From the following Trial Balance of Kamlesh and Mahajan and given adjustments, prepare a Trading Account, Profit and Loss account for the year ended 31st March, 2007 and a Balance Sheet as on that date. [September 2011)

Dr.                          Trial Balance as on 31st March 2007                           Cr.
Particulars
Amt.Rs.
Particulars
Amt. Rs.
Opening Stock
45,000
Capital A/c

Purchases
2,25,000
    Kamlesh
25,000
Plant and Machinery
75,000
    Mahajan
20,000
Carriage
16,800
Sales
4,50,000
Factory Rent
1,500
Discount Received
750
Insurance
1,050
Sundry Creditors
15,000
Sundry Debtors
60,000
Bad debts Reserve
200
Office Rent
3,000
Bills Payable
2,000
Printing & Stationery
600


Advertisement
15,000


Bills Receivable
3,000


Drawings:  Kamlesh
3,500


                 Mahajan
2,500


Salaries
18,000


Wages
20,000


Furniture
7,500


Royalty
1,000


Cash at Bank
14,500


5,12,950

5,12,950

The following adjustments are required:
(1)            Closing stock was valued at Cost price Rs. 35,000 and Market Price 40,000.
(2)            Plant– Machinery & Furniture are to be depreciated at 6% & 10% p.a respectively.
(3)            Maintain Reserve for Doubtful Debts @ 2 ½ % on Sundry Debtors.
(4)            Outstanding Expenses:  Factory Rent Rs. 300; Office Rent Rs. 600.
(5)            Interest on capital to be allowed at 6% p.a.
(6)            Prepaid insurance was Rs. 100.

175400
129650
87825-83525
189250
GROSS PROFIT
NET PROFIT
PARTNERS CAPITAL ACCOUNT BALANCE
BALANCE SHEET TOTAL


Solution:
In the books of M/s Kamlesh and Mahajan     
Trading Account for the year ended 31.03.2014

Particulars
Amt.
Amt.
Particulars
Amt.
Amt.
To Opening stock
45000
By Sales
450000
To Purchases
225000
To Carriage
16800
To Factory Rent
1500
(+) Outstanding
300
1800
To Wages
20000
To Royalty
1000
By Closing Stock
35000
To Gross Profit c/d
175400


485000


485000


Profit and Loss Account for the year ended 31.03.2014.

Particulars
Amt.
Amt.
Particulars
Amt.
Amt.
To Insurance
1050

By Gross Profit b/d

175400
(-) Prepaid
(100)
950
By Discount Received

750
To Office Rent
3000




(+) Outstanding
600
3600



To Printing and Stationery

600



To Advertisement

15000



To Salaries

18000



To Bad debts
-




(+) FBD
-




(+) NRDD
1500




(-) ORDD
(200)
1300



To Depreciation





Plant and Machinery
4500




Furniture
750
5250



To Interest on Capital





Kamlesh
1500




Mahajan
1200
2700



To Net Profit C/d





Kamlesh
64375




Mahajan
64375
128750





176150


176150

Partners Capital Account

Particulars
Kamlesh
Mahajan
Particulars
Kamlesh
Mahajan
To Drawings
3500
2500
By Balance b/d
25000
20000



By interest on Capital
1500
1200



By Net Profit b/d
64375
64375
To Balance c/d
87375
83075




90875
85575

90875
85575

Balance Sheet as on 31.03.2014

Liability
Amt.
Amt.
Assets
Amt.
Amt.
Capital


Plant & Machinery
75000

Kamlesh
87375

(-) Depreciation @ 6%
(4500)
70500
Mahajan
83075
170450
Sundry Debtors
60000

Sundry Creditors

15000
(-) NRDD
(1500)
58500
Bills Payable

2000
Bills Receivable

3000
Outstanding Expenses


Furniture
7500

Factory Rent
300

(-) Depreciation @10%
(750)
6750
Office Rent
600
900
Cash at bank

14500



Closing Stock

35000



Prepaid Insurance

100








188350


188350

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