Question

Practical Problem

Sanjay and Sudhir are partners sharing profit and losses in the ratio 3:2. The Trial Balance of the firm on 31st March, 2010 was follows:

Trial Balance as on 31st March, 2010
Particulars		Amount Rs	Particulars		Amount Rs
Opening stock		20,000	Capital A/cs-	Sanjay	40,000
Purchases		30,000		Sudhir	30,000
Debtors		12,000	Sales		70,000
Wages		5,000	Sundry Creditors		21,000
Salaries		10,000	Bills payable		20,000
Land and Building		30,000	Discount		5,000
Plant and Machinery		25,000	Outstanding Rent		1,500
Furniture		16,000
Advertisement (for 2 years)		6,000
Bills Receivable		8,000
Insurance		2,000
Drawings-	Sanjay	2,000
	Sudhir	3,000
Cash in hand		5,500
Rent		10,000
Power and Fuel		3,000
		1,87,500			1,87,500

Adjustments:

1) Stock on hand on 31st March, 2010 was at Rs 35,000.

2) Write off Rs 2,000, for further Bad debts and maintain R.D.D. at 5% on debtors.

3) Depreciate Land and Building at 5% and Machinery at 10%.

4) Outstanding expenses were wages Rs 2,000 and salary Rs 1,000.

5) Credit purchases amounted to Rs 4,000 were not recorded in the books of accounts.

6) Provide interest on Partners Capital at 5% p.a.

From the above Trial Balance and adjustments prepare Trading and Profit and Loss Account for the year ended 31st March, 2010 and Balance Sheet as on that data.

Answer 1

Trading Account for the year ended Mar.31,2010
Dr.						Cr.
Particulars			Amount (Rs)	Particulars	Amount (Rs)
Opening Stock			20,000	Sales	70,000
Purchases		30,000		Closing Stock	35,000
Add: Further Purchases		4,000	34,000
Wages		5,000
Add: Outstanding Wages		2,000	7,000
Power and Fuel			3,000
Gross Profit (Balancing Figure)			41,000
			1,05,000		1,05,000

Profit and Loss Account for the year ended March 31, 2010
Dr.						Cr.
Particulars			Amount (Rs)	Particulars	Amount (Rs)
Interest on Capital:				Gross Profit	41,000
Sanjay		2,000		Discount Received	5,000
Sudhir		1,500	3,500
Salaries		10,000
Add: Outstanding Salaries		1,000	11,000
Advertisement		6,000
Less: Prepaid Advertisement		(3,000)	3,000
Insurance			2,000
Rent			10,000
Bad-Debts		2,000
Add: R.D.D		500	2,500
Depreciation on:
Land and Building		1,500
Plant and Machinery		2,500	4,000
Net Profit (Balancing Figure)
Sanjay		6,000
Sudhir		4,000	10,000
			49,000		49,000

Balance Sheet as on March 31, 2010
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital of Sanjay	40,000		Fixed Assets
Less: Drawings	(2,000)		Land and Building	30,000
Add: Interest on Capital	2,000		Less: 5% Depreciation	(1,500)	28,500
Add: Net Profit	6,000	46,000	Plant and Machinery	25,000
Capital of Sudhir	30,000		Less:10% Depreciation	(2,500)	22,500
Less: Drawings	(3,000)		Furniture		16,000
Add: Interest on Capital	1,500		Current Assets
Add: Net Profit	4,000	32,500	Prepaid Advertisement		3,000
Current Liabilities			Bills Receivable		8,000
Creditors	21,000		Closing Stock		35,000
Add: New Creditors (purchase on credit)	4,000	25,000	Cash in Hand		5,500
Bills Payable		20,000	Debtors	12,000
Outstanding Expenses:			Less: Bad-Debts	(2,000)
Wages	2,000		Less: Reserve for doubtful Debts	(500)	9,500
Salaries	1,000
Rent	1,500	4,500
		1,28,000			1,28,000