queThe image shows a list of balances extracted from the books of Mr. D, intended for the preparation of a Trading and Profit and Loss account for the year ending 31st March, 2024, and a Balance Sheet as on that date.

Here's a breakdown of the key entries:

Balances:

Capital: ₹ 3,00,000

Buildings: ₹ 1,87,500

Machinery: ₹ 82,500

Debtors: ₹ 80,000

General expenses: ₹ 7,000

Rent paid: ₹ 37,100

Proprietor’s drawings: ₹ 6,500

Insurance paid: ₹ 2,900

Carriage inwards: ₹ 8,500

Cash at bank: ₹ 30,000

Returns outwards: ₹ 1,100

Salaries: ₹ 11,100

Discount allowed: ₹ 2,000

Stock (01-04-2023): ₹ 1,65,000

Bills payable: ₹ 50,000

Sales: ₹ 6,35,000

Purchases: ₹ 4,68,500

Wages: ₹ 25,000

Cash in hand: ₹ 18,000

Sundry creditors: ₹ 1,50,000

Returns inwards: ₹ 4,500

Adjustments:

Closing stock ₹ 2,82,100

Would you like assistance preparing the Trading and Profit and Loss account and Balance Sheet from this information?stions

Yes, I'd be glad to assist you in preparing both the Trading and Profit & Loss Account and the Balance Sheet for Mr. D based on the balances and adjustments provided.

### Step 1: Trading Account

The Trading Account helps to determine the **Gross Profit** by comparing sales and related direct costs.

1. **Sales**: ₹6,35,000
2. **Less Returns Inwards**: ₹4,500
   - **Net Sales**: ₹6,35,000 - ₹4,500 = ₹6,30,500
3. **Opening Stock**: ₹1,65,000
4. **Add Purchases**: ₹4,68,500
5. **Less Returns Outwards**: ₹1,100
   - **Net Purchases**: ₹4,68,500 - ₹1,100 = ₹4,67,400
6. **Add Carriage Inwards**: ₹8,500
7. **Add Wages**: ₹25,000
8. **Add Closing Stock**: ₹2,82,100

**Trading Account Calculation**:
\[
\text{Gross Profit} = \text{Net Sales} + \text{Closing Stock} - (\text{Opening Stock} + \text{Net Purchases} + \text{Carriage Inwards} + \text{Wages})
\]

### Step 2: Profit & Loss Account

This account is for indirect expenses and income to determine the **Net Profit**.

1. **General Expenses**: ₹7,000
2. **Rent Paid**: ₹37,100
3. **Insurance Paid**: ₹2,900
4. **Salaries**: ₹11,100
5. **Discount Allowed**: ₹2,000

**Profit & Loss Calculation**:
\[
\text{Net Profit} = \text{Gross Profit} - (\text{General Expenses} + \text{Rent} + \text{Insurance} + \text{Salaries} + \text{Discount Allowed})
\]

### Step 3: Balance Sheet

Assets and liabilities are categorized based on the balances and adjustments given.

#### **Assets**
1. **Fixed Assets**:
   - Buildings: ₹1,87,500
   - Machinery: ₹82,500
2. **Current Assets**:
   - Debtors: ₹80,000
   - Closing Stock: ₹2,82,100
   - Cash at Bank: ₹30,000
   - Cash in Hand: ₹18,000

#### **Liabilities**
1. **Capital**: ₹3,00,000
2. **Less Drawings**: ₹6,500
3. **Bills Payable**: ₹50,000
4. **Sundry Creditors**: ₹1,50,000

Would you like me to fill in the full calculations for each of these sections?

---

#### Additional Questions for Further Understanding:
1. How is Gross Profit used to assess a company's operational efficiency?
2. Why is it important to adjust for returns (inwards and outwards) in the Trading Account?
3. What is the significance of including both fixed and current assets on the Balance Sheet?
4. How does the calculation of Net Profit impact future business decisions?
5. Why are drawings deducted from capital on the Balance Sheet?

#### Tip:
To ensure accuracy, always double-check that both the Balance Sheet totals match. This confirms proper balancing between assets and liabilities.

The image shows a list of balances extracted from the books of Mr. D, intended for the preparation of a Trading and Profit and Loss account for the year ending 31st March, 2024, and a Balance Sheet as on that date. Here's a breakdown of the key entries: ... (full list of balances and adjustments)

Get a detailed solution on preparing the Trading and Profit & Loss Account along with the Balance Sheet for Mr. D's financial year ending on 31st March 2024. This problem covers key accounting concepts such as gross profit and net profit calculations, adjustments for closing stock, and asset-liability balancing in the Balance Sheet. Suitable for high school students in Grades 11-12 studying financial accounting.

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