9 .

The following is the trading and profit and loss a/c of sankar for the previous year
31.3.2020
Particulars Rs Particulars Rs
To salaries 12000 By Gross profit 32000
To LIP 2000 By miscellaneous income 10000
TO FIP 2500 By income form HP 5000
To postage 1500 By Dividend 5000
To provision for tax 2500
To sales tax 1500
To bad debts 2250
To provision for bad debts 750
To property tax 350
To reserve for future losses 1650
To fines 200
To interest on capital 1800
To drawings 2200
To entertainment expenses 1200
To charity 600
To advertisement 6000
T legal expenses 3000
To net profits 10000
52000 52000

ADDITIONAL INFORMATION

1. Salaries and wages includes Rs 200 P.M. For shankar himself.

2. Sales Tax is paid after the due date but income tax is paid within the due date
3. advertisement includes Rs 5000 in the nature of capital expenditure and remaining Rs
10000 is revenue in nature
4. Legal expenses include
5. a) related to wrongful dismissal of MD Rs 500
b) Allegation of smuggling business. Where smuggling income of Rs 20000
is not credited to Profit and loss a/c
c) Rs 1000 towards protection of copyrights
6. The WDV as on 1.4.19 of the assets of business was Rs 120000 and purchases a made
during the year Rs 60000. the block of assets fall under 25% depreciation RATE.