}To prepare the Trading and Profit and Loss Account for the year ended on March 31, 2021, and the Balance Sheet as of that date, taking into consideration the provided information, you can follow these steps:
Trading and Profit and Loss Account:
1. Calculate Gross Profit:
- Opening Stock on April 1, 2021: Rs. 66,810
- Purchases: Rs. 4,06,265
- Add: Insurance claim for goods destroyed by fire: Rs. 2,500
- Less: Closing Stock on March 31, 2022: Rs. 31,375
Gross Profit = (66,810 + 4,06,265 + 2,500) – 31,375 = Rs. 4,43,200
2. Operating Expenses:
- Wages: Rs. 57,850
- Salaries: Rs. 27,837
- Commission: Rs. 9,580
- Fuel and Power: Rs. 3,375 - Postage: Rs. 1,565
- Depreciation on Furniture: Rs. 1,813 (10% of 18,130)
Total Operating Expenses = Rs. 101,020
3. Calculate Bad Debts Expense:
- Bad Debts: Rs. 1,310
- Less: Recovery from Insurance (fire claim): Rs. 2,500 Bad Debts Expense = Rs. 1,310 – Rs. 2,500 = -Rs. 1,190
4. Calculate Net Profit:
Net Profit = Gross Profit – Operating Expenses + Bad Debts Expense Net Profit = 4,43,200 – 1,01,020 – 1,190 = Rs. 3,40,990
Balance Sheet as of March 31, 2021:
Assets:
- Stock (as given on March 31, 2022): Rs. 31,375 - Sundry Debtors: Rs. 1,25,500 (Given)
- Less: Provision for Doubtful Debts (5% on Sundry Debtors): Rs. 6,275 (5% of 1,25,500)
- Less: Bad Debts (after recovery): Rs. 1,310 - Cash in Hand: Rs. 8,113 (Given)
- Cash at Bank: Rs. 16,980 (Given)
- Furniture: Rs. 18,130 (Given)
- Less: Depreciation: Rs. 1,813 (10% of 18,130) - Loan to Mukesh: Rs. 7,500 (Given)
Liabilities:
- Sundry Creditors: Rs. 79,320 (Given)
- Bills Payable: Rs. 9,870 (Given)
- Outstanding Wages: Rs. 5,000 (Given) - Capital: Rs. 25,000 (Given)
- Commission Accrued (not paid): Rs. 1,755 (Given)
Calculate the Total Assets and Total Liabilities and Equity to Balance the Balance Sheet.
Total Assets = (31,375 + (1,25,500 – 6,275 – 1,310) + 8,113 + 16,980 + (18,130 – 1,813) + 7,500) = Rs. 2,02,621
Total Liabilities and Equity = (79,320 + 9,870 + 5,000 + 25,000 + 1,755) + Net Profit (from Profit and Loss Account) = Rs. 1,20,945 + Rs. 3,40,990 = Rs. 4,61,935
Now, you can prepare the Balance Sheet as follows:
Balance Sheet as of March 31, 2021:
Assets:
- Current Assets:
- Stock: Rs. 31,375
- Sundry Debtors (after adjustments): Rs. 1,18,915 (1,25,500 – 6,275 – 1,310) - Cash in Hand: Rs. 8,113
- Cash at Bank: Rs. 16,980
- Fixed Assets:
- Furniture (after depreciation): Rs. 16,317 (18,130 – 1,813) - Loan to Mukesh: Rs. 7,500
Total Assets: Rs. 1,83,880
Liabilities:
- Current Liabilities:
- Sundry Creditors: Rs. 79,320
- Bills Payable: Rs. 9,870
- Outstanding Wages: Rs. 5,000
- Commission Accrued (not paid): Rs. 1,755
- Capital: Rs. 25,000
- Net Profit: Rs. 3,40,990
Total Liabilities and Equity: Rs. 4,61,935
