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Question No 37 Chapter No 18 - USHA Publication 11 Class

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Question No 37 Chapter No 18

Mutual indebtedness

37. From the following figures taken from the books of Margret, prepare the trading and profit & loss account for the year ending 31st March 2019 and the balance sheet as of that date

Debit balances	Rs	Credit balances	Rs
Closing stock	25,000	Capital	50,000
Book debts	20,000	Creditor	10,000
Plant & machinery	10,000	Reserve	10,000
Unproductive wages	6,000	Sales	1,50,000
Salaries	2,000	Wages outstanding	1,000
Land & Building	30,000
Travelling Expenses	2,500
Cost of goods sold	95,000
Cash	30,500
	2,21,000		2,21,000

It was decided to write off 10% of plant & machinery and to reserve for bad and doubtful debts at 10%of sundry debtors; to place Rs 1,000 to bonus for staff; to place Rs 15,000 for general reserve and to carry forward the balance.

The solution to Question No 37 Chapter No 18:-

Trading A/c

Particular	Amount	Particular	Amount
To Cost of goods sold A/c	95,000	By Sale A/c	1,50,000


To Gross Profit A/c	55,000
	1,50,000		1,50,000

Profit/Loss A/c

Particular	Amount	Particular	Amount
To Wages A/c	6,000	By Gross Profit A/c	55,000
To Salaries	2,000
To Trade expenses	2,500
To Dep. On plant & machinery	1,000
To Provision for doubtful debts	2,000
To Staff bonus A/c	1,000
To General reserve A/c	15,000
To Net profit A/c	25,500
	55,000		55,000

Note: Since the cost of goods sold was calculated with reference to direct expenses, all expenses now given have been debited in the profit & loss account

Balance Sheet

Labilities		Amount	Assets		Amount
Capital A/c	50,000		Book debts	20,000
Add: Net Profit	25,500	75,500	Less: Provision for doubtful debts	2,000	18,000
Sundry Creditor		10,000	Cash in hand		30,500
Outstanding wages		1,000	Closing stock		25,000
General Reserve	10,000		Land & building		30,000
+ addition during the year	15,000	35,000	Plant & machinery	10,000	4,680
Provision for employee bonus		1,000	Less: depreciation	1,000	9,000
		1,12,500			1,12,500