Page 197 - DMGT104_FINANCIAL_ACCOUNTING

Debit
( )
( )
Land and Buildings
50,000
Purchases
40,000
Stock
2,500
Returns
1,500
10,000
Wages
9,000
Salaries
Office expenses Ledger Accounts 1,10,000 Credit
2,400
Carriage inwards 1,200
Carriage outwards 2,000
Discounts 750 1,200
Bad debts 1,200
Unit 8: Financial Statements
Sales 2,05,000
Capital account 1,30,000
Insurance 1,500
Commission 1,500 Notes
Plant and Machinery 50,000
Furniture and Fixtures 10,000
Bills Receivable 20,000
Sundry debtors and creditors 40,000 25,000
Cash in hand 1,500
Cash at bank 4,500
Office equipment 12,000
Bills payable 2,350
Total 3,67,550 3,67,550

Adjustments:
(a) Closing stock amounted to 60,000.
(b) Outstanding liabilities: Wages 2,000, Rent 3,000.
(c) Depreciate land and buildings at 5%, plant and machinery, office equipment and furniture
and fixtures at 10%.
(d) Insurance premium prepaid to the extent of 200.
Solution:
In the books of Mr. Nagaraj
Trading A/c for the year ending March 31, 2011
Dr. Cr.
( ) ( )
To Opening stock 40,000 By Sales 2,05,000
To Purchases 1,10,000 Less: Returns 1,500 2,03,500
Less: Returns 2,500 1,07,500 By Closing Stock 60,000
To Wages 10,000
Add: Outstanding 2,000 12,000
To Carriage inwards 1,200
To Profit and Loss A/c 1,02,800
(Gross profit transferred to
profit and loss A/c)
2,63,500 2,63,500

Profit & Loss A/c for the year ending March 31, 2007
Dr. Cr.
( ) ( )
To Salaries 9,000 By Trading A/c (gross profit 1,02,800
To Office expenses 2,400 transferred from trading A/c)
To Carriage outwards 2,000 By Discount 1,200
To Discount 750 By Commission 1,500
To Bad debts 1,200
To Insurance 1500
Less: Prepaid 200 1,300
To Outstanding rent 3,000
Contd...
To Depreciation:
Land and Buildings 2,500
Plant and Machinery 5,000
LOVELY PROFESSIONAL UNIVERSITY 191
Furniture & Fixture 1,000
Office equipment 1,200 9,700
To Capital A/c 76,150
(Net Profit transferred)
1,05,500 1,05,500