Amitbhai and Narendrabhai are in Partnership Sharing Profits and Losses equally.

Amitbhai and Narendrabhai are in Partnership Sharing Profits and Losses equally. From the following Trial Balance and Adjustments given below, you are required to prepare Trading and Profit and Loss Account for the year ended 31st March 2019 and Balance Sheet as on that date.

 

Trial Balance as on 31st March 2019

 

Debit Balance

Amount ₹

Credit Balance

Amount ₹

Plant & Machinery

2,80,000

Capital A/c :

 

Factory Building

75,000

Amitbhai

3,50,000

Sundry Debtors

28,700

Narendrabhai

3,00,000

Purchases

85,500

Sales

1,80,000

Bad Debts

500

Bills Payable

8,500

Sales Return

2,200

Discount

1,200

10% Govt. Bond

(Purchased on 1st Oct 2018)

40,000

Creditors

38,500

Import Duty

1,800

R.D

2,700

Legal Charges

2,000

Bank Loan

15,000

Motive Power

12,000

Purchases Return

2,000

Warehouse Rent

1,800

 

 

Cash in Hand

20,000

 

 

Cash at Bank

70,000

 

 

Advertisement (for 2 years, w.e.f 1st Jan 2019) 

10,000

 

 

Salaries

3,800

 

 

Rent

1,500

 

 

Drawings :

 

 

 

Amitbhai

2,400

 

 

Narendrabhai

3,200

 

 

Furniture

1,95,800

 

 

Bills Receivable

20,700

 

 

Freehold Property

41,000

 

 

 

8,97,900

 

8,97,900

Adjustments :

1) Stock on hand on 31st March 2019 was valued at  ₹ 43,000.

2) Uninsured goods worth ₹ 8,000 were stolen.

3) Create R.D.D at 2% on Sundry debtors.

4) Mr. Patil, our customer becomes insolvent and could not pay his debts of ₹ 500.

5) Outstanding Expenses - Rent ₹ 800 and Salaries ₹ 300

6) Depreciate Factory Building by ₹ 2,500 and Furniture by ₹ 1,800


SOLUTION

 

Dr. 

In the books of Amitbhai and Narendrabhai Trading and Profit and Loss Account for the year ended on 31st March 2019

Cr.


Particulars

Amount ₹

Amount ₹

Particulars

Amount ₹ 

Amount ₹ 

To Purchases

85,500

 

By Sales

1,80,000

 

Less: Purchase Return

2,000

83,500

Less: Sales Return

2,200

1,77,800

To Import Duty

 

1,800

By Closing Stock

 

43,000

To Motive Power

 

12,000

By Goods Stolen Away

 

8,000

To Depreciation - Factory Building

 

2,500

 

 

 

To Gross Profit c/d

 

1,29,000

 

 

 

 

 

2,28,800

 

 

2,28,800

 

 

 

 

 

 

To Warehouse Rent

 

1,800

By Gross Profit b/d

 

1,29,000

To R.B.D.D. A/C

 

 

By Discount

 

1,200

Bad debts

500

 

By O/s Interest on Govt. Bonds

 

2,000

Add: New Bad debts

500

 

By R.B.D.D. A/c (Excess Reserve)

(2,700 – 1,564)

 

1,136

Add: New Reserve

564

 

 

 

 

 

1564

 

 

 

 

Less: Old Reserve

2700

 

 

 

 

To Legal Charges

 

2,000

 

 

 

To Advertisement Expenses

10,000

 

 

 

 

less: Prepaid Adv. Exp.

8,750

1250

 

 

 

To Salaries

3,800

 

 

 

 

Add: O/s Salaries

300

4100

 

 

 

To Rent

1500

 

 

 

 

Add: O/s Rent

800

2,300

 

 

 

To Depreciation on Furniture

 

1,800

 

 

 

To Loss due to Theft

 

8,000

 

 

 

To Net Profit Transferred to Capital A/c

 

 

 

 

 

Amitbhai

56,043

 

 

 

 

Narendrabhai

56,043

1,12,086

 

 

 

 

 

1,33,336

 

 

1,33,336

  Balance Sheet as on 31st March 2019

Liabilities

Amount ₹

Amount ₹

Assets

Amount ₹

Amount ₹

Capital Account: Amitbhai

 

 

Plant & Machinery

 

2,80,000

Opening Balance

3,50,000

 

Factory Building

75,000

 

Add: Net Profit

56,043

 

Less: Depreciation

2,500

72,500

Less: Drawings

2,400

4,03,643

Closing Stock

 

43,000

 

 

 

Sundry Debtors

28,700

 

Capital Account: Narendrabhai

 

 

Less: B.D. (New)

500

 

Opening Balance

3,00,000

 

 

28,200

 

Add: Net Profit

56,043

 

Less: R.D.D. (New)

564

27,636

Less: Drawings

3,200

3,52,843

10 % Govt. Bond

 

40,000

Bills Payable

 

8,500

O/s Interest on Govt. Bond

 

2,000

Creditors

 

38,500

Cash in Hand

 

20,000

Bank Loan

 

15,000

Cash at Bank

 

70,000

Outstanding expenses

 

 

Prepaid Advertisement Expense

 

8,750

Rent

800

 

Furniture

1,95,800

 

Salaries

300

1,100

Less: Depreciation

1,800

1,94,000

 

 

 

Bills Receivable

 

20,700

 

 

 

Freehold property

 

41,000

 

 

 

 

 

 

 

 

8,19,586

 

 

8,19,586

Notes :

(1) Import duty, Motive power, and Depreciation on Factory building are recorded in the Trading A/c.

(2) 10 % govt. bond is an investment. It was purchased on 1 – 10 – 2018.

Interest is calculated for six months.

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