From the following balances, prepare final accounts of M/s Mangal and Sons for the year ended March 31st, 2022:
Opening stock ₹12,500; Bills receivable ₹2,000; Sales ₹70,000; Purchases ₹37,500; Creditors ₹20,000; Salaries ₹3,850; Insurance ₹200; Debtors ₹32,500; Carriage ₹1,450; Commission ₹750; Interest ₹900; Printing ₹250; Bills payable ₹3,150; Returns inward ₹1,300; Returns outward ₹500; Bank ₹5,250; Rent and taxes ₹1,300; Furniture ₹1,000; Capital ₹7,100;
Stock on March 31st, 2019 was valued at ₹15,000.
[Ans. Gross profit ₹32,750; Net profit ₹25,500; Balance sheet total ₹55,750.]
Answer (2)
To prepare the final accounts for M/s Mangal and Sons for the year ended 31st March, 2022, you will need to create a Trading and Profit & Loss Account, and a Balance Sheet.
1. Trading Account:
The Trading Account is prepared to find out the Gross Profit or Loss of the business.
Sales: ₹70,000
Less: Returns Inward (Sales Return): ₹1,300
Net Sales: ₹70,000 - ₹1,300 = ₹68,700
Opening Stock: ₹12,500
Add: Purchases: ₹37,500
Less: Returns Outward (Purchase Return): ₹500
Net Purchases: ₹37,500 - ₹500 = ₹37,000
Add: Carriage: ₹1,450
Total Cost of Goods Available for Sale: ₹12,500 + ₹37,000 + ₹1,450 = ₹50,950
Less: Closing Stock: ₹15,000
Cost of Goods Sold (COGS): ₹50,950 - ₹15,000 = ₹35,950
Gross Profit: Net Sales - COGS = ₹68,700 - ₹35,950 = ₹32,750
2. Profit & Loss Account:
The Profit & Loss Account is prepared to find out the Net Profit or Loss of the business.
Gross Profit: ₹32,750
Less: Expenses:
Salaries: ₹3,850
Insurance: ₹200
Commission: ₹750
Interest: ₹900
Printing: ₹250
Rent and taxes: ₹1,300
Total Expenses: ₹3,850 + ₹200 + ₹750 + ₹900 + ₹250 + ₹1,300 = ₹7,250
Net Profit: Gross Profit - Total Expenses = ₹32,750 - ₹7,250 = ₹25,500
3. Balance Sheet as of 31st March, 2022:
Assets:
Current Assets:
Closing Stock: ₹15,000
Debtors: ₹32,500
Bills Receivable: ₹2,000
Bank: ₹5,250
Non-Current Assets:
Furniture: ₹1,000
Total Assets: ₹15,000 + ₹32,500 + ₹2,000 + ₹5,250 + ₹1,000 = ₹55,750
Liabilities:
Current Liabilities:
Creditors: ₹20,000
Bills Payable: ₹3,150
Capital: ₹7,100 + Net Profit ₹25,500 = ₹32,600
Total Liabilities and Capital: ₹20,000 + ₹3,150 + ₹32,600 = ₹55,750
The Balance Sheet has balanced with a total of ₹55,750, confirming the correctness of the accounts prepared. This ensures that all assets, liabilities, and capital are appropriately accounted for.
The final accounts for M/s Mangal and Sons show a gross profit of ₹32,750 and a net profit of ₹25,500, with a balanced total in the balance sheet of ₹55,750. The Trading Account details net sales, costs, and profits, while the Profit & Loss Account outlines expenses against profits. In the Balance Sheet, total assets equal total liabilities and capital, ensuring accuracy in financial reporting.
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