From the following Trial Balance of Meena and Reena being equal partners, you are required to prepare Trading and Profit & Loss A/c for the year ended 31st March, 2014 and Balance Sheet as on that date after taking into consideration the additional information.

 Trial Balance as on 31^st March, 2014

Particulars (Debit)	Rs.	Particulars (Credit)	Rs.
Opening Stock Drawings: Meena Reena 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 Meena Reena Reserve Fund Sales Bills Payable Creditors Returns Reserve for Bad & Doubtful Debts	22000 18000 21600 130000 1000 16000 500 800
	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 %.

Solution: In the books of Meena & Reena

Trading A/c for the year ended 31.03.14

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

Profit and Loss A/c for the year ended 31 – 3 – 14

Particulars	Amount	Amount	Particulars	Amount	Amount
To Insurance	600		By Gross Profit c/d		30000
(-) Prepaid	-50	550
To Salaries & Wages	4500
(+) Outstanding	1000	5500
To Rent	3500
(+) Outstanding	500	4000
To Travelling Expenses		3000
To Office Expenses		2700
To Advertisement	3000
(-) Prepaid	-2000	1000
To Bad debts	-
(+) F.B.D,	-
(-) N.R.D.D.	900
(-) O.R.D.D.	-800	100
To Goods lost by fire		3000
To Depreciation
On Machinery	2400
On Building	750	3150
To Interest on Capital
Meena	2200
Reena	1800	4000
To Net Profit C/d
Meena	1500
Reena	1500	3000
		30000			30000

Partners Capital A/c

Particulars	Meena	Reena	Particulars	Meena	Reena
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 31.3.14

Liabilities	Amount	Amount	Assets	Amount	Amount
Capital A/c			Bills Receivable		600
Meena	24700		Debtors	18000
Reena	19800	44500	(-)N.R.D.D.	-900	17100
Reserve Fund		21600	Machinery	12000
Bills Payable		1000	(-) Depreciation	-2400	9600
Creditors		16000	Cash at bank		1000
Outstanding Expenses			Building	30000
Salaries	1000		(-) Depreciation	750	29250
Rent	500	1500	Closing Stock		25000
			Prepaid Insurance		50
			Prepaid Advertisement		2000
		84600			84600