Page 167 - DMGT104_FINANCIAL_ACCOUNTING

Unit 8: Financial Statements

Illustration 1: From the following information, prepare the trading account for the year ended Notes
31st March 2011.
Stock on 1st April 2005 (Opening stock) 4,000

Purchases
(i) Cash purchases 20,000
(ii) Credit purchases 50,000
Sales
(i) Cash sales 20,000
(ii) Credit sales 60,000

Stock on 31st March 2011 (Closing Stock) 6,000
Solution:
Dr. Trading Account for the year ended 31st March 2006 Cr.
( ) ( )
To Opening stock 4,000 By Credit sales 20,000
To Credit purchases 20,000 By Cash sales 60,000
To Cash purchases 50,000 By Total sales 80,000
To Total purchases 70,000 By Closing stock 6,000
To Gross profit c/d 12,000
86,000 86,000

Illustration 2: Prepare trading account of M/s Sundar and sons as on 31st March 2011
( )

Opening stock on 1st April 2004 50,000
Purchases
(i) Cash 1,20,000
(ii) Credit 1,00,000

Sales
(i) Cash 40,000
(ii) Credit 1,00,000
Purchase Returns 20,000
Carriage Inwards 10,000
Marine insurance on purchase 6,000

Other direct expenses 4,000
Sales Returns 30,000
Stock as on 31st March 2011 10,000
In this problem, return outwards and inwards are given in addition to cash and credit purchases
and sales of a firm to find out the net purchases and the net sales of the firm.
Net Sales = Cash Sales + Credit Sales – Sales Returns
Net Purchases = Cash Purchases + Credit Purchases – Purchase Returns

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