Nana and Nani are Partners in Partnership Firm sharing Profits and Losses equally. You are required to give effects of Adjustments in Profit & Loss A/c and Balance Sheet with the help of following information.

Trial Balance as on 31st March, 2019

Debit Balance Amount Credit Balance Amount 
Insurance 15,000 Capital A/c  
Land and Building 50,000 Nana 50,000 
(Addition of 20,000
w.e.f 1st July 2018) 		 Nani 50,000 
Salaries 5,000 10% Bank loan
taken on 1st Oct, 2018  		30,000 
Export Duty 2,500 Interest 1,500 
Interest 1,000 Bills Payable 8,500 
Furniture 40,000   
Debtors 26,000   
    
 1,39,500  1,39,500 
Adjustments:

1. Gross Profit amounted to 34,500.
2. Insurance Paid for 15 months w.e.f 01/04/2018.
3. depreciation Land and Building at 10% p.a. and Furniture at 5% p.a.
4. Write off 1,000 for Bad debts and maintain R.D.D. at 5% on Sundry debtors.
5. Closing Stock is valued at 34,500.

Solution:
Final account
In the books of Nana and Nani

Profit & Loss Account for the year ended 31st march, 2019
Particulars Amount Amount Particulars Amount Amount 
To Insurance 15,000  By Gross Profit  34,500 
(-) Prepaid Insurance (3,000) 12,000 
To Salaries  5,000 By Interest  1,500 
To Export Duty  2,500    
To Interest  1,000    
       
To Depreciation on      
Land & Building 4,500  
Furniture 2,000 6,500 
      
To Bad Debt (A) 1,000     
(+) R.D.D. (A) 1,250 2,250 
      
To Interest on Loan  1,500    
      
To Net Profit      
Nana 2,625     
Nani 2,625 5,250    
  36,000   36,000 
      
Balance Sheet as on 31st March, 2019
Liabilities Amount Amount Assets Amount Amount 
Capital:   Land & Building 50,000  
Nana 50,000  (-) Depreciation (4,500) 45,500 
Nani 50,000  Furniture 40,000  
(+) Net Profit 5,250 1,05,250 (-) Depreciation (2,000) 38,000 
      
   Debtors 26,000  
(-) Bad Debts (A)  1,000  
    25,000  
   (-) R.D.D. (A) 1,250 23,750 
10% Bank loan 30,000     
(+) Interest 1,500 31,500 Prepaid Insurance  3,000 
Bills Payable  8,000    
   Closing Stock  34,500 
      
      
  1,44,750   1,44,750 
 

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