From the following Trial Balance of Somnath and Ambadas being equal partners, you are required to prepare Trading and Profit & Loss A/c for the year ended 31st March, 2005 and Balance Sheet as on that date after taking into consideration the additional information.

Trial Balance as on 31^st March, 2005

Particulars(Debit)	Amount	Particulars(Credit)	Amount
Opening Stock Drawings: Somnath Ambadas Insurance Salaries and Wages Carriage Purchase Bills Receivable Rent Debtors Returns Machinery Travelling Expenses Cash at Bank Building Office Expenses Advertisement (for 3 years)	60000 1000 1500 600 4500 2500 65000 600 3500 18000 1000 12000 3000 1000 30000 2700 3000	Capital A/c Somnath Ambadas Reserve Fund Sales Bills Payable Creditors Reserve for Bad and Doubtful Debts Returns	22000 18000 21600 130000 1000 16000 800 500
	209900		209900

Adjustments:

1.   Closing stock: cost Rs. 25,000 and market price Rs. 30,000.

2.   Allow interest on capital at 10% p.a.

3.   Prepaid insurance Rs. 50.

4.   Provide for R.B.D.D. at 5% on debtors.

5.   Uninsured goods costing Rs. 3000 were destroyed by fire.

6.   Outstanding expenses: Salaries Rs. 1000; Rent Rs. 500.

7.   Provide depreciation on Machinery at 20%; Building 2 ½ %.

30000	3000	24700-19800	84600
GROSS PROFIT	NET PROFIT	PARTNERS CAPITAL ACCOUNT BALANCE	BALANCE SHEET TOTAL

Solution:

In the books of M/s Somnath and Ambadas

Trading Account for the year ended 31.03.2005

Particulars	Amt.	Amt.	Particulars	Amt.	Amt.
To Opening Stock		60000	By Sales	130000
To Purchases	65000		(-) Returns	(1000)	129000
(-) Returns	(500)	64500	By Goods lost by fire		3000
To Carriage		2500
			By Closing Stock		25000
To Gross Profit c/d		30000
		157000			157000

Profit and Loss Account for the year ended 31.03.2005

Particulars	Amt.	Amt.	Particulars	Amt.	Amt.
To Insurance	600		By Gross Profit B/d		30000
(-) Prepaid	(50)	550
To Salaries and Wages	4500
(+) Outstanding	1000	5500
To Rent	3500
(+) Outstanding	500	4000
To Travelling		3000
To Office Expenses		2700
To Bad Debts	-
(+) FBD	-
(+) NRDD	900
(-) ORDD	(800	100
To Advertisement	3000
(-) Prepaid	(2000)	1000
To Goods lost by fire		3000
To Interest on Capital
Somnath	2200
Ambadas	1800	4000
To Depreciation
Building	750
Machinery	2400	3150
To Net Profit c/d
Somnath	1500
Maroti	1500	3000
		30000			30000

Partners Current  Account

Particulars	Somnath	Ambadas	Particulars	Somnath	Ambadas
To Drawings	1000	1500	By Balance b/d	22000	18000
To Balance C/d	24700	19800	By Interest on Capital	2200	1800
			By Net Profit b/d	1500	1500
	25700	21300		25700	21300

Balance Sheet as on 31.03.2005

Liability	Amt.	Amt.	Assets	Amt.	Amt.
Capital A/c			Bills Receivable		600
Somnath	24700		Debtors	18000
Ambadas	19800	44500	(-) NRDD	(900)	17100
Reserve Fund		21600	Machinery	12000
Bills Payable		1000	(-) Depreciation	(2400)	9600
Creditors		16000	Cash at bank		1000
Outstanding salary	1000		Building	30000
Outstanding Rent	500	1500	(-) Depreciation	(750)	29250
			Closing Stock		25000
			Prepaid Insurance		50
			Prepaid Advertisement		2000
		84600			84600