11th | chapter:18 | Financial Statements of Sole Proprietorship | Question No. 5 to 8

Question 5:

Ascertain Gross Profit from the following:

	`		`
Opening Stock	2,00,000	Carriage on Sales	30,000
Closing Stock	1,80,000	Office Rent	58,000
Purchases	8,50,000	Sales	14,07,000
Carriage on Purchases	23,000

Answer:

Trading Account
Dr.			Cr.
Particulars	(Rs)	Particulars	(Rs)
Opening Stock	2,00,000	Sales	14,07,000
Purchases	8,50,000	Closing Stock	1,80,000
Carriage on Purchases	23,000
Gross Profit (Balancing Figure)	5,14,000
	15,87,000		15,87,000

Note: Carriage on Sales and Office Rent are the Indirect Expenses, therefore, these are not considered to compute the amount of Gross Profit.

Question 6:

From the following information, prepare Trading Account for the year ended 31st March, 2022:

	`		`
Stock on 1st April, 2018	40,000	Returns Outward	80,000
Purchases	4,00,000	Wages and Salaries	50,000
Sales	3,80,000	Returns Inward	20,000
Carriage Inwards	20,000	Stock on 31st March, 2022	1,30,000

Net Realisable Value (Market Value) of stock as on 31st March, 2022 was ` 1,20,000.

Answer:

Trading Account for the year ended March 31, 2022
Dr.						Cr.
Particulars		( `)	Particulars		( `)
Opening Stock		40,000	Sales	3,80,000
Purchases	4,00,000		Less: Return Inwards	(20,000)	3,60,000
Less: Return Outwards	(80,000)	3,20,000	Closing Stock		1,20,000
Carriage Inwards		20,000
Wages and Salaries		50,000
Gross Profit (Balancing Figure)		50,000
		4,80,000			4,80,000

Note: Closing Stock is taken at its Market Price (i.e. Rs 1,20,000) instead of its Cost (i.e. Rs 1,30,000). This is because, as per Principle of Conservatism, Closing stock is taken at Cost or Market Price whichever is less.

Question 7:

From the following information, prepare Trading Account for the year ended 31st March, 2022:
Adjusted Purchases ` 6,60,000; Sales ` 7,44,000; Closing Stock ` 50,400; Freight and Carriage Inwards ` 3,600; Wages ` 6,000; Freight and Cartage Outwards ` 2,000.

Answer:

Trading Account for the year ended March 31, 2022
Dr.				Cr.
Particulars	( `)	Particulars	( `)
Purchase (Adjusted)	6,60,000	Sales	7,44,000
Freight and Carriage Inwards	3,600
Wages	6,000
Gross Profit (Balancing Figure)	74,400
	7,44,000		7,44,000

Notes:

1. Freight and Carriage Outwards are indirect expenses, therefore it is not recorded in the Trading Account.

2. Closing Stock (i.e. Rs 50,400) is not recorded in the Trading Account as it is already adjusted in the amount of Adjusted Purchases.

Question 8:

Following balances appear in the Trial Balance of a firm as on 31st March, 2022:

		`
Opening Stock:	Raw Material	80,000
	Finished Goods	1,40,000
Purchases		3,60,000
Sales		7,00,000
Returns:	Purchases	10,000
	Sales	6,000
Wages		1,30,000
Factory Expenses		90,000
Freight:	Inwards	20,000
	Outwards	30,000
At the end of the accounting period, stock was:
Raw Materials		70,000
Work-in-Process		20,000
Finished Goods		1,10,000

Prepare Trading Account of the firm.

Answer:

Financial Statement of….
Trading Account for the year ended March 31,2022
Dr.						Cr.
Particulars		( `)	Particulars		( `)
Opening Stock			Sales	7,00,000
Raw Materials	80,000		Less: Return Inwards	6,000	6,94,000
Finished Goods	1,40,000	2,20,000	Closing Stock
Purchases	3,60,000		Raw Materials	70,000
Less: Return Outwards	10,000	3,50,000	Work-in-Progress	20,000
Freight Inwards		20,000	Finished Goods	1,10,000	2,00,000
Wages		1,30,000
Factory Expenses		90,000
Gross Profit (Balancing Figure)		84,000
		8,94,000			8,94,000