Livestock Economics, Marketing and Business Management

ILLUSTRATION

• The following are the balance taken from the books of Mr. Suresh on March31, 2005

	Rs		Rs
Capital	30000	Sales	15000
Drawings	5000	Sales Returns	2000
Furniture	2600	Discounts Allowed	1600
Bank overdraft	4200	Discounts Receives	2000
Creditors	13300	Taxes	2000
Buildings	20000	General Expenses	4000
Stock Opening	22000	Salaries	9000
Debtors	18000	Commissions Paid	2200
Rent from Tenants	1000	Carriage Inwards	1800
Purchases	11000	Bad debts	800
Reserve for Bad Debts	500	Closing Stock	20000
Depreciation Building by 25%		Furniture by 10%
Provide reserve for Bad Debts at 5%		Unexpected Taxes	900
interest on Capital at 5%

• Prepare (a) Trading Account and (b) Profit and Loss Account for the year (As on Closing Date).

Solution

Trading Account

Particulars	Rs	Rs	Particulars	Rs	Rs
To Stock		20000	By Sales	150000
To Purchases		11000	Less: Returns	2000	148000
To Carriage in		1800			20060
To Gross Profit		34260
		168060			168060

Profit and Loss Account of Mr.X for the year ending 31 March, 2005

Particulars	Rs	Rs	Particulars	Rs	Rs
To interest on Capital			By Trading Account (g/p)		34260
To Reserve for b/d Add: new reserve	800 900		By Rent received		1000
Less: Existing	1700 500	1200	By Discount Received		2000
To Depreciation: Building furniture	500 260	760
To Discounts Allowed To Taxes Less: Pre-Paid	2000 900	1600 1100
To General Expenses		4000
To Salaries		9000
To Commission Paid		2200
To Net Profit		15900
		37260
		37260			37260