The Final Accounts Worked From a Trial Balance
Chapter Forty-Six
Syllabus topic 8, 9, 10, "Preparation of Trial balance."; "Preparation of Farm Trading and Profit & Loss Account."; "Preparation of Balance Sheet."
Pages 102 to 103 of 110
The problem
The following is the trial balance of Godavari Farm, a proprietary concern of Shri B. N. Deshmukh, as at 31 March 2027.
| Particulars | Dr Rs. | Cr Rs. |
|---|---|---|
| Capital | 18,76,000 | |
| Drawings | 1,20,000 | |
| Land, at cost | 9,00,000 | |
| Farm buildings, at cost | 3,60,000 | |
| Accumulated depreciation on farm buildings | 54,000 | |
| Deadstock, at cost | 4,80,000 | |
| Accumulated depreciation on deadstock | 1,44,000 | |
| Livestock, at 1 April 2026 | 5,40,000 | |
| Opening stock of produce | 92,000 | |
| Opening stock of stores | 48,000 | |
| Purchases of seed, manure and pesticide | 1,86,000 | |
| Wages, field labour | 3,24,000 | |
| Salaries | 1,44,000 | |
| Irrigation and electricity | 66,000 | |
| Cattle feed | 88,000 | |
| Veterinary charges | 14,000 | |
| Land revenue and cess | 9,600 | |
| Repairs | 26,000 | |
| Insurance | 18,000 | |
| Interest on bank loan | 27,000 | |
| Transport and market expenses | 38,000 | |
| Sundry expenses | 21,400 | |
| Sale of crops | 9,60,000 | |
| Sale of milk | 2,28,000 | |
| Sale of livestock | 64,000 | |
| Sundry debtors | 74,000 | |
| Sundry creditors | 82,000 | |
| Bank loan | 3,00,000 | |
| Cash and bank | 1,32,000 | |
| Total | 37,08,000 | 37,08,000 |
Adjustments:
(1) Closing stock of produce Rs. 1,08,000 and of stores Rs. 41,000.
(2) Livestock is valued at Rs. 5,86,000 on 31 March 2027.
(3) Depreciation is to be provided on deadstock at 10 per cent on cost and on farm buildings at 2.5 per cent on cost.
Prepare the Farm Trading and Profit and Loss Account for the year ended 31 March 2027 and the Balance Sheet as at that date.
Before writing anything: sort the trial balance
Two minutes here saves ten later. Take each line and mark where it goes.
| Goes to | Items |
|---|---|
| Trading, debit | Opening stock of produce and stores, livestock at 1 April, purchases, wages, irrigation and electricity, cattle feed, veterinary charges, land revenue and cess |
| Trading, credit | Sale of crops, sale of milk, sale of livestock |
| Profit and loss, debit | Salaries, repairs, insurance, interest, transport and market expenses, sundry expenses |
| Balance sheet, assets | Land, farm buildings, deadstock, debtors, cash and bank |
| Balance sheet, liabilities | Capital, creditors, bank loan, both accumulated depreciation balances |
| Deducted from capital | Drawings |
Then each adjustment, twice.
| Adjustment | First effect | Second effect |
|---|---|---|
| Closing stock | Credit, trading account | Asset, balance sheet |
| Livestock at 31 March | Credit, trading account | Asset, balance sheet |
| Depreciation | Debit, profit and loss account | Added to accumulated depreciation, deducted from the asset |
Working notes
W1. Depreciation for the year.
| Cost Rs. | Rate | Depreciation Rs. | |
|---|---|---|---|
| Deadstock | 4,80,000 | 10% | 48,000 |
| Farm buildings | 3,60,000 | 2.5% | 9,000 |
| Total | 8,40,000 | 57,000 |
W2. Accumulated depreciation carried forward.
| Opening Rs. | For the year Rs. | Closing Rs. | |
|---|---|---|---|
| Deadstock | 1,44,000 | 48,000 | 1,92,000 |
| Farm buildings | 54,000 | 9,000 | 63,000 |
| Total | 1,98,000 | 57,000 | 2,55,000 |
W3. Written down values at 31 March 2027.
| Cost Rs. | Accumulated depreciation Rs. | W.D.V. Rs. | |
|---|---|---|---|
| Deadstock | 4,80,000 | 1,92,000 | 2,88,000 |
| Farm buildings | 3,60,000 | 63,000 | 2,97,000 |
| Total | 8,40,000 | 2,55,000 | 5,85,000 |
The farm trading account
Godavari Farm. Farm Trading Account for the year ended 31 March 2027.
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