OMTEX CLASSES: Sun and Moon are partners in a firm sharing profits and losses in the ratio of 3:2.

Sun and Moon are partners in a firm sharing profits and losses in the ratio of 3:2.

TEXTUAL PROBLEM NO. 7


SINGLE ENTRY
Sun and Moon are partners in a firm sharing profits and losses in the ratio of 3:2.
7. Sun and Moon are partners in a firm sharing profit and losses in the ratio of 3:2. They kept their books under Single Entry System. On 1stApril 2010 the following statement of affairs was extracted from their books.  [Textbook Problem No. 7]

Statement of Affairs as on 1stApril, 2010
Liabilities
Amount
Assets
Amount
Capitals: Sun
12500
Plant and Machinery
15000
Moon
10000
Stock 
10000
Creditors
15000
Debtors
17500
Bills Payable
12500
Cash in Hand
7500





50000

50000

On 31stMarch 2011 their assets and liabilities were as follows: Plant and Machinery Rs. 44000, Stock Rs. 32000, Cash in Hand Rs. 12,000, Creditors Rs. 8000, Debtors Rs. 20,000 and Bills Payable Rs. 15000. Drawing during the year: Sun Rs. 5000 and Moon Rs. 3000. 

Prepare Closing Statement of affairs and statement of profit or loss for the year ended 31stMarch 2011 after considering the following adjustments. 

(1) Plant is overvalued by 10% and stock is undervalued by 20%. 
(2) R.D.D. is to be created at 10% on Debtors. 

(3) Interest on Capital is to be allowed at 10% p.a. and at 10% p.a. on Drawings.