Solution-Prepare the trading and profit and loss account

Prepare the trading and profit and loss account

Reference no: EM13528252

The following Trial Balance has been extracted from the books of a merchant.

	Debit	Credit
Particulars	Dr. Rs	Cr.Rs
Drawings	17,500	-
Buildings	30,000	-
Debtors and Creditors	25,000	40,000
Purchases and Sales	1,50,000	2,32,500
Returns	1,750	1,450
Discount	3,550	2,550
Life Insurance	1,500	-
Cash	15,000	-
Stock (opening)	6,000	-
Bad Debts	2,500	-
Reserve for Bad Debts	-	8,500
Carriage Inwards	3,100	-
Wages	13,850	-
Machinery	4,00,000	-
Furniture	30,000	-
Salaries	17,500	-
Bank Commission	1,000	-
Bills Receivable/Bills Payable	30,000	20,000
Trade Expenses/Capital	6,750	4,50,000
	7,55,000	7,55,000

Adjustments

Allow interest on capital @ 5% p.a.
Machinery includes Rs 1,00,000 of a machine purchased on Dec 31, 2008. Wages include Rs 2,850 spent on the installation of a machine.
Trade expenses Rs 1,250 and wages Rs 1,750 have not been paid as yet.
Depreciate building by 5%; furniture and machinery by 10% p.a.
Make provision of doubtful debts at 5%.
Stock on Mar 31, 2009 was valued at Rs 25,000.

You are required to prepare the Trading and Profit and Loss Account for the year ended on Mar 31, 2009 and a Balance Sheet as on that date.

Reference no: EM13528252

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Prepare the trading and profit and loss account

Reference no: EM13528252

Reference no: EM13528252

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