of Jain Dr. Trading and Profit and Loss Account for the year ended st December, Cr. To Opening Stock To Purchases To Gross Profit c/d To Office salaries Add: Outstanding To Establishment expenses To Selling expenses To Depreciation on furniture ( , x %) To Interest on capital ( , x %) To Net profit (transferred to capital A/c) , , , , , , , , , , , By Sales By Closing Stock By Gross Profit b/d By Miscellaneous receipts , , , , , , Balance Sheet as on 31st December, Liabilities Assets Capital Add: Net profit Add: Interest on capital Less: Drawings , Income tax Creditors Office salaries outstanding , , , , , , , Furniture Less: Depreciation Stock in trade Debtors Cash at bank , , , , , , , , Illustration Edward’s books show the following balances. Prepare his trading and profit and loss A/c for the year ended 31st December, and a balance sheet on at that date.
Accountancy Debit balances Credit balances Drawings Sundry debtors Coal, gas and water Returns inward Purchases Stock on - - Travelling expenses Interest on loan paid Petty cash Repairs Investments , , , , , , , , , , Capital Loan at % p.a. Sales Interest on investments Sundry creditors , , , , , , , , , , , Adjustments: (a) Closing stock was ` , , on 31st December, . (b) Create % provision for bad and doubtful debts on sundry debtors (c) Create provision at % for discount on debtors (d) Interest on loan due for months. Solution In the books of Edward Dr.
Trading and Profit and Loss Account for the year ended 31st December, Cr. To Opening Stock To Purchases To Coal, gas and water To Gross profit c/d To Travelling expenses To Interest on loan paid Add: Interest outstanding ( , x / x / ) To Repairs To Provision for bad and doubtful debts To Provision for discount on debtors To Net profit (transferred to capital