From the following Trial Balance of Rajnish & Sons and the additional Information given below prepare Trading & Profit & Loss Account for the year ending on 31st March 2018 and Balance Sheet as on that date.

Trial Balance s on 31st March 2018

Debit Balances	Amount	Credit Balances	Amount
Stock (01.04.2017)	1,20,000	Capital	6,00,000
Purchases	4,00,000	Sales	3,00,000
Wages	17,000	Return outward	8,000
Carriage	6,000	Sundry Creditors	1,80,000
Salaries	60,000	Bills Payable	90,000
Rent, Rates and Taxes	12,000	8% Loan (taken on 01.10.2017)	1,00,000
Insurance	8,000	Bank Overdraft	79,200
Royalties	10,000
Discount	4,500
Courier charges	5,200
Bad Debts	7,000
Trade expenses	2,500
Drawings	15,000
Machinery	3,00,000
Furniture	1,50,000
Patents	50,000
Sundry Debtors	1,90,000
	13,57,200		13,57,200

Adjustments :

1. Closing Stock valued at 3,00,000 cost ;price and 3,20,000 at Market price.

2. Salaries were paid for 10 months only.

3. Insurance is paid for one year ending on 30.06.2018

4. One of the debtors Mr. Amit became3 insolvent, from whom 10,000 was not received.

5. 5% R.D.D. is to be maintained on Debtors.

6. Depreciation Machinery & Furniture @ 10% and 5%  respectively.

Solution:

In the books of Rajnish & Sons Final Account

Trading A/c And Profit & Loss A/c for the year ended 31st march, 2018 

Particulars	Amount	Amount	Particulars	Amount	Amount
To Opening Stock		1,20,000	By Sales		3,00,000
To Purchases	4,00,000
(-) Purchase Return	(8,000)	3,92,000
To Wages		17,000
To Carriage		6,000
To Royalties		10,000	By Closing Stock		3,00,000
To Gross Profit c/d		55,000
		6,00,000			6,00,000

To Bad Debts      (T)	7,000		By Gross Profit b/d		55,000
(+) Bad Debts     (A)	10,000
(+) R.D.D. New(A)	9,000	26,000
To Salaries	60,000
(+) Outstanding Salaries	12,000	72,000
To Rent, Rates & Taxes		12,000
To Insurance	8,000
(-) Prepaid Insurance	(2,000)	6,000
To Discount		4,500
To Courier charges		5,200
To Trade Exp		2,500
To Depreciation on
Machinery	30,000	37,500
Furniture	7,000
To Interest on loan		4,000
			By Net Loss		1,14,700
		1,69,700			1,69,700

Balance Sheet as on 31st March, 2018 

Liabilities	Amount	Amount	Assets	Amount	Amount
Capital	6,00,000		Machinery	3,00,000
(-) Drawings	(15,000)		(-) Depreciation	30,000	2,70,000
	5,85,000		Furniture	1,50,000
(-) Net Loss	(1,14,700)	4,70,300	(-) Depreciation	7,500	1,42,500
			Patents		50,000
Creditors		1,80,000	Debtors                (T)	1,90,000
			(-) Bad Debts        (A)	(10,000)
Bills Payable		90,000		1,80,000
			(-) R.D.D.                (A)	(9,000)	1,71,000
8% Loan	1,00,000
(+) Interest on Loan	4,000	1,04,000
Bank overdraft		79,200	Closing Stock		3,00,000
Outstanding Salaries		12,000	Prepaid Insurance		2,000
		9,35,500			9,35,500