Final Account of Raju for the year ending 31-12-2016

Income Statement:

Particulars Amount (Rs)
Sales XXXX
Less: Cost of Goods Sold
Opening Stock XXXX
Add: Purchases XXXX
Less: Closing Stock (20,904)
Total Cost of Goods Sold XXXX
Gross Profit XXXX

Expenses:

Particulars Amount (Rs)
Depreciation- Premises (4%) XXXX
Depreciation- Furniture (5%) XXXX
Interest on Capital (5%) XXXX
Provision for Bad Debts (5% on debtors) XXXX
Insurance (prepaid Rs 200) XXXX
Total Expenses XXXX

Net Profit before tax = Gross Profit - Total Expenses

Balance Sheet:

Liabilities Amount (Rs) Assets Amount (Rs)
Capital XXXX Fixed Assets:
Add: Net Profit XXXX Premises XXXX
Less: Drawings (if any) (XXXX) Less: Depreciation (XXXX)
Total Liabilities XXXX Furniture XXXX
Current Assets:
Stock (20,904)
Debtors XXXX
Less: Provision for Bad Debts (XXXX)
Prepaid Insurance 200
Cash and Bank XXXX
Total Current Assets XXXX
Total Assets XXXX

Explanation:

The Final Account of Raju for the year ended 31-12-2016 includes the Income Statement and the Balance Sheet. The Income Statement calculates the gross profit by deducting the cost of goods sold from the sales. The cost of goods sold is calculated by adding the purchases to the opening stock and deducting the closing stock. The expenses are then deducted from the gross profit to arrive at the net profit before tax. The expenses include depreciation on premises and furniture, interest on capital, provision for bad debts, and prepaid insurance.

The Balance Sheet lists the liabilities and assets of Raju as on 31-12-2016. The liabilities include capital, net profit, and drawings (if any). The assets include fixed assets such as premises and furniture, and current assets such as stock, debtors, prepaid insurance, and cash and bank.

Adjustments are made for closing stock, depreciation on premises and furniture, interest on capital, provision for bad debts, and prepaid insurance. The closing stock is deducted from the purchases to arrive at the cost of goods sold. Depreciation is calculated at 4% on premises and 5% on furniture. Interest on capital is allowed at 5%. Provision for bad debts is maintained at 5% on debtors. Prepaid insurance of Rs 200 is deducted from the insurance expense.

In conclusion, the Final Account of Raju for the year ended 31-12-2016 is prepared by taking into account the adjustments and calculating the gross profit, expenses, and net profit before tax, and listing the liabilities and assets in the Balance Sheet.