Page 172 - DMGT104_FINANCIAL_ACCOUNTING

Gross Profit
2,50,000
Less
Office and administrative expenses
Salaries
Rent and taxes
26,500
Insurance charges
3,720
Audit fee
2,700
Printing and stationery
1,100
1,11,570
General expenses
550
Less
Selling and distributive expenses
1,210
4,000
-1,16,780
Carriage outwards
1,33,220
Advertising Particulars 77,000 ( ) 5,210 ( )
Operating profit
Add-
Non operating Income-
Interest on investments 4,300
Financial Accounting
Rent received 2,300
Profit on sale of Machinery 41,000 47,600 +47,600
Less 1,80,820
Notes Non operating expense-
Interest on loans 15,000
Loss on sale of plant 3,100
Donations 4,250
Loss by theft 12,500 34,850 – 34,850
Net profit 1,45,970

In case of Net loss reverse entry is to be passed i.e.
Capital A/c (Net loss) Dr.
To profit & loss A/c
Net loss transferred

Illustration 5: Following is the trial balance of R. Prasad on 30th June 2010
Particulars Dr. ( ) Cr. ( )
Capital - 15,000
Purchases 20,000 -
Sales - 30,000
Wages 1,200 -
Furniture 800 -
Salaries 900 -
Traveling Expenses 700 -
Commission 300 -
Cash in hand 1,000 -
Cash at Bank 3,400 -
Buildings 16,000 -
Debtors & Creditors 4,500 4,000
Bills Payable & Bills Receivable 600 800
Telephone 100
Returns 500 200
50,000 50,000

On 30th June 2010 stock was valued at 7,500. Prepare Trading and Profit & Loss account for the
year ended on 30th June 2010
Solution:
Trading and Profit & Loss account of Mr. R. Prasad
(for the year ended on 30th June 2010)
Particulars ( ) Particulars ( )
To Purchases 20,000 By sales 30,000
-Returns 200 19,800 -Returns 500 29,500
To Wages 1,200 By Closing stock 7,500
To Gross Profit c/d 16,000
37,000 By Gross profit b/d 37,000
To Salaries 900 16,000
To Travelling Expenses 700
To Commission 300 Contd...

To Telephone 100
To Net Profit 14,000
166 LOVELY PROFESSIONAL UNIVERSITY
16,000 16,000