Final Accounts of Sole Proprietorship – Practical Problems and Solutions

Practical Problem No.1

Prepare the FInal Accounts, ie., Manufacturing, Trading and Profit and Loss Account for the year ended on March 31, 2020, and a Balance Sheet as on that date from the following balances extracted from the books of John Enterprises run by Mr. John.

Final-Accounts-Practical-Probolems

Stock on March 31, 2020 are:

$
Raw material 35,600
Work-in-pr0gress 17,400
Finished goods 96,500
Packing materials 1,250

Following liabilities are to be provided:

 

(a) Factory power 5,620
(b) Rent and rates 3,860
(c) Lighting and heating 1,600
(d) General expenses:
Factory 250
Office 400
(e) Insurance prepaid 1,700

Provide depreciation @ 10% on plsnt snf 5% on furniture. Increase bad debts provision by $1,000.

Five-sixth of rent and rates, lighting and heating and insurance are to be allocated to the factory and one-sixth to the office.

Solution

In the Books of John Enterprises
Manufacturing Trading and Profit and Loss Account
For the year ended March 31, 2020

final-accounts-of-sole-proprietorship-solution

FA-Sol-1

Balance Sheet as on March 31, 2020

Final-Accounts-Balance-Sheet-Mr-John

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