Way of deducting from respecting asset of the asset

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way of deducting from respecting asset of the asset side. 6.Provission for bad debts Profit &loss a/c Dr To provision for bad debts. Deducting from sundry debtors on the asset side 7. Provision for discount Profit &loss a/c Dr To provision for discount Deducting from sundry debtors on the asset side 8.Reserve for discount on creditors Reserve for discount on creditors a/c Dr To profit and loss a/c Shown by way of deduction from sundry creditors. 9.Income received in Advance Income a/c. To Income received in Advance a/c Shown on liabilities side
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48 Illustrations1: 1.on 31.03.2015 the following trial balance was prepared from the books of Krishna: Particulars Dr.(Rs) Cr.(Rs) Sundry debtors Sundry creditors Bills Receivables Plant machinery Purchases Capital Freehold premises Salaries Wages Postage and stationary Carriage in Carriage out Bad debts Bad debts provision General charges Cash at bank Cash in hand Bills payable Reserve Sales Closing stock 50600 5000 75000 90000 50000 11000 14400 750 750 1000 950 1500 5300 800 30000 - 10000 70000 350 5000 20000 231700 Total 337050 337050
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49 The following adjustments are required: 1. Raju gets a salary of Rs. 9000 p.a. 2. Allow 5% interest on capital, 3. Bad debts provision to be adjusted to 2.5% on sundry debtors. 4. 2.5% of the net profit to be credited to reserve. 5. It was discovered in April 2014 that stock sheet as on 31.03.2014 were overcast by Rs 1000. You are required to prepare Trading and Profit and loss account for the year ended 31 st march 2015 and a balance sheet as at that date. Solution Trading A/C for the year ending 31 st march 2015 Particular Rs particular Rs To purchase 90,000 Less overcast stock 1,000 To wages To carriage inward To Gross profit 89,000 14,400 750 1,27,550 2,31,700 By sales 2,31,700 2,31,700
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50 Profit and Loss A/C To salaries 11,000 Add O/S 9,000 To post & stationary To carriage out To Bad Debts 950 Add: new provision 1265 2215 Less: old provision 350 To General charges To Interest on Capital To Net Profit transferred to Capital account Total 20,000 750 1,000 1,865 1,500 3,500 98,935 1,27550 By Gross profit 1,27,550 1,27550
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51 Balance Sheet as at 31 st march 2015 Liabilities (Rs.) Assets (Rs.) Capital 70,000.00 Add: Interest on capital 3,500.00 73500.00 Add: Net profit 96416.60 Sundry creditors Bills payable Reserve 20000.00 Add:2 ½ % Net P. 2473.40 O/S salaries 169961.60 10000.00 5000.00 22473.40 9000.00 Plant & Machinery Freehold premises Sundry debtors 50600 Less: provision 1265 Bills receivable Closing stock Overstated Stock 2014 Cash at bank Cash in hand 75000.00 50000.00 49335.00 5000.00 30000.00 1000.00 5300.00 800.00 216435.00 216435.00 Illustrations2: From the following trial balance of X and Y. You are required to prepare Trading and Profit & Loss Account for the year ended 31 st March2016 and Balance sheet as on that date after considering the following adjustments. TrialBalanceason31 st March2016 Particulars Rs. Rs. Opening Stock 17,500 - Salaries and Wages 4,600 - Cash in hand 6,000 - Purchase and Sales 1,12,600 2,65,000 Office Expenses 4,300 - Productive Wages 7,000 - Bills Receivable 4,000 - Legal Expenses 3,300 - Bad debts 1,900 - Works Managers Salary 5,600 - Commission 1,800 2,500 Investments 42,000 - Debtors 67,500 - Creditors - 92,000 Bank over draft - 88,000 Patents 38,000 - Loose Tools 28,000 - Furniture 65,000 - Goodwill 80,000 - Interest - 1,600 Land &Building 1,25,000 - Capital Accounts: Neela - 1,10,000
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52 Sheela - 1,05,000 Drawings: NeelaSheela 20,000 30,000 - - 6,64,100 6,64,100 Adjustments: 1. Partners shares Profit and losses equally.
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