cash in Hand                                             5,400

Cash at Bank                                           26,300

Accounts Receivable                             1,45,000

Freehold Land                                       1,00,000

Building                                                3,20,000

Machinery                                             1,63,000

Office Equipment                                     37,000

Patents                                                    75,000

Accounts Payable                                                           63,000

Capital                                                                          6,20,000

Drawings                                                 52,450

Opening Stock- Raw Material                    20,100

-    Work in Progress           10,400

                                                             - Finished Goods              27,100

                             Purchases    - Raw Material               3,81,500

                                                - Consumables                  25,250

Sales                                                                             9,87,800

Return Inward                                            6,800

Return Outward                                                                 5,000          

Wages                                                     84,800

Fuel and Power                                         47,300

Carriage on  - Sales                                  20,400

       - Purchases                                        32,000

Salaries         - Office                               65,000

                                                          - Factory                                85,000

                            General Expenses                                 30,000

Insurance        - Factory                            4,000

                                                    - Office                                     2,000

Rent                                                                                         90,000                                               

            --------------       --------------     

             17,65,800          17,65,800

           ---------------       --------------                             

        

The following adjustments are also to be taken into account:

1.         Inventory of raw material on hand on 31^st March 2007 is Rs.21,300 work-in-progress is Rs.14,300 and finished goods Rs.32,400.

2.                   Machinery is to be depreciated @ 10% and office equipment @ 15%. Patents are to be amortized @ 20%.

3.                   Salaries outstanding for March 2007 is Rs.10,000 for factory and Rs.5,000 for office.

4.                   Insurance includes a premium of Rs.1,700 on a policy expiring on 30^th  September 2007, relating to office.

5.                   Bad debts to be written off are Rs.7,250.

6.                   Rent received in advance Rs.10,000.

 

Solution.

Manufacturing account
for the year ended March 31, 2007

Particulars	Rs.	Rs.	Particulars	Rs.
Opening Stock of Work in progress		10,400	Closing stock of work in progress	14,300
Opening stock of raw material	20,100		Cost of production (balance figure)	6,91,050
Add:purchases	3,81,500
	4,01,600
Less : Return Outward	5,000
	3,96,600
Less: closing stock of Raw Material	21,300	3,75,300
Consumables		25,250
Wages		84,800
Fuel and Power		47,300
Carriage on Purchases		32,000
Factory Salaries	85,000
Add Outstanding Salaries	10,000	95,000
Factory Insurance		4,000
Depreciation on:
Machinery		16,300
Patents		15,000
		7,05,350		7,05,350

Trading Account

for the year ended March 31, 2007

Particulars	Rs.	Particulars	Rs.	Rs.
Opening stock of Finished goods	27,100	Sales	9,87,800
Cost of Production	6,91,050	Less : Return Inward	6,800	9,81,000
Gross Profit c/d	2,95,250	Closing stock of finished goods		32,400
	10,13,400			10,13,400

Profit & Loss Account
for the year ended March 31, 2007

Particulars		Rs.	Particulars	Rs.
Carriage on sales		20,400	Gross profit b/d	2,95,250
Office Salaries	65,000		Rent	90,000
Add : Outstanding salaries	5,000	70,000
Office Insurance	2,000
Less: Prepaid Insurance	850	1,150
Bad Debts		7,250
General Expenses		30,000
Depreciation on Office Equipments		5,550
Net Profit t/f to capital a/c		2,50,900
		3,85,250		3,85,250

Balance Sheet of XYZ Ltd. as on March 31, 2007

Liabilities		Rs	Assets	Rs
Accounts Payable		63,000	Cash in Hand	5,400
Salaries Outstanding			Cash at Bank	26,300
Factory		10,000	Accounts Receivable	1,37,750
Office		5,000	Closing Stock of:
Capital	6,20,000		Raw Material	21,300
Add:Net Profit	2,50,900		Work in progress	14,300
	8,70,900		Finished Goods	32,400
Less : Drawings	52,450	818450	Prepaid Insurance	850
			Office Equipment	31,450
			Machinery	1,46,700
			Patents	60,000
			Building	3,20,000
			Freehold Land	1,00,000
		8,96,450		8,96,450