10,200 Illustration 3 Prepare a Trading Account and a Profit and Loss Account for the year ended 31st December 2016 and a Balance Sheet as on that date from the following Trial Balance and the adjustment items: Particulars Dr. (*) Cr.) Opening stock 46,000 Purchases and Sales 4,42,000 8,20,000 Sales returns and Purchases retums 8.000 12,000 Discount received 2,200 Wages 43,500 Salaries 66.000 Carriage inwards 39,100 Advertising expenses Bills receivable and payable 9,000 10,000 12% Bank loan (taken on 1st November 2016) 1,50,000 Office equipment 1,99,700 Land and building 3,36,000 Provision for doubtful debts 3,200 Sundry Debtors and Sundry Creditors 45,000 40,000 Rates and taxes 5,300 Office electricity expenses 9,400 Telephone charges 4.400 Cash at Bank 18,000 Printing and Stationery 11,200 Postage stamps 1,090 Furniture 2,00,000 Petty cash 210 Prepaid printing 1,200 Insurance premium 3.000 Carriage outwards 12,000 Bad debts 800 Interest on Bank loan paid 1,500 Capital Account 4,76,900 Reserve for Discount on creditors 1,700 TOTAL 15,14,300 15,14,300 Adjustment items: (a) Closing stock was valued at 38,000 on 31st December 2016. (b) Goods worth 2,500 were distributed by salesmen as free samples, but no entry has been made for this. (c) Depreciate furniture by 7'/2% p.a and office equipment by 10% p.a. (d) Reserve for discount on creditors to be maintained at 2%. (e) Provision for doubtful debts to be maintained at 5% on debtors. (f) Create a provision for discount on debtors at 2% 948 (g) (h) (i) Commission of 1,300 was earned but not yet received. Rates and taxes of * 800 was paid in advance for 2017. Creditors include a debt of 4,000 to Mr Nayak who is also included in the list of debtors for 5,000 and, therefore, to be set off before calculating the reserves