Page 171 - DEBK-XI(2020)

Adjustments in Preparation of Financial Statements 19.23

6. Following Trial Balance is extracted from the books of Merchant Mr. Negi on 31st March, 2020:

Particulars Dr. (`) Cr. (`)
Furniture and Fittings .................................................................................................................. 640 ...
Motor Vehicle .................................................................................................................. 6,250 ...
Building .................................................................................................................. 7,500 ...
Capital .................................................................................................................. ... 12,500
Bad Debts .................................................................................................................. 125 ...
Provision for Doubtful Debts .............................................................................................................. ... 200
Sundry Debtors and Creditors ........................................................................................................... 3,800 2,500
Stock as on 1st April, 2019 ................................................................................................................ 3,460 ...
Purchases and Sales .................................................................................................................. 5,475 15,450
Bank Loan .................................................................................................................. ... 2,850
Sales Return and Purchases Return ................................................................................................. 200 125
Advertising .................................................................................................................. 450 ...
Interest on Bank Loan .................................................................................................................. 118 ...
Commission .................................................................................................................. ... 375
Cash .................................................................................................................. 650 ...
Taxes and Insurance Premium .......................................................................................................... 782 ...
General Expenses .................................................................................................................. 1,250 ...
Salaries .................................................................................................................. 3,300 ...
34,000 34,000

Adjustments:
(a) Stock in hand on 31st March, 2020 ` 3,250.
(b) Depreciate Building @ 5% p.a., Furniture @ 10% p.a. and Motor Vehicle
@ 20% p.a.
(c) ` 85 is due for interest on Bank Loan.
(d) Salaries ` 300 and Taxes ` 200 are outstanding.

(e) Insurance Premium amounting ` 100 prepaid.
(f) One-third of the commission received is in respect of work to be done next year.
(g) Write off a further sum of ` 100 as bad debts from Debtors and create Provision for Doubtful
Debts @ 5% on debtors.
Complete the following Trading Account, Profit and Loss Account and Balance Sheet.

Dr. TRADING AND PROFIT AND LOSS ACCOUNT for the year ended 31st March, 2020 Cr.
Particulars ` Particulars `

To ...(1)... ..(2).. By Sales 15,450
To Purchases 5,475 Less: Returns ...(3)... ...(4)...
Less: Returns ...(5)... ...(6)... By ...(7)... ...(8)...
To Gross Profit c/d ...(9)...
...(10)... ...(11)...