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Net credit sties will be (Rs. 81,300 less Rs. 2,500 (Returns) Rs.78,800. Cash sales will be on the debit side ot the Cash Book. Credit Sales plus Cash Sales give you total sales. Examination of the credit side of the Cash Book will also reveal wages, carnage inwards, etc., which will be debited to the Trading Account. Thus all information to prepare Trading Account becomes available and gross profit will be ascertained. This is put on the credit side of the Profit and Loss Account. Credit side of the Cash Book reveals expenses. These expenses after proper adjustments (for expenses prepaid or outstanding) will be debited to the Profit and Loss A/c. Debit side of the Cash Book will reveal income (such as sale of old newspapers.) These will be put on the credit side of the Profit and Loss Alc. The profit and Loss A/C should also be debited with any depreciation which has to be written off. Thus net profit or net loss can be ascertained. Thus will be transferred to the Capital Account Balance Sheet-Preparation of Balance Sheet is easy. The previous Statement of Affairs will reveal the various assets. The assets adjusted for depreciation and disposal (see debit side of Cash Book) and new acquisition (see credit side of the Cash Book) will be put in the Balance sheet at the end of the year. The balance for cash, debtors, slock and creditors will be given as at the end of the year. These will put down in the Balance Sheet. Capital will be as per previous Statement of Affairs adjusted for net profit or net loss and drawings (see credit side of Cash Book), Illattratlon 2 The following information is given: 1st January, 2002 31st December, 2002 Rs. Rs. Total Debtors 19,300 20,500 Total Creditors 9,800 8,100 Stock 11,600 12,300 Plant and Machinery 30,000 Furniture 1.500 Summary of Cash Book Rs. Rs. To Balance b/d 5,000 By S. Creditors 31.000 To Receive From Debtors 78,000 By Wages 15,000 To Cash Sales 15,000 By Salaries 12,000 To Sales of Old Machinery 4.000 By Machinery 10.000 To Sales of Old Packing Boxes 600 By Inestments 6,000 98 X40 By Drawings By General Exps. By Balance cd 6.000 17,000 5,600 1.02,600 1.02.600 Bad Debts written off during the year were Rs. 1500. Discount allowed were Rs. 2000 and received were Rs. 600. Depreciation on Machinery is to be 10% on the value of machinery on 31st December, 2001. Furniture is to be depreciated at 5%. Interest @6% is to be allowed on capital. Prepare Trading Account Profit and Loss Account for 2002 and Balance Sheet as at December 31.2002