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On 31st March, 2023 the following Trial Balance was prepared from the Books of Manpreet:

Debit Balances Credit Balances

Furniture

Building

Drawings

Cash at Bank

Wages

Discount Allowed

Bank Charges

Salaries

Purchases

Opening Stock

Cash in Hand

Sales Return

Carriage Inwards

Machinery

Sundry Debtors

Bad Debts

Insurance

Rent

Advertisement

3,400

21,700

4,200

2,470

31,250

2,640

90 5,610

1,32,700

40,200

2650

1,250

3,400

43,800

1,000

1,250

2,450

3,500

Capital

Discount received

Bank Loan

Purcahses Return

Sales

Sundry Creditors

Provision for Doubtful Debts

1,00,000

2,000

10,000

970

1,91,940

12,450

800

  3,18,160   3,18,160

Prepare Trading and Profit & Loss Account for the year ended 31st March, 2023 and also the Balance Sheet as at that date after making the following adjustments:

(i) Closing Stock at cost was ₹ 35,000 whereas its net realisable value (market value) was ₹ 30,000.

(ii) A new machine was purchased for ₹ 3,000 on 1st April, 2022 but it was not paid for and no entry was passed in the books.

(iii) Wages include ₹ 500 paid for the installation of machinery.

(iv) Provision for Doubtful Debts was raised to ₹ 1,400 and further bad debts of ₹ 300 were written off.

(v) Fire broke out on 20th March, 2023 and destroyed stock to the value of ₹ 8,000. The insurance company admitted claim for loss of stock of ₹ 5,000 and the amount was paid on 15th April, 2023.

(vi) Outstanding wages were ₹ 700 while outstanding salaries were ₹ 500.

(vii) Prepaid insurance was ₹ 250 and prepaid advertisement ₹ 500.

(viii) Machinery was depreciated by 10% and Furniture by 15%.

[Gross Profit – ₹ 21,910; Net Profit – ₹ 1,400; Balance Sheet Total – ₹ 1,23,850.]

Anurag Pathak Changed status to publish October 13, 2023