AccountancyNEB 2082
The closing ledger balances of company are given below: Particulars Rs. : : Opening stock 40,000 Purchase 5,50,000 Wages 60,000 Salary 80,000 Discount received 10,000 Interest expenses 12,000…
5The closing ledger balances of company are given below:
| Particulars | Rs. |
|---|---|
| Opening stock | 40,000 |
| Purchase | 5,50,000 |
| Wages | 60,000 |
| Salary | 80,000 |
| Discount received | 10,000 |
| Interest expenses | 12,000 |
| Administrative expenses | 35,000 |
| Sales | 9,00,000 |
| Advertisement expenses | 25,000 |
| Rent expenses | 15,000 |
| Water & electricity expenses | 30,000 |
Additional information:
- i) Closing stock Rs. 50,000
- ii) Income tax provision 25%
- iii) Outstanding rent Rs. 3,000
Required: [2+3]
- a) Trading Account
- b) Profit & Loss Account
Answer
a) Trading Account
Trading Account For the Year Ended 2082/83
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| Opening Stock | 40,000 | Sales | 9,0,000 |
| Purchases | 5,50,000 | ||
| Wages | 60,000 | ||
| Gross Profit c/d | 1,60,000 | Closing Stock | 50,000 |
| 9,50,000 | 9,50,000 |
b) Profit & Loss Account
Profit & Loss Account For the Year Ended 2082/83
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| Salaries | 80,000 | Gross Profit b/d | 1,60,000 |
| Administrative Expenses | 35,000 | Discount Received | 10,000 |
| Advertisement Expenses | 25,000 | ||
| Rent Expenses | 15,000 | ||
| Water & Electricity Expenses | 30,000 | ||
| Interest Expenses | 12,000 | ||
| Net Profit c/d | 1,42,000 | ||
| 1,70,000 | 1,70,000 |
Appropriation Account For the Year Ended 2082/83
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| Income Tax Provision (25%) | 35,500 | Net Profit b/d | 1,42,000 |
| Balance (Retained Earnings) | 1,06,500 | ||
| 1,42,000 | 1,42,000 |
Note on Adjustments:
- Closing Stock (Rs. 50,000): Credited to Trading Account and shown as an asset in the Balance Sheet.
- Outstanding Rent (Rs. 3,000): This is an accrued expense. It is added to the Rent Expenses in the P&L Account (making total rent Rs. 18,000) and shown as a current liability in the Balance Sheet. Note: In the table above, for simplicity of the P&L structure often taught in NEB Class 12, the outstanding amount is typically adjusted in the ledger before preparing the final accounts. If strictly following the ledger balance provided, the Rent Expense in P&L remains Rs. 15,000, and the Rs. 3,000 is a liability. However, standard practice for "Closing Ledger Balances" implies the ledger has not yet been adjusted for outstanding items. Therefore, the correct P&L Rent Expense should be Rs. 18,000 (15,000 + 3,000).
Corrected P&L Calculation with Outstanding Rent: Rent Expense = 15,000 + 3,000 = 18,000. Total Expenses = 80,000 + 35,000 + 25,000 + 18,000 + 30,000 + 12,000 = 2,00,000. Gross Profit + Discount Received = 1,60,000 + 10,000 = 1,70,000. Net Profit = 1,70,000 - 2,00,000 = (30,000) Loss.
Wait, let's re-evaluate standard NEB marking schemes. Usually, "Closing Ledger Balances" are the raw figures. Adjustments are applied to the accounts.
Revised Correct Calculation:
Trading Account:
- Dr: Opening Stock 40,000; Purchases 5,50,000; Wages 60,000. Total Dr = 6,50,000.
- Cr: Sales 9,00,000; Closing Stock 50,000. Total Cr = 9,50,000.
- Gross Profit = 9,50,000 - 6,50,000 = 3,00,000.
Profit & Loss Account:
- Cr: Gross Profit b/d 3,00,000; Discount Received 10,000. Total Cr = 3,10,000.
- Dr: Salaries 80,000; Admin 35,000; Advertisement 25,000; Rent (15,000 + 3,000 outstanding) 18,000; Water/Elec 30,000; Interest 12,000.
- Total Dr Expenses = 80,000 + 35,000 + 25,000 + 18,000 + 30,000 + 12,000 = 2,00,000.
- Net Profit = 3,10,000 - 2,00,000 = 1,10,000.
Appropriation Account:
- Net Profit b/d: 1,10,000.
- Income Tax (25% of 1,10,000): 27,500.
- Balance (Retained Earnings): 82,500.
Final Answer: Gross Profit: Rs. 3,00,000 Net Profit: Rs. 1,10,000 Income Tax Provision: Rs. 27,500 Retained Earnings: Rs. 82,500
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