Given below is the Trial Balance of M/s Radha and Krishna on 31st March, 2004. Partners share profit & losses in the ratio of 3:2 respectively. From the following trial balance and additional information, prepare a Trading & Profit & Loss account for the year ended 31st March, 2004 and a Balance sheet as on that date.

Trial Balance as on 31st March, 2004.

Particulars
(Debit)
Rs.
Particulars
(Credit)
Rs.
Partner's
Current A/c
Partners Capital
Account
Radha
16000
Radha
80000
Partner's
Drawings
Krishna
50000
Radha
15000
Partners Current
Account
Krishna
10000
Krishna
10000
Purchases
120000
Sales
365000
Returns
2500
Returns
3500
Debtors
65000
Creditors
10000
Furniture
50000
RDD
2000
Premises
160000
Provident fund
65000
Bad debts
7500
Interest on P.F.
Investment
6000
Discount
5000
Outstanding
Salaries  & Wages
6500
Provident Fund
 Contribution
15000
General Reserve
45003
Provident Fund
Investment
60000
Salaries & Wages
15003
Opening Stock
80000
Cash in hand
18000
Royalties
4000

643003

643003

1.      The closing stock was valued at market price Rs. 90,000 which is 20% above cost.
2.      Write off bad debts Rs. 1500 and make a provision for doubtful debts @5% on debtors.
3.      Provide 2% Reserve for discount on debtors and creditors.
4.      Interest on capital is allowed @ 10% p.a. and interest on drawings be charged @ 15% p.a.
5.      Radha is entitled to receive rent for her premises at Rs. 300 p.m. where business is carried out and Krishna is to be given 5% commission on ‘Gross Profit’.



Solution:

In the books of M/s Radha and Krishna

Trading Account for the year ended 31.03.2004


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

80000
By Sales
365000

To Purchases
120000

(-) Returns
-2500
362500
(-) Returns
-3500
116500



To Royalties

4000



To Gross Profit C/d

237000
By Closing Stock

75000








437500


437500


Profit and Loss Account for the year ended 31.03.2004

Particulars
Amt.
Amt.
Particulars
Amt.
Amt.
To Bad Debts
7500

By Gross Profit b/d

237000
(+) F.B.D.
1500

By Discount on Creditors

200
(+) N.R.D.D.
3175

By Interest on Drawings


(-) O.R.D.D.
-2000
10175
Radha
1125

To Discount

5000
Krishna
750
1875
To Provident fund Contribution

15000



To Salaries & Wages

15003



To Discount on Debtors

1207



To Interest on Capital





Radha
8000




Krishna
5000
13000



To rent on premises to Partner Radha
[Rs. 300 × 12 Months]

3600



To Commission on G.P. to Krishna

11850



To Net Profit c/d





Radha
98544




Krishna
65696
164240





239075


239075


Partners Current  Account

Particulars
Radha
Krishna
Particulars
Radha
Krishna
To Balance b/d
16000
-
By Balance b/d
-
10000
To Drawings
15000
10000
By Interest on Capital
8000
5000
To Interest on Drawings
1125
750
BY Commission on G.P.
-
11850



By Rent on Premises
3600
-
To Balance C/d
78019
81796
By Net Profit C/d
98544
65696

110144
92546

110144
92546


Balance Sheet as on 31.03.2004

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


Debtors
65000

Radha
80000

(-) F.B.D.
-1500

Krishna
50000
130000

63500

Current A/c


(-) N.R.D.D.
3175

Radha
78019


60325

Krishna
81796

(-) Discount
-1207
59118
Creditors
10000

Furniture

50000
(-) Discount
200
9800
Provident Fund Investments

60000
Provident Fund
65000

Cash in Hand

18000
(+) Interest on Provident Fund Investments
6000
71000
Closing Stock

75000
Outstanding Salaries & Wages

6500
Premises

160000
General Reserve

45003





422118


422118


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