Mr. Kale and Mr. Gore were partners sharing profits and losses equally. The Trial Balance of their firm was as under: Prepare Trading and Profit and Loss Account for the year ended on 31st March, 2004 and Balance Sheet as on that date: (69)

Financial Statement Problem and Solution

Trial Balance

Trial Balance as on 31st March, 2004.

Debit Balance Rs. Credit Balance Rs.
Opening Stock
Wages
Purchases
Investments
Postage
Printing & Stationery
Carriage Outwards
Insurance
Debtors
Furniture
Bad Debts
Carriage Inwards
Cash in Hand
Machinery (Purchased on 1.7.03)
Salaries (For 10 months)
Sundry Expenses
Bills receivable 		30000
9500
52500
10000
1000
2500
1300
3200
35000
5500
1200
1800
5400
32000
15000
2100
8500 		Capitals:
Mr. Kale
Mr. Gore
Current Accounts:
Mr. Kale
Mr. Gore
Bills Payable
10% Bank Loan (Taken on 1.10.2003)
Bank Overdraft
Creditors
Sales
R.D.D.
Returns Outward
30000
60000

2100
1400
7500
10000
6500
25000
70500
3000
500
Total 216500 Total 216500

Adjustments

  1. Closing stock was valued at Rs. 61,500.
  2. Printing and Stationery included Rs. 500 paid for purchase of postal stamps.
  3. Depreciate Furniture and Machinery at 10% p.a.
  4. 5% interest is to be allowed on capital.
  5. Of the debtors Rs. 500 were bad and should be written off, and R.D.D. should be maintained at 5%.
  6. Goods of Rs. 7,500 were purchased on 30th March, 2004 and included in the closing stock but those purchases were not recorded in the books of accounts.
  7. Bills receivable include a dishonoured bill of Rs. 500.
GROSS PROFIT 31200
NET LOSS 5300
BALANCE SHEET TOTAL 152700

Solution

In the books of M/s Kale and Gore

Trading Account for the year ended 31.03.2004

Particulars Amt. Amt. Particulars Amt. Amt.
To Opening Stock 30000 By Sales 70500
To Purchases 52500 By Closing Stock 61500
(-) Return (500)
52000
(+) Unrecorded 7500 59500
To Wages 9500
To Carriage Inward 1800
To Gross Profit c/d 31200
132000 132000

Profit and Loss Account for the year ended 31.03.2004

Particulars Amt. Amt. Particulars Amt. Amt.
To Postage 1000 By Gross Profit b/d 31200
(+) Postal Stamp 500 1500
To Printing & Stationery 2500 By Net Loss c/d (transferred to Current A/c)
(-) Wrongly recorded (500) 2000 Kale 2650
To Carriage Outward 1300 Gore 2650 5300
To Insurance 3200
To Bad Debts 1200
(+) FBD (Further Bad Debts) 500
(+) NRDD (New RDD) 1750
3450
(-) ORDD (Old RDD) (3000) 450
To Salaries 15000
(+) Outstanding 3000 18000
To Sundry Expenses 2100
To Depreciation:
Machinery 2400
Furniture 550 2950
To Interest on Capital:
Kale 1500
Gore 3000 4500
To Interest on Bank Loan 500
36500 36500

Partners' Current Account

Particulars Kale (Rs.) Gore (Rs.) Particulars Kale (Rs.) Gore (Rs.)
To Net Loss b/d 2650 2650 By Balance b/d 2100 1400
To Balance c/d 950 1750 By Interest on Capital 1500 3000
3600 4400 3600 4400

Balance Sheet as on 31.03.2004

Liabilities Amt. Amt. Assets Amt. Amt.
Capital A/c: Investments 10000
Kale 30000 Debtors 35000
Gore 60000 90000 (+) Bills Rec. Dishonoured 500
Current A/c: 35500
Kale 950 (-) Further Bad Debts (FBD) (500)
Gore 1750 2700 35000
Bills Payable 7500 (-) New R.D.D. (1750) 33250
10% Bank Loan 10000 Furniture 5500
(+) Outstanding Interest 500 10500 (-) Depreciation (550) 4950
Bank Overdraft 6500 Cash in Hand 5400
Creditors 25000 Machinery 32000
(+) Unrecorded Purchase 7500 32500 (-) Depreciation (2400) 29600
Outstanding Salaries 3000 Bills Receivable 8500
(-) Dishonoured (500) 8000
Closing Stock 61500
152700 152700