Liabilities 9,500 1,000 200 10,700 980 9,720 17.300 720 Assets Capital 42,500 Plant and Machinery Add: Net Profit 11,545 Add: Purchase of Machinery 54,045 Add: Installation charges Less: Drawings 7.100 46.945 Creditors 10,000 Less: Depreciation (Note 1) Bank Overdraft 1,200 Stock Consignment Stock (at cost) Debtors Add: Unrecorded Sales Less: Unrecorded Sales Retur Less Provision for Doubtful Debts @ 5% Cash 58.145 Working Note: (1) Depreciation on Plant and Machinery On existing plant and machinery 9,500 x 10/100) On new purchase for 3 months ( 1,000+ 3 200) 10/100 x 3/12 30,000 2.000 32,000 500 31,500 1,575 966 29,925 480 58.145 950 30 980 200 Illustration 24 X started a business on January 1, 2016 with 10,000 in cash, 35,000 in goods and 10,000 in furniture. His Trial Balance on December 31, 2016 was drawn as follows: Particulars Particulars Bad Debts 3,500 Capital 30,000 Stock in Trade 5,000 Creditors 5.000 Furniture 15,000 Loan 2.400 Drawings 4.500 Commission Received Wages 1,800 Sales 28,700 Purchases 18,000 Advertisement 1,400 Debtors 9,000 Cash 3.200 Interest on Loan 400 Commission Paid 600 Miscellaneous Expenses 700 Insurance Premium 800 Salaries 2.400 66,300 66,300 Prepare Trading Account, Profit and Loss Account for the year ended December 31, 2016 and a Balance Sheet as at December 31, 2016 after taking into consideration the following: (1) Goods valued at 315,000 were destroyed by fire, against this an insurance claim of 10,000 was to be received. (i) During the year, proprietor had taken goods of 2,000 for personal consumption. The value of the remaining stock in hand was 8,000. (ii) Depreciate furniture by 10%p.a. The addition to furniture was made on 1st April. (iv) Y, a debtor for 32,000 was declared insolvent, only 50 paise in the rupee was receivable against his estate. (v) Create a provision for doubtful debts at 5% and provision for discount at 20% on Debtors as well as on Creditors. (vi) Goods sold to Robin for 500 wrongly debited to Rathin's Account. (vii) Cheque issued to a Creditor for 800 was wrongly debited to Purchase Account (viii) 1/4th of advertisement expenses is to be carried forward