Page 169 - DEBK-XI(2020)

Adjustments in Preparation of Financial Statements 19.21

Miscellaneous Expenses ........................................................................................... 30,000 ...
Creditors ........................................................................................... ... 3,00,000
Investments ........................................................................................... 1,00,000 ...
Discount Received ........................................................................................... ... 15,000
Debtors ........................................................................................... 2,58,000 ...
Bad Debts ........................................................................................... 15,000 ...
Provision for Doubtful Debts ........................................................................................... ... 8,000
Building ........................................................................................... 3,00,000 ...
Machinery ........................................................................................... 5,00,000 ...
Furniture ........................................................................................... 40,000 ...
Commission on Sales ........................................................................................... 45,000 ...
Interest on Investments ........................................................................................... ... 12,000
Insurance (up to 31st July, 2020) ........................................................................................... 24,000 ...
Bank Balance ........................................................................................... 1,50,000 ...
Input CGST ........................................................................................... 6,000 ...
Input SGST ........................................................................................... 6,000 ...
Output CGST ........................................................................................... ... 10,000
Output SGST ........................................................................................... ... 10,000

Total 34,65,000 34,65,000

Adjustments:
(i) Closing Stock ` 2,25,000.
(ii) Machinery of ` 45,000 plus CGST and SGST @ 6% each purchased on 1st October, 2019
was shown as Purchases. Freight paid on the Machinery was ` 5,000, which is included
in Freight on Purchases.
(iii) Commission is payable at 2½% on sales plus CGST and SGST @ 6% each.
(iv) Investments were sold at 10% profit, but the entire sales proceeds have been taken as
Sales.
(v) Write off Bad Debts ` 10,000 and create Provision for Doubtful Debts at 5% of Debtors.
(vi) Depreciate Building by 2½% p.a. and Machinery and Furniture at 10% p.a.
Prepare Trading and Profit and Loss Account for the year ended 31st March, 2020 and
Balance Sheet as at that date.
[Gross Profit—` 7,08,000; Net Profit—` 3,80,600; Balance Sheet Total—` 14,44,600.]

[Hints:

1. Sale of Investments of ` 1,10,000 will be deducted from sales.
2. Out of Purchases, purchase of machinery worth ` 45,000 will be deducted and freight
paid on this machinery ` 5,000 will also be deducted from Freight on Purchases.
3. Machinery will appear in the Balance Sheet as follows: ` 5,00,000 + ` 45,000 (1st Oct.,
2019) + ` 5,000 (Freight) – ` 52,500 (Depreciation) = ` 4,97,500.]