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Question No 29 Chapter No 18 - USHA Publication 11 Class

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Question No 29 Chapter No 18

Bad debts and provision

29.From the following trial balance extracted from the books of Sharma & Sons, prepare trading and profit & loss account of the year ended 31st March 2018 and a balance sheet as on date.

Ledger balances	(Dr.)Rs	(Cr.)Rs
Purchase & Sale	25,000	50,500
Debtors & Creditor	10,000	4,000
Drawings	5,500	-
Sales return & purchases return	300	250
Discount	760	-
Insurance premium	300	-
Cash	2,800	-
Stock(1st April 2017)	1,400	-
Bad debts	500	-
Bad debts reserve	-	1,540
Wages	2,800	-
Carriage	600	-
Machinery	22,000	-
Furniture	4,000	-
Salaries	3,000	-
Bank charges	500	-
Bill receivable & bills payable	5,500	5,000
Trade expenses	1,330	-
Capital account	-	29,000
Building	4,000	-
	90,290	90,290

Adjustments:

Depreciation building @5% and Machinery@10%
Trade expenses of Rs 220 and wages of Rs 200 have not yet been paid
Allow interest on capital at 10% p.a.
Make provision for doubtful debts at 12%
Stock on 31st March 2018 was Rs 10,000
Prepaid insurance premium is Rs 50.

The solution of Question No 29 Chapter No 18:-

Trading A/c

Particular		Amount	Particular		Amount
To Opening Stock A/c		1,400	By Sale A/c	50,500
To Purchases A/c	25,000		Less: Return	300	50,200
Less: return	250	24,750	By Closing Stock		10,000
To Wages A/c	2,800
Add: outstanding wages	200	3,000
To Carriage A/c		600
To Gross Profit A/c		30,450
		60,200			60,200

Profit/Loss A/c

Particular		Amount	Particular	Amount
To Discount A/c		760	By Gross Profit A/c	30,450
By Insurance A/c	300
Less: prepaid	50	250
By Trade Exp. A/c	1,330
Add: outstanding	220	1,550
To Dep. On building		160
To Dep. On Machinery		200
To Provision for doubtful debts
Bad debts	500
Add: new provision	1,200
Less: old Provision	1,540	160
To Interest on capital		2,000
To Salaries		3,000
To Bank changes		500
To Net profit A/c		18,930
		30,450		30,450

Balance Sheet

Labilities		Amount	Assets		Amount
Capital A/c	29,000		Debtors	10,000
Add: Net Profit	18,930		Less: Provision for doubtful debts	1,200	8,800
Add: Interest on capital	2,900		Cash in hand		2,800
Less: Drawing	5,500	45,330	Bill Receivable		5,500
Creditor		4,000	Machinery	22,000
Bill payable		5,000	Less: depreciation	2,200	19,800
Outstanding Trade exp.		220	Prepaid Insurance		50
Outstanding Wages		200	Furniture		4,000
			Building	4,000
			Less: depreciation	200	3,800
			Closing Stock		10,000
		54,750			54,750