Prepare Final Account of Abdul Traders for the year ending 31st march, 2019 with the help of following trial Balance and Adjustments.

Trail Balance as on 31st March, 2018

Debit Balance	Amount	Credit Balance	Amount
Salaries	10,000	Interest received	2,400
Purchases	71,400	Capital	1,60,000
Rent (11 months)	2,200	Sales	85,000
Machinery	56,000	Provision for Bad Debts	2,000
Advance against wages	4,000	Commissions Received	1,600
Opening stock	20,000	Bills Payable	9,200
Bad Debts	1,000	Creditors	56,000
Prepaid Insurance	2,400
Wages	2,600
Loose Tools	26,000
Commission Receivable	400
Sundry Debtors	64,000
Cash	1,000
Bank	3,000
Drawings	7,600
Freight Inward	1,000
Bills Receivable	13,600
Loan to Aruna	30,000
	3,16,200		3,26,200

Adjustments: 

1. Closing Stock valued at 89,600 

2. Outstanding expenses Salaries 2,000, Wages 4,000 

3. Charge depreciation on Machinery @10% 

4. Bad Debts written off 2,000 and create a provision for bad and doubtful debts 5% on Sundry Debtors 

Solution:  

In the Books of Abdul Traders Final Account

 

 Trading Account and Profit and loss Account for the year ending 31st, 2019

Particulars	Amount	Amount	Particulars	Amount	Amount
To Opening Stock		20,000	By Sales		85,000
To Purchases		71,400
To Wages	2,600
(+) Outstanding Salaries	4,000	6,600
To Freight Inward		1,000
			By Closing Stock		89,600
To Gross Profit c/d		75,600
		1,74,600			1,74,600

To Bad Debts   (T)	1,000		By Gross Profit b/d		75,600
(+) Bad Debts  (A)	2,000
(+) R.D.D.  New  (A)	3,100
	6,100
(-) R.D.D.  Old  (T)	(2,000)	4,100
To Rent	2,200		By Interest received		2,400
(+) Outstanding Rent	200	2,400
To salaries	10,000		By Commission  received		1,600
(+) outstanding Salaries	2,000	12,000
To Depreciation on Machinery		5,600
To Net Profit		55,500
		79,600			79,600

Balance Sheet as on 31st March, 2018

Liabilities	Amount	Amount	Assets	Amount	Amount
Capital	1,60,000		Machinery	56,000
(-) Drawings	(7,600)		(-) Depreciation	(5,600)	50,400
	1,52,400
Net Profit	55,500	2,07,900
			Loose Tools		26,000
			Cash		1,000
			Bank		3,000
			Debtors              (T)	64,000
			(-) bad Debt    (A)	(2,000)
				62,000
			(-) R.D.D.          (A)	(3,100)	58,900
Bills Payable		9,200	Bills Receivable		13,600
Creditors		56,000	Prepaid wages		4,000
Outstanding Salaries		2,000	Commission received		400
Outstanding Wages		4,000	Loan to Arun		30,000
Outstanding Rent		200	Prepaid Insurance		2,400
			Closing Stock		89,600
		2,79,300			2,79,300

Explanation and Calculation:

1. Rent for 11 months.

Here Rent is paid for 11 months only, Therefore one rent is unpaid. And it as to be recorded in Final statement. 

One month Rent is Outstanding hence Add to expense(rent) and Liability side to be record in the final statement.  

2.  Depreciation on Machinery

56,000*10/100 = 5,600

3.  Loan to Arun.

Abdul Trader gave the Loan to Arun. That mean Mr. Arun is liable to pay ₹30,000 to Abdul Traders. Therefore loan to Arun is an Asset.