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Question No 38 Chapter No 18 - USHA Publication 11 Class

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Question No 38 Chapter No 18

Mutual indebtedness

38.Te following balances were extracted from the books of Brijesh Chandra on 31st March 2018

Ledger balances	Rs	Ledger balances	Rs
Capital	24,500	Bad debts	550
Drawings	2,000	Loan (Cr.)	7,880
General expenses	2,500	Sales	65,360
Building	11,000	Purchases	47,000
Machinery	9,340	Scooter	2,000
Opening stock	16,200	Bad debts provision	900
Power	2,240	Commission(Cr.)	1,320
Taxes & insurance	1,315	Scooter expenses	1,800
Wages	7,200	Bills payable	3,850
Debtors	6,280	Cash	80
Creditor	2,500	Bank overdraft	3,300
Charity	105

Prepare final account for the year ended 31st march 2018 after giving effect to the following adjustments:

Stock on 31st March 2018 was valued at Rs 23,500
Write off furniture Rs 160 as bad debts and maintain the provision for bad debts at 5% on debtors
Depreciation machinery at 10% and scooter at12%
Provide Rs 750 for outstanding interest on loan and overdraft
Manager is given 10% commission on net profit before charging such commission

The solution of Question No 38 Chapter No 18:-

Trading A/c

Particular	Amount	Particular	Amount
To Opening Stock A/c	16,200	By Sale A/c	65,360
To Purchases A/c	47,000	By Closing Stock A/c	23,500
To Wages A/c	7,200
To Power Expenses A/c	2,240
To Gross Profit A/c	16,220
	88,860		88,860

Profit/Loss A/c

Particular		Amount	Particular	Amount
To General Exp. A/c		2,500	By Gross Profit A/c	16,220
To Taxes & insurance		1,315	By Commission A/c	1,320
To Charity		105
To Bad debts		1,000
written off during the year	550
Add: written off now	106
Add: new provision	306
Less: old provision	900	116
To Scooter Exp.		1,800
To Dep. On machinery		934
To Dep. On Scooter		240
To Interest on loan and O/d		750
To Manager’s commission		978

To Net profit A/c		8,802
		17,540		17,540

Balance Sheet

Labilities		Amount	Assets		Amount
Capital A/c	24,500		Debtors	6,280
Add: Net Profit	8,802		Less: bad debts w/off	160
Less: Drawing	2,000	31,302	Less: provision	306	5,814
Creditor		2,500	Cash in hand		80
loan		7,880	Closing stock		23,500
Bill payable		3,850	Building		11,000
Outstanding interest		750	scooter	2,000
Manager’s comm. Due		978	Less: depreciation	240	1,760
			Machinery	9,340
			Less: depreciation	934	8,406
		50,560			50,560