Question

Kajol and Sunny were partners sharing profits and losses in the ratio of 3:2. The following Balances were extracted from the books of account for the year ended March 31, 2015.

Account Name	Debit Amount Rs	Credit Amount Rs
Capital
Kajol		1,15,000
Sunny		91,000
Current accounts [on 1-04-2005*]
Kajol		4,500
Sunny	3,200
Drawings
Kajol	6,000
Sunny	3,000
Opening stock	22,700
Purchases and Sales	1,65,000	2,35,800
Freight inward	1,200
Returns	2,000	3,200
Printing and Stationery	900
Wages	5,500
Bills receivables and Bills payables	25,000	21,000
Discount	400	800
Salaries	6,000
Rent	7,200
Insurance premium	2,000
Traveling expenses	700
Sundry expenses	1,100
Commission		1,600
Debtors and Creditors	74,000	78,000
Building	85,000
Plant and Machinery	70,000
Motor car	60,000
Furniture and Fixtures	15,000
Bad debts	1,500
Provision for doubtful debts		2,200
Loan		25,000
Legal expenses	300
Audit fee	900
Cash in hand	7,500
Cash at bank	12,000
	5,78,100	5,78,100

Prepare final accounts for the year ended March 31,2015, with following adjustments:

(a) Stock on March 31,2015 was Rs37,500.

(b) Bad debts Rs3,000; Provision for bad debts is to be made at 5% on debtors

(c) Rent Prepaid were Rs1,200.

(d) Wages outstanding were Rs 2,200.

(e) Interest on capital to be allowed on capital at 6% per annum and interest on drawings to be charged @ 5% per annum.

(f) Kajol is entitled to a Salary of Rs 1,500 per annum.

(g) Prepaid insurance was Rs 500.

(h) Depreciation was charged on Building, @ 4%; Plant and Machinery, @ 5%; Motor car, @ 10% and furniture and fixture, @ 5%.

(i) Goods worth Rs 7,000 were destroyed by fire on January 20,2015. The Insurance company agreed to pay Rs 5,000 in full settlement of the claim.

*As per the question, this year should be 01-04-2014

Answer 1

Financial Statement as on March 31, 2015 Trading Account
Dr.									Cr.
Particulars				Amount Rs	Particulars				Amount Rs
Opening Stock				22,700	Sales			2,35,800
Purchases			1,65,000		Less: Sales Return			(2,000)	2,33,800
Less: Purchases Return			(3,200)
Less: Goods Lost by Fire			(7,000)	1,54,800	Closing Stock				37,500
Freight Inward				1,200
Wages			5,500
Add: Outstanding			2,200	7,700
Gross Profit				84,900
				2,71,300					2,71,300

Profit and Loss Account
Dr.								Cr.
Particulars			Amount Rs	Particulars				Amount Rs
Printing and Stationery			900	Gross Profit				84,900
Discount Allowed			400	Discount Received				800
Salaries			6,000	Commission				1,600
Rent		7,200		Insurance Co. (Claim)				5,000
Less: Prepaid		(1,200)	6,000
Insurance Premium		2,000
Less: Prepaid		(500)	1,500
Travelling Expenses			700
Sundry Expenses			1,100
Bad Debt		1,500
Add: Further Bad debt		3,000
Add: Provision for Bad Debts		3,550
		8,050
Less: Provision for Bad Debt (Old)		(2,200)	5,850
Legal Expenses			300
Audit Fee			900
Goods Lost by Fire			7,000
Depreciation on
Building			3,400
Plant and Machinery			3,500
Motor Car			6,000
Furniture and Fixture			750
Net Profit			48,000
			92,300					92,300

Profit and Loss Appropriation Account
Dr.							Cr.
Particulars			Amount Rs	Particulars			Amount Rs
Interest on Capital				Net profit			48,000
Kajol		6,900
Sunny		5,460	12,360	Interest on Drawings
				Kajol	300
Partner’s Salaries				Sunny		150	450
Kajol			1,500
Profit & Loss – Gross Profit
Kajol’s Current		20,754
Sunny’s Current		13,836	34,590
			48,450				48,450

Partners’ Capital Account
Dr.					Cr.
Particulars	Kajol	Sunny	Particulars	Kajol	Sunny
			Balance b/d	1,15,000	91,000
Balance c/d	1,15,000	91,000
	1,15,000	91,000		1,15,000	90,000

Partners’ Current Account
Dr.					Cr.
Particulars	Kajol	Sunny	Particulars	Kajol	Sunny
Balance b/d		3,200	Balance b/d	4,500
Drawings	6,000	3,000	Interest on Capital	6,900	5,460
Interest on Drawings	300	150	Partner’s Salaries	1,500
Balance c/d	27,354	12,946	Profit and Loss Appropriation	20,754	13,836
	33,654	19,296		33,654	19,296

Balance Sheet as on March 31, 2015
Liabilities			Amount Rs	Assets			Amount Rs
Bills Payable			21,000	Bills Receivable			25,000
Creditors			78,000	Debtors		74,000
Loan			25,000	Less: Further Bad debt		(3,000)
Wages Outstanding			2,200	71,000
Capital:				Less: 5% Provision for Bad Debt	(3,550)		67,450
Kajol	1,15,000
Sunny	91,000		2,06,000	Building	85,000
				Less: 5% Depreciation	(3,400)		81,600
Current:
Kajol		27,354		Plant and Machinery		70,000
Sunn		12,946	40,300	Less: 5% Depreciation	(3,500)		66,500
				Motor Car		60,000
				Less: 10% Depreciation		(6,000)	54,000
				Furniture & Fixture		15,000
				Less: 5% Depreciation		(750)	14,250
				Cash in Hand			7,500
				Cash at Bank			12,000
				Closing Stock			37,500
				Prepaid Rent			1,200
				Prepaid Insurance			500
				Insurance Co. (Claim)			5,000
			3,72,500				3,72,500