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Trading and Profit And Loss Account Examples with Balance Sheet


Example 1.)

The following trial balance was taken from the books of Habib-ur-Rehman on December 31, 1991 (Extracted from the books of X & Co.)

Cash    13,000  
Sundry debtors    10,000  
Bill receivable     8,500  
Opening stock    45,000  
Building    50,000  
Furniture and fittings    10,000  
Investment (Temporary)     5,000  
Plant and Machinery    15,500  
Bills payable     9,000
Sundry creditors    20,000
Habib's capital    78,200
Habib's drawings     1,000  
Sales   100,000
Sales discount        400  
Purchases    30,000  
Freight in      1,000  
Purchase discount        500
Sales salary expenses      5,000  
Advertising expenses      4,000  
Miscellaneous sales expenses         500  
Office salary expenses      8,000  
Misc. general expenses      1,000  
Interest income      1,000
Interest expenses        800  
 

  2,08,700 2,08,700
 

Closing stock on December 31, 1991 was $10,000

Required: Prepare income statement/trading and profit and loss account and balance sheet from the above trial balance in report form.

Solution:

Habib-ur-Rehman
Income Statement/Profit and Loss Account
For the year ended December 31, 1991

Gross sales   100,000  
Less: Sales discount        400  
       
 
Net Sales     99,600

Cost of Goods Sold:
     
Opening stock     45,000  
Purchases 30,000    
Add: Freight in   1,000    
 
   
  31,000    
Less purchase discount     500    
 
   
Net purchases     30,500  
   
 
Cost of goods available fort sale     75,500  
Less closing stock     10,000  
   
 
Cost of goods sold     65,500
     
Gross profit     34,100

Operating Expenses:
     
Selling Expenses:      
   Sales salary expenses 5,000    
   Advertising expenses 4,000    
   Misc. selling expenses    500    
 
  9,500  
General Expense:      
   Office salaries expenses 8,000    
   Misc. general expenses 1,000    
 
  9,000  
   
 
Total operating expenses     18,500
     
Net profit from operations     15,600

Other Expenses and Incomes:
     
Interest income 1,000    
Interest expenses    800    
 
   
Net increase        200
     
Net income     15,800
     


Habib-ur-Rehman
Balance Sheet
As at December 31, 1991

ASSETS    
   Current Assets:    
      Cash 13,000  
      Sundry debtors 10,000  
      Bills receivable  8,500  
      Stock on Dec. 31, 19 .. 10,000  
      Investment  5,000  
 
 
         Total Current Assets    46,500
   Fixed Assets:    
      Buildings 50,000  
      Plant and Machinery 15,500  
      Furniture and fittings 10,000  
 
 
         Total Fixed Assets    75,500
   
         Total Assets   122,000
   
     
LIABILITIES:    
   Current Liabilities:    
      Sundry creditors 20,000  
      Bills payable  9,000  
 
 
         Total Current Liabilities   29,000
   Fixed Liabilities:    
      Habib's capital 78,200  
      Net income for the year 15,800  
 
 
  94,000  
      Less: Drawings  1,000  
 
93,000
   
      Total Liabilities and Capital   122,000
   





Example 2.)

Prepare a trading and profit and loss account and balance sheet on 31st December, 1991.
(Extracted from the books of X & Co.)
  $   $
 Stock on 1st January 11,000  Returns outwards     500
 Bills receivables  4,500  Trade expenses     200
 Purchases 39,000  Office fixtures   1,000
 Wages  2,800  Cash in hand     500
 Insurance     700  Cash at bank  4,750
 Sundry debtors 30,000  Tent and taxes  1,100
 Carriage inwards     800  Carriage outwards  1,450
 Commission (Dr.)     800  Sales 60,000
 Interest on capital     700  Bills payable   3,000
 Stationary     450  Creditors 19,650
 Returns inwards  1,300  Capital 17,900

The stock on 21st December, 1991 was valued at $25,000.

Solution:

X & Co.
Trading and Profit and Loss Account
For the year ended 31st December, 1991


To Opening stock   11,000 | By Sales 60,000  
To Purchases 39,000   |     Less returns i/w   1,300  
    Less returns o/w    500   |  
58,700
 
38,500 | By Closing stock   25,000
To Carriage inwards        800 |      
To Wages     2,800 |      
To Gross profit c/d   30,600 |      
   
|    
    83,700 |     83,700
   
|    
To Stationary        450 | By Gross profit b/d   30,600
To Rent and rates     1,100 |      
To Carriage outwards     1,450 |      
To Insurance        700 |      
To Trade expenses        200 |      
To Commission        800 |      
To Interest on capital        700 |      
To Net profit transferred to capital a/c   25,200 |      
|
   
|    
    30,600 |     30,600
   
|    



X & Co.
Balance Sheet
As at 31st December, 1991

Liabilities $ | Assets $
Creditors   19,650 | Cash in hand    500
Bills payable    3,000 | Cash at bank  4,750
Capital 17,900   | Sundry debtors 30,000
Add Net profit 25,200   | Bill receivable   4,500
 
43,100 | Stock 25,000
      | Office equipment   1,000
   
|  
    65,750 |   65,750
   
|  





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