Final Accounts: March 2015 Board Solution
Question 7
From the following Trial Balance of M/s Sanjay and Keshav, you are required to prepare Trading and Profit and Loss account, for the year ended 31st March 2013 and Balance Sheet as on that date after taking into account the following additional information :
Trial Balance as on 31st March, 2013
| Debit Balances | Amount (₹) | Credit Balances | Amount (₹) |
|---|---|---|---|
| Opening stock | 1,80,000 | Sales | 5,25,000 |
| Bills receivable | 80,000 | Rent | 22,000 |
| Purchases | 2,40,000 | Bills payable | 78,000 |
| Bad debts | 20,000 | Sundry creditors | 1,00,000 |
| Salary and wages | 24,000 | Capital account | |
| Discount | 9,000 | Sanjay | 5,00,000 |
| Carriage inward | 12,000 | Keshav | 3,00,000 |
| Travelling expenses | 13,000 | ||
| Cash in hand | 38,000 | ||
| Furniture | 2,80,000 | ||
| Insurance | 12,000 | ||
| Land and building | 4,00,000 | ||
| Postage and telegram | 7,000 | ||
| Sundry debtors | 2,10,000 | ||
| Total | 15,25,000 | Total | 15,25,000 |
Additional information:
- (1) Insurance paid in advance ₹ 3,000.
- (2) Depreciation provided on furniture at 10%.
- (3) Salary and wages outstanding ₹ 6,000.
- (4) Rent received in advance ₹ 5,000.
- (5) Closing stock as on 31.03.2013 ₹ 2,00,000.
Solution
In the books of M/s Sanjay and Keshav
Trading and Profit & Loss Account for the year ended 31st March, 2013
| Dr. Particulars | Amount (₹) | Amount (₹) | Particulars | Amount (₹) | Cr. Amount (₹) |
|---|---|---|---|---|---|
| To Opening Stock | 1,80,000 | By Sales | 5,25,000 | ||
| To Purchases | 2,40,000 | By Closing Stock | 2,00,000 | ||
| To Carriage Inward | 12,000 | ||||
| To Gross Profit c/d | 2,93,000 | ||||
| Total | 7,25,000 | Total | 7,25,000 | ||
| To Bad Debts | 20,000 | By Gross Profit b/d | 2,93,000 | ||
| To Salary and Wages | 24,000 | By Rent | 22,000 | ||
| (+) Outstanding | 6,000 | 30,000 | (-) Received in Advance | 5,000 | 17,000 |
| To Discount | 9,000 | ||||
| To Travelling Expenses | 13,000 | ||||
| To Insurance | 12,000 | ||||
| (-) Prepaid | 3,000 | 9,000 | |||
| To Postage and Telegram | 7,000 | ||||
| To Depreciation on Furniture | 28,000 | ||||
| To Net Profit (Transferred to Capital A/c) | |||||
| Sanjay (1/2) | 97,000 | ||||
| Keshav (1/2) | 97,000 | 1,94,000 | |||
| Total | 3,10,000 | Total | 3,10,000 |
Balance Sheet as on 31st March, 2013
| Liabilities | Amount (₹) | Amount (₹) | Assets | Amount (₹) | Amount (₹) |
|---|---|---|---|---|---|
| Capital Accounts: | Land and Building | 4,00,000 | |||
| Sanjay | 5,00,000 | Furniture | 2,80,000 | ||
| (+) Net Profit | 97,000 | 5,97,000 | (-) Depreciation (10%) | 28,000 | 2,52,000 |
| Keshav | 3,00,000 | Sundry Debtors | 2,10,000 | ||
| (+) Net Profit | 97,000 | 3,97,000 | Bills Receivable | 80,000 | |
| Sundry Creditors | 1,00,000 | Closing Stock | 2,00,000 | ||
| Bills Payable | 78,000 | Cash in Hand | 38,000 | ||
| Outstanding Salary & Wages | 6,000 | Prepaid Insurance | 3,000 | ||
| Rent Received in Advance | 5,000 | ||||
| Total | 11,83,000 | Total | 11,83,000 |
Working Notes:
1. Depreciation on Furniture:
$$ \text{Depreciation} = 2,80,000 \times \frac{10}{100} = 28,000 $$
2. Net Profit Distribution:
Since the profit-sharing ratio is not mentioned in the problem, it is assumed to be equal (1:1).
$$ \text{Total Net Profit} = 1,94,000 $$
$$ \text{Sanjay's Share} = 1,94,000 \times \frac{1}{2} = 97,000 $$
$$ \text{Keshav's Share} = 1,94,000 \times \frac{1}{2} = 97,000 $$
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