Ganga and Godawari are partners sharing profits and losses equally the Trial Balance of their firm on 31st March, 2007 was as following. (20) [September, 2009]


Particulars
Debit Rs.
Credit Rs.
Stock (1-4-2006)
80000

Purchases & Sales
400000
768000
Return Inward
30000

Carriage
7500

Power & Fuel
40000

Wages
35000

Trade Expenses
8000

Debtors and Creditors
80000
60000
Salaries
72000

Insurance
6000

Postage
6000

Commission
8000
12000
Plant & Machinery
200000

Furniture
80000

Advertisement
15000

Building
400000

Drawings


Ganga
8000

Godawari
10000

Capital


Ganga

250000
Godawari

250000
12% Bank loan
taken on 1.10.2006

150000
Cash in hand
7500


1490000
1490000


Adjustments:
1.   Stock on 31.3.2007 was valued at Cost price Rs. 1,00,000 and Market price Rs. 1,20,000.
2.   Depreciate plant and Machinery and Buildings at 20% and 10% respectively.
3.   Insurance is paid for one year ending on 30.06.2007.
4.   Goods withdrawn by Ganga for her personal use of Rs. 10,000 during the year were not recorded in the books.
5.   Provide Rs. 10,000 as Bad debts and Reserve for Doubtful Debts is to be maintained at 5% on Debtors.
Prepare : Trading Account, Profit and Loss Account for the year ending on 31st March, 2007 and Balance Sheet as on that date after making the above adjustments.

Solution:
In the books of M/s Ganga & Godawari
Trading Account for the year ended 31.03.2007

Particulars
Amt.
Amt.
Particulars
Amt.
Amt.
To Opening stock

80000
By Sales
768000

To Purchases

400000
(-) Return
-30000
738000
To Carriage

7500
By Goods withdrawn by the Partner Ganga

10000
To Power and Fuel

40000



To Wages

35000



To Gross Profit C/d

285500
By Closing Stock

100000


848000


848000

Profit and Loss Account for the year ended 31.03.2007
Particulars
Amt.
Amt.
Particulars
Amt.
Amt.
To Trade Expenses

8000
By Gross Profit b/d

285500
To Salaries

72000
By Commission

12000
To Insurance
6000




(-) Prepaid
-1500
4500



To Postage

3000



To Commission

8000



To Advertisement

15000



To Depreciation





Plant and machinery
40000




Building
40000
80000



To Bad Debts
-




(+)F.B.D.
10000




(+) N.R.D.D.
3500




(-) O.R.D.D.
-
13500



To Interest on Bank Loan

9000



To Net Profit





Ganga
42250




Godawari
42250
84500





292500


292500

Partners Current  Account
Particulars
Ganga
Godawari
Particulars
Ganaga
Godawari
To Drawings
8000
10000
By Balance b/d
250000
250000
To Drawings
[Goods]
10000
-
By Net Profit b/d
42250
42250
To Balance C/d
274250
282250




292250
292250

292250
292250

Balance Sheet as on 31.12.1997
Liability
Amt.
Amt.
Assets
Amt.
Amt.
Capital A/c


Debtors
80000

Ganga
274250

(-) F.B.D.
-10000

Godawari
282250
556500

70000

Creditors

60000
(-) N.R.D.D.
-3500
66500
12% Bank Loan
150000

Plant & Machinery
200000

(+) Interest
9000
159000
(-) Depreciation
-40000
160000



Furniture

80000



Building
400000




(-) Depreciation
-40000
360000



Cash in hand

7500



Closing Stock

100000



Prepaid Insurance

1500


775500


775500