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Question No 27 Chapter No 18 - USHA Publication 11 Class

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Question No 27 Chapter No 18

Bad debts and provision

27. From the following trial balance of Kabul Singh prepare Trading and Profit & Loss account for the year ended 31st march 2019 and balance sheet as of that date:

Debit balances	Rs	Credit balances	Rs
Cash in hand	540	Sales	98,780
Cash at bank	2,630	Return outwards	500
Purchases account	40,675	Capital account	62,000
Returns inwards	680	Sundry creditor	6,300
Wages account	8,480	Rent	9,000
Fuel & power	4,730
Carriage on sales	3,200
Carriage on purchases	2,040
Stock (1.42017)	5,760
Building account	32,000
Freehold land	10,000
Machinery	20,000
Patents	7,500
Salaries	15,000
General expenses	3,000
Insurance	600
Drawings	5,245
Sundry debtors	14,500
	1,76,580		1,76,580

Prepare trading and profit & loss account and a balance sheet as on 31st march 2010 after taking into account the following adjustments:

Stock on hand 31st Match 2018 id Rs 6,800
Plant and machinery is to be depreciated at 10% and patents at 20%
Salaries for the month of march 2018 amounting to Rs 1,500 were unpaid
Insurance includes a premium of RS 170 a policy expiring on 31st Sept 2018
Further bad debts are Rs 725
Rent receivable Rs 1,000

The solution of Question No 27 Chapter No 18:-

Trading A/c

Particular		Amount	Particular		Amount
To Opening Stock A/c		5,760	By Sale A/c	98,780
To Purchases A/c	40,675		Less: Return	680	98,100
Less: Return	500	40,175	By Closing Stock		6,800
To Wages A/c		8,480
To Fuel & power A/c		4,730
To Carriage on purchases A/c		2,040
To Gross Profit A/c		43,715
		1,04,900			1,04,900

Profit/Loss A/c

Particular		Amount	Particular		Amount
To carriage on sale A/c		3,200	By Gross Profit A/c		43,715
To Salaries A/c	15,000		By Rent A/c	9,000
Add: outstanding salaries	1,500	16,500	Add: Rent receivable	1,000	10,000
To General Exp.		3,000
To Insurance A/c	600
less: prepaid insurance	85	515
To Bad debts		725
To Dep. On Plant & machinery		2,000
To Dep. On patents		1,500
To Net profit A/c		26,275
		53,715			53,715

Balance Sheet

Labilities		Amount	Assets		Amount
Capital A/c	62,000		Debtors	14,500
Add: Net Profit	26,275		Less: provision for doubtful debts	725	13,775
less: Drawing	5,245	83,030	Cash in hand		540
Creditor		6,300	Cash at bank		2,630
Outstanding salaries		1,500	Rent receivable		1,000
			Insurance premium prepaid		85
			Closing Stock		6,800
			Freehold land		10,000
			Building		32,000
			Patent	7,500
			Less: depreciation	1,500	6,000
			Machinery	20,000
			Less: depreciation	2,000	18,000
		90,830			90,830