Following is the Trial Balance of Premlal and Sundarlal as on 31 st March, 2006. (20)

Trial Balance as on 31 st March, 2006 [September 2008]

Debit Balance
Amount
Rs.
Credit Balance
Amount
Rs.
Stock on 1-4-2005
Purchases
Drawings :  Premlal
Sundarlal
Sales Return
Wages :Productive
Unproductive
Salaries
Rent, Rates and Insurance
Bad Debts
Discount allowed
Machinery
Building
Sundry Debtors
Cash
90,000
2,25,000
33,000
30,000
7,200
10,500
1,800
18,600
10,200
1,200
3,900
45,000
1,08,600
1,53,000
3,000
Sales
Purchase Returns
Discount received
Sundry Creditors
Capital : Premlal
Sundarlal
Bank Overdraft
3,75,000
3,000
3,000
90,000
1,05,000
1,35,000
30,000
7,41,000
7,41,000

1.    Closing stock was valued on 31-03-2006 at market price Rs. 60,000 which was 20% above its cost price.
2.    Outstanding productive wages Rs. 600.
3.    Rent, Rates and Insurance include Insurance Rs. 1,600 paid for one year ending on 30th June, 2006.
4.    Maintain Reserve for doubtful debts at 5% on debtors.
5.    Depreciate building by 5% and machinery at 10% p.a.
6.    Goods costing Rs. 2500 were distributed as free samples for which no record has been made in the books.
7.    Six months interest is due on Bank Overdraft at 10% p.a.

Solution:
In the books of M/s Premlal & Sundarlal
Trading Account for the year ended 31.03.2006

Particulars
Amt.
Amt.
Particulars
Amt.
Amt.
To Opening Stock

90000
By Sales
375000

To Purchases
225000

(-) Return
-7200
367800
(-) Returns
-3000
222000
By Goods Distributed as Free Samples

2500
To Production Wages
10500

By Closing Stock

50000
(+) Outstanding
600
11100



To Gross Profit C/d

97200





420300


420300

Profit and Loss Account for the year ended 31.03.2006

Particulars
Amt.
Amt.
Particulars
Amt.
Amt.
To Unproductive Wages

1800
By Gross Profit b/d

97200
To Salaries

18600
By Discount Received

3000
To Rent, Rates and Insurance
10200




(-) Prepaid
-400
9800



To Bad Debts
1200




(+) F.B.D.
-




(+) N.R,D.D.
7650




(-) O.R.D.D.
-
8850



To Discount allowed

3900



To Depreciation





Building
5430




Machinery
4500
9930



To Advertisement

2500



To interest due on Bank Overdraft

1500



To Net Profit C/d





Premlal
21660




Sunderlal
21660
43320





100200


100200

Partners Capital   Account
Particulars
Premlal
Sunderlal
Particulars
Premlal
Sunderlal
To Drawings
33000
30000
By Balance b/d
105000
135000
To Balance c/d
93660
126660
By Net Profit b/d
21410
21410







126410
156410

126410
156410

Balance Sheet as on 31.12.2006
Liability
Amt.
Amt.
Assets
Amt.
Amt.
Capital A/c


Machinery
45000

Premlal
126660

(-) Depreciation
-4500
40500
Sundarlal
93660
220320
Building
108600

Sundry Creditors

90000
(-) Depreciation
-5430
103170
Bank Overdraft
30000

Sundry Debtors
153000

(+) Interest due
1500
31500
(-) N.R.D.D.
7650
145350
Outstanding Productive Wages

600
Cash

3000



Closing Stock

50000



Prepaid Insurance

400








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