Question

Practical Problem

Given below is the Trial Balance of M/s Seeta and Geeta as on 31^st March, 2010. You are required to prepare Trading and Profit and Loss Account for the year ended 31^st March, 2010 and Balance Sheet on that date.

Trial Balance as on 31st March, 2010
Debit Balance		Amount Rs	Credit Balance		Amount Rs
Current A/c-	Geeta	4,000	Capital A/c-	Seeta	1,20,000
Opening stock		88,000		Geeta	1,20,000
Purchases		1,76,000	Current A/c- Seeta		5,000
Wages		23,500	Sundry Creditors		1,03,000
Salaries		15,000	Bank overdraft		60,000
Office expenses		8,000	Sales		3,08,000
Bank charges		2,600
Legal charges		3,000
Machinery		90,000
Land and Building		1,30,000
Interest		3,600
Export duty		3,800
Bad Debts		4,000
Sundry Debtors		82,000
Travelling Expenses		3,200
Electricity charges		2,300
Furniture		37,000
8% Debentures		40,000
(Purchased on 1.10.2009)
		7,16,000			7,16,000

Adjustments:

1) Stock on hand on 31st March, 2010 was valued at Rs 80,000.

2) Goods costing Rs 16,000 destroyed by fire and Insurance Company admitted a claim of Rs 13,000.

3) Provide for outstanding expenses: Salaries Rs 3,000, Wages Rs 2,400.

4) Depreciate Machinery at 10% p.a. Land and Building at 5% p.a.

5) Create Reserve for Bad and doubtful debts at 5% on Sundry Debtors.

6) Legal charges paid in advance Rs 1,200.

7) Provide interest on capital at 8% p.a.

Answer 1

Trading Account for the year ended March 31,2010
Dr.						Cr.
Particulars			Amount (Rs)	Particulars	Amount (Rs)
Opening Stock			88,000	Sales	3,08,000
Purchases			1,76,000	Closing Stock	80,000
Wages		23,500		Goods Destroyed by fire	16,000
Add: Outstanding Wages		2,400	25,900
Gross Profit (Balancing Figure)			1,14,100
			4,04,000		4,04,000

Profit and Loss Account for the year ended March 31, 2010
Dr.						Cr.
Particulars			Amount (Rs)	Particulars	Amount (Rs)
Salaries		15,000		Gross Profit	1,41,100
Add: Outstanding Salaries		3,000	18,000	Accrued Interest	1,600
Office Expenses			8,000
Bank Charges			2,600
Legal charges		3,000
Less: Prepaid		(1,200)	1,800
Interest			3,600
Export Duty			3,800
Bad-Debts		4,000
Add: Reserve for Bad and doubtful Debts		4,100	8,100
Travelling Expenses			3,200
Electricity Charges			2,300
Goods destroyed by fire (not received from Insurance company)			3,000
Depreciation on:
Land and Building		6,500
Machinery		9,000	15,500
Interest on Capital:
Seeta		9,600
Geeta		9,600	19,200
Net Profit (Balancing Figure)
Seeta’s Current A/c		13,300
Geeta’s Current A/c		13,300	26,600
			1,15,700		1,15,700

Balance Sheet as on March 31, 2010
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital			Fixed Assets
Seeta	1,20,000		Land and Building	1,30,000
Geeta	1,20,000	2,40,000	Less: 5% Depreciation	(6,500)	1,23,500
Current A/c:			Machinery	90,000
Seeta	27,900		Less: 10% Depreciation	(9,000)	81,000
Geeta	18,900	46,800	Furniture		37,000
Current Liabilities			Current Assets
Creditors		1,03,000	Closing Stock		80,000
Bank Overdraft		60,000	Debtors	82,000
Outstanding Expenses:			Less: Reserve for Bad and Doubtful Debts	(4,100)	77,900
Salaries	3,000		Prepaid Legal Charges		1,200
Wages	2,400	5,400	Cash		13,000
			8% Debentures	40,000
			Add: Accrued Interest	1,600	41,600
		4,55,200			4,55,200

Working Notes:

Partners’ Current Accounts
Dr.							Cr.
Particulars		Seeta	Geeta	Particulars	Seeta	Geeta
Balance b/d			4,000	Balance b/d	5,000
Balance c/d		27,900	18,900	Interest on Capital A/c	9,600	9,600
				Profit and Loss A/c-Profit	13,300	13,300
		27,900	18,900		27,900	22,900