Problem 2:
From following figures extracted from the books of Mr. XYZ, you are required to prepare a Trading & Profit & Loss Account for the year ended 31st March, 2008 and a Balance Sheet as on that date after making the necessary adjustments.
$ $
Mr. XYZ's Capital 228,800 Stock 1.4.2007 38,500
Mr. XYZ ' Drawings 13,200 Wages 35,200
Plant & Machinery 99,000 Sundry creditors 44,000
Freehold property 66,000 Postage & Telegrams 1,540
Purchases 110,000 Insurance 1,760
Rtuens outwards 1,100 Gas & fuel 2,970
Salaries 13,200 Bad debts 660
Office Expenses 2,750 Office rent 2,860
Discount A/c (Dr.) 5,500 Loose tools 2,900
Sundry Debtors 29,260 Factory lighting 1,100
Loan to Mr. Krish @10% p.a. 44,000 Provision for doubtful debts 880
Balance on 1.4.2007 Interest on loan to Mr. Krish 1,100
Cash at bank 29,260 Cash in hand 2,640
Bills payable 5,500 sales 231,440
Adjustments:
a) Stock on 31st March, 2008 was valued at $ 72,600
b) A new machine was installed during the year costing $15,400 but it is not recorded in the books as on payment was made for it. Wages $ 1,100 paid for its erection has been debited to the wages account.
c) Depreciate :
a. Plant & machine by 33.33%
b. Furniture by 10%
c. Freehold property by 6%
d) Loose tools were valued at $ 1.760 as on 31.3.2008
e) Of the sundry debtors Rs.660 are bad and should be written off.
f) Maintain a provision of 5% on sundry debtors for doubtful debts.
g) The manager is entitled to a commission of 10% of the net profits after charging such commission.