Amitbhai and Narendrabhai are in Partnership 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, 2019 and Balance
Sheet as on that date.
Trial Balance as on 31st March, 2019
Debit Balance Amount ` Credit Balance Amount `
Plant & Machinery 2,80,000 Capital A/c :
Factory Building 75,000 Amitbhai 3,50,000
Sundry Debtors 28,700 Narendrabhai 3,00,000
Purchases 85,500 Sales 1,80,000
Bad Debts 500 Bills Payable 8,500
Sales Return 2,200 Discount 1,200
10% Govt. Bond 40,000 Creditors 38,500
(Purchased on 1st Oct, 2018) R.D.D. 2,700
Import Duty 1,800 Bank Loan 15,000
Legal Charges 2,000 Purchases Return 2,000
Motive Power 12,000
Warehouse Rent 1,800
Cash in Hand 20,000
Cash at Bank 70,000
Advertisement 10,000
(for 2 years, w.e.f 1st Jan 2019)
Salaries 3,800
Rent 1,500
Drawings :
Amitbhai 2,400
Narendrabhai 3,200
Furniture 1,95,800
Bills Receivable 20,700
Free hold Property 41,000
8,97,900 8,97,900
Answers
Amitbhai and Narendrabhai are in Partnership Sharing Profits and Losses equally
Explanation:
Trial Balance of 31 March 2019
Debit balance Amount Credit Balance Amount
(INR ₹) (INR ₹)
Plant & machinery 2,80,000 Capital A/c:
Factory & Building 75,000 Amitbhai 3,50,000
Sundry Debtors 28,700 Narendrabhai 3,00,000
Purchases 85,500 Sales 1,80,000
Bad Debts 500 Bills Payable 8,500
Sales Return 2,200 Discount 1,200
10% Govt Bond 40,000 Creditors 38,500
Import Duty 1,800 RDD 2,700
Legal Charges 2,000 Bank Loan 15,000
Motive Power 12,000 Purchases Return 2,000
Warehouse Rent 1,800
Cash in Hand 20,000
Cash at Bank 70,000
Advertisement 10,000
(for 2 years, w.e.f 1st Jan)
Drawings:
Amitbhai 2,400
Narendrabhai 3,200
Salaries 3,800
Rent 1,500
Furniture 1,95,800
Bills Receivable 20,700
Freehold Property 41,000
__________________________________________________________
8,97,900 8,97,900
____________________________________________________________________________________________________________________
Adjustments
- Stock on hand on 31 March 2019 valued at ₹ 43,000.
- Uninsured goods worth ₹ 8,000 were stolen.
- Mr. Patil, customer becomes insolvent & could not pay his debts of ₹ 500.
- Create R.D.D at 2% on Sundry debtors.
- Depreciate Furniture by ₹ 1,800 & Factory Building by ₹ 2,500
- Outstanding Expenses - Salaries ₹ 300 & Rent ₹ 800
________________________________________________________
In the books of Amitbhai and Narendrabhai Trading and Profit and Loss Account for the year ended on 31st March 2019
Dr Cr
Particulars Amt. Amt. Particulars Amt Amt
To Purchases 85,500 By Sales 1,80,000
Less: Less:
Purchase Return 2,000 83,500 Sales Return 2,200 1,77,800
To Import Duty 1,800 By Closing Stock 43,000
To Motive Power 12,000 By Goods Stolen 8,000
To Depreciation:
Factory Building 2,500
To Gross Profit c/d 1,29,000
__________________________________________________________
2,28,800 2,28,800
__________________________________________________________
To Bad debts 500 o/s Int.on GB 2,000
Add:
To New Bad debts 500 By R.B.D.D. A/c 1,136
(Excess Reserve)
(2,700 – 1,564)
Add: New Reserve 564
1,564
Less: Old Reserve 2,700
To Legal Charges 2,000
To Ad Expenses 10,000
less: Prepaid Adv Exp. 8,750 1,250
To Salaries 3,800
Add: O/s Salaries 300 4,100
To Rent 1,500
Add: O/s Rent 800 2,300
To Dep on Furniture 1,800
To Loss due to Theft 8,000
To Net Profit Transferred
to Capital A/c :
Amitbhai 56,043
Narendrabhai 56,043 1,12,086
__________________________________________________________
1,33,336 1,33,336
_________________________________________________________
For Balance Sheet Please refer attachment
Notes for Balance Sheet:
- Import duty, Motive power, and Depreciation on Factory building are recorded in the Trading A/c.
- 10 % govt. bond is an investment. It was purchased on 1 – 10 – 2018. Interest is calculated for six months. Interest on Govt. Bond = 40000 × 6/12 × 0.10 = ₹ 2,000
- Adv. exp. paid for 2 years from 01 – 01 – 2019. Up to 31 – 3 – 2019, 3 months adv. exp. is written off to Profit and Loss A/c. It is calculated as below : 10, 000 × 3 = ₹ 1,250
- Prepaid adv. exp. 10,000 – 1,250 = ₹ 8,750
Explanation:
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