Amitbhai and Narendrabhai are in Partnership sharing Profits and losses equally. from the following Trail 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.
| Debit Balance | Amount ₹ | Credit Balance | Amount ₹ |
| Plant & Machinery | 2,80,000 | Capital A/c: | |
| Amitbhai | 3,50,000 | ||
| Narendrabhai | 3,00,000 | ||
| Factory Building | 75,000 | Sales | 1,80,000 |
| Sundry Debtors | 28,700 | Bills Payable | 8,500 |
| Purchases | 85,500 | Discount | 1,200 |
| Bad Debts | 500 | Creditors | 38,500 |
| Sales return | 2,200 | R.D.D. | 2,700 |
| 10% Govt. Bond | 40,000 | Bank Loan | 15,000 |
| (Purchased on 1st Oct 2018) | |||
| Import Duty | 1,800 | Purchases Return | 2,000 |
| Legal Charges | 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-year, 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 |
Adjustments:
1. Stock on hand on 31st March 2019 was valued at ₹43,000.
2. Uninsured goods worth ₹8,000 were stolen.
3. Create R.D.D. at 2% on Sundry Debtors.
4. Mr. Patil, Our Customer become insolvent and could not pay his debts of ₹500.
5. Outstanding Expenses - Rent ₹800 and Salaries ₹300.
6. Depreciation Factory Building by ₹2,500 and Furniture by ₹1,800.
Solution:
Final Account
In the Books of Amitbhai and Narendrabhai
| Dr. Trading A/c And Profit & Loss A/c for the year ended 31st march, 2019 Cr. |
| Particulars | Amount | Amount | Particulars | Amount | Amount |
| To Purchase | 85,500 | By Sales | 1,80,000 | ||
| (-) Purchase Return | 2,000 | 83,500 | (-) Sales Return | 2,200 | 1,77,800 |
| To Import duty | 1,800 | By Goods were stolen | 8,000 | ||
| To Motive Power | 12,000 | ||||
| By Closing Stock | 43,000 | ||||
| To Gross Profit c/d | 1,31,500 | ||||
| 2,27,800 | 2,27,800 |
| To Bad Debt (T) | 500 | By Gross Profit b/d | 1,31,500 | ||
| (+) Bad Debt (A) | 500 | ||||
| (+) R.D.D. (A) | 564 | ||||
| 1,564 | |||||
| (-) R.D.D. (T) | 2,700 | -1,136 | |||
| To Legal Charges | 2,000 | By R.D.D. | 1,136 | ||
| To Warehouse rent | 1,800 | By Interest receivable | 2,000 | ||
| To Advertisement | 10,000 | By Discount | 1,200 | ||
| (-) Prepaid Advertisement | 8,750 | 1,250 | |||
| To Salaries | 3,800 | ||||
| (+) Outstanding Exp | 300 | 4,100 | |||
| To Rent | 1,500 | ||||
| (+) Outstanding Exp | 800 | 2,300 | |||
| To Depreciation: | |||||
| Factory Building | 2,500 | ||||
| Furniture | 1,800 | 4,300 | |||
| To loss on goods were stolen | 8,000 | ||||
| To Net Profit | |||||
| Amitbhai | 56,043 | ||||
| Narendrabhai | 56,043 | 1,12,086 | |||
| 1,35,836 | 1,35,836 |
| Liabilities | Amount | Amount | Assets | Amount | Amount |
| Capital A/c: | Plant & Machinery | 2,80,000 | |||
| Amitbhai 3,50,000 | |||||
| Narendrabhai | 6,50,000 | ||||
| 3,00,000(-) Drawings: | |||||
| Amitbhai 2,400 | |||||
| Narendrabhai 3,200 | 5,600 | ||||
| 6,44,400 | |||||
| (+) Net Profit | 1,12,086 | 5,32,314 | |||
| Factory Building | 75,000 | ||||
| (-) Depreciation | 2,500 | 72,500 | |||
| 10% Govt. Bond | |||||
| (Purchased on 1st Oct 2018) | |||||
| (+) Interest Receivable | 40,000 | ||||
| 2,000 | 42,000 | ||||
| Bills Payable | 8,500 | Cash in Hand | 20,000 | ||
| Creditors | 38,500 | Cash at bank | 70,000 | ||
| Bank Loan | 15,000 | Furniture | 1,95,800 | ||
| (-) Depreciation | 1,800 | 1,94,000 | |||
| Outstanding: | Bills Receivable | 20,700 | |||
| Rent | 800 | ||||
| Salaries | 300 | 1,100 | |||
| Free hold Property | 41,000 | ||||
| Debtors | 28,700 | ||||
| (-) Bad Debt (A) | 500 | ||||
| 28,200 | |||||
| (-) R.D.D. @2% (A) | 564 | 27,636 | |||
| Prepaid Advertisement | 8,750 | ||||
| Closing Stock | 43,000 | ||||
| 8,19,586 | 8,19,586 |
Explanation Of Adjustments:
Amitbhai and Narendrabhai are in Partnership
1. Stock on hand on 31st March 2019 was valued at ₹43,000.
Stock on 31st march 2019 is the end month of the year therefore stock is closing at valued ₹43,000. 1st Effect in Balance sheet Assets side And 2nd Effect in Trading A/c credit side.
2. Uninsured goods worth ₹8,000 were stolen.
Goods stolen which were uninsured, No entry for insurance claim. Stolen means a loss for the business of Amitbhai and Narendrabhai are in Partnership.
The Loss entry in the Profit/Loss A/c Debit side And Show to the credit side of Trading A/c.
3. Create R.D.D. at 2% on Sundry Debtors.
Reserve for Doubtful debts, new R.D.D. (Provision for Doubtful Debts) Show to the debit side of Profit/Loss A/c And Deduct from Sundry Debtors Balance Sheet Asset Side.
4. Mr. Patil, Our Customer become insolvent and could not pay his debts of ₹500.
Mr. Patil Customer of Amitbhai and Narendrabhai Partnership Business Became insolvent(unable to pay) Add to the Bad Debts of Profit/loss A/c And Deduct from the Sundry Debtors from Assets side.
5. Outstanding Expenses - Rent ₹800 and Salaries ₹300.
Outstanding Expenses are Add to the specified expense on the debit side of profit/loss A/c And Balance Sheet Liability side.
6. Depreciation Factory Building by ₹2,500 and Furniture by ₹1,800.
Depreciation of Factory Building and Furniture or any Asset effect will be same to all Assets. 1st effect show to the debit side of the Profit/Koss A/c And Less from the the Asset in Balance Sheet Asset Side.
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