Final Accounts of Shri Krishna Traders

Problem

From the following Trial Balance of Shri Krishna Traders as on 30th June 2019, and the additional information given below, prepare:

1. Trading Account
2. Profit & Loss Account
3. Balance Sheet

for the year ended 30th June 2019.

Trial Balance of Shri Krishna Traders

Particulars	Debit (₹)	Credit (₹)
Capital	—	1,00,000
Furniture	20,000	—
Creditors	—	1,20,000
Purchases	1,50,000	—
Provision for Bad Debts	—	6,000
Debtors	2,00,000	—
Interest Earned	—	4,000
Printing & Stationery	8,000	—
Insurance Expense	12,000	—
Salaries	30,000	—
Opening Stock	50,000	—
Sales	—	3,21,000
Office Expenses	12,000	—
Purchases Returns	—	5,000
Bank Overdraft	—	2,000
Wages	20,000	—
Drawings	24,000	—
Rent	15,000	—
Transportation Outward	7,000	—
Sales Returns	10,000	—
Total	5,58,000	5,58,000

Additional Information

1. Depreciate Furniture by 10% under Written Down Value Method.
2. A provision for doubtful debts is to be created at 5% of Sundry Debtors.
3. Salaries for June 2019 amounting to ₹3,000 are unpaid and must be provided for. Salaries include ₹2,000 paid in advance. Office expenses outstanding are ₹8,000.
4. Insurance amounting to ₹2,000 is prepaid.
5. Goods costing ₹6,000 were withdrawn by the proprietor for private use. Closing Stock is ₹60,000.

---

Solution

📖 CLICK HERE TO VIEW SOLUTION

Step 1 — Calculation of Adjustments

1. Net Purchases

Particulars	Amount (₹)
Purchases	1,50,000
Less: Purchases Returns	(5,000)
Net Purchases	1,45,000
Less: Goods withdrawn for private use	(6,000)
Adjusted Purchases	1,39,000

2. Net Sales

Particulars	Amount (₹)
Sales	3,21,000
Less: Sales Returns	(10,000)
Net Sales	3,11,000

3. Depreciation on Furniture

Furniture = ₹20,000

Depreciation @ 10%:

₹20,000 × 10% = ₹2,000

Therefore, closing value of Furniture:

₹20,000 − ₹2,000 = ₹18,000

4. Provision for Doubtful Debts

Debtors = ₹2,00,000

Required provision @ 5%:

₹2,00,000 × 5% = ₹10,000

Existing provision = ₹6,000

Additional provision required:

₹10,000 − ₹6,000 = ₹4,000

Therefore, ₹4,000 is charged to Profit & Loss Account.

---

Trading Account

Shri Krishna Traders

Trading Account for the year ended 30th June 2019

Dr. Particulars	Amount (₹)	Cr. Particulars	Amount (₹)
Opening Stock	50,000	Sales	3,21,000
Purchases	1,50,000	Less: Sales Returns	(10,000)
Less: Purchases Returns	(5,000)	Net Sales	3,11,000
Less: Goods withdrawn for private use	(6,000)	Closing Stock	60,000
Adjusted Purchases	1,39,000
Wages	20,000
Gross Profit c/d	1,62,000
Total	3,71,000	Total	3,71,000

Gross Profit = ₹1,62,000

---

Profit & Loss Account

Shri Krishna Traders

Profit & Loss Account for the year ended 30th June 2019

Dr. Particulars	Amount (₹)	Cr. Particulars	Amount (₹)
Salaries	30,000	Gross Profit b/d	1,62,000
Add: Outstanding Salaries	3,000	Interest Earned	4,000
Less: Salaries Paid in Advance	(2,000)
Salaries Expense	31,000
Rent	15,000
Transportation Outward	7,000
Printing & Stationery	8,000
Insurance Expense	12,000
Less: Prepaid Insurance	(2,000)
Insurance Expense	10,000
Office Expenses	12,000
Add: Outstanding Office Expenses	8,000
Office Expenses	20,000
Depreciation on Furniture	2,000
Additional Provision for Doubtful Debts	4,000
Net Profit transferred to Capital A/c	69,000
Total	1,66,000	Total	1,66,000

Net Profit = ₹69,000

---

Balance Sheet

Shri Krishna Traders

Balance Sheet as at 30th June 2019

Liabilities / Equity	Amount (₹)	Assets	Amount (₹)
Capital		Fixed Assets
Opening Capital	1,00,000	Furniture	20,000
Less: Drawings	(24,000)	Less: Depreciation	(2,000)
Less: Goods withdrawn for private use	(6,000)	Furniture – Net Value	18,000
Add: Net Profit	69,000
Closing Capital	1,39,000	Current Assets
		Debtors	2,00,000
Current Liabilities		Less: Provision for Doubtful Debts	(10,000)
Bank Overdraft	2,000	Debtors – Net	1,90,000
Creditors	1,20,000	Closing Stock	60,000
Outstanding Salaries	3,000	Prepaid Salaries	2,000
Outstanding Office Expenses	8,000	Prepaid Insurance	2,000
Total Liabilities	2,72,000	Total Assets	2,72,000

---

Final Answers

Particulars	Amount (₹)
Gross Profit	1,62,000
Net Profit	69,000
Closing Capital	1,39,000
Total Balance Sheet	2,72,000

Important Accounting Points

• Goods withdrawn for personal use ₹6,000 → deducted from Purchases and also deducted from Capital.
• Existing provision ₹6,000 → adjusted against the new provision of ₹10,000; only ₹4,000 is charged to P&L.
• Outstanding expenses → added to the respective expense and shown as a liability.
• Prepaid expenses → deducted from the respective expense and shown as a current asset.
• Depreciation ₹2,000 → charged to P&L and deducted from Furniture.
• Closing Stock ₹60,000 → shown in Trading Account and Balance Sheet.