Question

From the following information prepare Trading Account for the year ended 31st March, 2018:

| Stock on 1st April,2017 | Rs.40,000 | Returns outward | Rs.80,000 |
| Purchase | Rs.4,00,000 | Wages and Salaries | Rs.50,000 |
| Sales | Rs.3,80,000 | Returns Inward | Rs.20,000 |
| Carriage Inwards | Rs.20,000 | Stock on 31st March,2018 | Rs.1,30,000 |

Answer 1

Note: According to the Principle of Conservatism, closing stock is valued at Cost or Market Price, whichever is less. Hence, closing stock is valued at Market Price (i.e., Rs.1,20,000)