From the following Trial Balance of Somnath and Ambadas being equal partners, you are required to prepare Trading and Profit & Loss A/c for the year ended 31st March, 2005 and Balance Sheet as on that date after taking into consideration the additional information.


Trial Balance as on 31st March, 2005
Particulars(Debit)
Amount
Particulars(Credit)
Amount
Opening Stock
Drawings:
Somnath
Ambadas
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
Somnath
Ambadas
Reserve Fund
Sales
Bills Payable
Creditors
Reserve for Bad and Doubtful Debts
Returns

22000
18000
21600
130000
1000
16000
800
500
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 %.

30000
3000
24700-19800
84600
GROSS PROFIT
NET PROFIT
PARTNERS CAPITAL ACCOUNT BALANCE
BALANCE SHEET TOTAL


Solution:
In the books of M/s Somnath and Ambadas
Trading Account for the year ended 31.03.2005

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

60000
By Sales
130000

To Purchases
65000

(-) Returns
(1000)
129000
(-) Returns
(500)
64500
By Goods lost
by fire

3000
To Carriage

2500






By Closing Stock

25000
To Gross Profit c/d

30000





157000


157000

Profit and Loss Account for the year ended 31.03.2005
Particulars
Amt.
Amt.
Particulars
Amt.
Amt.
To Insurance
600

By Gross Profit B/d

30000
(-) Prepaid
(50)
550



To Salaries and
Wages
4500




(+) Outstanding
1000
5500



To Rent
3500




(+) Outstanding
500
4000



To Travelling

3000



To Office Expenses

2700



To Bad Debts
-




(+) FBD
-




(+) NRDD
900




(-) ORDD
(800
100



To Advertisement
3000




(-) Prepaid
(2000)
1000



To Goods lost by fire

3000



To Interest on Capital





Somnath
2200




Ambadas
1800
4000



To Depreciation





Building
750




Machinery
2400
3150



To Net Profit c/d





Somnath
1500




Maroti
1500
3000





30000


30000

Partners Current  Account
Particulars
Somnath
Ambadas
Particulars
Somnath
Ambadas
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 31.03.2005

Liability
Amt.
Amt.
Assets
Amt.
Amt.
Capital A/c


Bills Receivable

600
Somnath
24700

Debtors
18000

Ambadas
19800
44500
(-) NRDD
(900)
17100
Reserve Fund

21600
Machinery
12000

Bills Payable

1000
(-) Depreciation
(2400)
9600
Creditors

16000
Cash at bank

1000
Outstanding salary
1000

Building
30000

Outstanding Rent
500
1500
(-) Depreciation
(750)
29250



Closing Stock

25000



Prepaid Insurance

50



Prepaid Advertisement

2000


84600


84600

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