Govind and Gopal had started partnership firm on 1-4-2016. Partners are entitled for 5 %
interest on capital. 10 % Commission is payable to Gopal on profit after deduction of
commission from the profit. Partners sharing profit-loss in the proportion of 3 : 2. There are
several mistakes in the Trading Account and Profit-Loss Account prepared by an unexperienced
accountant. You are asked to prepare revised annual accounts from the given trading account,
profit-loss account and list of assets and liabilities and other information.
Trading Account and profit and Loss Account as on 31-3-17
Dr
Cr
Particular
Amt. (`) Particular
Amt. (`)
To Purchase 2,48,600 By Sales 3,32,400
+ Goods Returned Credit 2400 - Goods Returned Debit 600 3,31,800
2,51,000 By Interest 600
+ Closing Stock 50,000 3,01,000 + Discount Received 800 1400
To Wages 11,200 By Net Loss 27,200
To Carriage Inward 8000
- To Carriage Outward 4000 4000
To Salary 18,000
To Rent 12,000
To Postage Expense 600
To Sundry Expense 1200
To Telephone Expense 1600
To Govind’s Drawing 6000
To Gopal’s Drawing 4800
3,60,400
3,60,400
The position of assets and liabilities as on 31-3-2017 was as follows:
Assets:
Stock ` 50,000, Debtors ` 1, 00,000, Furniture ` 20,000, Building ` 50,000,
Cash on hand ` 6000, Bank balance ` 24,000.
Liabilities:
Creditors ` 40,000, Bills Payable ` 14,000, Capital of Govind ` 1, 00,000,
Capital on Gopal ` 30,000
Adjustments:
1. Write off bad debts of ` 2800.
2. Provide 2 % discount reserve on debtors.
3. Maintain bad debts reserve of ` 7200.
4. Provide 5 % depreciation on furniture and building.
Answers
Explanation:
Govind and Gopal had started partnership firm on 1-4-2016. Partners are entitled for 5 %
interest on capital. 10 % Commission is payable to Gopal on profit after deduction of
commission from the profit. Partners sharing profit-loss in the proportion of 3 : 2. There are
several mistakes in the Trading Account and Profit-Loss Account prepared by an unexperienced
accountant. You are asked to prepare revised annual accounts from the given trading account,
profit-loss account and list of assets and liabilities and other information.
Trading Account and profit and Loss Account as on 31-3-17
Dr
Cr
Particular
Amt. (`) Particular
Amt. (`)
To Purchase 2,48,600 By Sales 3,32,400
+ Goods Returned Credit 2400 - Goods Returned Debit 600 3,31,800
2,51,000 By Interest 600
+ Closing Stock 50,000 3,01,000 + Discount Received 800 1400
To Wages 11,200 By Net Loss 27,200
To Carriage Inward 8000
- To Carriage Outward 4000 4000
To Salary 18,000
To Rent 12,000
To Postage Expense 600
To Sundry Expense 1200
To Telephone Expense 1600
To Govind’s Drawing 6000
To Gopal’s Drawing 4800
3,60,400
3,60,400
The position of assets and liabilities as on 31-3-2017 was as follows:
Assets:
Stock ` 50,000, Debtors ` 1, 00,000, Furniture ` 20,000, Building ` 50,000,
Cash on hand ` 6000, Bank balance ` 24,000.
Liabilities:
Creditors ` 40,000, Bills Payable ` 14,000, Capital of Govind ` 1, 00,000,
Capital on Gopal ` 30,000
Adjustments:
1. Write off bad debts of ` 2800.
2. Provide 2 % discount reserve on debtors.
3. Maintain bad debts reserve of ` 7200.
4. Provide 5 % depreciation on furniture and building.3