Final Accounts of Sole Proprietorship – Practical Problems and Solutions

True Tamplin

Written by True Tamplin, BSc, CEPF®
Updated on June 21, 2021

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.
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.


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


Balance Sheet as on March 31, 2020


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