Prepare Trading and Profit & Loss account and Balance Sheet from the following particulars as on 31st March, 2016.

Steps to Solve

1. Identify Revenue and Expenses

   Start by identifying all the revenue sources and expenses from the given particulars.

   Revenue:

   • Sales: $350,000$
   • Returns Outward: $7,500$
   • Sundry Receipts: $120$
   • Sales Tax Collected: $5,200$

   Expenses:

   • Purchases: $220,000$
   • Returns Inward: $2,800$
   • Freight: $4,400$
   • Freight on Sales: $2,100$
   • General Expenses: $12,800$
   • Wages and Salaries: $18,000$
   • Bad debts: $8,200$

2. Calculate Total Revenue and Total Expenses

   First, calculate the net sales:

   $$ \text{Net Sales} = \text{Sales} - \text{Returns Outward} $$

   Then, sum all expenses.

3. Compute Gross Profit

   Calculate Gross Profit using the formula:

   $$ \text{Gross Profit} = \text{Net Sales} - \text{Total Expenses} $$

4. Prepare the Trading Account

   List your total revenues and expenses in the Trading Account format, showing gross profit or loss, if any.

5. Prepare the Profit & Loss Account

   Combine all the non-operating income and expenses accumulated, and calculate the net profit or loss.

6. Prepare the Balance Sheet

   List all assets and liabilities:

   • Assets: Cash in hand, Cash at Bank, Debtors, Closing Stock, Motor Truck, etc.
   • Liabilities: Creditors, Bank Overdraft, 18% Loan, etc.

7. Final Values Using Adjustments

   Remember to apply provided adjustments like:

   • Closing stock of $50,000$
   • Write-offs for bad debts
   • Stock purchases and depreciation adjustments as per given percentages.