Q.

4 IN THE BOOKS OF ARWA Matching of COST V/S REVENUE Capital and Revenue
PROCESS PRINCIPLE
MANUFACTURING , TRADING , PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2020
AMOUNT AMOUNT

TO OPENING STOCK
RAW MATERIALS 40,000 BY SALES OF SCRAP
WORK IN PROCESS 40,000
BY CLOSING STOCK
TO PURCHASES OF RAW MATERIALS 255,000 RAW MATERIALS
TO MANUFACTURING WAGES 105,000 WORK IN PROCESS
LESS INSTALLATION OF MACHINERY 5,000 100,000
TO ALTERATIONS TO MACHINERY 5,000 BY RAW MAT WITHDRAWN BY ARWA
TO DEPRECIATION - BUILDINGS 30,000

BY COST OF PRODUCTION
TRANSFERRED TO TRADING ACCOUNT

430,000

TO OPENING STOCK- FINISHED GOODS 0 BY SALES OF FINISHED GOODS

TO COST OF PRODUCTION TR FROM MFG 400,000 LESS RETURNS
TO PURCHASES OF FINISHED GOODS 20,000 LESS SALE OF FURNITURE
TO CUSTOM DUTY ON FINISHED GOODS 10,000
430,000 BY CLOSING STOCK FINISHED GOODS

TO GROSS PROFIT 170000 BY GOODS WITHDRAWN BY ARWA

600000

TO ADMN AND FINANCE EXPENSES 70,000 BY GROSS PROFIT

TO BAD DEBTS 2,750 BY DISCOUNTS

ADD NEW PROVISION 2,250
5,000 BY RESERVE FOR DISCOUNT ON CRS
TO PROVISION FOR DISCOUNT ON DRS 5,000
TO ENTERTAINMENT EXPENSES BY PROFIT ON SALE OF FURNITURE
TO INTEREST
TO DEPRECIATION - FURNITURE 1,050
TO DEPRECIATION - BUILDINGS
81,050
TO NET PROFIT TRANSFERRED TO 99,950
CAPITAL ACCOUNT
 181,000

BALANCE SHEET AS AT 31 MARCH 2020

Capital and Liabilities AMOUNT Assets

ARWA'S CAPITAL 113,250 PATENTS

ADD PROFIT 99,950
LESS DRAWING - BUILDNGS AND MACHINERY 195,000
GOODS WITHDRAWN 10,000 203,200 ADD INSTALLATION WAGES 5,000
LESS DEPRECIATION @ 15 % 30,000

TOTAL CREDITORS 110,000 FURNITURE 12,000

ADD BILL DISHONOURED 10,000 LESS SALE OF FURNITURE WDV 1,500
LESS RES FOR DIS @ 5 % 6,000 LESS DEPRECIATION @ 10 % 1,050
114,000
STOCK
ACCEPTANCES 40,000 RAW MATERIALS
WORK IN PROCESS 20,000
FINISHED GOODS 100,000

TOTAL DEBTORS 40,000

ADD BILL DISHONOURED 10,000
LESS PROV FOR DIS @ 10 % 5,000
LESS PROV BAD & DD @ 5 % 2,250

357,200
 Capital and Revenue

MARCH 2020
AMOUNT AMOUNT

Direct Expense

20,000 20,000

DRAWN BY ARWA 10,000

30,000
400,000
RADING ACCOUNT

430,000

506,000 CR BAL
4,000 DR BAL
2,000 500,000

INISHED GOODS 100,000

AWN BY ARWA

600000

170,000 Indirect Expense

4,500

COUNT ON CRS 6,000

OF FURNITURE 500
 181,000

AMOUNT

15,000
Wrong
195000 X 15 % = 29250
Correct
170,000 200000 x 15 % = 30000

Bal for dep

9,450 12000 - 1500 =10500

120,000

42,750

357,200