On 31st March, 2020 the following Trial Balance was prepared from the books of Manpreet:
Debit Balance:
furniture ..... 3,400
building.....21,700
drawing.......4,200
cash at bank......2,470
wages ......31,250
discount allowed......2,640
bank charges........90
salaries.......5,610
purchase......1,32,700
opening stock.......40,200
cash in hand......150
sales return.....1,250
carriage inward......3,400
machinery......14,600
sundry debtors.....43,800
bad debts.....1,000
insurance......1,250
rent.....2,450
bills receivable.....2,500
advertisement......3,500
credit balance:
capital.....1,00,000
discount received......2,000
bank loan......10,000
purchase return......970
sundry creditors......12,450
sales.......1,91,940
provision for doubtful debt....800
Prepare Trading and Profit and Loss Account for the year ended 31st March, 2020 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 3 30,000.
(ü) A new machine was purchased for 3,000 on 1st October, 2019 but it was not paid for
and no entry was passed in the books.
(ui) Wages include 3 500 paid for the installation of machinery.
(w) Provision for Doubtful Debts was raised to 1,400 and further bad debts of 7 300 were
written off.
(v) In the month of March, 2020, a fire broke out and destroyed stock to the value of
38,000. The insurance company admitted claim for loss of stock to the tune of 5,000
only and the amount was paid in April, 2020,
(vi) Outstanding wages were ... 700 while outstanding salaries amounted to ? 500.
(vii) Prepaid insurance was ...250 and prepaid advertisement ....500.
(viii) Machinery was depreciated by 10% and furniture by 15%.