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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 31st 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. 1st 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 1st 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.

Open in App
Solution

Financial Statement of….
Trading Account
for the year ended March 31,2010
Dr.

Cr.

Particulars
Amount
(Rs)
Particulars
Amount
(Rs)
Opening Stock
25,000
Sales
4,30,000
Purchases
2,20,000
Closing Stock
80,000
Add: Additions
3,000
Add: Import Duty
11,500
Less: Drawings by Mohini
(2,000)
2,32,500
Factory Insurance
5,000
Manufacturing Expenses
9,000
Wages and Salaries
23,000
Add: Outstanding wages
2,500
25,500
Gross Profit (Balancing Figure)
2,13,000
5,10,000
5,10,000

Profit and Loss Account
for the year ended March 31, 2010
Dr.

Cr.

Particulars
Amount
(Rs)
Particulars
Amount
(Rs)
Discount
4,000
Gross Profit
2,13,000
Advertisement
10,000
Discount
3,500
Less: Prepaid 10,000×2124
(8,750)
1,250
Accrued Interest on Government Bonds 60,000×10100×92
4,500
Salaries and Wages
45,000
Warehouse Rent
6,000
Depreciation on Machinery
7,500
Reserve on Doubtful Debts
2,250
Net Profit (Balancing Figure)
Mohini
77,500
Rohini
77,500
1,55,000
2,21,000
2,21,000

Balance Sheet
as on March 31, 2010
Liabilities
Amount
(Rs)
Assets
Amount
(Rs)
Capital
Fixed Assets
Mohini
1,95,500
Building
1,40,000
Rohini
1,67,500
3,63,000
Plant and Machinery
75,000
Current Liabilities
Less: 10% Depreciation
(7,500)
67,500
Creditors
35,000
Current Assets
Add: Additions
3,000
38,000
Closing Stock
80,000
Bills Payable
50,000
Debtors
45,000
Outstanding Wages
2,500
Less: Reserve for Doubtful
Debts Rs 45,000×5100
2,250
42,750
Bills Receivable
45,000
Cash in Hand
5,000
10% Government Bond
60,000
Add: Accrued Interest
4,500
64,500
Prepaid Advertisement
8,750
4,53,500
4,53,500

Working Notes:

Partners’ Capital Accounts

Dr.

Cr.

Particulars

Mohini

Rohini

Particulars

Mohini

Rohini

Drawings

2,000

Balance b/d

1,20,000

90,000

Balance c/d

1,95,500

1,67,500

Profit and Loss A/c-Profit

77,500

77,500

1,97,500

1,67,500

1,97,500

1,67,500

Note: As per the textbook the Total of Balance sheet is Rs 4,48,500 but as per our solution it should be Rs 4,53,500.

*There is difference of Rs 10,000 in the Debit and Credit side of Trial Balance, therefore, Factory Building has been increased by Rs 10,000.


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