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Reassessment of Liabilities

Practical Pro...

Question

Practical Problem

Madhuri and Minakshi are in partnership sharing profits and losses in the ratio 3:2. 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, 2012 and Balance Sheet on that date.

Trial Balance as on 31^st March, 2012

Debit Balance

Amount

Rs

Credit Balance

Amount

Rs

Building

4,00,000

Capital A/cs-

Madhuri

3,00,000

Plant and Machinery

1,20,000

Minakshi

2,00,000

Purchases

6,50,000

Sales

8,10,000

Carriage

7,000

Sundry Creditors

1,00,000

Opening stock

90,000

Outstanding salaries

4,200

Wages

35,000

8% Bank loan

1,00,000

Sundry Debtors

1,50,000

(Taken on 1.10.2011 )

Salaries

28,000

Postage and Telegram

4,000

Insurance

5,000

Bad debts

3,000

Rent

4,000

Discount

3,200

Drawing A/c-

Madhuri

10,000

Minakshi

5,000

15,14,200

15,14,200

Adjustments:

1) Stock on hand on 31st March, 2010 was valued at Rs 1,10,000.

2) Depreciate Plant and Machinery at 10% p.a. and Building at 5% p.a.

3) Prepaid Insurance Rs 1,500.

4) Create R.D.D at 5% on Sundry Debtors.

5) Partners are allowed interest at 5% p.a. on their capitals.

6) Salaries include Rs 2,500 as advance to workers.

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Solution

Trading Account
for the year ended March 31,2012

Dr.

Cr.

Particulars

Amount

(Rs)

Particulars

Amount

(Rs)

Opening Stock

90,000

Sales

8,10,000

Purchases

6,50,000

Closing Stock

1,10,000

Carriage

7,000

Wages

35,000

Gross Profit (Balancing Figure)

1,38,000

9,20,000

9,20,000

Profit and Loss Account
for the year ended March 31, 2012

Dr.

Cr.

Particulars

Amount

(Rs)

Particulars

Amount

(Rs)

Salaries

28,000

Gross Profit

1,38,000

Add: Prepaid

2,500

25,500

Postage and Telegram

4,000

Insurance

5,000

Less: Prepaid

(1,500)

3,500

Bad-Debts

3,000

Add: Reserve for Doubtful Debts

7,500

10,500

Rent

4,000

Discount

3,200

Interest on Loan Outstanding

4,000

Depreciation on:

Plant and Machinery

12,000

Building

20,000

32,000

Interest on Capital:

Madhuri

15,000

Minakshi

10,000

25,000

Net Profit (Balancing Figure)

Madhuri

15,780

Minakshi

10,520

26,300

1,38,000

1,38,000

Balance Sheet
as on March 31, 2012

Liabilities

Amount

(Rs)

Assets

Amount

(Rs)

Capital of Madhuri

3,00,000

Fixed Assets

Less: Drawings

(10,000)

Building

4,00,000

Add: Interest on Capital

15,000

Less: 5% Depreciation

(20,000)

3,80,000

Add: Net Profit

15,780

3,20,780

Plant and Machinery

1,20,000

Capital of Minakshi

2,00,000

Less:10% Depreciation

(12,000)

1,08,000

Less: Drawings

(5,000)

Current Assets

Add: Interest on Capital

10,000

Closing Stock

1,10,000

Add: Net Profit

10,520

2,15,520

Debtors

1,50,000

8% Bank Loan

1,00,000

Less: Reserve for Doubtful Debts

(7,500)

1,42,500

Add: Outstanding Interest on Loan

4,000

1,04,000

Prepaid Insurance

1,500

Current Liabilities

Prepaid Salary

2,500

Creditors

1,00,000

Outstanding Salaries

4,200

7,44,500

7,44,500

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Similar questions

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 31^st 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.

Practical Problem

Rohan and Roshan are partners in ‘Shan Traders’ sharing profits and losses in the ratio of 2:1. From the following Trial Balance and adjustments prepare Trading and Profit and Loss Account for the year ended 31st March, 2011 and Balance Sheet as on that date

Trial Balance as on 31^st March, 2011
Particulars	Amount Rs	Particulars		Amount Rs
Opening stock	32,000	Sales		1,93,500
Purchases	64,000	Sundry Creditors		15,000
Plant and Machinery	30,000	Unpaid Wages		1,500
Furniture	18,500	Return outward		2,500
Carriage	1,500	Capital A/c-	Rohan	90,000
Wages and Salaries	35,000		Roshan	50,000
Bills Receivable	5,000
Sundry Debtors	32,000
Conveyance	4,000
Rent, Rates and Taxes	2,000
Return Inward	3,500
Cash in hand	14,750
Land and Building	83,500
Bad debts	1,750
Patents	25,000
	3,52,500			3,52,500

Adjustments:

1) Closing stock: Cost price Rs 25,000 and market price Rs 30,000.

2) An amount of Rs 3,500 spent for repairs to Building is debited to Building account.

3) Depreciate plant and Machinery and Building at 5% p.a.

4) Goods of Rs 750 taken by Roshan for this personal use.

5) Included in wages advances given to workers Rs 3,000.

6) Provide Rs 1,500 for bad and doubtful debts on Debtors.

Practical Problem

Mohini and Rohini are in partnership firm 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, 2010 and Balance Sheet as on that date.

Trial Balance as on 31^st March, 2010
Particulars		Debit Amount Rs	Credit Amount Rs
Partner’s Capital Ac-	Mohini		1,20,000
	Rohini		90,000
Purchases and Sales		2,20,000	4,30,000
Sundry Debtors and Creditors		45,000	35,000
Bills Receivable and Bills Payable		45,000	50,000
Discount		4,000	3,500
Opening stock		25,000
Wages and Salaries		23,000
Manufacturing Expenses		9,000
Factory Insurances		5,000
Factory Building*		1,40,000
Plant and Machinery		75,000
Advertisement (for 2years w.e.f. 1^st Jan. 2010)		10,000
Salaries and Wages		45,000
Warehouse rent		6,000
Import duty		11,500
Cash in hand		5,000
10% Government Bond		60,000
(purchased on 1^st July, 2009)
		7,28,500	7,28,500

Adjustments:

1) Closing stock was valued at market price Rs 92,000 which is 15% above its cost price.

2) Goods costing Rs 3,000 purchased and received on 31st March, 2010 were not recorded in purchase book.

3) Depreciate Machinery at 10% p.a.

4) Outstanding Wages were Rs 2,500.

5) Goods of Rs 2,000 were taken by Mohini for personal use but no entry was made in the books of account.

6) Maintain R.D.D at 5% on Sundry Debtors.

Prepare trading and profit and loss account and balance sheet of M/s Royal Traders from the following balances as on March 31, 2017.

Debit balances	Amount Rs	Credit balances	Amount Rs
Stock	20,000	Sales	2,45,000
Cash	5,000	Creditors	10,000
Bank	10,000	Bills payable	4,000
Carriage on purchases	1,500	Capital	2,00,000
Purchases	1,90,000
Drawings	9,000
Wages	55,000
Machinery	1,00,000
Debtors	27,000
Postage	300
Sundry expenses	1,700
Rent	4,500
Furniture	35,000

Closing stock Rs 8,000.

Practical Problem

From the following Trading Balance of M/s Ajay and Vijay you are required to prepared Trading and Profit and Loss Account for the year ended 31st March, 2009 and Balance Sheet as on that date

Trial Balance as on 31^st March, 2009
Particulars		Debit Amount Rs	Credit Amount Rs
Capital A/cs -	Ajay		60,000
	Vijay		35,000
Purchases and Sales		46,700	85,000
Sundry Debtors and Creditors		28,000	25,000
Bills Receivable and payable		5,000	6,000
Commission		4,600	1,800
Opening stock		18,000
Wages		9,900
Investment		13,500
Postage and Telegrams		3,600
Insurance		1,200
Plant and Machinery		40,700
Furniture		18,000
Cash in hand		2,500
Carriage		3,200
Bad debts		400
Prepaid Rent		7,000
Salaries		10,500
		2,12,800	2,12,800

Adjustments:

1) The closing stock is valued at Rs 31,000.

2) Outstanding expenses were wages Rs. 1,400, salaries Rs 800.

3) Depreciate Plant and Machinery by 10%.

4) Insurance at Rs 500 is paid in advance.

5) Provide for further bad debts of Rs 1,500.

6) Commission due but not received Rs 1,200.

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Trial Balance as on 31^st March, 2012
Debit Balance		Amount Rs	Credit Balance		Amount Rs
Building		4,00,000	Capital A/cs-	Madhuri	3,00,000
Plant and Machinery		1,20,000		Minakshi	2,00,000
Purchases		6,50,000	Sales		8,10,000
Carriage		7,000	Sundry Creditors		1,00,000
Opening stock		90,000	Outstanding salaries		4,200
Wages		35,000	8% Bank loan		1,00,000
Sundry Debtors		1,50,000	(Taken on 1.10.2011 )
Salaries		28,000
Postage and Telegram		4,000
Insurance		5,000
Bad debts		3,000
Rent		4,000
Discount		3,200
Drawing A/c-	Madhuri	10,000
	Minakshi	5,000
		15,14,200			15,14,200

Trading Account for the year ended March 31,2012
Dr.				Cr.
Particulars	Amount (Rs)	Particulars	Amount (Rs)
Opening Stock	90,000	Sales	8,10,000
Purchases	6,50,000	Closing Stock	1,10,000
Carriage	7,000
Wages	35,000
Gross Profit (Balancing Figure)	1,38,000
	9,20,000		9,20,000

Profit and Loss Account for the year ended March 31, 2012
Dr.					Cr.
Particulars		Amount (Rs)	Particulars	Amount (Rs)
Salaries	28,000		Gross Profit	1,38,000
Add: Prepaid	2,500	25,500
Postage and Telegram		4,000
Insurance	5,000
Less: Prepaid	(1,500)	3,500
Bad-Debts	3,000
Add: Reserve for Doubtful Debts	7,500	10,500
Rent		4,000
Discount		3,200
Interest on Loan Outstanding		4,000
Depreciation on:
Plant and Machinery	12,000
Building	20,000	32,000
Interest on Capital:
Madhuri	15,000
Minakshi	10,000	25,000
Net Profit (Balancing Figure)
Madhuri	15,780
Minakshi	10,520	26,300
		1,38,000		1,38,000

Balance Sheet as on March 31, 2012
Liabilities		Amount (Rs)	Assets			Amount (Rs)
Capital of Madhuri	3,00,000		Fixed Assets
Less: Drawings	(10,000)		Building	4,00,000
Add: Interest on Capital	15,000		Less: 5% Depreciation	(20,000)		3,80,000
Add: Net Profit	15,780	3,20,780	Plant and Machinery	1,20,000
Capital of Minakshi	2,00,000		Less:10% Depreciation	(12,000)		1,08,000
Less: Drawings	(5,000)		Current Assets
Add: Interest on Capital	10,000		Closing Stock			1,10,000
Add: Net Profit	10,520	2,15,520	Debtors		1,50,000
8% Bank Loan	1,00,000		Less: Reserve for Doubtful Debts		(7,500)	1,42,500
Add: Outstanding Interest on Loan	4,000	1,04,000	Prepaid Insurance			1,500
Current Liabilities			Prepaid Salary			2,500
Creditors		1,00,000
Outstanding Salaries		4,200
		7,44,500				7,44,500