FJ: - , :;

I
Pro blem :
th e
San thos h co capital of Rs. 40,000. At the end of the year
mmenced business on I April 2017 with a
st
folio •
s of accounts.
win g balances were obtained from the book

Particulars Dr. Cr.

Plant and Machinery 12,500
Purchases 48,500
Wages 7,050
Returns outwards 500
Sales 60,000
Furniture & fixtures 2,500
Freight 1,000
Carriage outwards 250
Rent and taxes 2,300
Printing and stationery 400
Debtors 10,300
Creditors 5,000
Postage and telegrams 400
Discounts 600
Rent received 600
Insurance 350
Salaries 3,600
Cash in hand 3,050
Cash at bank 13~300
Returns inwards 1,000
Trade expenses 200

7,300. Make the following adjustments.

The stock at 31 March 2018 was worth Rs.
st

reserve for doubtful debts at 5% on debtors.

a) Write off bad debts Rs. 300 and provide
and creditors at 2%.
b) Create a reserve for discount on debtors
ted at I0%. Furniture at 5%.
c) Plant and Machinery are to be deprecia
Rs. 50.
d) Insurance was prepaid to the extent of
st .
ing and Prof it & Los s Acc ount for the year and Balance Sheet as on 31 March 2018
Prep are Trad
 '

Particulars Dr. Cr. -

B Plant and Machiner y 12,500 -
T Purchases 48,500
T Wages 7,050
T Returns outwards 500
T Sales 60,000
B Furniture & fixtures 2,500
T Freight 1,000
P/L Carriage outwards 250
P/L Rent and taxes 2,300
P/L Printing and stationery 400
B Debtors I0,300
B Creditors 5,000
P/L Postage and telegrams 400
P/L Discounts 600
Rent received 600
P/L
Insurance 350
P/L
Salaries 3,600
P/L
Cash in hand 3,050
B
13,300
B Cash at bank
1,000
T Returns inwards
200
P/L Trade expenses

. Make the following adjustments.(T&B)

The stock at 31 March 2018 was worth Rs. 7,300
st

ve for doubtful debts at 5% on debtors.(P/L&B)

a) Write off bad debts Rs. 300 and provide reser
tors at 2%.(P/L& B)
b) Create a reserve for discount on debtors and credi
I 0%. Furniture at 5%.(P/L& B)
c) Plant and Machinery are to be depreciated at
/L& B)
d) Insurance was prepaid to the extent of Rs. 50.(P
st
ing and Profit & Loss Account for the year and Balance Sheet as on 31 March 2018.
Prepare Trad

---
Solution:

Santhosh Trading and Profit & Loss account for the year ended 31-March-2018
Dr Cr
Particulars Amount Amount Particulars Amount Amount
To Purchases 48,500 By Sales 60,000
Less: Returns 500 48,000 Less: Returns 1,000 59,000
To Freight 1,000 By Closing Stock 7,300
To wages 7,050
To Gross Profit c/d 10,250

66,300 66,300
To carriage outwards 250 By Gross profit b/d 10,050
To Rent & taxes 2,300 By Discount 600
To Printing & stationery 400 By Rent 600
To Trade expenses 200 By Reserve for discount
on Creditors (b) 100
(5000x2/100 = 100)
To Postage & telegrams 400
To Insurance 350
Less: Prepaid Insurance 50 300
To Salaries 3,600
To Bad debts (a) 300
To Reserve for Doubtful Debts
at 5% (c) (10000x5/l00- 500) 500
To Reserve for discount on
Debtors at 2% (b) 190
(9500x2/l 00 190)
To Depreciation on:
Plant and Machinery (c) 1,250
( 125 00x 10/100 1250)
Furniture (c) 125
(2500x5/100 125)
To Net profit 1,735
11,550 11,550
..

Note: Calculation of Reserve for Doubtful Debts

5
Debtors 10,300 10000 X -100 = 500 (a)
Less: bad debts 300
Reserve for Doubtful Debts 10,000
Calculation of reserve for discount on Debtors

Good debts (as calculate above) 10,000 9500 X 2-

100
= 190 (b)
Less: provision for doubtful debts 500
9,500
 9
Q

st
Balance Sheet as on 31 March 2018 -
Assets Amount Amount
Liabilities Amount Amount
3,050
Capital 40,000 Cash in hand 13,300
Add: Net Profit 1,735 41,735 Cash at bank
10,300
Sundry Debtors
300
5,000 Less: Bad debts
Creditors 10,000
Less: Reserve for 100 4,900
I;

Discount on Creditors 500

Less: Reserve for bad debts
9,500
190 9,310
Less: Reserve for Discount
7,300
Closing stock
2,500
Furniture 2,375
Less: Depreciation (5%)
125

Plant & Machinery 12,500

1,250 11,250
Less: Depreciation( 10%)
50
Prepaid insurance '
46,635
46,635