2. You are required to prepare a Profit & Loss
Account for the year ending 31st December, 2007 and the
Balance Sheet on that date. The Trial Balance of XYZ Ltd.
for the year ended 31st December 2007 is as follows:-



Trial Balance of XYZ Ltd. as on 31st Dec. 2007



Debit Balances

Rs.

Credit Balances
Rs.

Materials used
3,50,000
Sales(including 2% Sales tax)
9,18,000

Cost of Labour
1,50,000
Sale of Scrap
100

Stock, finished and work in process on 31st December, 2006
50,000
Rent received
2,000

Wages : Factory Staff
15,000
Discounts
2,750

Directors Remuneration
50,000
Recovered against fire claim re : Stock
5,000

Salaries : Clerical Staff
75,000
Capital : Equity
25,000

Insurances : Workmen’s Compensation
1,500
Preference- 9%
8,000

General, fire etc.
2,000
Creditors
1,56,000

Directors’ Life Insurance
1,500
Provision for Taxation
1,05,000

Maintenance : Buildings
1,000
Profit & Loss Account
13,750

Plant and Machinery
12,500



Rent and Rates of premises and hire of plant
20,000



Heat, Light and Power
15,000



Experimental and Laboratory Expenses
10,000



Canteen Expenses
5,000



Staff Welfare expenses
2,500



Motor Expenses
12,500



Professional Charges
2,800



Postage and Telephone
3,500



Books, Printing and Stationery
11,000



Sundry expenses
10,000



Carriage and Packing on Sales
3,300



Discounts
5,000



Debtors
1,78,000



Freehold Property
50,000



Plant and Machinery
12,500



Fixtures and Fittings – Offices
3,500



Office machinery and Equipment
3,000



Motor Car and Van
6,500



Stock of materials on 31st Dec. 2007
1,20,000



Bank
38,000



Sales Tax Paid
15,000




12,35,600

12,35,600




Depreciation is to be provided at the following rates:

Plant and Machinery
10%

Fixture and
Fittings 05%

Office Machinery, etc.
10%

Motor Vans and Cars
25%



The stock of finished goods and work in progress as on 31st
December, 2007 was Rs. 35,000. Provide for preference
dividend and ordinary dividend at 10%. The total taxation
liability is estimated at Rs.1,50,000 of which Rs. 75,000
relates to the current year.



Debtors include Rs. 10,000 deposited as security against
government contracts.



The Works Manager is paid partly by salary and partly by a
commission; he is entitled to a commission of 5% on the
amount by which the surplus in the factory cost exceeds 20%
of the sales for the period. Charge the commission if any
in the Profit and Loss Account.