Final Accounts

4.5 From the following trial balance of Mr. Guru Prepare final accounts for the year ended on
31-03-2019.
Dr. Rs. Cr. Rs.
Drawings 6,000 Capital 80,000
Postage & Telegram 800 Rent received 1,200
Insurance premium 700 Creditors 10,000
Machinery 25,000 Purchase returns 1,000
Trade expenses 400 Sales 1,20,000
Opening stock 15,000 Reserve for bad & doubtful debts 400
Purchases 82,000 Discount 800
Salary & Wages 21,300
Carriage outwards 500
Printing & stationery 800
Rent 4,600
Taxes 2,000
Bank 20,500
Cash 6,200
Debtors 20,600
Sales returns 2,000
Furniture 5,000
2,13,400 2,13,400

Adjustments:
1. Stock on 31-03-2019 Rs.14,600
2. Write off bad debts Rs.600
3. Reserve for bad and doubtful debts @5% on sundry debtors
4. Provide reserve for discount on debtors@ 2% and creditors@2%
5. Depreciate machine@5% and furniture@20%
6. Prepaid insurance Rs.100
7. A fire occurred on 25-2-2019 destroying stock to the extent of Rs.5,000. The stocks were
insured and the insurance company reimbursed the loss.

Trading account of Mr. Guru for the year ended 31-03-2019

Dr. Rs. Cr. Rs.
To Opening stock 15,000 By Sales 1,20,000
Less: Sales return 2,000 1,18,000
To Purchases 82,000 By Closing stock 14,600
Less: Purchases return 1,000 81,000 Add: Stock destroyed by fire 5,000 19,600
To Gross Profit 41,600
1,37,600 1,37,600
 Profit & Loss account of Mr. Guru for the year ended 31-03-2019
Dr. Rs. Cr. Rs.
To Salary & Wages 21,300 By Gross Profit 41,600
To Rent 4,600 Rent received 1,200
To Taxes 2,000 Discount received 800
To Carriage outwards 500 To Reserve for discount
on creditors:
Creditors [10,000x2%] 200
To Printing & stationery 800
To Trade expenses 400
To Postage & Telegram 800
To Insurance 700
Less: Prepaid 100 600
To Depreciation on machine [25,000x5%] 1,250
To Depreciation on furniture [5,000x20%] 1,000
To Provision on bad debts:
To Existing bad debts xxx
Add: New Bad debts written off 600
600
Add: New Provision on debtors
[20,600-600=20,000x5%] 1,000
1,600
Less: Existing provision on bad debts 400 1,200
To New Reserve for discount on debtors:
[20,600-600=20,000-1,000=19,000x2%] 380
To Net Profit 8,970
43,800
Balance sheet of Mr. Guru as on 31-03-2019
Liabilities Rs. Assets Rs.
Capital 80,000 Machine 25,000
Add: Net Profit 8,970 Less: Depreciation 1,250 23,750
88,970 Furniture 5,000
Less: Drawings 6,000 82,970 Less: Depreciation 1,000 4,000
Cash 6,200
Bank 20,500
Creditors 10,000 Debtors 20,600
Less: Reserve for Less: New Bad debts written off 600
discount on creditors 200 20,000
9,800 Less: New Provision on debtors 1,000
19,000
Less: New Reserve for discount 380 18,620
on debtors
Closing stock 14,600
Prepaid insurance 100
Insurance company
[Reimbursed the loss on fire] 5,000
92,770 92,770