Pradeep and Prashant are partners sharing profits and losses in equal ratio. From the following Trial Balance you are required to prepare Trading and Profit & Loss account for the year ended 31st March, 1998 and Balance Sheet as on that date after taking into consideration the additional information. (71)

Trial Balance as on 31st March, 1998

Particulars (Debit)	Amount	Particulars (Credit)	Amount
Land and Building Plant (Addition on 1st Jan.98, Rs.3,000) Drawings     Pradeep     Prashant Opening Stock Freight Purchases Carriage Office Expenses Rent, Rates & Taxes Insurance Motor van Salaries Bad debts Customers Account Cash at Bank	44500 9750 3000 2000 26000 5000 34500 700 2270 1750 480 20000 1750 950 14600 250	Capitals     Pradeep     Prashant Sales Suppliers Account Reserve for Doubtful Debts Outstanding Expenses	60000 40000 57000 9500 500 500
Total	167500		167500

Additional Information:

1. Closing stock on 31^st March, 1998 was at cost Rs. 40,000 and Market price Rs. 50,000.
2. Provide 10% p.a. interest on Capital.
3. Charge interest on drawings: Pradeep Rs. 100 and Prashant Rs. 150.
4. Depreciate plant at 10% p.a.
5. Prashant’s withdrawal of goods worth Rs. 1,000 for personal use but not recorded in the books.

Solution:

In the books of M/s Pradeep and Prashant

Trading Account for the year ended 31.03.1998

Particulars	Amount	Amount	Particulars	Amount	Amount
To Opening Stock		26000	By Sales		57000
To Purchases		34500	By Goods Withdrawn by Partner Prashant		1000
To Freight		5000
To Carriage		700
To Gross Profit c/d		31800	By Closing Stock		40000
		98000			98000

Profit and Loss Account for the year ended 31.03.1998

Particulars	Amount	Amount	Particulars	Amount	Amount
To Office Expenses		2270	By Gross Profit b/d		31800
To Rent, Rates & Taxes		1750	By Interest on Drawings:
To Insurance		480	Pradeep	100
To Salaries		1750	Prashant	150	250
To Bad Debts	950
(+) Further Bad Debts (F.B.D.)	-
(+) New Reserve for D.D. (N.R.D.D.)	-
(-) Old Reserve for D.D. (O.R.D.D.)	(500)	450
To Depreciation on Plant		750
To Interest on Capital:
Pradeep	6000
Prashant	4000	10000
To Net Profit Transferred to Capital A/c:
Pradeep	7300
Prashant	7300	14600
		32050			32050

Partners' Capital Account

Particulars	Pradeep	Prashant	Particulars	Pradeep	Prashant
To Drawings	3000	2000	By Balance b/d	60000	40000
To Drawings (Goods)		1000	By Interest on Capital	6000	4000
To Interest on Drawings	100	150	By Net Profit (from P&L A/c)	7300	7300
To Balance c/d	70200	48150
	73300	51300		73300	51300

Balance Sheet as on 31.03.1998

Liabilities	Amount	Amount	Assets	Amount	Amount
Capital A/c:			Land & Building		44500
Pradeep	70200		Plant	9750
Prashant	48150	118350	Less: Depreciation	(750)	9000
Creditors (Suppliers Account)		9500	Motor Van		20000
Outstanding Expenses		500	Debtors (Customers Account)		14600
			Cash at Bank		250
			Closing Stock		40000
Total		128350	Total		128350