Page 161 - DEBK-XI(2020)

Adjustments in Preparation of Financial Statements 19.13

6. (With GST). Trial Balance of M/s. Taj & Co. as on 31st March, 2020 was as follows:

Particulars Dr. Balance Particulars Cr. Balance
` `
Purchases 1,62,505 Sales 2,52,400
Sundry Debtors 50,200 Provision for Doubtful Debts 5,200
Opening Stock 26,725 Sundry Creditors 30,526
Wages 23,137 Bills Payable 3,950
Salaries 5,575 Outstanding Wages 4,000
Furniture 7,250 Outstanding General Expenses 700
Postage 4,226 Capital 10,000
Power and Fuel 1,350 Output CGST 2,000
General Expenses 5,831 Output SGST 2,000
Bad Debts 525
Loan to Suraj @ 10% p.a. (1st Dec., 2019) 3,000
Cash at Bank 10,000
Drawings 4,452
Input CGST 3,000
Input SGST 3,000
3,10,776 3,10,776

Prepare Trading and Profit and Loss Account for the year ended 31st March, 2020 and
Balance Sheet after considering the following information:
(i) Depreciation on Furniture @ 10% to be charged.
(ii) Debtors include an amount of ` 500 due from a customer who has become insolvent.
(iii) Provision for Doubtful Debts @ 5% on Sundry Debtors is to be maintained.
(iv) Goods costing ` 1,500 on which CGST and SGST was paid @ 6% each were
destroyed by fire and insurance company admitted a claim for ` 1,000.
(v) Stock on 31st March, 2020 was ` 12,550.

Solution: TRADING AND PROFIT AND LOSS ACCOUNT
Dr. for the year ended 31st March, 2020 Cr.
Particulars ` Particulars `
To Opening Stock 26,725 By Sales 2,52,400
To Purchases 1,62,505 By Goods Lost by Fire A/c 1,500
To Wages 23,137 By Closing Stock 12,550
To Power and Fuel 1,350
To Gross Profit c/d 52,733
(Transferred to Profit and Loss A/c)
2,66,450 2,66,450
To Depreciation on Furniture 725 By Gross Profit b/d 52,733
To Goods Lost by Fire (` 1,680 – ` 1,000) 680 By Provision for Doubtful Debts:
To Salaries 5,575 Existing 5,200
To Postage 4,226 Less: Bad Debts ` (525 + 500) 1,025
To General Expenses 5,831 4,175
To Net Profit transferred to Capital A/c 37,486 Less: Provision for Doubtful Debts
(5% on ` 49,700) 2,485 1,690
By Interest on Loan (` 3,000 × 10/100 × 4/12) 100
54,523 54,523