Profit and loss account and its solution (SEE) / Office Management and Accounting

 

1. From the following information, prepare a profit and loss account for the year ended 31^st March, 2020.

Gross loss Office expenses Salaries and wages Commission earned Directors fees Interest on loan Depreciation

Rs. 71,500 81,000 73,000 23,000 18,000 17,500 16,000

Entertainment expenses Bad debts recovered   Selling expenses Interest on investment Refreshment expenses Salesman commission Stationery

Rs. 8,900 13,000 23,700 40,000 11,500  9,600 15,000

Solution:

Profit and loss account of

………………..

For the year ended 31^st March, 2020

           Dr.                                                                                                                                       Cr.

Particulars	Amount	Particulars	Amount
To Gross loss To Office expenses To Salaries and wages To Directors fees To Interest on loan To Depreciation To Entertainment expenses To Selling expenses To Refreshment expenses To Salesman commission To Stationery	71,500 81,000 73,000 18,000 17,50 16,000 8,900 23,700 11,500  9,600 15,000	By Commission earned By Bad debts recovered   By Interest on investment By Net loss c/d (Dr. – Cr.)	23,000 13,000 40,000 2,69,700
	3,45,700		3,45,700

2. Prepare a profit and loss account of Muna & Sons (Pvt.) Ltd. for the year ended 30^th Chaitra from the following particulars.

Gross profit Salaries and wages Office rent and rates Bad debts Income from investment Dividend received

Rs. 1,20,000 34,000 25,000 6,000 12,000 18,000

Discount allowed Carriage outward Bank charges Stationery expenses Legal fees Rent form tenant

Rs. 4,500 6,500 1,500 2,500 1,750  4,850

Solution:

Profit and loss account of

Muna & Sons (Pvt.) Ltd.

For the year ended 30^th Chaitra, 2077

           Dr.                                                                                                                                       Cr.

Particulars	Amount	Particulars	Amount
To Salaries and wages To Office rent and rates To Bad debts To Discount allowed To Carriage outward To Bank charges To Stationery expenses To Legal fees To Net Profit c/d (Cr. - Dr.)	34,000 25,000 6,000 4,500 6,500 1,500 2,500 1,750 73,100	By Gross profit By Income from investment By Dividend received By Rent form tenant	1,20,000 12,000 18,000 4,850
	1,54,850		1,54,850

 

3. Following ledger balances taken from Tara Trade Concern are provided to you:

Gross loss Rent received Interest on fixed deposit Repair and maintenance Salesman commission Legal charges Depreciation on furniture Staff salaries

Rs. 80,000 24,000 6,000 4,000 8,500 500 1,250 20,000

Export duty Commission (Cr.) General expenses Carriage on sales Sale of scrap Entertainment expenses Discount on sales

Rs. 4,000 3,500 700 1,500 1,700  600 1,200

Required: Profit and loss account

Solution:

Profit and loss account of

Tara Trade Concern

For the year ended ……………

           Dr.                                                                                                                                       Cr.

Particulars	Amount	Particulars	Amount
To Gross loss To Repair and maintenance To Salesman commission To Legal charges To Depreciation on furniture To Staff salaries To Export duty To General expenses To Carriage on sales To Entertainment expenses To Discount on sales	80,000 4,000 8,500 500 1,250 20,000 4,000 700 1,500 600 1,200	By Rent received By Interest on fixed deposit By Commission By Sale of scrap By Net loss c/d (Dr. - Cr.)	24,000 6,000 3,500 1,700 87,100
	1,22,300		1,22,300

 

4. Calculate the net profit or net loss from the following ledger balances of Radha & Sons for the fiscal year ended 31^st Ashadh, last year:

Salaries and wages Insurance premium Travelling expenses Bad debts recovered Postage and telegram Advertisement Freight outward

Rs. 32,000 6,000 4,000 3,200 1,600 4,500 1,850

Sundry Expenses Gross profit Legal charges Interest on overdraft Loss on sale of furniture Transfer fees Discount on purchase

Rs. 750 85,000 4,000 2,500 1,800  11,000 650

Required: Profit and loss account

Solution:

Profit and loss account of

Radha & Sons

For the year ended 31^st Ashadh, last year

           Dr.                                                                                                                                       Cr.

Particulars	Amount	Particulars	Amount
To Salaries and wages Insurance premium Travelling expenses To Postage and telegram Advertisement Freight outward To Sundry Expenses To Legal charges Interest on overdraft Loss on sale of furniture To Net profit c/d (Cr. - Dr)	32,000 6,000 4,000 1,600 4,500 1,850 750 4,000 2,500 1,800 40,850	By Gross profit By Bad debts recovered By Transfer fees By Discount on purchase	85,000 3,200 11,000 650
	99,850		99,850

5. What is meant by final accounts?

Ans. Final accounts are the statements prepared at the end of accounting period to determine the operating result and financial condition of the business firm at the particular date.

6. What is Trading account?

Ans. Trading account is an account prepared at the end of accounting period to determine the gross profit or gross loss of the business firm at the particular date.

7. Why is the profit and loss account prepared?

Ans. the profit and loss account is prepared to determine net profit and net loss of the business firm at the end of the year.